The following discussion contains forward-looking statements.
Forward-looking statements give our current expectations or forecasts of future events.
You can identify these statements by the fact that they do not relate strictly to
historical or current facts. They use of words such as "anticipate",
"estimate", "expect", "project", "intend",
"plan", "believe", and other words and terms of similar meaning in
connection with any discussion of future operating or financial performance. From time to
time, we also may provide forward-looking statements in other materials we release to the
public.
Plan of Operations
We
are engaged in
research
and development of cannabis-based medical products for the treatment of
a variety of medical conditions such as multiple
myeloma, psoriasis, fibromyalgia, post-traumatic stress disorder (PTSD)
and migraine, and (ii)
consulting services to companies and governmental agencies with respect to complex international medical cannabis protocols and
regulations.
We
have not yet commenced any significant activities related to our consulting services.
Our
goal is to become a leader in the research and development of cannabis-based medical drugs and treatments. To achieve our goal,
we plan to focus our activities on the following areas:
Research
and Development
Our
research
and development is focused primarily on exploring several formulations
containing active compounds from the cannabis
plant, including (but not exclusive to) the cannabinoids CBD and THC,
and identifying potential therapeutic applications of the
synergistic effects of these active compounds. The synergistic
contributions of our formulations have not yet been scientifically
researched and demonstrated. We aim to standardize the formulations
across the extracts as a whole, not simply by reference to
their key active components (CBD and/or THC).
Although
there are existing reports and studies on CBD and THC, our formulations will contain several active compounds from the cannabis
plant, that must be fully researched and documented in order to verify its effectiveness to indications, at what doses and which
method of administration will be the most appropriate and effective.
One
World
Cannabis plans to produce pharmaceutical-grade cannabinoid-based
products and treatments, that will be standardized in composition,
formulation and dose, administered by means of an appropriate and
efficient delivery system, and tested in properly controlled
pre-clinical and clinical studies. OWC plans to conduct its researche,
led by internationally renowned investigators, at the facilities
of leading Israeli hospitals and scientific institutions. The Company
will adhere to legislation, rules and guidelines regarding
the investigations. Dr. Baruch, OWC's Director of Research and
Regulatory Affairs, and Alon Sinai, OWC's Chief Operating
Officer, will monitor the investigations and researches.
To
date,
OWC has signed three research collaboration and license agreements with
Sheba Academic Medical Center, Tel Hashomer, Israel
("Sheba"). Sheba is a university-affiliated hospital that serves as
Israel's national medical center and the
most comprehensive medical center in the Middle East. Within the
framework of the agreements with Sheba, OWC will initiate three
studies at the Sheba facilities to explore the effect of three
formulations, all based on active ingredients in the cannabis extracts,
on multiple myeloma, psoriasis and fibromyalgia (a specific formulation
to each indication).
In
addition,
OWC signed an R&D service agreement with G.C. Group Ltd., an Israeli
pharmaceutical R&D company, in April 2015,
to provide formulation development services for OWC's new delivery
system in the form of a cannabis soluble tablet. The
cannabis soluble tablet could provide physicians with the ability to
control and administrate optimal dosage, to replace the most
common usage/delivery method of medical cannabis today, which is not
acceptable by scientists and physicians, such as smoking,
edibles and oil extracts with no adequate means of dosage control. The
agreement was terminated on December 31, 2015.
The
Company
expects to start developing other delivery systems, designed for
different indications, during 2016.
The
Company
has recently signed a Memorandum of Understanding (MoU) with Emilia
Cosmetics Ltd., a large Israeli private label manufacturer,
for the development, manufacture and marketing of a cannabinoid-based
topical cream to treat psoriasis. The Company will initiate
the development of the topical cream by the end of the first quarter of
2016, at Emilia Cosmetics labs located in Yerucham, Israel.
After the completion of the formulation development, expected to be
during the second quarter of 2016, the Company will initiate
a phase I study at the Sheba facilities to explore the effect of topical
cream on psoriasis. However, we do not know if our expectations
will be fulfilled in a timely manner, if at all, or that the costs of
development will exceed our anticipation.
To
date,
One World Cannabis has filed eight provisional patents with the United
States Patent and Regulatory Office (USPTO), all
related to its line of activity related to cannabis-based medical
products. Assuming the successful completion of the clinical
trials, of which there can be no assurance, the Company believes that it
will be able to retain the intellectual rights and secure
patent protections.
