OWPC 10-K
One World Products, Inc. (OWPC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For
the fiscal year ended
OR
For the transition period from ____________ to ____________
Commission
file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
One World Products, Inc.
(Address of principal executive offices and zip code)
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 |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
| Yes ☐ |
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
| Yes ☐ |
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.
| 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
| 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 the 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 | ☐ |
| ☒ | 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 has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| Yes ☐ | No
|
The
aggregate market value of the registrant’s common stock held by non-affiliates of the registrant based upon the closing price of
$0.0538 per share as of June 30, 2024 was approximately $
As of June 1, 2025, there were shares of registrant’s common stock outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE:
TABLE OF CONTENTS
PART I
Forward Looking Statements
This Form 10-K contains “forward-looking” statements including statements regarding our expectations of our future operations. For this purpose, any statements contained in this Form 10-K that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control.
These risks and uncertainties include our limited operating history; changes in cannabis laws, regulations and guidelines; our reliance on Colombian licenses, our ability to obtain authorizations and quotas; regulatory compliance risks; competition in our industry; our ability to establish and maintain bank accounts; our ability to comply with foreign trade policies; the continued demand for cannabis and derivate products; our ability to retain and acquire skilled personnel; and the risks involved in conducting operations in Colombia, as well as other factors set forth under the caption “Risk Factors” in this Form 10-K. Although the forward-looking statements in this report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. In light of these risks and uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. Except as required by law, we undertake no obligation to announce publicly revisions we make to these forward-looking statements to reflect the effect of events or circumstances that may arise after the date of this report. All written and oral forward-looking statements made subsequent to the date of this report and attributable to us or persons acting on our behalf are expressly qualified in their entirety by this section.
ITEM 1. BUSINESS
Overview
On February 21, 2019, we entered into an Agreement and Plan of Merger (“Merger Agreement”) with OWP Merger Subsidiary, Inc. (“OWP Merger Sub), our wholly-owned subsidiary, and OWP Ventures, Inc. (“OWP Ventures”). Under the Merger Agreement, the acquisition of OWP Ventures by us was effected by the merger of OWP Merger Sub with and into OWP Ventures, with OWP Ventures being the surviving entity as our wholly-owned subsidiary (the “Merger”). The closing (the “Closing”) of the Merger occurred on February 21, 2019.
Immediately prior to the Closing, we were a public “shell” company with nominal assets. As of the Closing, we are no longer a public shell. As a result of the Merger, we are engaged in OWP Ventures’ business, including the business of its wholly-owned subsidiary, One World Pharma, S.A.S., a Colombian company (“OWP SAS”). On November 23, 2021, we changed our name from One World Pharma, Inc. to One World Products, Inc. through the merger of One World Products, Inc., a recently formed Nevada corporation wholly-owned by us, with and into us. This merger was effected solely to effect the change of our name, and had no effect on our officers, directors, operations, assets or liabilities.
On June 3, 2020, Isiah L. Thomas, III was appointed to serve as our Chief Executive Officer and Vice Chairman. Mr. Thomas was a 12-time NBA All Star, two-time NBA champion, and is an accomplished international business executive. In 2021, through ISIAH International, LLC, of which he is the sole member, Mr. Thomas purchased $3,000,000 of our Series B Preferred Stock in installments over a period of time ending in July 2021.
On December 22, 2023, OWP SAS, 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 United States Bankruptcy Code (the “Bankruptcy Code”) in the United States, whereby the Company intended to restructure its debts and continue to operate.
However, effective October 1, 2024, OWP Colombia entered into a liquidation proceeding pursuant to Colombian Law 1116 of 2006, under which the creditors of a company can request “judicial liquidation” of such company. The proceeding is expected to last approximately one year. The proceeding was submitted to the Superintendent of Corporations of Colombia as a substitute to the reorganization proceedings previously filed on December 22, 2023.
OWP SAS now has no revenue-producing operations. The Company’s primary operations during the fourth quarter of 2023, and through 2024, have consisted of activities associated with completing the Liquidation Proceedings, resolving substantial litigation, claims reconciliation, terminating operations and liquidating its assets, which primarily consist of the farm in Popayán and equipment.
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During March of 2024, the Company, through OWP Ventures, began to sell a CBD based product in the United States, called Pro-11. During the fourth quarter of 2024, the Company began to redesign the packaging and engaged a sales representative to focus greater resources on bringing this product to market.
The Company is developing its industrial hemp solutions business targeting the automotive market. The Company intends to focus on research and development in this area to take advantage of the automotive industry’s effort in achieving carbon neutral manufacturing using renewable material solutions. In October of 2024, the Company, in collaboration with partners in the automotive industry, developed hemp-based molded containers for automotive part packaging applications and received an initial order for 1,400 units of these reusable totes, designed to move and protect automotive parts through the supply chain.
Products
Our business currently involves the sale of CBD based product in the United States, called Pro-11. During the fourth quarter of 2024, the Company began to redesign the packaging and engaged a sales representative to focus greater resources on bringing this product to market.
Regulation
Our primary active business operations are currently the sale of cannabidiol (CBD) products derived from hemp. We comply with the U.S. federal regulations under the Agriculture Improvement Act of 2018 (commonly known as the 2018 Farm Bill). All CBD used in our products is sourced from hemp that contains no more than 0.3% THC (tetrahydrocannabinol) by dry weight, in accordance with federal law. However, CBD regulations vary by state and may be subject to change. It is the responsibility of the consumer to understand and comply with local, state, and federal laws regarding the purchase, possession, and use of CBD products.
Intellectual Property
Our success depends, at least in part, on our ability to protect our core technology and intellectual property. To accomplish this, we rely on trade secrets, including know-how, employee and third-party nondisclosure agreements and other contractual rights to establish and protect our proprietary rights in our technology.
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Seasonality
The natural growth and harvest cycle of the Cannabis sativa plant when cultivated for industrial purposes (fiber, seed, or CBD) depends largely on climate and geographic location, but generally for temperate regions (like much of North America and Europe) the planting season is from late April to June, the growing season is generally from May to August and the harvest season is from August to October.
Principal Executive Offices
Our principal executive offices are located at 6605 Grand Montecito Pkwy, Suite 100, Las Vegas, Nevada 89149. Our telephone number is (800) 605-3210. We believe our facilities are adequate to meet our current and near-term needs.
Employees
As of December 31, 2024, we had 2 full-time employees. Since inception, we have never had a work stoppage, other than due to the Covid-19 quarantine from March 2020 through May 25, 2020, and our employees are not represented by labor unions. We consider our relationship with our employees to be positive.
ITEM 1A. Risk Factors
The following important factors, and the important factors described elsewhere in this report or in our other filings with the SEC, could affect (and in some cases have affected) our results and could cause our results to be materially different from estimates or expectations. Other risks and uncertainties may also affect our results or operations adversely. The following and these other risks could materially and adversely affect our business, operations, results or financial condition.
Risks Relating to our Business
Limited Operating History
We are an early-stage company that has generated minimal revenues and we have a limited operating history upon which our business and future prospects may be evaluated. We are subject to all of the business risks and uncertainties associated with any new business enterprise in the cannabis and industrial hemp plastics industries, including the risk that we will not achieve our operating goals. In order for us to meet future operating requirements, we will be required to sell our products. Until such time as we are able to fund our business from operations, we will be required to raise funds through various sources, including the sale of equity and debt securities, Failure to generate cash from operations and to reach profitability may adversely affect our success.
We have had a history of losses, we expect losses in the future, and there can be no assurance that we will become profitable in the future.
We have experienced operating losses on an ongoing basis. For the years ended December 31, 2024 and 2023, we incurred net losses of $3,935,012 and $3,953,321, respectively. As of such dates, we had accumulated deficits of $30,864,698 and $26,929,686, respectively. We expect our losses to continue for the foreseeable future. These continuing losses may be greater than current levels. If our revenues do not increase substantially or if our expenses exceed our expectations, we may never become profitable. Even if we do achieve profitability, we may not sustain profitability on a quarterly or annual basis in the future.
Our auditor has given us a “going concern” qualification, which questions our ability to continue as a going concern without additional financing.
Our independent certified public accountant has added an emphasis paragraph to its report on our financial statements for the year ended December 31, 2024 regarding our ability to continue as a going concern. Key to this determination is our recurring net losses, an accumulated deficit, and a working capital deficiency. In the event sales do not materialize at expected levels, management would seek additional financing or would conserve cash by further reducing expenses. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations or cause substantial dilution for our stockholders. If we are unable to obtain additional funds, our ability to carry out and implement our planned business objectives and strategies will be significantly delayed, limited or may not occur. We cannot guarantee that we will become profitable.
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Our Wholly-owned Colombian Subsidiary, OWP SAS, is in Liquidation Proceedings
Effective October 1, 2024, the Company’s Colombian subsidiary, One World Pharma S.A.S. (“OWP Colombia”), entered into a liquidation proceeding pursuant to Colombian Law 1116 of 2006, under which the creditors of a company can request “judicial liquidation” of such company. The proceeding is expected to last approximately one year. The proceeding was submitted to the Superintendent of Corporations of Colombia as a substitute to the reorganization proceedings previously filed on December 22, 2023.
The operations of OWP Colombia have previously been deconsolidated. As such, we do not expect the judicial liquidation to have a significant impact to the Company’s financial statements.
Regulatory Compliance Risks
Our current industrial hemp plastics products are manufacturing on our behalf by third parties on a job-by-job basis. We believe all such third-parties operate in compliance with applicable laws, including those that relate to industrial hemp.
Ability to Establish and Maintain Bank Accounts
Many banking institutions in countries where we or our prospective customers operate will not accept payments related to the cannabis industry due to domestic laws and regulations or pressure exerted by the United States on banks with laws subject to the laws of the United States (including, the Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act)). Failure to conduct our business through normal banking channels may impede our ability to make payments for goods and services and transact business in the ordinary course. Failure to operate in normal banking channels may also increase our cost of doing business and adversely impact our business. In the event financial service providers do not accept accounts or transactions related to the cannabis industry, it is possible that we may be required to seek alternative payment solutions. If the industry was to move toward alternative payment solutions, we would have to adopt policies and protocols to manage the Company’s exposure to foreign exchange and interest rate risks. Our inability to effectively manage such risks may adversely affect our operations and financial performance.
Anti-Money Laundering Laws and Regulations
We are subject to a variety of laws and regulations within Colombia and internationally that are designed to prevent money laundering and proceeds of crime through strict financial recordkeeping. In the event that any of our investments, or any proceeds thereof, any dividends or distributions therefrom, or any profits or revenues accruing from such investments are found to be in violation of money laundering legislation or otherwise, such transactions may be viewed as proceeds of crime under applicable legislation. Money laundering laws could restrict or otherwise jeopardize our ability to declare or pay dividends, effect other distributions or subsequently cause the repatriation of such funds to the United States or to any shareholders’ jurisdiction of residence. Furthermore, while we have no current intention to declare or pay dividends on our common stock in the foreseeable future, in the event that a determination was made that the revenues from our cannabis operations could reasonably be shown to constitute proceeds of crime, we may decide or be required to suspend the declaration, and or, payment of dividends without advance notice and for an extended or indefinite period of time.
Foreign Trade Policies
Our international operations are subject to inherent risks, including changes in the regulations governing the flow of cannabis products between countries, fluctuations in cross-currency rates, discriminatory fiscal policies, unexpected changes in local regulations and laws and the uncertainty of enforcement of remedies in foreign jurisdictions. In addition, foreign jurisdictions could impose tariffs, quotas, trade barriers and other similar restrictions on our international sales and subsidize competing cannabis products. All of these risks could result in increased costs or a reduction in revenues.
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United States Regulation
Although we do not believe that our limited U.S. activity will subject us to regulation under U.S. federal or state laws applicable to the sale of cannabis and marijuana products, we cannot assure you that current or future U.S. laws and regulations will not detrimentally affect our business. Local, state and federal cannabis laws and regulations in the United States are constantly changing and they are subject to evolving interpretations, which could require us to incur substantial costs associated with compliance or to alter one or more of our product or service offerings. In addition, violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our revenues, profitability, and financial condition. We cannot predict the nature of any future laws, regulations, interpretations or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business.
Liability, Enforcement, Complaints, etc.
Our participation in the cannabis and hemp industries may lead to litigation, formal or informal complaints, enforcement actions, and inquiries by third parties, other companies and/or various governmental authorities against us. Litigation, complaints, and enforcement actions involving us could consume considerable amounts of financial and other corporate resources, which could have an adverse effect on our future cash flows, earnings, results of operations and financial condition.
Legal Proceedings
From time to time, we may be a party to legal and regulatory proceedings, including matters involving governmental agencies, entities with whom we transact business and other proceedings arising in the ordinary course of business. We will evaluate our exposure to these legal and regulatory proceedings and establish reserves for the estimated liabilities in accordance with generally accepted accounting principles. Assessing and predicting the outcome of these matters involves substantial uncertainties. Unexpected outcomes in these legal proceedings, or changes in management’s evaluations or predictions and accompanying changes in established reserves, could have an adverse impact on our financial results.
Environmental Regulations
We are subject to Colombian environmental laws governing the use of natural resources, which prohibit such use that causes harm to the interests of the community or of third parties. Parties that cause environmental damage while acting under the authority of a permit and, or license, are responsible for incurring the costs to rectify the damage. The imposition of environmental sanctions in addition to civil and criminal penalties may be imposed. Environmental damage caused while a party is acting without a license may lead to the imposition of sanctions, in addition to civil or criminal proceedings. Parties that cause environmental damage, in addition to sanctions or penalties that apply, are also required to carry out studies to assess the characteristics of the damage. Colombian environmental authorities may investigate potential claims, authorize preventative measures, or impose sanctions on parties breaching environmental law. Any such measures imposed on us could have a material adverse effect on our business.
Demand for Cannabis and Derivative Products
The global sale of cannabis and hemp products is a new industry as a result of recent legal and regulatory changes. Although we expect demand for licensed cannabis to exceed supply produced by licensed producers, there is a risk that such demand does not develop as anticipated. Further, there is a risk that the adoption rate by pharmacies to sell medical cannabis is lower than expected or that such adoption rate may take longer than anticipated. There is also a risk that the international export market for medicinal cannabis and extracts, such as CBD, CBG and CBC, will not materialize as projected or not be commercially viable. Should any of such events materialize, the result may have a material adverse effect on our business, operations and financial condition.
Weather, Climate Change and Risks Inherent in an Agricultural Business
Our business involves growing and/or sourcing cannabis and related products, which is an agricultural product. Although our medical cannabis is intended to be grown in greenhouses, hemp used as feedstock for medicinal extracts and derivatives will be grown both outdoors and in greenhouses. The occurrence of severe adverse weather conditions, especially droughts, hail, floods or frost, is unpredictable and may have a potentially devastating impact on agricultural production and may otherwise adversely affect the supply of cannabis and hemp. Adverse weather conditions may be exacerbated by the effects of climate change and may result in the introduction and increased frequency of pests and diseases. The effects of severe adverse weather conditions may reduce our yields or require us to increase our level of investment to maintain yields. Additionally, higher than average temperatures and rainfall can contribute to an increased presence of insects and pests, which could negatively affect cannabis crops. Future droughts could reduce the yield and quality of our cannabis production, which could materially and adversely affect our business, financial condition and results of operations.
