The information contained in this Form 10-Q is intended to update the information contained in our Annual Report on Form 10-K for the year ended December 31, 2021 and presumes that readers have access to, and will have read, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other information contained in such Form 10-K. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.

The following discussion contains certain statements that may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, "Management's Discussion and Analysis of Financial Condition and Results of Operations." These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in the Form 10-K in the section entitled "Risk Factors" for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this quarterly report on Form 10-Q. The following should also be read in conjunction with the unaudited Financial Statements and notes thereto that appear elsewhere in this report.





Overview

Through our wholly-owned subsidiary, One World Pharma S.A.S, 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. We have been generating revenue from the sale of our seeds since the second quarter of 2020. From August 2021 through March 2022, we made payments of approximately $1,400,000 for the purchase of a state of the art distillation machine that we expect to be placed in service within our vertically integrated extraction facility during the second quarter of 2022. Once the equipment is placed in service, we will be one of the only companies in Colombia to both hold licenses and possess the capability to extract high-quality CBD and THC oils.





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Results of Operations for the Three Months Ended March 31, 2022 and 2021:

The following table summarizes selected items from the statement of operations for the three months ended March 31, 2022 and 2021.





                                 Three Months Ended March 31,        Increase /
                                    2022                2021         (Decrease)
Revenues                       $       10,147       $     23,282     $   (13,135 )
Cost of goods sold                      9,956              7,579           2,377
Gross profit                              191             15,703         (15,512 )

Operating expenses:
General and administrative            381,383            740,426        (359,043 )
Professional fees                     171,050            219,463         (48,413 )
Depreciation expense                   12,485              9,884           2,601
Total operating expenses:             564,918            969,773        (404,855 )

Operating loss                       (564,727 )         (954,070 )      (389,343 )

Total other income (expense)          (44,779 )          (86,147 )       (41,368 )

Net loss                       $     (609,506 )     $ (1,040,217 )   $  (430,711 )




Revenues

Revenues during the three months ended March 31, 2022 were $10,147, compared to $23,282 during the three months ended March 31, 2021, a decrease of $13,135, or 56%. Revenues decreased slightly as we began to shift our focus toward producing and selling oils.





Cost of Goods Sold

Cost of goods sold for the three months ended March 31, 2022 were $9,956, compared to $7,579 for the three months ended March 31, 2021, an increase of $2,377, or 31%. Cost of goods sold consists primarily of labor, agricultural raw materials, depreciation and overhead.

General and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2022 were $381,383, compared to $740,426 during the three months ended March 31, 2021, a decrease of $359,043, or 48%. The expenses for the current period consisted primarily of compensation expenses, office rent, and travel costs. General and administrative expenses decreased primarily due to decreased stock-based compensation related to the amortization of stock options and shares issued to officers that were incurred in the prior year, and not awarded in the current year at similar levels. General and administrative expenses included non-cash, stock-based compensation of $29,347 and $322,812 during the three months ended March 31, 2022 and 2021, respectively.





Professional Fees

Professional fees for the three months ended March 31, 2022 were $171,050, compared to $219,463 during the three months ended March 31, 2021, a decrease of $48,413, or 22%. Professional fees included non-cash, stock-based compensation of $11,767 and $105,278 during the three months ended March 31, 2022 and 2021, respectively. Professional fees decreased primarily due to decreased stock-based compensation efforts during the current period.





Depreciation Expense

Depreciation expense for the three months ended March 31, 2022 was $12,485, compared to $9,884 during the three months ended March 31, 2021, an increase of $2,601, or 26%. Depreciation expense increased as equipment was placed in service in the second half of the prior year.