While
we
retain full ownership on our intellectual property rights that we
conceived prior to the signing of the research collaboration
and license agreements with Sheba Academic Medical Center, the psoriasis
and fibromyalgia agreements with Sheba provide that all
intellectual property rights that is conceived during the course of the
research is to be jointly owned by Sheba and One World
Cannabis.
Pursuant
to
the collaboration agreements, we expect to pay Sheba $330,000 for
conducting the multiple myeloma trial between the 3rd quarter
of 2015 and the second quarter of 2016. In addition, we expect to
commence pre-clinical studies on fibromyalgia and psoriasis
during the second quarter of 2016. Pursuant to the collaboration
agreements, we are obliged to pay Sheba $300,000 throughout 2016
for conducting the psoriasis research, and $100,000 for the fibromyalgia
research during the two years of the study. We currently
have the financial resources to fund our obligations under these
agreements, but anticipate that we will require additional funding
during the next 12 months for our continuing and planned expanded
operations.
Research
and Development Status
The
following table summarizes the stages of development for each of our current Product Prospects.
|
Target
Indication
|
|
Collaborator
|
|
Status
|
|
|
|
|
|
|
|
|
Multiple
Myeloma
|
|
Sheba
|
|
●
|
Entered
into a research agreement for in vitro studies
|
|
|
|
Academic
|
|
●
|
Negotiating
terms of a research agreement for in vivo studies
|
|
|
|
Medical
Center
|
|
●
|
Completed
one in vitro study
|
|
|
|
|
|
●
|
Proceeding
with further pre-clinical in vitro studies (safety and toxicity, pharmacokinetic, and pharmacodynamic)
|
|
|
|
|
|
●
|
Submitted
a clinical trial protocol to the Israeli Institutional Review Board and received its approval to commence a clinical study
|
|
|
|
|
|
●
|
Intend
to commence a clinical study in the first quarter of 2016
|
|
|
|
|
|
●
|
Drafted
a clinical trial protocol synopsis, which we believe will assist us
in preparing an application for orphan status designation
|
|
|
|
|
|
|
|
|
|
|
|
|
●
|
Entered
into a Research Collaboration and License Agreement but have not commenced any studies to date
|
|
Psoriasis
|
|
Sheba
Academic
Medical Center
|
|
●
|
Drafted
a protocol of a Phase I, double blind, randomized, placebo
controlled, multiple escalating dose study to determine the safety,
tolerability and pharmacokinetic profile of medical grade cannabis
in healthy volunteers
|
|
|
|
|
|
|
|
|
|
|
|
|
●
|
Entered
into a nonbinding memorandum of understanding for the development, manufacture and marketing of a cannabinoid-based topical
cream
|
|
Psoriasis
|
|
Emilia
Cosmetics Ltd.
|
|
●
|
Intend
to enter into a binding agreement in the second quarter of 2016
|
|
|
|
|
|
●
|
Intend
to initiate development of the topical cream in the second quarter of 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
●
|
Entered
into a research agreement for in vitro studies
|
|
Fibromyalgia
|
|
Sheba
Academic
Medical Center
|
|
●
|
Drafted
a clinical trial protocol synopsis, which we believe will assist us
in preparing an application for orphan status designation
|
|
|
|
|
|
|
|
|
New
delivery system - cannabis soluble tablet
|
|
G.C.
Group
Ltd.
|
|
●
|
Completed
a proof of concept (the R=Research phase) of the desired end product (the soluble tablet) to test the fabric, durability,
solidification and other features of the cannabis soluble tablet.
|
OWC's
Investigation on Multiple Myeloma
Dr.
Merav
Leiba, Head of Multiple Myeloma Outpatient Clinic and Multiple Myeloma
Research Lab at Sheba's Hematology Institute,
led the in vitro tests on multiple myeloma. Dr. Leiba, a specialist in
Internal Medicine and Hematology, was a postdoctoral fellow
at the Jerome Lipper Multiple Myeloma Center at Dana Farber Cancer
Institute, Boston, Massachusetts (2006-2008). Dr. Leiba has
participated in numerous clinical and investigational studies aimed at
developing novel drugs for multiple myeloma.
Our
in
vitro tests results on multiple myeloma cells studied outside their
normal biological context, on which we announced on June
17, 2015, led us to proceed with further pre-clinical study (safety and
toxicity, PK, PD) of our formulation, to find out whether
it has scientific merit for further development as an investigational
new drug. While we are encouraged by the results of the
limited in vitro tests, there can be no assurance that any clinical
trial will result in commercially viable products or treatments.
