0001622244 false --12-31 Q2 P5Y P3Y P3Y 0001622244 2022-01-01 2022-06-30 0001622244 2022-08-18 0001622244 2022-06-30 0001622244 2021-12-31 0001622244 OWPC:SeriesAConvertiblePreferredStockMember 2022-06-30 0001622244 OWPC:SeriesAConvertiblePreferredStockMember 2021-12-31 0001622244 OWPC:SeriesBConvertiblePreferredStockMember 2022-06-30 0001622244 OWPC:SeriesBConvertiblePreferredStockMember 2021-12-31 0001622244 2022-04-01 2022-06-30 0001622244 2021-04-01 2021-06-30 0001622244 2021-01-01 2021-06-30 0001622244 OWPC:SeriesAConvertiblePreferredStockMember 2021-06-30 0001622244 OWPC:SeriesAConvertiblePreferredStockMember 2021-03-31 0001622244 OWPC:SeriesBConvertiblePreferredStockMember 2021-03-31 0001622244 us-gaap:CommonStockMember 2021-03-31 0001622244 us-gaap:AdditionalPaidInCapitalMember 2021-03-31 0001622244 OWPC:SubscriptionsPayableMember 2021-03-31 0001622244 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-03-31 0001622244 us-gaap:RetainedEarningsMember 2021-03-31 0001622244 2021-03-31 0001622244 OWPC:SeriesAConvertiblePreferredStockMember 2022-03-31 0001622244 OWPC:SeriesBConvertiblePreferredStockMember 2022-03-31 0001622244 us-gaap:CommonStockMember 2022-03-31 0001622244 us-gaap:AdditionalPaidInCapitalMember 2022-03-31 0001622244 OWPC:SubscriptionsPayableMember 2022-03-31 0001622244 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-03-31 0001622244 us-gaap:RetainedEarningsMember 2022-03-31 0001622244 2022-03-31 0001622244 OWPC:SeriesAConvertiblePreferredStockMember 2020-12-31 0001622244 OWPC:SeriesBConvertiblePreferredStockMember 2020-12-31 0001622244 us-gaap:CommonStockMember 2020-12-31 0001622244 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001622244 OWPC:SubscriptionsPayableMember 2020-12-31 0001622244 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001622244 us-gaap:RetainedEarningsMember 2020-12-31 0001622244 2020-12-31 0001622244 OWPC:SeriesAConvertiblePreferredStockMember 2021-12-31 0001622244 OWPC:SeriesBConvertiblePreferredStockMember 2021-12-31 0001622244 us-gaap:CommonStockMember 2021-12-31 0001622244 us-gaap:AdditionalPaidInCapitalMember 2021-12-31 0001622244 OWPC:SubscriptionsPayableMember 2021-12-31 0001622244 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-12-31 0001622244 us-gaap:RetainedEarningsMember 2021-12-31 0001622244 OWPC:SeriesAConvertiblePreferredStockMember 2021-04-01 2021-06-30 0001622244 OWPC:SeriesBConvertiblePreferredStockMember 2021-04-01 2021-06-30 0001622244 us-gaap:CommonStockMember 2021-04-01 2021-06-30 0001622244 us-gaap:AdditionalPaidInCapitalMember 2021-04-01 2021-06-30 0001622244 OWPC:SubscriptionsPayableMember 2021-04-01 2021-06-30 0001622244 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-04-01 2021-06-30 0001622244 us-gaap:RetainedEarningsMember 2021-04-01 2021-06-30 0001622244 OWPC:SeriesAConvertiblePreferredStockMember 2022-04-01 2022-06-30 0001622244 OWPC:SeriesBConvertiblePreferredStockMember 2022-04-01 2022-06-30 0001622244 us-gaap:CommonStockMember 2022-04-01 2022-06-30 0001622244 us-gaap:AdditionalPaidInCapitalMember 2022-04-01 2022-06-30 0001622244 OWPC:SubscriptionsPayableMember 2022-04-01 2022-06-30 0001622244 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-04-01 