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The occurrence and effects of plant disease, insects and pests can be unpredictable and devastating to agriculture, potentially rendering all or a substantial portion of the affected harvests unsuitable for sale. Even if only a portion of the crop and, or, production is damaged, our results of operations could be adversely affected as all or a substantial portion of the production costs may have been incurred. Although some plant diseases are treatable, the cost of treatment can be high and such events could adversely affect our operating results and financial condition. Furthermore, if we fail to control a given plant disease and the production is threatened, we may be unable to supply our customers, which could adversely affect our business, financial condition and results of operations. There can be no assurance that natural elements will not have a material adverse effect on any such production.
Product Liability
As a manufacturer, distributor and/or seller of cannabis products designed to be ingested or inhaled by humans, we face an inherent risk of exposure to product liability claims, regulatory action and litigation if our products are alleged to have caused damages, loss or injury. In addition, the sale of our cannabis products involves the risk of injury to consumers due to tampering by unauthorized third parties or product contamination. Adverse reactions resulting from human consumption of our cannabis products alone or in combination with other medications or substances could occur. We may be subject to various product liability claims, including, among others, that our products caused injury or illness, include inadequate instructions for use or include inadequate warnings concerning health risks, possible side effects or interactions with other substances. A product liability claim or regulatory action against us could result in increased costs, could adversely affect our reputation with our clients and consumers generally, and could have a material adverse effect on our results of operations and financial condition. There can be no assurances that we will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities. Such insurance is expensive and may not be available in the future on acceptable terms, or at all.
Energy Prices and Supply
We may require substantial amounts of diesel and electric energy and other resources to harvest and transport cannabis and hemp. We rely upon third parties for our supply of energy resources used in our operations. The prices for and availability of energy resources may be subject to change or curtailment, respectively, due to, among other things, new laws or regulations, imposition of new taxes or tariffs, interruptions in production by suppliers, imposition of restrictions on energy supply by government, worldwide price levels and market conditions. If our energy supply is curtailed for an extended period of time and we are unable to find replacement sources at comparable prices, or at all, our business, financial condition and results of operations would be materially and adversely affected.
Retention and Acquisition of Skilled Personnel
We will be required to attract and retain top quality talent to compete in the marketplace. We believe our future growth and success will depend in part on our abilities to attract and retain highly skilled managerial, product development, sales and marketing, and finance personnel. There can be no assurance of success in attracting and retaining such personnel. Shortages in qualified personnel could limit our ability to be successful. At present and for the near future, we will depend upon a relatively small number of employees primarily in Colombia to develop, manufacture, market, sell and distribute our products. As the size of our business increases, we will seek to hire additional employees in other jurisdictions. Expansion of marketing and distribution of our products will require us to find, hire and retain additional capable employees who can understand, explain, market and sell our products and/or our ability to enter into satisfactory logistic arrangements to sell our products. There is intense competition for capable personnel in all of these areas and we may not be successful in attracting, training, integrating, motivating, or retaining new personnel or subcontractors for these required functions.
Emerging Market Risks
Emerging market investment generally poses a greater degree of risk than investment in more mature market economies as developing market economies are more susceptible to destabilization resulting from domestic and international developments.
Colombia’s legal and regulatory requirements in connection with companies conducting agricultural activities, banking system and controls as well as local business culture and practices are different from those in the United States. Our officers and directors must rely, to a great extent, on our local legal counsel and local consultants retained by us in order to keep abreast of material legal, regulatory and governmental developments as they pertain to and affect our business operations, and to assist us with our governmental relations. We also rely on the advice of local experts and professionals in connection with current and new regulations that develop in respect of banking, financing and tax matters. Any developments or changes in such legal, regulatory or governmental requirements or in local business practices are beyond our control and may adversely affect our business.
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We also bear the risk that changes can occur to the Government in Colombia and a new government may void or change the laws and regulations that we are relying upon. Currently, there are no restrictions on the repatriation from Colombia of earnings to foreign entities and Colombia has never imposed such restrictions. However, there can be no assurance that restrictions on repatriation of earnings will not be imposed in the future. Exchange control regulations for Colombia require that any proceeds in foreign currency originated on exports of goods from Colombia be repatriated to Colombia. However, purchase of foreign currency is allowed through Colombian authorized financial entities for purposes of payments to foreign suppliers, repayment of foreign debt, payment of dividends to foreign stockholders and other foreign expenses.
Due to our location in Colombia, our business, financial position and results of operations may be affected by the general conditions of the Colombian economy, price instabilities, currency fluctuations, inflation, interest rates, regulatory changes, taxation changes, social instabilities, political unrest and other developments in or affecting Colombia, over which we do not have control.
Global Economy
Financial and commodity markets in Colombia are influenced by the economic and market conditions in other countries, including other South American and emerging market countries and other global markets. Although economic conditions in these countries may differ significantly from economic conditions in Colombia, investors’ reactions to developments in these other countries, such as the recent developments in the global financial markets, may substantially affect the capital flows into, and the market value of securities of issuers with operations in Colombia.
Insurance Coverage
Our production is, in general, subject to different risks and hazards, including adverse weather conditions, fires, plant diseases and pest infestations, other natural phenomena, industrial accidents, labor disputes, changes in the legal and regulatory framework applicable to us, and environmental contingencies. We will endeavor to obtain appropriate insurance covering these risks in amounts sufficient to support a downturn in the sale of our products due to these potential production risks. The cost of such insurance may be high and we may not be able to obtain sufficient amount of insurance to cover these risks.
General Business Risks
Inability to Manage Growth
We may not be able to effectively manage our growth as a producer, manufacturer and exporter of cannabis and hemp products. Our strategy envisions growing our business. We plan to expand our production and manufacturing capability and create a global distribution network. Any growth in or expansion of our business is likely to continue to place a strain on our management and administrative resources, infrastructure and systems. As with other growing businesses, we expect that we will need to further refine and expand our business development capabilities, our systems and processes and our access to financing sources. We also will need to hire, train, supervise and manage new employees. These processes are time consuming and expensive, will increase management responsibilities and will divert management attention. We cannot assure you that we will be able to:
| ● | cultivate and/or source cannabis material in Colombia and expand our manufacturing processes and systems in our facilities in Colombia; | |
| ● | execute and perform under our current manufacturing and distribution agreements with Smokiez Edibles and Kx Family Care; | |
| ● | raise additional capital to fund our operations; | |
| ● | identify and hire qualified employees or retain valued employees; or | |
| ● | obtain and maintain necessary licenses in relevant jurisdictions |
Our inability, or failure to effectively manage, our growth and expansion could harm our business and materially and adversely affect our operating results and financial condition.
Speculative Forecasts
Any forecasts we provide will be highly speculative in nature and we cannot predict results in a development stage company with a high degree of accuracy. Any financial projections, especially those based on ventures with minimal operating history, are inherently subject to a high degree of uncertainty, and their ultimate achievement depends on the timing and occurrence of a complex series of future events, both internal and external to the enterprise. There can be no assurance that potential revenues or expenses we project will be accurate.
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Limited Management Team
Our limited senior management team size may hamper our ability to effectively manage a publicly traded company while operating our business. Our management team has experience in the management of publicly traded companies and complying with federal securities laws, including compliance with recently adopted disclosure requirements on a timely basis. They realize it will take significant resources to meet these requirements while simultaneously working on cultivating, developing and distributing our cannabis and hemp related products. Our management will be required to design and implement appropriate programs and policies in responding to increased legal, regulatory compliance and reporting requirements, and any failure to do so could lead to the imposition of fines and penalties and harm our business.
Risks Related to our Common Stock
Limited Trading
Although prices for shares of our common stock are quoted on the OTCQB tier of the OTC Markets, there is limited trading and no assurance can be given that an active public trading market will develop or, if developed, that it will be sustained. The OTC Markets is generally regarded as a less efficient and less prestigious trading market than other national markets. There is no assurance if or when our common stock will be quoted on another more prestigious exchange or market. The market price of our common stock is may be volatile as there will likely be a limited trading market for the stock, which may cause transactions of small blocks of stock to have a disproportionate impact on the stock price.
We may issue additional stock without stockholder consent.
Our Board of Directors has authority, without action or vote of the stockholders, to issue all or part of our authorized but unissued shares. Additional shares may be issued in connection with future financing, acquisitions, employee stock plans, or otherwise. Any such issuance will dilute the percentage ownership of existing stockholders. The Board of Directors can also issue preferred stock in one or more series and fix the terms of such stock without stockholder approval. Preferred stock may include the right to vote as a series on particular matters, preferences as to dividends and liquidation, conversion and redemption rights and sinking fund provisions. The issuance of preferred stock could adversely affect the rights of the holders of common stock and reduce the value of the common stock. In addition, specific rights granted to holders of preferred stock could discourage, delay or prevent a transaction involving a change in control of our company, even if doing so would benefit our stockholders. Such issuance could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.
Broker-dealers may be discouraged from effecting transactions in our common stock because it is considered a penny stock and is subject to the penny stock rules.
Our common stock currently constitutes “penny stock.” Subject to certain exceptions, for the purposes relevant to us, “penny stock” includes any equity security that has a market price of less than $5.00 per share. Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act of 1934, as amended, impose sales practice and disclosure requirements on certain brokers-dealers who engage in certain transactions involving a “penny stock.” In particular, a broker-dealer selling penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse), must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer’s account and information with respect to the limited market in penny stocks.
The additional sales practice and disclosure requirements imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our shares, which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market.
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Because our Board of Directors does not intend to pay dividends on our common stock in the foreseeable future, stockholders may have to sell their shares of our common stock to realize a return on their investment in the company.
Holders of our common stock are entitled to receive dividends if, and when, declared by our Board of Directors out of funds legally available. To date, we have paid no dividends. Our Board of Directors does not intend to declare any dividends in the foreseeable future, but instead intends to retain all earnings, if any, for use in our business operations. Accordingly, a return on an investment in shares of our common stock may be realized only through a sale of such shares, if at all.
Control of Common Stock will Influence Decision Making
Our officers, directors and principal stockholders are able to exert significant influence over us and may make decisions that are not in the best interests of all stockholders. Our officers, directors and principal stockholders (greater than 5% stockholders) collectively own approximately 83.9% of our fully-diluted common stock. As a result of such ownership, these stockholders are able to affect the outcome of, or exert significant influence over, all matters requiring stockholder approval, including the election and removal of directors and any change in control. In particular, this concentration of ownership of our common stock could have the effect of delaying or preventing a change of control of our company or otherwise discouraging or preventing a potential acquirer from attempting to obtain control of our company. This, in turn, could have a negative effect on the market price of our common stock. It could also prevent our stockholders from realizing a premium over the market prices for their shares of our common stock.
We are an Emerging Growth Company Within the Meaning of the Securities Act.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates exceeds $700 million as of the end of any second quarter of a fiscal year, in which case we would no longer be an emerging growth company as of the end of such fiscal year. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.
Antitakeover Protections
Anti-takeover provisions may limit the ability of another party to acquire us, which could cause our stock price to decline. Our articles of incorporation, as amended, bylaws and Nevada law contain provisions that could discourage, delay or prevent a third party from acquiring us, even if doing so may be beneficial to our stockholders. In addition, these provisions could limit the price investors would be willing to pay in the future for shares of our common stock.
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Increased Compliance Costs
The requirements of being a public company, including compliance with the reporting requirements of the Securities Exchange Act of 1934, as amended, and the requirements of the Sarbanes-Oxley Act of 2002, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner. As a public company, we need to comply with laws, regulations and requirements, certain corporate governance provisions of the Sarbanes-Oxley Act of 2002, related regulations of the SEC, and requirements of the principal trading market upon which our common stock may trade, with which we are not required to comply as a private company. As a result, the combined business will incur significant legal, accounting and other expenses that a private company would not incur. Complying with these statutes, regulations and requirements will occupy a significant amount of the time of our board of directors and management, will require us to have additional finance and accounting staff, may make it more difficult to attract and retain qualified officers and members of our board of directors, particularly to serve on the audit committee, and may make some activities more difficult, time consuming and costly. We will need to:
| ● | institute a more comprehensive compliance function; | |
| ● | establish new internal policies, such as those relating to disclosure controls and procedures and insider trading; | |
| ● | design, establish, evaluate and maintain a system of internal control over financial reporting in compliance with the requirements of the Sarbanes-Oxley Act of 2002 and the related rules and regulations of the SEC and the Public Company Accounting Oversight Board; | |
| ● | prepare and distribute periodic reports in compliance with its obligations under the federal securities laws including the Securities Exchange Act of 1934, as amended, or Exchange Act; | |
| ● | involve and retain to a greater degree outside counsel and accountants in the above activities; and | |
| ● | establish an investor relations function. |
If we are unable to accomplish these objectives in a timely and effective fashion for our business, our ability to comply with financial reporting requirements and other rules that apply to reporting companies could be impaired. If our finance and accounting personnel insufficiently support our business in fulfilling these public-company compliance obligations, or if we are unable to hire adequate finance and accounting personnel, we could face significant legal liability, which could have a material adverse effect on our financial condition and results of operations. Furthermore, if we identify any issues in complying with those requirements (for example, if our company or the independent registered public accountants identified a material weakness or significant deficiency in our company’s internal control over financial reporting), we could incur additional costs rectifying those issues, and the existence of those issues could adversely affect, our reputation or investor perceptions of our company.
Risks Relating to Our Agreements with Tysadco Partners, LLC
The sale of our common stock to Tysadco may cause dilution, and the sale of the shares of common stock acquired by Tysadco, or the perception that such sales may occur, could cause the price of our common stock to fall.
Pursuant to a Purchase Agreement, Tysadco has committed to purchase up to an aggregate of $10,000,000 of our common stock. The shares that may be sold pursuant to the Purchase Agreement in the future may be sold by us to Tysadco at our discretion from time to time, commencing three years from February 9, 2024, the date the SEC declared the registration statement effective. The per share purchase price for the shares that we may sell to Tysadco under the Purchase Agreement will fluctuate based on the price of our common stock, and will be equal to 88% of the of the lowest daily volume weighted average price of our common stock during the period of 10 trading days beginning five trading days preceding the day we deliver the applicable put notice to Tysadco. Depending on market liquidity at the time, sales of shares of common stock to Tysadco may cause the trading price of our common stock to fall.
We generally have the right to control the timing and amount of any sales of our shares to Tysadco, except that, pursuant to the Purchase Agreement, we may not sell shares to Tysadco if the sale would result in its beneficial ownership of more than 4.99% of our outstanding common stock. Tysadco may ultimately purchase all, some or none of the shares of our common stock that may be sold pursuant to the Purchase Agreement and, after it has acquired shares, Tysadco may sell all, some or none of those shares. Therefore, sales to Tysadco by us could result in substantial dilution to the interests of other holders of our common stock. Additionally, the sale of a substantial number of shares of our common stock to Tysadco, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.
Tysadco will pay less than the then-prevailing market price for our common stock for purchases under the Purchase Agreement.
The common stock to be issued to Tysadco pursuant to the Purchase Agreement will be purchased at a 12% discount to the lowest volume weighted average price of our common stock during the during the period of 10 trading days beginning five trading days preceding the day we deliver the applicable put notice to Tysadco. Tysadco has a financial incentive to sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price. If Tysadco sells the shares, the price of our common stock could decrease. If our stock price decreases, Tysadco may have a further incentive to sell the shares of our common stock that it holds. These sales may have a further impact on our stock price.
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We may not be able to put to Tysadco all $10,000,000 of shares available under the Purchase Agreement.
