As filed with the Securities and Exchange Commission on September 12, 2019 May 15, 2015.
Registration No. 333-200529 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 5Form S-1
to
FORM S-1
REGISTRATION STATEMENT
Under
The Securities Act of UNDER THE SECURITIES ACT OF 1933
Punto Group, Corp.
(Exact name of registrant as specified in its charter)
ONE WORLD PHARMA, INC. |
(Exact name of registrant as specified in its charter) |
Nevada | 61-1744826 | |||||
|
|
| ||||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
Punto Group, Corp.
1810 E. Sahara Ave., Office 2163471 West Oquendo Road, Suite 301
Las Vegas, NV 8910489118
(702) 605-0605(800) 605-3210
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
INCORP SERVICES, INC.Craig Ellins
2360 CORPORATE CIRCLE, STE. 400Chief Executive Officer
HENDERSON, NEVADA 89074-7722One World Pharma, Inc.
Tel. (702) 866-25003471 West Oquendo Road, Suite 301
Las Vegas NV 89118
(800) 605-3210
(Name, address, including zip code, and telephone number, including area code, of agent for service)
1
Copies of Communications to:
Alison Newman, Esq.
Zev M. Bomrind, Esq.
Fox Rothschild LLP
101 Park Avenue
New York, New York 10178
(212) 878-7997
Approximate date of commencement of proposed sale to the public:As soon as practicable after the effective date of this Registration Statement.registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box:xbox. [X]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:¨offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:¨offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:¨offering. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. (check one)
Large accelerated filer [ ] | Accelerated filer [ ] | |
Non-accelerated filer [X] | Smaller reporting company [X] | |
Emerging growth company [X] |
CALCULATION OF REGISTRATION FEE |
Title of Each Class of Securities to be Registered | Amount to be | Proposed Maximum Offering Price Per Share(2) | Proposed | Amount of Registration Fee | ||||||||||||
Common stock, par value $0.001 per share | 9,824,359 | $ | 3.80 | $ | 37,332,564.20 | $ | 4,524.71 |
(1) | In accordance with Rule 416(a) under the Securities Act of 1933, as amended (the “Securities Act”), the Registrant is also registering hereunder an indeterminate number of shares that may be issued and resold resulting from stock splits, stock dividends or similar transactions. |
(2) | The proposed maximum offering price per share and the proposed maximum aggregate offering price have been estimated solely for the purpose of calculating the amount of the registration fee in accordance with Rule 457(c) under the Securities Act of 1933 on the basis of the average of the high and low prices of the Common Stock on the OTC Markets on September 10, 2019, a date within five trading days prior to the date of the filing of this registration statement. |
Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting companyx
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
Securities to be Registered | Amount To Be Registered(1) |
| Offering Price Per Share(2) |
| Aggregate Offering Price |
| Registration Fee |
Common Stock: | 4,000,000 | $ | 0.02 | $ | 80,000 | $ | 10.91 |
(1) In the event of a stock split, stock dividend or similar transaction involving our common stock, the number of shares registered shall automatically be increased to cover the additional shares of common stock issuable pursuant to Rule 416 under the Securities Act of 1933, as amended.
(2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(a) of the Securities Act.
The registrantRegistrant hereby amends this registration statementRegistration Statement on such date or dates as may be necessary to delay its effective date until the registrantRegistrant shall file a further amendment which specifically states that this registration statementRegistration Statement shall thereafterhereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statementRegistration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this preliminary prospectus is not complete and may be changed. These securitiesWe may not be soldsell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities nor does it seekand we are not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION, DATED SEPTEMBER __, 2019
PROSPECTUS
ONE WORLD PHARMAM, INC.
PUNTO GROUP, CORP.
4,000,000SHARES OF COMMON STOCK9,824,359 Shares of Common Stock
$0.02 PER SHARE
This is the initial offering of common stock of Punto Group, Corp. and no public market currently exists for the securities being offered. We are offering for sale 4,000,000 shares of common stock at a fixed price of $0.02 per share. There is no minimum number of shares that must be sold by us forprospectus relates to the offering to proceed, and weresale by the selling shareholders identified herein of up to9,824,359.We will retain thenot receive any proceeds from the sale of any ofthese shares by the offered shares. selling shareholders.
The offering is being conducted on a self-underwritten, best efforts basis, which means our President, Andrei Kriukov, will attempt toselling shareholders may sell the shares. This Prospectus will permit our President to sell the shares directly to the public, with no commission or other remuneration payable to him for any shares he may sell. In offering the securities on our behalf, he will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities and Exchange Act of 1934. The shares will be offered at a fixed price of $0.02 per share for a period of two hundred and forty (240) days from the effective date of this prospectus. The offering shall terminate on the earlier of (i) when the offering period ends (240 days from the effective date of this prospectus), (ii) the date when the sale of all 4,000,000 shares is completed, (iii) when the Board of Directors decides that it is in the best interest of the Company to terminate the offering prior the completion of the sale of all 4,000,000 shares registered under the Registration Statement of which this Prospectus is part.
There is no assurance that all or anya portion of the shares of Common Stock beneficially owned by them and offered by ushereby from time to time directly or through one or more underwriters, broker-dealers or agents. Please see the section entitled “Plan of Distribution” on page 32 of this prospectus for more information. For a list of the selling shareholders, see the section entitled “Selling Shareholders” on page 29 of this prospectus. We will be sold. We may not raise sufficient fundsbear all fees and expenses incident to cover our offering expenses.Punto Group, Corp. is a development stage company and has recently started its operation. To date we have been involved primarily in organizational activities. We do not have sufficient capital for operations. Any investment inobligation to register the shares offered herein involves a high degree of risk. You should only purchase shares if you can afford a loss of your investment. Common Stock.
Our independent registered public accountant has issued an audit opinion for Punto Group, Corp. which includes a statement expressing substantial doubt as to our ability to continue as a going concern.
There has been no market for our securities and a public market may never develop, or, if any market does develop, it may not be sustained. Our common stockCommon Stock is not traded on any exchange or on the over-the-counter market. After the effective date of the registration statement relating to this prospectus, we hope to have a market maker file an application with the Financial Industry Regulatory Authority (“FINRA”) for our common stock to be eligible for trading on the Over-the-Counter Bulletin Board. To be eligible for quotation, issuers must remain current in their quarterly and annual filings with the SEC. If we are not able to pay the expenses associated with our reporting obligations we will not be able to apply for quotationquoted on the OTC Bulletin Board. We do not yet have a market maker who has agreedPink under the symbol “OWPC.” Prior to file such application. There can be no assurance thatFebruary 7, 2019 the symbol for our common stock will ever beCommon Stock was “PNTT.” On September 10, 2019, the closing price per share of our Common Stock as quoted on a stock exchange or a quotation service or that any market for our stock will develop.the OTC Pink was $3.80 per share.
We are a “shell company” withinmay amend or supplement this prospectus from time to time by filing amendments or supplements as required. You should read the meaning of Rule 405, promulgated pursuant to Securities Act, because we have nominal assetsentire prospectus and nominal operations. Accordingly, the ability of holders of our common stock to re-sell their shares may be limited by applicable regulations. For us to cease being a “shell company” we must have more than nominal operations and more than nominal assetsany amendments or assets which do not consist solely of cash or cash equivalents.supplements carefully before you make your investment decision.
We are an “emerging growth company” under the federal securities laws and, as such, may elect to comply with certain reduced public company reporting requirements.
Investing in our common stockCommon Stock involves a high degree of risk. See “Risk Factors”risks. You should carefully read the “Risk Factors” beginning on page 7.3 of this prospectus before investing.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined ifpassed upon the adequacy or accuracy of this prospectus is truthful or complete.prospectus. Any representation to the contrary is a criminal offense.
Prospectus dated [●], 2019.
SUBJECT TO COMPLETION, DATED _________________, 2014
TABLE OF CONTENTS
Prospectus Summary | 1 | |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
| ||
Security Ownership of Certain Beneficial Owners and Management | 25 | |
Certain Relationships and Related Party Transactions and Director Independence | 26 | |
Description of Securities | 27 | |
Selling Shareholders | 29 | |
Plan of Distribution | 32 | |
Legal Matters | 34 | |
Experts | 34 | |
About this Prospectus | 34 | |
Where You Can Find More Information | 34 | |
Index to Consolidated Financial Statements | F-1 |
We have not authorized any dealer, salespersonThe market data and certain other statistical information used throughout this prospectus are based on independent industry publications, governmental publications, reports by market research firms or other person to give any information or represent anything not contained in this prospectus. you should not relyindependent sources. Some data are also based on any unauthorized information. this prospectus is not an offer to sell or buy any shares in any state or other jurisdiction in which it is unlawful. the information in this prospectus is current as of the date on the cover. youour good faith estimates.
You should rely only on the information contained in or incorporated by reference into this prospectus.
4
PROSPECTUS SUMMARY
As used We have not authorized anyone to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume that the information provided in this prospectus unlessis accurate as of any date other than the context otherwise requires, “we,” “us,” “our,” and “Punto Group, Corp.” refers to Punto Group, Corp. The followingdate on the front of this prospectus.
This summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all of the information that may be important to you.you should consider before investing in our securities. You should read carefully the entire prospectus, including “Risk Factors” and the financial statements and notes thereto, before making an investment decisiondecision.
Unless otherwise indicated or the context otherwise requires, all references to purchase our common stock.the “Company,” “we,” “us” or “our” and similar terms in this prospectus refer to One World Pharma, Inc. and its subsidiaries.
PUNTO GROUP, CORP.One World Pharma, Inc.
Punto Group, Corp. intendsWe plan to developbe a producer of raw cannabis and hemp plant ingredients for both medical and industrial uses across the internet-based project management software for small business. Our project management software enables organizationsglobe. We have received licenses from Colombian regulators to plan, managecultivate, produce and execute any business projects. Our software applications will help organizations better optimize all kind of project resources and plan and control all business processes online. We are going to provide an online servicedistribute the raw ingredients of the project management system, a mobile application,cannabis and technical support. Our online systemhemp plant for medicinal, scientific and software applications address a broad rangeindustrial purposes. Specifically, we are one of business activity,the first companies in Colombia to receive licenses for seed, cultivation, extraction and export from planning to task execution.the Colombian government (the “Licenses”).
We planted our first crop of cannabis in Popayan, Colombia in 2018, and began initial harvesting in the first quarter of 2019 for the purpose of further research and development activities and quality control testing of the cannabis we have produced. We intend to offer a complete solution for small businesses that allows themcommence limited shipping of non-psychoactive products to manage projects online with easy access to the user's files in real time and project’s team collaboration. .The main result for businesses is mobility in decision-making and real-time projects’ operation controlling online. We believe that our system is easy-to-use, highly productive and offer real-time project management in any location. However, there is no assurance that we will achieve our business objectives in the future. There is no guarantee that we will sell the minimum amount of the shares we need to start our operations or assurance that we will generate any revenue.
We are a development stage company and intend to use the net proceeds from this offering to develop our business operations (See “Description of Business” and “Use of Proceeds”). To implement our plan of operations we require a minimum of $32,000 for the next twelve months as described in our Plan of Operations. We expect our operations to begin to generate revenues during months 6-12 after completion of this offering. However, there is no assurance that we will generate any revenuecustomers in the first 12 months after completionquarter of 2020. Although we hold the four Colombian Licenses, we will need to obtain additional approvals from Colombian regulators before we can fully execute our offering or ever generate any revenue.business plan, particularly with respect to the sale psychoactive products.
BeingOur first cultivation and extraction sites are located in Popayan, Colombia. Our facility encompasses approximately 30 acres and includes a development stage company,covered greenhouse built specifically to cultivate high-grade cannabis and hemp. In addition, we have very limited operating history.entered into agreements with local farming co-operatives that include small farmers and indigenous tribe members, under which they will cultivate cannabis on up to approximately 140 acres of land using our seeds and propagation techniques, and sell their harvested products to us on an exclusive basis.
We employ modern propagation and cultivation techniques drawn from U.S. practices that allow us to rapidly multiply the cells of a specific plant strain to produce large numbers of genetically consistent progeny plants using our own plant tissue culture method. We believe this technique allows us to cultivate plants which are stable, robust and able to produce genetically superior cannabis and hemp derived products. We intend to have our processes and products certified as compliant with international standards, including Good Agricultural Practices (“GAP”), Good Manufacturing Practice (“GMP”) and the standards set forth in EU Pharmacopoeia, a publication that sets forth quality standards applicable to the European pharmaceutical industry.
We intend to build additional covered greenhouse capacity in excess of 1 million square feet. We are building out our extraction and production facility and expect it to be operational before the end of 2019. In addition, we have a contractual relationship with a local co-operative under which they agree to assist us in cultivation at our facility.
We have received approval from the Instituto Colombiano Agropecuario (the “ICA”) to begin cultivating 13 proprietary high THC cannabis strains and 2 high CBD strains. We have also received approval to grow 68 mother plants to begin this characterization process, which we have commenced. If we do not generate any revenue,are successful in this process, the strains will be entered in the ICA cultivar registry. Only registered strains may be sold under Colombian law.
We believe there is a large and growing market for cannabis and hemp products around the world. The market for CBD has shown particular demand and growth. We will pursue sales into this market using a direct sales force to establish direct customer relationships and distributor relationships. We will seek out customers who have large and recurring needs and demands. Countries that we intend to focus on include EU countries, the UK, Poland, Israel, and Canada.
We expect to commence limited shipping of non-psychoactive products to customers in the first quarter of 2020. However, we are subject to numerous risks that may delay the date of first sale, including regulatory requirements imposed or that may in the future be imposed by the Colombian regulating authorities. In addition, we will need a minimumto obtain quota approval from Colombian regulators before making we can make sales of $10,000 of additional funding to pay for ongoing SEC filing requirements. We do not currently have any arrangements for additional financing. our psychoactive products.
Our principal executive offices are located there at 1810 E. Sahara Ave.3471 West Oquendo Rd., Office 216Suite 301, Las Vegas, NV 89104.Nevada 89118. Our phonetelephone number is (702) 605-0605.
From inception until the date(800) 605-3210. We maintain a website at www.oneworldpharma.com. Information contained on our website does not constitute part of this filing,prospectus.
The Offering
The following summary contains basic information about the offering and the securities being registered hereunder and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the securities we have had limited operating activities. Our financial statements from inception (September 2, 2014) through March 31, 2015 , reports no revenuesare offering, please refer to the sections of this prospectus titled “Description of Capital Stock.”
Securities Being Offered by the Selling Shareholders: | 9,824,359 shares of Common Stock, including (i) 9,146,552 issued and outstanding shares of Common Stock, and (ii) 677,807 shares of Common Stock issuable upon exercise of convertible notes. | |
Trading Market | The Common Stock offered in this prospectus is quoted on the OTC Pink under the symbol “OWPC.” | |
Shares of Common Stock Outstanding Before the Offering: | 44,482,939 (1) | |
Shares of Common Stock Outstanding After the Offering: | 45,160,746 (2) | |
Use of Proceeds: | We will not receive any of the proceeds from the sale of the shares of our Common Stock being offered for sale by the selling shareholders. | |
Plan of Distribution: | The selling shareholders may sell all or a portion of the shares of Common Stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. Registration of the Common Stock covered by this prospectus does not mean, however, that such shares necessarily will be offered or sold. See“Plan of Distribution.” | |
Risk Factors: | An investment in our securities involves a high degree of risk and could result in the loss of your entire investment. Prior to making an investment decision, you should carefully consider all of the information in this prospectus and, in particular, you should evaluate the risk factors set forth under the caption “Risk Factors” beginning on page 3 of this prospectus. |
(1) The number of shares of Common Stock shown above to be outstanding before this offering excludes (i) shares of Common Stock issuable upon conversion of outstanding convertible notes, and a net loss(ii) 766,669 shares of $ 5,207 .. Our independent registered public accounting firm has issued an audit opinion for Punto Group, Corp. which includes a statement expressing substantial doubtCommon Stock issuable upon exercise of outstanding stock options.
(2) The number of shares of Common Stock shown above to be outstanding after this offering is based on 44,482,939 shares outstanding as to our ability to continue as a going concern. To date, we have formed the Company, developed our business plan and product concept.
As of the date of this prospectus there is no public trading market for our common stock and no assurance that a trading market for our securities will ever develop. The company is publicly offering itsassumes the issuance of 677,807 shares to raise funds in order for our business to develop its operations and increase its likelihood of commercial success.Common Stock upon exercise of convertible notes held by one of the selling shareholders.
We do not anticipate earning revenues until we enter into commercial operation. Since we are presently in the development stage of our business, we can provide no assurance that we will successfully assemble, construct and sell any products or services related to our planned activities.
5
THE OFFERING
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARY FINANCIAL INFORMATION
The following table summarizes our consolidated financial data. We have derived the summary consolidated statements of operations data for the period from September 2, 2014 (inception) through March 31, 2015 ..
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
An investment in our common stocksecurities involves a high degree of risk. You should carefully consider the risks described below and thefollowing risk factors in addition to other information in this prospectus before investing inpurchasing our common stock.securities. The risks and uncertainties described below are those that we currently deem to be material and that we believe are specific to our company, our industry and our securities. In addition to these risks, our business may be subject to risks currently unknown to us. If any of the followingthese or other risks occur,actually occurs, our business operating results and financial condition couldmay be seriously harmed. Theadversely affected, the trading price of our common stock, when and if we trade at a later date, couldsecurities may decline due to any of these risks, and you may lose all or part of your investment.
RISKS RELATED TO OUR BUSINESSRisks Relating to our Business
WE HAVE A LIMITED OPERATING HISTORY AND MAY BE UNABLE TO ACHIEVE OR SUSTAIN PROFITABILITY OR ACCURATELY PREDICT OUR FUTURE RESULTS.Limited Operating History
We were formed in September 2, 2014are an early stage company that has not generated any revenues and, we have a limited operating history upon which our business and future prospects may be evaluated. To date, we have suffered recurring losses from operations and have an accumulated deficit of approximately $4,608,726 as of June 30, 2019. We will be subject to date, have been involved primarily in organizational activities and obtaining financing. Asall of the period from Inception (September 2, 2014) to March 31, 2015 , we had a net loss of $ 5,207 .. Development stage companies in businessesbusiness risks and uncertainties associated with low barriers to entry, such as ours, often fail to achieve or maintain successful operations, even in favorable market conditions. There is a substantialany new business enterprise, including the risk that we will not be successful inachieve our operating goals. In order for us to meet future operating requirements, we will need to successfully grow, harvest and sell our cannabis 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.
Change of Cannabis Laws, Regulations and Guidelines
Cannabis laws and regulations are dynamic and subject to evolving interpretations which could require us to incur substantial costs associated with compliance or if initially successful, in thereafter generating any operating revenues or in achieving profitable operations.
As such, we have a very limited operating historyalter certain aspects of selling our products and professional services to third parties. Our limited operating history makes it difficult to evaluate our current business and future prospects andplan. Regulations may increase the risk of your investment. We expect to have significant operating expensesbe enacted in the future that will be directly applicable to further supportcertain aspects of our businesses. 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 growprocedures, when and if promulgated, could have on our business. Management expects that the legislative and regulatory environment in the cannabis industry in Colombia and internationally will continue to be dynamic and will require innovative solutions to try to comply with this changing legal landscape in this nascent industry for the foreseeable future. Compliance with any such legislation may have a material adverse effect on our business, financial condition and results of operations.
Public opinion can also exert a significant influence over the regulation of the cannabis industry. A negative shift in the public’s perception of the cannabis industry could affect future legislation or regulation in different jurisdictions.
Reliance on Colombian Licenses, Authorizations and Quotas
Our ability to import seeds, grow, store and sell cannabis and hemp in Colombia or internationally is dependent on our ability to sustain and/or obtain the necessary licenses and authorizations by certain authorities in Colombia and/or the importing jurisdiction. The licenses and authorizations are subject to ongoing compliance and reporting requirements and our ability to obtain, sustain or renew any such licenses and authorizations on acceptable terms is subject to changes in regulations and policies and to the discretion of the applicable authorities or other governmental agencies in foreign jurisdictions. Failure to comply with the requirements of the licenses or authorizations or any failure to maintain the licenses or authorizations would have a material adverse impact on our business, financial condition and operating results. In addition, Colombian regulators limit the cultivation and sale of psychoactive cannabis by Quotas issued on an annual basis to licensed producers.
Although we believe that we will meet the requirements to obtain, sustain or renew the necessary licenses and authorizations, there can be no guarantee that the applicable authorities will issue these licenses or authorizations. In addition, to date we have not been issued Quotas that would allow us to commence the commercial sale of psychoactive cannabis products. Should the authorities fail to issue the necessary licenses or authorizations, including expandingrequired Quotas, we may be curtailed or prohibited from the rangeproduction and/or distribution of integrationscannabis and hemp or from proceeding with the development of our operations as currently proposed and our business, financial condition and results of the operation may be materially adversely affected.
Regulatory Compliance Risks
Achievement of our business objectives is contingent, in part, upon compliance with regulatory requirements enacted by applicable governmental authorities and obtaining all regulatory approvals, where necessary, for the sale of our products in Colombia and other jurisdictions where we intend to distribute and sell our products. We will incur ongoing costs and obligations related to regulatory compliance. Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Civil or criminal fines or penalties may be imposed on us for violations of applicable laws or regulations. Vigorous enforcement of these laws could require extensive changes to our operations, increase our compliance costs or give rise to material liabilities, which could have a material adverse effect on our business, results of operations and financial condition.
Competition
There are many companies engaged in the cannabis business who we will compete with, including larger and more established companies with substantially greater marketing, financial, human and other resources than we have. These companies include PharmaCielo, CannaVida, Empresa Colombiana de Cannabis, Khiron Life Sciences Corp., MedCan, Canopy Growth Corporation, and Clever Leaves. Although we believe we are competitively positioned to be a leader in the medicinal cannabis industry given our early entry into the market, the management team’s expertise in medical product branding, marketing, quality control, and market relationships, competition in the medical cannabis industry is growing quickly. As more competitors enter the market, prices may be reduced. We believe our approach in creating brand loyalty will allow us to effectively compete in the market but there is no assurance that will be the case, and our competitors may adopt a similar or identical approach. To date, we have obtained four licenses in Colombia that authorize us to engage in cannabis activities, and there are currently few authorized producers there. However, Colombia offers an open process to apply for licenses and there are no significant barriers to entry. As a result, our ability to generate revenues and earnings may be reduced as competition intensifies, thereby causing a material adverse effect on our business and financial condition.
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, whether owing 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 negatively affect 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 towards alternative payment solutions we would have to adopt policies and protocols to manage our volatility and exchange rate risk exposures. Our inability to 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 involve money laundering, financial recordkeeping and proceeds of crime. 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 back 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 declaring or paying dividends without advance notice and for an indefinite period of time.
Foreign Trade Policies
Our prospective international operations are subject to inherent risks, including changes in the regulations governing the flow of cannabis products between our softwarecountries, fluctuations in currency values, discriminatory fiscal policies, unexpected changes in local regulations and third-party applicationslaws and platform, expanding our directthe uncertainty of enforcement of remedies in foreign jurisdictions. In addition, foreign jurisdictions could impose tariffs, quotas, trade barriers and indirect sales capabilities, pursuing acquisitions of complementary businesses, investing in our data center infrastructure and research and development and increasingother similar restrictions on our international presence,sales and subsidize competing cannabis products. All of these risks could result in increased costs or decreased revenues.
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, 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 do 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 are responsible for incurring the costs to rectify the damage. The imposition of environmental sanctions is in addition to civil and criminal penalties that 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 Derivate 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 the demand for licensed cannabis to be in excess of the supply being produced by the 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, they may have a material adverse effect on our business, results of operations and financial condition.
Weather, Climate Change and Risks Inherent in an Agricultural Business
Our business involves growing cannabis, 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. Further, our prospective Colombian medicinal cannabis operations will initially focus on outdoor production. 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.
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 when only a portion of the production is damaged, our results of operations could be adversely affected because 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 achieve or sustain profitability or accurately predict our future results.
We require minimum funding of approximately $32,000 to conduct our proposed operations for a period of one year. If we are not able to raise this amount, or if we experience a shortage of funds prior to funding we may utilize funds from Andrei Kriukov, our sole officer and director, who has informally agreed to advance funds to allow us to pay for professional fees, including fees payable in connection with the filing of this registration statement and operation expenses. However, Mr. Kriukov has no formal commitment, arrangement or legal obligation to advance or loan funds to the company. After one year we may need additional financing. We do not currently have any arrangements for additional financing.
If we are successful in raising the funds from this offering, we plan to commence activities to continue our operations. We cannot provide investors with any assurance that we will be able to raise sufficient funds to continue our business plan according to our plan of operations.
You should not consider our start up as indicative of our success, and we cannot assure you that we will achieve profitability in the future, nor that if we do become profitable, we will sustain profitability.
WE DO NOT CURRENTLY HAVE ANY CUSTOMERS. ANY FAILURE TO OFFER HIGH-QUALITY CUSTOMER SERVICE MAY ADVERSELY AFFECT OUR RELATIONSHIPS WITH OUR FUTURE CUSTOMERS AND OUR FINANCIAL RESULTS.
We do not currently have any customers. Our future customers depend on our customer success organization to manage the post-sale customer lifecycle, including to implement new online-system forsupply our customers, provide training and ongoing education services and resolve technical issues relating to our applications. We may be unable to respond quickly enough to accommodate short-term increases in demand for our customer success services. We also may be unable to modify the format of our customer success services to compete with changes in similar services provided by our competitors. Increased customer demand for these services, without corresponding revenue, could increase costs and adversely affect our operating results. In addition, our sales process is highly dependent on the reliable functional operation of our applications, our business reputation and positive recommendations from our existing customers. Any failure to maintain high-quality customer service, or a market perception that we do not maintain high-quality customer service,which could adversely affect our reputation, our ability to sell our applications to existingbusiness, financial condition and prospective customers and our business, operating results and financial position.
BECAUSE OUR AUDITORS HAVE RAISED A GOING CONCERN, THERE IS A SUBSTANTIAL UNCERTAINTY THAT WE WILL CONTINUE OPERATIONS IN WHICH CASE YOU COULD LOSE YOUR INVESTMENT.
Our auditors have issued a going concern opinion. This means that there is substantial doubt that we can continue as an ongoing business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue in business. As such we may have to cease operations and you could lose your investment.
WE ARE SOLELY DEPENDENT UPON THE FUNDS TO BE RAISED IN THIS OFFERING TO START OUR BUSINESS, THE PROCEEDS OF WHICH MAY BE INSUFFICIENT TO ACHIEVE REVENUES AND PROFITABLE OPERATIONS. WE MAY NEED TO OBTAIN ADDITIONAL FINANCING WHICH MAY NOT BE AVAILABLE.
Our current operating funds are less than necessary to complete our intended operations in development of online project management system. We need the proceeds from this offering to start our operations as described in the “Plan of Operation” section of this prospectus. As of March 31, 2015 , we had cash in the amount of $ 810 and liabilities of $ 2,917 .. As of this date, we have no income and just recently started our operation. The proceeds of this offering may not be sufficient for us to achieve revenues and profitable operations. We need additional funds to achieve a sustainable sales level where ongoing operations can be funded out of revenues. There is no assurance that any additional financing will be available or if available, on terms that will be acceptable to us.
AS OF TODAY WE HAVE NOT YET DEVELOPED ANY SOFTWARE AND THERE IS NO ASSURANCE THAT WE EVER DEVELOP ANY SOFTWARE.
We have not yet developed any software for this business and we cannot guarantee we ever develop any software. You are likely to lose your entire investment if we cannot develop and profitably sell our software.
WE CURRENTLY HAVE NO PROTECTION BY ANY TRADEMARKS, PATENTS AND/OR OTHER INTELLECTUAL PROPERTY REGISTRATIONS. OUR SOLE SOFTWARE DEVELOPER HAS NOT ENTERED INTO A CONTRACT GOVERNING THE OWNERSHIP OF ANY DEVELOPED INTELLECTUAL PROPERTY ASSETS. IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, OUR PROPOSED BUSINESS WILL FAIL.
We have not applied for any trademark, patent or other intellectual property registration with any governmental agency for our name or for our software product. Our sole software developer has not entered into a contract governing the ownership of any developed intellectual property assets. Because we have not taken steps to protect our proposed software programs, unauthorized parties may attempt in the future to reverse engineer, copy or obtain and use our software programs. If they are successful we could lose our technology or they could develop similar programs, which could create more competition for us and even cause our proposed business operations to fail
WE HAVE LIMITED BUSINESS, SALES AND MARKETING EXPERIENCE IN OUR INDUSTRY.
We have not garnered any customers and have yet to generate revenues. While we have plans for marketing our business, there can be no assurance that such efforts will be successful. There can be no assurance that our proposed businessnatural elements will gain wide acceptance in its target market or that we will be able to effectively market our service. Additionally, we arenot have a newly-formed, development stage company with no prior experience in our industry. We are entirely dependentmaterial adverse effect on the servicesany such production.
Product Liability
As a manufacturer and distributor of our sole officer and director, Andrei Kriukov, to build our customer base. Our company has no prior experience upon which it can rely in order to garner its first prospective customers to buy our service.
IF WE DO NOT ATTRACT CUSTOMERS, WE WILL NOT MAKE A PROFIT, WHICH ULTIMATELY WILL RESULT IN A CESSATION OF OPERATIONS.
We currently have no customers. We have not identified any customers and we cannot guarantee we ever will have any customers. Even if we obtain customers, there is no guarantee that we will generate a profit. If we cannot generate a profit, we will have to suspend or cease operations. You are likely to lose your entire investment if we cannot sell software at prices which generate a profit.
WE CANNOT PREDICT THE SPEED OF TECHNOLOGY CHANGES IN OUR BUSINESS AND IF WE FAIL TO ANTICIPATE OR SUCCESSFULLY IMPLEMENT NEW TECHNOLOGIES THE QUALITY, TIMELINESS AND COMPETITIVENESS OF OUR PRODUCTS AND SERVICES WILL SUFFER.
Rapid technology changes in our industry require us to anticipate, sometimes years in advance, which technologies we must implement and take advantage of in order to make our product and service competitive in the market. Therefore, we must start our business with a range of technical development goals that we hopeproducts designed to be ableingested or inhaled by humans, we face an inherent risk of exposure to achieve. We may not be able to achieve these goals, or our competitors may be able to achieve them more quicklyproduct liability claims, regulatory action and effectively than we can. In either case,litigation if our products and services may be technologically inferiorare alleged to our competitors’, less appealing to consumers,have caused damages, loss or both. If we cannot achieve our technology goals withininjury. In addition, the original development schedulesale of our products and services, then weinvolve the risk of injury to consumers due to tampering by unauthorized third parties or product contamination. Adverse reactions resulting from human consumption of our products alone or in combination with other medications or substances could occur. We may delay their release until these technology goals can be achieved, which may delaysubject to various product liability claims, including, among others, that our products caused injury or reduce revenue and increaseillness, 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 development expenses. Alternatively, we may increase the resources employed in research and development in an attempt to accelerate our development of new technologies, either to preserve our product or service launch schedule or to keep upreputation with our competition, which would increase our development expenses. Any such failure to adapt to,clients and appropriately allocate resources among, emerging technologies would harm our competitive position, reduce our market shareconsumers generally, and significantly increase the time we take to bring our product to market.
BECAUSE WE ARE SMALL AND DO NOT HAVE MUCH CAPITAL, OUR MARKETING CAMPAIGN MAY NOT BE ENOUGH TO ATTRACT SUFFICIENT CLIENTS TO OPERATE PROFITABLY. IF WE DO NOT MAKE A PROFIT, WE WILL SUSPEND OR CEASE OPERATIONS.
Due to the fact we are small and do not have much capital, we must limit our marketing activities and may not be able to make our services known to potential customers. Because we will be limiting our marketing activities, we may not be able to attract enough customers to operate profitably. If we cannot operate profitably, we may have to suspend or cease operations.
IF WE ARE UNABLE TO COMPLETE OUR PRODUCT AND SERVICE PROGRAMMING AND DEVELOPING WE WILL NOT BE ABLE TO GENERATE REVENUES AND YOU WILL LOSE YOUR INVESTMENT.