Other Income (Expense)

Other expenses, on a net basis, for the three months ended March 31, 2022 were $44,779, compared to other expenses, on a net basis, of $86,147 during the three months ended March 31, 2021, a decrease in net expenses of $41,368, or 48%. Other expenses consisted of $166,192 of interest expense, including $125,280 of stock-based finance costs on the amortization of debt discounts, as partially offset by a gain on early extinguishment of debt of $121,372 on the forgiveness of a PPP Loan and $41 of interest income, for the three months ended March 31, 2022, compared to $93,461 of interest expense, including $73,927 of stock-based finance costs on the amortization of debt discounts, as partially offset by $7,000 of sublease income on sublet office space and $314 of interest income during the three months ended March 31, 2021.





Net Loss

Net loss for the three months ended March 31, 2022 was $609,506, or $0.01 per share, compared to $1,040,217, or $0.02 per share, during the three months ended March 31, 2021, a decrease of $430,711, or 41%. The net loss decreased primarily due to decreased stock-based compensation during the current period.





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Liquidity and Capital Resources

The following is a summary of the Company's cash flows provided by (used in) operating, investing, financing activities and effect of exchange rate changes on cash for the three months ended March 31, 2022 and 2021:





                                             2022           2021
Operating Activities                      $ (647,595 )   $  (766,038 )
Investing Activities                          (3,482 )      (157,988 )
Financing Activities                         600,000       1,769,750
Effect of Exchange Rate Changes on Cash       16,804             360
Net Increase (Decrease) in Cash           $  (34,273 )   $   846,084

Net Cash Used in Operating Activities

During the three months ended March 31, 2022, net cash used in operating activities was $647,595, compared to net cash used in operating activities of $766,038 for the three months ended March 31, 2021. The cash used in operating activities was primarily attributable to our net loss.

Net Cash Used in Investing Activities

During the three months ended March 31, 2022, net cash used in investing activities was $3,482, compared to net cash used in investing activities of $157,988 for the three months ended March 31, 2021. The cash used in investing activities consisted of purchases of fixed assets.

Net Cash Provided by Financing Activities

During the three months ended March 31, 2022, net cash provided by financing activities was $600,000, compared to net cash provided by financing activities of $1,769,750 for the three months ended March 31, 2021. The current period consisted of $600,000 of proceeds received on debt financing, compared to $268,250 of proceeds received on debt financing and $1,527,500 received on the sale of preferred and common stock, less debt repayments of $26,000, during the three months ended March 31, 2021.

Ability to Continue as a Going Concern

As of March 31, 2022, our balance of cash on hand was $85,405, and we had negative working capital of $1,215,325 and an accumulated deficit of $20,526,394. We are too early in our development stage to project future revenue levels, and may not be able to generate sufficient funds to sustain our operations for the next twelve months. Accordingly, we may need to raise additional cash to fund our operations. These factors raise substantial doubt about the Company's ability to continue as a going concern.

In the event sales 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; therefore, without sufficient financing it would be unlikely for the Company to continue as a going concern.

The condensed 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. The condensed consolidated 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. Our ability to scale production and distribution capabilities and further increase the value of our brands, is largely dependent on our success in raising additional capital.

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.





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Critical Accounting Policies and Estimates

The preparation 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 financial 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 Form 10-Q, 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

The Company recognizes revenue in accordance with ASC 606 - Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. The Company's sales to date have primarily consisted of the sale of seeds. These sales include multi-element arrangements whereby the Company collects 50% of the sale upon delivery of the sales, and the remaining 50% upon the completion of the harvest, whether the seeds result in a successful crop, or not. In addition, the Company has a right of first refusal to purchase products resulting from the harvest. At March 31, 2022, the Company had $31,072 of deferred revenues and $20,838 of deferred cost of goods sold, as included in other current assets on the balance sheet, that are expected to be recognized upon the customers' completion of their harvests in 2022.





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 and non-employees in accordance with the provisions of ASC 718 Stock Compensation (ASC 718). All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty's performance is complete or the date at which a commitment for performance by the counterparty to earn the equity instruments is reached because of sufficiently large disincentives for nonperformance.

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