2022-06-30 0001622244 us-gaap:RetainedEarningsMember 2022-04-01 2022-06-30 0001622244 OWPC:SeriesAConvertiblePreferredStockMember 2021-01-01 2021-06-30 0001622244 OWPC:SeriesBConvertiblePreferredStockMember 2021-01-01 2021-06-30 0001622244 us-gaap:CommonStockMember 2021-01-01 2021-06-30 0001622244 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-06-30 0001622244 OWPC:SubscriptionsPayableMember 2021-01-01 2021-06-30 0001622244 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-06-30 0001622244 us-gaap:RetainedEarningsMember 2021-01-01 2021-06-30 0001622244 OWPC:SeriesAConvertiblePreferredStockMember 2022-01-01 2022-06-30 0001622244 OWPC:SeriesBConvertiblePreferredStockMember 2022-01-01 2022-06-30 0001622244 us-gaap:CommonStockMember 2022-01-01 2022-06-30 0001622244 us-gaap:AdditionalPaidInCapitalMember 2022-01-01 2022-06-30 0001622244 OWPC:SubscriptionsPayableMember 2022-01-01 2022-06-30 0001622244 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-01-01 2022-06-30 0001622244 us-gaap:RetainedEarningsMember 2022-01-01 2022-06-30 0001622244 OWPC:SeriesAConvertiblePreferredStockMember 2021-06-30 0001622244 OWPC:SeriesBConvertiblePreferredStockMember 2021-06-30 0001622244 us-gaap:CommonStockMember 2021-06-30 0001622244 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001622244 OWPC:SubscriptionsPayableMember 2021-06-30 0001622244 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30 0001622244 us-gaap:RetainedEarningsMember 2021-06-30 0001622244 2021-06-30 0001622244 OWPC:SeriesAConvertiblePreferredStockMember 2022-06-30 0001622244 OWPC:SeriesBConvertiblePreferredStockMember 2022-06-30 0001622244 us-gaap:CommonStockMember 2022-06-30 0001622244 us-gaap:AdditionalPaidInCapitalMember 2022-06-30 0001622244 OWPC:SubscriptionsPayableMember 2022-06-30 0001622244 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2022-06-30 0001622244 us-gaap:RetainedEarningsMember 2022-06-30 0001622244 OWPC:SeriesConvertibleAPreferredStockMember 2021-06-30 0001622244 OWPC:SeriesConvertibleAPreferredStockMember 2022-06-30 0001622244 OWPC:MergerAgreementMember OWPC:OWPVenturesIncMember 2019-02-20 2019-02-21 0001622244 OWPC:MergerAgreementMember OWPC:OWPVenturesIncMember 2019-02-21 0001622244 OWPC:MergerAgreementMember 2019-02-20 2019-02-21 0001622244 OWPC:MergerAgreementMember 2019-02-21 0001622244 OWPC:MergerAgreementMember OWPC:OWPVenturesIncMember 2021-08-01 2021-08-31 0001622244 OWPC:MergerAgreementMember OWPC:OWPVenturesIncMember 2021-08-31 0001622244 OWPC:OneWorldProductsIncMember 2022-01-01 2022-06-30 0001622244 OWPC:OWPVenturesIncMember 2022-01-01 2022-06-30 0001622244 OWPC:OneWorldPharmaSASMember 2022-01-01 2022-06-30 0001622244 OWPC:ColombianHopeSASMember 2022-01-01 2022-06-30 0001622244 OWPC:AgrobaseSASMember 2022-01-01 2022-06-30 0001622244 us-gaap:FairValueInputsLevel1Member 2022-06-30 0001622244 us-gaap:FairValueInputsLevel2Member 2022-06-30 0001622244 us-gaap:FairValueInputsLevel3Member 2022-06-30 0001622244 us-gaap:FairValueInputsLevel1Member 2021-12-31 0001622244 us-gaap:FairValueInputsLevel2Member 2021-12-31 0001622244 us-gaap:FairValueInputsLevel3Member 2021-12-31 0001622244 OWPC:UtilitiesDepositsMember 2022-06-30 0001622244 