We have not completed development of our project management online system and application and we have no revenues from the sale or use of our service and product. The success of our proposed business will depend on the completion and the acceptance of our system by the general public. Achieving such acceptance will require significant marketing investment. Our product and service, once developed and tested, may not be accepted by our customers at sufficient levels to support our operations and build our business. If our product is not accepted at sufficient levels, our business will fail.
THE MARKETS IN WHICH WE PARTICIPATE ARE INTENSELY COMPETITIVE, AND IF WE DO NOT COMPETE EFFECTIVELY, OUR OPERATING RESULTS COULD BE ADVERSELY AFFECTED.
The overall market for project management online system is rapidly evolving and subject to changing technology, shifting customer needs and frequent introductions of new applications. Many of our competitors and potential competitors are larger and have greater brand name recognition, longer operating histories, larger marketing budgets and significantly greater resources than we do. Some of our smaller competitors may offer applications on a stand-alone basis at a lower price than us due to lower overhead or other factors, while some of our larger competitors may offer applications at a lower price in an attempt to cross-sell additional products in the future or retain a customer using a different application.
We believe there are a limited number of direct competitors that provide a comprehensive product and service. However, we face competition both from point solution providers, including legacy on-premise enterprise systems, and other internet-based management software vendors that may address one or more of the functional elements of our applications, but are not designed to address a broad range of enterprise work management needs. In addition, we face competition from manual processes and traditional tools, such as paper-based techniques, spreadsheets and email.
BECAUSE OUR SOLE OFFICER AND DIRECTOR WILL OWN 50% OR MORE OF OUR OUTSTANDING COMMON STOCK, HE WILL MAKE AND CONTROL CORPORATE DECISIONS THAT MAY BE DISADVANTAGEOUS TO MINORITY SHAREHOLDERS.
If maximum offering shares will be sold, Mr. Kriukov, our sole officer and director, will own 50 % of the outstanding shares of our common stock. Accordingly, he will have significant influence in determining the outcome of all corporate transactions or other matters, including the election of directors, mergers, consolidations and the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. The interests of Mr. Kriukov may differ from the interests of the other stockholders and may result in corporate decisions that are disadvantageous to other shareholders.
WE DEPEND TO A SIGNIFICANT EXTENT ON CERTAIN KEY PERSON, THE LOSS OF WHOM MAY MATERIALLY AND ADVERSELY AFFECT OUR COMPANY.
Currently, we have only one employee who is also our sole officer and director. We depend entirely on Mr. Kriukov for all of our operations. The loss of Mr. Kriukov wouldcould have a substantial negativematerial adverse effect on our companyresults of operations and may cause our business to fail. Mr. Kriukov has not been compensated for his services since our incorporation, and it is highly unlikely that he will receive any compensation unless and until we generate substantial revenues.financial condition. There is intense competition for skilled personnel and there can be no assurance that we will be able to attract and retain qualified personnel on acceptable terms. The loss of Mr. Kriukov’s services could prevent us from completing the development of our plan of operation and our business. In the event of the loss of services of such personnel, no assurance can be givenassurances 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 services of adequate replacement personnel.future on acceptable terms, or at all.
Energy Prices and Supply
We require substantial amounts of diesel and electric energy and other resources for our harvest activities and to 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 cut 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 because the economies in the developing world 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 must rely, to some extent, on the members of management who have previous experience working and conducting business in Colombia to enhance our understanding of and appreciation for the local business culture and practices in such countries. 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.
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 any employment agreements or maintain key person life insurance policies on our officercontrol.
Risks Related to Conducting Operations in Colombia
We recently were granted medicinal cannabis licenses in Colombia. Over the past 10 to 15 years, the Government of Colombia has made strides in improving the social, political, economic, legal and director. We dofiscal regimes. However, operations in Colombia will still be subject to risk due to the potential for social, political, economic, legal and fiscal instability. The Government of Colombia faces ongoing problems including, but not anticipate entering into employment agreements with his or acquiring key man insurancelimited to, unemployment and inequitable income distribution and unstable neighboring countries. The instability in the foreseeable future.
BECAUSE OUR SOLE OFFICER AND DIRECTOR WILL ONLY BE DEVOTING LIMITED TIME TO OUR OPERATIONS, OUR OPERATIONS MAY BE SPORADIC WHICH MAY RESULT IN PERIODIC INTERRUPTIONS OR SUSPENSIONS OF OPERATIONS. THIS ACTIVITY COULD PREVENT US FROM ATTRACTING ENOUGH CUSTOMERS AND RESULT IN A LACK OF REVENUES WHICH MAY CAUSE US TO CEASE OPERATIONS.
Mr. Kriukov, our sole officer and director will only be devoting limited time to our operations. He will be devoting approximately 20 hours a week to our operations. Because our sole office and director will only be devoting limited time to our operations, our operations may be sporadic and occur at times which are convenient to him As a result, operations may be periodically interrupted or suspended whichneighboring countries could result in an influx of immigrants resulting in a lackhumanitarian crisis and/or increased illegal activities. Colombia is also home to a number of revenuesinsurgency groups and large swaths of the countryside are under guerrilla influence. In addition, Colombia experiences narcotics-related violence, a possible cessationprevalence of kidnapping, extortion and thefts and civil unrest in certain areas of the country. Such instability may require us to suspend operations on our properties.
Other risks exist relating to the conduct of business in Colombia. These risks include the future imposition of special taxes or similar charges, as well as foreign exchange fluctuations and currency convertibility and controls. Other risks of doing business in Colombia include our ability to enforce our contractual rights or the taking or nationalization of property without fair compensation, restrictions on the use of expatriates in our operations, renegotiation or nullification of existing concessions, licenses, permits and contracts, changes in taxation policies, or other matters.
The Government of Colombia recently reached a peace accord with the country’s largest guerrilla group. The Government of Colombia also entered into and dissolved formal discussions with the country’s second largest guerrilla group due to their unwillingness to cease criminal and violent crimes. There is no certainty that the agreements will be adhered to by all of the members of the guerrilla groups or that a peace agreement will be ultimately reached with the country’s second largest guerrilla group. There is a risk that any peace agreement might contain new laws or change existing laws that could have a material adverse effect on us. Furthermore, the achievement of peace with the country’s guerrilla groups could create additional social or political instability in the immediate aftermath, which could have a material adverse effect on our operations.
Global Economy
OUR SOLE OFFICER AND DIRECTOR HAS NO EXPERIENCE MANAGING A PUBLIC COMPANY WHICH IS REQUIRED TO ESTABLISH AND MAINTAIN DISCLOSURE CONTROL AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING.
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 have never operated aswill endeavor to obtain appropriate insurance covering these risks in amounts sufficient to support a public company. Mr. Kriukov,downturn in the sale of our sole officerproducts due to these potential production risks. The cost of such insurance may be high and director has no experience managing a public company which is required to establish and maintain disclosure controls and procedures and internal control over financial reporting. As a result, we may not be able to operate successfully as a public company, even if our operations are successful. We planobtain sufficient amount of insurance to comply with all of the various rules and regulations, which are required for a public company that is reporting company with the Securities and Exchange Commission. However, if we cannot operate successfully as a public company, your investment may be materially adversely affected.cover these risks.
WE RELY ON THIRD-PARTY SOFTWARE THAT IS REQUIRED FOR THE DEVELOPMENT AND DEPLOYMENT OF OUR APPLICATIONS, WHICH MAY BE DIFFICULT TO OBTAIN OR WHICH COULD CAUSE ERRORS OR FAILURES OF OUR APPLICATIONS.Operations in Spanish
We rely on software licensed from or hosted by third parties to offer our applications. In addition, we may need to obtain licenses from third parties to use intellectual property associated with the development of our applications, which might not be available to us on acceptable terms, or at all. Any loss of the right to use any software required for the development, maintenance and delivery of our applications could result in delays in the provision of our applications until equivalent technology is either developed by us, or, if available, is identified, obtained and integrated, which could harm our business. Any errors or defects in third-party software could result in errors or a failure of our applications, which could harm our business. We are going to use software for creating our online project management software. The set of software we need includes Qt Software, Eclipse, Embarcadero Delphi XE7. We are going to buy mentioned software when we will start our operations. We believe that we cannot create our software without these programming tools. Our operations depend on these software. As of today, we have not contacted any software providers and do not have any current agreements with software providers. All services and prices are publicly open on their official websites.
AS AN “EMERGING GROWTH COMPANY” UNDER THE JOBS ACT, WE ARE PERMITTED TO RELY ON EXEMPTIONS FROM CERTAIN DISCLOSURE REQUIREMENTS.
We qualify as an “emerging growth company” under the JOBS Act. As a result we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
-
have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
-
provide an auditor attestation with respect to management’s report on the effectiveness of our internal controls over financial reporting;
-
comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the auditconducting most of our operations in Colombia, our regulatory licenses and the financial statements (i.e., an auditor discussionbooks and analysis);
-
submit certain executive compensation matters to shareholder advisory votes,records, including key documents such as “say-on-pay”material contracts and “say-on-frequency;”financial documentation, are principally negotiated and
-
disclose certain executive compensation related items such as entered into in the correlation between executive compensationSpanish language and performance and comparisons of the Chief Executive’s compensation to median employee compensation.English translations may not exist or be readily available.
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise applyGeneral Business Risks
Inability to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.Manage Growth
We will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal year in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. Even if we no longer qualify for the exemptions for an emerging growth company, we may still be, in certain circumstances, subject to scaled disclosure requirements as a smaller reporting company. For example, smaller reporting companies, like emerging growth companies, are not required to provide a compensation discussion and analysis under Item 402(b) of Regulation S-K or auditor attestation of internal controls over financial reporting.
Until such time, however, we cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
RISKS RELATED TO THIS OFFERING
OUR PRESIDENT, MR. KRIUKOV DOES NOT HAVE ANY PRIOR EXPERIENCE OFFRERING AND SELLING SECURITIES , AND OUR OFFERING DOES NOT REQUIRE A MIMIMUM AMOUNT TO BE RAISED. AS A RESULT OF THIS WE MAY NOT BE ABLE TO RAISE ENOUGH FUNDS TO COMMENCE AND SUSTAIN OUR BUSINESS AND INVESTORS MAY LOSE THEIR ENTIRE INVESTMENT.
Mr. Kriukov does not have any experience conducting a securities offering. Consequently, we may not be able to raise any funds successfully. Also, the best effort offering does not require a minimum amount to be raised. If we are not able to raise sufficient funds, we may not be able to fundeffectively manage our operations as planned, andgrowth. Our strategy envisions growing our business will suffer and your investment may be materially adversely affected. Our inability to successfully conduct a best-effort offering could be the basis of your losing your entire investment in us.
BECAUSE THE OFFERING PRICE HAS BEEN ARBITRARILY SET BY THE COMPANY, YOU MAY NOT REALIZE A RETURN ON YOUR INVESTMENT UPON RESALE OF YOUR SHARES.
The offering price and other terms and conditions relative to the Company’s shares have been arbitrarily determined by us and do not bear any relationship to assets, earnings, book value or any other objective criteria of value. Additionally, as the Company was formed on September 2, 2014 and has only a limited operating history and no earnings, the price of the offered shares is not based on its past earnings and no investment banker, appraiser or other independent third party has been consulted concerning the offering price for the shares or the fairness of the offering price used for the shares, as such our stockholders may not be able to receive a return on their investment when they sell their shares of common stock.
WE ARE SELLING THIS OFFERING WITHOUT AN UNDERWRITER AND MAY BE UNABLE TO SELL ANY SHARES.
This offering is self-underwritten, that is, we are not going to engage the services of an underwriter to sell the shares; we intend to sell our shares through our President, who will receive no commissions. There is no guarantee that he will be able to sell any of the shares. Unless he is successful in selling at least half of the shares and we receive the proceeds in the amount of $32,000 from this offering, we may have to seek alternative financing to implement our business plan.
ANY ADDITIONAL FUNDING WE ARRANGE THROUGH THE SALE OF OUR COMMON STOCK IN THE FUTURE WILL RESULT IN DILUTION TO PURCHASERS OF SECURITIES IN THIS OFFERING.
business. We are a development stage company and have generated no revenue to date. Long term financing beyond the maximum aggregate amount of this offering may be requiredplan to expand our business. The exact amount of funding will dependproduction and manufacturing capability and create a distribution network on the scalea global basis. Any growth in or expansion of our developmentbusiness is likely to continue to place a strain on our management and expansion. We do not currently have planned our expansion,administrative resources, infrastructure and systems. As with other growing businesses, we have not decided yet on the scale of our development and expansion and on exact amount of funding needed for our long term financing. Our most likely source of additional capital will be through the sale of additional shares of common stock. Such stock issuances will cause interests of purchasers of securities in this offering to be diluted. Such dilution will negatively affect the value of investors’ shares.
THE TRADING IN OUR SHARES WILL BE REGULATED BY THE SECURITIES AND EXCHANGE COMMISSION RULE 15G-9 WHICH ESTABLISHED THE DEFINITION OF A “PENNY STOCK.”
The shares being offered are defined as a penny stock under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and rules of the Commission. The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker-dealers who sell our securities to persons other than certain accredited investors who are, generally, institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 ($300,000 jointly with spouse), or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker dealer must make certain mandated disclosures in penny stock transactions, including the actual sale or purchase price and actual bid and offer quotations, the compensation to be received by the broker-dealer and certain associated persons, and deliver certain disclosures required by the Commission. Consequently, the penny stock rules may make it difficult for you to resell any shares you may purchase, if at all.
DUE TO THE LACK OF A TRADING MARKET FOR OUR SECURITIES, YOU MAY HAVE DIFFICULTY SELLING ANY SHARES YOU PURCHASE IN THIS OFFERING.
We are not registered on any market or public stock exchange. There is presently no demand for our common stock and no public market exists for the shares being offered in this prospectus. We plan to contact a market maker immediately following the completion of the offering and apply to have the shares quoted on the Over-the-Counter Bulletin Board (“OTCBB”). The OTCBB is a regulated quotation serviceexpect that displays real-time quotes, last sale prices and volume information in over-the-counter securities. The OTCBB is not an issuer listing service, market or exchange. Although the OTCBB does not have any listing requirements, to be eligible for quotation on the OTCBB, issuers must remain current in their filings with the SEC or applicable regulatory authority. If we are not able to pay the expenses associated with our reporting obligations we will not be ableneed to apply for quotation on the OTC Bulletin Board. Market makersfurther 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 not permitted to begin quotation of a security whose issuer does not meet this filing requirement. Securities already quoted on the OTCBB that become delinquent in their required filingstime consuming and expensive, will be removed following a 30 to 60 day grace period if they do not make their required filing during that time.increase management responsibilities and will divert management attention. We cannot guaranteeassure you that our application will be accepted or approved and our stock listed and quoted for sale. As of the date of this filing, there have been no discussions or understandings between Punto Group, Corp. and anyone acting on our behalf, with any market maker regarding participation in a future trading market for our securities. If no market is ever developed for our common stock, it will be difficult for you to sell any shares you purchase in this offering. In such a case, you may find that you are unable to achieve any benefit from your investment or liquidate your shares without considerable delay, if at all. In addition, if we fail to have our common stock quoted on a public trading market, your common stock will not have a quantifiable value and it may be difficult, if not impossible, to ever resell your shares, resulting in an inability to realize any value from your investment.
WE WILL INCUR ONGOING COSTS AND EXPENSES FOR SEC REPORTING AND COMPLIANCE. WITHOUT REVENUE WE MAY NOT BE ABLE TO REMAIN IN COMPLIANCE, MAKING IT DIFFICULT FOR INVESTORS TO SELL THEIR SHARES, IF AT ALL.
The estimated cost of this registration statement is $8,000 which will be paid from offering proceeds. If the offering proceeds are less than registration cost, we will have to utilize funds from Mr. Kriukov, our sole officer and director, who has verbally agreed to loan the company funds to complete the registration process. Mr. Kriukov’s verbal agreement to provide us loans for registration costs is non- binding and discretionary. After the effective date of this prospectus, we will be required to file annual, quarterly and current reports, or other information with the SEC as provided by the Securities Exchange Act. We plan to contact a market maker immediately following the close of the offering and apply to have the shares quoted on the OTC Electronic Bulletin Board. To be eligible for quotation, issuers must remain current in their filings with the SEC. In order for us to remain in compliance we will require future revenues to cover the cost of these filings, which could comprise a substantial portion of our available cash resources. The costs associated with being a publicly traded company in the next 12 month will be approximately $10,000. If we are unable to generate sufficient revenues to remain in compliance it may be difficult for you to resell any shares you may purchase, if at all. Also, if we are not able to pay the expenses associated with our reporting obligations we will not be able to apply for quotation on the OTC Bulletin Board.
WE MAY BE EXPOSED TO POTENTIAL RISKS AND SIGNIFICANT EXPENSES RESULTING FROM THE REQUIREMENTS UNDER SECTION 404 OF THE SARBANES-OXLEY ACT OF 2002.
We will be required, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, to include in our annual report our assessment of the effectiveness of our internal control over financial reporting. We expect to incur significant continuing costs, including accounting fees and staffing costs, in order to maintain compliance with the internal control requirements of the Sarbanes-Oxley Act of 2002. Development of our business will necessitate ongoing changes to our internal control systems, processes and information systems. If our business develops and grows, our current design for internal control over financial reporting will not be sufficient to enable management to determine that our internal controls are effective for any period, or on an ongoing basis. Accordingly, as we develop our business, such development and growth will necessitate changes to our internal control systems, processes and information systems, all of which will require additional costs and expenses.
In the future, if we fail to complete the annual Section 404 evaluation in a timely manner, we could be subject to regulatory scrutiny and a loss of public confidence in our internal controls. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. However, as an “emerging growth company,” as defined in the JOBS Act, our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 until the later of the year following our first annual report required to be filed with the SEC, or the date we are no longer an emerging growth company. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.
WE WILL BE SUBJECT TO THE 15(D) REPORTING REQUIREMENTS UNDER THE SECURITIES EXCHANGE ACT OF 1934, UPON EFFECTIVENESS OF THIS REGISTRATION STATEMENT WHICH DOES NOT REQUIRE A COMPANY TO FILE ALL THE SAME REPORTS AND INFORMATION AS A FULLY REPORTING COMPANY.
Upon effectiveness of this registration statement, we will be subject to the 15(d) reporting requirements according to the Securities Exchange Act of 1934. We are required to file the necessary reports in the fiscal year that the registration statement is declared effective. After that fiscal year and provided that we have less than 300 shareholders, we are not required to file these reports. If the reports are not filed, the investors will have reduced information about us including about our business, plan of operations and financial condition. In addition, as a filer subject to Section 15(d) of the Exchange Act, we are not required to prepare proxy or information statements; our common stock will not be subject to the protection of the going private regulations; we will be subject to only limited portions of the tender offer rules; our officers, directors, and more than ten (10%) percent shareholders are not required to file beneficial ownership reports about their holdings of our common shares; that these persons will not be subject to the short-swing profit recovery provisions of the Exchange Act; and that more than five percent (5%) holders of classes of your equity securities will not be required to report information about their ownership positions in the securities.
BECAUSE WE ARE A SHELL COMPANY, YOU WILL NOT BE ABLE TO RESELL YOUR SHARES IN CERTAIN CIRCUMSTANCES, WHICH COULD HINDER THE RESALE OF YOUR SHARES.
We are a “shell company” within the meaning of Rule 405, promulgated pursuant to Securities Act of 1933, as amended (the “Securities Act”), because we have nominal assets and nominal operations. Accordingly, the securities sold in this offering can only be resold through registration under Section 5 the Securities Act, Section 4(1), if available, for non-affiliates or by meeting the conditions of Rule 144(i), which will potentially reduce liquidity of our securities. Another implications of us being a shell company are enhanced reporting requirements imposed on shell companies and that we cannot file registration statements under Section 5 of the Securities Act using a Form S-8, a short form of registration to register securities issued to employees and consultants under an employee benefit plan. Additionally, though exemptions, such as Section 4(1) of the Securities Act may be available for non-affiliate holders our shares to resell their shares, because we are a shell company, a holder of our securities may not rely on the safe harbor from being deemed statutory underwriter under Section 2(11) of the Securities Act, as provided by Rule 144, to resell his or her securities. Only after we (i) are not a shell company, and (ii) have filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that we may be required to file such reports and materials, other than Form 8-K reports); and have filed current “Form 10 information” with the SEC reflecting our status as an entity that is no longer a shell company for a period of not less than 12 months, can our securities be resold pursuant to Rule 144. “Form 10 information” is, generally speaking, the same type of information as we are required to disclose in this prospectus, but without an offering of securities. These circumstances regarding how Rule 144 applies to shell companies may hinder your resale of your shares of the Company. Being a shell company will also negatively impact on our ability to attract additional capital through subsequent unregistered offerings.
FORWARD LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risk and uncertainties. We use words such as “anticipate”, “believe”, “plan”, “expect”, “future”, “intend”, and similar expressions to identify such forward-looking statements. Investors should be aware that all forward-looking statements contained within this filing are good faith estimates of management as of the date of this filing. Our actual results could differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us as described in the “Risk Factors” section and elsewhere in this prospectus.
USE OF PROCEEDS
Our offering is being made on a self-underwritten and “best-efforts” basis: no minimum number of shares must be sold in order for the offering to proceed. The offering price per share is $0.02. The following table sets forth the uses of proceeds assuming the sale of 25%, 50%, 75% and 100%, respectively, of the securities offered for sale by the Company. There is no assurance that we will raise the full $80,000 as anticipated.
Description | If 25% shares sold | If 50% shares sold | If 75% shares sold | If 100% shares sold |
Fees $ | Fees $ | Fees $ | Fees $ | |
Gross proceeds | 20,000 | 40,000 | 60,000 | 80,000 |
Offering expenses | 8,000 | 8,000 | 8,000 | 8,000 |
Net proceeds | 12,000 | 32,000 | 52,000 | 72,000 |
SEC reporting and compliance | 10,000 | 10,000 | 10,000 | 10,000 |
Establishing an office | 2,000 | 2,500 | 3,500 | 4,000 |
Professional Software | - | 3,000 | 4,000 | 4,500 |
Serever and Workstations | - | 5,000 | 7,000 | 13,000 |
Research and Development | - | 1,500 | 3,000 | 5,000 |
Website and app development | - | 2,000 | 3,000 | 4,500 |
Marketing and Sales | - | 8,000 | 21,500 | 31,000 |
The above figures represent only estimated costs. If necessary, Mr. Kriukov, our president and director, has verbally agreed to loan the Company funds to complete the registration process. Also, these loans would be necessary if the proceeds from this offering will not be sufficient to implement our business plan and maintain reporting status and quotation on the OTC Electronic Bulletin Board when and if our common stocks become eligible for trading on the Over-the-Counter Bulletin Board. Mr. Kriukov will not be paid any compensation or anything from the proceeds of this offering. There is no due date for the repayment of the funds advanced by Mr. Kriukov. Mr. Kriukov will be repaid from revenues of operations if and when we generate revenues to pay the obligation.
DETERMINATION OF OFFERING PRICE
The offering price of the shares has been determined arbitrarily by us. The price does not bear any relationship to our assets, book value, earnings, or other established criteria for valuing a privately held company. In determining the number of shares to be offered and the offering price, we took into consideration our cash on hand and the amount of money we would need to implement our business plan. Accordingly, the offering price should not be considered an indication of the actual value of the securities.
DILUTION
Dilution represents the difference between the Offering price and the net tangible book value per share immediately after completion of this Offering. Net tangible book value is the amount that results from subtracting total liabilities and from total assets. Dilution arises mainly as a result of our arbitrary determination of the Offering price of the shares being offered. Dilution of the value of the shares you purchase is also a result of the lower book value of the shares held by our existing stockholder.
The historical net tangible book value as of March 31, 2015 was negative $ 1,207 or approximately $0 per share. Historical net tangible book value per share of common stock is equal to our total tangible assets less total liabilities, divided by the number of shares of common stock outstanding as of March 31, 2015 ..
The following table sets forth as of March 31, 2015 , the number of shares of common stock purchased from us and the total consideration paid by our existing stockholders and by new investors in this offering if new investors purchase 25%, 50%, 75% or 100% of the offering, after deduction of offering expenses payable by us, assuming a purchase price in this offering of $0.02 per share of common stock.
Percent of Shares Sold from Maximum Offering Available | 25% | 50% | 75% | 100% |
Offering price per share | 0.02 | 0.02 | 0.02 | 0.02 |
Post offering net tangible book value |
|
| 50,793 | 70,793 |
Post offering net tangible book value per share |
| 0.0051 | 0.0073 | 0.0088 |
Pre-offering net tangible book value per share | 0 | 0 | 0 | 0 |
Increase (Decrease) in net tangible book value per share after offering | 0.0022 | 0.0051 | 0.0073 | 0.0088 |
Dilution per share |
|
|
|
|
% dilution | 89 | 74.5 | 63.5 | 56 |
Capital contribution by purchasers of shares | 20,000 | 40,000 | 60,000 | 80,000 |
Capital Contribution by existing stockholders | 4,000 | 4,000 | 4,000 | 4,000 |
Percentage capital contributions by purchasers of shares | 83,33% | 90.91% | 93.75% | 95.24% |
Percentage capital contributions by existing stockholders | 16,67% | 9.09% | 6.25% | 4.76% |
Gross offering proceeds | 20,000 | 40,000 | 60,000 | 80,000 |
Anticipated net offering proceeds | 12,000 | 32,000 | 52,000 | 72,000 |
Number of shares after offering held by public investors | 1,000,000 | 2,000,000 | 3,000,000 | 4,000,000 |
Total shares issued and outstanding | 5,000,000 | 6,000,000 | 7,000,000 | 8,000,000 |
Purchasers of shares percentage of ownership after offering | 20.00% | 33.33% | 42.86% | 50.00% |
Existing stockholders percentage of ownership after offering | 80.00% | 66.67% | 57.14% | 50.00% |
MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes and other financial information included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. You should review the “Risk Factors” section of this prospectus for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
We qualify as an “emerging growth company” under the JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, we will not be required to:
● | |||
|
|
systems effectively or efficiently or in a timely manner; | ||
|
|
|
|
|
|
| allocate our human resources optimally; | ||
| |||
● | meet our capital needs; | ||
● | identify and | ||
● | obtain and |
In addition, Section 107 of the JOBS Act also provides that an emergingOur inability or failure to manage our growth company can take advantage of the extended transition period providedand expansion effectively 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 Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
We will remain an “emerging growth company” for up to five years, or until the earliest of (i) the last day of the first fiscal yearnature and we cannot predict results in which our total annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three year period. Even if we no longer qualify for the exemptions for an emerging growth company, we may still be, in certain circumstances, subject to scaled disclosure requirements as a smaller reporting company. For example, smaller reporting companies, like emerging growth companies, are not required to provide a compensation discussion and analysis under Item 402(b) of Regulation S-K or auditor attestation of internal controls over financial reporting.
Our cash balance is $ 810 as of March 31, 2015 .. We believe our cash balance is not sufficient to fund our operations for any period of time. We have been utilizing and may utilize funds from Andrei Kriukov, our President, who has informally agreed to advance funds to allow us to pay for offering costs, filing fees, and professional fees. As of March 31, 2015 , Mr. Kriukov advanced us $ 2,917 .. Mr. Kriukov, however, has no formal commitment, arrangement or legal obligation to advance or loan funds to the company. In order to implement our plan of operations for the next twelve month period, we require a minimum of $32,000 of funding from this offering. Being a development stage company we have very limited operating history. After twelve months period we may need additional financing. We do not currently have any arrangements for additional financing. The current rate at which we use funds in our operations is approximately $833 a month. The minimum period of time we will be able to conduct planned operations using currently-available capital resources is approximately one month. Our principal executive offices are located at 1810 E. Sahara Ave., Office 216 Las Vegas, NV 89104. Our phone number is (702) 605-0605.
We are a development stage company and have generated no revenue to date. Our full business plan entails activities described in the Plan of Operation section below. Long term financing beyond the maximum aggregate amount of this offering may be required to expand our business. The exact amount of funding will depend on the scale of our development and expansion. Our expansion may include expanding our office facilities, software, server and workstations, hiring sales personnel and entering into agreements with new clients. We do not currently have planned our expansion, and we have not decided yet on the scale of our development and expansion and on exact amount of funding needed for our long term financing. If we do not generate any revenue we may need a minimum of $10,000 of additional funding at the end of the twelve month period described in our “Plan of Operation” below to maintain a reporting status.
Our independent registered public accountant has issued a going concern opinion. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated revenues and no revenues are anticipated until we complete our initial business development. There is no assurance we will ever reach that stage.
To meet our need for cash we are attempting to raise money from this offering. If we are unable to successfully find customers we may quickly use up the proceeds from this offering and will need to find alternative sources. At the present time, we have not made any arrangements to raise additional cash, other than through this offering.
If we need additional cash and cannot raise it, we will either have to suspend operations until we do raise the cash, or cease operations entirely. Even if we raise $80,000 from this offering, it will last one year, but we may need more funds for business operations in the next year, and we will have to revert to obtaining additional money.
PLAN OF OPERATION
Establish Our Office
1-3 months
$2,000-$4,000
We lease the office in Las Vegas, Nevada and require the necessary equipment to continue operations. We plan to purchase office equipment such as telephones, fax, office supplies and furniture. We also need to organize place for our server (data center). We believe that it will cost at least $2,000 to set up office and obtain the necessary equipment and stationery to continue operations. If we sell 50% and 75% of the shares offered we will buy better equipment with advanced features that will cost us $2,500 and $3,500 accordingly. In the event we sell all of the shares offered we will buy additional and more advanced equipment that will help us in everyday operations; therefore the office set up cots will be approximately $4,000.
Website and App Development
3-5 months
$2,000-$4,500
We plan to develop our website and application for mobile devices. We are going to finish this step in the end of 5th month of our operation. Our sole officer and director, Andrei Kriukov will be in charge of registering our web domain and find affordable hosting with advanced features. As of the date of this prospectus we have not yet identified or registered any domain names for our website. But we plan to find easy-to-remember name for better promotion. We plan to hire a web-studio for creating design and CSS and HTML code. We do not have any written agreements with any web designers at current time. Our President, Andrei Kriukov will be responsible for the content and programming online project management system and application. All activities regarding our business will occur at our Las Vegas office.
The website development costs, including site design and implementation will be approximately $2,000. The web site require Flash, Java, HTML 5 support. If we sell 75% of the shares offered and all of the shares offered we will develop more sophisticated and well-designed website, therefore developing cost will be $3,000 and $4,500 accordingly. Updating and improving our website will continue throughout the lifetime of our operations.
Buying Professional Software
4-5 months
$3,000-$4,500
We are going to buy professional software for programming our project management online system and application. We plan to buy advanced license for many workstations in case our business will develop. We need professional development tools for ASP.NET programming language as Macromedia HomeSite (Adobe Systems), Eclipse Java development tools (JDT) and Eclipse C++. Also we need Microsoft development tools software and mobile application iOS SDK and Android SDK software. We are going to buy Antivirus Software to defense our server and customers data. Our director will be responsible for programming. We have to buy minimum set of software for $3,000 in case we sell 50% of the shares. If we sell 75% and 100% of the shares we will buy additional extensions to develop more sophisticated online project management software, we need $4,000 and $4,500 accordingly.
Buying Server and Workstations
8-9 months
Minimum $5,000
We need to buy a computer server (data center) to operate all customers’ data. We need Dell PowerEdge M1000e server or equivalent with advanced hardware requirements. With the growth of our customer base, we need to conclude an agreement with the service provider server maintenance. We plan to buy workstations with advanced hardware suitable for software programming. If we sell 50% shares in this offering, the purchase costs of the server and workstations will be approximately $5,000. If we sell 75% of the shares offered we will buy more professional server and workstations with additional hardware and equipment with advanced features that will cost us approximately $7,000. In the event we sell all of the shares offered we will buy more advanced equipment and it will cost approximately $13,000.