The Purchase Agreement provides for the purchase by Tysadco of up to $10,000,000 of shares of our common stock. Our ability to draw down funds and sell shares under the Purchase Agreement requires the satisfaction of a number of conditions, including that the registration statement of which this prospectus is a part be declared effective by the SEC and continue to be effective at the time of the put, as well as Tysadco’s compliance with its obligations under the Purchase Agreement. Accordingly, there can be no guarantee that we will be able to draw down all or any portion of the $10,000,000 available to us under the Purchase Agreement.
ITEM 1B. Unresolved Staff Comments
Not Applicable.
ITEM 1C. CYBERSECURITY
We periodically assess risks from cybersecurity threats, and monitor our information systems for potential vulnerabilities. However, to date, given the small size of our company and the nature of our operations, our reliance on information systems has been limited to the use of standard off-the-shelf software (such as Google, QuickBooks and Microsoft Office) and the use by our employees of standard personal computers. Accordingly, management has not implemented any formal process for assessing, identifying, and managing risks from cybersecurity threats.
As
discussed above, given the nature of our current operations and our experience to date, we do not currently perceive cybersecurity as
a particularly significant risk to our business. Accordingly,
ITEM 2. Properties
Our principal executive offices are located at 6605 Grand Montecito Pkwy., Suite 100, Las Vegas, NV 89149, Telephone No.: (800) 605-3210. Our leased premises are shared and are utilized for corporate business offices. Our Nevada premises are subject to a month-to-month lease agreement.
We believe that our current facilities are adequate for our current needs. We intend to secure new facilities or expand existing facilities as necessary to support future growth. We believe that suitable additional space will be available on commercially reasonable terms as needed to accommodate our operations.
ITEM 3. Legal Proceedings
Due to challenging economic conditions, OWP SAS 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 on December 22, 2023. As of December 31, 2024, OWP SAS was involved in a total of 23 separate lawsuits for various civil and labor disputes in the municipal civil courts in Colombia, in the Cities of Bogota, Cali. Funza and Popayán. If the civil courts rule against OWP SAS, we estimate the potential liability from these claims is approximately $310,000. However, this is only an estimate, and our potential liability could be greater.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
There is a limited public market for our common stock. Shares of our common stock trade on the over-the-counter market and are quoted on the OTCQB tier of the OTC Markets under the symbol “OWPC”.
The following table sets forth, for the fiscal quarters indicated, the high and low bid information for our common stock, as reported on the OTC Markets. The following quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
| High | Low | |||||||
| Fiscal Year Ended December 31, 2024 | ||||||||
| First Quarter | $ | 0.08 | $ | 0.03 | ||||
| Second Quarter | $ | 0.08 | $ | 0.04 | ||||
| Third Quarter | $ | 0.05 | $ | 0.02 | ||||
| Fourth Quarter | $ | 0.04 | $ | 0.02 | ||||
| Fiscal Year Ended December 31, 2023 | ||||||||
| First Quarter | $ | 0.13 | $ | 0.05 | ||||
| Second Quarter | $ | 0.10 | $ | 0.05 | ||||
| Third Quarter | $ | 0.12 | $ | 0.06 | ||||
| Fourth Quarter | $ | 0.10 | $ | 0.02 | ||||
As of May 31, 2025, there were approximately 85 shareholders of record of our common stock. Such number does not include any shareholders holding shares in nominee or “street name”. As of June 1, 2025, there were 109,226,421 shares of common stock outstanding on record.
Dividends
We have not declared or paid any dividends on our common stock since our inception and do not anticipate paying dividends for the foreseeable future. The payment of dividends is subject to the discretion of our board of directors and depends, among other things, upon our earnings, our capital requirements, our financial condition, and other relevant factors. We intend to reinvest any earnings in the development and expansion of our business. Any cash dividends in the future to common shareholders will be payable when, as and if declared by our board of directors, based upon the board’s assessment of our financial condition and performance, earnings, need for funds, capital requirements, prior claims of preferred stock to the extent issued and outstanding, and other factors, including income tax consequences, restrictions and applicable laws. There can be no assurance, therefore, that any dividends on our common stock will ever be paid.
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Equity Compensation Plan Information
This following table provides information about shares our common stock that may be issued under our options outstanding at December 31, 2024. Other than individual options outstanding reflected in the table below, we did not have any shares authorized for issuance under equity plans at December 31, 2024.
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||||||||
| (a) | (b) | (c) | ||||||||||
| Equity compensation plans approved by security holders | 5,392,000 | $ | 0.15 | 4,608,000 | ||||||||
| Equity compensation plans not approved by security holders (1) | 29,678,317 | 0.17 | N/A | |||||||||
| Total | 35,070,317 | $ | 0.17 | 4,608,000 | ||||||||
(1) Represents options to purchase 5,500,000 shares of common stock at a per share exercise price of $0.13 issued outside of our option plan to our CEO, Isiah L. Thomas, III, and warrants to purchase a total of 13,511,650, 2,000,000 and 8,666,667 shares of common stock at $0.25, $0.50 and $0.00001 per share, respectively.
On February 12, 2020, the Company’s stockholders approved our 2019 Stock Incentive Plan (the “2019 Plan”), which had been adopted by the Company’s Board of Directors (the “Board”) as of December 10, 2019. The 2019 Plan provides for the issuance of up to 10,000,000 shares of common stock to the Company and its subsidiaries’ employees, officers, directors, consultants and advisors, stock options (non-statutory and incentive), restricted stock awards, stock appreciation rights (“SARs”), restricted stock units (“RSUs”) and other performance stock awards. Options granted under the 2019 Plan may either be intended to qualify as incentive stock options under the Internal Revenue Code of 1986, or may be non-qualified options, and are exercisable over periods not exceeding ten years from date of grant. Unless sooner terminated in accordance with its terms, the Stock Plan will terminate on December 10, 2029.
Recent Sales of Unregistered Securities
Issuance of Series C Special Preferred Stock
Effective November 8, 2024, the Company entered into an Exchange Agreement (the “Thomas Agreement”) with Isiah L. Thomas, III, the Company’s Chairman and Chief Executive Officer, pursuant to which the Company issued 100 shares of Series C Special Preferred Stock in consideration of Mr. Thomas’ forgiveness of $486,512 of accrued salary owed to him, based on the $486,512 fair value of the Series C Special Preferred Stock, as obtained via an independent valuation using a market approach to valuing the change in control. The consummation of the Thomas Agreement resulted in Mr. Thomas acquiring voting control of the Company.
Common Stock Issued for Services
On December 31, 2024, the Company issued 750,000 shares of common stock, restricted in accordance with Rule 144, in consideration of consulting services.
On December 31, 2024, the Company issued 500,000 shares of common stock, restricted in accordance with Rule 144, in consideration of consulting services.
On December 31, 2024, the Company issued 482,316 shares of common stock, restricted in accordance with Rule 144, to ClearThink Capital Partners, LLC, for services provided for the period ending December 31, 2024.
On December 25, 2024, the Company issued 909,090 shares of common stock, restricted in accordance with Rule 144, to the Company’s Chief Financial Officer.
In connection with the above security issuances, we did not pay any underwriting discounts or commissions. None of the sales of securities described or referred to above was registered under the Securities Act. In making the sales without registration under the Securities Act, we relied upon one or more of the exemptions from registration contained in Section 4(2) of the Securities Act, and in Regulation D promulgated under the Securities Act. No general solicitation or advertising was used in connection with the sales.
ITEM 6. Selected Financial Data
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This discussion summarizes the significant factors affecting the operating results, financial condition, liquidity and cash flows of the Company for the fiscal years ended December 31, 2024 and 2023. The discussion and analysis that follows should be read together with the section entitled “Forward Looking Statements” and our financial statements and the notes to the financial statements included elsewhere in this annual report on Form 10-K.
Except for historical information, the matters discussed in this section are forward looking statements that involve risks and uncertainties and are based upon judgments concerning various factors that are beyond the Company’s control. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report.
Overview
We are currently focused on research and development activities involving sustainable industrial help solutions. These solutions enable automakers to reduce their carbon footprint and support environmental initiatives within the automotive supply chain. In October of 2024, we partnered with other companies in the automotive industry to produce 1,400 reusable hemp-based molded reusable totes, designed to move and protect automotive parts through the supply chain. We are actively seeking to raise capital and further research and development in this area. If successful, we intend to produce these hemp-based materials for a variety of applications, starting with automotive component applications.
Due to challenging economic conditions and under prior management, OWP SAS experienced significant operational and managerial challenges, resulting in the accumulation of approximately $1.2 million of past due financial obligations. Without adequate resources and in an effort to forestall the imposition of interest, late charges, fines and any court-mandated order(s) to cease operations, OWP SAS 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 on December 22, 2023. On October 1, 2024, the Company amended its filing with the Court to change from a Reorganization Proceeding to a liquidation of its assets, primarily consisting of the farm in Popayán and equipment. The Company has deconsolidated its foreign subsidiaries to include the petitioning entity, OWP SAS, as well as the Company’s non-operating shell entities, Agrobase, S.A.S. and Hope Colombia, S.A.S., given the lack of independently identifiable operations. The deconsolidation resulted in a loss on deconsolidation of foreign subsidiaries in the amount of $1,564,823 for the year ended December 31, 2023. In addition, the Company recognized a loss on investment of $245,272 for the year ended December 31, 2024, related to the subsequent support of the bankruptcy proceedings.
On May 15, 2024, OWP Ventures, Inc., acquired Pétalo Pharmaceutical, S.A.S. (“Pétalo”), a Company located in Colombia and legally constituted as a simplified stock company that owns licenses to cultivate, produce and distribute the raw ingredients of the cannabis and hemp plant for medicinal, scientific and industrial purposes from the free trade zone in Colombia. Pétalo had no operations, other than obtaining four licenses, including seed use, cultivation of non-psychoactive cannabis, cultivation of psychoactive cannabis, and manufacturing allowing for extraction and export from the free trade zone, which we intended to establish an export business using these licenses. During the fourth quarter of 2024, we dissolved this entity, resulting in $75,000 of impairment expense.
We also entered into a strategic partnership with Stephen Marley’s Kx Family Care in 2024 in which we purchased 2,000 units of CBD products, which we white labeled as Pro-11 and began selling online. There can be no assurances that this strategic partnership will generate significant revenues or be profitable for the Company.
Critical Accounting Policies
The establishment and consistent application of accounting policies is a vital component of accurately and fairly presenting our financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”), as well as ensuring compliance with applicable laws and regulations governing financial reporting. While there are rarely alternative methods or rules from which to select in establishing accounting and financial reporting policies, proper application often involves significant judgment regarding a given set of facts and circumstances and a complex series of decisions.
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Basis of Presentation
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”). All references to Generally Accepted Accounting Principles (“GAAP”) are in accordance with The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the Hierarchy of Generally Accepted Accounting Principles.
These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein.
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 December 31, 2024:
| State of | ||||
| Name of Entity | Incorporation | Relationship | ||
| One World Products, Inc.(1) | Nevada | Parent | ||
| OWP Ventures, Inc.(2) | Delaware | 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.
The consolidated financial statements herein contain the operations of the wholly-owned subsidiaries listed above. The Company’s headquarters are located in Las Vegas, Nevada.
Foreign Currency Translation
The functional currency of the Company is Colombian Peso (“COP”). The Company has maintained its financial statements using the functional currency, and translated those financial statements to the US Dollar 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 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
Under ASC 280, Segment Reporting, operating segments are defined as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company operates as a single segment, consisting of its CBD sales operations in the United States. Therefore, the Company’s Chief Executive Officer, who is also the CODM, makes decisions and manages the Company’s operations based on the consolidated operating segment for the distribution of its products.
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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.
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.
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 years ended December 31, 2024 and 2023, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.
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Results of Operations for the Years ended December 31, 2024 and 2023
The following table summarizes selected items from the statement of operations for the years ended December 31, 2024 and 2023.
| For the Years Ended | ||||||||||||
| December 31, | Increase / | |||||||||||
| 2024 | 2023 | (Decrease) | ||||||||||
| Revenues | $ | 4,863 | $ | 7,589 | $ | (2,726 | ) | |||||
| Cost of goods sold | 948 | 173,122 | (172,174 | ) | ||||||||
| Gross profit (loss) | 3,915 | (165,533 | ) | 169,448 | ||||||||
| Operating expenses: | ||||||||||||
| General and administrative | 653,983 | 1,289,656 | (635,673 | ) | ||||||||
| Professional fees | 1,061,926 | 591,416 | 470,510 | |||||||||
| Depreciation expense | - | 34,266 | (34,266 | ) | ||||||||
| Impairment expense | 160,000 | - | 160,000 | |||||||||
| Total operating expenses: | 1,875,909 | 1,915,338 | (39,429 | ) | ||||||||
| Operating loss | (1,871,994 | ) | (2,080,871 | ) | (208,877 | ) | ||||||
| Total other expense | (2,063,018 | ) | (1,872,450 | ) | 190,568 | |||||||
| Net loss | $ | (3,935,012 | ) | $ | (3,953,321 | ) | $ | (18,309 | ) | |||
Revenues
Revenues for the year ended December 31, 2024 were $4,863, compared to $7,589 during the year ended December 31, 2023, a decrease of $2,726, or 36%. Revenues during the current period were generated by sales of our CBD product, while revenues from the comparative period were attributable to sales of cannabis seeds by OWP SAS.
Cost of Goods Sold
Cost of goods sold for the year ended December 31, 2024 were $948, compared to $173,122 during the year ended December 31, 2023, a decrease of $172,174, or 99%. Cost of goods sold consists primarily of CBD inventory and shipping costs during the year ended December 31, 2024 and primarily of labor, depreciation and maintenance on cultivation and production equipment, and supplies consumed in our Colombian cannabis operations during the year ended December 31, 2023. Our gross margins were approximately 81% for the year ended December 31, 2024, compared to negative 2,181% during the year ended December 31, 2023. Costs of goods sold increased as we transitioned to selling CBD products.
General and Administrative Expenses
General and administrative expenses for the year ended December 31, 2024 were $653,983, compared to $1,289,656 for the year ended December 31, 2023, a decrease of $635,673, or 49%. General and administrative expenses decreased primarily due to decreased salaries and wages and lease expenses in Colombia over the comparative period, as we transitioned to new ventures. The expenses for the current period consisted primarily of compensation expenses, office rent, and travel costs, including $74,250 of stock-based compensation, which consisted entirely of $74,250 of common stock that was issued to our officers. The expenses for the prior period consisted primarily of compensation expenses, office rent, and travel costs, including $207,233 of stock-based compensation, which consisted $89,850 of common stock and $117,383 of stock options that were issued to our officers. Stock-based compensation decreased by $132,983, or 64%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Professional Fees
Professional fees for the year ended December 31, 2024 were $1,061,926, compared to $591,416 during the year ended 2023, an increase of $470,510, or 80%. Professional fees included non-cash stock-based compensation of $622,714, consisting of $607,224 of common stock and $15,490 of stock options expense, during the year ended December 31, 2024, compared to $278,353, consisting of $243,987 of common stock and $34,366 of stock options expense, during the year ended December 31, 2023, an increase of $344,361, or 124%. Professional fees increased primarily due to increased stock-based compensation during the current period.
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Depreciation Expense
We had no depreciation expense for the year ended December 31, 2023, compared to $34,266 of depreciation expense for the year ended December 31, 2023. Depreciation expense decreased due to the prior year disposal of equipment forfeited in Colombia.
Impairment Expense
We had $160,000 of impairment expense for the year ended December 31, 2024. Impairment expense consisted of $85,000 of deposits on equipment that were determined to be impaired, and $75,000 of impairment expense related to the dissolution of Pétalo Pharmaceutical, S.A.S.
