Quarterly report pursuant to Section 13 or 15(d)

Deconsolidation of Foreign Subsidiaries

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Deconsolidation of Foreign Subsidiaries
 6 Months Ended
Jun. 30, 2024
Deconsolidation Of Foreign Subsidiaries  
Deconsolidation of Foreign Subsidiaries

Note 3 – Deconsolidation of Foreign Subsidiaries

 

On December 22, 2023, our wholly-owned subsidiary, One World Products, S.A.S., a Colombian Simplified Shares Company, filed for protection under Colombian Law 1116 of 2006, which is the primary legislation governing business insolvency proceedings (restructuring and liquidation) (“Reorganization Proceedings”) in Colombia. The Reorganization Proceeds are similar to Chapter 11 of the Bankruptcy Code in the United States, whereby the Company intends to restructure its debts and continue to operate. The plan of reorganization and assessment of valid claims has not yet been determined, or approved by the court and creditors, as necessary. OWP SAS has currently identified approximately 23 creditors, consisting of approximately $1.2 million of financial obligations, collectively. In accordance with ASC 810-10-15, the Company has deconsolidated its foreign subsidiaries until it emerges from the Reorganization Proceedings to include the petitioning entity, OWP SAS. Given the lack of independently identifiable operations, the Company has also deconsolidated its non-operating shell entities, Agrobase, S.A.S. and Hope Colombia, S.A.S (collectively, the “Foreign Subsidiaries”). The deconsolidation resulted in a loss on deconsolidation of foreign subsidiaries in the amount of $220,272 and $1,564,823 for the six months ended June 30, 2024 and the year ended December 31, 2023, respectively. There were no income, losses or cash flows within the Foreign Subsidiaries between the date of petition on December 22, 2023 and December 31, 2023. A summary of the deconsolidated condensed combined balance sheets and statement of operations and comprehensive loss of the Foreign Subsidiaries is as follows:

 

FOREIGN SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

    June 30, 2024     December 31, 2023  
Assets                
                 
Current assets:                
Cash   $ 30,045     $ 1,660  
Inventory     42,253       45,791  
Other current assets     47,814       2,687  
Total current assets     120,112       50,138  
                 
Other assets     208,738       226,542  
Fixed assets, net     2,319,761       2,346,281  
                 
Total Assets   $ 2,648,611     $ 2,622,961  
                 
Liabilities and Stockholders’ Equity (Deficit)                
                 
Current liabilities:                
Accounts payable   $ 349,456     $ 392,403  
Accrued expenses     442,134       482,587  
Notes payable     168,754       183,148  
Intercompany liabilities owed to OWP Ventures, Inc.     7,692,501       7,348,034  
Total current liabilities     8,652,845       8,406,172  
                 
Stockholders’ Equity (Deficit):                
Accumulated other comprehensive income     58,686       -  
Accumulated (deficit)     (6,062,920 )     (5,783,211 )
Total Stockholders’ Equity (Deficit)     (6,004,234 )     (5,783,211 )
                 
Total Liabilities and Stockholders’ Equity (Deficit)   $ 2,648,611     $ 2,622,961  

 

 

ONE WORLD PRODUCTS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

FOREIGN SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

 

    For the Three     For the Six  
    Months Ended     Months Ended  
    June 30, 2024     June 30, 2024  
             
Revenues   $ -     $ -  
Cost of goods sold     -       -  
Gross profit     -       -  
                 
Operating expenses:                
General and administrative     63,081       140,947  
Professional fees     17,163       32,129  
Depreciation expense     14,675       26,520  
Total operating expenses     94,919       199,596  
                 
Operating loss     (94,919 )     (199,596 )
                 
Other income (expense):                
Interest expense     (40,380 )     (80,113 )
Total other expense     (40,380 )     (80,113 )
                 
Net loss   $ (135,299 )   $ (279,709 )
Other comprehensive loss:                
Gain on foreign currency translation   $ 54,638     $ 58,686  
                 
Net loss   $ (80,661 )   $ (221,023 )

 

FOREIGN SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 

    For the Six  
    Months Ended  
    June 30, 2024  
Cash flows from operating activities        
Net loss   $ (279,709 )
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization expense     26,520  
Decrease (increase) in assets:        
Inventory     3,538  
Other current assets     (45,127 )
Other assets     17,804  
Increase (decrease) in liabilities:        
Accounts payable     (42,947 )
Accrued expenses     (40,603 )
Accrued interest on intercompany loans     81,867  
Net cash used in operating activities     (278,657 )
         
Cash flows from financing activities        
Proceeds received from intercompany loan     262,600  
Net cash provided by financing activities     262,600  
         
Effect of exchange rate changes on cash     44,442  
         
Net increase (decrease) in cash     28,385  
Cash - beginning     1,660  
Cash - ending   $ 30,045  
         
Supplemental disclosures:        
Interest paid   $ -  
Income taxes paid   $ -  

 

 

ONE WORLD PRODUCTS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)