OWPC:UtilitiesDepositsMember 2021-12-31 0001622244 OWPC:RefundableDepositOnEquipmentPurchaseMember 2022-06-30 0001622244 OWPC:RefundableDepositOnEquipmentPurchaseMember 2021-12-31 0001622244 OWPC:DownPaymentonDistillationEquipmentMember 2022-06-30 0001622244 OWPC:DownPaymentonDistillationEquipmentMember 2021-12-31 0001622244 OWPC:SecurityDepositsOnLeasesHeldInColombiaMember 2022-06-30 0001622244 OWPC:SecurityDepositsOnLeasesHeldInColombiaMember 2021-12-31 0001622244 OWPC:SecurityDepositOnOfficeLeaseMember 2022-06-30 0001622244 OWPC:SecurityDepositOnOfficeLeaseMember 2021-12-31 0001622244 us-gaap:LandMember 2022-06-30 0001622244 us-gaap:LandMember 2021-12-31 0001622244 us-gaap:BuildingMember 2022-06-30 0001622244 us-gaap:BuildingMember 2021-12-31 0001622244 us-gaap:OfficeEquipmentMember 2022-06-30 0001622244 us-gaap:OfficeEquipmentMember 2021-12-31 0001622244 us-gaap:FurnitureAndFixturesMember 2022-06-30 0001622244 us-gaap:FurnitureAndFixturesMember 2021-12-31 0001622244 us-gaap:MachineryAndEquipmentMember 2022-06-30 0001622244 us-gaap:MachineryAndEquipmentMember 2021-12-31 0001622244 2022-01-02 0001622244 2021-12-27 2022-01-02 0001622244 2021-08-27 2021-09-01 0001622244 2021-09-01 0001622244 2022-06-01 0001622244 OWPC:AJBCapitalMember 2022-01-01 2022-06-30 0001622244 OWPC:PromissoryNoteMember OWPC:AJBCapitalInvestmentsLLCMember 2021-09-24 0001622244 OWPC:PromissoryNoteMember OWPC:AJBCapitalInvestmentsLLCMember OWPC:PurchaseAgreementMember 2021-09-24 0001622244 us-gaap:WarrantMember 2021-09-23 2021-09-24 0001622244 us-gaap:CallOptionMember 2021-09-24 0001622244 2021-09-24 0001622244 OWPC:PromissoryNoteMember OWPC:AJBCapitalInvestmentsLLCMember OWPC:PurchaseAgreementMember 2021-09-23 2021-09-24 0001622244 OWPC:PromissoryNoteMember OWPC:AJBCapitalInvestmentsLLCMember 2021-09-23 2021-09-24 0001622244 us-gaap:ConvertibleDebtMember OWPC:PromissoryNoteMember 2022-06-30 0001622244 us-gaap:ConvertibleDebtMember OWPC:PromissoryNoteMember 2021-12-31 0001622244 us-gaap:ConvertibleDebtMember 2022-06-30 0001622244 us-gaap:ConvertibleDebtMember 2021-12-31 0001622244 2021-01-01 2021-12-31 0001622244 OWPC:UnsecuredPromissoryNoteOneMember 2022-06-30 0001622244 OWPC:UnsecuredPromissoryNoteOneMember 2021-12-31 0001622244 OWPC:UnsecuredPromissoryNoteTwoMember 2022-06-30 0001622244 OWPC:UnsecuredPromissoryNoteTwoMember 2021-12-31 0001622244 OWPC:UnsecuredPromissoryNoteThreeMember 2022-06-30 0001622244 OWPC:UnsecuredPromissoryNoteThreeMember 2021-12-31 0001622244 OWPC:UnsecuredPromissoryNoteFourMember 2022-06-30 0001622244 OWPC:UnsecuredPromissoryNoteFourMember 2021-12-31 0001622244 OWPC:UnsecuredPromissoryNoteFiveMember 2022-06-30 0001622244 OWPC:UnsecuredPromissoryNoteFiveMember 2021-12-31 0001622244 OWPC:UnsecuredPromissoryNoteSixMember 2022-06-30 0001622244 OWPC:UnsecuredPromissoryNoteSixMember 2021-12-31 0001622244 OWPC:UnsecuredPromissoryNoteSevenMember 2022-06-30 0001622244 OWPC:UnsecuredPromissoryNoteSevenMember 2021-12-31 0001622244 OWPC:UnsecuredPromissoryNoteEightMember 2022-06-30 0001622244 OWPC:UnsecuredPromissoryNoteEightMember 2021-12-31 0001622244 OWPC:UnsecuredPromissoryNoteOneMember OWPC:OWPVenturesIncMember 2022-06-13 0001622244 OWPC:UnsecuredPromissoryNoteOneMember