| Notes Payable |
Note
16 – Notes Payable
Schedule
of Notes Payable
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December
31, |
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December
31, |
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2023 |
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2022 |
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On August 18,
2023, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., issued an unsecured promissory note of $35,000
to LDL8 Consulting, LLC for the purchase
of equipment from another vendor. The promissory note bears interest at 10%
per annum and is due on demand. In the event of default, the interest rate increases to 15%
until repayment.
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$ |
35,000 |
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$ |
- |
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On June 23, 2023, the Company
completed the sale of a Promissory Note in the principal amount of $300,000
(the “Third AJB Note”) to AJB
Capital Investments LLC (“AJB Capital”) for an aggregate purchase price of $276,000,
pursuant to a Securities Purchase Agreement between the Company and AJB Capital (the “Purchase Agreement”). The Company
received net proceeds of $262,500
after deduction of an original issue discount
of $24,000,
$7,500
of legal fees and a $6,000
of broker fee, which are being amortized
as a debt discount over the life of the loan.
The Third AJB Note matures on March
23, 2024 (the “Maturity Date”),
bears interest at a rate of 12%
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 the Volume Weighted Average Price (“VWAP”) during (i) the 10-trading
day period preceding the issuance date of the note, or (ii) the 10 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 AJB Capital in the amount
of $100,000
(the “Commitment Fee”) in the
form of 1,666,667
shares of the Company’s common stock
(the “Commitment Fee Shares”). During the period commencing on the six-month anniversary of the closing date and ending
on the five-year anniversary of the closing date, AJB Capital is entitled to be issued additional shares of common stock or receive
a cash payment to the extent AJB Capital’s sale of the Commitment Fee Shares has resulted in net proceeds in an amount less
than the Commitment Fee. The Commitment Fee Shares resulted in a debt discount of $42,175
that is being amortized over the life of
the loan.
In connection with the issuance of the Third AJB Note and Commitment Fee Shares, the Company entered into
a Registration Rights Agreement with AJB Capital in which the Company agreed to file a registration statement with the SEC within
180 days of June 23, 2023, registering the shares of common stock issuable under the Third AJB Note and Purchase Agreement.
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300,000 |
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- |
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On September 15, 2022,
the Company, through its wholly-owned subsidiary, One World Pharma, SAS, received proceeds of 55,488,000
COP, or approximately $12,243,
on a loan with a face value of 70,000,000
COP, or approximately $15,445,
from an individual pursuant to an unsecured promissory note, bearing interest at 4%
per month, or 48% per annum, due on demand. The debt discount of $3,202
was expensed as finance costs at the time
of origination. The face value of the note has been adjusted by $2,870
due to foreign currency translation adjustments.
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- |
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14,552 |
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On June 17, 2022, the Company,
through its wholly-owned subsidiary, One World Pharma, SAS, received proceeds of 230,400,000
COP, or approximately $55,821,
on a loan with a face value of 240,000,000
COP, or approximately $58,147,
from an individual pursuant to an unsecured promissory note, bearing interest at 4%
per month, or 48% per annum, due on demand. The debt discount of $2,326
was expensed as finance costs at the time
of origination. The face value of the note has been adjusted by $4,647
due to foreign currency translation adjustments.
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- |
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49,894 |
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On May 31, 2022, the Company,
through its wholly-owned subsidiary, One World Pharma, SAS, received proceeds of 314,640,000
COP, or approximately $76,231,
on a loan with a face value of 360,000,000
COP, or approximately $87,220,
from an individual pursuant to promissory note, security by equipment, bearing interest at 2.1%
per month, or 25% per annum, which matured on November
28, 2022 and is currently past due. The debt
discount of $10,990
was expensed as finance costs at the time
of origination. The face value of the note has been adjusted by $6,970
due to foreign currency translation adjustments.
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- |
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74,841 |
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On May 30, 2022, the Company,
through its wholly-owned subsidiary, One World Pharma, SAS, received a non-interest bearing loan of 20,000,000
COP, or approximately $4,846,
from an individual pursuant to an unsecured promissory note, due on demand. The face value of the note has been adjusted by $387
due to foreign currency translation adjustments.
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- |
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4,158 |
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On
April 29, 2022, the Company, through its wholly-owned subsidiary, One World Pharma, SAS, received a non-interest bearing loan of
10,000,000
COP, or approximately $2,423,
from an individual pursuant to an unsecured promissory note, due on demand. The face value of the note has been adjusted by $193
due to foreign currency translation adjustments.
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- |
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2,079 |
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| Total notes payable |
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335,000 |
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|
145,524 |
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| Less:
unamortized debt discounts |
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24,136 |
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- |
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| Notes payable, net of discounts |
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310,864 |
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145,524 |
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| Less:
current maturities |
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310,864 |
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145,524 |
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| Notes
payable, long-term portion |
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$ |
- |
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$ |
- |
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The
Company recognized aggregate debt discounts on the notes payable to AJB Capital for the year ended December 31, 2023, as follows:
Schedule
of Notes Payable Debt Discounts
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December
31, |
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2023 |
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Fair value
of 1,666,667
commitment shares of common stock
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$ |
42,175 |
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| Original issue discounts |
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24,000 |
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| Legal
and brokerage fees |
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13,500 |
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| Total
debt discounts |
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79,675 |
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| Less:
Amortization of debt discounts |
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55,539 |
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| Unamortized
debt discounts |
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$ |
24,136 |
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The
aggregate debt discounts of $79,675,
for the year ended December 31, 2023, are being amortized over the life of the loan using the straight-line method, which approximates
the effective interest method. The Company recorded finance expense in the amount of $55,539
on the amortization of these discounts for the
year ended December 31, 2023. In addition, the Company issued 269,261
additional commitment shares to AJB Capital on
December 7, 2023, with a fair value of $19,602,
based on the closing traded price on the date of grant, to adjust for market price fluctuations in previously awarded commitment shares.
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 on the stated interest of notes payable in the amount of $92,486
and $85,653
for the years ended December 31, 2023 and 2022,
respectively.
ONE
WORLD PRODUCTS, INC.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
Company recognized interest expense for the year ended December 31, 2023 and 2022, respectively, as follows:
Schedule
of Interest Expenses
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December
31, |
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December
31, |
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|
2023 |
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2022 |
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| Interest on
convertible notes, related party |
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$ |
60,000 |
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$ |
59,023 |
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| Interest on notes payable |
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92,486 |
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85,653 |
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| Interest on notes payable,
related parties |
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81,114 |
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19,127 |
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| Amortization of debt discounts
on convertible notes |
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26,140 |
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50,753 |
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| Amortization of debt discounts
on convertible notes, common stock |
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49,001 |
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106,894 |
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| Amortization of debt discounts
on convertible notes, warrants |
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- |
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255,026 |
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| Finance cost on equity
line of credit, issuances of series B preferred stock |
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- |
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205,005 |
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| Finance cost on equity
line of credit, issuances of common stock |
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- |
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134,128 |
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| Finance cost on equity
line of credit |
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- |
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30,000 |
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| Interest
on accounts payable |
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- |
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11,249 |
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| Total
interest expense |
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$ |
308,741 |
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$ |
956,858 |
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