Research and Development
8-12 months
$1,500-$5,000
Research and development costs related to the development of our software applications are generally recognized as incurred. We have devoted our product development efforts primarily to enhancing the functionality, and expanding the capabilities, of our applications. We expect that our research and development expenses will continue to increase in absolute dollars as we increase our research and development headcount to further strengthen and enhance our applications. We plan to spend minimum $1,500 for research and development process.
Marketing and Sales
9-12 months
$8,000-$31,000
Our sole officer and director, Andrei Kriukov, will be responsible for marketing of our product and our service. We intend to use marketing strategies, such as web advertisements, social communities marketing, direct mailing, and phone calls to acquire potential customers. We believe that the key marketing strategy for our type of business is online marketing. One of the most powerful aspects of online marketing is the ability to target our chosen group with a high degree of accuracyaccuracy. Any financial projections, especially those based on ventures with minimal operating history, are inherently subject to a high degree of uncertainty, and cost effective way. We will use online marketing tools such as banner advertisingtheir ultimate achievement depends on the timing and organic search, business communities. Also, social computing toolsoccurrence of a complex series of future events, both internal and services tend to focus primarily on communication systems that allow users to interact and share data, and collaborative systems that enable information sharing and collaboration among users.
We expect that sales and marketing expenses will increase as a result of our expected growth, and sales and marketing expenses may fluctuate as a percentage of total revenues dueexternal to the timing of such expenses, in any particular quarterly or annual period.
We also plan to attend shows and exhibitions in our industry to come face to face and find new business opportunities and partners. We intend to spend at least $8,000 on marketing efforts during the first year. Marketing is an ongoing matter that will continue during the life of our operations.
Andrei Kriukov, our president willenterprise. There can be devoting approximately twenty hours per week to our operations. Once we expand operations, and are able to attract more and more customers to use our services, Mr. Kriukov has agreed to commit more time as required. Because Mr. Kriukov will only be devoting limited time to our operations, our operations may be sporadic and occur at times which are convenient to him As a result, operations may be periodically interrupted or suspended which could result in a lack of revenues and a cessation of operations
Estimated Expenses for the Next Twelve Month Period
The following provides an overview of our estimated expenses to fund our plan of operation over the next twelve months.
Description | If 25% shares sold | If 50% shares sold | If 75% shares sold | If 100% shares sold |
Fees $ | Fees $ | Fees $ | Fees $ | |
TOTAL | 12,000 | 32,000 | 52,000 | 72,000 |
SEC reporting and compliance | 10,000 | 10,000 | 10,000 | 10,000 |
Establishing an office | 2,000 | 2,500 | 3,500 | 4,000 |
Professional Software | - | 3,000 | 4,000 | 4,500 |
Serever and Workstations | - | 5,000 | 7,000 | 13,000 |
Research and Development | - | 1,500 | 3,000 | 5,000 |
Website and app development | - | 2,000 | 3,000 | 4,500 |
Marketing and Sales | - | 8,000 | 21,500 | 31,000 |
DESCRIPTION OF BUSINESS
In General
We were incorporated in Nevada State on September 2, 2014. We lease the office in Las Vegas, Nevada and plan to start our operations. Our business office is located at 1810 E. Sahara Ave., Office 216, Las Vegas, NV 89104. Our phone number is (702) 605-0605.
Punto Group, Corp. are going to provide internet-based project management software for small business. Our project management software enables organizations to plan, manage and execute any business projects. Our software application will help organizations better optimize all kind of project resources and plan and control all business processes online. We will provide an online service of the project management system, a mobile application, and technical support. Our online system and software applications address a broad range of business activity, from planning to task execution.We intend to offer a complete solution for small businesses that allows them to manage projects online with easy access to the user's files in real time and project’s team collaboration. However, there is no assurance that potential revenues or expenses we project will achieve our business objectives in the future. There is no guarantee that we will sell the minimum amount of the shares we need to start our operations or assurance that we will generate any revenue.
Background
be accurate.
AccordingLimited Management Team
Our limited senior management team size may hamper our ability to Wikipedia projecteffectively manage a publicly traded company while operating our business. Our managementis the process and activity of planning, organizing, motivating, and controlling resources, procedures and protocols to achieve specific goals team has experience in scientific or daily problems. Aprojectis a temporary endeavor designed to produce a unique product, service or resultwith a defined beginning and end (usually time-constrained, and often constrained by funding ordeliverables),undertaken to meet unique goals and objectives,typically to bring about beneficial change or added value. The temporary nature of projects stands in contrast withbusiness as usual (or operations),which are repetitive, permanent, or semi-permanent functional activities to produce products or services. In practice, 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 two systems is often quite different,requirements while simultaneously working on cultivating, developing and as such requires the development of distinct technical skills anddistributing our products. Our management strategies.
Project management includes developing a project plan, which includes defining and confirming the project goals and objectives, identifying tasks and how goals will be achieved, quantifyingrequired 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 resources needed,imposition of fines and determining budgetspenalties and timelinesharm our business.
Risks Related to our Common Stock and this Offering
Limited Trading
Although prices for completion. It also includes managingshares of our Common Stock are quoted on the implementation of the project plan, along with operating regular 'controls' to ensure thatOTC Markets, there is accuratelittle current trading and objective information on 'performance' relative to the plan, and the mechanisms to implement recovery actions where necessary.
The development of information technology and the Internet enables to create new project management tools. Many companies use project management software in order to optimize their business. Web-based services are havingno assurance can be given that an impact on more traditional service delivery mechanisms.
All materials presented in this prospectus were not prepared for us. We gathered all general information form publicly available information sources.
We are going toactive public trading market will develop a special project management software for small business. Our software will help to small business in their daily operations. Weor, if developed, that it will be developing easy-to-use tools for people who organize their own business and would like to optimize it with project management system approach. We intend to offer online internet-based project management system and mobile application. To work in our online system will require only a browser, mobile devise, internet connection and clients get access to projects from anywhere and at any time. We are creating easy website navigation and friendly design for our customers.sustained. The key idea of our businessOTC Markets is providing the convenience, portability, ease of use and accessibility tools for any entrepreneur.
Our software can be used with any web browser and mobile device supported by Android or iOS. The browser should support Java and Flash technologies. The mobile app will be prepared for Android and iOS mobile platforms. Our potential clients will meet with web navigation regarding key project management processes: time management and controlling, cost analyzing and controlling, scope management, quality management, The project management tools will be used in software such as Milestone Checklist (Milestones are a tool used in project management to mark specific points along a project timeline. These points may signal anchors suchgenerally regarded as a project startless efficient and end date, a need for external review or input and budget checks, among others. In many instances, milestones do not impact project duration. Instead, they focus on major progress points that must be reached to achieve success) and Gantt Chart (Gantt chart illustrates the project schedule and shows the project manager the interdependencies of each activity. Gantt charts are universally used for any type of project from construction to software development).
We will technically support our potential clients by sending them tutorials and instruction and chat with them online in case technical problems.
less prestigious trading market than other national markets. There is no assurance that we will achieveif or when our business objectives in the future and our softwareCommon Stock will be quoted on demand in the future. Thereanother more prestigious exchange or market. The market price of our Common Stock is no guarantee that we will sell the minimum amount of the shares we need to start our operations or assurance that we will generate any revenue.
Exiting Project Management Online Systems and Software Overview
One of the most common project management software tool types is scheduling tools. Scheduling tools are used to sequence project activities and assign dates and resources to them. The detail and sophistication of a schedule produced by a scheduling tool can vary considerably with the project management methodology used, the features provided and the scheduling methods supported. According to Wikipedia scheduling tools may include support for:
- Multiple dependency relationship types between activities.
- Resource assignment and leveling.
- Critical path.
- Activity duration estimation and probability-based simulation.
- Activity cost accounting.
- Providing information.
Project planning software can be expected to provide information to various people or stakeholders, and can be used to measure and justify the level of effort required to complete the project. Typical requirements might include:
- Overview information on how long tasks will take to complete.
- Early warning of any risks to the project.
- Information on workload, for planning holidays.
- Evidence.
- Historical information on how projects have progressed, and in particular, how actual and planned performance are related.
- Optimum utilization of available resource.
- Cost maintenance.
- Collaboration with each teammates and customers.
- Instant communication to collaborators and customers.
The project management software could be divided on the following types:
Desktop
Project management software has been implemented as a program that runs on the desktop of each user. Project management tools that are implemented as desktop software are typically single-user applications used by the project manager or another subject matter expert, such as a scheduler or risk manager.
Web-based
Project management software has been implemented as a web applicationlikely to be accessed using a web browser. This may also include the ability to use a smartphone or tablet to gain access to the application. Software as a Service (SaaS) is also web-based and has become a common delivery modelhighly volatile because for many business applications, including Project Management, Project Management Information System (PMIS) and Project Portfolio Management (PPM). SaaS is typically accessed by users usingsome time there will likely be a thin client via a web browser.
Personal
A personal project management application is one used at home, typically to manage lifestyle or home projects. There is considerable overlap with single user systems, although personal project management software typically involves simpler interfaces. See also non-specialised tools below.
Single user
A single-user system is programmed with the assumption that only one person will ever need to edit the project plan at once. This may be used in small companies, or ones where only a few people are involved in top-down project planning. Desktop applications generally fall into this category.
Collaborative
A collaborative system is designed to support multiple users modifying different sections of the plan at once; for example, updating the areas they personally are responsible for such that those estimates get integrated into the overall plan. Web-based tools, including extranets, generally fall into this category, but have the limitation that they can only be used when the user has live Internet access. To address this limitation, some software tools using client–server architecture provide a rich client that runs on users' desktop computer and replicate project and task information to other project team members through a central server when users connect periodically to the network. Some tools allow team members to check out their schedules (and others' as read only) to work on them while not on the network. When reconnecting to the database, all changes are synchronized with the other schedules.
Integrated
An integrated system combines project management or project planning, with many other aspects of company life. For example, projects can have bug tracking issues assigned to each project, the list of project customers becomes a customer relationship management module, and each person on the project plan has their own task lists, calendars, and messaging functionality associated with their projects.
Non-specialized tools
While specialized software is common, software that is not project management-specific is often used in the management of projects. In particular, office productivity tools are used by most project managers.
We will provide web-based type of project management software because we believe that this type is a priority solution for modern customers.
Our Product and Service
We will provide an online service for small business to manage their personal or business projects. We will be developing easy-to-use tools for people who organize their own business and would like to optimize it with project management system approach. We intend to offer online internet-based project management system and mobile application. To work in our online system will require only a browser, mobile devise, internet connection and clients get access to projects from anywhere and at any time. We are creating easy website navigation and friendly design for our customers. The key idea of our business is providing the convenience, portability, ease of use and accessibility tools for any entrepreneur.
Online Project Management System
We are going to develop a website for project management online. Our potential clients will get access to our web-platform and can organize a project. It helps to keep all project data in one place. Customers can work effectively with instant email notifications and the built-in collaboration features on projects and tasks. We will provide our future customers with free and premium access. It is possible to manage one project with limited operations with free access. Premium access allows to work with many projects with any resources. The website supports all Internet protocols and technologies such as HTML 5, Flash, Java and etc.
Mobile Application
We will develop an application for project management. This application will be integrated with our website. Our future customers can download the application to their mobile device from the website.
Technical Support
We plan to provide technical support service for our future customers. We are going to set up online hotline, forum and guest book forms for communication concerning technical troubles with our website or application.
Customer Segments
Our important customers are small business companies that just established their business or already sell their service and products. We are focused on small businesses because they don't have even enough money to pay expensive consultants for project management or software. This type of customers first need in a simple and inexpensive project management system, which will allow them to quickly solve their projects’ tasks. Many of our future customers even do not have an office or place to do their operations. We are developing an applicationtrading market for the most popular mobile platforms – iOS and Android. It helps to our future clients to manage a project online.
We divide our clients on 2 groups. The first has never met with project management systems. The second has known the main subject but never managed a project online. We will create convenient environment for both of them and believe that will easy manage their project with our system.
Competition
The overall market for project management online systems is rapidly evolving and subject to changing technology, shifting customer needs and frequent introductions of new systems and applications. We believe there are a limited number of direct competitors that provide an online project management systems for small business offering. However, we will face competition both from project management software companies and cloud-based online systems. Many of our competitors have long history and image.
Primarily we focus on the needsstock, which causes trades of small business given their particular simplicityblocks of operations and management of the mono project.
The principal competitive factors in our market are application functionality, ease of use of applications, total cost of ownership, levels of customer support, brand reputation, capability for integration of applications, ability respondstock to customer needs. Since we have not yet commenced operations or developed software, there is a substantial uncertainty that we compete favorably on the basis of these factors.
Marketing
Our sole officer and director, Andrei Kriukov, will be responsible for marketing of our services. The marketing and advertising will be targeted to small business.
We believe that our business should be promoted with using online marketing tools:
-
Google Adwords. It is an online advertising service that places advertising copy at the top, bottom, or beside, the list of search results Google displays for a particular search query.
-
Social Nets. Nowadays Facebook, Twitter, Instagram, YouTube are the most popular social nets which are using for advertising. There are million subscribers that spend a lot of time there. We plan to create virtual societies to advertise our service there.
-
Apple Store and Google Play. We will sell our application mobile devices there.
-
Webinars. We are going to deliver online lectures for our potential clients to meet them with our service and application.
We believe that our clients will recommend our service to business society.
Even if we are able to obtain sufficient number of customers to buy our services, there is no guarantee that it will cover our costs and that we will be able retain enough customers to justify our expenditures. If we are unable to generate a significant amount of revenue it would materially affect our financial condition and our business could be harmed.
Revenue
We're going to generate our income from the premium access, app sales and the sale of additional space on our server. We also will use our website and application such as platform for other companies advertisement which are interested in our potential customers. However, there is no assurance that we will generate any revenue after completion our offering or ever generate any revenue.
Our customers will pay for using of our online service and application. Our subscription agreements will be one to three years.
We will sell license to new customers. We generally recognize the license fee portion of the arrangement in advance, provided all revenue recognition criteria are satisfied. Our license agreements are typically one year.
Professional services revenue related to implementation, data extraction, integration and configuration and training on our online system and application. We generally recognize the revenue associated with these professional services on a time and materials basis as we deliver the services or provide training to our customers.
Insurance
We do not maintain any insurance and do not intend to maintain insurance in the future. Because we do not have any insurance, if we are made a party of a products liability action, we may not have sufficient funds to defend the litigation. If that occurs a judgment could be rendered against us that could cause us to cease operations.
Office
Our business office is located at 1810 E. Sahara Ave., Office 216 Las Vegas, NV 89104. Our phone number is (702) 605-0605. We lease this office in Sahara Business Center, Las Vegas from September 30, 2014.
Employees
We are a development stage company and currently have no employees, other than our sole officer, Andrei Kriukov.
Government Regulation
We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to our business and operation of any facility in any jurisdiction which we would conduct activities. We do not believe that regulation will have a materialsignificant impact on the way we conductstock price.
Penny Stock Risk
Because our business.
LEGAL PROCEEDINGS
We are notCommon Stock is a “penny stock,” trading therein will be subject to regulatory restrictions. Our Common Stock is currently, a party to any legal proceedings, and we are not aware of any pending or potential legal actions.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTER AND CONTROL PERSONS
The name, age and titles of our executive officer and director are as follows:
|
|
|
|
|
|
Andrei Kriukov has acted as our President, Treasurer, Secretary and sole Director since our incorporation on September 2, 2014. There was no any arrangement or understanding between Mr. Kriukov and any other person(s) pursuant to which he was selected as a director ofin the company. Mr. Kriukov owns 100% of the outstanding shares of our common stock. As such, it was unilaterally decided that Mr. Kriukov was goingnear future will likely continue to be, our sole President, Chief Executive Officer, Treasurer, Chief Financial Officer, Chief Accounting Officer, Secretary and sole member of our board of directors. For the last seven years, Mr. Kriukovconsidered a “penny stock.” The SEC has been working as a freelance project manager in IT. Mr. Kriukov worked for many companies in IT industry around the world such as freelance project manager. He worked for LLC Nowanet (Poland), LLC Opositif Communication (France), Otimize IT (Brazil), LLC Frex Software (Canada), LLC Bitrax Inet (England). He was responsible for IT projects management. Ha has been consulting companies in project management software and solve the projects problems. He created project management tools for every specific project, controlled and prepared analysis of project’s efficiency. Mr. Kriukov operates his business from his offices inthe Kingdom of Thailand and Nevada, USA. Mr. Kriukov intends to devote 20 hours a week of his time to planning and organizing activities of Punto Group, Corp. Once we expand operations, and are able to attract more customers to purchase our product, Mr. Kriukov has agreed to commit more time as required. Because Mr. Kriukov will only be devoting limited time to our operations, our operations may be sporadic and occur at times which are convenient to him. As a result, operations may be periodically interrupted or suspended which could result in a lack of revenues and a cessation of operations.
During the past ten years, Mr. Kriukov has not been the subject to any of the following events:
1. Any bankruptcy petition filed by or against any business of which Mr. Kriukov was a general partner or executive officer either at the time of the bankruptcy or within two years prior toadopted rules that time.
2. Any conviction in a criminal proceeding or being subject to a pending criminal proceeding.
3. An order, judgment, or decree, not subsequently reversed, suspended or vacated, or any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting Mr. Kriukov’s involvement in any type of business, securities or banking activities.
4. Found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Future Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
5. Was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
6. Was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
7. Was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
i.
Any Federal or State securities or commodities law or regulation; or
ii.
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
iii.
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
8. Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
TERM OF OFFICE
Each of our directors is appointed to hold office until the next annual meeting of our stockholders or until his respective successor is elected and qualified, or until he resigns or is removed in accordance with the provisions of the Nevada Revised Statues. Our officers are appointed by our Board of Directors and hold office until removed by the Board or until their resignation.
DIRECTOR INDEPENDENCE
Our board of directors is currently composed of one member, Andrei Kriukov, who does not qualify as an independent director in accordance with the published listing requirements of the NASDAQ Global Market. The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to each director that no relationships exist which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management.
COMMITTEES OF THE BOARD OF DIRECTORS
Our Board of Directors has no committees. We do not have a standing nominating, compensation or audit committee.
EXECUTIVE COMPENSATION
MANAGEMENT COMPENSATION
The following tables set forth certain information about compensation paid, earned or accrued for services by our Executive Officer from inception on September 2, 2014 until March 31, 2015 :
Name and | Year | Salary | Bonus | Stock | Option | Non-Equity | Nonqualified | All Other | Total | |||
Principal | ($) | ($) | Awards | Awards | Incentive Plan | Deferred | Compensation | ($) | ||||
Position |
|
| ($) | ($) | Compensation | Compensation | ($) |
| ||||
|
|
|
|
| ($) | Earnings (S) |
|
| ||||
Andrei Kriukov, President, Secretary and Treasurer | September 2, 2014 until March 31, 2015 |
|
|
|
|
|
|
|
| |||
-0- | -0- | -0- | -0- | -0- | -0- | -0- | -0- |
There are no current employment agreements between the company and its officer.
Mr. Kriukov currently devotes approximately twenty hours per week to manage the affairs of the Company. He has agreed to work with no remuneration until such time as the company receives sufficient revenues necessary to provide management salaries. At this time, we cannot accurately estimate when sufficient revenues will occur to implement this compensation, or what the amount of the compensation will be.
There are no annuity, pension or retirement benefits proposed to be paid to the officer or director or employees in the event of retirement at normal retirement date pursuant to any presently existing plan provided or contributed to by the company or any of its subsidiaries, if any.
DIRECTOR COMPENSATION
The following table sets forth director compensation as of March 31, 2015 :
Name | Fees | Stock | Option | Non-Equity | Nonqualified | All Other | Total |
Earned | Awards | Awards | Incentive Plan | Deferred | Compensation | ($) | |
or Paid | ($) | ($) | Compensation | Compensation | ($) |
| |
in Cash |
|
| ($) | Earnings |
|
| |
($) |
|
|
| ($) |
|
| |
Andrei Kriukov | -0- | -0- | -0- | -0- | -0- | -0- | -0- |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Andrei Kriukov will not be paid for any underwriting services that he performs on our behalf with respect to this offering.
On October 8, 2014, we issued a total of 4,000,000 shares of restricted common stock to Andrei Kriukov, our sole officer and director in consideration of $4,000. Further, Mr. Kriukov has advanced funds to us. As of May 15 , 2015, Mr. Kriukov advanced us $ 2,917 .. There is no due date for the repayment of the funds advanced by Mr. Kriukov. The obligation to Mr. Kriukov does not bear interest. There is no written agreement evidencing the advancement of funds by Mr. Kriukov or the repayment of the funds to Mr. Kriukov. The entire transaction was oral. Mr. Kriukov’s verbal agreement to fund SEC registration costs is non- binding and discretionary. Mr. Kriukov is providing us office space free of charge and we have a verbal agreement with Mr. Kriukov that, if necessary, he will loan the company funds to complete the registration process.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of Sep by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities, (ii) our director, and or (iii) our officer. Unless otherwise indicated, the stockholder listed possesses sole voting and investment power with respect to the shares shown.
|
|
|
|
|
| ||
|
|
|
|
|
(1) A beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights.
Future sales by existing stockholders
A total of 4,000,000 shares of common stock were issued to our sole officer and director, all of which are restricted securities, as defined in Rule 144 of the Rules and Regulations of the SEC promulgated under the Securities Act. As we are a “shell company”, Rule 144 would not be available for the resale of restricted securities by our stockholders until we have complied with the requirements of Rule 144(i).Shares purchased in this offering, which will be immediately resalable, and sales of all of our other shares after applicable restrictions expire, could have a depressive effect on the market price, if any, of our common stock and the shares we are offering.
There is no public trading market for our common stock. There are no outstanding options or warrants to purchase, or securities convertible into, our common stock. There is one holder of record for our common stock. The record holder is our sole officer and director who owns 4,000,000 restricted shares of our common stock.
PLAN OF DISTRIBUTION
We are registering 4,000,000 shares of our common stock for sale at the price of $0.02 per share.
This offering is being made by us without the use of outside underwriters or broker-dealers. The shares of common stock to be sold by us will be sold on our behalf by Andrei Kriukov, our sole executive officer and director. He will not receive commissions, proceeds or other compensation from the sale of any shares on our behalf.
In connection with the Company’s selling efforts in the offering, Mr. Kriukov will not register as aregulate broker-dealer pursuant to Section 15 of the Exchange Act, but rather will rely upon the “safe harbor” provisions of SEC Rule 3a4-1, promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Generally speaking, Rule 3a4-1 provides an exemption from the broker-dealer registration requirements of the Exchange Act for persons associated with an issuer that participate in an offering of the issuer’s securities. Mr. Kriukov is not subject to any statutory disqualification, as that term is defined in Section 3(a)(39) of the Exchange Act. Mr. Kriukov will not be compensated in connection with his participation in the offering by the payment of commissions or other remuneration based either directly or indirectly on transactions in our securities. Mr. Kriukov is not, nor has been within the past 12 months, a broker or dealer, and he is not, nor has been within the past 12 months, an associated person of a broker or dealer. At the end of the offering, Mr. Kriukov will continue to primarily perform substantial duties for the Company or on its behalf otherwise thanpractices in connection with transactions in securities. Mr. Kriukov will not and has not participated in the selling of anypenny stocks. Penny stocks generally are equity securities for any issuer more than once every twelve months.
This offering is self-underwritten, which means that it does not involve the participation of an underwriter or broker, and aswith a result, no broker for the sale of our securities will be used. In the event a broker-dealer is retained by us to participate in the offering, we must file a post-effective amendment to the registration statement to disclose the arrangements with the broker-dealer, and that the broker-dealer will be acting as an underwriter and will be so named in the prospectus. Additionally, FINRA must approve the terms of the underwriting compensation before the broker-dealer may participate in the offering.
To the extent required under the Securities Act, a post-effective amendment to this registration statement will be filed disclosing the name of any broker-dealers, the number of shares of common stock involved, the price at which the common stock is to be sold, the commissions paid or discounts or concessions allowed to such broker-dealers, where applicable, that such broker-dealers did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus and other facts material to the transaction.
We are subject to applicable provisions of the Exchange Act and the rules and regulations under it, including, without limitation, Rule 10b-5 and a distribution participant under Regulation M. All of the foregoing may affect the marketability of the common stock.
All expenses of the registration statement including, but not limited to, legal, accounting, printing and mailing fees are and will be borne by us.
Penny Stock Regulations
You should note that our stock is a penny stock. The SEC has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject(other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to certain exceptions. Ourtransactions in such securities are coveredis provided by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000exchange or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse.system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from thethose rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which providesspecifies information about penny stocks and the nature and levelsignificance of risks inof the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and itsany salesperson in the transaction, and monthly account statements showingindicating the market value of each penny stock held in the customer'scustomer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from thesethose rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser'spurchaser’s written agreement to the transaction. These disclosure and other requirements may haveadversely affect the effect of reducing the level of trading activity in the secondary market for our Common Stock.
No Dividend Payments
We have not paid dividends in the past and we do not expect to pay dividends for the foreseeable future, and any return on investment may be limited to potential future appreciation on the value of our Common Stock. Our payment of any future dividends will be at the discretion of our board of directors after taking into account various factors, including without limitation, our financial condition, operating results, cash needs, growth plans and the terms of any credit agreements that we may be a party to at the time. To the extent we do not pay dividends, our stock may be less valuable because a return on investment will only occur if and to the extent the stock price appreciates, which may never occur. In addition, shareholders must generally rely on sales of the shares they own after price appreciation as the only way to realize their investment, and if the price of our Common Stock does not appreciate, then there will be no return on investment.
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 30.2% 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.
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.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
The information contained in this prospectus contains certain forward-looking statements. All statements other than statements of historical facts contained or incorporated by reference in this prospectus, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “will,” “may,” “future,” “plan,” “intend” and “expect” and similar expressions generally identify forward-looking statements. These forward-looking statements are not guarantees and are subject to known and unknown risks, uncertainties and assumptions that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Although we believe that our plans, intentions and expectations reflected in the forward-looking statements are reasonable, we cannot be sure that they will be achieved. Particular uncertainties that could cause our actual results to be materially different than those expressed in our forward-looking statements 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” on page 3 of this prospectus. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the foregoing. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
We will not receive any of the proceeds from the sale of the shares of our Common Stock being offered for sale by the selling shareholders. We will bear all fees and expenses incident to our obligation to register the shares of Common Stock. Brokerage fees, commissions and similar expenses, if any, attributable to the sale of shares offered hereby will be borne by the applicable selling shareholders.
Market Price for our Common Stock
Our Common Stock is currently quoted on the OTC Markets under the trading symbol “OWPC.” Prior to February 7, 2019, the symbol for our Common Stock was “PNTT.” Since the commencement of trading, there has been an extremely limited market for our Common Stock. 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, and have not been adjusted for the one-for-four reverse stock split of our Common Stock effected on January 10, 2019. 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, 2017 | ||||||||
First Quarter | $ | 0.08 | $ | 0.08 | ||||
Second Quarter | $ | 0.08 | $ | 0.08 | ||||
Third Quarter | $ | 0.08 | $ | 0.08 | ||||
Fourth Quarter | $ | 0.08 | $ | 0.08 | ||||
Fiscal Year Ended December 31, 2018 | ||||||||
First Quarter | $ | 0.08 | $ | 0.08 | ||||
Second Quarter | $ | 0.08 | $ | 0.08 | ||||
Third Quarter | $ | 0.08 | $ | 0.08 | ||||
Fourth Quarter | $ | 4.04 | $ | 0.08 | ||||
Fiscal Year Ending December 31, 2019 | ||||||||
First Quarter | $ | 4.10 | $ | 0.78 | ||||
Second Quarter | $ | 4.00 | $ | 2.00 | ||||
Third Quarter (through September 10, 2019) | $ | 4.00 | $ | 3.00 |
Holders
As of September 10, 2019, there were approximately 105 registered holders of record of our Common Stock.
Dividends
We do not anticipate paying dividends in the foreseeable future and currently intend to retain any future earnings to support the development and expansion of our business. The declaration and payment of dividends is subject to these penny stock rules. Consequently, these penny stock rules may affect the abilitydiscretion of broker-dealersour board of directors and to tradecertain limitations imposed under Nevada statutes. The timing, amount and form of dividends, if any, will depend upon, among other things, our securities.results of operation, financial condition, cash requirements, and other factors deemed relevant by our board of directors.
11 |
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 Colombia”). With respect to this discussion, the terms “we,” “us,” “our” and “our company” refers to One World Pharma, Inc. and its wholly-owned direct and indirect subsidiaries, OWP Ventures and OWP Colombia.
We plan to be a producer of raw cannabis and hemp plant ingredients for both medical and industrial uses across the globe. We have received licenses from Colombian regulators to cultivate, produce and distribute the raw ingredients of the cannabis and hemp plant for medicinal, scientific and industrial purposes. Specifically, we are one of the first companies in Colombia to receive licenses for seed, cultivation, extraction and export from the Colombian government (the “Licenses”).
We planted our first crop of cannabis in Popayan, Colombia in 2018, and began initial harvesting in the first quarter of 2019 for the purpose of further research and development activities and quality control testing of the cannabis we have produced. We intend to commence limited shipping of non-psychoactive products to customers in the first quarter of 2020. Although we hold the four Colombian Licenses, we will need to obtain additional approvals from Colombian regulators before we can fully execute our business plan, particularly with respect to the sale psychoactive products. As described further under “Regulation” below,
● | We will need to obtain quota approvals from the Colombian authorities before we can commence commercial sale of our psychoactive products under our Cannabis Manufacturing License and Psychoactive Cultivation License; | |
● | We will need to register the distinct cannabis strains we expect to sell on Colombia’s National Registrar; and | |
● | We will need to be issued sanitary registrations before we can sell products intended for human consumption. |
Our first cultivation and extraction sites are located in Popayan, Colombia. Our facility encompasses approximately 30 acres and includes a covered greenhouse built specifically to cultivate high-grade cannabis and hemp. In addition, we have entered into agreements with local farming co-operatives that include small farmers and indigenous tribe members, under which they will cultivate cannabis on up to approximately 140 acres of land using our seeds and propagation techniques, and sell their harvested products to us on an exclusive basis.
We employ modern propagation and cultivation techniques drawn from U.S. practices that allow us to rapidly multiply the cells of a specific plant strain to produce large numbers of genetically consistent progeny plants using our own plant tissue culture method. We believe this technique allows us to cultivate plants which are stable, robust and able to produce genetically superior cannabis and hemp derived products. We intend to have our processes and products certified as compliant with international standards, including Good Agricultural Practices (“GAP”), Good Manufacturing Practice (“GMP”) and the standards set forth in EU Pharmacopoeia, a publication that sets forth quality standards applicable to the penny stock rules discourage investor interestEuropean pharmaceutical industry.
We intend to build additional covered greenhouse capacity in excess of 1 million square feet. We are building out our extraction and limitproduction facility and expect it to be operational before the marketabilityend of 2019. In addition, we have a contractual relationship with a local co-operative under which they agree to assist us in cultivation at our facility.
We have received approval from the Instituto Colombiano Agropecuario (the “ICA”) to begin cultivating 13 proprietary high THC cannabis strains and 2 high CBD strains. We have also received approval to grow 68 mother plants to begin this characterization process, which we have commenced. If we are successful in this process, the strains will be entered in the ICA cultivar registry. Only registered strains may be sold under Colombian law.
We believe there is a large and growing market for cannabis and hemp products around the world. The market for CBD has shown particular demand and growth. We will pursue sales into this market using a direct sales force to establish direct customer relationships and distributor relationships. We will seek out customers who have large and recurring needs and demands. Countries that we intend to focus on include EU countries, the UK, Poland, Israel, and Canada.
We expect to commence limited shipping of non-psychoactive products to customers in the first quarter of 2020. However, we are subject to numerous risks that may delay the date of first sale, including regulatory requirements imposed or that may in the future be imposed by the Colombian regulating authorities. In addition, we will need to obtain quota approval from Colombian regulators before making we can make sales of our common stock.psychoactive products.
ProceduresHistory and Background
One World Pharma S.A.S., is a Colombian company (“OWP Colombia”), incorporated on July 14, 2017 with the goal of procuring the following Colombian Licenses.