OWPC:OWPVenturesIncMember 2022-06-12 2022-06-13 0001622244 OWPC:UnsecuredPromissoryNoteTwoMember OWPC:OneWorldPharmaSASMember 2022-06-16 2022-06-17 0001622244 OWPC:UnsecuredPromissoryNoteTwoMember OWPC:OneWorldPharmaSASMember 2022-06-17 0001622244 OWPC:UnsecuredPromissoryNoteThreeMember OWPC:OneWorldPharmaSASMember 2022-05-31 2022-05-31 0001622244 OWPC:UnsecuredPromissoryNoteThreeMember OWPC:OneWorldPharmaSASMember 2022-05-31 0001622244 OWPC:UnsecuredPromissoryNoteThreeMember OWPC:OneWorldPharmaSASMember 2022-05-30 2022-05-31 0001622244 OWPC:UnsecuredPromissoryNoteFourMember OWPC:OneWorldPharmaSASMember 2022-05-30 0001622244 OWPC:UnsecuredPromissoryNoteFiveMember OWPC:OneWorldPharmaSASMember 2022-04-29 0001622244 OWPC:UnsecuredPromissoryNoteSixMember OWPC:OWPVenturesIncMember 2022-03-01 0001622244 OWPC:UnsecuredPromissoryNoteSixMember OWPC:OWPVenturesIncMember 2022-02-27 2022-03-01 0001622244 OWPC:UnsecuredPromissoryNoteSevenMember OWPC:OWPVenturesIncMember 2022-02-15 0001622244 OWPC:UnsecuredPromissoryNoteSevenMember OWPC:OWPVenturesIncMember 2022-02-13 2022-02-15 0001622244 OWPC:UnsecuredPromissoryNoteEightMember OWPC:OWPVenturesIncMember OWPC:LendersMember 2020-05-04 0001622244 OWPC:UnsecuredPromissoryNoteEightMember OWPC:OWPVenturesIncMember 2020-05-03 2020-05-04 0001622244 OWPC:UnsecuredPromissoryNotesMember 2022-06-30 0001622244 OWPC:UnsecuredPromissoryNotesMember 2021-12-31 0001622244 OWPC:UnsecuredPromissoryNoteMember OWPC:IsiahThomasIIIMember 2022-06-03 0001622244 OWPC:UnsecuredPromissoryNoteMember OWPC:IsiahThomasIIIMember 2022-05-05 0001622244 OWPC:UnsecuredPromissoryNoteMember OWPC:DrKennethPeregoIIMember 2022-05-05 0001622244 OWPC:UnsecuredPromissoryNoteMember OWPC:DrKennethPeregoIIMember 2021-12-29 0001622244 OWPC:UnsecuredPromissoryNoteMember OWPC:DrKennethPeregoIIMember 2021-12-26 2021-12-29 0001622244 OWPC:SeriesAConvertiblePreferredStockMember 2022-01-01 2022-06-30 0001622244 us-gaap:SeriesAPreferredStockMember 2022-06-30 0001622244 us-gaap:SeriesBPreferredStockMember 2022-06-30 0001622244 us-gaap:SeriesAPreferredStockMember 2022-01-01 2022-06-30 0001622244 us-gaap:SeriesBPreferredStockMember 2022-01-01 2022-06-30 0001622244 us-gaap:CommonStockMember OWPC:SubscriptionPayableMember 2022-03-28 2022-03-29 0001622244 OWPC:BoardOfDirectorsMember OWPC:TwoThousandNineteenStockIncentivePlanMember 2020-02-11 2020-02-12 0001622244 OWPC:OfficersDirectorsAndEmployeesMember 2022-01-01 2022-06-30 0001622244 OWPC:OfficersDirectorsAndEmployeesMember 2021-01-01 2021-06-30 0001622244 OWPC:OfficersDirectorsAndEmployeesMember 2022-06-30 0001622244 us-gaap:SubsequentEventMember OWPC:OWPVenturesIncMember OWPC:ViceChairmanMember 2022-08-05 0001622244 us-gaap:SubsequentEventMember OWPC:OWPVenturesIncMember OWPC:ChairmanAndCEOMember 2022-08-02 0001622244 us-gaap:SubsequentEventMember OWPC:OWPVenturesIncMember OWPC:ViceChairmanMember 2022-07-07 0001622244 us-gaap:SubsequentEventMember srt:MinimumMember 2022-08-02 0001622244 us-gaap:SubsequentEventMember srt:MaximumMember 2022-08-02 0001622244 2022-08-15 0001622244 us-gaap:SubsequentEventMember 2022-08-14 2022-08-15 iso4217:USD xbrli:shares iso4217:USD xbrli:shares utr:sqft iso4217:COP OWPC:Integer xbrli:pure