Other Income (Expense)
Other expenses, on a net basis, for the year ended December 31, 2024 were $2,063,018, compared to other expenses, on a net basis, of $1,872,450 for the year ended December 31, 2023. Other expense during the year ended December 31, 2024 consisted of a loss on the early extinguishment of debts of $724,086, a loss on investments of $245,272 related to the bankruptcy of our foreign subsidiaries, and $1,093,660 of interest expense. Other expenses for the year ended December 31, 2023 consisted of a loss on disposal of fixed assets of $3,290, a loss of $1,564,823 on the deconsolidation of our foreign subsidiaries, and $308,741 of interest expense, including $19,603 on shares of common stock issued as commitment fees to AJB Capital on debt financing arrangements, as partially offset by a gain of $4,397 on the early extinguishment of leases and $7 of interest income.
Net Loss
Net loss for the year ended December 31, 2024 was $3,935,012, or $0.04 per share, compared to $3,953,321, or $0.05 per share, during the year ended December 31, 2023, a decrease of $18,309. The net loss for the year ended December 31, 2024 included non-cash expenses consisting of $85,000 of impairment expense, a loss on investment of $245,272 related to the bankruptcy of our foreign subsidiaries, $1,183,476 of stock-based compensation, $51,008 of expense on amended warrants, $1,093,660 of interest expense, and $722,716 on the amortization of debt discounts. The net loss for the year ended December 31, 2023 included non-cash expenses consisting of $34,266 of depreciation, a $3,290 loss on disposal of fixed assets, a loss of $1,564,823 on the deconsolidation of our foreign subsidiaries, $505,189 of stock-based compensation, and $308,741 of interest expense, including $55,539 on the amortization of debt discounts and $19,603 on shares of common stock issued as commitment fees to AJB Capital on debt financing arrangements.
Liquidity and Capital Resources
As of December 31, 2024, the Company had current assets of $68,300, consisting of cash of $42,456, accounts receivable of $114, inventory of $16,226 and prepaid expenses of $9,504. The Company’s current liabilities as of December 31, 2024 were $3,168,589, consisting of $594,059 of accounts payable, $651,250 of accrued expenses, $256,732 of dividends payable, and $1,666,548 of debts, including $72,195 owed to related parties.
The following table summarizes our total current assets, liabilities and working capital at December 31, 2024 and 2023.
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Current Assets | $ | 68,300 | $ | 13,882 | ||||
| Current Liabilities | $ | 3,168,589 | $ | 3,872,111 | ||||
| Working Capital | $ | (3,100,289 | ) | $ | (3,858,229 | ) | ||
| 18 |
The following table summarizes our cash flows during the years ended December 31, 2024 and 2023, respectively.
| For the Year Ended | ||||||||
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Net cash used in operating activities | $ | (1,121,637 | ) | $ | (1,194,131 | ) | ||
| Net cash used in investing activities | (75,000 | ) | (5,046 | ) | ||||
| Net cash provided by financing activities | 1,280,695 | 1,059,500 | ||||||
| Effect of exchange rate changes on cash | (42,328 | ) | 131,046 | |||||
| Cash removed in deconsolidated foreign subsidiaries | - | (1,659 | ) | |||||
| Net change in cash | $ | 41,730 | $ | (10,290 | ) | |||
The decrease in funds used in operating activities for the year ended December 31, 2024, compared to the year ended December 31, 2023, was primarily due to decreased operations in the current year as capital resources tightened.
The increase in funds used in investing activities for the year ended December 31, 2024, compared to the year ended December 31, 2023, was due primarily to the purchase of Pétalo Pharmaceutical, SAS, compared to the purchase of fixed assets in the year ended December 31, 2023.
The increase in funds provided by financing activities for the year ended December 31, 2024, compared to the year ended December 31, 2023, was due primarily to $721,195 of increased net debt financing proceeds received, as partially offset by $500,000 of decreased proceeds received from the sale of our securities during the year ended December 31, 2024.
Satisfaction of our Cash Obligations for the Next 12 Months
As of December 31, 2024, we had $42,456 of cash on hand and negative working capital of $3,100,289. On April 21, 2025, we raised approximately $250,000 from a related party, of which approximately $48,000 has been used to partially pay interest on outstanding debts. We do not currently have sufficient funds to fund our operations at their current levels for the next twelve months. As we implement our business and attempt to expand operational activities, we expect to continue to experience net negative cash flows from operations in amounts not now determinable, and will be required to obtain additional financing to fund operations. Our ability to continue as a going concern is dependent upon our ability to raise additional capital and to achieve sustainable revenues and profitable operations. Since inception, we have raised funds primarily through the sale of equity securities. We will need, and are currently seeking, additional funds to operate our business. No assurance can be given that any future financing will be available or, if available, that it will be on terms that are satisfactory to us. Even if we are able to obtain additional financing, it may contain undue restrictions on our operations or cause substantial dilution for our stockholders. If we are unable to obtain additional funds, our ability to carry out and implement our planned business objectives and strategies will be significantly delayed, limited or may not occur. We cannot guarantee that we will become profitable. Even if we achieve profitability, given the competitive and evolving nature of the industry in which we operate, we may not be able to sustain or increase profitability and our failure to do so would adversely affect our business, including our ability to raise additional funds.
The accompanying consolidated financial statements appearing in this 10-K have been prepared assuming that we will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. The consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
Off-Balance Sheet Arrangements
We have no outstanding off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
| 19 |
ITEM 8. Financial Statements and Supplementary Data
ONE WORLD PRODUCTS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2024 AND 2023
TABLE OF CONTENTS
| 20 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of One World Products, Inc. and subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of One World Products, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, consolidated stockholders’ equity (deficit) and consolidated cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
Going Concern
Due to the net loss and working capital deficiency, the Company evaluated the need for a going concern listed in note 2. Auditing management’s evaluation of a going concern can be a significant judgment given the fact that the Company uses management estimates on future revenues and expenses, which are not able to be easily substantiated. We evaluated the appropriateness of the going concern, we examined and evaluated the financial information along with management’s plans to mitigate the going concern and management’s disclosure on going concern.
/s/
We have served as the Company’s auditor since 2018.
June 2, 2025
| F-1 |
ONE WORLD PRODUCTS, INC.
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventory | ||||||||
| Prepaid expenses | ||||||||
| Total current assets | ||||||||
| Security deposits | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Stockholders’ Equity (Deficit) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Dividends payable | ||||||||
| Convertible note payable, related party, current maturities | ||||||||
| Notes payable, related parties, current maturities | ||||||||
| Notes
payable, net of $ | ||||||||
| Total current liabilities | ||||||||
| Notes
payable, related parties, long-term portion, net of $ | ||||||||
| Total Liabilities | ||||||||
| Series A convertible preferred stock, $ par value, shares authorized; and shares issued and outstanding at December 31, 2024 and 2023, respectively | ||||||||
| Series B convertible preferred stock, $ par value, shares authorized; shares issued and outstanding at December 31, 2024 and 2023 | ||||||||
| Stockholders’ Equity (Deficit): | ||||||||
| Preferred stock, $ par value, shares authorized; and -- shares of Series C preferred stock issued and outstanding at December 31, 2024 and 2023, respectively | ||||||||
| Common stock, $ par value, shares authorized; and shares issued and outstanding at December 31, 2024 and 2023, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Subscriptions payable | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated (deficit) | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity (Deficit) | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Equity (Deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-2 |
ONE WORLD PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Revenues | $ | $ | ||||||
| Cost of goods sold | ||||||||
| Gross profit (loss) | ( | ) | ||||||
| Operating expenses: | ||||||||
| General and administrative | ||||||||
| Professional fees | ||||||||
| Depreciation expense | ||||||||
| Impairment expense | ||||||||
| Total operating expenses | ||||||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income (expense): | ||||||||
| Loss on sale of fixed assets | ( | ) | ||||||
| Gain (loss) on early extinguishment of debt | ( | ) | ||||||
| Loss on deconsolidation of foreign subsidiaries | ( | ) | ||||||
| Loss on investment | ( | ) | ||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Total other expense | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive income (loss): | ||||||||
| Gain (loss) on foreign currency translation | $ | ( | ) | $ | ||||
| Net other comprehensive loss | $ | ( | ) | $ | ( | ) | ||
| Series A convertible preferred stock declared ($ per share) | ( | ) | ( | ) | ||||
| Net loss attributable to common shareholders | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding - basic and diluted | ||||||||
| Net loss per share - basic and diluted | $ | ) | $ | ) | ||||
| Dividends declared per share of common stock | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-3 |
ONE WORLD PRODUCTS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
| Series A Convertible | Series B Convertible | Series C | Additional | Accumulated Other | Total Stockholders’ | |||||||||||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Preferred Stock | Preferred Stock | Common Stock | Paid-In | Subscriptions | Comprehensive | Accumulated | Equity | ||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Capital | Payable | Income (Loss) | Deficit | (Deficit) | ||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||
| Series A convertible preferred stock sold for cash | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| Series A Convertible Preferred Stock issued for services | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| Series B preferred stock conversions | - | ( | ) | ( | ) | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| Commitment shares issued pursuant to promissory note | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock sold for cash | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of common stock options issued for services | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Series A convertible preferred stock dividends declared ($ per share) | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Gain on foreign currency translation | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Series A Convertible Preferred Stock sold for cash | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| Series C preferred stock issued to CEO in settlement of accrued compensation | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued pursuant to debt modifications | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued for services | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| Commitment shares issued pursuant to promissory note | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||
| Cancellation of subscriptions payable | - | - | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||
| Amended warrants | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Relative fair value of warrants issued for loan commitment | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Amortization of common stock options issued for services | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||||||
| Series A convertible preferred stock dividend declared ($ per share) | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Gain on foreign currency translation | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-4 |
ONE WORLD PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Years Ended | ||||||||
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization expense | ||||||||
| Impairment expense | ||||||||
| Loss on disposal of fixed assets | ||||||||
| (Gain) loss on early extinguishment of debt | ( | ) | ||||||
| Loss on deconsolidation of foreign subsidiaries | ||||||||
| Amortization of debt discounts | ||||||||
| Series A preferred stock issued for services | ||||||||
| Common stock issued for services | ||||||||
| Stock options issued for services | ||||||||
| Amended warrants | ||||||||
| Decrease (increase) in assets: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventory | ( | ) | ||||||
| Other current assets | ||||||||
| Other assets | ( | ) | ||||||
| Right-of-use assets | ||||||||
| Increase (decrease) in liabilities: | ||||||||
| Accounts payable | ||||||||
| Accrued expenses | ( | ) | ||||||
| Deferred revenues | ( | ) | ||||||
| Lease liability | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities | ||||||||
| Purchase of fixed assets | ( | ) | ||||||
| Purchase of licenses | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities | ||||||||
| Proceeds from notes payable, related parties | ||||||||
| Repayments of notes payable, related parties | ( | ) | ||||||
| Proceeds from notes payable | ||||||||
| Repayments of notes payable | ( | ) | ||||||
| Proceeds from sale of preferred and common stock | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash | ( | ) | ||||||
| Cash removed in deconsolidated foreign subsidiaries | ( | ) | ||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash - beginning | ||||||||
| Cash - ending | $ | $ | ||||||
| Supplemental disclosures: | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Non-cash investing and financing transactions: | ||||||||
| Dividends payable | $ | $ | ||||||
| Deposit on equipment settled with note payable | $ | $ | ||||||
| Accounts payable settled with exchange of equipment | $ | $ | ||||||
| Value of debt discounts attributable to commitment shares to related parties | $ | $ | ||||||
| Value of debt discounts attributable to commitment shares | $ | $ | ||||||
| Value of debt discounts attributable to commitment warrants | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
| F-5 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Nature of Business and Significant Accounting Policies
Overview
On December 22, 2023, OWP SAS, 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 United States Bankruptcy Code (the “Bankruptcy Code”) in the United States, whereby the Company intended to restructure its debts and continue to operate, however, the Company amended its filing on October 1, 2024, to liquidate its assets.
In connection with the Reorganization Proceedings, OWP SAS paused production and sales of its cannabis operations in Colombia until the Court provided the Company with a plan of reorganization, at which time the Company intended to resume operations and satisfy its obligations in Colombia in accordance with the court’s plan, however, the Company now intends to have the Court liquidate its assets and pay its creditors out of the proceeds of the liquidation. As a result of these actions, OWP SAS has no revenue-producing operations. The Company’s primary operations during the fourth quarter of 2023, and through 2024, have consisted of activities associated with completing the Liquidation Proceedings, resolving substantial litigation, claims reconciliation, terminating operations and liquidating its assets, which primarily consist of the farm in Popayán and equipment.
In
accordance with ASC 810-10-15, the Company has deconsolidated its foreign subsidiaries to include the petitioning entity, OWP SAS,
as well as the Company’s non-operating shell entities, Agrobase, S.A.S. and Hope Colombia, S.A.S., given the lack of
independently identifiable operations. The deconsolidation resulted in a loss on deconsolidation of foreign subsidiaries in the
amount of $
During March of 2024, the Company, through OWP Ventures, began to sell a CBD based product in the United States, called Pro-11. During the fourth quarter of 2024, the Company began to redesign the packaging and engaged a sales representative to focus greater resources on bringing this product to market.
On
May 15, 2024, OWP Ventures, Inc., acquired Pétalo Pharmaceutical, S.A.S. (“Pétalo”), a Company located in Colombia
and legally constituted as a simplified stock company that owned licenses to cultivate, produce and distribute the raw ingredients of
the cannabis and hemp plant for medicinal, scientific and industrial purposes from the free trade zone in Colombia. Pétalo had
no operations, other than obtaining four licenses, including seed use, cultivation of non-psychoactive cannabis, cultivation of psychoactive
cannabis, and manufacturing allowing for extraction and export from the free trade zone. The acquisition was accounted for as an asset
purchase, and the $
During 2024, the Company also began developing industrial hemp solutions for the automotive market. The Company intends to focus increased efforts on research and development in this area to help the automotive industry meet its goals of achieving carbon neutral manufacturing using renewable material solutions. In October of 2024, the Company, in collaboration with partners in the automotive industry, developed hemp-based molded containers for automotive part packaging applications and received an initial order for 1,400 units of these reusable totes, designed to move and protect automotive parts through the supply chain.
Nature of Business
One
World Products, Inc. (the “Company,” “we,” “our” or “us”) was incorporated in Nevada
on September 2, 2014. On February 21, 2019, the Company entered into an Agreement and Plan of Merger with OWP Merger Subsidiary, Inc.,
a wholly-owned subsidiary, and OWP Ventures, Inc. (“OWP Ventures”), which is the parent company of One World Pharma SAS,
a Colombian Simplified Shares Company (“OWP SAS”). Pursuant to the Merger Agreement, we acquired OWP Ventures (and indirectly,
OWP SAS) 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 shares of our common stock; (b) options to purchase shares of common stock of OWP Ventures at an exercise
price of $ automatically converted into options to purchase shares of our common stock at an exercise price of $; (c)
the outstanding principal and interest under a $
| F-6 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 SAS. OWP SAS was a licensed cannabis cultivation, production and distribution (export) company located in Popayán, Colombia (nearest major city is Cali). The Company had intended to be a producer of and/or source raw and processed cannabis and hemp plant ingredients for both medical and industrial uses across the globe. The Company received licenses to cultivate, produce and distribute the raw ingredients of the cannabis and hemp plant for medicinal, scientific and industrial purposes. Specifically, the Company was 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. The Company owned approximately 30 acres and had a covered greenhouse built specifically to cultivate high-grade cannabis and hemp.
