10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2014

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____.

Commission File No. 001-13869

ONE WORLD HOLDINGS, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada	87-0429198
(State or Other Jurisdiction Of Incorporation or Organization)	(I.R.S. Employer Identification Number)
14515 Briarhills Parkway, Suite 105, Houston, Texas	77077
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (281) 940-8534

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.

Yes x                                No ¨

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x                                No ¨

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-3 of the Exchange Act.  (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.

Yes ¨                            No x

As of November 12, 2014 there were 48,869,166 outstanding shares of the registrant’s common stock.

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ONE WORLD HOLDINGS, INC.

FORM 10-Q INDEX

QUARTER ENDED SEPTEMBER 30, 2014

	Page Number
PART I – FINANCIAL INFORMATION
Item 1.  Financial Statements
Condensed Consolidated Balance Sheets as of September 30, 2014 (Unaudited) and December 31, 2013	3
Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2014 and 2013 (Unaudited)	4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013 (Unaudited)	5
Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.  Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.  Controls and Procedures	24
PART II – OTHER INFORMATION
Item 1.  Legal Proceedings	25
Item 1A.  Risk Factors	25
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.  Defaults Upon Senior Securities	26
Item 4.  Mine Safety Disclosures	26
Item 5.  Other Information	26
Item 6.  Exhibits	26
Signature Page

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

ONE WORLD HOLDINGS, INC.

Condensed Consolidated Balance Sheets

	September 30, 2014
	(Unaudited)			December 31, 2013
ASSETS
Current assets:
Cash	$	89,299		$	6,456
Inventories		133,941			146,488
Prepaid consulting services		248,356			380,860
Prepaid expenses and other current assets		12,860			21,570
Total current assets		484,456			555,374
Property and equipment, net		56,000			66,500
Other assets		2,701			2,701
Total	$	543,157		$	624,575
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued expenses	$	1,110,855		$	870,291
Accrued interest payable		240,951			113,369
Convertible debentures, net of discount		1,191,953			592,095
Derivative liability		2,642,968			2,104,849
Notes payable		116,000			91,000
Current portion of long-term debt, net of discount		20,245			13,979
Stockholder advances		544,439			405,939
Total current liabilities		5,867,411			4,191,522
Long-term debt, net of current portion and discount		14,548			9,106
Total liabilities		5,881,959			4,200,628
Commitments and contingencies
Stockholders’ deficit:
Preferred stock, $0.001 par value, 10,000,000 shares authorized: Series AA, 80,000 and 0 shares issued and outstanding, respectively		80			-
Series BB, 186,000 and 0 shares issued and outstanding, respectively		186			-
Common stock; $0.0025 par value, 500,000,000 shares authorized, 29,435,392 and 1,224,590 shares issued and outstanding, respectively		73,589			3,061
Unissued common stock, 0 and 39,668 shares, respectively		-			99
Additional paid-in capital		10,561,914			6,146,595
Accumulated deficit		(15,974,571	)		(9,725,808	)
Total stockholders’ deficit		(5,338,802	)		(3,576,053	)
	$	543,157		$	624,575

See accompanying notes to condensed consolidated financial statements

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ONE WORLD HOLDINGS, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013
Sales	$	5,692		$	-		$	34,860		$	-
Cost of sales		13,988			-			34,861			-
Gross deficit		(8,296	)		-			(1	)		-
Operating expenses:
Selling, general and administrative		550,805			588,544			3,583,083			1,458,590
Research and development		93,268			1,725			101,890			76,021
Depreciation		3,500			-			10,500			-
Total operating expenses		647,573			590,269			3,695,473			1,534,611
Loss from operations		(655,869	)		(590,269	)		(3,695,474	)		(1,534,611	)
Other income (expense):
Interest expense		(465,311	)		(182,084	)		(1,728,367	)		(302,962	)
Loss on derivative liability		(513,535	)		(1,188,211	)		(354,442	)		(1,311,620	)
Gain (loss) on debt settlement		67,661			(579,310	)		(470,480	)		(876,484	)
Total other expense		(911,185	)		(1,949,605	)		(2,553,289	)		(2,491,066	)
Loss before income taxes		(1,567,054	)		(2,539,874	)		(6,248,763	)		(4,025,677	)
Provision for income taxes		-			-			-			-
Net loss	$	(1,567,054	)	$	(2,539,874	)	$	(6,248,763	)	$	(4,025,677	)
Net loss per common share – basic and diluted	$	(0.06	)	$	(6.80	)	$	(0.36	)	$	(20.80	)
Weighted average number of common shares    outstanding – basic and diluted		25,635,511			373,373			17,238,381			193,538