Clinical
trials
are expensive, time consuming and difficult to design and implement.
We, as well as the regulatory authorities in Israel
and elsewhere, such as an IRB (Helsinki committee), IMCU - Israel
Medical Cannabis Unit, or the FDA, may suspend, delay or terminate
our clinical trials at any time, may require us, for various reasons, to
conduct additional clinical trials, or may require a
particular clinical trial to continue for a longer duration than
originally planned, including, among others:
●
lack
of effectiveness of any formulation or delivery system during clinical trials;
●
discovery of serious or unexpected toxicities or side effects experienced by trial participants or other safety issues;
●
slower than expected rates of subject recruitment and enrollment rates in clinical trials;
●
delays
or inability in manufacturing or obtaining sufficient quantities of materials for use in clinical trials due to regulatory and
manufacturing constraints;
●
delays in obtaining regulatory authorization to commence a trial, including IRB approvals, licenses required for obtaining and
using cannabis for research, either before or after a trial is commenced;
●
unfavorable results from ongoing pre-clinical studies and clinical trials.
●
patients or investigators failing to comply with study protocols;
●
patients
failing to return for post-treatment follow-up at the expected rate;
●
sites
participating in an ongoing clinical study withdraw, requiring us to engage new sites;
●
third-party
clinical
investigators decline to participate in our clinical studies, do not
perform the clinical studies on the anticipated
schedule, or act in ways inconsistent with the established investigator
agreement, clinical study protocol, good clinical practices,
and other Institutional Review Board requirements;
●
third-party entities do not perform data collection and analysis in a timely or accurate manner or at all;
●
regulatory
inspections of our clinical studies require us to undertake corrective action or suspend or terminate our clinical studies;
Any
of the foregoing could have a material adverse effect on our business, results of operations and financial condition.
Consulting
Services
OWCP
believes
that the complexity of the medical cannabis programs has created a
demand for consulting and advisory services in different
aspects of the medical cannabis industry. The Company's services are
designed to help government officials, policy-makers
and regulatory agencies develop and implement tailor-made comprehensive
medical cannabis programs. In addition, One World Cannabis
offers medical cannabis regulatory compliance services and patient-care
consultancy services.
Our
initial activities to secure consulting contracts will be in member states of the European Union and states of the United States
that allow for public medical cannabis programs.
OWC
management has the expertise in designing training programs for physicians, caregivers, and researches that are essential to the
establishment of a successful, patient-focused medical cannabis program. By working with policy-makers, government officials,
public agencies, and privately owned businesses, we believe we can also raise the public's awareness of the benefits of
cannabis-based treatments and products.
In
furtherance
of our plans, we may, in the future, consider strategic acquisitions
and joint ventures as well as other projects
to grow our business activities including but not limited to: product
licensing and royalty agreements, consulting, and strategic
alliances to support our Product Prospect development. However, there
can be no assurance that this strategy will be successful
in generating any revenues or growing out business.
Results
of Operations during the three months ended March 31, 2016 as compared to the
three months ended March 31, 2015
We
have not generated any revenue during the three months ended March 31, 2016 and
2015. We have operating expenses related to
general and administrative expenses and research and development expenses. During the
three months ended March 31, 2016, we
incurred a net loss of $314,388 due to general and administrative expenses of $221,556, research and development expenses of
$37,043, interest expenses of $998, valuation loss on derivatives of $28,245 and expenses due to amortization of debt
discount of $26,546 as compared to
a net loss of $404,603 due to general and administrative expenses of
$305,479 and research and development expenses of $99,124.
Our
general
and administrative expenses decreased by $83,923 or 27% during the three
months ended March 31, 2016 as compared
to the same period in the prior year due to a decrease in
non-cash compensation expense. During the three months ended March 31, 2016, our research and
development expenses decreased by $62,081 or 63% as compared to the same
period in the prior year.
Liquidity
and Capital Resources
On March 31, 2016, we had current assets of $320,806 consisting of $266,373
in cash, other receivables of $15,842 and prepaid assets of $38,591. We had
property and equipment, net of accumulated depreciation,
valued at $22,367 as of March 31, 2016. We had total assets of $343,173 as of
March 31, 2016.
