Quarterly report pursuant to Section 13 or 15(d)

Notes Payable

v3.23.3
Notes Payable
 9 Months Ended
Sep. 30, 2023
Notes Payable  
Notes Payable

Note 15 – Notes Payable

    September 30,     December 31,  
    2023     2022  
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.   $ 35,000     $ -  
                 
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.		     300,000       -  
                 
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 $1,823 due to foreign currency translation adjustments.     17,268       14,552  
                 
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 $3,383 due to foreign currency translation adjustments.     59,204       49,894  
                 
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 $1,586 due to foreign currency translation adjustments.     88,806       74,841  
                 
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 $88 due to foreign currency translation adjustments.     4,934       4,158  
                 
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 $44 due to foreign currency translation adjustments.     2,467       2,079  
                 
Total notes payable     507,679       145,524  
Less: unamortized debt discounts     53,442       -  
Notes payable, net of discounts     454,237       145,524  
Less: current maturities     454,237       145,524  
Notes payable, long-term portion   $ -     $ -  

 

The Company recognized aggregate debt discounts on the notes payable to AJB Capital for the nine months ended September 30, 2023, as follows:

 

 

ONE WORLD PRODUCTS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

    September 30,  
    2023  
       
Fair value of 1,666,667 commitment shares of common stock   $ 42,175  
Original issue discounts     24,000  
Legal and brokerage fees     13,500  
Total debt discounts     79,675  
Amortization of debt discounts     26,233  
Unamortized debt discounts   $ 53,442  

 

The aggregate debt discounts of $79,675, for the nine months ended September 30, 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 $26,233 and $-0- on the amortization of these discounts for the nine months ended September 30, 2023 and 2022, respectively.

 

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 notes payable in the amount of $47,255 and $21,120 for the nine months ended September 30, 2023 and 2022, respectively.

 

The Company recognized interest expense for the nine months ended September 30, 2023 and 2022, as follows:

    September 30,     September 30,  
    2023     2022  
             
Finance cost on equity line of credit   $ -     $ 15,000  
Interest on convertible notes, related party     44,877       43,899  
Interest on notes payable, related parties     58,804       43,763  
Interest on notes payable     47,255       21,120  
Amortization of debt discounts     13,549       50,753  
Amortization of debt discounts, common stock     12,684       106,894  
Amortization of debt discounts, warrants     -       255,026  
Series B preferred stock issued as a commitment on an ELOC     -       205,005  
Common stock issued as a commitment on the 2nd AJB Note     -       134,128  
Interest on accounts payable     -       11,249  
Total interest expense   $ 177,169     $ 886,837