See accompanying notes to condensed consolidated financial statements

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ONE WORLD HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	2014			2013
Cash flows from operating activities:
Net loss	$	(6,248,763	)	$	(4,025,677	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		10,500			-
Amortization of debt discount to interest expense		1,068,942			203,919
Preferred stock issued for services		80			-
Common stock issued for services		2,750			652,006
Warrants issued for interest expense		394,860			-
Stock options issued for services		240,000			-
Notes payable issued for services		35,000			-
(Gain) loss on derivative liability		354,442			1,311,620
(Gain) loss on debt settlement		470,480			876,484
Changes in operating assets and liabilities:
Decrease in inventories		12,547			-
Decrease in prepaid consulting services		2,230,849			-
(Increase) decrease in prepaid assets and other current assets		8,710			(135,752	)
Increase in accounts payable and accrued expenses		240,564			157,505
Increase in accrued interest payable		163,580			76,859
Net cash used in operating activities		(1,015,459	)		(883,036	)
Cash flows from investing activities		-			-
Net cash provided by investing activities		-			-
Cash flows from financing activities:
Proceeds from convertible debentures		997,235			526,000
Proceeds from notes payable		25,000			131,500
Proceeds from issuance of stock		-			100,000
Proceeds from stockholder advances		188,500			182,958
Payments on convertible debentures		(107,433	)		(534	)
Payments on notes payable		(5,000	)		(19,500	)
Net cash provided by financing activities		1,098,302			920,424
Net increase in cash		82,843			37,388
Cash, beginning of the period		6,456			2,147
Cash, end of the period	$	89,299		$	39,535

See accompanying notes to condensed consolidated financial statements

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ONE WORLD HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

Nine Months Ended September 30, 2014

(Unaudited)

NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF FINANCIAL STATEMENT PRESENTATION

Organization, Nature of Business

One World Holdings, Inc. (the "Company"), a Nevada Corporation, is a Houston based company focused on doll design and marketing.  Substantially all of the Company's operations are conducted through its wholly owned subsidiary, The One World Doll Project, Inc. (a Texas Corporation - "OWDPI"). OWDPI began operations on October 1, 2010, and on January 14, 2011, OWDPI was incorporated in the State of Texas.  The accompanying consolidated financial statements are presented as if OWDPI was a corporation from inception.  National Fuel and Energy, Inc. (a Texas Corporation) is a wholly owned subsidiary of the Company that has been dormant since its inception on October 1, 2010. Additionally, on July 21, 2011, we completed a reverse merger whereby OWDPI was recapitalized and became the reporting entity for accounting purposes.  In October 2013, we received our first shipment of dolls from our manufacturer and commenced sales of dolls.

Reverse Stock Split and Increase in the Number of Authorized Common Shares

Stockholders holding a majority of the voting power of the outstanding voting stock of the Company, as well as the Company’s Board of Directors, acted by written consent to approve an amendment to the Company’s Articles of Incorporation dated December 30, 2013 to (a) effect a reverse stock split of the Company’s common stock by a ratio of one-for-seven hundred fifty (1:750) and (b) reduce the number of authorized shares of common stock from 1,500,000,000 to 50,000,000.  The Financial Industry Regulatory Authority (“FINRA”) approved the reverse stock split effective January 13, 2014.  The reverse stock split has been given retroactive effect in our consolidated financial statements.