On December 31, 2015, we had current assets of $407,549 consisting of $357,161
in cash, other receivables of $11,797 and prepaid assets of $38,591. We had
property and equipment, net of accumulated depreciation of $11,863, valued at $22,899 as of December 31, 2015. We had total assets of $430,448 as of
December 31, 2015.
On
March 31, 2016, we had $315,031 in current liabilities consisting of $9,117
in accounts payable, $26,799 in accrued expenses, customer deposits of $150,000,
derivatives valued at $70,219 and convertible notes
payable of $58,896.
On
December 31, 2015, we had $107,626 in current liabilities consisting of $28,125
in accounts payable, $24,607 in accrued expenses, advances and accounts payables
to related parties of $1,820, customer deposits of $50,000 and convertible notes
payable of $3,074.
We
had positive working capital of $5,775 at March 31, 2016 as compared to
$349,923 on December 31, 2015. Our accumulated deficits as
of March 31, 2016 and December 31, 2015 were $7,863,253 and $7,548,866, respectively.
We
used
$171,811 in our operating activities during the three month ended March 31, 2016, which was due to a net loss of $314,388
offset by derivative valuations adjustments of $28,245, amortization of debt discount expenses of $26,546, depreciation expenses of $2,389,
options and warrants issued for services valued
at $8,074, an increase in accounts receivable of $4,045, a decrease in
accounts payable to a related party of $1,820, a decrease
in accounts payable of $19,004, an increase in customer deposits of $100,000 and an
increase in accrued expenses of
$2,192.
We used $387,040 in our operating activities during the
three months ended March 31, 2015, which was due to a net loss of $404,603 offset by increases in
depreciation expenses of $2,181, non-cash compensation expenses valued at $500,
options and warrants issued for services
valued at $10,839, a decrease in prepaid expenses of $24,090, increase in accounts payable to related party of $138, increase in accounts payable of $20,788
and an increase of accrued expenses of
$40,697.
We
used
$1,860 and $1,630 during the three months ended March 31, 2016 and 2015,
respectively, to purchase property
and equipment.
Our
financing
activities during the three months ended March 31, 2016 provided us
with $71,250 through proceeds from debt issuance. We financed our negative cash flow from
operations during the three months ended March 31, 2015 through
proceeds from issuance of common stock of $90,000.
Based
upon
our cash position of $266,374 at March 31, 2016, we believe that we
may need to raise additional capital, either equity
or debt during the first half of
fiscal year 2016 in order to fund our plan of operations
including our research and development initiatives for the next twelve
months. There can be no assurance, however, that additional
capital will be sufficient to fund our currently anticipated expenditure
requirements for the next twelve-month period nor can
there be any assurance that financing will be available at satisfactory
terms and conditions or at all, for that matter.
Our
auditors
have issued an opinion on our financial statements which includes a
statement describing our going concern status. 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 and meet our other financial
obligations. This is because we have not generated any revenues
and no revenues are anticipated until we begin marketing the product.
Accordingly, we must raise capital from sources other than
the actual sale of the product. We must raise capital to implement our
project and stay in business. Even if we raise the maximum
amount of money in this offering, we do not know how long the money will
last, however, we do believe it will last at least twelve
months.
Our
lack
of operating history may make it difficult to raise capital. Our
inability to borrow funds or raise equity capital to facilitate
our business plan may have a material adverse effect on our financial
condition and future prospects.
Funding
of Our Research Programs
On
October
22, 2014, we have entered into a collaboration agreement with Sheba
Academic Medical Center, a hospital in Tel-Aviv, Israel,
relating to the use of cannabis to treat Myeloma. Within the framework
of this collaboration agreement, the Company currently
conducts pre-clinical studies on multiple myeloma, which have commenced
in April 2015 and we expect to commence pre-clinical studies
on fibromyalgia in the first quarter of 2016. Pursuant to the agreement,
we are obligated to pay Sheba $330,000 between the third
quarter of 2015 and second quarter of 2016.
We
are obligated to provide $300,000 in funding in the second quarter of 2016 related to the Psoriasis research conducted at Sheba.
We have funding obligations of $100,000 related to the Fibromyalgia research due during two years of the studies.
Our
expenditures allocated to our corporate activities conducted through our facilities in Petach Tikva were $1,200,000 for
the year ended December 31, 2015 and we expect will be $900,000 for the year ended December 31, 2016.
At
present, we use our available working capital to fund these studies. However, we will need to raise additional funding prior to
or if clinical studies are to commence.