On December 20, 2017, the Colombian Ministry of Health, by means of resolution No. 5251 of 2017, granted OWP Colombia its license for Subscribingthe production of cannabis derivatives for domestic use and export, allowing OWP Colombia to extract high tetrahydrocannabinol (“THC”) compounds (“Cannabis Manufacturing License”). This license will expire on December 20, 2022.
If you decideOn December 26, 2017, the Colombian Ministry of Justice, by means of resolution No. 1087 of 2017, granted OWP Colombia its license to subscribeuse seeds for anysowing for sale or delivery of seeds and/or for scientific research purposes, allowing for genetic and seed bank registration (“Cannabis Seed Possession License”). This license will expire on December 26, 2022.
On December 26, 2017, the Colombian Ministry of Justice, by means of resolution No. 1088 of 2017, granted OWP Colombia its license to grow non-psychoactive cannabis plants (less than 1.0% THC). Under this license, OWP Colombia can produce seeds for planting, deliver and make sales of the cannabis crop in order to produce cannabis derivatives and deliver and make sales of the cannabis crop for industrial purposes (“Cannabis Non-Psychoactive Cultivation License”). This license will expire on December 26, 2022.
On January 4, 2018, the Colombian Ministry of Justice, by means of resolution No. 0015 of 2018, granted OWP Colombia its license to grow psychoactive cannabis plants (greater than 1.0% THC) (“Psychoactive Cultivation License”). Under this license, OWP Colombia can produce seeds for planting, and deliver and make sales of the cannabis crop in order to produce cannabis derivatives. This license will expire on January 4, 2023.
Six months prior to the expiration of each of the Licenses, we can apply for successive renewals for additional five-year periods. In each renewal application, the corresponding Ministry will assess compliance with all the relevant requirements in determining whether or not to renew the License.
On March 27, 2018, OWP Ventures, Inc. was formed as a Delaware corporation for the purpose of acquiring OWP Colombia.
On May 30, 2018, OWP Ventures entered into a Stock Purchase Agreement with the shareholders of OWP Colombia whereby the shareholders of OWP Colombia transferred their shares in this offering, you must
-
execute and deliver a subscription agreement; and
-
deliver a check or certified fundsOWP Colombia to usOWP Ventures in exchange for acceptance or rejection.
All checks for subscriptions must be made payable to “Punto Group, Corp.” The Company will deliver stock certificates attributable to10,200,000 shares of common stock purchased directlyof OWP Ventures.
OWP Colombia planted its first crop of cannabis in 2018, which it began harvesting in the first quarter of 2019 for the purpose of further research and development activities and quality control testing of the cannabis we have produced. To date, we have not yet generated any revenues from our activities.
Products
We are focused on cultivating, processing and supplying crude cannabis oil, distillate and isolate to customers’ specification. We plan to sell as a wholesaler to industrial companies making cannabis related products. We also plan on supplying the hemp plant bio-mass remaining after our extraction process to industry participants that utilize hemp in the manufacture of their products. Hemp is used to make a variety of commercial and industrial products, including rope, textiles, clothing, shoes, food, paper, bioplastics, insulation and biofuel.
We are currently in the process of cultivating medicinal cannabis at our facility in Popayán, Colombia for a variety of medical conditions. We have registered 25 varieties or strains of cannabis with the Colombian Ministry of Health and intend to register additional varieties by the end of 2019. See “Operations - Strains of Cannabis”. The development of these strains enables us to select mother plants and identify the concentrations of cannabinoids required for the products which we intend to distribute. The cannabis will be produced in accordance with GMP Standards. We are committed to developing final products consistent with medicinal cannabis industry standards and pharmaceutical procedures. Our products will include a variety of cannabinoids and terpenes designed to address specific medical conditions. The composition of the strains will include a wide range of THC and CBD ratios.
Industry
Medicinal cannabis refers to the purchasers. use of cannabis and its constituent cannabinoids and terpenes to treat disease or ameliorate symptoms such as pain, muscle spasticity, nausea and other indications. Cannabinoid is a blanket term covering a family of complex chemicals, both natural and man-made, that bind with cannabinoid receptors (protein molecules on the surface of cells) and effect a wide number of responses. Cannabinoid receptors in the human body are part of a system called the endocannabinoid system. This system produces chemicals called endocannabinoids, which also bind with cannabinoid receptors. Cannabinoid receptors are found in the brain and throughout the body. Scientists have found that cannabinoid receptors in the endocannabinoid system are involved in a vast array of functions in our bodies, including helping to modulate brain and nerve activity (including memory and pain), energy metabolism, heart function, the immune system and even reproduction. While there are a large number of active cannabinoids found in cannabis, the two most common currently used for medical purposes are tetrahydrocannabinol and cannabidiol. Although no clinical trials have been completed in the United States to validate the effectiveness of tetrahydrocannabinol or cannabidiol in managing disease and improving symptoms, scientific studies have identified that they, alone and/or in combination, may potentially provide treatment benefits for a large number of medical conditions. For example, tetrahydrocannabinol, a psychotropic cannabinoid, has been shown to activate pathways in the central nervous system which work to block pain signals and has shown potential to assist patients with Post Traumatic Stress Disorder (PTSD) and stimulate appetite in patients following chemotherapy. Cannabidiol, on the other hand, is non-psychotropic and has shown potential to relieve convulsion and inflammation, and is the active ingredient in Epidolex, which in June 2018 was approved by the FDA for the treatment of two rare and severe forms of epilepsy.
RightRegulation
Our active business operations are currently conducted solely within Colombia, and as such, the discussion below is limited to Reject SubscriptionsColombian laws and regulations applicable to our business, which require us to hold the relevant licenses, quotas and other permits, as described below. Our activities in the United States consist solely of corporate administrative activities at our Las Vegas headquarters, including accounting, finance and SEC compliance functions. We believe that our current activities in the United States will not subject us to regulation under the U.S. Controlled Substances Act or other applicable U.S. federal or state laws with respect to our proposed business plans. All export activities will be conducted from Colombia, and we do not intend to export any of our products to jurisdictions where such sales are not legal under local law. Accordingly, we do not currently intend to export our products to the United States to the extent such products may be subject to regulation under the U.S. Controlled Substances Act or other applicable U.S. federal or state regulations.
WeRegulatory Authorities
Several authorities interact in the Colombian cannabis industry. The Ministry of Health is in charge of granting the Cannabis Manufacturing and Distribution License and exercises administrative control over the production of cannabis derivatives. The Ministry of Justice, through the subsection for the Control and Supervision of Chemical Substances and Narcotic Drugs, is the competent authority for issuing the Cannabis Seeds Possession License, the Cannabis Psychoactive Cultivation License and the Cannabis Non-Psychoactive Cultivation License and for exercising administrative control over cannabis operations and cultivation. The National Narcotics Fund (“FNE”) exercises administrative and operational control over activities related to the management of psychoactive and non-psychoactive cannabis and its derivatives. The National Food and Drug Surveillance Institute (“INVIMA”) is in charge of issuing and monitoring compliance under the health and phytosanitary registrations that may be applicable to products containing cannabis derivatives. The Colombian Agricultural Institute (“ICA”) is responsible for maintaining the registry of the Genetic Pool or ¨Fuente Semillera” and the registration of cannabis seeds and strains under the “Registro Nacional de Cultivares Comerciales”.
In exercising the administrative and operational control activities discussed above the Ministry of Justice, Ministry of Health, ICA and FNE are required to coordinate their activities to the extent necessary, according to their competencies, with the Ministry of Agriculture and Rural Development through ICA, as well as with the National Police.
Licenses
Under Colombian law, there are four types of cannabis licenses that authorize different activities concerning the various stages of the production line of the medical cannabis industry: (i) the Cannabis Seeds Possession License; which is required for the domestic sale and delivery of seeds (but not export) and for scientific research purposes; (ii) the Cannabis Psychoactive Cultivation License, which is required for the production of seeds for sowing; for grain production; production of cannabis derivatives; for scientific research purposes, for storage, and for final disposal; (iii) the Cannabis Non-Psychoactive Cultivation License, which is required for the production of grain and seeds for sowing; production of cannabis derivatives; for industrial purposes; for scientific research purposes; for storage; and for final disposal; and (iv) the Cannabis Manufacturing and Distribution License, which is required for the production of cannabis derivatives for domestic use; production of cannabis derivatives for scientific research purposes; and production of cannabis derivatives for exportation. OWP Colombia holds all of these licenses.
The legal framework currently in force in Colombia regarding medical cannabis is established in Law 1787 of 2016 (the “Law”) and the Decree 613 of 2017 (the “Decree”). Cannabis licenses must be issued by the Ministry of Health or the Ministry of Justice in an estimated time of 60 days, however, in practice, this process can take between four and six months. In accordance with Colombia’s international obligations, there is a limit in the amount of Cannabis allowed for fabrication or cultivation assigned by the Colombian Government (specific crop or manufacturing quotas) that must be requested by each licensee when applying for a Cannabis Psychoactive Cultivation License or a Cannabis Manufacturing License. The activities of cultivation and manufacturing can only be started once the specific quotas have been granted to the licensee.
Duration of Licenses
The Cannabis Seeds Possession License, the Cannabis Psychoactive Cultivation License, the Cannabis Non-Psychoactive License, and the Cannabis Manufacturing and Distribution License are granted by the Ministry of Justice and/or the Ministry of Health (as applicable), when the applicant fulfills the general criteria described in Article 2.8.11.2.1.5 of the Decree, and the specific requirements for each type of license. Each of these licenses is valid for up to five years. The Ministry of Justice and the Ministry of Health (as applicable) maintain the right to acceptmonitor the activities performed by the corresponding licensee, and in the event of a breach by the licensee of the obligations and duties set forth in the Decree, the licenses may be revoked. The relevant Ministry may renew these licenses for additional and successive five-year periods. In each renewal application, the Ministry will assess compliance with all the relevant requirements in determining whether or reject subscriptionsnot to renew the license.
Quotas
As described above, regulations of cannabis in wholeColombia provides an additional requirement applicable to the Cannabis Psychoactive Cultivation License and Cannabis Manufacturing License, which require the grant of crop and manufacturing quotas (the “Quotas”). According to Article 2.8.11.2.6.2 of the Decree, the assignment of Quotas is collectively made by the Ministry of Health, the Ministry of Justice, the ICA, the INVIMA, and the FNE.
According to Article 2.8.11.2.6.5 of the Decree, there are two types of Quotas: (i) crop quotas for psychoactive cannabis (for holders of the Cannabis Psychoactive Cultivation License) which are granted by the Ministry of Justice; and (ii) the manufacturing quotas for psychoactive cannabis (for holders of the Cannabis Manufacturing License) which are granted by the Ministry of Health.
These Quotas are requested by the licensees no later than the last calendar day of April of each year, and, if they are granted by the corresponding authority, they can only be used by the licensees during the next calendar year (for instance, if a licensee requests a specific crop Quota in March, 2018, and this Quota is granted by the Ministry of Justice, the licensee will be allowed to use the Quota from January 1, 2019 to December 31, 2019). In extraordinary events, the licensees can request a supplementary Quota that will apply to the calendar year requested (the issuance of these Quotas depends on the special circumstances defined by the Colombian governmental authorities).
On December 3, 2018, by means of resolution 1256 of 2018, Colombia´s Ministry of Justice granted OWP Colombia a supplementary Quota for growing psychoactive mother plants; six for each of 13 varieties, for a total of 78 “mother” plants. However, before we commence the commercial sale of our psychoactive products (greater than 1% THC content), we will need to obtain Quotas from the Ministry of Health. This will require us to conduct successful agricultural characterization tests approved by and registered with the ICA/Ministry of Agriculture and Rural Development, and stabilized extracts characterization tests approved by INVIMA/Ministry of Health, of product samples grown by us under Quotas obtained from the Ministry of Justice. We have already requested from the Ministry of Health and Justice our annual Quotas for the export sale of psychoactive ingredients in 2020, and are awaiting the issuance of such Quotas in order to start our production process.
Strains of Cannabis
Strains of cannabis are registered in Colombia in two manners:
● | Registration of the Genetic Pool or “Fuente Semillera”: Under Article 2.8.11.11.1 of the Decree, licensed producers of cannabis had until December 31, 2018 to register the genetics of strains of cannabis with the ICA. Under this transitory article, the government allowed a limited period for licensed producers of cannabis to source genetics currently available in Colombia and register these as their “fuente semillera”. We registered 25 varieties under this article. This registration enables us to grow our own strains of cannabis as opposed to having to purchase registered strains from other licensed producers. | |
● | Registration Under the “Registro Nacional de Cultivares Comerciales”: Licensed producers of cannabis have to be granted a breeding/research license to be able to develop, select and trial stabilized cannabis cultivars. This registration allows licensed producers to register unique and stable varieties of cannabis for commercial production within Colombia. We were granted such license in the first quarter of 2018. Licensed producers can then request from ICA a registration trial, which is a field flowering trial with the supervision of ICA officials. The data collected in these trials can lead to registration of the cultivar in the National Registrar. Only registered varieties will be allowed to be produced commercially. We are in the final phase of field flowering trials and intend to apply to register additional strains under this provision by the end of 2019. |
Sanitary Registration
The commercialization of cannabis-based finished products intended for human consumption requires the issuance of sanitary registrations by the INVIMA, and in the case of products intended for animal consumption, by the ICA.
Environmental
Under Colombian law, general principles of environmental law are set out in Law 99 of 1993 and Article 9 of the National Code of Natural Resources and Protection of the Environment. These laws establish principles governing the use of natural resources, including that use must occur without causing harm to the interests of the community or of third parties. Parties that cause environmental damage while acting under the authority of a permit are responsible for incurring the costs to rectify the damage. The imposition of environmental sanctions is in part,addition to civil and criminal penalties that may be imposed. Environmental damage caused while a party is acting without a license constitutes a breach of Law 99 of 1993 and may lead to the imposition of sanctions, in addition to civil or criminal proceedings that may result. Parties that cause environmental damage, in addition to sanctions or penalties that apply, will also be required to carry out studies to assess the characteristics of the damage. Under Colombian law, liability for environmental damage creates a presumption of liability in case of a: (i) breach of environmental laws; (ii) environmental damage; and (iii) breach of environmental license or any other administrative act from the environmental authorities. The Environmental Authorities may investigate potential claims, authorize preventative measures, or impose sanctions on parties breaching environmental law.
Competition
The market for medicinal cannabis is characterized by unsatisfied patient demand, with few authorized producers. Although competition in the market is growing and Colombia offers an open process to apply for the licenses, we believe we are competitively positioned to satisfy the demand for medicinal cannabis given our early entry into the market, the management team’s expertise in medical product branding, marketing, quality control and domestic market relationships. In addition, the Colombian government has published for comment a draft decree that requires any applicant for any reason orof the four Licenses to furnish evidence that it has completed the seed registration process before the ICA and obtained the corresponding technical sheet for no reason. All monies from rejected subscriptionsthe cannabis plants and varieties. If enacted, this new regulation will be returned immediately by usresult in stricter requirements on potential competitors seeking a Colombian License.
Cultivation in Colombia has natural cost advantages. However, management believes the more sustainable competitive advantage is to create patient loyalty and brand preference, as opposed to the subscriber, without interest or deductions. Subscriptions for securities will be accepted or rejected with letter by mail within 48 hours after we receive them. distribution of more homogeneous products. Domestically our competition consists of PharmaCielo, CannaVida, Empresa Colombiana de Cannabis, Khiron Life Sciences Corp., MedCan, Canopy Growth Corporation, and Clever Leaves.
DESCRIPTION OF SECURITIES
GeneralIntellectual Property
Our authorizedsuccess 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.
Seasonality
Colombia and its vertical offering of microclimates is the ideal country for year-round growing and processing of all possible varieties of cannabis in a natural, environmentally friendly manner.
Our principal executive offices are located at 3471 West Oquendo Rd., Suite 301, Las Vegas, Nevada 89118, Telephone No.: (800) 605-3210. Our leased premises are 3,210 square feet and are utilized for corporate business offices. Our Nevada premises are subject to a lease agreement expiring October 31, 2021. In addition, OWP Colombia leases land in Popayan, Colombia at a rate of 8,000,000 COP per month on a renewable lease expiring on September 30, 2022. Our anticipated future lease commitments on a calendar year basis in US dollars, excluding common area maintenance, are as follows:
2019 | $ | 84,074 | ||
2020 | 85,700 | |||
2021 | 77,553 | |||
2022 | 22,407 | |||
Total | $ | 269,734 |
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.
Employees
As of September 10, 2019, we had 28 full-time employees. Since inception, we have never had a work stoppage, and our employees are not represented by labor unions. We consider our relationship with our employees to be positive.
We are not party to any legal proceedings.
17 |
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations, and other parts of this prospectus contain forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this prospectus are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth in the section captioned “Risk Factors” on page 3 of this prospectus. The following should be read in conjunction with our audited financial statements included elsewhere herein.
Overview
On February 21, 2019, we entered into the Merger Agreement with OWP Merger Sub, our wholly-owned subsidiary, and 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 Closing of the Merger occurred on February 21, 2019. As a result of the Merger (a) holders of the outstanding capital stock consists of 75,000,000OWP Ventures received an aggregate of 39,475,398 shares of our Common Stock; (b) options to purchase 825,000 shares of common stock par value $0.001 per share. As of October 8, 2014, there were 4,000,000OWP Ventures at an exercise price of $0.50 automatically converted into options to purchase 825,000 shares of our common stockCommon Stock at an exercise price of $0.50; (c) the outstanding principal and interest under a $300,000 convertible note issued and outstanding those were held by one registered stockholderOWP Ventures became convertible, at the option of record and nothe holder, into shares of preferred stock issuedour Common Stock at a conversion price equal to the lesser of $0.424 per share or 80% of the price we sell our Common Stock in a future “Qualified Offering”; (d) 875,000 shares of our Common Stock owned by OWP Ventures prior to the Merger were cancelled; and outstanding. Our sole(e) OWP Ventures’ chief operating officer became our chief operating officer and director, Andrei Kriukov owns 4,000,000.two of OWP Ventures’ directors became members of our board of directors.
Common StockOWP Ventures, Inc. 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 One World Pharma S.A.S. One World Pharma S.A.S, is a licensed cannabis cultivation, production and distribution (export) company located in Popayán, Colombia (nearest major city is Cali). We plan to be a producer of raw cannabis and hemp plant ingredients for both medical and industrial uses across the globe. We have received licenses to cultivate, produce and distribute the raw ingredients of the cannabis and hemp plant for medicinal, scientific and industrial purposes. Specifically, we are one of the only companies in Colombia to receive seed, cultivation, extraction and export licenses from the Colombian government. Currently, we own approximately 30 acres and have a covered greenhouse built specifically to cultivate high-grade cannabis and hemp. In addition, we have entered into agreements with local farming co-operatives that include small farmers and indigenous tribe members, under which they will cultivate cannabis on up to approximately 140 acres of land using our seeds and propagation techniques, and sell their harvested products to us on an exclusive basis. We planted our first crop of cannabis in 2018, which we began harvesting in the first quarter of 2019 for the purpose of further research and development activities and quality control testing of the cannabis we have produced. To date, we have not yet generated any revenues from our activities.
The Merger was accounted for as a reverse merger (recapitalization) with OWP Ventures deemed to be the accounting acquirer. Accordingly, the financial statements included in this prospectus the following discussion reflect the historical operations of OWP Ventures and its wholly-owned subsidiary One World Pharma S.A.S prior to the Merger, and that of the combined company following the Merger. The historical financial information for One World Pharma, Inc. (formerly Punto Group Corp.) prior to the Merger has been omitted.
Results of Operations for the Three Months Ended June 30, 2019 and 2018:
We have not generated any revenues to date, and there were limited expenses in the comparative period prior to the acquisition of One World Pharma, SAS by OWP Ventures, Inc. on May 30, 2018, when activities were ramped up to develop operations.
The following table summarizes selected items from the statement of operations for the three months ended June 30, 2019 and 2018.
Three Months Ended June 30, | Increase / | |||||||||||
2019 | 2018 | (Decrease) | ||||||||||
Revenues | $ | - | $ | - | $ | - | ||||||
Operating expenses: | ||||||||||||
General and administrative | 565,167 | 124,840 | 440,327 | |||||||||
Professional fees | 741,542 | 156,977 | 584,565 | |||||||||
Total operating expenses: | 1,306,709 | 281,817 | 1,024,892 | |||||||||
Operating loss | (1,306,709 | ) | (281,817 | ) | (1,024,892 | ) | ||||||
Total other expense | (18,519 | ) | (1,801 | ) | (16,718 | ) | ||||||
Net loss | $ | (1,325,228 | ) | $ | (283,618 | ) | $ | (1,041,610 | ) |
General and Administrative Expenses
General and administrative expenses for the three months ended June 30, 2019 were $565,167, compared to $124,840 during the three months ended June 30, 2018, an increase of $440,327, or 353%. The expenses for the current period consisted primarily of compensation expenses, office rent, and travel costs.
Professional Fees
Professional fees for the three months ended June 30, 2019 were $741,542, compared to $156,977 during the three months ended June 30, 2018, an increase of $584,565, or 372%. Professional fees included non-cash, stock-based compensation of $395,715 during the three months ended June 30, 2019. Professional fees increased primarily due to increased stock-based compensation during the current period.
Other Income (Expense)
Other expenses, on a net basis, for the three months ended June 30, 2019 were $18,519, compared to $1,801 during the three months ended June 30, 2018, an increase of $16,718, or 928%. Other expenses consisted of a loss on disposal of assets of $4,087 and $14,579 of interest expense, as offset by $147 of interest income for the three months ended June 30, 2019. Other expenses during the three months ended June 30, 2018 consisted of $1,801 of interest expense.
Net Loss
Net loss for the three months ended June 30, 2019 was $1,325,228, or $0.03 per share, compared to $283,618, or $0.01 per share, during the three months ended June 30, 2018, an increase of $1,041,610, or 367%. The net loss for the three months ended June 30, 2019 included non-cash expenses consisting of $2,436 of depreciation, $395,715 of stock-based compensation and $14,579 of accrued interest.
Results of Operations for the Six Months Ended June 30, 2019 and the period from inception (March 27, 2018) to June 30, 2018:
The following table summarizes selected items from the statement of operations for the six months ended June 30, 2019 and the period from inception (March 27, 2018) to June 30, 2018.
For the Six | From Inception | |||||||||||
Months Ended | (March 27, 2018) to | Increase / | ||||||||||
June 30, 2019 | June 30, 2018 | (Decrease) | ||||||||||
Revenues | $ | - | $ | - | $ | - | ||||||
Operating expenses: | ||||||||||||
General and administrative | 1,044,787 | 124,840 | 919,947 | |||||||||
Professional fees | 1,444,422 | 156,977 | 1,287,445 | |||||||||
Total operating expenses: | 2,489,209 | 281,817 | 2,207,392 | |||||||||
Operating loss | (2,489,209 | ) | (281,817 | ) | (2,207,392 | ) | ||||||
Total other expense | (159,535 | ) | (1,801 | ) | (157,734 | ) | ||||||
Net loss | $ | (2,648,744 | ) | $ | (283,618 | ) | $ | (2,365,126 | ) |
General and Administrative Expenses
General and administrative expenses for the six months ended June 30, 2019 were $1,044,787, compared to $124,840 during the period from inception (March 27, 2018) to June 30, 2018, an increase of $919,947, or 737%. The expenses for the current period consisted primarily of compensation expenses, office rent, and travel costs.
Professional Fees
Professional fees for the six months ended June 30, 2019 were $1,444,422, compared to $156,977 during the six months ended June 30, 2018, an increase of $1,287,445, or 820%. Professional fees included non-cash, stock-based compensation of $664,255 during the period from inception (March 27, 2018) to June 30, 2018. Professional fees increased primarily due to increased stock-based compensation during the current period.
Other Income (Expense)
Other expenses, on a net basis, for the six months ended June 30, 2019 were $159,535, compared to $1,801 during the six months ended June 30, 2018, an increase of $157,734, or 8,758%. Other expenses consisted of a loss on disposal of assets of $4,087 and $155,696 of interest expense, as offset by $248 of interest income for the six months ended June 30, 2019. Other expenses during the period from inception (March 27, 2018) to June 30, 2018 consisted of $1,801 of interest expense.
Net Loss
Net loss for the six months ended June 30, 2019 was $2,648,744, or $0.07 per share, compared to $283,618, or $0.01 per share, during the period from inception (March 27, 2018) to June 30, 2018, an increase of $2,365,126, or 834%. The net loss for the six months ended June 30, 2019 included non-cash expenses consisting of $5,005 of depreciation, $664,255 of stock-based compensation and $155,696 of accrued interest, including $125,000 of amortization on debt discounts.
Results of Operations from Inception (March 27, 2018) to December 31, 2018
General and Administrative Expense: General and administrative expenses were $903,913 for the year ended December 31, 2018.
Professional Fees: Professional fees were $917,936 for the year ended December 31, 2018.
Bad Debts Expense: Bad debts expense of $50,000 for the year ended December 31, 2018 related to an allowance for doubtful accounts on the uncertain collection of a note receivable.
Other Expense: Other expense was $88,234 for the year ended December 31, 2018. Other expense consisted of $88,234 of interest expense.
Loss on Foreign Currency Translation: Loss on foreign currency translation was $4,090 for the year ended December 31, 2018.
Net Loss: Net loss was $1,960,083 for the period of inception (March 27, 2018) to December 31, 2018.
Liquidity and Capital Resources
The following is a summary of our cash flows provided by (used in) operating, investing, financing activities and effect of exchange rate changes on cash for the material rightssix month period ended June 30, 2019 and restrictions associated withthe period from inception (March 27, 2018) to June 30, 2018:
2019 | 2018 | |||||||
Operating Activities | $ | (1,933,479 | ) | $ | (285,897 | ) | ||
Investing Activities | (366,585 | ) | (11,585 | ) | ||||
Financing Activities | 2,243,602 | 707,000 | ||||||
Effect of exchange rate changes on cash | 143,001 | 35,402 | ||||||
Net Increase in Cash | $ | 86,539 | $ | 444,920 |
Net Cash Used in Operating Activities
During the six months ended June 30, 2019, net cash used in operating activities was $1,933,479, compared to net cash used in operating activities of $285,897 for the period from inception (March 27, 2018) to June 30, 2018. Net cash used in operating activities was $1,268,497 for the period from inception (March 27, 2018) to December 31, 2018. The cash used in operating activities was primarily attributable to our net losses.
Net Cash Used in Investing Activities
During the six months ended June 30, 2019, net cash used in investing activities was $366,585, compared to net cash used in investing activities of $11,585 for the period from inception (March 27, 2018) to June 30, 2018. Net cash used in investing activities was $753,661 for the period from inception (March 27, 2018) to December 31, 2018. The cash used in investing activities consisted of purchases of fixed assets.
Net Cash Provided by Financing Activities
During the six months ended June 30, 2019, net cash provided by financing activities was $2,243,602, compared to net cash used in financing activities of $707,000 for the period from inception (March 27, 2018) to June 30, 2018. The current period consisted of $500,000 of convertible debt financing that was subsequently converted into 1,253,493 shares of common stock.stock at $0.40 per share, repayments of $207,000 to shareholders on previous advances, proceeds of $602 on subscriptions receivable and $1,950,000 of proceeds received from the sale of stock at $0.50 per share. Net cash provided by financing activities was $2,152,094 for the period from inception (March 27, 2018) to December 31, 2018, and consisted of the proceeds from the sale of common stock, a secured convertible note payable, unsecured advances payable on demand by shareholders, notes payable and contributed capital.
Ability to Continue as a Going Concern
Prior to the $2,054,500 of proceeds from of our recent stock sales, our balance of cash on hand was $212,385, and we had a working capital deficit of $745,796 and an accumulated deficit of $4,608,726 as of June 30, 2019. We currently may not have sufficient funds to sustain our operations for the next twelve months and we may need to raise additional cash to fund our operations to the extent necessary to provide working capital.
We have incurred recurring losses from operations resulting in an accumulated deficit, and, as set forth above, our cash on hand is not sufficient to sustain operations. These factors raise substantial doubt about our ability to continue as a going concern. Management is actively pursuing its cannabis cultivation activities and expects to begin revenue generating export operations in the first quarter of 2020. In addition, we are currently seeking additional sources of capital to fund short- term operations. Management believes these factors will contribute toward achieving profitability. In the event revenues do not materialize at the expected rates, management would seek additional financing or would attempt to conserve cash by further reducing expenses. There can be no assurance that we will be successful in achieving these objectives, becoming profitable or continuing our business without either a temporary interruption or a permanent cessation. Additional financing may result in substantial dilution to existing stockholders.
The accompanying consolidated financial statements 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 unaudited 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.
Critical Accounting Policies and Estimates
The holderspreparation of financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our common stock currentlyfinancial statements. These accounting policies are important for an understanding of our financial condition and results of operations. Critical accounting policies are those that are most important to the presentation of our financial condition and results of operations and require management’s subjective or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments.
While our significant accounting policies are more fully described in notes to our consolidated financial statements appearing elsewhere in this prospectus, we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating our reported financial results and affect the more significant judgments and estimates that we used in the preparation of our financial statements.
Revenue Recognition
We have (i) equal ratable rightsadopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, we recognize revenue from the sale of commercial sales of products, licensing agreements and contracts. For the comparative periods, revenue has not been adjusted and continues to dividends from funds legally available therefore, when,be reported under ASC 605 — Revenue Recognition.
There was no impact on our financial statements as a result of adopting ASC 606 for the six months ended June 30, 2019, or the year ended December 31, 2018.
Stock-Based Compensation
We account for equity instruments issued to employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and if declaredEquity-Based Payments to Non-employees pursuant to ASC 505-50 (ASC 505-50). 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.
22 |
The following table contains information regarding the current members of the Board of Directors and executive officers. The ages of individuals are provided as of September 10, 2019:
Name | Age | Position | ||
Craig Ellins | 77 | Chief Executive Officer, Chief Financial Officer, Director | ||
Bruce Raben | 65 | Director | ||
Dr. Kenneth Perego | 50 | Director | ||
Brian Moore | 32 | Chief Operating Officer and Secretary |
Craig Ellinshas spent over 30 years developing start-ups in various industries, most recently focusing on the marijuana industry, including indoor growing technology. Mr. Ellins has served as the Chief Executive Officer and President, of OWP Ventures since its inception in March 2018 and as our President, Chief Executive Officer, Chief Financial Officer and director since November 30, 2018. From March 13, 2014 until April 29, 2016, Mr. Ellins served as the Chief Executive Officer of GB Sciences, Inc., a cannabis company focused on standardized cultivation and production methods as well as biopharmaceutical research and development, and from April 29, 2016 until May 8, 2017, he served as the Chief Innovation Officer of GB Sciences, Inc. He also served as the Chairman of the Company;Board of GB Sciences from March 13, 2014, until May 8, 2017. From 2013 to 2014, Mr. Ellins served as the Chairman and Chief Executive Officer of Cognitiv, Inc., which engages in the creation, development, and maintenance of Websites and mobile applications. From 2009 to 2013, Mr. Ellins served as Chief Executive Officer and Chairman of Phototron Holdings, Inc., now known as GrowLife, Inc. GrowLife, Inc. manufactures and supplies branded equipment and expendables for urban gardening in the United States. We believe that Mr. Ellins’ cannabis industry and public company experience qualify him to serve as our director.
Bruce Raben was a director of OWP Ventures prior to the Merger and was appointed to our Board of Directors pursuant to the Merger Agreement. Mr. Raben is an investment banker with Hudson Capital Advisors BD, LLC, a registered broker dealer, and has been its Managing Member since it was founded by him in 2004. Mr. Raben also serves on the board of directors of Digipath, Inc., a cannabis testing laboratory. Mr. Raben has been an investment banker, merchant banker and private investor for over 30 years. Starting in 1979 at Drexel Burnham Lambert, he worked on many leveraged buyouts and recapitalizations including Mattel Toys, SFN Co.’s, Magma Copper, Warnaco, Mellon Bank and John Fairfax. Mr. Raben then went on to co-found the Corporate Finance Department at Jeffries & Co. in 1990. Mr. Raben opened a west coast office for CIBC’s high yield finance and merchant banking activities in 1996. Mr. Raben received his A.B. from Vassar College in 1975 and his MBA from Colombia University in 1979. We believe that Mr. Raben’s investment banking and financial experience qualify him to serve as our director.