Basis of Presentation
The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”). All references to Generally Accepted Accounting Principles (“GAAP”) are in accordance with The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and the Hierarchy of Generally Accepted Accounting Principles.
These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein.
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 December 31, 2024:
| State of | ||||
| Name of Entity | Incorporation | Relationship | ||
| (1) |
| (2) |
The consolidated financial statements herein contain the operations of the wholly-owned subsidiaries listed above. The Company’s headquarters are located in Las Vegas, Nevada.
Reclassifications
Certain reclassifications have been made to the prior years’ financial statements to conform to current year presentation. These reclassifications had no effect on previously reported results of operations or retained earnings.
Foreign Currency Translation
The functional currency of the Company is Colombian Peso (COP). The Company has maintained its financial statements using the functional currency, and translated those financial statements to the US Dollar 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 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.
| F-7 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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
Under ASC 280, Segment Reporting, operating segments are defined as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company operates as a single segment, consisting of its CBD sales operations in the United States. Therefore, the Company’s Chief Executive Officer, who is also the CODM, makes decisions and manages the Company’s operations based on the consolidated operating segment for the distribution of its products.
Fair Value of Financial Instruments
The Company discloses the fair value of certain assets and liabilities in accordance with ASC 820, Fair Value Measurements and Disclosures (ASC 820). ASC 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
| - | Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
| - | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
| - | Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement. |
The carrying value of cash, accounts receivable, accounts payables and accrued expenses 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 $
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 CBD products consisted of finished goods, along with packaging.
Fixed Assets
Fixed assets are stated at the lower of cost or estimated net recoverable amount. The cost of property, plant and equipment is depreciated using the straight-line method based on the lesser of the estimated useful lives of the assets or the lease term based on the following life expectancy:
| Buildings | |
| Office equipment | |
| Furniture and fixtures | |
| Equipment and machinery | |
| Leasehold improvements |
Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which have extended the useful life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the cost and related accumulated depreciation and amortization are eliminated and any resulting gain or loss is reflected in operations.
| F-8 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 for the year ended December 31, 2024, consisted primarily of the sale of Pro-11 CBD rub cannisters, and up until December 31, 2023, primarily consisted of the sale of cannabis seeds in Colombia. These sales in Colombia included multi-element arrangements whereby the Company collected 50% of the sale upon delivery of the seeds, and the remaining 50% upon the completion of the harvest, whether the seeds result in a successful crop, or not. In addition, the Company had a right of first refusal to purchase products resulting from the harvest. At December 31, 2024 and 2023, the Company didn’t have any deferred revenues or deferred cost of goods sold outstanding.
Advertising Costs
The
Company expenses the cost of advertising and promotions as incurred. Advertising and promotions expense was $
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.
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 years ended December 31, 2024 and 2023, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.
Income Taxes
The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.
Uncertain Tax Positions
In accordance with ASC 740, “Income Taxes” (“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.
The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.
Adoption of New Accounting Standards and Recently Issued 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.
| F-9 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Recently Adopted Accounting Standards
In November 2023, the FASB issued Accounting Standards Update (“ASU”) No. 2023-07, “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosure.” The ASU updated reportable segment disclosure requirements, primarily through requiring enhanced disclosures about significant segment expenses and information used to assess segment performance. The Company adopted ASU No. 2023-07 during the year ended December 31, 2024. See Note 20 “Segment Reporting” in the accompanying Notes to the Consolidated Financial Statements for additional information.
In August 2020, FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity; Own Equity (“ASU 2020-06”), as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year. The Company adopted ASU No. 2020-06 during the year ended December 31, 2024.
Accounting Standards Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”. The amendments in this ASU add specific requirements for income tax disclosures to improve transparency and decision usefulness. The guidance in ASU 2023-09 requires that public business entities disclose specific categories in the income tax rate reconciliation and provide additional qualitative information for reconciling items that meet a quantitative threshold. In addition, the amendments in ASU 2023-09 require that all entities disclose the amount of income taxes paid disaggregated by federal, state, and foreign taxes and disaggregated by individual jurisdictions. The ASU also includes other disclosure amendments related to the disaggregation of income tax expense between federal, state and foreign taxes. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. The amendments in this update should be applied on a prospective basis and retrospective application is permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.
In November 2024, the FASB issued Accounting Standards Update (“ASU”) 2024-03 and in January 2025, the FASB issued ASU 2025-01, “Income Statement - Reporting Comprehensive Income -Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses.” The guidance requires disclosures about specific expense categories, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization and selling expenses. The ASU is effective in the first annual reporting period beginning after December 15, 2026, and for interim periods within annual reporting periods beginning after December 15, 2027. The Company is currently assessing the effect that adoption of this guidance will have on its Consolidated Financial Statements.
There are no other recently issued accounting pronouncements that the Company has yet to adopt that are expected to have a material effect on its financial position, results of operations, or cash flows.
Note 2 – Going Concern
As
shown in the accompanying financial statements, the Company had $
| F-10 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. These financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
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 intended to restructure its debts and
continue to operate, however, the Company amended its filing on October 1, 2024, to liquidate its assets. OWP SAS had identified
approximately 23 creditors, consisting of approximately $
FOREIGN SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
| December 31, | ||||
| 2023 | ||||
| Assets | ||||
| Current assets: | ||||
| Cash | $ | |||
| Inventory | ||||
| Other current assets | ||||
| Total current assets | ||||
| Other assets | ||||
| Fixed assets, net | ||||
| Total Assets | $ | |||
| Liabilities and Stockholders’ Equity (Deficit) | ||||
| Current liabilities: | ||||
| Accounts payable | $ | |||
| Accrued expenses | ||||
| Notes payable | ||||
| Intercompany liability owed to OWP Ventures, Inc. | ||||
| Total current liabilities | ||||
| Stockholders’ Equity (Deficit): | ||||
| Accumulated (deficit) | ( | ) | ||
| Total Stockholders’ Equity (Deficit) | ( | ) | ||
| Total Liabilities and Stockholders’ Equity (Deficit) | $ | |||
| F-11 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4 – Related Party Transactions
Issuance of Series C Special Preferred Stock to Chief Executive Officer
Effective
November 8, 2024, the Company entered into an Exchange Agreement (the “Thomas Agreement”) with Isiah L. Thomas, III, the
Company’s Chairman and Chief Executive Officer, pursuant to which the Company issued
shares of Series C Special Preferred Stock, which represented a controlling voting interest in the Company. The shares were issued
in consideration of Mr. Thomas’ forgiveness of $
Series A Preferred Stock Sale to Director
On
July 25, 2024, the Company received proceeds of $
Expense Reimbursements Owed to Officers and Directors
As
of December 31, 2024, the Company owed a total of $
Related Party Debt Repayments
On
July 26, 2024, the Company partially repaid $
On
April 22, 2024, the Company repaid an aggregate total of $
Common Stock Issued as Consideration for Related Party Debt Modifications
On
March 15, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., agreed to issue shares of common stock to officers
and directors in consideration for extending the maturity dates and terms of previously received debt financing, as listed below. The
aggregate fair value of the common stock was $
| Aggregate | ||||||||||||||
| Name | Position | Debts Extended | Shares | Fair Value | ||||||||||
| Isiah L. Thomas, III | Chairman and CEO | $ | $ | |||||||||||
| Dr. Kenneth Perego, II | Vice Chairman | |||||||||||||
| Joerg Sommer | Former President | |||||||||||||
| Dr. John McCabe | >5% Shareholder | |||||||||||||
| $ | $ | |||||||||||||
Common Stock Issued for Services, Related Parties
On
December 25, 2024, the Company issued shares of common stock to the Company’s Chief Financial Officer. The
fair value of the shares was $
On
September 25, 2024, the Company issued shares of common stock to the Company’s Chief Financial Officer. The
fair value of the shares was $
On
July 1, 2024, the Company issued shares of common stock to Todd Peterson as a signing bonus pursuant to his appointment as the
Company’s Chief Financial Officer. The fair value of the shares was $
| F-12 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On
March 15, 2024, the Company issued shares of common stock to officers and directors for services provided, as listed below. The aggregate
fair value of the common stock was $
| Name | Position | Shares | Fair Value | |||||||
| Isiah L. Thomas, III | Chairman and CEO | $ | ||||||||
| Dr. Kenneth Perego, II | Vice Chairman | |||||||||
| Terry Buffalo | Director | |||||||||
| Joerg Sommer | Former President | |||||||||
| $ | ||||||||||
Compensation Commitments
As
of December 31, 2024, the Company owed $
Note 5 – Fair Value of Financial Instruments
Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.
The Company has certain financial instruments that must be measured under the new fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
| F-13 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balances sheet as of December 31, 2024 and 2023:
| Fair Value Measurements at December 31, 2024 | ||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets | ||||||||||||
| Cash | $ | $ | $ | |||||||||
| Total assets | ||||||||||||
| Liabilities | ||||||||||||
| Notes payable, related parties, net of $ | ||||||||||||
| Notes payable, net of $ | ||||||||||||
| Total liabilities | ( | ) | ||||||||||
| $ | $ | ( | ) | $ | ||||||||
| Fair Value Measurements at December 31, 2023 | ||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets | ||||||||||||
| Cash | $ | $ | $ | |||||||||
| Total assets | ||||||||||||
| Liabilities | ||||||||||||
| Convertible notes payable, related party | ||||||||||||
| Notes payable, related parties | ||||||||||||
| Notes payable, net of $ | ||||||||||||
| Total liabilities | ( | ) | ||||||||||
| $ | $ | ( | ) | $ | ||||||||
There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs for the years ended December 31, 2024 or 2023.
Note 6 – 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 CBD products consist entirely of finished goods. Inventory was $
Note 7 – Prepaid Expenses
Prepaid expenses at December 31, 2024 and 2023, consisted of the following:
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Prepaid virtual office rent | $ | $ | ||||||
| Prepaid audit retainer | ||||||||
| Prepaid license fees | ||||||||
| Prepaid OTC markets listing fees | ||||||||
| Interest receivable | ||||||||
| Total prepaid expenses | $ | $ | ||||||
Note 8 – Security Deposits
Security
deposits consisted of refundable deposits on equipment purchases in the amount of $
| F-14 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 9 – Licenses
On
May 15, 2024, OWP Ventures, Inc., acquired Pétalo Pharmaceutical, S.A.S. (“Pétalo”), a Company located in Colombia
and legally constituted as a simplified stock company that owns licenses to cultivate, produce and distribute the raw ingredients of
the cannabis and hemp plant for medicinal, scientific and industrial purposes from the free trade zone in Colombia. Pétalo had
no operations, other than obtaining four licenses, including seed use, cultivation of non-psychoactive cannabis, cultivation of psychoactive
cannabis, and manufacturing allowing for extraction and export from the free trade zone. The Company intended to use these licenses to
establish an export business within the free trade zone. The acquisition was accounted for as an asset purchase, and the $
Note 10 – Fixed Assets
The Company didn’t have any fixed assets at December 31, 2024 and 2023.
On
October 1, 2023, the Company, through its wholly-owned subsidiary, One World Pharma, S.A.S., disposed of furniture and fixtures that
were abandoned. No proceeds were received on the disposal, resulting in a loss on disposal of fixed assets of $
On
October 1, 2023, the Company, through its wholly-owned subsidiary, One World Pharma, S.A.S., sold a truck previously used at the Popayán
farm. The Company received proceeds of $
Depreciation
and amortization expense totaled $-
Note 11 – Accrued Expenses
Accrued expenses consisted of the following at December 31, 2024 and 2023, respectively:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Accrued compensation | $ | $ | ||||||
| Accrued payroll taxes | ||||||||
| Accrued interest | ||||||||
| $ | $ | |||||||
| F-15 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 12 – Convertible Note Payable, Related Party
Convertible note payable, related party consists of the following at December 31, 2024 and 2023, respectively:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| On September 27, 2022, the Company completed the sale of a Convertible Promissory Note in the principal amount of $ | $ | $ | ||||||
| Total convertible note payable, related party | ||||||||
| Less: current maturities | ||||||||
| Convertible note payable, related party, long-term portion | $ | $ | ||||||
The
Company recorded interest expense pursuant to the stated interest rates on the convertible notes in the amount of $
Note 13 – Notes Payable, Related Parties
Notes payable, related parties, consists of the following at December 31, 2024 and 2023, respectively:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| On December 26, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., issued an unsecured promissory note in the amount of $ | $ | $ | ||||||
| On December 16, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., issued an unsecured promissory note in the amount of $ | ||||||||
| On December 16, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On November 29, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On March 19, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an
advance of $ | ||||||||
| F-16 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| On March 15, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc.,
issued an unsecured promissory note in the amount of $ | ||||||||
| On March 15, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., issued an unsecured promissory note in the amount of $ | ||||||||
| On March 15, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., issued an unsecured promissory note in the amount of $ | ||||||||
| On March 15, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., issued an unsecured promissory note in the amount of $ | ||||||||
| On March 12, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On March 1, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On February 26, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On January 29, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On January 11, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ |
| F-17 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| On January 8, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On November 28, 2023, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On October 11, 2023, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received
an advance of $ | ||||||||
| On September 11, 2023, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On August 31, 2023, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On August 14, 2023, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On August 5, 2022, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On August 2, 2022, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On June 13, 2022, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On July 7, 2022, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ |
| F-18 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| On June 3, 2022, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On May 5, 2022, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On May 5, 2022, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On March 1, 2022, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On February 15, 2022, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| On December 29, 2021, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $ | ||||||||
| Total notes payable, related parties | ||||||||
| Less: unamortized debt discounts | ||||||||
| Notes payable, related parties, net of discounts | ||||||||
| Less: current maturities | ||||||||
| Notes payable, related parties, long-term portion | $ | $ |
The
Company recorded interest expense pursuant to the stated interest rates on the notes payable, related parties, in the amount of $
| F-19 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 14 – Notes Payable
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| On April 19, 2024, the “Company completed the sale of a | ||||||||
| The Note matures on | ||||||||
| Pursuant to the Purchase Agreement with SDT, SDT received a pre-funded
warrant to purchase shares of the Company’s common stock (the “Warrant”). The Warrant includes a make-whole provision, whereby,
if SDT is unable to sell the Warrant Shares (as defined in the Warrant) for net proceeds equal to at least $ | ||||||||
| A portion of the proceeds were used to repay the $ | $ | $ | ||||||
| On April 19, 2024, the “Company completed the sale of a | ||||||||
| The Fourth AJB Note matures on | ||||||||
| Pursuant to the Purchase Agreement with AJB, the Company paid a $ | ||||||||
| On March 4, 2024, the Company completed the sale of a promissory note to the Sanguine Group, LLC (“Sanguine”) in the principal amount of $ | ||||||||
| F-20 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| Pursuant to the Purchase Agreement, the Company paid a commitment fee to Sanguine
in the form of
shares of the Company’s common stock (the “Commitment Fee Shares”). The Commitment Fee Shares resulted in a
debt discount of $ | ||||||||
| On August 18, 2023, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., issued an unsecured promissory note of $ | ||||||||
| On June 23, 2023, the Company completed the sale of a Promissory Note in the principal amount of $ | ||||||||
| The Third AJB Note matured on | ||||||||
| Pursuant to the Purchase Agreement, the Company
paid a commitment fee to AJB Capital in the amount of $ | ||||||||
| 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. The note was repaid on March 14, 2024 out of the proceeds received from the Sanguine Group Note. | ||||||||
| Total notes payable | ||||||||
| Less: unamortized debt discounts | ||||||||
| Notes payable, net of discounts | ||||||||
| Less: current maturities | ||||||||
| Notes payable, long-term portion | $ | $ |
| F-21 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company recognized aggregate debt discounts on the notes payable to for the years ended December 31, 2024 and 2023, as follows:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Fair value of commitment shares of common stock | $ | $ | ||||||
| Fair value of pre-funded warrants | ||||||||
| Original issue discounts | ||||||||
| Legal and brokerage fees | ||||||||
| Total debt discounts | ||||||||
| Amortization of debt discounts | ||||||||
| Unamortized debt discounts | $ | $ | ||||||
The
aggregate debt discounts of $
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
The
Company recorded interest expense pursuant to the stated interest rates on the notes payable in the amount of $
The Company recognized interest expense for the year ended December 31, 2024 and 2023, respectively, as follows:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Interest on convertible notes, related party | $ | $ | ||||||
| Interest on notes payable, related parties | ||||||||
| Interest on notes payable | ||||||||
| Amended warrants | ||||||||
| Amortization of debt discounts, common stock | ||||||||
| Amortization of debt discounts, warrants | ||||||||
| Amortization of debt discounts | ||||||||
| Total interest expense | $ | $ | ||||||
Note 15 – Convertible Preferred Stock
Preferred Stock
The
Company has authorized shares of $ par value “blank check” preferred stock, of which shares have
been designated Series A Preferred Stock and shares have been designated Series B Preferred Stock, as amended on August 2, 2022.
| F-22 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Series A and B Preferred Stock have been classified outside of permanent equity and liabilities. the Series A Preferred Stock embodies conditional obligations that the Company may settle by issuing a variable number of equity shares, and in both the Series A and B Preferred Stock, monetary value of the obligation is based on a fixed monetary amount known at inception.
