One World Products, Inc.

Previous wording

Due to challenging economic conditions and under prior management, OWP SAS experienced significant operational and managerial challenges in 2022 and 2023, resulting its accumulation of financial obligations of approximately $1.2 million, which are substantially past due. 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 $242,631 and $1,564,823 for the nine months ended September 30, 2024 and the year ended December 31, 2023, respectively.

Current wording

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.

Previous wording

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 intends to establish an export business within the free trade zone using these licenses.

Current wording

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.

Previous wording

Cost of goods sold for the three months ended September 30, 2024 were $310, compared to $767 for the three months ended September 30, 2023, a decrease of $457, or 60%. Cost of goods sold for our CBD product consists primarily of finished goods sold, while costs of goods related to our cannabis seeds in the prior period consisted primarily of labor, agricultural raw materials, depreciation and overhead. Costs of goods sold decreased as we transitioned to the sale of CBD products and sales decreased. Our profit margin during the three months ended September 30, 2024 was 80%, compared to 87% for the three months ended September 30, 2023.

Current wording

Cost of goods sold for the three months ended March 31, 2025 were $295, compared to $49 for the three months ended March 31, 2024, an increase of $246, or 502%. Cost of goods sold for our CBD product consists primarily of finished goods sold. Costs of goods sold increased commensurate with our increased sales of CBD products. Our profit margin during the three months ended March 31, 2025 was 78%, compared to 83% for the three months ended March 31, 2024.

Previous wording

General and administrative expenses for the nine months ended September 30, 2024 were $552,874, compared to $907,595 during the nine months ended September 30, 2023, a decrease of $354,721, or 39%. The expenses for the current period consisted primarily of compensation expenses, office rent, and travel costs. 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 management and shifted our focus to operations within the United States. General and administrative expenses included non-cash, stock-based compensation of $59,250 and $177,891 during the nine months ended September 30, 2024 and 2023, respectively.

Current wording

General and administrative expenses for the three months ended March 31, 2025 were $98,668, compared to $198,847 during the three months ended March 31, 2024, a decrease of $100,179, or 50%. The expenses for the current period consisted primarily of compensation expenses, office rent, advertising and travel costs. General and administrative expenses decreased primarily due to decreased advertising, promotion, and salaries and wages in the current period. General and administrative expenses included non-cash, stock-based compensation of $15,000 and $33,000 during the three months ended March 31, 2025 and 2024, respectively.

Previous wording

Professional fees for the three months ended September 30, 2024 were $169,596, compared to $236,139 during the three months ended September 30, 2023, a decrease of $66,543, or 28%. Professional fees included non-cash, stock-based compensation of $21,564 and $147,367 during the three months ended September 30, 2024 and 2023, respectively. Professional fees increased primarily due to increased stock-based compensation issued to consultants during the current period.

Current wording

Professional fees for the three months ended March 31, 2025 were $28,308, compared to $578,671 during the three months ended March 31, 2024, a decrease of $550,363, or 95%. Professional fees included non-cash, stock-based compensation of $3,808 and $462,933 during the three months ended March 31, 2025 and 2024, respectively. Professional fees decreased primarily due to decreased stock-based compensation issued to directors and consultants during the current period.

Previous wording

Other expenses, on a net basis, for the nine months ended September 30, 2024 were $1,778,337, compared to other expenses, on a net basis, of $172,766 during the nine months ended September 30, 2023, an increase in net expenses of $1,605,571, or 929%. Other expenses consisted of an early extinguishment of debt in the amount of $724,086 related to common stock issued to related parties as commitment shares on debt modifications, a $242,631 loss on deconsolidation of foreign subsidiaries, and $811,620 of interest expense, including $349,731 of stock-based finance costs on the amortization of debt discounts for the nine months ended September 30, 2024, compared to $177,169 of interest expense, including $12,684 of stock-based finance costs on the amortization of debt discounts, as partially offset by a gain on early extinguishment of debt of $4,397 on the termination of long term leases and $6 of interest income for the nine months ended September 30, 2023.

Current wording

Other expenses, on a net basis, for the three months ended March 31, 2025 were $129,766, compared to other expenses, on a net basis, for the three months ended March 31, 2024 of $923,737, a decrease in net expenses of $793,971, or 86%. Other expenses consisted of $129,766 of interest expense, including $30,658 of stock-based finance costs on the amortization of debt discounts for the three months ended March 31, 2025, compared to an early extinguishment of debt in the amount of $724,086 related to common stock issued to related parties as commitment shares on debt modifications, a $97,672 loss on deconsolidation of foreign subsidiaries, and $101,979 of interest expense, including $46,030 of stock-based finance costs on the amortization of debt discounts for the three months ended March 31, 2024.

Previous wording

The following is a summary of the Company’s cash flows provided by (used in) operating, investing, financing activities and effect of exchange rate changes on cash for the nine months ended September 30, 2024 and 2023:

Current wording

The following is a summary of the Company’s cash flows provided by (used in) operating, investing, financing activities and effect of exchange rate changes on cash for the three months ended March 31, 2025 and 2024:

Previous wording

During the nine months ended September 30, 2024, net cash used in operating activities was $1,010,268, compared to net cash used in operating activities of $1,043,238 for the nine months ended September 30, 2023. The cash used in operating activities was primarily attributable to our net loss.

Current wording

During the three months ended March 31, 2025, net cash used in operating activities was $52,095, compared to net cash used in operating activities of $249,750 for the three months ended March 31, 2024. The cash used in operating activities was primarily attributable to our net loss.

Previous wording

During the nine months ended September 30, 2024, net cash provided by financing activities was $1,208,500, compared to net cash provided by financing activities of $874,500 for the nine months ended September 30, 2023. The current period consisted of $150,000 of proceeds received on the sale of preferred stock and $2,075,500 of proceeds received on debt financing, as partially offset by $1,017,000 of debt repayments, compared to $250,000 of proceeds received on the sale of preferred stock, $300,000 from the sale of common stock, $262,500 of proceeds received on debt financing and $62,000 of proceeds received on debt financing received by related parties during the nine months ended September 30, 2023.

Current wording

During the three months ended March 31, 2025, net cash provided by financing activities was $10,000, compared to net cash provided by financing activities of $332,000 for the three months ended March 31, 2024. The current period consisted of $10,000 of proceeds received on debt financing, compared to $285,000 of proceeds received on debt financing, $347,000 of proceeds received on debt financing received by related parties, as partially offset by $300,000 of debt repayments during the three months ended March 31, 2024.

Previous wording

As of September 30, 2024, our balance of cash on hand was $81,630, and we had negative working capital of $3,154,500 and an accumulated deficit of $30,230,366. We are too early in our development stage to project future revenue levels, and may not be able to generate sufficient funds to sustain our operations for the next twelve months. Accordingly, we will need to raise additional cash to fund our operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Current wording

As of March 31, 2025, our balance of cash on hand was $361, and we had negative working capital of $3,351,082 and an accumulated deficit of $31,120,364. We are too early in our development stage to project future revenue levels, and may not be able to generate sufficient funds to sustain our operations for the next twelve months. Accordingly, we will need to raise additional cash to fund our operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

Previous wording

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 revenues in the current period consisted of the sale of our CBD rub, and in the prior period revenues consisted entirely of the sale of seeds. The sale of seeds included multi-element arrangements whereby the Company collected 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 had a right of first refusal to purchase products resulting from the harvest.

Current wording

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 revenues consisted of the sale of our Pro-11 CBD rub cannisters.

Previous wording

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 and CBD derived products.

Current wording

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.