 

 

 

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 June 30, 2022

 

OR

 

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

 

For the transition period from ____________ to ____________

 

Commission file number: 333-200529

 

 

 

ONE WORLD PRODUCTS, 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.)

     
2332 Galiano Street, 2nd Floor, Coral Gables, Florida 33134   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 August 18, 2022 was 65,861,631.

 

 

 

 

 

 

TABLE OF CONTENTS

 

  Page
PART I - FINANCIAL INFORMATION 1
ITEM 1.   FINANCIAL STATEMENTS (Unaudited) 1
    Condensed Consolidated Balance Sheets as of June 30, 2022 (Unaudited) and December 31, 2021 1
    Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited) 2
    Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited) 3
    Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 (Unaudited) 5
    Notes to the Condensed Consolidated Financial Statements (Unaudited) 6
ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 18
ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 22
ITEM 4.   CONTROLS AND PROCEDURES 22
PART II - OTHER INFORMATION 23
ITEM 1.   Legal Proceedings 23
ITEM 1A.   RISK FACTORS 23
ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 23
ITEM 3.   DEFAULTS UPON SENIOR SECURITIES 23
ITEM 4.   MINE SAFETY DISCLOSURES 23
ITEM 5.   OTHER INFORMATION 23
ITEM 6.   EXHIBITS 24
    SIGNATURES 25

 

 

 

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

ONE WORLD PRODUCTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   June 30,   December 31, 
   2022   2021 
   (Unaudited)      
Assets          
           
Current assets:          
Cash  $54,797   $119,678 
Accounts receivable   26,753    19,880 
Inventory   315,722    198,595 
Other current assets   231,194    306,030 
Total current assets   628,466    644,183 
           
Right-of-use assets   1,483,218    - 
Security deposits   1,532,055    1,255,988 
Fixed assets, net   1,021,557    1,003,013 
           
Total Assets  $4,665,296   $2,903,184 
           
Liabilities and Stockholders’ Equity (Deficit)          
           
Current liabilities:          
Accounts payable  $675,150   $480,146 
Accrued expenses   678,161    457,762 
Deferred revenues   33,510    30,164 
Dividends payable   118,025    98,920 
Current portion of lease liabilities   106,999    - 
Convertible notes payable, net of $125,389 and $412,673 of debt discounts at June 30, 2022 and December 31, 2021, respectively   624,611    337,327 
Notes payable, current maturities   152,636    119,274 
Notes payable, related parties, current maturities   40,000    - 
Total current liabilities   2,429,092    1,523,593 
           
Long-term lease liability   1,389,982    - 
Notes payable, long-term portion   700,000    - 
Notes payable, related parties, long-term portion   200,000    200,000 
           
Total Liabilities   4,719,074    1,723,593 
           
Series A convertible preferred stock, $0.001 par value, 500,000 shares authorized; 65,233 shares issued and outstanding   652,330    652,330 
Series B convertible preferred stock, $0.001 par value, 300,000 shares authorized; 238,501 shares issued and outstanding   3,577,515    3,577,515 
           
Stockholders’ Equity (Deficit):          
Preferred stock, $0.001 par value, 9,200,000 shares authorized; no shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively   -    - 
Common stock, $0.001 par value, 300,000,000 shares authorized; 65,861,631 and 65,599,565 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively   65,862    65,600 
Additional paid-in capital   16,928,274    16,843,656 
Subscriptions payable, consisting of 262,066 shares at December 31, 2021   -    21,725 
Accumulated other comprehensive loss   (59,875)   (64,347)
Accumulated (deficit)   (21,217,884)   (19,916,888)
Total Stockholders’ Equity (Deficit)   (4,283,623)   (3,050,254)
           
Total Liabilities and Stockholders’ Equity (Deficit)  $4,665,296   $2,903,184 

 

See accompanying notes to financial statements.

 

1

 

 

ONE WORLD PRODUCTS, INC.  

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS  

(Unaudited)  

 

   2022   2021   2022   2021 
   For the Three Months Ended   For the Six Months Ended 
   June 30,   June 30, 
   2022   2021   2022   2021 
                 
Revenues  $32,864   $42,323   $43,011   $65,605 
Cost of goods sold   20,840    173    30,796    7,752 
Gross profit   12,024    42,150    12,215    57,853 
                     
Operating expenses:                    
General and administrative   387,807    368,146    769,190    1,108,572 
Professional fees   113,805    306,194    284,855    525,657 
Depreciation expense   12,172    13,114    24,657    22,998 
Total operating expenses   513,784    687,454    1,078,702    1,657,227 
                     
Operating loss   (501,760)   (645,304)   (1,066,487)   (1,599,374)
                     