Series A Preferred Stock Sales
On
July 25, 2024, the Company received proceeds of $
On
various dates between January 4, 2023 and April 3, 2023, the Company received total proceeds from four accredited investors of
$
Cancellation of Series A Preferred Stock Subscriptions Payable
On July 3, 2024, a consultant agreed to forfeit shares of Series A Preferred Stock, with a fair value of $, that was previously awarded on July 1, 2023, but hadn’t yet been issued.
Series A Preferred Stock Issued for Services, Consultants
On
January 1, 2023, the Company issued shares of series A preferred stock in consideration of consulting services. The fair value
of the shares was $
Preferred Stock Dividends
The
Series A Preferred Stock accrues dividends at the rate of
Series B Preferred Stock Issuances
On November 16, 2023, a shareholder converted shares of Series B Preferred Stock into shares of common stock, in accordance with the terms of the agreement, therefore there was no gain or loss recognized on the conversion.
On September 12, 2023, a shareholder converted shares of Series B Preferred Stock into shares of common stock, in accordance with the terms of the agreement, therefore there was no gain or loss recognized on the conversion.
On July 7, 2023, a shareholder converted shares of Series B Preferred Stock into shares of common stock, in accordance with the terms of the agreement, therefore there was no gain or loss recognized on the conversion.
Note 16 – Commitments and Contingencies
Legal Matters
From time to time, the Company may be a party to various legal matters, threatened claims, or proceedings in the normal course of business. Legal fees and other costs associated with such actions are expensed as incurred. The Company assesses, in conjunction with its legal counsel, the need to record a liability for litigation and contingencies. Legal accruals are recorded when and if it is determined that a loss related to a certain matter is both probable and reasonably estimable. There are currently no pending legal matters outside of the bankruptcy matters in Colombia, noted below.
Due to challenging economic conditions, OWP SAS 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 on December 22, 2023. As
of December 31, 2024, OWP SAS was involved in a total of 23 separate lawsuits for various civil and labor disputes in the municipal
civil courts in Colombia, in the Cities of Bogota, Cali. Funza and Popayán. If the civil courts rule against OWP SAS, we estimate
the potential liability from these claims is approximately $
Debt Commitment Obligations
The Company has entered into various forms of debt financing that require the Company to issue shares of common stock or pre-funded warrants that carry certain make-whole provisions whereby, if the debt holder is unable to sell the commitment fee shares for net proceeds equal to at least the commitment fee, the Company shall pay the shortfall in cash, or cause the issuance of additional shares of common stock, to the debt holder until the sale of which would ultimately generate total net funds equal to the commitment fee, as follows:
| Debt Holder | Commitment Shares or Warrants | Commitment Amounts | ||||
| SDT Equities Note | warrants to purchase shares of the Company’s common stock * | $ | ||||
| Fourth AJB Note | shares of the Company’s common stock | $ | ||||
| Third AJB Note | shares of the Company’s common stock | $ | ||||
| * |
| F-23 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Equity Line of Credit
On
September 1, 2022, the Company entered into a Purchase Agreement (the “ELOC Purchase Agreement”) with Tysadco Partners, LLC
(“Tysadco”). Pursuant to the ELOC Purchase Agreement, Tysadco has agreed to purchase from the Company, from time to time
upon delivery by the Company to Tysadco of “Request Notices,” and subject to the other terms and conditions set forth in
the ELOC Purchase Agreement, up to an aggregate of $
In connection with the ELOC Purchase Agreement, the Company entered into a Registration Rights Agreement with Tysadco under which the Company agreed to file a registration statement with the Securities and Exchange Commission covering the shares of common stock issuable under the ELOC Purchase Agreement and conversion of the Commitment Fee Shares (the “Registration Rights Agreement”). There have not been any advances on this arrangement to date.
Contingent Compensation
On
August 22, 2023, the Company entered into an advisor agreement with an individual to provide consulting and business advisory services
to the Company. Pursuant to the agreement, the Company has agreed to compensate the consultant a fee of $
On
May 23, 2023, the Company appointed Joerg Sommer to be the Company’s President. In connection
with his appointment, the Company entered into an offer letter with Mr. Sommer (the “Offer Letter”) under which he was initially
paid an annual base salary of $
$
$
$
$
To date, the Company has not received gross proceeds pursuant to the Qualified Offering terms, and Mr. Sommer resigned on July 2, 2024.
Note 17 – Stockholders’ Equity
Preferred Stock
The Company has authorized shares of $ par value “blank check” preferred stock, of which shares have been designated Series A Preferred Stock and shares have been designated Series B Preferred Stock, See Note 15 above for a description of the features and issuances of the Series A Preferred Stock and Series B Preferred Stock.
On October 10, 2024, the Company filed with the State of Nevada a Certificate of Designation (the “Certificate of Designation”), which established a Series C Special Preferred Stock. There follows a summary of the rights, preferences, powers, restrictions and limitations of the Series C Special Preferred Stock:
| F-24 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Section 1. Designation, Amount and Par Value. The series of Preferred Stock shall be designated as Series C Special Preferred Stock (the “Series C Special Preferred Stock”) and the number of shares so designated shall be One Hundred (100). Each share of the Series C Special Preferred Stock shall have a par value of $.
Section 2. Fractional Shares. The Series C Special Preferred Stock may not be issued in fractional shares.
Section 3. Voting Rights. The holders of the Series C Special Preferred Stock shall, as a class, have rights in all matters requiring shareholder approval to a number of votes equal to two (2) times the sum of:
(a) The total number of shares of common stock which are issued and outstanding at the time of any election or vote by the shareholders; plus
(b) The number of votes allocated to shares of Preferred Stock issued and outstanding of any other class that shall have voting rights.
Section 4. Dividends. The Series C Special Preferred Stock shall not be entitled to any dividends.
Section 5. Liquidation. Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, the holders of Series C Special Preferred Stock shall not be entitled to any payment.
Section 6. Conversion. The Series C Special Preferred Stock shall have no rights of conversion.
Section 7. Protection Provisions. So long as any shares of Series C Special Preferred Stock are outstanding, the Company shall not, without first obtaining the unanimous written consent of the holders of Series C Special Preferred Stock, alter or change the rights, preferences or privileges of the Series C Special Preferred Stock so as to affect adversely the holders of Series C Special Preferred Stock.
Section 8. Waiver. Any of the rights, powers or preferences of the holders of the Series C Special Preferred Stock may be waived by the affirmative consent or vote of the holders of at least a majority of the shares of Series C Special Preferred Stock then outstanding.
Section 9. No Other Rights or Privileges. Except as specifically set forth herein, the holder(s) of the shares of Series C Special Preferred Stock shall have no other rights, privileges or preferences with respect to the Series C Special Preferred Stock.
Issuance of Series C Special Preferred Stock
Effective
November 8, 2024, the Company entered into an Exchange Agreement (the “Thomas Agreement”) with Isiah L. Thomas, III, the
Company’s Chairman and Chief Executive Officer, pursuant to which the Company issued
shares of Series C Special Preferred Stock in consideration of Mr. Thomas’ forgiveness of $
Common Stock
The Company is authorized to issue an aggregate of billion shares of common stock with a par value of $, as amended on October 15, 2024. As of December 31, 2024, there were shares of common stock issued and outstanding.
Common Stock Issued in Escrow Pursuant to Default Provisions of Debt Financing
On March 4, 2024, the Company issued shares of common stock in escrow pursuant to default provisions on debt financing received from the Sanguine Group. The note was never in default and the shares were cancelled pursuant to the subsequent debt repayment on April 22, 2024.
Common Stock Issued as a Promissory Note Commitment
On
April 19, 2024, the Company paid a commitment fee to AJB Capital in the form of shares of common stock in connection with the
issuance of the Fourth AJB Note (defined above). The relative fair value of the common stock was $
On
March 19, 2024, the Company paid a commitment fee to Joerg Sommer, the Company’s then President, in the form of
shares of common stock in connection with the issuance of the Second Sommer Note (defined above). The relative fair value of the
common stock was $
| F-25 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On
March 4, 2024, the Company paid a commitment fee to The Sanguine Group, LLC in the form of shares of common stock in connection
with the issuance of the First Sanguine Note (defined above). The relative fair value of the common stock was $
Common Stock Issued as Consideration for Related Party Debt Modifications
On
March 15, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., agreed to issue shares of common stock to officers
and directors in consideration for extending the maturity dates and terms of previously received debt financing, as listed below. The
aggregate fair value of the common stock was $
| Aggregate | ||||||||||||||
| Name | Position | Debts Extended | Shares | Fair Value | ||||||||||
| Isiah L. Thomas, III | Chairman and CEO | $ | $ | |||||||||||
| Dr. Kenneth Perego, II | Vice Chairman | |||||||||||||
| Joerg Sommer | Former President | |||||||||||||
| Dr. John McCabe | >5% Shareholder | |||||||||||||
| $ | $ | |||||||||||||
Common Stock Issued for Services, Related Parties
On
December 25, 2024, the Company issued shares of common stock to the Company’s Chief Financial Officer. The
fair value of the shares was $
On
September 25, 2024, the Company issued shares of common stock to the Company’s Chief Financial Officer. The
fair value of the shares was $
On
July 1, 2024, the Company issued shares of common stock to Todd Peterson as a signing bonus pursuant to his appointment as the
Company’s Chief Financial Officer. The fair value of the shares was $
On
March 15, 2024, the Company issued shares of common stock to officers and directors for services provided, as listed below. The aggregate
fair value of the common stock was $
| Name | Position | Shares | Fair Value | |||||||
| Isiah L. Thomas, III | Chairman and CEO | $ | ||||||||
| Dr. Kenneth Perego, II | Vice Chairman | |||||||||
| Terry Buffalo | Director | |||||||||
| Joerg Sommer | Former President | |||||||||
| $ | ||||||||||
On
June 15, 2023, the Company issued
shares of common stock to the Company’s then President, Joerg Sommer, for services provided. The aggregate fair value of the
common stock was $
Common Stock Issued for Services, Employees and Consultants
On
December 31, 2024, the Company issued shares of common stock in consideration of consulting services. The
fair value of the shares was $
On
December 31, 2024, the Company issued shares of common stock in consideration of consulting services. The
fair value of the shares was $
| F-26 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On
December 31, 2024, the Company issued shares of common stock to ClearThink Capital Partners, LLC, for services provided for the
period ending December 31, 2024. The fair value of the common stock was $
On
September 30, 2024, the Company issued shares of common stock to ClearThink Capital Partners, LLC, for services provided for
the period ending September 30, 2024. The fair value of the common stock was $
On
August 7, 2024, the Company issued shares of common stock to ClearThink Capital Partners, LLC, for services provided for the
period ending June 30, 2024. The fair value of the common stock was $
On
July 1, 2024, the Company issued shares of common stock in consideration of consulting services. The
fair value of the shares was $
On
June 30, 2024, the Company awarded shares of common stock to ClearThink Capital Partners, LLC, for services provided. The fair
value of the common stock was $
On
May 10, 2024, the Company issued shares of common stock in consideration of consulting services. The
fair value of the shares was $
On
March 31, 2024, the Company awarded shares of common stock to ClearThink Capital Partners, LLC, for services provided. The fair
value of the common stock was $
On
March 15, 2024, the Company issued an aggregate shares of common stock to two consultants for services provided. The aggregate
fair value of the common stock was $
On
February 9, 2024, the Company issued shares of common stock to ClearThink Capital Partners, LLC, for services provided. The fair
value of the common stock was $
On
November 21, 2023, the Company issued shares of common stock to a consultant for services provided. The aggregate fair value
of the common stock was $
On
October 4, 2023, the Company issued shares of common stock to ClearThink Capital Partners, LLC, for services provided. The aggregate
fair value of the common stock was $
On
September 18, 2023, the Company issued shares of common stock to ClearThink Capital Partners, LLC, for services provided. The
aggregate fair value of the common stock was $
Common Stock Sales
On
October 2, 2023, the Company sold shares of common stock at a price of $ per share for total cash proceeds of $
On
February 14, 2023, the Company sold shares of common stock at a price of $ per share for total cash proceeds of $
Common Stock Issued as a Promissory Note Commitment
On
June 23, 2023, the Company paid a commitment fee to AJB Capital in the form of shares of common stock in connection with the
issuance of the Third AJB Note (defined above). The aggregate fair value of the common stock was $
| F-27 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to the Second AJB Note, which was repaid on September 27, 2022, the Company, AJB Capital was entitled to be issued additional shares of common stock of the Company to the extent AJB Capital’s sale of their previously issued commitment fee shares resulted in net proceeds in an amount less than the defined commitment fee. As a result, the Company issued an additional shares of common stock to AJB Capital on September 15, 2022. The fair value of the shares was $, based on the closing price of the Company’s common stock on the date of grant. In addition, the Company issued another commitment shares to AJB Capital on December 7, 2023, with a fair value of $, based on the closing traded price on the date of grant.
Amortization of Stock-Based Compensation
A
total of $
Stock Incentive Plan
On February 12, 2020, the Company’s stockholders approved our 2019 Stock Incentive Plan (the “2019 Plan”), which had been adopted by the Company’s Board of Directors (the “Board”) as of December 10, 2019. The 2019 Plan provides for the issuance of up to shares of common stock to the Company and its subsidiaries’ employees, officers, directors, consultants and advisors, stock options (non-statutory and incentive), restricted stock awards, stock appreciation rights (“SARs”), restricted stock units (“RSUs”) and other performance stock awards. Options granted under the 2019 Plan may either be intended to qualify as incentive stock options under the Internal Revenue Code of 1986, or may be non-qualified options, and are exercisable over periods not exceeding ten years from date of grant. Unless sooner terminated in accordance with its terms, the Stock Plan will terminate on December 10, 2029.
