One World Products, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Related Parties

Related Parties

9 Months Ended

Sep. 30, 2020

Note 4 – Related Parties

Craig Ellins Separation

On June 3, 2020, the Company entered into a Separation and Release Agreement with Craig Ellins (the “Separation Agreement”), pursuant to which Mr. Ellins resigned from all of his positions with the Company and its subsidiaries, including his positions as Chief Executive Officer and Chairman of the Board of the Company. Pursuant to the Separation Agreement, the Company (i) issued Mr. Ellins 2,000,000 shares of the Company’s Common Stock, (ii) reimbursed Mr. Ellins for $55,000 of expenses previously incurred by him on behalf of the Company, and (iii) agreed to make 12 monthly payments to Mr. Ellins in the amount of $8,000 each in the 12-month period following the date on which the Company has raised $1.5 million in gross proceeds from the sale of its securities following the date of the Separation Agreement. The Separation Agreement also contains mutual releases and prohibits Mr. Ellins from competing with the Company for a period of two years.

Appointment of Isiah L. Thomas III as Chief Executive Officer and Vice Chairman

On June 3, 2020, Isiah L. Thomas III was appointed to serve as the Company’s Chief Executive Officer and Vice Chairman pursuant to a letter agreement with the Company (the “Employment Agreement”).

Pursuant to the Employment Agreement:

	●	Mr. Thomas is entitled to be paid a base salary of $120,000 in the first year of his employment; $240,000 in the second year of his employment; and $300,000 in the third year of his employment.

	●	The Company will have the option to pay Mr. Thomas’s salary with shares of the Company’s Common Stock until the Company has raised gross proceeds of at least $1.5 million from the sale of its securities following the date of his employment. If the Company so elects to pay his salary with shares of Common Stock, the number of shares of Common Stock shall be issued be equal to (a) 1.25 times the cash payment to which he would have been otherwise entitled, divided by (b) the closing price of the Common Stock on the day such cash payment was due.

	●	The Company has awarded Mr. Thomas 500,000 shares of the Company’s Common Stock, and an option (the “Option”) to purchase 5,500,000 shares of the Company’s Common Stock at an exercise price equal to $0.55 per share. The Option vests as to 1,500,000 shares immediately, as to 1,000,000 shares 120 days following the issuance of the Option (the “Second Vesting Date”), and as to the remaining 3,000,000 shares quarterly over the three years following the Second Vesting Date.

Debt Repayment, Related Party

On various dates between, July 2, 2020 and July 6, 2020, the Company repaid a total of $140,983 of indebtedness owed to MCKP Investments LLC, consisting of $136,000 of principal and $4,983 of interest. The Company’s Chairman of the Board, Dr. Kenneth Perego, II, is the controlling member of MCKP Investments LLC.

Preferred Stock Sales

On September 1, 2020, the Company received proceeds of $26,000 from the sale of 2,600 units to the Company’s Chairman of the Board, Dr. Ken Perego. Each unit consisted of one share of Series A Preferred Stock and five-year warrants to purchase 50 shares of common stock at an exercise price of $0.25 per share. The proceeds received were allocated between the preferred stock and warrants on a relative fair value basis.

On July 10, 2020, the Company received proceeds of $110,000 from the sale of 11,000 units to the Company’s Chairman of the Board, Dr. Ken Perego. Each unit consisted of one share of Series A Preferred Stock and five-year warrants to purchase 50 shares of common stock at an exercise price of $0.25 per share. The proceeds received were allocated between the preferred stock and warrants on a relative fair value basis.

Common Stock Issued for Services, Officers and Directors

On May 31, 2020, the Company awarded 350,000 shares of common stock to the Company’s Chairman of the Board, Dr. Ken Perego, for services provided. The aggregate fair value of the common stock was $120,000 based on the closing price of the Company’s common stock on the date of grant.

Common Stock Options Issued for Services, Directors

On May 31, 2020, the Company awarded options to purchase 350,000 shares of the Company’s Common Stock at an exercise price equal to $0.56 per share to the Company’s Chairman of the Board, Dr. Ken Perego. The options will vest as to 116,667 shares immediately, with the remaining 233,333 shares quarterly over the following two years, beginning October 1, 2020. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 302% and a call option value of $0.5599, was $195,959. The options are being expensed over the vesting period, resulting in $86,263 of stock-based compensation expense during the nine months ended September 30, 2020. As of September 30, 2020, a total of $109,696 of unamortized expenses are expected to be expensed over the vesting period.

On May 31, 2020, the Company awarded options to purchase 350,000 shares of the Company’s Common Stock at an exercise price equal to $0.56 per share to one of the Company’s Directors, Bruce Raben. The options will vest as to 116,667 shares immediately, with the remaining 233,333 shares quarterly over the following two years, beginning October 1, 2020. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 302% and a call option value of $0.5599, was $195,959. The options are being expensed over the vesting period, resulting in $86,263 of stock-based compensation expense during the nine months ended September 30, 2020. As of September 30, 2020, a total of $109,696 of unamortized expenses are expected to be expensed over the vesting period.