Subsequently on September 24, 2014, stockholders holding a majority of the voting power of the outstanding voting stock of the Company, as well as the Company’s Board of Directors, acted by written consent to approve an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 50,000,000 to 500,000,000.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, OWDPI and National Fuel and Energy, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.

Interim Financial Information

The interim financial information of the Company as of September 30, 2014 and for the three months and nine months ended September 30, 2014 and 2013 is unaudited, and the balance sheet as of December 31, 2013 is derived from audited financial statements.  The accompanying condensed consolidated financial statements have been prepared in accordance with U. S. generally accepted accounting principles for interim financial statements.  Accordingly, they omit or condense notes and certain other information normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles.  The accounting policies followed for quarterly financial reporting conform with the accounting policies disclosed in Note 2 to the Notes to Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2013.  In the opinion of management, all adjustments necessary for a fair presentation of the financial information for the interim periods reported have been made.  All such adjustments are of a normal recurring nature.  The results of operations for the three months and nine months ended September 30, 2014 are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2014.  The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013.

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Certain amounts in the condensed consolidated financial statements for the three months and nine months ended September 30, 2013 have been reclassified to conform to the current year presentation.

NOTE 2 – GOING CONCERN

The Company has incurred operating losses since inception, only recently began sales of its dolls, and has limited financial resources and a working capital deficit of $5,382,955 at September 30, 2014.  These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company's condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  In addition, the Company had an accumulated deficit of $15,974,571 and a total stockholders’ deficit of $5,338,802 at September 30, 2014. The Company's ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and, ultimately, achieve profitable operations.  Management’s plans to address the Company’s continuing existence include obtaining debt or equity funding from private or institutional sources or obtaining loans from financial institutions and individuals, where possible.  The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 3 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Disclosures about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value.  As of September 30, 2014 and December 31, 2013, we believe the amounts reported for cash, accounts payable and accrued expenses, accrued interest payable, and notes payable approximate fair value because of the short-term nature of these financial instruments.

We adopted ASC Topic 820 (originally issued as SFAS 157, “Fair Value Measurements”) for financial instruments measured as fair value on a recurring basis.  ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements.

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.  ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements).  These tiers include:

· Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

· Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

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· Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Liabilities measured at fair value on a recurring basis are as follows at September 30, 2014:

	Total		Level 1		Level 2		Level 3
Derivative liability	$	2,642,968	$	-	$	-	$	2,642,968
Convertible debentures		1,191,953		-		-		1,191,953
Current portion of long-term debt		20,245		-		-		20,245
Long-term debt, net of current portion		14,548		-		-		14,548
Total liabilities measured at fair value	$	3,869,714	$	-	$	-	$	3,869,714

NOTE 4 – INCOME (LOSS) PER SHARE

The computation of basic income (loss) per common share is based on the weighted average number of shares outstanding during each period.

The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the common stock equivalents that would arise from the exercise of stock options and warrants outstanding, using the treasury stock method and the average market price per share during the period.  Common stock equivalents are not included in the diluted loss per share calculation when their effect is anti-dilutive.

Since we had no dilutive effect of stock options and warrants for the three months and nine months ended September 30, 2014 and 2013, our basic weighted average number of common shares outstanding is the same as our diluted weighted average number of common shares outstanding.

At September 30, 2014, we had outstanding stock options and warrants for a total of 4,977,267 shares of common stock that would have a potential dilutive effect on our calculation of income (loss) per share.

NOTE 5 – CONVERTIBLE DEBENTURES

Through September 30, 2014, we have financed our operations through the issuance of various convertible debentures.  For the nine months ended September 30, 2014, we received cash proceeds of $997,235 from the issuance of new convertible debentures.  We also issued new convertible debentures for $95,000 in services, the transfer of $50,000 from stockholder advances, the transfer of accrued interest payable of $30,731 and original issue discount of $46,000.