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. Since 2001, he has been a practicing urologic surgeon with an emphasis in urologic oncology and reconstructive urology, with Alexandria Urology Associates, LLP, of which he is a Partner. He has a strong clinical background in research and is focused on new drug discovery. Dr. Perego is also the manager and principal member of CB Medical, LLC, which he founded in 2017 to pursue investment opportunities in cannabis businesses in Colombia as well as the United States. We believe that Dr. Perego’s medical experience qualifies him to serve as our director.
Brian Moorewas employed by OWP Ventures prior to the Merger and was appointed as our Chief Operating Officer and Secretary pursuant to the Merger Agreement. From 2016 until he joined the Company in March 2018, Mr. Moore worked in corporate development at GB Sciences, and from 2013 until 2015 he was a Project Engineer for Austin General Contracting, Inc.
The following table shows the compensation paid by us (including OWP Ventures and OWP Colombia prior to the Merger) to our Chief Executive Officer during the fiscal year ended December 31, 2018. No compensation was paid to these officers in the prior fiscal year.
Summary Compensation Table | ||||||||||||||||
Name and Principal Position | Year | Salary ($) | All Other Compensation ($) | Total ($) | ||||||||||||
Craig Ellins | 2018 | $ | 24,000 | $ | -0- | $ | 24,000 | |||||||||
CEO, President & Chairman |
Employment Contracts
We are not a party to an employment agreement with any of our executive officers.
Option Grants
Neither our company nor any of our subsidiaries granted options to executive officers during the fiscal year ended December 31, 2018.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
Neither our company nor any of our subsidiaries had options outstanding as of December 31, 2018.
Director Compensation
We did not compensate our non-employee directors for services during our fiscal year ended December 31, 2018.
We are party to a Consulting Agreement with Bruce Raben dated February 8, 2019 under which Mr. Raben was issued an option to purchase 125,000 shares of common stock of OWP Ventures prior to the Merger and is paid a monthly fee of $5,000. The Consulting Agreement is for an initial one-year term, continuing thereafter until terminated by either party.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding our Common Stock beneficially owned on September 10, 2019, for (i) each stockholder known to be the beneficial owner of more than 5% of our outstanding Common Stock, (ii) each of our executive officers and directors, and (iii) all executive officers and directors as a group. In general, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of such security, or the power to dispose or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which the person has the right to acquire beneficial ownership within 60 days, through the exercise of a warrant or stock option, conversion of a convertible security or otherwise. At September 10, 2019, 44,482,939 shares of our Common Stock were outstanding. Unless otherwise noted below the address of each person identified is 3471 West Oquendo Road, Suite 301, Las Vegas, NV 89118.
Name and Address | Amount and Nature of Beneficial Ownership | Percentage of Class | ||||||
Directors and Executive Officers | ||||||||
Craig Ellins | 3,745,000 | 8.4 | % | |||||
Brian Moore | 2,500,000 | 5.6 | % | |||||
Dr. Kenneth Perego(1) | 7,000,000 | 15.7 | % | |||||
Bruce Raben(2) | 418,744 | * | ||||||
All Directors and Executive Officers as a Group (4 individuals) | 13,442,912 | 30.2 | % | |||||
5% Stockholders | ||||||||
Solid Bridge Investments, Inc.(3) | 7,000,000 | 15.7 | % |
* | Less than one percent. |
(1) | Consists of shares held by CB Medical, LLC of which Dr. Perego is the controlling member. |
(2) | Includes 93,744 shares of Common Stock that may be acquired under an option to purchase 125,000 shares of Common Stock at an exercise price of $0.50 per share that vests in 12 monthly installments beginning March 8, 2019, and 200,000 shares of Common Stock held by The Raben Education Trust dated 5/20/99, of which Mr. Raben is a Co-Trustee. |
(3) | The principals of Solid Bridge Investments, Inc. are Carlos Andres de Fex Gomez and Gloria Veronica Serna Diez, who founded OWP Colombia and were its principal shareholders prior to the sale of OWP Colombia to OWP Ventures. |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
AND DIRECTOR INDEPENDENCE
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 Craig Ellins
During the year ended December 31, 2018, Craig Ellins advanced an aggregate of $207,000 to OWP Ventures. These advances are evidenced by promissory notes payable on demand that bear interest at the rate of 6% per annum.
During the year ended December 31, 2018, Mr. Ellins advanced OWP Ventures an additional $307,141. The additional advances bear interest at the rate of 6% per annum and are evidenced by an amended and restated promissory note which matures on the earlier to occur of February 13, 2022 and the date that we have raised an aggregate of $5,000,000 in financing in one or a series of transactions following the date of the amended and restated note.
Director Independence
Our board of directors currently consists of Craig Ellins, our President and Chief Executive Officer, Dr. Kenneth Perego, II, and Bruce Raben. As an executive officer, Mr. Ellins 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 Mr. Raben are “independent” in accordance with the Nasdaq Global Market’s requirements. As our Common Stock is currently quoted on the OTC Bulletin Board, we are not currently subject to corporate governance standards of listed companies.
As of September 10, 2019, our authorized capital stock consisted of 75,000,000 shares of Common Stock, par value $0.001 per share, of which 44,482,939 shares of Common Stock were outstanding and held by approximately 105 stockholders of record.
Reverse Stock Split
On January 10, 2019, we effected a 1-for-4 reverse stock split. No fractional shares were issued, and no cash or other consideration was paid in connection with the Reverse Stock Split. Instead, we issued one whole share of the post-Reverse Stock Split Common Stock to any stockholder who otherwise would have received a fractional share as a result of the Reverse Stock Split. We were authorized to issue 75,000,000 shares of Common Stock prior to the Reverse Stock Split, which remains unaffected. The Reverse Stock Split did not have any effect on the stated par value of the Common Stock. Unless otherwise stated, all share and per share information in this prospectus has been retroactively adjusted to reflect the Reverse Stock Split.
Common Stock
Dividend Rights
Subject to preferences that may apply to shares of preferred stock outstanding at the time, the holders of outstanding shares of our Common Stock are entitled to receive dividends out of funds legally available at the times and in the amounts that our board of directors may determine.
Voting Rights
Each holder of our Common Stock is entitled to one vote for each share ratablyof our Common Stock held on all matters submitted to a vote of stockholders. Cumulative voting for the election of directors is not provided for in our articles of incorporation, as amended, which means that the holders of a majority of the voting shares voted can elect all of the directors then standing for election.
No Preemptive or Similar Rights
Holders of our Common Stock do not have preemptive rights, and our Common Stock is not convertible or redeemable.
Right to Receive Liquidation Distributions
Upon our dissolution, liquidation or winding-up, the assets of the Companylegally available for distribution to our stockholders are distributable ratably among the holders of our Common Stock, subject to the preferential rights and payment of liquidation preferences, if any, on any outstanding shares of preferred stock.
Preferred Stock
None.
Anti-takeover Provisions
Certain provisions of our articles of incorporation, as amended, and Nevada law may have the effect of delaying, deferring or discouraging another person from acquiring control of our company.
Nevada Law
In addition, Nevada has enacted the following legislation that may deter or frustrate takeovers of Nevada corporations:
Authorized but Unissued Stock – The authorized but unissued shares of our Common Stock are available for future issuance without stockholder approval. These additional shares may be used for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The existence of authorized but unissued shares of common stock upon liquidation, dissolutionmay enable our board of directors to issue shares of stock to persons friendly to existing management.
Evaluation of Acquisition Proposals – The Nevada Revised Statutes expressly permit our board of directors, when evaluating any proposed tender or winding upexchange offer, any merger, consolidation or sale of substantially all of our assets, or any similar extraordinary transaction, to consider all relevant factors including, without limitation, the social, legal, and economic effects on our employees, customers, suppliers, and other relevant interest holders, and on the communities and geographical areas in which they operate. Our board of directors may also consider the amount of consideration being offered in relation to the then current market price of our outstanding shares of capital stock and our then current value in a freely negotiated transaction.
Control Share Acquisitions – Nevada has adopted a control share acquisitions statute designed to afford stockholders of public corporations in Nevada protection against acquisitions in which a person, entity or group seeks to gain voting control. With enumerated exceptions, the statute provides that shares acquired within certain specific ranges will not possess voting rights in the election of directors unless the voting rights are approved by a majority vote of the affairspublic corporation’s disinterested stockholders. Disinterested shares are shares other than those owned by the acquiring person or by a member of a group with respect to a control share acquisition, or by any officer of the corporation or any employee of the corporation who is also a director. The specific acquisition ranges that trigger the statute are: acquisitions of shares possessing one-fifth or more but less than one-third of all voting power; acquisitions of shares possessing one-third or more but less than a majority of all voting power; or acquisitions of shares possessing a majority or more of all voting power. Under certain circumstances, the statute permits the acquiring person to call a special stockholders’ meeting for the purpose of considering the grant of voting rights to the holder of the control shares. The statute also enables a corporation to provide for the redemption of control shares with no voting rights under certain circumstances.
Transfer Agent and Registrar
The transfer agent and registrar for our Common Stock is vStock Transfer, LLC. Its mailing address is 18 Lafayette Place, Woodmere, NY 11598, its telephone number is (212) 828-8436, and its facsimile number is (646) 536-3179.
The shares of Common Stock being offered by the selling shareholders primarily consist of approximately 33% of the shares of Common Stock held by certain shareholders of the Company (iii) do notthat we have preemptive, subscription or conversion rightsdetermined to register for resale to increase liquidity in the trading of our Common Stock, as follows:
● | Former shareholders of OWP Ventures who received shares of our Common Stock in the Merger, or their transferees, who are not officers or directors of ours; and | |
● | Purchasers of our Common Stock in a private placement of our shares of Common Stock that we conducted in July and August 2019 in which we sold our shares of Common Stock at a price of $0.50 per share (the “August 2019 Private Placement”). |
In addition, we are registering 1,985,000 shares of Common Stock held by a former consultant of ours pursuant to a contractual obligation with that consultant, and therewe are no redemption or sinking fund provisions or rights applicable thereto; and (iv) are entitled to one non-cumulative vote per share on all matters on which stock holders may vote. Please refer to the Company’s Articles of Incorporation, Bylaws and the applicable statutes of the State of Nevada for a more complete description of the rights and liabilities of holders of the Company’s securities.
Preferred Stock
We do not have an authorized class of preferred stock.
Warrants
We have not issued and do not have any outstanding warrants to purchaseregistering 417,663 shares of our common stock.
Options
We have not issued and do not have any outstanding optionsCommon Stock issuable upon conversion of a convertible promissory note pursuant to purchase sharesthe terms of our common stock.
Convertible Securities
We have not issued and do not have any outstanding securitiessuch convertible into shares of our common stock or any rights convertible or exchangeable into shares of our common stock.
Dividend Policypromissory note.
We are registering the shares of Common Stock in order to permit the selling shareholders to offer the shares for resale from time to time. Except as set forth above, in the table below and for the ownership of the shares of Common Stock, or prior investments in the Company, the selling shareholders have never declarednot had any material relationship with us within the past three years.
The table below lists the selling shareholders and other information regarding the beneficial ownership of the shares of Common Stock by each of the selling shareholders. The second column lists the number of shares of Common Stock beneficially owned by each selling shareholder, based on its ownership of Common Stock. The third column lists the shares of Common Stock being offered by this prospectus by the selling shareholders.
The selling shareholders may sell all, some or paid any cash dividends on ournone of their shares in this offering. See “Plan of Distribution,” following the table below.
Name of Selling Shareholder | Number of Shares of Common Stock Owned Prior to Offering | Maximum Number of Shares of Common Stock to be Sold Pursuant to this Prospectus | Number of Shares of Common Stock Owned After Offering | Percentage of Common Stock Owned After the Offering | ||||||||||||
Adam & Meredith Liebross (3) | 238,095 | 78,976 | 159,119 | * | ||||||||||||
Adam Liebross (2) | 50,000 | 16,585 | 33,415 | * | ||||||||||||
AGD, Inc. (2) | 50,000 | 16,585 | 33,415 | * | ||||||||||||
Alan Stahler (3) | 480,000 | 159,216 | 320,784 | * | ||||||||||||
Amy Black (2) | 1,125,000 | 373,163 | 751,837 | 1.7 | % | |||||||||||
Anil Narang (2) | 100,000 | 33,170 | 66,830 | * | ||||||||||||
Annslee Perego (7) | 200,000 | 66,340 | 133,660 | * | ||||||||||||
Ariel Maifredy Huetio Prieto (1) | 450,000 | 149,265 | 300,735 | * | ||||||||||||
Beechwood Ventures LLC (3) | 100,000 | 33,170 | 66,830 | * | ||||||||||||
Boru Enterprises, Inc. (4) | 50,000 | 16,585 | 33,415 | * | ||||||||||||
Brad Chauvin and Melissa B. Chauvin (3) | 200,000 | 66,340 | 133,660 | * | ||||||||||||
Bruce A. Frasco (9) | 40,000 | 13,268 | 26,732 | * | ||||||||||||
Chelsea Aronson Brescia (2) | 250,000 | 82,925 | 167,075 | * | ||||||||||||
Copans 2009 Revocable Trust (2) | 50,000 | 16,585 | 33,415 | * | ||||||||||||
CSW Ventures, LLP (11) | 1,201,937 | 677,807 | 524,130 | 1.2 | % | |||||||||||
Dale A. Weishuhn (9) | 25,000 | 8,293 | 16,707 | * | ||||||||||||
Denes Miklosne (2) | 1,000,000 | 331,700 | 668,300 | 1.5 | % |
Dennis Hartmann (10) | 51,040 | 16,930 | 34,110 | * | ||||||||||||
Elena Dubinska (19) | 40,000 | 13,268 | 26,732 | * | ||||||||||||
Emerging Growth Advisors, Inc. (4) | 430,000 | 132,680 | 297,320 | * | ||||||||||||
Emily Rose Muench (9) | 100,000 | 33,170 | 66,830 | * | ||||||||||||
Endalkachew Mersha (2) | 350,000 | 116,095 | 233,905 | * | ||||||||||||
Eric Stoppenhagen (1) | 150,000 | 49,755 | 100,245 | * | ||||||||||||
Esther Stahler Idev Grat (3) | 100,000 | 33,170 | 66,830 | * | ||||||||||||
Gordon Dixon (2) | 5,000 | 1,659 | 3,341 | * | ||||||||||||
Greg Cullen (5) | 150,000 | 49,755 | 100,245 | * | ||||||||||||
Harold A. Fuselier III (3) | 200,000 | 66,340 | 133,660 | * | ||||||||||||
High Louisiana Delta, LLC (9) | 285,000 | 94,535 | 190,465 | * | ||||||||||||
Humberto Guzman (3) | 150,000 | 49,755 | 100,245 | * | ||||||||||||
Integrity Media, Inc. (4) | 30,000 | 9,951 | 20,049 | * | ||||||||||||
Jacques Roy (7) | 200,000 | 66,340 | 133,660 | * | ||||||||||||
John Abroon (2) | 125,000 | 41,463 | 83,537 | * | ||||||||||||
John McCabe (7) | 600,000 | 199,020 | 400,980 | * | ||||||||||||
Joseph A. Tintari (9) | 50,000 | 16,585 | 33,415 | * | ||||||||||||
Joseph Eisenberger (9) | 400,000 | 132,680 | 267,320 | * | ||||||||||||
Julia Hewitt (2) | 5,000 | 1,659 | 3,341 | * | ||||||||||||
Kenneth Fong and Derek C. Fong (3) | 24,000 | 7,961 | 16,039 | * | ||||||||||||
Kris Hall (3) | 100,000 | 33,170 | 66,830 | * | ||||||||||||
Lakeside Partners, LLC (3) | 100,000 | 33,170 | 66,830 | * | ||||||||||||
Lee and Joanna Mendelson 2015 Revocable Trust (2) | 100,000 | 33,170 | 66,830 | * | ||||||||||||
Liebross 1986 Living Trust (2) | 100,000 | 33,170 | 66,830 | * | ||||||||||||
Liliana Pechene (1) | 1,200,000 | 398,040 | 801,960 | 1.8 | % | |||||||||||
Living Trust of M. Tsenter and J. Levin (2) | 50,000 | 16,585 | 33,415 | * | ||||||||||||
Madrone Capital Fund I, LLC (5) | 2,166,667 | 718,683 | 1,447,984 | 3.3 | % | |||||||||||
Mark Dodson (3) | 100,000 | 33,170 | 66,830 | * | ||||||||||||
Mark J. and Marsha A. Edelheit (2) | 100,000 | 33,170 | 66,830 | * | ||||||||||||
Marlon G. Perego (3) | 100,000 | 33,170 | 66,830 | * | ||||||||||||
Marseven Resources, LLC (9) | 100,000 | 33,170 | 66,830 | * | ||||||||||||
MG Buddies, LLC (9) | 1,059,000 | 351,270 | 707,730 | 1.6 | % | |||||||||||
Michael Webb (3) | 20,000 | 6,634 | 13,366 | * | ||||||||||||
Mitch Kove (3) | 5,000 | 1,659 | 3,341 | * | ||||||||||||
Patricia Farley (3) | 100,000 | 33,170 | 66,830 | * | ||||||||||||
Penmed LLC (5) | 1,297,143 | 430,262 | 866,881 | 2.0 | % | |||||||||||
Raben Education Trust (13) | 200,000 | 66,340 | 133,660 | * | ||||||||||||
Raul Pineda Veloza (6) | 1,200,000 | 398,040 | 801,960 | 1.8 | % | |||||||||||
Reinhold A. Bacher and Mario Ferlan (3) | 50,000 | 16,585 | 33,415 | * | ||||||||||||
Rimma Doubinskaia (2) | 471,428 | 156,373 | 315,055 | * | ||||||||||||
Rodolfo Caicedo Arias (1) | 1,200,000 | 398,040 | 801,960 | 1.8 | % | |||||||||||
Ruth Tekabe (3) | 1,000 | 332 | 668 | * | ||||||||||||
Shalom Maidenbaum (3) | 300,000 | 99,510 | 200,490 | * | ||||||||||||
Shane Castille (3) | 50,000 | 16,585 | 33,415 | * | ||||||||||||
SKG Capital, LLC (9) | 200,000 | 66,340 | 133,660 | * | ||||||||||||
Sky Ventures LLC (3) | 200,000 | 66,340 | 133,660 | * | ||||||||||||
Susan Casale (2) | 125,000 | 41,463 | 83,537 | * | ||||||||||||
The Capital Lending Resources, Inc Profit Sharing Trust Dated April 1, 1997 (9) | 200,000 | 66,340 | 133,660 | * | ||||||||||||
The Sanguine Group LLC (8) | 1,253,493 | 415,783 | 837,710 | 1.9 | % | |||||||||||
The Weiner-Scott Family Trust (2) | 50,000 | 16,585 | 33,415 | * | ||||||||||||
Theodore Deikel Revocable Trust UAD 10/24/89, as Amended (9) | 400,000 | 132,680 | 267,320 | * | ||||||||||||
Thomas J. Rathmann, Jr (9) | 200,000 | 66,340 | 133,660 | * | ||||||||||||
Timmothy R Randell (3) | 60,000 | 19,902 | 40,098 | * | ||||||||||||
Todd Denkin (2) | 350,000 | 116,095 | 233,905 | * | ||||||||||||
Venturetek L.P. (9) | 200,000 | 66,340 | 133,660 | * | ||||||||||||
William J. Gutierrez (2) | 5,000 | 1,659 | 3,341 | * | ||||||||||||
William M. Ellis III and Peggy B Ellis (3) | 50,000 | 16,585 | 33,415 | * | ||||||||||||
William Moore (2) | 125,000 | 41,463 | 83,537 | * | ||||||||||||
Woodman Management Corporation (1)(12) | 1,985,000 | 1,985,000 | -0 | - | * | |||||||||||
Yuly Dubinsky (2) | 178,572 | 59,232 | 119,340 | * |
* Denotes less than 1%.
(1) This selling shareholder was a founder of OWP Ventures, and these shares of Common Stock were issued to the selling shareholder in the Merger in exchange for shares of common stock.stock of OWP Ventures originally issued to the selling shareholder as a founder of OWP Ventures.
(2) This selling shareholder received shares of common stock of OWP Ventures in a transfer from a founder of OWP Ventures, and these shares of Common Stock were issued to the selling shareholder in the Merger in exchange for such shares of common stock of OWP Ventures.
(3) These shares of Common Stock were issued to the selling shareholder in the Merger in exchange for shares of common stock of OWP Ventures that were purchased by the selling shareholder from OWP Ventures in a private placement at a price of $0.50 per share (the “Ventures Private Placement”).
(4) These shares of Common Stock were issued to the selling shareholder for services provided to the Company.
(5) Consists of both shares of Common Stock purchased from the Company in the August 2019 Private Placement and shares of Common Stock issued to the selling shareholder in the Merger in exchange for shares of common stock of OWP Ventures that were purchased in the Ventures Private Placement.
(6) These shares of Common Stock were issued to the selling shareholder in the Merger in exchange for shares of common stock of OWP Ventures originally issued to the selling shareholder in exchange for shares of OWP Colombia.
(7) These shares of Common Stock were issued to the selling shareholder in the Merger in exchange for shares of common stock of OWP Ventures that were transferred to the selling shareholder by a transferor that acquired its shares of OWP Ventures in exchange for shares of OWP Colombia.
(8) These shares of Common Stock were issued to the selling shareholder in the Merger in exchange for shares of common stock of OWP Ventures originally issued to the selling shareholder upon conversion of $501,397 of convertible debt owed to the selling shareholder by OWP Ventures, consisting of $500,000 of principal and $1,397 of interest.
(9) These shares of Common Stock were purchased by the selling shareholder in the August 2019 Private Placement.
(10) These shares of Common Stock were issued to the selling shareholder upon the cashless exercise of options issued to the selling shareholder as a consultant to the Company.
(11) The shares of Common Stock beneficially held by CSW Ventures, LLP consist of (i) 784,274 shares of Common Stock issuable under a convertible promissory note dated as of November 30, 2018 issued by OWP Ventures to CSW Ventures (the “Ventures Note”), and (ii) 417,663 shares of Common Stock issuable under a convertible promissory note dated as of July 22, 2019 issued by the Company to CSW Ventures (the “Company Note”), in each case as of September 4, 2019. We are registering all of the shares currently intendissuable under the Company Note in accordance with the terms thereof, and approximately 33% of the shares of Common Stock currently issuable under the Ventures Note. David Weiner is the principal of CSW Ventures and is also the principal of Woodman Management Corp.
(12) These shares are being registered pursuant to retain future earnings, if any,the contractual terms of a consulting agreement with Woodman Management Corp. David Weiner is the principal of Woodman Management Corp., which is no longer providing services to finance the expansionCompany.
(13) Bruce Raben, one of our business. As a result, we do not anticipate paying any cash dividends indirectors, is the foreseeable future.Co-Trustee of this shareholder. These shares were acquired by this selling shareholder from one our service providers.
INDEMNIFICATION
Under our Articles of Incorporation and BylawsEach Selling Shareholder (the “Selling Shareholders”) of the corporation, wesecurities and any of their pledgees, assignees and successors-in-interest may, indemnify an officerfrom time to time, sell any or director who is made a party to any proceeding, including a lawsuit, becauseall of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successfultheir securities covered hereby on the meritsprincipal Trading Market or any other stock exchange, market or trading facility on which the securities are traded or in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney's fees. With respect to a derivative action, indemnityprivate transactions. These sales may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officerat fixed or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the lawsnegotiated prices. A Selling Shareholder may use any one or more of the State of Nevada.following methods when selling securities:
● | ordinary brokerage transactions and transactions in which the broker dealer solicits purchasers; | |
● | block trades in which the broker dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction; | |
● | purchases by a broker dealer as principal and resale by the broker dealer for its account; | |
● | an exchange distribution in accordance with the rules of the applicable exchange; | |
● | privately negotiated transactions; | |
● | settlement of short sales; | |
● | in transactions through broker dealers that agree with the Selling Shareholders to sell a specified number of such securities at a stipulated price per security; | |
● | through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise; | |
● | a combination of any such methods of sale; or | |
● | any other method permitted pursuant to applicable law. |
Regarding indemnification for liabilities arisingThe Selling Shareholders may also sell securities under Rule 144 or any other exemption from registration under the Securities Act of 1933, as amended (the “Securities Act”), if available, rather than under this prospectus.
Broker dealers engaged by the Selling Shareholders may arrange for other brokers dealers to participate in sales. Broker dealers may receive commissions or discounts from the Selling Shareholders (or, if any broker dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.
In connection with the sale of the securities or interests therein, the Selling Shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may be permittedin turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Shareholders may also sell securities short and deliver these securities to directorsclose out their short positions, or officers under Nevada law, we are informedloan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Shareholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the opiniondelivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The Selling Shareholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and Exchange Commission, indemnificationany profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Shareholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.
The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Shareholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Shareholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public policy, as expressedinformation under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the Actapplicable state or an exemption from the registration or qualification requirement is available and is therefore, unenforceable.
INTERESTS OF NAMED EXPERTS AND COUNSELcomplied with.
No expertUnder applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the Common Stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Shareholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the Common Stock by the Selling Shareholders or counsel named inany other person. We will make copies of this prospectus as having prepared or certified any partavailable to the Selling Shareholders and have informed them of the need to deliver a copy of this Prospectusprospectus to each purchaser at or having given an opinion uponprior to the time of the sale (including by compliance with Rule 172 under the Securities Act).
The validity of the securities being registered orshares of Common Stock offered hereby has been passed upon other legal matters in connection withfor us by Fox Rothschild LLP, 101 Park Avenue, New York, NY 10178.
The audited consolidated balance sheets at December 31, 2018 and the registration or offeringaudited consolidated statements of operations, shareholders’ (deficit) equity and cash flows for the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest directly or indirectly, in the Company or any of its parents or subsidiaries. Nor was any such person connected with Punto Group, Corp. or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
EXPERTS
Hillary CPA Groupperiod ended December 31, 2018 have been audited by M&K CPAS, PLLC, our independent registered public accounting firm, has audited ourfirm. We have included these financial statements includedin this registration statement in reliance upon the reports of such firm given their authority as experts in accounting and auditing.
This prospectus is part of a registration statement that we filed with the SEC. You should rely only on the information provided in this prospectus. We have not authorized anyone to provide you with information different from that contained in this prospectus. The information contained in this prospectus and registration statement to the extent and for the periods set forth in their audit report. Hillary CPA Group has presented its report with respect to our audited financial statements.
LEGAL MATTERS
John T. Root, Jr. has opined on the validityis accurate only as of the shares of common stock being offered hereby.
AVAILABLE INFORMATION
We have not previously been required to comply with the reporting requirements of the Securities Exchange Act. We have filed with the SEC a registration statement on Form S-1 to register the securities offered by this prospectus. For future information about us and the securities offered under this prospectus, you may refer to the registration statement and to the exhibits filed as a part of the registration statement. In addition, after the effective date of this prospectus, we will be requiredregardless of the time of delivery of this prospectus or of any sale of Common Stock. Applicable SEC rules may require us to update this prospectus in the future.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, orproxy statements and other information with the SEC as provided by the Securities Exchange Act.SEC. You may read and copy any reports, statementsreport, statement or other information that we file with the SEC at the SEC’s public reference facility maintained by the SEC Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may obtain further information on the operation of the Public Reference room by calling the SEC at 1-800-SEC-0330. Our SEC filings are also available to the public throughat the SEC’s website atwww.sec.gov, as well as our website at www.oneworldpharma.com. Information contained on our website does not constitute a part of this prospectus.
This prospectus is part of a registration statement that we filed with the SEC. This prospectus and any accompanying prospectus supplement do not contain all of the information included in the registration statement, and certain statements contained in this prospectus and any accompanying prospectus supplement about the provisions or contents of any contract, agreement or any other document referred to herein are not necessarily complete. For each of these contracts, agreements or documents filed as an exhibit to the registration statement, we refer you to the actual exhibit for a more complete description of the matters involved. In addition, we have omitted certain parts of the registration statement in accordance with the rules and regulations of the SEC. To obtain all of the information that we filed with the SEC Internet site at www.sec.gov.in connection herewith, we refer you to the registration statement, including its exhibits and schedules. You should assume that the information contained in this prospectus and any accompanying prospectus supplement is accurate only as of the date appearing on the front of the prospectus or prospectus supplement, as applicable.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
We have had no changes in or disagreements with our independent registered public accountant.
FINANCIAL STATEMENTS
Our fiscal year end is September 30. We will provide audited financial statements to our stockholders on an annual basis; the statements will be prepared by us and audited by Hillary CPA Group.
Our financial statements from inception to September 30, 2014, immediately follow:
ONE WORLD PHARMA, INC. AND SUBSIDIARIES
Table of Contents
27
Report of Independent Registered Public Accountant
To the Board of Directors and Shareholders
(Formerly Punto Group, Corp.)
1810 E Sahara Avenue, Suite 216CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2019 | December 31, 2018 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 212,385 | $ | 125,846 | ||||
Other current assets | 136,779 | 35,344 | ||||||
Inventory | 24,978 | - | ||||||
Total current assets | 374,142 | 161,190 | ||||||
Right-of-use asset | 258,754 | - | ||||||
Security deposits | 69,542 | - | ||||||
Fixed assets, net | 713,932 | 356,439 | ||||||
Total Assets | $ | 1,416,370 | $ | 517,629 | ||||
Liabilities and Stockholders’ Equity (Deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 175,129 | $ | 121,194 | ||||
Accrued expenses | 99,107 | 34,425 | ||||||
Current portion of lease liability | 38,561 | - | ||||||
Convertible note payable | 300,000 | 300,000 | ||||||
Advances from shareholders | 307,141 | 514,141 | ||||||
Notes payable | 200,000 | 200,000 | ||||||
Total current liabilities | 1,119,938 | 1,169,760 | ||||||
Long-term lease liability | 222,358 | - | ||||||
Total Liabilities | 1,342,296 | 1,169,760 | ||||||
Stockholders’ Equity (Deficit): | ||||||||
Common stock, $0.001 par value, 75,000,000 shares authorized; 39,922,899 and 34,291,905 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively | 39,923 | 34,292 | ||||||
Additional paid-in capital | 4,503,966 | 1,278,352 | ||||||
Subscriptions receivable, consisting of 6,012,500 shares at December 31, 2018 | - | (602 | ) | |||||
Accumulated other comprehensive loss | 138,911 | (4,090 | ) | |||||
Accumulated (deficit) | (4,608,726 | ) | (1,959,982 | ) | ||||
74,074 | (652,030 | ) | ||||||
Noncontrolling Interest | - | (101 | ) | |||||
Total Stockholders’ Equity (Deficit) | 74,074 | (652,131 | ) | |||||
Total Liabilities and Stockholders’ Equity (Deficit) | $ | 1,416,370 | $ | 517,629 |
See accompanying notes to financial statements.