Common Stock Options Issued for Services
On
November 29, 2023, the Company awarded options to purchase an aggregate
shares of common stock under the 2019 Plan at an exercise price equal to $
per share, exercisable over a
ten-year period to three consultants. The options vest in equal quarterly installments over two years. The aggregate estimated value
using the plain vanilla Black-Scholes Pricing Model, based on a volatility rate of %
and a call option value of $,
was $.
The options are being expensed over the vesting period, resulting in $
of stock-based compensation expense during the year ended December 31, 2023. As of December 31, 2024, a total of $
On August 22, 2023, the Company awarded options to purchase shares of common stock under the 2019 Plan at an exercise price equal to $ per share, exercisable over a ten-year period to a consultant. The estimated value using the plain vanilla Black-Scholes Pricing Model, based on a volatility rate of % and a call option value of $, was $. The options were fully vested, resulting in $ of stock-based compensation expense during the year ended December 31, 2023.
Common Stock Options Expired
On January 1, 2023, options to purchase a total of shares of common stock at a price $ per share expired.
| Shares Underlying | ||||||||||||||||||||
| Shares Underlying Options Outstanding | Options Exercisable | |||||||||||||||||||
| Weighted | ||||||||||||||||||||
| Shares | Average | Weighted | Shares | Weighted | ||||||||||||||||
| Range of | Underlying | Remaining | Average | Underlying | Average | |||||||||||||||
| Exercise | Options | Contractual | Exercise | Options | Exercise | |||||||||||||||
| Prices | Outstanding | Life | Price | Exercisable | Price | |||||||||||||||
| $ | - $ | years | $ | $ | ||||||||||||||||
| F-28 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| Weighted | ||||||||
| Average | ||||||||
| Number | Exercise | |||||||
| of Shares | Prices | |||||||
| Balance, December 31, 2022 | $ | |||||||
| Options granted | ||||||||
| Options exercised | ( | ) | ( | ) | ||||
| Balance, December 31, 2023 | ||||||||
| Options granted | ||||||||
| Options expired | ||||||||
| Balance, December 31, 2024 | $ | |||||||
| Exercisable, December 31, 2024 | $ | |||||||
Note 19 – Common Stock Warrants
Warrants
to purchase a total of
Amendment of Warrants
On
September 17, 2024, the Board approved the extension of warrants previously awarded to AJB Capital Investments LLC as part of debt
financing that originated on September 24, 2021, whereby the Company’s originally issued warrants consisting of, (i) a
three-year warrant to purchase
Warrants Issued for Debt Financing
On
April 19, 2024, the Company completed the sale of a (i) Promissory Note in the principal amount of $
Series A Preferred Stock Sale to Director
On
July 25, 2024, the Company received proceeds of $
Warrants Granted
On
April 3, 2023, the Company received proceeds of $
| F-29 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On
January 27, 2023, the Company received proceeds of $
On
January 9, 2023, the Company received proceeds of $
On
January 4, 2023, the Company received proceeds of $
The following is a summary of information about our warrants to purchase common stock outstanding at December 31, 2024.
| Shares Underlying | ||||||||||||||||||||
| Shares Underlying Warrants Outstanding | Warrants Exercisable | |||||||||||||||||||
| Weighted | ||||||||||||||||||||
| Shares | Average | Weighted | Shares | Weighted | ||||||||||||||||
| Range of | Underlying | Remaining | Average | Underlying | Average | |||||||||||||||
| Exercise | Warrants | Contractual | Exercise | Warrants | Exercise | |||||||||||||||
| Prices | Outstanding | Life | Price | Exercisable | Price | |||||||||||||||
| $ | -$ | years | $ | $ | ||||||||||||||||
The fair value of each warrant grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants under the fixed option plan:
| December 31, | December 31, | |||||||
| 2024 | 2023 | |||||||
| Average risk-free interest rates | % | % | ||||||
| Average expected life (in years) | ||||||||
| Volatility | % | % | ||||||
The
weighted average fair value of warrants granted with exercise prices at the current fair value of the underlying stock was approximately
$
| F-30 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is a summary of activity of outstanding common stock warrants:
| Weighted | ||||||||
| Average | ||||||||
| Number | Exercise | |||||||
| of Shares | Prices | |||||||
| Balance, December 31, 2022 | $ | |||||||
| Warrants granted | ||||||||
| Balance, December 31, 2023 | ||||||||
| Warrants granted | ||||||||
| Warrants cancelled | ( | ) | ( | ) | ||||
| Balance, December 31, 2024 | $ | |||||||
| Exercisable, December 31, 2024 | $ | |||||||
Note 20 – Segment Reporting
Operating
segments are defined as components of an enterprise with separate financial information, which are evaluated regularly by the chief operating
decision maker (“CODM”) and are used in resource allocation and performance assessments. The Company’s Chief Executive
Officer is the Company’s CODM. The Company is organized and operates as
The Company’s CODM reviews financial information and operational forecasts presented on a consolidated basis for the purpose of making operating decisions and assessing financial performance. The Company’s CODM assesses performance for the Company’s single reportable segment based on the Company’s net loss as reported on the consolidated statement of comprehensive income (loss).
Note 21 - Income Tax
The Company accounts for income taxes under FASB ASC 740-10, which requires use of the liability method. FASB ASC 740-10-25 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences.
For
the years ended December 31, 2024 and 2023, the Company incurred a net operating loss and, accordingly, no provision for income taxes
has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets.
At December 31, 2024, the Company had approximately $
The
provision (benefit) for income taxes for the years ended December 31, 2024 and 2023 were assuming a
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Federal statutory income tax rate | % | % | ||||||
| State income taxes | % | % | ||||||
| Change in valuation allowance | ( | )% | ( | )% | ||||
| Net effective income tax rate | ||||||||
| F-31 |
ONE WORLD PRODUCTS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of the Company’s deferred tax asset are as follows:
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carryforwards | $ | $ | ||||||
| Net deferred tax assets before valuation allowance | $ | $ | ||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax assets | $ | $ | ||||||
Based on the available objective evidence, including the Company’s history of its loss, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December 31, 2024 and 2023, respectively.
In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions.
Note 22 – Subsequent Events
Debt Financing, Related Parties
On
April 21, 2025, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received proceeds of $
On
April 7, 2025, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received proceeds of $
On
April 2, 2025, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $
On
March 24, 2025, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $
Common Stock Issued for Services, Related Parties
On
March 25, 2025, the Company issued shares of common stock to the Company’s Chief Financial Officer. The
fair value of the shares was $
| F-32 |
ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
ITEM 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2024 (the “Evaluation Date”). The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2024, our Principal Executive Officer and Principal Financial Officer, concluded that, as of such date, our disclosure controls and procedures were not effective at the reasonable assurance level.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management has conducted, with the participation of our Principal Executive Officer and our Principal Accounting Officer, an assessment, including testing of the effectiveness, of our internal control over financial reporting as of Evaluation Date. Management’s assessment of internal control over financial reporting was conducted using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013 Framework).
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013 Framework). Based on this assessment, Management identified the following three material weaknesses that have caused management to conclude that, as of December 31, 2024, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level:
1. We do not have a formal policy or written procedures for the approval, identification and reporting of related-party transactions. Our controls are not adequate to ensure that all material transactions and developments with related parties will be properly identified, approved and reported. In our assessment of our disclosure controls and procedures, management evaluated the impact of our failure to have policies and procedures for the identification, approval and reporting of related-party transactions and has concluded that the control deficiency that resulted represented a material weakness.
2. We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act. In our assessment of our disclosure controls and procedures, management evaluated the impact of our failure to have written documentation of our internal controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.
| 21 |
3. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. In our assessment of our disclosure controls and procedures, management evaluated the impact of our failure to have segregation of duties and has concluded that the control deficiency that resulted represented a material weakness.
To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.
Remediation of Material Weaknesses
To remediate the material weakness in our documentation, evaluation and testing of internal controls we plan to engage a third-party firm to assist us in remedying this material weakness once resources become available.
We also intend to remedy our material weakness with regard to insufficient segregation of duties by hiring additional employees in order to segregate duties in a manner that establishes effective internal controls once resources become available.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) or in other factors that occurred during the fourth fiscal quarter of 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. Other Information
| 22 |
PART III
ITEM 10. Directors, Executive Officers and Corporate Governance
Set forth below are the present directors and executive officers of the Company. There are no arrangements or understandings between any of the directors, officers and other persons pursuant to which such person was selected as a director or an officer.
| Name | Age | Position | ||
| Isiah L. Thomas, III | 63 | Chief Executive Officer, Chairman of the Board | ||
| Dr. Kenneth Perego, II | 55 | Vice Chairman of the Board | ||
| Terry Buffalo | 60 | Director | ||
| Todd Peterson | 55 | Chief Financial Officer |
Biographies
Set forth below are brief accounts of the business experience of each director and executive officer of the Company.
Isiah L. Thomas, III has been our Chief Executive Officer since June 2020, and our Chairman of the Board since December 2021. Mr. Thomas has also been the Chairman and Chief Executive Officer of Isiah International, LLC, a holding company with interests in a diversified portfolio of businesses, since 2011. Mr. Thomas also has been a Commentator and Analyst for NBA TV, since 2014, and Turner Sports, since 2012. He previously served as the President & Alternate Governor of the New York Liberty of the Women’s National Basketball Association from 2015 to February 2019, the Head Basketball Coach at Florida International University, from 2009 to 2012, the General Manager, President of Basketball Operation and Head Coach of the New York Knicks of the National Basketball Association (“NBA”), from 2006 to 2008, the Head Coach of the Indiana Pacers of the NBA from 2000 to 2003, the Owner of the Continental Basketball Association from 1998 to 2000, Minority Owner & Executive Vice President of the Toronto Raptors of the NBA from 1994 to 1998 and point guard for the Detroit Pistons of the NBA from 1981 to 1994. Mr. Thomas has served as a director of Get in Chicago, an organization focused on stopping gun and related violence in Chicago, since 2013, and as a director of Madison Square Garden Entertainment Corp. since April 2020. He is also the Founder of Mary’s Court Foundation, a charitable organization established in 2010. We believe that Mr. Thomas’s business experience qualifies him to serve as our chairman and CEO.
Dr. Kenneth Perego, II was a director of OWP Ventures prior to the Merger and was appointed to our Board of Directors pursuant to the Merger Agreement, before being appointed Vice Chairman of the Board on December 7, 2021. He has been a practicing urologic surgeon in private practice since 2001 with an emphasis in urologic oncology and reconstructive urology. He has a strong clinical background in research and is focused on new drug discovery. We believe that Dr. Perego’s medical experience qualifies him to serve as our director.
Terry Buffalo was appointed to serve as a director of One World Products on September 1, 2022. Mr. Buffalo established Buffalo Cannabis Advisors in 2022 and currently serves as its President, was the Chief Executive Officer and a director of American Cannabis Company from 2015 to 2021, and was the Chief Executive of First Midwest Securities, Inc. from 2002 to 2013. Prior to that, Mr. Buffalo was the President of American Investment Services from 1997 to 2002. In addition, Mr. Buffalo currently serves on the advisory board of Element Apothec since 2020. We believe that Mr. Buffalo’s investment banking and cannabis management experience qualifies him to serve as our director.
Todd Peterson, CPA was appointed to serve as the Company’s Chief Financial Officer on July 1, 2024. Mr. Peterson currently serves as the president of KSNE2 Enterprises, LLC, an accounting and consulting firm located in Las Vegas, Nevada specializing in publicly traded microcap companies, since August 2008, and was the chief financial officer of Digipath, Inc. from June 19, 2015 to June 18, 2021. Mr. Peterson also served as From February 2007 to August 2008, he was the senior accounting manager of Accuity Financial, an accounting firm located in Las Vegas, Nevada specializing in publicly traded microcap companies, Mr. Peterson was the audit manager of DeJoya Griffith and Company a PCAOB registered audit firm located in Las Vegas, Nevada providing audit and accounting services primarily to publicly traded microcap companies from November 2004 to February 2007, he was also the audit manager of Ocel, Heimer & Associates, Ltd., a regional audit firm located in Minneapolis, Minnesota from 1999 to 2004. Upon graduating from the University of St. Thomas with a Bachelor of Arts degree in accounting in 1997, Mr. Peterson worked as an accountant during 1998 for R.W. Ramsay & Associates, Ltd.
Family Relationships
There are no family relationships among any of our directors or executive officers.
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Board Committees and Audit Committee Financial Expert
We do not currently have a standing audit, nominating or compensation committee of the board of directors, or any committee performing similar functions. Our board of directors performs the functions of audit, nominating and compensation committees. No member of our board of directors qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K promulgated under the Securities Act.
Director Nominations
As of December 31, 2024, we did not affect any material changes to the procedures by which our shareholders may recommend nominees to our board of directors. We have not established formal procedures by which security holders may recommend nominees to the Company’s board of directors.
Code of Ethics
We have adopted a code of ethics that applies to our principal executive officers, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of our code of ethics may be obtained free of charge by contacting us at the address or telephone number listed on the cover page hereof.
Delinquent Section 16(a) Reports
The were no persons who, at any time during the fiscal year ended December 31, 2024, was a director, executive officer, or beneficial owner of more than 10% of our common stock that failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the most recent fiscal year, except for a Form 4 that has not been filed by Isiah L. Thomas, III for the issuance of 100 shares of Series C Special Preferred Stock that awarded Mr. Thomas voting control of the Company.
ITEM 11. Executive Compensation
Summary Compensation Table
The following summary compensation table sets forth the aggregate compensation we paid or accrued during the fiscal years ended December 31, 2024 and 2023 to Isiah L. Thomas, III, our Chief Executive Officer, and Todd Peterson, our Chief Financial Officer (together, our “Named Executive Officers”), that received total compensation in excess of $100,000 during 2024.
| Name and | Fiscal | Stock | ||||||||||||||
| Financial Position | Year | Salary | Awards | Total | ||||||||||||
| Isiah L. Thomas, III, | 2024 | $ | 120,000 | (1) | $ | 132,000 | (2) | $ | 252,000 | |||||||
| Chief Executive Officer and Chairman | 2023 | $ | 120,000 | (1) | $ | - | $ | 120,000 | ||||||||
| Todd Petesrson, | 2024 | $ | 48,000 | $ | 57,750 | (3) | $ | 105,750 | ||||||||
| Chief Financial Officer | 2023 | $ | - | $ | - | $ | - | |||||||||
(1) Consists of $120,000 and $120,000 of accrued salary for the years ended December 31, 2024 and 2023, respectively, of which $486,512 was paid on November 8, 2024 in the form of the issuance of 100 shares of Series C Special Preferred Stock, which gave Mr. Thomas voting control of the Company.
(2) On March 15, 2024, Mr. Thomas was awarded 2,000,000 shares of common stock. The fair value of the common stock was $132,000, based on the closing stock price on the grant date.
(3) Consists of quarterly awards of common stock in lieu of cash from March 15, 2024 through December 25, 2024, totaling 2,009,090 shares in the aggregate. The fair value of the common stock was $57,750, based on the closing stock price on the grant dates.
Employment Agreements
We entered into an employment agreement with Todd Peterson on July 1, 2024 under which he serves as our Chief Financial Officer. Mr. Peterson received an initial salary of $8,000 per month, and was awarded quarterly compensation of $15,000, payable in cash or shares of common stock at the Company’s discretion, on the fifth calendar day preceding each fiscal quarter. Upon termination of employment, the Stock Consideration will be pro-rated and determined based on the closing stock price on the Termination Date. In addition, Mr. Peterson was awarded a signing bonus of 250 shares of the Company’s common stock on July 1, 2024.