Other income (expense):                    
Sublease income   1,000    7,500    1,000    14,500 
Gain on early extinguishment of debt   -    -    121,372    - 
Interest income   -    1,244    41    1,558 
Interest expense   (190,730)   (116,634)   (356,922)   (210,095)
Total other expense   (189,730)   (107,890)   (234,509)   (194,037)
                     
Net loss  $(691,490)  $(753,194)  $(1,300,996)  $(1,793,411)
                     
Other comprehensive loss:                    
Gain (loss) on foreign currency translation  $(12,332)  $(5,779)  $4,472   $(5,419)
                     
Net other comprehensive loss  $(703,822)  $(758,973)  $(1,296,524)  $(1,798,830)
Series A convertible preferred stock declared ($0.60 per share)   

(8,847

)   12,616    (19,105)   (34,843)
Net loss attributable to common shareholders  $(712,669)  $(746,357)  $(1,315,629)  $(1,833,673)
                     
Weighted average number of common shares outstanding - basic   65,861,631    59,329,167    65,734,218    58,721,432 
Net loss per share - basic  $(0.01)  $(0.01)  $(0.02)  $(0.03)
                     
Weighted average number of common shares outstanding - fully diluted   65,861,631    59,329,167    65,734,218    58,721,432 
Net loss per share - fully diluted  $(0.01)  $(0.01)  $(0.02)  $(0.03)
                     
Dividends declared per share of common stock  $0.00   $0.00   $0.00   $0.00 

 

See accompanying notes to financial statements.

 

2

 

 

ONE WORLD PHARMA, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) 

(Unaudited)

 

   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Payable   Income (Loss)   Deficit   (Deficit) 
   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 Three Months Ended June 30, 2022 
   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, 2022   65,233   $652,330    238,501   $3,577,515    65,861,631   $65,862   $16,895,975   $-   $(47,543)  $(20,526,394)  $(3,612,100)
                                                        
Amortization of common stock options issued for services   -    -    -    -    -    -    41,146                 -    -    -    41,146 
                                                        
Series A convertible preferred stock dividend declared ($0.60 per share)   -    -    -    -    -    -    (8,847)   -    -    -    (8,847)
                                                        
Gain on foreign currency translation   -    -    -    -    -    -    -    -    (12,332)   -    (12,332)
                                                        
Net loss   -    -    -    -    -    -    -    -    -    (691,490)   (691,490)
                                                        
Balance, June 30, 2022   65,233   $652,330    238,501   $3,577,515    65,861,631   $65,862   $16,928,274   $-   $(59,875)  $(21,217,884)  $(4,283,623)

 

3

 

 

   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)

 

   For the Six Months Ended June 30, 2022 
   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, 2021   65,233   $652,330    238,501   $3,577,515    65,599,565   $65,600   $16,843,656   $21,725   $(64,347)  $(19,916,888)  $(3,050,254)
                                                        
Common stock issued for services   -    -    -    -    262,066    262    21,463    (21,725)   -    -    - 
                                                        
Amortization of common stock options issued for services   -    -    -    -    -    -    82,260    -    -    -    82,260 
                                                        
Series A convertible preferred stock dividend declared ($0.60 per share)   -    -    -    -    -    -    (19,105)   -    -    -    (19,105)
                                                        
Gain on foreign currency translation   -    -    -    -    -    -    -    -    4,472    -    4,472 
                                                        
Net loss   -    -    -    -    -    -    -    -    -    (1,300,996)   (1,300,996)
                                                        
Balance, June 30, 2022   65,233   $652,330    238,501   $3,577,515    65,861,631   $65,862   $16,928,274   $-   $(59,875)  $(21,217,884)  $(4,283,623)

 

See accompanying notes to financial statements.

 

4

 

 

ONE WORLD PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   2022   2021 
   For the Six Months Ended 
   June 30, 
   2022   2021 
Cash flows from operating activities          
Net loss  $(1,300,996)  $(1,793,411)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization expense   24,657    22,998 
Gain on early extinguishment of debt   (121,372)   - 
Amortization of debt discounts   300,600    183,819 
Stock-based compensation   -    107,796 
Amortization of options issued for services   82,260    654,579 
Decrease (increase) in assets:          
Accounts receivable   (6,873)   (23,095)
Inventory   (117,127)   (146,714)
Other current assets   74,836    (21,640)
Right-of-use assets   52,488    22,636 
Security deposits   (276,067)   (2,239)
Increase (decrease) in liabilities:          
Accounts payable   195,004    (175,327)
Accrued expenses   222,497    (100,163)
Deferred revenues   3,346    - 
Lease liability   (38,725)   (22,114)
Net cash used in operating activities   (905,472)   (1,292,875)
           