(Formerly Punto Group, Corp.)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
For the Three Months Ended June 30, | For the Six Months Ended | From Inception (March 27, 2018) to | ||||||||||||||
2019 | 2018 | June 30, 2019 | June 30, 2018 | |||||||||||||
Revenue: | $ | - | $ | - | $ | - | $ | - | ||||||||
Operating expenses: | ||||||||||||||||
General and administrative | 565,167 | 124,840 | 1,044,787 | 124,840 | ||||||||||||
Professional fees | 741,542 | 156,977 | 1,444,422 | 156,977 | ||||||||||||
Total operating expenses | 1,306,709 | 281,817 | 2,489,209 | 281,817 | ||||||||||||
Operating loss | (1,306,709 | ) | (281,817 | ) | (2,489,209 | ) | (281,817 | ) | ||||||||
Other income (expense): | ||||||||||||||||
Loss on disposal of assets | (4,087 | ) | - | (4,087 | ) | - | ||||||||||
Interest income | 147 | - | 248 | - | ||||||||||||
Interest expense | (14,579 | ) | (1,801 | ) | (155,696 | ) | (1,801 | ) | ||||||||
Total other expense | (18,519 | ) | (1,801 | ) | (159,535 | ) | (1,801 | ) | ||||||||
Net loss | $ | (1,325,228 | ) | $ | (283,618 | ) | $ | (2,648,744 | ) | $ | (283,618 | ) | ||||
Other comprehensive loss: | ||||||||||||||||
Gain on foreign currency translation | $ | 151,288 | $ | - | $ | 143,001 | $ | 35,402 | ||||||||
Net other comprehensive loss | $ | (1,173,940 | ) | $ | (283,618 | ) | $ | (2,505,743 | ) | $ | (248,216 | ) | ||||
Weighted average number of common shares outstanding - basic and fully diluted | 39,922,899 | 29,777,996 | 38,779,975 | 29,410,501 | ||||||||||||
Net loss per share - basic and fully diluted | $ | (0.03 | ) | $ | (0.01 | ) | $ | (0.06 | ) | $ | (0.01 | ) |
See accompanying notes to financial statements.
(Formerly Punto Group, Corp.)
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
Accumulated | Total | |||||||||||||||||||||||||||||||
Additional | Other | Stockholders’ | ||||||||||||||||||||||||||||||
Common Stock | Paid-In | Subscriptions | Comprehensive | Accumulated | Noncontrolling | Equity | ||||||||||||||||||||||||||
Shares | Amount | Capital | Receivable | Income (Loss) | Deficit | Interest | (Deficit) | |||||||||||||||||||||||||
Balance, March 27, 2018 | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||
Consolidation of One World Pharma, Inc. | - | - | (349,420 | ) | - | - | - | - | (349,420 | ) | ||||||||||||||||||||||
Common stock sold for cash | 23,411,905 | 23,412 | 978,703 | (602 | ) | - | - | - | 1,001,513 | |||||||||||||||||||||||
Common stock issued for services | 680,000 | 680 | 284,920 | - | - | - | - | 285,600 | ||||||||||||||||||||||||
Common stock issued for purchase of One World Pharma S.A.S. | 10,200,000 | 10,200 | 152,709 | - | - | - | - | 162,909 | ||||||||||||||||||||||||
Contributed capital | - | - | 136,440 | - | - | - | - | 136,440 | ||||||||||||||||||||||||
Beneficial conversion feature on convertible note | - | - | 75,000 | - | - | - | - | 75,000 | ||||||||||||||||||||||||
Loss on foreign currency translation | - | - | - | - | (4,090 | ) | - | - | (4,090 | ) | ||||||||||||||||||||||
Net loss | - | - | - | - | - | (1,959,982 | ) | (101 | ) | (1,960,083 | ) | |||||||||||||||||||||
Balance, December 31, 2018 | 34,291,905 | $ | 34,292 | $ | 1,278,352 | $ | (602 | ) | $ | (4,090 | ) | $ | (1,959,982 | ) | $ | (101 | ) | $ | (652,131 | ) | ||||||||||||
Cash received on subscriptions receivable of OWP Ventures, Inc. | - | - | - | 602 | - | - | - | 602 | ||||||||||||||||||||||||
Common stock of OWP Ventures, Inc. sold for cash | 3,900,000 | 3,900 | 1,946,100 | - | - | - | - | 1,950,000 | ||||||||||||||||||||||||
Issuance of common stock of OWP Ventures, Inc. on debt conversion | 1,253,493 | 1,253 | 500,144 | - | - | - | - | 501,397 | ||||||||||||||||||||||||
Common stock issued for services, OWP Ventures, Inc. | 30,000 | 30 | 14,970 | - | - | - | - | 15,000 | ||||||||||||||||||||||||
Amortization of common stock options issued for services, OWP Ventures, Inc. | - | - | 88,297 | - | - | - | - | 88,297 | ||||||||||||||||||||||||
Exchange of OWP Ventures, Inc. shares for One World Pharma, Inc. shares (1:1) | 1,322,501 | 1,323 | (10,730 | ) | - | - | - | 101 | (9,306 | ) | ||||||||||||||||||||||
Common stock cancelled pursuant to merger with OWP Ventures, Inc. | (875,000 | ) | (875 | ) | 875 | - | - | - | - | - | ||||||||||||||||||||||
Amortization of common stock options issued for services | - | - | 560,958 | - | - | - | - | 560,958 | ||||||||||||||||||||||||
Beneficial conversion feature on convertible note | - | - | 125,000 | - | - | - | - | 125,000 | ||||||||||||||||||||||||
Gain on foreign currency translation | - | - | - | - | 143,001 | - | - | 143,001 | ||||||||||||||||||||||||
Net loss | - | - | - | - | - | (2,648,744 | ) | - | (2,648,744 | ) | ||||||||||||||||||||||
Balance, June 30, 2019 (Unaudited) | 39,922,899 | $ | 39,923 | $ | 4,503,966 | $ | - | $ | 138,911 | $ | (4,608,726 | ) | $ | - | $ | 74,074 |
See accompanying notes to financial statements.
(Formerly Punto Group, Corp.)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
For the Six | From Inception | |||||||
Months Ended | (March 27, 2018) to | |||||||
June 30, 2019 | June 30, 2018 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (2,648,744 | ) | $ | (283,618 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization expense | 5,005 | 103 | ||||||
Loss on disposal of fixed assets | 4,087 | |||||||
Debt discounts | 125,000 | - | ||||||
Stock-based compensation | 15,000 | - | ||||||
Amortization of options issued for services | 649,255 | - | ||||||
Decrease (increase) in assets: | ||||||||
Other current assets | (110,741 | ) | - | |||||
Inventory | (24,978 | ) | - | |||||
Right-of-use assets | (258,754 | ) | - | |||||
Security deposits | (69,542 | ) | (13,092 | ) | ||||
Increase (decrease) in liabilities: | ||||||||
Accounts payable | 53,935 | 7,957 | ||||||
Accrued expenses | 66,079 | 2,753 | ||||||
Lease liability | 260,919 | - | ||||||
Net cash used in operating activities | (1,933,479 | ) | (285,897 | ) | ||||
Cash flows from investing activities | ||||||||
Purchase of fixed assets | (366,585 | ) | (11,585 | ) | ||||
Net cash used in investing activities | (366,585 | ) | (11,585 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from convertible note payable | 500,000 | - | ||||||
Proceeds from shareholders | - | 207,000 | ||||||
Repayment of advances from shareholders | (207,000 | ) | - | |||||
Proceeds from subscriptions receivable | 602 | - | ||||||
Proceeds from sale of common stock | 1,950,000 | 500,000 | ||||||
Net cash provided by financing activities | 2,243,602 | 707,000 | ||||||
Effect of exchange rate changes on cash | 143,001 | 35,402 | ||||||
Net increase in cash | 86,539 | 444,920 | ||||||
Cash - beginning | 125,846 | - | ||||||
Cash - ending | $ | 212,385 | $ | 444,920 | ||||
Supplemental disclosures: | ||||||||
Interest paid | $ | 14,965 | $ | - | ||||
Income taxes paid | $ | - | $ | - | ||||
Non-cash investing and financing transactions: | ||||||||
Fair value of net assets acquired in merger | $ | 9,306 | $ | - | ||||
Value of shares issued for conversion of debt | $ | 501,397 | $ | - | ||||
Beneficial conversion feature | $ | 125,000 | $ | - |
See accompanying notes to financial statements.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 – Nature of Business and Significant Accounting Policies
Nature of Business
One World Pharma, Inc. (formerly Punto Group, Corp.) was incorporated in Nevada on September 2, 2014. On February 21, 2019, One World Pharma, Inc. (“One World Pharma,” the “Company,” “we,” “our” or “us”) entered into an Agreement and Plan of Merger with OWP Merger Subsidiary, Inc., our wholly-owned subsidiary, and OWP Ventures, Inc. (“OWP Ventures”), which is the parent company of One World Pharma SAS, a Colombian company (“OWP Colombia”). Pursuant to the Merger Agreement, we acquired OWP Ventures (and indirectly, OWP Colombia) 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 39,475,398 shares of our Common Stock; (b) options to purchase 825,000 shares of common stock of OWP Ventures at an exercise price of $0.50 automatically converted into options to purchase 825,000 shares of our Common Stock at an exercise price of $0.50; (c) the outstanding principal and interest under a $300,000 convertible note issued by OWP Ventures became convertible, at the option of the holder, into shares of our Common Stock at a conversion price equal to the lesser of $0.424 per share or 80% of the price we sell our Common Stock in a future “Qualified Offering”; (d) 875,000 shares of our Common Stock owned by OWP Ventures prior to the Merger were cancelled; and (e) OWP Ventures’ chief operating officer became our chief operating officer and two of OWP Ventures’ directors became members of our board of directors. The Company’s headquarters are located in Las Vegas, Nevada, 89104
We have auditedand all of its customers are expected to be outside of the accompanying balance sheet ofUnited States. On January 10, 2019, the Company changed its name from Punto Group, Corp. (a Nevada corporation) asto One World Pharma, Inc.
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 Colombia. OWP Colombia is a licensed cannabis cultivation, production and distribution (export) company located in Popayán, Colombia (nearest major city is Cali). We plan to be a producer of Septemberraw cannabis and hemp plant ingredients for both medical and industrial uses across the globe. We have received licenses to cultivate, produce and distribute the raw ingredients of the cannabis and hemp plant for medicinal, scientific and industrial purposes. Specifically, we are one of the only companies in Colombia to receive seed, cultivation, extraction and export licenses from the Colombian government. Currently, we own approximately 30 2014,acres and have a covered greenhouse built specifically to cultivate high-grade cannabis and hemp. In addition, we have entered into agreements with local farming co-operatives that include small farmers and indigenous tribe members, under which they will cultivate cannabis on up to approximately 140 acres of land using our seeds and propagation techniques, and sell their harvested products to us on an exclusive basis. We planted our first crop of cannabis in 2018, which we began harvesting in the related statementsfirst quarter of operations, stockholders' equity, and cash flows2019 for the period then ended. These financial statements are the responsibilitypurpose of further research and development activities and quality control testing of the Company's management. Our responsibility iscannabis we have produced. To date, we have not yet generated any revenues from our activities.
The Merger was accounted for as a reverse merger (recapitalization) with OWP Ventures deemed to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance withbe the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whetheraccounting acquirer. Accordingly, the financial statements are freeincluded in this Quarterly Report on Form 10-Q reflect the historical operations of material misstatement. An audit includes examining, on a test basis, evidence supportingOWP Ventures and its wholly-owned subsidiary OWP SAS prior to the amountsMerger, and disclosures inthat of the combined company following the Merger. The historical financial statements. An audit also includes assessinginformation for One World Pharma, Inc. (formerly Punto Group Corp.) prior to the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.Merger has been omitted.
Basis of Presentation
The accompanying consolidated financial statements have been prepared assumingin accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and the rules of the Securities and Exchange Commission (SEC). Intercompany accounts and transactions have been eliminated.
The unaudited condensed consolidated financial statements of the Company and the accompanying notes included in this Quarterly Report on Form 10-Q are unaudited. In the opinion of management, all adjustments necessary for a fair presentation of the Condensed Consolidated Financial Statements have been included. Such adjustments are of a normal, recurring nature. The Condensed Consolidated Financial Statements, and the accompanying notes, are prepared in accordance with GAAP and do not contain certain information included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, and Current Report on Form 8-K with respect to the Merger originally filed with the SEC on February 25, 2019, as amended and restated on July 12, 2019. The interim Condensed Consolidated Financial Statements should be read in conjunction with that Annual Report on Form 10-K and Current Report on Form 8-K. Results for the interim periods presented are not necessarily indicative of the results that might be expected for the entire fiscal year.
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
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 June 30, 2019:
State of | ||||||||
Name of Entity | Incorporation | Relationship | ||||||
One World Pharma, Inc.(1) | Nevada | Parent | ||||||
OWP Ventures, Inc.(2) | Delaware | Subsidiary | ||||||
One World Pharma S.A.S.(3) | Colombia | 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 Pharma, Inc.
(3)Wholly-owned subsidiary of OWP Ventures, Inc. since May 30, 2018, located in Colombia and legally constituted as a simplified stock company registered in the Chamber of Commerce of Bogotá on July 18, 2017. Its headquarters are located in Bogotá.
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 and substantially all of its production efforts are within Popayán, Colombia.
Foreign Currency Translation
The functional currency of the Company is Columbian Peso (COP). The Company has maintained its financial statements using the functional currency, and translated those financial statements to the US Dollar (USD) 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 requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the 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 those estimates.
Segment Reporting
ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.
Fair Value of Financial Instruments
Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, accounts receivable, accounts payable and accrued expenses reported on the balance sheets are estimated by management to approximate fair value primarily due to the short term nature of the instruments.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash on deposit with various financial institutions in Columbia, and all highly-liquid investments with original maturities of three months or less at the time of purchase. We have not held any cash equivalents to date.
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
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 $250,000, under current regulations. The Company didn’t have any amounts in excess of FDIC insured limits at June 30, 2019, and has not experienced any losses in such accounts.
Revenue Recognition
The Company has adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the sale of commercial sales of products, licensing agreements and contracts. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition.
There was no impact on the Company’s financial statements as a result of adopting ASC 606 for the six months ended June 30, 2019, or the year ended December 31, 2018.
Inventory
Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. 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.
Stock-Based Compensation
The Company accounts for equity instruments issued to employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718) and Equity-Based Payments to Non-employees pursuant to ASC 505-50 (ASC 505-50). 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 periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.
Adoption of New Accounting Standards and Recently Issued Accounting Pronouncements
In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07,Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The new guidance is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its financial statements.
In February 2018, the FASB issued ASU No. 2018-02,Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The guidance permits entities to reclassify tax effects stranded in Accumulated Other Comprehensive Income as a result of tax reform to retained earnings. This new guidance is effective for annual and interim periods in fiscal years beginning after December 15, 2018. Early adoption is permitted in annual and interim periods and can be applied retrospectively or in the period of adoption. The Company is currently in the process of evaluating the impact of adoption on its financial statements.
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
In May 2017, the FASB issued ASU 2017-09,Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when a change to the terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the fair value, vesting condition or the classification of the award is not the same immediately before and after a change to the terms and conditions of the award. The new guidance is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its financial statements.
In February 2016, the FASB established Topic 842,Leases, by issuing ASU No. 2016-02, which requires lessees to recognize the rights and obligations created by leases on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-11,Targeted Improvements, ASU No. 2018-10,Codification Improvements to Topic 842, and ASU No. 2018-01,Land Easement Practical Expedient for Transition to Topic 842. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations.
The new standard became effective January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. The Company adopted the new standard on January 1, 2019 using the modified retrospective transition approach as of the effective date of the initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients in transition. The Company elected the “package of practical expedients”, which permits entities not to reassess under the new lease standard prior conclusions about lease identification, lease classification and initial direct costs. The Company does not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements.
The most significant effects of the adoption of the new standard relate to the recognition of new ROU assets and lease labilities on our balance sheet for office operating leases and providing significant new disclosures about our leasing activities.
The new standard also provides practical expedients for an entity’s ongoing accounting. The Company has also elected the short-term leases recognition exemption for all leases that qualify. This means that the Company will continue asnot recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets and lease liabilities, for existing short-term leases of those assets in transition. The Company also currently expects to elect the practical expedient to not separate lease and non-lease components for its leases. The new standard did not have a going concern. material impact.
In May 2014, the FASB issued ASU No. 2014-09,Revenue from Contracts with Customers. Since ASU 2014-09 was issued, several additional ASUs have been issued to clarify various elements of the guidance. These standards provide guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted the new standard to be effective upon inception. We have completed an initial evaluation of the potential impact from adopting the new standard, including a detailed review of performance obligations for all material revenue streams. Based on this initial evaluation, adoption does not have a material impact on our financial position, results of operations, or cash flows. Related disclosures have been expanded in line with the requirements of the standard.
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.
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2 –Going Concern
As discussedshown in Note 10 to the accompanying condensed consolidated financial statements as of June 30, 2019, the Company has cash on hand of $212,385, a working capital deficit of $745,796 and an accumulated deficit of $4,608,726, and the Company’s operating lossescash on hand may not be sufficient to sustain operations. These factors raise substantial doubt about itsthe Company’s ability to continue as a going concern. Management is actively pursuing its cannabis cultivation activities and expects to begin revenue generating export operations in the first quarter of 2020. In addition, the Company is currently seeking additional sources of capital to fund short term operations. Management believes these factors will contribute toward achieving profitability. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
In our opinion,any uncertainty as to the Company’s ability to continue as a going concern. These financial statements referredalso do not include any adjustments relating to above present fairly, in all material respects, the financial positionrecoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company as of September 30, 2014 and the results of its operations and its cash flows for the period from September 2, 2014 (Inception) through September 30, 2014 in conformity with U.S. generally accepted accounting principles.
David L. Hillary, Jr., CPA, CITP
Indianapolis, Indiana
October 28, 2014
5797 East 169th Street, Suite 100 Noblesville, IN 46062 317‐222‐1416 www.HillaryCPAgroup.com
F-1
The accompanying notes are an integral part of these financial statements.
F-2
The accompanying notes are an integral part of these financial statements.
F-3
The accompanying notes are an integral part of these financial statements.
F-4
The accompanying notes are an integral part of these financial statements.
F-5
32
PUNTO GROUP, CORP
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
Note 1: Organization and Basis of Presentation
Punto Group, Corp. (the “Company”) is a for profit corporation established under the corporation laws in the State of Nevada, United States of America on September 2, 2014.
The Company is in the development phase as defined under Accounting Standards Codification (“ASC”)
915-205 “Development-Stage Entities.” As such, the Company is subjectbe unable to all risks inherent to the
establishment of a start-up business enterprise.
The financial statements of the Company have been prepared in accordance with generally accepted
accounting principles in the United States of America. The Financial Statements and related disclosures
continue as of September 30, 2014 are audited pursuant to the rules and regulations of the United States Securities
and Exchange Commission (“SEC”). Unless the context otherwise requires, all references to “Punto
Group, Corp.,” “we,” “us,” “our” or the “company” are to Punto Group, Corp. and any subsidiaries.
Note 2: Significant Accounting Policies and Recent Accounting Pronouncements
Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that 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 period. Actual results could differ from those
estimates.
Due to the limited level of operations, the Company has not made material assumptions or estimates other
than the assumption that the Company is a going concern.
Cash
Note 3 – Reverse Merger
On February 21, 2019, One World Pharma, Inc. entered into an Agreement and Cash Equivalents
The Company considers all highly liquid investmentsPlan of Merger with OWP Merger Subsidiary, Inc., our wholly-owned subsidiary, and OWP Ventures, which is the parent company of OWP Colombia. Pursuant to the Merger Agreement, we acquired OWP Ventures (and indirectly, OWP Colombia) by the merger of OWP Merger Subsidiary with and into OWP Ventures, with OWP Ventures being the surviving entity as our wholly-owned subsidiary. As a result of the Merger (a) holders of the outstanding capital stock of OWP Ventures received an original maturityaggregate of three months or less
when purchased39,475,398 shares of our Common Stock; (b) options to be cash equivalents.
Fair Valuepurchase 825,000 shares of Financial Instruments
ASC 825, “Disclosures about Fair Valuecommon stock of Financial Instruments”, requires disclosureOWP Ventures at an exercise price of fair value
information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value,
establishes$0.50 automatically converted into options to purchase 825,000 shares of our Common Stock at an exercise price of $0.50; (c) the outstanding principal and interest under a framework for measuring fair value in generally accepted accounting principles, and
expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon
certain market assumptions and pertinent information available$300,000 convertible note issued by OWP Ventures became convertible, at the option of the holder, into shares of our Common Stock at a conversion price equal to management asthe lesser of October 31, 2013.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair
values. These financial instruments include cash, accrued liabilities and notes payable. Fair values were
assumed to approximate carrying values for these financial instruments since they are short term in nature
and their carrying amounts approximate fair value.
Basic and Diluted Earnings (Loss) Per Share
The Company computes earnings (loss)$0.424 per share in accordance with ASC 260-10-45 “Earnings per
Share”, which requires presentation of both basic and diluted earnings per share on the faceor 80% of the
statement price we sell our Common Stock in a future “Qualified Offering”; (d) 875,000 shares of operations. Basic earnings (loss) per share is computedour Common Stock owned by dividing net earnings (loss)
F-6
33
PUNTO GROUP, CORP
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
available to common stockholders by the weighted average number of outstanding common shares during
the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares
outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if
their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and
diluted earnings (loss) per share are equal.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a
significant impact on the Company’s results of operations, financial position or cash flow.
Note 3: Revenue Recognition
The Company recognizes revenue when products are fully delivered or services have been provided and
collection is reasonably assured. No revenue has been earned since inception.
Note 4: Legal Matters
The Company has no known legal issues pending.
Note 5: Debt
On September 2, 2014, Andrey Kryukov, the Director and President of the Company, made the initial
depositOWP Ventures prior to the Company bank account in the amount $1,717 which is being carried as a loan payable. The
loan is non-interest bearing, unsecuredMerger were cancelled; and due upon demand.
Note 6: Capital Stock
As(e) OWP Ventures’ chief operating officer became our chief operating officer and two of September 30, 2014 there has been no stock issued.
Note 7: Income Taxes
The Company uses the asset and liability methodOWP Ventures’ directors became members of accounting for income taxes in accordance with ASC
Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i)
taxes payable or refundable for the current year and (ii) deferred tax consequencesour board of temporarydirectors.
differences resulting from matters that have been recognized in an entity’s financial statements or tax
returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of
operations in the period that includes the enactment date. A valuation allowance is provided to reduce the
deferred tax assets reported if based on the weight of the available positive and negative evidence, it is
more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an
enterprise’s financial statements and prescribes 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. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties,
accounting in interim periods, disclosure, and transition. There are no material uncertain tax positions for
the reporting period presented.
F-7
34
PUNTO GROUP, CORP
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 2014
Note 8:4 – Related Party Transactions
The Company neither owns nor leases any real or personal property. The director
Repayment and Exchanges of Advances from Shareholders
A total of $207,000 of demand notes owed to our CEO was repaid over various dates from March of 2019 through May of 2019.
On various dates between October 25, 2018 and November 23, 2018, our CEO advanced funds to the Company
provides office space totaling $307,141 under short-term unsecured demand loans, bearing interest at 6% per annum. On February 13, 2019, these promissory notes were exchanged for an amended and services free of charge. The Company's sole officer and director is involved in
other business activities and mayrestated promissory note in the future, become involvedprincipal amount of $307,141 that bears interest at 6% and is payable upon the earlier of (i) a public or private offering of our equity securities, resulting in other business opportunitiesgross proceeds of at least $5,000,000, or (ii) February 13, 2022.
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 5 – Fair Value of Financial Instruments
Under FASB ASC 820-10-5, fair value is defined as theythe 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.
become available.
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. |
The following schedule summarizes the valuation of financial instruments at fair value on a related party transaction involvingrecurring basis in the balance sheet as of June 30, 2019 and December 31, 2018, respectively:
Fair Value Measurements at June 30, 2019 | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
Assets | ||||||||||||
Cash | $ | 212,385 | $ | - | $ | - | ||||||
Right-of-use asset | - | 258,754 | - | |||||||||
Total assets | 212,385 | 258,754 | - | |||||||||
Liabilities | ||||||||||||
Convertible note payable | - | - | 300,000 | |||||||||
Advances from shareholders | - | 307,141 | - | |||||||||
Notes payable | - | - | 200,000 | |||||||||
Lease liability | - | 260,919 | - | |||||||||
Total liabilities | - | (568,060 | ) | (500,000 | ) | |||||||
$ | 212,385 | $ | (309,306 | ) | $ | (500,000 | ) |
Fair Value Measurements at December 31, 2018 | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
Assets | ||||||||||||
Cash | $ | 125,846 | $ | - | $ | - | ||||||
Total assets | 125,846 | - | - | |||||||||
Liabilities | ||||||||||||
Convertible note payable | - | - | 300,000 | |||||||||
Advances from shareholders | - | 514,141 | - | |||||||||
Notes payable | - | - | 200,000 | |||||||||
Total liabilities | - | (514,141 | ) | (500,000 | ) | |||||||
$ | 125,846 | $ | (514,141 | ) | $ | (500,000 | ) |
There were no transfers of financial assets or liabilities between Level 1, Level 2 and Level 3 inputs for the six months ended June 30, 2019 or the year ended December 31, 2018.
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 6 – Other Current Assets
Other current assets included the following as of June 30, 2019 and December 31, 2018, respectively:
June 30, 2019 | December 31, 2018 | |||||||
Security deposit | $ | 4,518 | $ | 4,494 | ||||
Prepaid expenses | 67,350 | 30,850 | ||||||
Other receivables | 64,911 | - | ||||||
Total | $ | 136,779 | $ | 35,344 |
Note 7 – Fixed Assets
Fixed assets consist of the following at June 30, 2019 and December 31, 2018, respectively:
June 30,2019 | December 31, 2018 | |||||||
Land | $ | 179,731 | $ | - | ||||
Office equipment | 23,469 | 18,314 | ||||||
Furniture and fixtures | 32,216 | 23,595 | ||||||
Software | 17,654 | - | ||||||
Equipment and machinery | 310,919 | - | ||||||
Construction in progress | 156,909 | 316,491 | ||||||
720,898 | 358,400 | |||||||
Less: accumulated depreciation | (6,966 | ) | (1,961 | ) | ||||
Total | $ | 713,932 | $ | 356,439 |
Construction in progress consists of equipment and capital improvements on the Popayán farm that have not yet been placed in service.
Depreciation and amortization expense totaled $5,005 and $103 for the six months ended June 30, 2019 and June 30, 2018, respectively.
Note 8 – Accrued Expenses
Accrued expenses consisted of the following at June 30, 2019 and December 31, 2018, respectively:
June 30, 2019 | December 31, 2018 | |||||||
Accrued payroll | $ | 53,681 | $ | 6,327 | ||||
Accrued withholding taxes | 6,232 | 6,387 | ||||||
Accrued ICA fees and contributions | 11,936 | 8,514 | ||||||
Accrued interest | 27,258 | 12,924 | ||||||
Deferred rent obligations | - | 273 | ||||||
$ | 99,107 | $ | 34,425 |
F-12 |
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 9 – Convertible Note Payable
Convertible note payable consists of the following at June 30, 2019 and December 31, 2018, respectively:
June 30, 2019 | December 31, 2018 | |||||||
On November 30, 2018, the Company received proceeds of $300,000 on a secured convertible note that carries a 6% interest rate from CSW Ventures, LP (“CSW”). The proceeds were used to fund the Company’s purchase of 875,000 shares of common stock, on a 1:4 split adjusted basis, of One World Pharma, Inc. The Note is due on demand. In the event that the Company consummates the closing of a public or private offering of its equity securities, resulting in gross proceeds of at least $500,000 (“Qualified Financing”) at any time prior to the repayment of this note, then the outstanding principal and unpaid interest may, at the option of the holder, be converted into such equity securities at a conversion price equal to eighty percent (80%) of the purchase price paid by the investors purchasing the equity securities in the Qualified Financing. The Company’s obligations under this Note are secured by a lien on the assets of the Company. | $ | 300,000 | $ | 300,000 | ||||
On January 14, 2019, the Company received proceeds of $500,000 on an unsecured convertible promissory note that carries a 6% interest rate from The Sanguine Group LLC. The Note was due January 14, 2022. In the event that the Company consummated the closing of a public or private offering of its equity securities, resulting in gross proceeds of at least $500,000 (“Qualified Financing”) at any time prior to the repayment of this note, then the outstanding principal and unpaid interest would automatically be converted into such equity securities at a conversion price equal to the lesser of (i) eighty percent (80%) of the purchase price paid by the investors purchasing the equity securities in the Qualified Financing, or (ii) $0.424 per share. The Company’s obligations under this Note were secured by a lien on the assets of the Company. A Qualified Financing subsequently occurred on February 4, 2019, at which time the principal and interest were converted into 1,253,493 shares of the Company’s common stock. | - | - | ||||||
Less: unamortized debt discounts | - | - | ||||||
Convertible note payable | $ | 300,000 | $ | 300,000 |
In addition, the Company recognized and measured the embedded beneficial conversion feature present in the convertible notes by allocating a significant shareholder.portion of the proceeds equal to the intrinsic value of the feature to additional paid-in-capital. The natureintrinsic value of the feature was calculated on the commitment date using the effective conversion price of the convertible notes. This intrinsic value is limited to the portion of the proceeds allocated to the convertible debt.
The aforementioned accounting treatment resulted in a total debt discount equal to $125,000 and details$75,000 for the six months ended June 30, 2019 and the year ended December 31, 2018, respectively. The Company recorded finance expense in the amount of $125,000 for the six months ended June 30, 2019.
The convertible note limits the transaction are described in Note 5.maximum number of shares that can be owned by the note holder as a result of the conversions to common stock to 4.99% of the Company’s issued and outstanding shares.
Note 9: Subsequent Events
The Company has evaluated events subsequent throughrecorded interest expense pursuant to the stated interest rates on the convertible notes in the amount of $10,323 and $125,000 of interest expense related to the debt discount for the six months ended June 30, 2019.
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 10 – Advances from Shareholders
Advances from shareholders consist of the following at June 30, 2019 and December 31, 2018, respectively:
June 30, 2019 | December 31, 2018 | |||||||
On various dates between May 3, 2018 and November 23, 2018, our CEO advanced short-term unsecured demand loans, bearing interest at 6% per annum, of an aggregate $514,141 to the Company, as follows:
A total of $207,000 was repaid over various dates from March of 2019 through May of 2019, and $307,141 was exchanged for the note described below. | $ | - | $ | 514,141 | ||||
On February 13, 2019, a total of $307,141 of the advances from our CEO received from October 25, 2018 to November 23, 2018, as shown above, were exchanged for an amended and restated promissory note in the principal amount of $307,141 (the “Amended Note”). The Amended Note bears interest at 6% and is payable upon the earlier of (i) a public or private offering of our equity securities, resulting in gross proceeds of at least $5,000,000, or (ii) February 13, 2022. | 307,141 | - | ||||||
Total advances from shareholders | $ | 307,141 | $ | 514,141 |
The Company recorded interest expense in the amount of $12,457 for the six months ended June 30, 2019.
Note 11 – Notes Payable
Notes payable consists of the following at June 30, 2019 and December 31, 2018, respectively:
June 30,2019 | December 31,2018 | |||||||
On December 26, 2018, the Company received proceeds of $100,000 from CSW on an unsecured promissory note due on demand that carries a 6% interest rate. | $ | 100,000 | $ | 100,000 | ||||
On November 26, 2018, the Company received proceeds of $100,000 from CSW on an unsecured promissory note due on demand that carries a 6% interest rate. | 100,000 | 100,000 | ||||||
Total notes payable | $ | 200,000 | $ | 200,000 |
The Company recorded interest expense in the amount of $5,951 for the six months ended June 30, 2019.
The Company recognized interest expense for the six months ended June 30, 2019 and the period from inception (March 27, 2018) to June 30, 2018, respectively, as follows:
June 30, 2019 | June 30, 2018 | |||||||
Interest on convertible notes | $ | 10,323 | $ | - | ||||
Interest on advances from shareholders | 12,457 | 1,761 | ||||||
Interest on notes payable | 5,951 | - | ||||||
Amortization of beneficial conversion features | 125,000 | - | ||||||
Interest on accounts payable | 1,965 | 40 | ||||||
Total interest expense | $ | 155,696 | $ | 1,801 |
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 12 – Leases
The Company’s corporate offices are within leased facilities. The Company doesn’t have any other office or equipment leases subject to the recently adopted ASU 2016-02. This real property lease contains a one-time renewal option for an additional 36 months. In the locations in which it is economically feasible to continue to operate, management expects that lease options will be exercised. The office lease contains provisions requiring payment of property taxes, utilities, insurance, maintenance and other occupancy costs applicable to the leased premise. As the Company’s lease does not provide an implicit discount rate, the Company uses an incremental borrowing rate based on the information available at the commencement date these financial statementsin determining the present value of lease payments.