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Outstanding Equity Awards at Fiscal Year End
As of December 31, 2024, our Named Executive Officers had outstanding unexercised options as set forth below.
| Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option Exercise Price ($) | Option Expiration Date ($) | ||||||||||
| Isiah L. Thomas, III | 5,500,000 | (1) | - | $ | 0.13 | June 30, 2030 | ||||||||
| Todd Peterson | 125,000 | (2) | - | 0.13 | December 30, 2030 | |||||||||
(1) On January 21, 2021, the Company granted Mr. Thomas options to purchase 5,500,000 shares of our common stock, with half of the options vesting immediately on the grant date and the remaining 2,750,000 options vesting quarterly in increments of 250,000 options per quarter.
(2) On December 31, 2020, the Company granted Mr. Peterson options to purchase 125,000 shares of our common stock, vesting in quarterly increments over one year from the grant date.
Option Exercises and Stock Vested
None of our Named Executive Officers exercised any stock options or acquired stock through vesting of an equity award during the year ended December 31, 2024.
Director Compensation
The following table summarizes the compensation paid or accrued by us to our directors that are not Named Executive Officers for the year ended December 31, 2024.
| Name | Fees Earned or Paid in Cash | Stock Award | Option Awards | Non-Equity Incentive Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All other Compensation | Total | |||||||||||||||||||||
| Dr. Kenneth Perego II | $ | - | $ | 132,000 | (1) | $ | - | $ | - | $ | - | $ | - | $ | 132,000 | |||||||||||||
| Terry Buffalo | $ | - | $ | 132,000 | (2) | $ | - | $ | - | $ | - | $ | - | $ | 132,000 | |||||||||||||
(1) On March 15, 2024, we awarded Mr. Perego 2,000,000 shares of common stock. The fair value of the common stock was $132,000, based on the closing stock price on the grant date.
(2) On March 15, 2024, we awarded Mr. Buffalo 2,000,000 shares of common stock. The fair value of the common stock was $132,000, based on the closing stock price on the grant date.
Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors.
As of December 31, 2024, Dr. Perego held options to acquire 350,000 shares and, Mr. Buffalo did not own any outstanding options. As of December 31, 2024, no directors held any outstanding restricted stock units or other stock awards.
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ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of May 31, 2025, certain information with regard to the record and beneficial ownership of the Company’s common stock by (i) each person known to the Company to be the record or beneficial owner of 5% or more of the Company’s common stock, (ii) each director of the Company, (iii) each of the named executive officers, and (iv) all executive officers and directors of the Company as a group. The address of each of our directors and executive officers named in the table is c/o One World Products, Inc., 6605 Grand Montecito Pkwy., Suite 100, Las Vegas, NV 89149:
| Series A | Series B | Series C Special | Percent of | |||||||||||||||||||||||||||||||||
| Common Stock | Preferred Stock | Preferred Stock | Preferred Stock | Combined | ||||||||||||||||||||||||||||||||
| Name of Beneficial Owner(1) | Number of Shares | % of Class(2) | Number of Shares | % of Class | Number of Shares | % of Class | Number of Shares | % of Class(6) | Voting Power(7) | |||||||||||||||||||||||||||
| Officers and Directors: | ||||||||||||||||||||||||||||||||||||
| Isiah L. Thomas, III, Chairman and CEO(3) | 28,138,000 | 20.9 | % | - | - | 200,000 | 83.9 | % | 100 | 100 | % | 73.2 | % | |||||||||||||||||||||||
| Dr. Kenneth Perego II, Vice Chairman(4) | 17,785,000 | 15.6 | % | 26,000 | 22.7 | % | - | - | - | - | 4.1 | % | ||||||||||||||||||||||||
| Todd Peterson, Chief Financial Officer | 2,828,535 | 2.6 | % | - | - | - | - | - | - | * | ||||||||||||||||||||||||||
| Terry L. Buffalo, Director | 2,000,000 | 1.8 | % | - | - | - | - | - | - | * | ||||||||||||||||||||||||||
| Directors and Officers as a Group (4 persons) | 50,751,535 | 36.3 | % | - | - | - | - | - | - | 78.4 | % | |||||||||||||||||||||||||
| 5% Shareholders | ||||||||||||||||||||||||||||||||||||
| ISIAH International, LLC(3) | 28,138,000 | 20.9 | % | - | - | 200,000 | 83.9 | % | 100 | 100 | % | 73.2 | % | |||||||||||||||||||||||
| Dr. John McCabe(5) | 24,567,180 | 22.0 | % | 3,000 | 2.6 | % | 20,000 | 8.4 | % | - | - | 5.7 | % | |||||||||||||||||||||||
* less than 1%
| (1) | Except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock owned by such person. |
| (2) | Percentage of beneficial ownership is based upon 109,226,421 shares of common stock, 114,733 shares of Series A Preferred Stock, 238,501 shares of Series B Preferred Stock, and 100 shares of Series C Special Preferred Stock outstanding as of May 31, 2025. For each named person, this percentage includes common stock that the person has the right to acquire either currently or within 60 days of May 31, 2025, including through the exercise of an option; however, such common stock is not deemed outstanding for the purpose of computing the percentage owned by any other person. |
| (3) | Includes 5,500,000 shares of common stock that may be acquired upon exercise of a vested option, and 20,000,000 shares of common stock that may be acquired upon conversion of Series B Preferred Stock currently held by Isiah International, LLC. Mr. Thomas is the sole member and Chief Executive Officer of ISIAH International. |
| (4) | Includes 7,000,000 shares of common stock held by CB Medical, LLC, of which Dr. Kenneth Perego, II is the controlling member. Includes 350,000 shares of common stock that may be acquired under an option, and 550,000 shares of common stock that may be acquired under a warrant. In addition, includes 26,000 shares of Series A Preferred Stock, convertible into 2,600,000 shares of common stock with each share of preferred carrying 100 voting rights. |
| (5) | Includes 150,000 shares of common stock that may be acquired upon exercise of a vested warrant, and 300,000 shares of common stock that may be acquired upon conversion of Series A Preferred Stock, and 2,000,000 shares of common stock that may be acquired upon conversion of Series B Preferred Stock. The address for Mr. McCabe is 160 Kincaid Lane, Boyce, LA 71409. |
| (6) | The holders of the Series C Special Preferred Stock, as a class, have votes equal to two (2) times the sum of (a) the total number of shares of issued and outstanding common stock; plus (b) the number of votes allocated to shares of all other preferred stock issued and outstanding. |
| (7) | Each share of common stock is entitled to one vote per share, and each share of Preferred Stock carries a number of votes equal to the number of shares of common stock into which such Preferred Stock may then be converted. The Preferred Stock generally will vote together with the common stock and not as a separate class. |
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ITEM 13. Certain Relationships and Related Transactions, and Director Independence
Certain Relationships and Related Party Transactions
Other than the transactions described below, there has not been, nor is there currently proposed, any transaction or series of similar transactions to which we were or will be a party:
| ● | in which the amount involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years; and | |
| ● | in which any director, executive officer, stockholders who beneficially owns more than 5% of our common stock or any member of their immediate family had or will have a direct or indirect material interest. |
Advances by and repayments to Dr. Kenneth Perego, II, M.D., our Vice Chairman of the Board
On December 16, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $10,000 from Dr. Kenneth Perego, II, M.D., our Vice Chairman of the Board, pursuant to an unsecured promissory note due on demand that carries a 10% interest rate.
On November 29, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $24,195 from Dr. Kenneth Perego, II, M.D., our Vice Chairman of the Board, pursuant to an unsecured promissory note due on demand that carries a 10% interest rate.
On March 15, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., issued an unsecured promissory note in the amount of $337,000 to Dr. Kenneth Perego, II, M.D., our Vice Chairman of the Board, maturing on March 1, 2027, that carries a 10% interest rate. The note was issued in exchange for the cancellation of promissory notes in the aggregate amount of $337,000, consisting entirely of principal. On July 26, 2024, the Company repaid $150,000 of principal.
On March 12, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $100,000 from Dr. Kenneth Perego, II, M.D., our Vice Chairman of the Board, pursuant to an unsecured promissory note due on demand that carries a 10% interest rate. A total of $101,123, consisting of $100,000 of principal and $1,123 of interest, was repaid on April 22, 2024.
On February 26, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $27,000 from Dr. Kenneth Perego, II, M.D., our Vice Chairman of the Board, pursuant to an unsecured promissory note due on demand that carries a 10% interest rate. A total of $27,414, consisting of $27,000 of principal and $414 of interest, was repaid on April 22, 2024.
On January 11, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $10,000 from Dr. Kenneth Perego, II, M.D., our Vice Chairman of the Board, pursuant to an unsecured promissory note due on demand that carries a 10% interest rate. A total of $10,279, consisting of $10,000 of principal and $279 of interest, was repaid on April 22, 2024.
On January 8, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $10,000 from Dr. Kenneth Perego, II, M.D., our Vice Chairman of the Board, pursuant to an unsecured promissory note due on demand that carries a 10% interest rate. A total of $10,288, consisting of $10,000 of principal and $288 of interest, was repaid on April 22, 2024.
On September 11, 2023, the Company received an advance of $52,000 from Dr. Kenneth Perego, II, M.D., our Vice Chairman of the Board, pursuant to an unsecured promissory note due on demand that carried a 10% interest rate.
On August 31, 2023, the Company received an advance of $4,000 from Dr. Kenneth Perego, II, M.D., pursuant to an unsecured promissory note due on demand that carried a 6% interest rate.
On August 14, 2023, the Company received an advance of $6,000 from Dr. Kenneth Perego, II, M.D., pursuant to an unsecured promissory note due on demand that carried a 6% interest rate.
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Series A Preferred Stock Sales to Dr. Kenneth Perego, II, M.D., our Vice Chairman of the Board
On July 25, 2024, the Company and the Perego Trust (“Perego”), an entity controlled by Dr. Kenneth Perego, II, M.D., our Vice Chairman of the Board, entered into a Securities Purchase Agreement (the “Purchase Agreement”) under which Perego purchased from the Company 15,000 shares of the Company’s Series A Preferred Stock (“Series A Preferred Stock”), convertible into an aggregate of 150,000 shares of the Company’s common stock, for a purchase price of $10 per share, and a purchase price of $150,000. Each share of Series A Preferred Stock has a Stated Value of $10 and is convertible into common stock at a conversion price equal to $0.10.
Advances by and Repayments to Isiah L. Thomas, III, our Chairman of the Board and CEO
On December 16, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., issued an unsecured promissory note in the amount of $8,000 to Isiah L. Thomas, III, our Chairman of the Board and CEO, due on demand, that carries a 10% interest rate.
On March 15, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., issued an unsecured promissory note in the amount of $27,467 to Isiah L. Thomas, III, our Chairman of the Board and CEO, maturing on March 1, 2027, that carries a 10% interest rate. The note was issued in exchange for the cancellation of another promissory note, consisting of $24,500 of principal and $2,967 of accrued interest.
Debt and Common Stock Issued to Dr. John McCabe
On December 26, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., issued an unsecured promissory note in the amount of $30,000 to Dr. John McCabe, an affiliate investor, due on demand, that carries a 10% interest rate.
On March 15, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., issued an unsecured promissory note in the amount of $1,803,398 to Dr. John McCabe, an affiliate investor, maturing on March 1, 2027, that carries a 7% interest rate. The note was issued in exchange for the cancellation of a $840,740 convertible note, consisting of $750,000 of principal and $90,740 of accrued interest., and other promissory notes in the aggregate amount of $962,658, consisting of a total of $850,000 of principal and $112,658 of accrued interest.
On March 1, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $100,000 from Dr. John McCabe, an affiliate investor, pursuant to an unsecured promissory note, maturing on March 1, 2025, that carried an 8% interest rate. The note was cancelled on March 15, 2024, in exchange for the note maturing on March 1, 2027, listed above.
On January 29, 2024, the Company, through its wholly-owned subsidiary, OWP Ventures, Inc., received an advance of $50,000 from Dr. John McCabe, an affiliate investor, pursuant to an unsecured promissory note, maturing on January 29, 2025, that carried an 8% interest rate. The note was cancelled on March 15, 2024, in exchange for the note maturing on March 1, 2027, listed above.
On February 14, 2023, the Company sold 3,000,000 shares of common stock at a price of $0.10 per share to Dr. John McCabe, a greater than 10% stockholder, for total proceeds of $300,000.
Director Independence
Our board of directors currently consists of Isiah L. Thomas, III, our Chief Executive Officer and Chairman, Dr. Kenneth Perego, II, our Vice Chairman, and Terry Buffalo. As an executive officer, Mr. Thomas does not qualify as “independent” under standards of independence set forth by national securities exchanges. Our Board of Directors has determined that Dr. Kenneth Perego, II and Terry Buffalo are “independent” in accordance with the NASDAQ Capital Market’s requirements. As our common stock is currently quoted on the OTCQB, we are not currently subject to corporate governance standards of listed companies.
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ITEM 14. Principal AccountING Fees And Services
M&K CPAS, PLLC was the Company’s independent registered public accounting firm for the years ended December 31, 2024 and 2023.
Audit and Non-Audit Fees
The following table sets forth fees billed by our auditors during the last two fiscal years for services rendered for the audit of our annual financial statements and the review of our quarterly financial statements, services by our auditors that are reasonably related to the performance of the audit or review of our financial statements and that are not reported as audit fees, services rendered in connection with tax compliance, tax advice and tax planning, and all other fees for services rendered.
| Years Ended December 31, | ||||||||
| 2024 | 2023 | |||||||
| Audit fees(1) | $ | 80,050 | $ | 66,300 | ||||
| Audit related fees | - | - | ||||||
| Tax fees | - | - | ||||||
| All other fees | - | - | ||||||
| Total | $ | 80,050 | $ | 66,300 | ||||
(1) Audit fees were principally for audit services and work performed in the review of the Company’s quarterly reports on Form 10-Q.
All of the 2024 and 2023 services described above were approved by the Board of Directors in accordance with the SEC rule that requires audit committee pre-approval of audit and non-audit services provided by the Company’s independent registered public accounting firm. The Board of Directors has considered whether the provisions of such services, including non-audit services, is compatible with maintaining M&K CPAS, PLLC ‘s independence and has concluded that it is independent.
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PART IV
ITEM 15. Exhibits and Financial Statement Schedules
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* Filed herewith.
+ Compensatory plan or agreement.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| ONE WORLD PRODUCTS, INC. | ||
| (Registrant) | ||
| By: | /s/ Isiah L. Thomas III | |
| Isiah L. Thomas, III | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| By: | /s/ Todd Peterson | |
| Todd Peterson | ||
| Chief Financial Officer | ||
| (Principal Financial Officer) | ||
| Dated: | June 2, 2025 | |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant, and in the capacities and on the dates indicated:
| Signature | Title | Date | ||
| /s/ Isiah L. Thomas, III | Chief Executive Officer and Chairman | |||
| Isiah L. Thomas, III | (Principal Executive Officer) | June 2, 2025 | ||
| /s/ Todd Peterson | Chief Financial Officer | June 2, 2025 | ||
| Todd Peterson | (Principal Financial Officer) | |||
/s/ Dr. Kenneth Perego, II |
Vice Chairman of the Board | June 2, 2025 | ||
| Dr. Kenneth Perego, II | ||||
s/ Terry Buffalo |
Director | June 2, 2025 | ||
| Terry Buffalo |
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