Cash flows from investing activities          
Purchase of fixed assets   (43,201)   (223,922)
Net cash used in investing activities   (43,201)   (223,922)
           
Cash flows from financing activities          
Repayment of convertible note payable   -    (40,567)
Proceeds from notes payable   839,320    268,250 
Proceeds from notes payable, related parties   40,000    - 
Proceeds from sale of preferred and common stock   -    3,077,510 
Net cash provided by financing activities   879,320    3,305,193 
           
Effect of exchange rate changes on cash   4,472    (5,419)
           
Net increase (decrease) in cash   (64,881)   1,782,977 
Cash - beginning   119,678    28,920 
Cash - ending  $54,797   $1,811,897 
           
Supplemental disclosures:          
Interest paid  $27,932   $8,175 
Income taxes paid  $-   $- 
           
Non-cash investing and financing transactions:          
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  $19,105   $34,843 
Initial recognition of right-of-use assets and lease liabilities  $

1,535,706

   $- 

 

See accompanying notes to financial statements.

 

5

 

 

ONE WORLD PRODUCTS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 1 – Nature of Business and Significant Accounting Policies

 

Nature of Business

 

One World Products, Inc., formerly known as One World Pharma, Inc. (the “Company,” “we,” “our” or “us”) was incorporated in Nevada on September 2, 2014. On February 21, 2019, we entered into an Agreement and Plan of Merger with OWP Merger Subsidiary, Inc., our wholly-owned subsidiary, and OWP Ventures, Inc. (“OWP Ventures”), which is the parent company of One World Pharma SAS, a Colombian company (“OWP Colombia”). Pursuant to the Merger Agreement, we acquired OWP Ventures (and indirectly, OWP Colombia) by the merger of OWP Merger Subsidiary with and into OWP Ventures, with OWP Ventures being the surviving entity as our wholly-owned subsidiary (the “Merger”). As a result of the Merger (a) holders of the outstanding capital stock of OWP Ventures received an aggregate of 39,475,398 shares of our common stock; (b) options to purchase 825,000 shares of common stock of OWP Ventures at an exercise price of $0.50 automatically converted into options to purchase 825,000 shares of our common stock at an exercise price of $0.50; (c) the outstanding principal and interest under a $300,000 convertible note issued by OWP Ventures became convertible, at the option of the holder, into shares of our common stock at a conversion price equal to the lesser of $0.424 per share or 80% of the price we sell our common stock in a future “Qualified Offering”; (d) 875,000 shares of our common stock owned by OWP Ventures prior to the Merger were cancelled; and (e) OWP Ventures’ chief operating officer became our chief operating officer and two of OWP Ventures’ directors became members of our board of directors. The Company’s headquarters are located in Coral Gables, Florida, and all of its customers are outside of the United States. On January 10, 2019, the Company changed its name from Punto Group, Corp. to One World Pharma, Inc., and on November 23, 2021, the Company changed its name to One World Products, Inc. through the merger of One World Products, Inc., a recently formed Nevada corporation wholly-owned by the Company, with and into the Company (the “Name Change Merger”) pursuant to the applicable provisions of the Nevada Revised Statutes (“NRS”). As permitted by the NRS, the articles of merger filed with the Secretary of State of the state of Nevada to effect the Name Change Merger amended Article I of the Company’s Articles of Incorporation to change the Company’s name to “One World Products, Inc.” The Name Change Merger was effected solely to effect the change of the Company’s name, and had no effect on the Company’s officers, directors, operations, assets or liabilities.

 

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. 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 began harvesting cannabis in the first quarter of 2019 for the purpose of further research and development activities, quality control testing and extraction. We have been generating revenue from the sale of our seeds since the second quarter of 2020. In August 2021, we paid total deposits of $1,155,000 of the approximate total cost of $1,400,000 for the construction of a vertically integrated extraction facility designed to process the cannabis flower. Upon completion of construction, we will be one of the only companies in Colombia to both hold licenses and possess the capability to extract high-quality CBD and THC oils.

 

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, 2021. 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.

 

6

 

 

ONE WORLD PRODUCTS, 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 June 30, 2022:

 

    State of      
Name of Entity   Incorporation    Relationship 
One World Products, 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 
Agrobase, S.A.S.(5)   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 Products, 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 substantive income or expenses.
(5) Wholly-owned subsidiary of OWP Ventures, Inc., formed on September 12, 2019, located in Colombia and legally constituted as a simplified stock company. This company has yet to incur any substantive income or expenses.