The components of lease expense were as follows:
For the SixMonths Ended | ||||
June 30, 2019 | ||||
Finance lease cost: | ||||
Amortization of assets | $ | 19,971 | ||
Interest on lease liabilities | 9,158 | |||
Total lease cost | $ | 29,129 |
Supplemental balance sheet information related to leases were as follows:
June 30, 2019 | ||||
Finance lease: | ||||
Right-of-use asset | $ | 278,725 | ||
Accumulated amortization | (19,971 | ) | ||
Right-of-use asset, net | $ | 258,754 | ||
Current portion of finance lease liability | $ | 38,561 | ||
Long-term finance lease liability | 222,358 | |||
Total finance lease liability | $ | 260,919 | ||
Weighted average remaining lease term: | ||||
Operating leases | N/A | |||
Finance leases | 5.5 years | |||
Weighted average discount rate: | ||||
Operating leases | N/A | |||
Finance leases | 6.75 | % |
Supplemental cash flow and other information related to leases was as follows:
For the Six Months Ended | ||||
June 30, 2019 | ||||
Cash paid for amounts included in the measurement of lease liabilities: | ||||
Operating cash flows used for finance leases | $ | 26,964 | ||
Leased assets obtained in exchange for lease liabilities: | ||||
Total operating lease liabilities | $ | - | ||
Total finance lease liabilities | $ | 260,919 |
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company’s maturities of lease liabilities under finance leases as of June 30, 2019 are as follows:
Finance | ||||
Leases | ||||
2019 | $ | 27,234 | ||
2020 | 55,824 | |||
2021 | 57,498 | |||
2022 | 59,223 | |||
2023 | 61,000 | |||
Thereafter | 51,957 | |||
Total | 312,876 | |||
Less interest | 56,461 | |||
Present value of lease liabilities | 260,919 | |||
Less current portion | 38,561 | |||
Long-term lease liabilities | $ | 222,358 |
There were no operating leases as of June 30, 2019.
Note 13 – Changes in Stockholders’ Equity
One World Pharma is authorized to issue an aggregate of 75,000,000 shares of common stock with a par value of $0.001. As of June 30, 2019, there were 39,922,899 shares of common stock issued and outstanding. The par value of OWP Ventures’ common stock was $0.0001 per share. The par value presented for OWP Ventures’ transactions have been
issued retroactively adjusted to assessreflect the need for potential recognition or disclosurepar value of One World Pharma in this report. Such eventsQuarterly Report on Form 10-Q.
Reverse Stock Split
On January 10, 2019, One World Pharma, Inc. effected a 1-for-4 reverse stock split. No fractional shares were evaluated
throughissued, and no cash or other consideration was paid in connection with the date these financial statements were available to be issued.
In October 8, 2014,Reverse Stock Split. Instead, the Company issued 4,000,000one whole share of the post-Reverse Stock Split common stock to any stockholder who otherwise would have received a fractional share as a result of the Reverse Stock Split. One World Pharma, Inc. was authorized to issue 75,000,000 shares of common stock prior to the Reverse Stock Split, which remains unaffected. The Reverse Stock Split did not have any effect on the stated par value of the common stock. Unless otherwise stated, all share and per share information in this Quarterly Report on Form 10-Q has been retroactively adjusted to reflect the Reverse Stock Split.
Cash Received on Subscriptions Receivable
On various dates between January 30, 2019 and February 5, 2019, the Company received $602 from two of the Company’s founders for sales of common stock of OWP Ventures during 2018 at $0.001 per share on subscriptions receivable.
Common Stock Sales
On various dates between January 3, 2019 and February 19, 2019, the Company sold an aggregate 3,900,000 shares of common stock of OWP Ventures at $0.50 per share for total proceeds of $4,000.$1,950,000.
As
Common Stock Issued for Debt Conversion
On February 4, 2019, a total of 1,253,493 shares of common stock of OWP Ventures were issued pursuant to the conversion of $501,397 of convertible debt owed to The Sanguine Group LLC, consisting of $500,000 of principal and $1,397 of interest.
Common Stock Issued for Services
On February 18, 2019, the Company issued 30,000 shares of common stock of OWP Ventures to a consultant for services. The total fair value of the datecommon stock was $15,000 based recent independent third-party sales at $0.50 per share.
F-16 |
ONE WORLD PHARMA, INC.
(Formerly Punto Group, Corp.)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Common Stock Options Issued for Services
On February 8, 2019, the Company awarded cashless options to a service provider to acquire up to 100,000 shares of common stock, exercisable at $0.50 per share over a thirty-six (36) month period from the origination date. The options vest as to (i) 8,333 shares on the 8th day of each subsequent month for the following eleven months, and (ii) 8,337 shares on the one-year anniversary of the effective date.
On February 8, 2019, the Company awarded cashless options to one of our directors to acquire up to 125,000 shares of common stock, exercisable at $0.50 per share over a thirty-six (36) month period from the origination date. The options vest as to (i) 10,416 shares on the 8th day of each subsequent month for the following eleven months, and (ii) 10,424 shares on the one-year anniversary of the effective date.
On January 28, 2019, the Company awarded cashless options to a service provider to acquire up to 500,000 shares of common stock, exercisable at $0.50 per share over a thirty-six (36) month period from the origination date. The options vest as to (i) 41,666 shares on the 8th day of each subsequent month for the following eleven months, and (ii) 41,674 shares on the one-year anniversary of the effective date.
On January 28, 2019, the Company awarded cashless options to a service provider to acquire up to 100,000 shares of common stock, exercisable at $0.50 per share over a thirty-six (36) month period from the origination date. The options vest as to (i) 8,333 shares on the 8th day of each subsequent month for the following eleven months, and (ii) 8,337 shares on the one-year anniversary of the effective date.
On October 24, 2018, the Company issued 50,000 shares of common stock to a consultant in settlement for services. The total fair value of the common stock was $21,000 based recent independent third-party sales at $0.42 per share.
A total of $560,958 was expensed during the six months ending June 30, 2019 pursuant to the options issued for services.
Common Stock Issued for Share Exchange
On February 21, 2019, One World Pharma acquired OWP Ventures in the Merger. As a result of the Merger (a) holders of the outstanding capital stock of OWP Ventures received an aggregate of 39,475,398 shares of our Common Stock; (b) the options described above to purchase 825,000 shares of common stock of OWP Ventures at an exercise price of $0.50 automatically converted into options to purchase 825,000 shares of our Common Stock at an exercise price of $0.50; (c) the outstanding principal and interest under a $300,000 convertible note issued by OWP Ventures became convertible, at the option of the holder, into shares of our Common Stock at a conversion price equal to the lesser of $0.424 per share or 80% of the price we sell our Common Stock in a future “Qualified Offering”; and (d) 875,000 shares of our Common Stock owned by OWP Ventures prior to the Merger were cancelled.
Note 14 – Income Taxes
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 six months ended June 30, 2019 and the year ended December 31, 2018, 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 June 30, 2019, the Company had approximately $3,681,600 of federal net operating losses. The net operating loss carry forwards, if not utilized, will begin to expire in 2038.
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 June 30, 2019 and December 31, 2018, respectively.
In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions.
Note 15 – Subsequent Events
Common Stock Exchanged for Debt, Officer
On September 4, 2019, the Company’s CEO purchased 400,000 shares of common stock at a price of $0.50 per share. The consideration for such shares was paid by the cancellation of $200,000 of outstanding indebtedness of the Company to the CEO under a promissory note, dated February 13, 2019.
Common Stock Sales
On various dates between July 18, 2019 and September 4, 2019, the Company sold an aggregate of 4,109,000 shares of common stock at a price of $0.50 per share for total cash proceeds of $2,054,500.
Common Stock Options Exercised
On August 28, 2019, a total of 51,040 shares of common stock were issued upon exercise on a cashless basis of options to purchase 58,331 shares of common stock at a price $0.50 per share.
Debt Exchange
On July 22, 2019, the Company exchanged two outstanding demand notes bearing 6% interest (See Note 11), in the aggregate amount of $207,332, consisting of $200,000 of principal and $7,332 of accrued interest, for a convertible promissory note in the principal amount of $207,332, bearing 6% interest, due on demand and convertible into common stock at a fixed conversion price of $0.50 per share.
F-17 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of OWP Ventures, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of OWP Ventures, Inc. (the Company) for the period from inception (March 27, 2018) to December 31, 2018, and the related consolidated statement of operations, comprehensive income, stockholders’ equity, and consolidated cash flows for the period from inception (March 27, 2018) to December 31, 2018, and the related notes and schedules (collectively referred to as the financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018, and the results of its operations and its cash flows for the period from inception (March 27, 2018) to December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated 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 availablewe engaged to be issued,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 Company had 4,000,000 sharespurpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
issued
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and outstanding.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.
Note 10: Going Concern
The accompanying consolidated financial statements and notes have been prepared assuming that the Company will
continue as a going concern.
For As discussed in Note 2 to the period ended September 30, 2014,financial statements, the Company hadsuffered a net loss of $717.00 The Company’sfrom operations and has a net capital deficiency, which raises substantial doubt about its ability
to continue as a going concern is dependent upon the Company’s ability to generate sufficient revenues to
operate profitably or raise additional capital through debt financing and/or through sales of common
stock.
Management plans to fund operations of the Company through the proceeds from an offering pursuant to
a Registration Statement on Form S-1 or private placements of restricted securities or the issuance of
stock in lieu of cash for payment of services until such a time as profitable operations are achieved. There
are no written agreements in place for such funding or issuance of securities and there can be no
assurance that such will be available in the future. Management believes that this plan provides an
opportunity for the Company to continue as a going concern. Managements plans regarding those matters are also discussed in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ M&K CPAS, PLLC
We have served as the Company’s auditor since 2018.
Houston, TX
April 29, 2019
CONSOLIDATED BALANCE SHEET
December 31, | ||||
2018 | ||||
Assets | ||||
Current assets: | ||||
Cash | $ | 125,846 | ||
Other current assets | 35,344 | |||
Total current assets | 161,190 | |||
Fixed assets, net | 356,439 | |||
Total Assets | $ | 517,629 | ||
Liabilities and Stockholders’ Equity (Deficit) | ||||
Current liabilities: | ||||
Accounts payable | $ | 121,194 | ||
Accrued expenses | 34,425 | |||
Convertible note payable | 300,000 | |||
Advances from shareholders | 514,141 | |||
Notes payable | 200,000 | |||
Total current liabilities | 1,169,760 | |||
Total Liabilities | 1,169,760 | |||
Stockholders’ Equity (Deficit): | ||||
Preferred stock, $0.0001 par value, 5,000,000 shares authorized; no shares issued and outstanding | - | |||
Common stock, $0.0001 par value, 200,000,000 shares authorized; 34,291,905 shares issued and outstanding | 3,429 | |||
Additional paid-in capital | 1,309,215 | |||
Subscriptions receivable, consisting of 6,012,500 shares | (602 | ) | ||
Accumulated other comprehensive loss | (4,090 | ) | ||
Accumulated (deficit) | (1,959,982 | ) | ||
(652,030 | ) | |||
Noncontrolling Interest | (101 | ) | ||
Total Stockholders’ Equity (Deficit) | (652,131 | ) | ||
Total Liabilities and Stockholders’ Equity (Deficit) | $ | 517,629 |
The failureaccompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME
From Inception | ||||
(March 27, 2018) to | ||||
December 31, 2018 | ||||
Revenue: | $ | - | ||
Expenses: | ||||
General and administrative | 903,913 | |||
Professional fees | 917,936 | |||
Bad debts expense | 50,000 | |||
Total operating expenses | 1,871,849 | |||
Operating loss | (1,871,849 | ) | ||
Other expense: | ||||
Interest expense | (88,234 | ) | ||
Total other expense | (88,234 | ) | ||
Net loss | $ | (1,960,083 | ) | |
Less: Net loss attributable to the noncontrolling interest | 101 | |||
Net loss attributable to OWP Ventures, Inc. | $ | (1,959,982 | ) | |
Other comprehensive income: | ||||
Loss on foreign currency translation | $ | (4,090 | ) | |
Net other comprehensive loss | $ | (1,964,072 | ) | |
Weighted average number of common shares outstanding - basic and fully diluted | 31,992,168 | |||
Net loss per share - basic and fully diluted | $ | (0.06 | ) |
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
Accumulated | Total | |||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In | Subscriptions | Other Comprehensive | Accumulated | Noncontrolling | Stockholders’ Equity | ||||||||||||||||||||||||||
Shares | Amount | Capital | Receivable | Income (Loss) | Deficit | Interest | (Deficit) | |||||||||||||||||||||||||
Balance, March 27, 2018 | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||||
Consolidation of One World Pharma, Inc. | - | - | (349,420 | ) | - | - | - | - | (349,420 | ) | ||||||||||||||||||||||
Common stock sold for cash | 23,411,905 | 2,341 | 999,774 | (602 | ) | - | - | - | 1,001,513 | |||||||||||||||||||||||
Common stock issued for services | 680,000 | 68 | 285,532 | - | - | - | - | 285,600 | ||||||||||||||||||||||||
Common stock issued for purchase of One World Pharma S.A.S. | 10,200,000 | 1,020 | 161,889 | - | - | - | - | 162,909 | ||||||||||||||||||||||||
Contributed capital | - | - | 136,440 | - | - | - | - | 136,440 | ||||||||||||||||||||||||
Beneficial conversion feature on convertible note | - | - | 75,000 | - | - | - | - | 75,000 | ||||||||||||||||||||||||
Loss on foreign currency translation | - | - | - | - | (4,090 | ) | - | - | (4,090 | ) | ||||||||||||||||||||||
Net loss | - | - | - | - | - | (1,959,982 | ) | (101 | ) | (1,960,083 | ) | |||||||||||||||||||||
Balance, December 31, 2018 | 34,291,905 | $ | 3,429 | $ | 1,309,215 | $ | (602 | ) | $ | (4,090 | ) | $ | (1,959,982 | ) | $ | (101 | ) | $ | (652,131 | ) |
The accompanying notes are an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
From Inception | ||||
(March 27, 2018) to | ||||
December 31, 2018 | ||||
Cash flows from operating activities | ||||
Net loss | $ | (1,959,982 | ) | |
Minority interest in net loss | (101 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Bad debts expense | 50,000 | |||
Depreciation and amortization expense | 1,961 | |||
Debt discount amortization | 75,000 | |||
Stock issued for services | 285,600 | |||
Decrease (increase) in assets: | ||||
Other current assets | 131,488 | |||
Increase (decrease) in liabilities: | ||||
Accounts payable | 123,870 | |||
Accrued expenses | 23,667 | |||
Net cash used in operating activities | (1,268,497 | ) | ||
Cash flows from investing activities | ||||
Cash acquired in One World Pharma, Inc. investment | 4,739 | |||
Investment in note receivable | (50,000 | ) | ||
Investment in One World Pharma, Inc. | (350,000 | ) | ||
Purchase of fixed assets | (358,400 | ) | ||
Net cash used in investing activities | (753,661 | ) | ||
Cash flows from financing activities | ||||
Proceeds from convertible note payable | 300,000 | |||
Proceeds from advances from shareholders | 514,141 | |||
Proceeds from notes payable | 200,000 | |||
Proceeds from contributed capital | 136,440 | |||
Proceeds from sale of common stock | 1,001,513 | |||
Net cash provided by financing activities | 2,152,094 | |||
Effect of exchange rate changes on cash | (4,090 | ) | ||
Net increase (decrease) in cash | 125,846 | |||
Cash - beginning | - | |||
Cash - ending | $ | 125,846 | ||
Supplemental disclosures: | ||||
Interest paid | $ | 310 | ||
Income taxes paid | $ | - | ||
Non-cash financing transactions: | ||||
Beneficial conversion feature | $ | 75,000 |
The accompanying notes are an integral part of these financial statements.
OWP VENTURES, INC. AND SUBSIDIARIES
Notes to achieveConsolidated Financial Statements
Note 1 – Nature of Business and Significant Accounting Policies
Nature of Business
OWP Ventures, Inc. was incorporated in Delaware on March 27, 2018. OWP Ventures, Inc. and its subsidiary (“OWP,” the necessary levels of profitability“Company,” “we,” “our” or obtain the additional funding would be
detrimental to the Company.
F-8
PUNTO GROUP, CORP | |||
(A DEVELOPMENT STAGE COMPANY) | |||
BALANCE SHEET | |||
|
|
| |
| December 31, 2014 | September 30, 2014 | |
| (Unaudited) | (Audited) | |
|
|
| |
CURRENT ASSETS |
|
| |
Cash | $ 1,650 | $ 1,000 | |
Prepaid Expenses | $ 600 | $ 300 | |
TOTAL ASSETS | $ 2,250 | $ 1,300 | |
|
|
| |
LIABILITIES |
|
| |
Current Liabilities: |
|
| |
Loan Payable - Related Party | $ 1,717 | $ 1,717 | |
TOTAL LIABILITIES | $ 1,717 | $ 1,717 | |
|
|
| |
|
|
| |
STOCKHOLDERS' EQUITY |
|
| |
Common stock: authorized 75,000,000; $0.001 par value; |
|
| |
4,000,000 shares issued and outstanding at |
|
| |
December 31, 2014 | $ 4,000 | $ - | |
Profit (loss) accumulated during the development stage | $ (3,467) | $ (417) | |
Total Stockholders' Equity | $ 533 | $ (417) | |
|
|
| |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 2,250 | $ 1,300 | |
|
|
| |
|
|
| |
The accompanying notes are an integral part of these financial statements |
PUNTO GROUP, CORP | ||
(A DEVELOPMENT STAGE COMPANY) | ||
STATEMENT OF OPERATIONS | ||
(Unaudited) | ||
|
|
|
| Three months ended December 31, 2014 | From Inception (September 2, 2014) through December 31, 2014 |
REVENUES |
|
|
Sales | $ - | $ - |
Total Income | $ - | $ - |
|
|
|
Operating Expenses: |
|
|
Professional Fees | $ 2,100 | $ 2,100 |
General & Administrative | $ 20 | $ 20 |
Filing Fees | $ 30 | $ 147 |
Rent | $ 900 | $ 1,200 |
Total Expenses | $ 3,050 | $ �� 3,467 |
|
|
|
Income Before Income Tax | $ (3,050) | $ (3,467) |
|
|
|
Provision for Income Tax | $ - | $ - |
|
|
|
Net Income for Period | $ (3,050) | $ (3,467) |
|
|
|
Net gain (loss) per share: |
|
|
Basic and diluted | $ (0.0008) | $ - |
|
|
|
Weighted average number of shares outstanding: Basic and diluted | 4,000,000 | 0 |
|
|
|
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements |
PUNTO GROUP, CORP | ||
(A DEVELOPMENT STAGE COMPANY) | ||
STATEMENTS OF CASH FLOWS | ||
(Audited) | ||
|
|
|
| Three months ended December 31, 2014 | From Inception (September 2, 2014) through December 30, 2014 |
Operating activities: |
|
|
Net Income | $ (3,050) | $ (3,467) |
Adjustment to reconcile net loss to net cash |
|
|
provided by operations: |
|
|
(Increase)/Decrease in Prepaid Expenses | $ (300) | $ (600) |
Net cash provided by operating activities | $ (3,350) | $ (4,067) |
|
|
|
Financing activities: |
|
|
Proceeds from issuance of common stock | $ 4,000 | $ 4,000 |
Due to related party | $ - | $ 1,717 |
Net cash provided by financing activities | $ 4,000 | $ 5,717 |
|
|
|
Investing activities: |
|
|
Net cash provided by investing activities | $ - | $ - |
|
|
|
Net increase in cash | $ 650 | $ 1,650 |
|
|
|
Cash, beginning of period | $ 1,000 | $ - |
Cash, end of period | $ 1,650 | $ 1,650 |
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements |
PUNTO GROUP, CORP
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 2014
Note 1: Organization and Basis of Presentation
Punto Group, Corp. (the “Company”“us”) is a for profit corporation established underholding company formed to enter and support the corporation lawscannabis industry. Through its subsidiary, One World Pharma S.A.S (“OWP SAS”), a licensed cannabis cultivation, production and distribution (export) company located in Popayán, Colombia (nearest major city is Cali) plans to be a global leader in the Statedistribution of Nevada, United Statesmedical cannabis and cannabis extracts for medical and scientific purposes, which includes manufacture, acquisition in any capacity, import, export, storage, transportation, marketing, and distribution of America on September 2, 2014.psychoactive and non-psychoactive cannabis derivatives.
Basis of Presentation
The Company isaccompanying consolidated financial statements have been prepared in the development phase as defined under Accounting Standards Codification (“ASC”) 915-205 “Development-Stage Entities.” As such, the Company is subject to all risks inherent to the establishment of a start-up business enterprise.
The Financial Statements and related disclosures as of December 31, 2014 meet the standards established by the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The December 31, 2014, Balance Sheet data include all disclosures required byaccordance with accounting principles generally accepted in the United States of America (“U.S.”)(U.S. GAAP) and the rules of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. TheseThe Company has adopted a December 31 year-end.
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, 2018:
State of | ||||
Name of Entity | Incorporation | Relationship | ||
OWP Ventures, Inc.(1) | Delaware | Parent | ||
One World Pharma, Inc.(2) | Nevada | Subsidiary | ||
One World Pharma S.A.S.(3) | Colombia | Subsidiary |
(1) | Holding company in the form of a corporation as of December 31, 2018. |
(2) | Subsidiary as of December 31, 2018, following November 22, 2018 purchase of 66.2% of the issued and outstanding shares of One World Pharma, Inc. (f/k/a Punto Group, Corp.) by OWP Ventures, Inc. The shares were cancelled and returned to treasury pursuant to a merger on February 21, 2019, by a wholly-owned subsidiary of One World Pharma, Inc. with and into OWP Ventures, Inc. Following the merger, One World Pharma, Inc. is the parent company. |
(3) | Wholly-owned subsidiary of OWP Ventures, Inc. since May 30, 2018, located in Colombia and legally constituted as a simplified stock company registered in the Chamber of Commerce of Bogotá on July 18, 2017. Its sole headquarters is located in Bogotá. |
The consolidated financial statements herein contain the operations of the wholly-owned subsidiary listed above. All significant inter-company transactions have been eliminated in the preparation of these financial statements. The Company’s headquarters are located in Las Vegas, Nevada and substantially all of its production efforts are within Popayán, Colombia.
These statements reflect all adjustments, (consisting onlyconsisting of normal recurring adjustments)adjustments, which in the opinion of management are necessary for the fair statementpresentation of the resultsinformation contained therein.
Foreign Currency Translation
The functional currency of the Company is Columbian Peso (COP). The Company has maintained its financial statements using the functional currency, and translated those financial statements to the US Dollar (USD) 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 period. Theserespective 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 should be read in conjunction withstatements. Accumulated other comprehensive income represents the financial statements included in our Annual Report for the year ended September 30, 2014. Unless the context otherwise requires, all referencesaccumulated balance of foreign currency translation adjustments.
OWP VENTURES, INC. AND SUBSIDIARIES
Notes to “Punto Group, Corp,” “we,” “us,” “our” or the “company” are to Punto Group, Corp. and any subsidiaries.Consolidated Financial Statements
Note 2: Significant Accounting Policies and Recent Accounting Pronouncements
Use of Estimates and Assumptions
The preparation of financial statements in conformity with accounting principles generally accepted accounting principlesin the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the 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 those estimates.
DueSegment Reporting
ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance. The Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.
Fair Value of Financial Instruments
The Company adopted 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 limited levelshort-term nature of operations, the Company has not made material assumptions or estimates other than the assumption that the Company is a going concern.instruments.
39
Cash and Cash Equivalents
The Company considersCash and cash equivalents include cash on hand, cash on deposit with various financial institutions in Columbia, and all highly liquidhighly-liquid investments with an original maturitymaturities of three months or less when purchasedat the time of purchase. We have not held any cash equivalents to be cash equivalents.date.
Fair ValueCash in Excess of Financial InstrumentsFDIC Insured Limits
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of October 31, 2013.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities and notes payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value.
Basic and Diluted Earnings (Loss) Per Share
The Company computes earnings (loss) per sharemaintains 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 $250,000, under current regulations. The Company did not have any funds in excess of FDIC insured limits at December 31, 2018, and has not experienced any losses in such accounts.
Property and Equipment
Property and equipment are stated at cost, less accumulated depreciation, and we depreciate it on a straight-line basis over the estimated useful lives of the assets. Additions and improvements (including interest costs for construction of qualifying long-lived assets) are capitalized. Maintenance and repair expenses are charged to expense as incurred. The cost of property and equipment sold or disposed of and the related accumulated depreciation are eliminated from the property and related accumulated depreciation accounts, and any gain or loss is credited or charged to other income (expense).
We generally provide for depreciation over the following estimated useful service lives. Additionally, if there are indicators that certain assets may be potentially impaired, we will analyze such assets in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basicthe related GAAP standard. The estimated useful lives for significant property and diluted earnings per share on the face of the statement of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) availableequipment categories are as follows:
Software | 3 years |
Furniture and Fixtures and Office Equipment | 5 years |
Machinery | 7 years |
OWP VENTURES, INC. AND SUBSIDIARIES
Notes to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal.Consolidated Financial Statements
Recent Accounting PronouncementsRevenue Recognition
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
40
Note 3: Revenue Recognition
The Company recognizes revenue when products are fully delivered, or services have been provided and collection is reasonably assured. No revenue has been earned since inception.
Note 4: Legal Matters
The Company has no known legal issues pending.
Note 5: Debt
On September 2, 2014, Andrey Kryukov, the Director and President ofadopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company maderecognizes revenue from the initial deposit tocommercial sales of products, licensing agreements and contracts by applying the Company bank accountfollowing steps: (1) identify the contract with a customer; (2) identify the performance obligations in the amount $1,717 whichcontract; (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 being carried as a loan payable. satisfied. We have not yet generated any revenue.
Basic and Diluted Loss Per Share
The loanbasic net loss per common share is non-interest bearing, unsecuredcomputed 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 periods presented, potential dilutive securities had an anti-dilutive effect and due upon demand.were not included in the calculation of diluted net loss per common share.
Note 6: Capital Stock
On October 8, 2014, the Company issued 4,000,000 shares at $0.001 per share for total proceeds of $4,000.
As of December 31, 2014 there were no outstanding stock options or warrants.
Note 7: Income Taxes
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii)recognizes deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measuredbased on differences between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and laws that are expected to apply to taxable incomebe in effect when the years in which those temporary differences are expected to be recovered or settled.recovered. The effect onCompany provides a valuation allowance for deferred tax assets and liabilitiesfor which it does not consider realization of a change insuch assets to be more likely than not.
Uncertain Tax Positions
In accordance with ASC 740, “Income Taxes” (“ASC 740”), the Company recognizes the tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferredbenefit from an uncertain tax assets reportedposition only if based on the weight of the available positive and negative evidence, it is more likely than not some portion or allthat the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribesposition. 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. ASC Topic 740.10.40 providesThese 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.
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.
Recent Accounting Pronouncements
In June 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-07,Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost recognition over that period). The new guidance is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its financial statements.
OWP VENTURES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
In February 2018, the FASB issued ASU No. 2018-02,Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The guidance permits entities to reclassify tax effects stranded in Accumulated Other Comprehensive Income as a result of tax reform to retained earnings. This new guidance is effective for annual and interim periods in fiscal years beginning after December 15, 2018. Early adoption is permitted in annual and interim periods and can be applied retrospectively or in the period of adoption. The Company is currently in the process of evaluating the impact of adoption on its financial statements.
In May 2017, the FASB issued ASU 2017-09,Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, which clarifies when a change to the terms or conditions of a share-based payment award must be accounted for as a modification. The new guidance requires modification accounting if the fair value, vesting condition or the classification of the award is not the same immediately before and after a change to the terms and conditions of the award. The new guidance is effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its financial statements.
In February 2016, the FASB established Topic 842,Leases, by issuing ASU No. 2016-02, which requires lessees to recognize the rights and obligations created by leases on the balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-11,Targeted Improvements, ASU No. 2018-10,Codification Improvements to Topic 842, and ASU No. 2018-01,Land Easement Practical Expedient for Transition to Topic 842. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the statement of operations.
The new standard will be effective January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The entity must also recast its comparative period financial statements and provide the disclosures required by the new standard for the comparative periods. The Company expects to adopt the new standard on January 1, 2019 using the effective date as of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients in transition. The Company expects to elect the “package of practical expedients”, which permits entities not to reassess under the new lease standard prior conclusions about lease identification, lease classification and initial direct costs. The Company does not expect to elect the use-of-hindsight or the practical expedient pertaining to land easements.
While the Company continues to assess all of the effects of adoption, it currently believes that most significant effects relate to the recognition of new ROU assets and lease labilities on our balance sheet for office operating leases and providing significant new disclosures about our leasing activities.
The new standard also provides practical expedients for an entity’s ongoing accounting. The Company currently expects to elect the short-term leases recognition exemption for all leases that qualify. This means that the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets and lease liabilities for existing short-term leases of those assets in transition. The Company also currently expects to elect the practical expedient to not separate lease and non-lease components for its leases.
In May 2014, the FASB issued ASU No. 2014-09,Revenue from Contracts with Customers. Since ASU 2014-09 was issued, several additional ASUs have been issued to clarify various elements of the guidance. These standards provide guidance on recognizing revenue, including a five-step model to determine when revenue recognition is appropriate. The standard requires that an entity recognize revenue to depict the transfer of control of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We adopted the new standard to be effective upon inception. We have completed an initial evaluation of the potential impact from adopting the new standard, including a detailed review of performance obligations for all material revenue streams. Based on this initial evaluation, adoption does not have a material impact on our financial position, results of operations, or cash flows. Related disclosures have been expanded in line with the requirements of the standard.
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.
F-26 |
OWP VENTURES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 2 –Going Concern
As shown in the accompanying consolidated financial statements, the Company has incurred recurring losses from operations resulting in an accumulated deficit of ($1,959,982), and as of December 31, 2018, the Company’s cash on hand may not be sufficient to sustain operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is actively pursuing new customers to increase revenues. In addition, the Company is currently seeking additional sources of capital to fund short term operations. Management believes these factors will contribute toward achieving profitability. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The consolidated 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 – Acquisition
Common Stock Issued for Acquisition of One World Pharma, SAS
On May 30, 2018, the Company issued an aggregate 10,200,000 shares of common stock to the shareholders of One World Pharma SAS pursuant to a stock purchase agreement whereby OWP Ventures, Inc. acquired 100% of the common stock of One World Pharma SAS. The net fair value of assets and liabilities assumed has been deemed to be more representative of the fair value of the 10,200,000 shares issued as consideration than the non-trading shares of common stock issued in consideration, resulting in the valuation of the shares at $162,909.
According to the purchase method of accounting, the Company recognized the identifiable assets acquired and liabilities assumed as follows:
May 30, | ||||
2018 | ||||
Assets Acquired: | ||||
Cash | 26,446 | |||
Prepaid Expenses(1) | 55,293 | |||
Fixed Assets | 103,296 | |||
Total | 185,035 | |||
Liabilities Assumed: | ||||
Accounts Payable | 16,365 | |||
Accrued Expenses | 5,761 | |||
Total | 22,126 | |||
Net Assets (Liabilities) | 162,909 |
(1)Prepaid expenses include $29,356 of costs incurred in obtaining the licenses. No further adjustment to fair value was necessary due to the highly speculative nascent stage of Colombia’s legal cannabis industry, uncertain tax positionsregulatory and unrestricted Colombian licensing environment, and additional permissions and authorizations necessary to execute the Company’s business plan.
Note 4 – Investment
Common Stock Purchase
On November 22, 2018, the Company purchased 875,000 shares of the issued and outstanding common stock, on a 1:4 split adjusted basis, of One World Pharma, Inc. from the majority shareholder. The shares represented 66.2% of the issued and outstanding shares of the Company’s common stock. Subsequently, a wholly-owned subsidiary of One World Pharma, Inc. was formed and merged with and into OWP Ventures, Inc. on February 21, 2019, and the 875,000 shares were cancelled and returned to treasury.
