Deconsolidation of Foreign Subsidiaries

9 Months Ended

Sep. 30, 2024

Deconsolidation Of Foreign Subsidiaries

Deconsolidation of Foreign Subsidiaries

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 Procedures are similar to Chapter 11 of the Bankruptcy Code in the United States, whereby the Company would restructure its debts and continue to operate. The plan of reorganization and assessment of valid claims had not yet been determined, or approved by the court and creditors as of October 1, 2024, when the Company amended its filing to completely liquidate the assets of the Company. OWP SAS has currently identified approximately 23 creditors, consisting of approximately $1.2 million of financial obligations, collectively. In accordance with ASC 810-10-15, the Company had deconsolidated its foreign subsidiaries. Given the lack of independently identifiable operations, the Company has also deconsolidated its non-operating shell entities, Agrobase, S.A.S. and Hope Colombia, S.A.S (collectively, the “Foreign Subsidiaries”). 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. There were no income, losses or cash flows within the Foreign Subsidiaries between the date of petition on December 22, 2023 and December 31, 2023. A summary of the deconsolidated condensed combined balance sheets and statement of operations and comprehensive loss of the Foreign Subsidiaries is as follows:

FOREIGN SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30,			December 31,
	2024			2023
Assets
Current assets:
Cash	$	8,472		$	1,660
Inventory		37,393			45,791
Other current assets		15,971			2,687
Total current assets		61,836			50,138
Other assets		207,928			226,542
Fixed assets, net		2,306,501			2,346,281
Total Assets	$	2,576,265		$	2,622,961
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	331,121		$	392,403
Accrued expenses		481,277			482,587
Notes payable		168,099			183,148
Intercompany liabilities owed to OWP Ventures, Inc.		7,737,202			7,348,034
Total current liabilities		8,717,699			8,406,172
Stockholders’ Equity (Deficit):
Accumulated other comprehensive income		62,311			-
Accumulated (deficit)		(6,203,745	)		(5,783,211	)
Total Stockholders’ Equity (Deficit)		(6,141,434	)		(5,783,211	)
Total Liabilities and Stockholders’ Equity (Deficit)	$	2,576,265		$	2,622,961

ONE WORLD PRODUCTS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

FOREIGN SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

	For the Three			For the Nine
	Months Ended			Months Ended
	September 30,			September 30,
	2024			2024
Revenues	$	-		$	-
Cost of goods sold		-			-
Gross profit		-			-
Operating expenses:
General and administrative		67,115			208,062
Professional fees		12,121			44,250
Depreciation expense		13,260			39,780
Total operating expenses		92,496			292,092
Operating loss		(92,496	)		(292,092	)
Other income (expense):
Interest expense		(48,329	)		(128,442	)
Total other expense		(48,329	)		(128,442	)
Net loss	$	(140,825	)	$	(420,534	)
Other comprehensive loss:
Gain on foreign currency translation	$	3,625		$	62,311
Net loss	$	(137,200	)	$	(358,223	)

FOREIGN SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

	For the Nine
	Months Ended
	September 30,
	2024
Cash flows from operating activities
Net loss	$	(420,534	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		39,780
Decrease (increase) in assets:
Inventory		8,398
Other current assets		(13,284	)
Other assets		18,614
Increase (decrease) in liabilities:
Accounts payable		(61,282	)
Accrued expenses		(16,359	)
Accrued interest on intercompany loans		104,210
Net cash used in operating activities		(340,457	)
Cash flows from financing activities
Proceeds received from intercompany loan		284,958
Net cash provided by financing activities		284,958
Effect of exchange rate changes on cash		62,311
Net increase (decrease) in cash		6,812
Cash - beginning		1,660
Cash - ending	$	8,472
Supplemental disclosures:
Interest paid	$	-
Income taxes paid	$	-