 

The consolidated financial statements herein contain the operations of the wholly-owned subsidiaries listed above. As of August 1, 2022, the Company’s headquarters are located in Coral Gables, Florida and substantially all of its production efforts are within Popayán, Colombia.

 

Foreign Currency Translation

 

The functional currency of the Company is Columbian Peso (COP). The Company has maintained its financial statements using the functional currency, and translated those financial statements to the US Dollar (USD) throughout this report. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income (loss) for the respective periods.

 

Comprehensive Income

 

The Company has adopted 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 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 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.

 

7

 

 

ONE WORLD PRODUCTS, 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.

 

Cash in Excess of FDIC Insured Limits

 

The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation (FDIC) up to $250,000, under current regulations. The Company did not have any cash in excess of FDIC insured limits at June 30, 2022, 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. 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. The Company’s sales to date have primarily consisted of the sale of seeds. These sales include multi-element arrangements whereby the Company collects 50% of the sale upon delivery of the sales, and the remaining 50% upon the completion of the harvest, whether the seeds result in a successful crop, or not. In addition, the Company has a right of first refusal to purchase products resulting from the harvest. At June 30, 2022, the Company had $33,510 of deferred revenues and $22,132 of deferred cost of goods sold, as included in other current assets on the balance sheet, that are expected to be recognized upon the customers’ completion of their harvests in 2022.

 

Inventory

 

Inventories are stated at the lower of cost or net realizable value. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value. Our cannabis products consist of cannabis flower grown in-house, along with produced extracts.

 

Stock-Based Compensation

 

The Company accounts for equity instruments issued to employees and non-employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718). 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 October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which creates an exception to the general recognition and measurement principle for contract assets and contract liabilities from contracts with customers acquired in a business combination. The new guidance will require companies to apply the definition of a performance obligation under accounting standard codification (“ASC”) Topic 606 to recognize and measure contract assets and contract liabilities (i.e., deferred revenue) relating to contracts with customers that are acquired in a business combination. Under current GAAP, an acquirer in a business combination is generally required to recognize and measure the assets it acquires and the liabilities it assumes at fair value on the acquisition date. The new guidance will result in the acquirer recording acquired contract assets and liabilities on the same basis that would have been recorded by the acquiree before the acquisition under ASC Topic 606. These amendments are effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The adoption of ASU 2021-08 is not expected to have a material impact on the Company’s financial statements or related disclosures.

 

8

 

 

ONE WORLD PRODUCTS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

In May 2021, the FASB issued ASU No. 2021-04, Earnings Per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity Classified Written Call Options. ASU 2021-04 addresses issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options. ASU 2021-04 is effective for fiscal years beginning after December 15, 2021 and interim periods within those fiscal years, with early adoption permitted. The adoption of ASU 2021-04 has not had a material impact on the Company’s financial statements or related disclosures.

 

In March 2020, the FASB issued ASU 2020-04 establishing Topic 848, Reference Rate Reform. ASU 2020-04 contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The adoption of ASU 2020-04 did not have a material impact on the Company’s consolidated financial statements, as we transitioned from the London Interbank Offered Rate, commonly referred to as LIBOR, to alternative references rates, as well as utilizing the aforementioned expedients and exceptions provided in ASU 2020-04.

 

In August 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 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 is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2021, with early adoption permitted. The adoption of ASU 2020-06 is not expected to have a material impact on the Company’s financial statements or related disclosures.

 

No other new accounting pronouncements, issued or effective during the period ended June 30, 2022, have had or are expected to have a significant impact on the Company’s financial statements.

 

Note 2 –Going Concern

 

As shown in the accompanying condensed consolidated financial statements as of June 30, 2022, our balance of cash on hand was $54,797, and we had negative working capital of $1,800,626 and an accumulated deficit of $21,217,884. We are too early in our development stage to project future revenue levels, and may not be able to generate sufficient funds to sustain our operations for the next twelve months. Accordingly, we may need to raise additional cash to fund our operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

 

In the event sales do not materialize at the expected rates, management would seek additional financing and would attempt to conserve cash by further reducing expenses. There can be no assurance that we will be successful in achieving these objectives; therefore, without sufficient financing it would be unlikely for the Company to continue as a going concern.