OWP VENTURES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
This acquisition was accounted for as a business combination under the reporting period presented.purchase method of accounting. The purchase resulted in $349,420 of goodwill. According to the purchase method of accounting, the Company recognized the identifiable assets acquired and liabilities assumed as follows:
November 22, | ||||
2018 | ||||
Consideration: | ||||
Cash paid at closing | $ | 350,000 | ||
Accounts payable | 198 | |||
Fair value of total consideration exchanged | $ | 350,198 | ||
Fair value of identifiable assets acquired assumed: | ||||
Other current assets | $ | 778 | ||
Total fair value of assets assumed | 778 | |||
Consideration paid in excess of fair value (Goodwill)(1) | $ | 349,420 |
41
(1)The consideration paid in excess of the net fair value of assets acquired and liabilities assumed has been recognized as additional paid-in capital due to the subsequent reverse merger. |
Note 8:5 – Related Party Transactions
TheAdvances from Shareholders
See Note 12 for disclosures on short-term related party loans.
Common Stock Sales
On March 27, 2018, the Company neither owns nor leases any real or personal property. The directorsold 100 shares of common stock at $0.10 per share to its Chief Executive Officer for proceeds of $10 as part of the formation of the entity.
On March 27, 2018, the Company provides office spacesold 4,844,900 shares of common stock at $0.0001 per share to its Chief Executive Officer on subscriptions receivable. The proceeds of $485 were subsequently received on November 9, 2018.
On March 27, 2018, the Company sold an aggregate of 16,205,000 shares of common stock to nine of the Company’s founders at $0.0001 per share on subscriptions receivable. The total proceeds of $1,620 were subsequently received between November 5, 2018 and services freeFebruary 5, 2019.
Note 6 – Fair Value of charge.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 Company's sole officerstandard outlines a valuation framework and director is involvedcreates a fair value hierarchy in other business activitiesorder to increase the consistency and may incomparability of fair value measurements and the future, become involved in other business opportunities as they become available.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 a related party transaction involving a significant shareholder.certain financial instruments that must be measured under the new fair value standard. The natureCompany’s financial assets and detailsliabilities are measured using inputs from the three levels of the transactionfair value hierarchy. The three levels are describedas follows:
Level 1 - Inputs are unadjusted quoted prices in Note 5.
Note 9: Subsequent Events
The Company has evaluated events subsequent through the date these financial statements have been issued to assess the needactive markets for potential recognitionidentical assets or disclosure in this report. Such events were evaluated through the date these financial statements were available to be issued.
Based on this evaluation, it was determined that no events occurred requiring recognition or disclosure.
Note 10: Going Concern
The accompanying financial statements and notes have been prepared assumingliabilities that the Company will continuehas 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.
OWP VENTURES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The following schedule summarizes the valuation of financial instruments at fair value on a recurring basis in the balance sheet as a going concern.
For the period endedof December 31, 2014, the Company had a net loss2018:
Fair Value Measurements at December 31, 2018 | ||||||||||||
Level 1 | Level 2 | Level 3 | ||||||||||
Assets | ||||||||||||
Cash | $ | 125,846 | $ | - | $ | - | ||||||
Total assets | 125,846 | - | - | |||||||||
Liabilities | ||||||||||||
Convertible note payable | - | - | 300,000 | |||||||||
Advances from shareholders | - | 514,141 | - | |||||||||
Notes payable | - | - | 200,000 | |||||||||
Total liabilities | - | (514,141 | ) | (500,000 | ) | |||||||
$ | 125,846 | $ | (514,141 | ) | $ | (500,000 | ) |
There were no transfers of $3,467.00 The Company’s ability to continue as a going concern is dependent upon the Company’s ability to generate sufficient revenues to operate profitablyfinancial assets or raise additional capital through debt financing and/or through sales of common stock.
Management plans to fund operations of the Company through the proceeds from an offering pursuant to a Registration Statement on Form S-1 or private placements of restricted securities or the issuance of stock in lieu of cash for payment of services until such a time as profitable operations are achieved. There are no written agreements in place for such funding or issuance of securitiesliabilities between Level 1, Level 2 and there can be no assurance that such will be available in the future. Management believes that this plan provides an opportunity for the Company to continue as a going concern.
The failure to achieve the necessary levels of profitability or obtain the additional funding would be detrimental to the Company.
PUNTO GROUP, CORP | |||
(A DEVELOPMENT STAGE COMPANY) | |||
BALANCE SHEETS | |||
|
|
| |
| March 31, 2015 | September 30, 2014 | |
| (Unaudited) | (Audited) | |
|
|
| |
CURRENT ASSETS |
|
| |
Cash | $ 810 | $ 1,000 | |
Prepaid Expenses | $ 900 | $ 300 | |
TOTAL ASSETS | $ 1,710 | $ 1,300 | |
|
|
| |
LIABILITIES |
|
| |
Current Liabilities: |
|
| |
Loan Payable - Related Party | $ 2,917 | $ 1,717 | |
TOTAL LIABILITIES | $ 2,917 | $ 1,717 | |
|
|
| |
|
|
| |
STOCKHOLDERS' EQUITY |
|
| |
Common stock: authorized 75,000,000; $0.001 par value; |
|
| |
4,000,000 shares issued and outstanding at |
|
| |
March 31, 2015 | $ 4,000 | $ - | |
Profit (loss) accumulated during the development stage | $ (5,207) | $ (417) | |
Total Stockholders' Equity | $ (1,207) | $ (417) | |
|
|
| |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 1,710 | $ 1,300 | |
|
|
| |
|
|
| |
The accompanying notes are an integral part of these financial statements |
PUNTO GROUP, CORP (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS (Unaudited) | |||
| Three months ended March 31, 2015 | Six months ended March 31, 2015 | From Inception (September 2, 2014) through March 31, 2015 |
REVENUES |
|
|
|
Sales | $ - | $ - | $ - |
Total Income | $ - | $ - | $ - |
|
|
|
|
Operating Expenses: |
|
|
|
Professional Fees | $ 800 | $ 2,900 | $ 2,900 |
General & Administrative | $ 40 | $ 90 | $90 |
Filing Fees | $ - | $ - | $117 |
Rent | $ 900 | $ 1,800 | $ 2,100 |
Total Expenses | $ 1,740 | $ 4,790 | $ 5,207 |
|
|
|
|
Income Before Income Tax | $ (1,740) | $ (4,790) | $ (5,207) |
|
|
|
|
Provision for Income Tax | $ - | $ - | $ - |
|
|
|
|
Net Income for Period | $ (1,740) | $ (4,790) | $ (5,207) |
|
|
|
|
Net gain (loss) per share: |
|
|
|
Basic and diluted | $ (0.0008) | $ (0.0008) | $ - |
|
|
|
|
Weighted average number of shares outstanding: Basic and diluted | 4,000,000 | 4,000,000 |
|
|
|
|
|
The accompanying notes are an integral part of these financial statements |
|
PUNTO GROUP, CORP | ||
(A DEVELOPMENT STAGE COMPANY) | ||
STATEMENTS OF CASH FLOWS | ||
(Unaudited) | ||
|
|
|
| Six months ended March 31, 2015 | From Inception (September 2, 2014) through March 31, 2015 |
Operating activities: |
|
|
Net Income | $ (4,790) | $ (5,207) |
Adjustment to reconcile net loss to net cash |
|
|
provided by operations: |
|
|
(Increase)/Decrease in Prepaid Expenses | (600) | (900) |
Net cash provided by operating activities | (5,390) | $ (6,107) |
|
|
|
Financing activities: |
|
|
Proceeds from issuance of common stock | 4,000 | 4,000 |
Due to related party | 1,200 | 2,917 |
Net cash provided by financing activities | $ 5,200 | $ 6,917 |
|
|
|
Investing activities: |
|
|
Net cash provided by investing activities | - | - |
|
|
|
Net increase in cash | (190) | $ 810 |
|
|
|
Cash, beginning of period | $ 1,000 | $ - |
Cash, end of period | $ 810 | $ 810 |
|
|
|
|
|
|
The accompanying notes are an integral part of these financial statements |
PUNTO GROUP, CORP
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
MARCH 31, 2015
Note 1: Organization and Basis of Presentation
Punto Group, Corp. (the “Company”) is a for profit corporation established under the corporation laws in the State of Nevada, United States of America on September 2, 2014.
The Company is in the development phase as defined under Accounting Standards Codification (“ASC”) 915-205 “Development-Stage Entities.” As such, the Company is subject to all risks inherent to the establishment of a start-up business enterprise.
The Financial Statements and related disclosures as of March 31, 2015 meet the standards established by the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The March 31, 2015, Balance Sheet data include all disclosures required by accounting principles generally accepted in the United States of America (“U.S.”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. These financial statements include all adjustments (consisting only of normal recurring adjustments) necessary for the fair statement of the results for the period. These financial statements should be read in conjunction with the financial statements included in our Annual ReportLevel 3 inputs for the year ended September 30, 2014. UnlessDecember 31, 2018.
Note 7 – Note Receivable
A note receivable of $50,000 owed by KRG Logistics, Inc. (“KRG”) was impaired and recognized as bad debts expense as of December 31, 2018.
On July 2, 2018, the context otherwise requires, all referencesCompany loaned $50,000 to “Punto Group, Corp,” “we,” “us,” “our”KRG in exchange for a 90-day, unsecured promissory note, requiring the repayment of $60,000, consisting of $50,000 of principal and $10,000 of interest on October 2, 2018. The promissory note provides the Company with a right of first refusal to purchase KRG at terms to be determined, or the “company” areright to Punto Group, Corp.apply the total amount due from KRG against amounts that may be owed by the Company to KRG for services provided to the Company, which could include sublease rent, logistics operations, import and export services and any subsidiaries.other services provided KRG at the lowest current rates charged to any other customer(s). The note has been extended until June 30, 2019.
Note 2: Significant Accounting Policies8 – Other Current Assets
Other current assets included the following as of December 31, 2018:
December 31, | ||||
2018 | ||||
Security deposit | $ | 4,494 | ||
Prepaid expenses | 30,850 | |||
$ | 35,344 |
Note 9 – Fixed Assets
Fixed assets consist of the following at December 31, 2018:
December 31, | ||||
2018 | ||||
Office equipment | $ | 18,314 | ||
Furniture and fixtures | 23,595 | |||
Construction in progress | 316,491 | |||
358,400 | ||||
Less: accumulated depreciation | (1,961 | ) | ||
Total | $ | 356,439 |
Construction in progress consists of equipment and Recent Accounting Pronouncementscapital improvements on the Popayán farm that have not yet been placed in service.
UseOWP VENTURES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Depreciation and amortization expense totaled $1,961 for the year ended December 31, 2018.
Note 10 – Accrued Expenses
Accrued expenses consisted of Estimatesthe following at December 31, 2018:
December 31, | ||||
2018 | ||||
Accrued payroll | $ | 6,327 | ||
Accrued withholding taxes | 6,387 | |||
Accrued ICA fees and contributions | 8,514 | |||
Accrued interest | 12,924 | |||
Deferred rent obligations | 273 | |||
$ | 34,425 |
Note 11 – Convertible Note Payable
Convertible note payable consists of the following at December 31, 2018:
December 31, | ||||
2018 | ||||
On November 30, 2018, the Company received proceeds of $300,000 on a secured convertible note that carries a 6% interest rate from CSW Ventures, LP (“CSW”). The proceeds were used to fund the Company’s purchase of 875,000 shares of common stock, on a 1:4 split adjusted basis, of One World Pharma, Inc. The Note is due on demand. In the event that the Company consummates the closing of a public or private offering of its equity securities, resulting in gross proceeds of at least $500,000 (“Qualified Financing”) at any time prior to the repayment of this note, then the outstanding principal and unpaid interest may, at the option of the holder, be converted into such equity securities at a conversion price equal to eighty percent (80%) of the purchase price paid by the investors purchasing the equity securities in the Qualified Financing. The Company’s obligations under this Note are secured by a lien on the assets of the Company. | $ | 300,000 | ||
Less: unamortized debt discounts | - | |||
Convertible note payable | $ | 300,000 |
In addition, the Company recognized and Assumptionsmeasured the embedded beneficial conversion feature present in the convertible notes by allocating a portion of the proceeds equal to the intrinsic value of the feature to additional paid-in-capital. The intrinsic value of the feature was calculated on the commitment date using the effective conversion price of the convertible notes. This intrinsic value is limited to the portion of the proceeds allocated to the convertible debt.
The preparationaforementioned accounting treatment resulted in a total debt discount equal to $75,000. The Company recorded finance expense in the amount of financial statements$75,000, attributed to the aforementioned debt discount, during the year ended December 31, 2018.
The convertible note limits the maximum number of shares that can be owned by the note holder as a result of the conversions to common stock to 4.99% of the Company’s issued and outstanding shares.
The Company recorded interest expense pursuant to the stated interest rates on the convertible notes in conformitythe amount of $1,529 for the year ended December 31, 2018.
F-30 |
OWP VENTURES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Note 12 – Advances from Shareholders
Advances from shareholders consist of the following at December 31, 2018:
December 31, | ||||
2018 | ||||
On various dates between May 3, 2018 and November 23, 2018, our CEO advanced short-term unsecured demand loans, bearing interest at 6% per annum, of an aggregate $514,141 to the Company, as follows: $10,000 – May 3, 2018 | $ | 514,141 | ||
Total advances from shareholders | $ | 514,141 |
The Company recorded interest expense in the amount of $10,738 for the year ended December 31, 2018.
Note 13 – Notes Payable
Notes payable consists of the following at December 31, 2018:
December 31, | ||||
2018 | ||||
On December 26, 2018, the Company received proceeds of $100,000 from CSW on an unsecured promissory note due on demand that carries a 6% interest rate. | $ | 100,000 | ||
On November 26, 2018, the Company received proceeds of $100,000 from CSW on an unsecured promissory note due on demand that carries a 6% interest rate. | 100,000 | |||
Total notes payable | $ | 200,000 |
The Company recorded interest expense in the amount of $658 for the year ended December 31, 2018.
Note 14 – Stockholders’ Equity
Company is authorized to issue an aggregate of 200,000,000 shares of common stock with generally accepted accounting principlesa par value of $0.0001. As of December 31, 2018, there were 34,291,905 shares of common stock issued and outstanding.
Common Stock Sales
On December 14, 2018, the Company sold 100,000 shares of common stock at $0.50 per share for proceeds of $50,000.
On October 4, 2018, the Company sold 357,143 shares of common stock at $0.42 per share for proceeds of $150,000.
On September 20, 2018, the Company sold 238,095 shares of common stock at $0.42 per share for proceeds of $100,000.
On July 28, 2018, the Company sold 476,191 shares of common stock at $0.42 per share for proceeds of $200,000.
On June 15, 2018, the Company sold 1,190,476 shares of common stock at $0.42 per share for proceeds of $500,000.
On March 27, 2018, the Company sold 100 shares of common stock at $0.10 per share to its Chief Executive Officer for proceeds of $10 as part of the formation of the entity.
OWP VENTURES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
On March 27, 2018, the Company sold 4,844,900 shares of common stock at $0.0001 per share to its Chief Executive Officer on subscriptions receivable. The proceeds of $485 were subsequently received on November 9, 2018.
On March 27, 2018, the Company sold an aggregate 16,205,000 shares of common stock to nine of the Company’s founders at $0.0001 per share on subscriptions receivable. The total proceeds of $1,620 were subsequently received between November 5, 2018 and February 5, 2019.
Common Stock Issued for Services
On October 30, 2018, the Company issued 630,000 shares of common stock to a consultant for services. The total fair value of the common stock was $264,600 based recent independent third-party sales at $0.42 per share.
On October 24, 2018, the Company issued 50,000 shares of common stock to a consultant in settlement for services. The total fair value of the common stock was $21,000 based recent independent third-party sales at $0.42 per share.
Common Stock Issued for Share Exchange
On May 30, 2018, the Company issued an aggregate 10,200,000 shares of common stock to the shareholders of One World Pharma SAS as part of a stock purchase agreement whereby OWP Ventures, Inc. acquired 100% of the common stock of One World Pharma SAS. The net fair value of assets and liabilities assumed has been deemed to be more representative of the fair value of the 10,200,000 shares issued as consideration than the non-trading shares of common stock issued in consideration, resulting in the valuation of the shares at $162,909.
Adjustments to Additional Paid-In Capital
Pursuant to the purchase of 66.2% of the outstanding common stock of One World Pharma, Inc for $350,000 on November 30, 2018, the Company realized goodwill of $349,420 on the consideration paid in excess of the net fair value of assets and liabilities assumed, which has been recognized as contributed capital due to the subsequent reverse merger between the two entities on February 21, 2019.
On various dates between April 16, 2018 and June 20, 2018, total capital contributions of $136,440 were received from the Company’s CEO, Craig Ellins.
Note 15 – Income Taxes
The Company accounts for income taxes under FASB ASC 740-10, which requires management to make estimatesuse of the liability method. FASB ASC 740-10-25 provides that deferred tax assets and assumptions that affectliabilities are recorded based on the reported amountsdifferences between the tax bases of assets and liabilities and disclosure of contingent assetstheir carrying amounts for financial reporting purposes, referred to as temporary differences.
For the year ended December 31, 2018, the Company incurred a net operating loss and, liabilities ataccordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the dateuncertainty of the financial statements andrealization of any tax assets. At December 31, 2018, the reported amountsCompany had approximately $1,506,000 of revenues and expenses duringfederal net operating losses. The net operating loss carry forwards, if not utilized, will begin to expire in 2038.
The effective income tax rate for the period. Actual results could differ from those estimates.year ended December 31, 2018 consisted of the following:
Due
December 31, | ||||
2018 | ||||
Federal statutory income tax rate | 21 | % | ||
State income taxes | - | % | ||
Change in valuation allowance | (21 | )% | ||
Net effective income tax rate | - |
OWP VENTURES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The components of the limited levelCompany’s deferred tax asset are as follows:
December 31, | ||||
2018 | ||||
Deferred tax assets: | ||||
Net operating loss carry forwards | $ | 1,506,000 | ||
Net deferred tax assets before valuation allowance | $ | 316,260 | ||
Less: Valuation allowance | (316,260 | ) | ||
Net deferred tax assets | $ | - |
Based on the available objective evidence, including the Company’s history of operations,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, 2018.
In accordance with FASB ASC 740, the Company has not made material assumptionsevaluated its tax positions and determined there are no uncertain tax positions.
Note 16 – Subsequent Events
Promissory Notes, Related Party
On various dates between October 25, 2018 and November 23, 2018, our CEO advanced funds to the Company totaling $307,141 under short-term unsecured demand loans, bearing interest at 6% per annum. On February 13, 2019, these promissory notes were exchanged for an amended and restated promissory note in the principal amount of $307,141 (the “Amended Note”). The Amended Note bears interest at 6% and is payable upon the earlier of (i) a public or estimates other thanprivate offering of its equity securities, resulting in gross proceeds of at least $5,000,000, or (ii) February 13, 2022.
Convertible Promissory Note
On January 14, 2019, the assumptionCompany received proceeds of $500,000 on an unsecured convertible promissory note that carries a 6% interest rate from The Sanguine Group LLC. The Note was due January 14, 2022. In the event that the Company isconsummated the closing of a going concern.
46
Cashpublic or private offering of its equity securities, resulting in gross proceeds of at least $500,000 (“Qualified Financing”) at any time prior to the repayment of this note, then the outstanding principal and Cash Equivalents
unpaid interest would automatically be converted into such equity securities at a conversion price equal to the lesser of (i) eighty percent (80%) of the purchase price paid by the investors purchasing the equity securities in the Qualified Financing, or (ii) $0.424 per share. The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Fair Value of Financial Instruments
ASC 825, “Disclosures about Fair Value of Financial Instruments”, requires disclosure of fair value information about financial instruments. ASC 820, “Fair Value Measurements” defines fair value, establishesCompany’s obligations under this Note were secured by a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of October 31, 2013.
The respective carrying values of certain on-balance-sheet financial instruments approximate their fair values. These financial instruments include cash, accrued liabilities and notes payable. Fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair value.
Basic and Diluted Earnings (Loss) Per Share
The Company computes earnings (loss) per share in accordance with ASC 260-10-45 “Earnings per Share”, which requires presentation of both basic and diluted earnings per sharelien on the faceassets of the statementCompany. A Qualified Financing subsequently occurred on February 4, 2019, at which time the principal and interest were converted into 1,253,493 shares of operations. Basic earnings (loss) per share is computed by dividing net earnings (loss) available to common stockholders by the weighted average number of outstanding common shares during the period. Diluted earnings (loss) per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive earnings (loss) per share excludes all potential common shares if their effect is anti-dilutive. The Company has no potential dilutive instruments, and therefore, basic and diluted earnings (loss) per share are equal.
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.common stock.
Note 3: Revenue Recognition
The Company recognizes revenue when products are fully delivered or services have been providedCommon Stock Sales
On various dates between January 3, 2019 and collection is reasonably assured. No revenue has been earned since inception.
Note 4: Legal Matters
The Company has no known legal issues pending.
Note 5: Debt
As Of march 31, 2015, Andrey Kryukov, the Director and President ofFebruary 19, 2019, the Company loaned to the Company $2,917 which is being carried as a loan payable. The loan is non-interest bearing, unsecured and due upon demand.
Note 6: Capital Stock
On October 8, 2014, the Company issued 4,000,000sold an aggregate 3,900,000 shares of common stock at $0.001$0.50 per share for total proceeds of $4,000.$1,950,000.
As
Common Stock Options Issued for Services
On February 8, 2019, the Company awarded cashless options to a service provider to acquire up to 100,000 shares of March 31, 2015 there were no outstandingcommon stock, exercisable at $0.50 per share over a thirty-six (36) month period from the origination date. The options or warrants.
Note 7: Income Taxes
The Company usesvest as to (i) 8,333 shares on the asset and liability method8th day of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognizedeach subsequent month for the amount of:following eleven months, and (ii) 8,337 shares on the one-year anniversary of the effective date.
On February 8, 2019, the Company awarded cashless options to one of our directors to acquire up to 125,000 shares of common stock, exercisable at $0.50 per share over a thirty-six (36) month period from the origination date. The options vest as to (i) taxes payable or refundable10,416 shares on the 8th day of each subsequent month for the current yearfollowing eleven months, and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based10,424 shares on the weightone-year anniversary of the available positiveeffective date.
On January 28, 2019, the Company awarded cashless options to a service provider to acquire up to 500,000 shares of common stock, exercisable at $0.50 per share over a thirty-six (36) month period from the origination date. The options vest as to (i) 41,666 shares on the 8th day of each subsequent month for the following eleven months, and negative evidence, it is more likely than not some portion or all(ii) 41,674 shares on the one-year anniversary of the deferred tax assets will not be realized.effective date.
ASC Topic 740.10.30 clarifies
On January 28, 2019, the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribesCompany awarded cashless options to a recognition threshold and measurement attributeservice provider to acquire up to 100,000 shares of common stock, exercisable at $0.50 per share over a thirty-six (36) month period from the origination date. The options vest as to (i) 8,333 shares on the 8th day of each subsequent month for the financial statement recognitionfollowing eleven months, and measurement(ii) 8,337 shares on the one-year anniversary of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. There are no material uncertain tax positions for the reporting period presented.effective date.
ONE WORLD PHARMA INC.
Common Stock
Shares
P R O S P E C T U S
September __, 2019
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Note 8: Related Party Transactions
The Company neither owns nor leases any real or personal property. The director of the Company provides office space and services free of charge. The Company's sole officer and director is involved in other business activities and may in the future, become involved in other business opportunities as they become available.
The Company has a related party transaction involving a significant shareholder. The nature and details of the transaction are described in Note 5.
Note 9: Subsequent Events
The Company has evaluated events subsequent through the date these financial statements have been issued to assess the need for potential recognition or disclosure in this report. Such events were evaluated through the date these financial statements were available to be issued.
Based on this evaluation, it was determined that no events occurred requiring recognition or disclosure.
Note 10: Going Concern
The accompanying financial statements and notes have been prepared assuming that the Company will continue as a going concern.
For the period ended March 31, 2015, the Company had a net loss of $5,207.00 The Company’s ability to continue as a going concern is dependent upon the Company’s ability to generate sufficient revenues to operate profitably or raise additional capital through debt financing and/or through sales of common stock.
Management plans to fund operations of the Company through the proceeds from an offering pursuant to a Registration Statement on Form S-1 or private placements of restricted securities or the issuance of stock in lieu of cash for payment of services until such a time as profitable operations are achieved. There are no written agreements in place for such funding or issuance of securities and there can be no assurance that such will be available in the future. Management believes that this plan provides an opportunity for the Company to continue as a going concern.
The failure to achieve the necessary levels of profitability or obtain the additional funding would be detrimental to the Company.
PROSPECTUS
4,000,000 SHARES OF COMMON STOCK
PUNTO GROUP, CORP.
_______________
Dealer Prospectus Delivery Obligation
Until _____________ ___, 20___, all dealers that effect transactions in these securities whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
48
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. Other Expenses Of Issuance And DistributionOTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimatedfollowing table sets forth the costs (assuming all shares are sold)and expenses Incurred by us in connection with the sale of the Common Stock being registered by this offering are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
(1)registration statement. All amounts shown are estimates, other thanexcept for the SEC’sSecurities and Exchange Commission (“SEC”) registration fee.
SEC registration fee | $ | 4,524.71 | ||
Accounting fees and expenses | 2,500 | |||
Legal fees and expenses | 10,000 | |||
Miscellaneous expenses | 2,500 | |||
Total | $ | 19,524.71 |
ITEM 14. Indemnification Of Director And Officers
Punto Group, Corp.’s Bylaws allowITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
We are a Nevada corporation. The Nevada Revised Statutes and certain provisions of our articles of incorporation, as amended, and bylaws under certain circumstances provide for the indemnification of our officers, directors and controlling persons against liabilities which they may incur in such capacities. A summary of the circumstances in which such indemnification is provided for is contained herein, but this description is qualified in its entirety by reference to our bylaws and to the statutory provisions.
In general, any officer, and/director, employee or directoragent may be indemnified against expenses, fines, settlements or judgments arising in regards eachconnection with a legal proceeding to which such person carrying out the dutiesis a party, if that person is not liable due to conduct that constituted a breach of his or her office. The Boardfiduciary duties and such breach involved intentional misconduct, fraud or a knowing violation of Directors will make determination regardinglaw, and that person’s actions were in good faith, were believed to be in our best interest, and were not unlawful. Indemnification may not be made for any claim as to which the indemnificationperson seeking indemnity has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals, to be liable to our company unless the court in which the action or suit was brought or another court of competent jurisdiction determines that in view of all the circumstances of the director, officercase, such person is fairly and reasonably entitled to indemnity for such expenses as such court deems proper. Unless such person is successful upon the merits in such an action, indemnification may be awarded only after a determination by independent decision of our board of directors, by legal counsel, or employee as is proper under the circumstances if he has metby a vote of our stockholders, that the applicable standard of conduct set forth underwas met by the Nevada Revised Statutes.person to be indemnified. Under our articles of incorporation, as amended, and bylaws , we will advance expenses incurred by officers, directors, employees or agents who are parties to or are threatened to made parties to any threatened, pending or completed action by reason of the fact that such person was serving in such capacity, prior to the disposition of such action and promptly following request therefor, upon receipt of an undertaking by or on behalf of such person to repay such advances if it should be determined ultimately that such person is not entitled to indemnification.
AsThe circumstances under which indemnification is granted in connection with an action brought on our behalf is generally the same as those set forth above; however, with respect to such actions, indemnification is granted only with respect to expenses actually incurred in connection with the defense or settlement of the action. Indemnification may also be granted pursuant to the terms of agreements which may be entered in the future or pursuant to a vote of stockholders or directors. The Nevada Revised Statutes also grant us the power to purchase and maintain insurance which protects our officers and directors against any liabilities incurred in connection with their service in such a position, and we have obtained such a policy.
A stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers as required by these indemnification provisions. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees regarding which indemnification by us is sought, nor are we aware of any threatened litigation that may result in claims for indemnification.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, for a director, officer and/may be permitted to directors, officers or personpersons controlling Punto Group, Corp.,us pursuant to the foregoing provisions, we have been informed that, in the opinion of the Securities and Exchange Commission suchSEC, this indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
II-1 |
ITEM 15. Recent Sales Of Unregistered SecuritiesRECENT SALES OF UNREGISTERED SECURITIES
Since inception,Over the Registrant haspast three years, we have issued and sold the following securities that were not registeredwithout registration under the Securities Act of 1933, as amended.Act:
Name and Address | Date | Shares | Consideration |
Andrei Kriukov |
| 4,000,000 | $4,000.00 |
1810 E. Sahara Ave., Office 216 Las Vegas, NV 89104 | October 8, 2014 | ||
|
|
WeOn August 30, 2019 we issued the foregoing restricted51,040 shares of commonCommon Stock to a consultant upon the exercise of a stock option held by the consultant.
We sold an aggregate of 2,965,000 shares of Common Stock in the August 2019 Private Placement at a price of $0.50 per share.
On February 21, 2019, we issued 39,475,398 shares of our Common Stock to our sole officer and director pursuant tothe shareholders of OWP Ventures, Inc., as consideration for the Merger in a private transaction exempt from registration under Section 4(2) of the Securities Act, of 1933. He is a sophisticated investor, is our sole officer and director, and is in possession of all material information relating to us. Further, no commissions were paid to anyone in connection with the sale of the shares and general solicitation was not made to anyone.Regulation D promulgated thereunder.
ITEM 16. ExhibitsEXHIBITS
The following exhibits are filed as part of this registration statement:
* Previously filed
ITEM 17. Undertakings
* Filed herewith.
II-2 |
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrantregistrant hereby undertakes:
(a)(1) Toto file, during any period in which offers or sales of securities are being made, a post-effective amendment to this registration statement to:statement:
(i) Includeto include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;Act;
(ii) Toto reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 349(b) (§230.349(b) of this chapter)424(b) if, in the aggregate, the changes in volume and price represent no more than 20%a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.statement; and
(iii) Toto include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
(2) That,that, for the purpose of determining any liability under the Securities Act, of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initialbona fide offering thereof.
(3) Toto remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That,that, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(i) If the registrant is subject to Rule 430C,purchaser, each prospectus filed pursuant to Rule 349(b)424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(5) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 349;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or our securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to our directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, above, or otherwise, we havethe registrant has been advised that in the opinion of the SECSecurities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities other(other than the payment by usthe registrant of expenses incurred or paid by one of our directors, officers,a director, officer or controlling personsperson of the registrant in the successful defense of any action, suit or proceeding,proceeding) is asserted by one of our directors, officers,such director, officer or controlling personsperson in connection with the securities being registered, wethe registrant will, unless in the opinion of ourits counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and we will be governed by the final adjudication of such issue.
II-3 |
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Las Vegas, Nevada, United States of America May 15 , 2015.on September 12, 2019.
One World Pharma Inc. | |||||
| |||||
By: | /s/ Craig Ellins | ||||
Craig Ellins | |||||
|
|
| |||
|
| ||||
|
| ||||
|
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Craig Ellins, with full authority to act without the others, his true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this registration statement, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance withPursuant to the requirements of the Securities Act of 1933, this registration statement washas been signed by the following persons in the capacities and on the dates stated.indicated:
Signature | Title | Date | ||||
|
|
| ||||
/s/ Craig Ellins | Chief Executive Officer, Chief Financial Officer, Director | September 12, 2019 | ||||
| ||||||
|
|
| ||||
/s/ Bruce Raben | Director | September 12, 2019 | ||||
Bruce Raben | ||||||
/s/ Kenneth Perego | Director | September 12, 2019 | ||||
Kenneth Perego |
51
EXHIBIT INDEX
II-4 |
|
Description of Exhibit
3.1
Articles of Incorporation of the Registrant *
3.2
Bylaws of the Registrant *
5.1
Opinion of John T. Root, Jr. *
23.1
Consent of Hillary CPA Group
23.2
Consent of John T. Root, Jr. (contained in exhibit 5.1) *
99.1
Form of Subscription *
*Previously filed
52