The debentures are generally unsecured and bear interest ranging from 6% to 22% per annum, with maturities ranging from two months to two years.  The outstanding principal and accrued interest of the debentures are convertible into shares of the Company’s common stock at a fixed conversion price ranging from $0.0025 to $30.00 per share or variable discounted pricing based on the market price of the Company’s common stock.

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We evaluated the convertible debentures in accordance with ASC Topic 815, “Derivatives and Hedging,” and determined that the conversion feature of the convertible promissory notes with variable conversion prices were not afforded the exemption for conventional convertible instruments due to their variable conversion rates.  The notes have no explicit limit on the number of shares issuable so they did not meet the conditions set forth in current accounting standards for equity classification. We elected to recognize the notes under paragraph 815-15-25-4, whereby there would be a separation into a host contract and derivative instrument. We elected to initially and subsequently measure the notes in their entirety at fair value, with changes in fair value recognized in earnings.  We recorded a derivative liability and debt discount representing the imputed interest associated with the embedded derivative.

For those convertible debentures with fixed conversion prices, we recorded a beneficial conversion feature at the inception of the debt to additional paid-in capital and to debt discount where the conversion price was less that the market price of the stock.

The debt discount is amortized over the life of the note and recognized as interest expense.  For the nine months ended September 30, 2014 and 2013, we amortized debt discount of $1,068,942 and $203,919, respectively, to interest expense.  The derivative liability is adjusted periodically according to the stock price fluctuations and was $2,642,968 and $2,104,849 at September 30, 2014 and December 31, 2013, respectively.  For purpose of estimating the fair value of the convertible debentures, we used the Black Scholes option valuation model.

At September 30, 2014, the convertible debentures and related accrued interest payable were convertible into approximately 241,019,000 shares of our common stock.

As of September 30, 2014, several of the convertible debentures are delinquent.  We believe we have good relationships with the debenture holders, and continue to have discussions with them regarding the extension of maturity dates.

During the nine months ended September 30, 2014, we had the following activity in the accounts related to the convertible debentures:

	Derivative Liability			Debt Discount			Gain (Loss) on Derivative Liability			Gain on Extinguishment of Debt			Interest Expense
Balance at December 31, 2013	$	2,104,849		$	(408,194	)
Adjustment to derivative liability		(1,093,610	)		-		$	1,093,610		$	-		$	-
New debt – debt discount		2,208,054			(801,502	)		(1,448,052	)		-			-
New debt – original issue discount		-			(4,500	)		-			-			-
New debt – beneficial conversion feature		-			(730,073	)		-			-			-
Amortization of debt discount to interest    expense		-			1,061,124			-			-			(1,061,124	)
Debt conversions and repayments		(576,325	)		95,175			-			(470,480	)		-
Balance at September 30, 2014	$	2,642,968		$	(787,970	)	$	354,442		$	(470,480	)	$	(1,061,124	)

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In estimating the fair value of the derivatives and calculating the adjustment to the derivative liability as of September 30, 2014, we used the Black-Scholes pricing model with the following range of assumptions:

Market price of stock	$	0.0189
Risk-free interest rate		0.02% – 0.58	%
Expected life in years		0.25 – 1.93
Dividend yield		0	%
Expected volatility		266.99% – 514.66	%

NOTE 6 – NOTES PAYABLE

As of September 30, 2014, we had short-term notes payable to six individuals totalling $116,000.  These notes are unsecured, payable to non-related parties and bear interest ranging from 0% to 16% per annum.

NOTE 7 – STOCKHOLDER ADVANCES

Since the inception of the Company, we have relied on cash advances from certain stockholders to fund our operations.  These advances generally have no specified repayment terms and no stated rate of interest.  All advances are considered by us to be due on demand until such time as the advances are converted into notes payable, issuances of shares of our common stock or other formal repayment arrangements.  At September 30, 2014, stockholder advances totalled  $544,439.

NOTE 8 – LONG-TERM DEBT

Our long-term debt consisted the following at September 30, 2014:

Long-term convertible debentures,    net of discount of $58,109 (see Note 5)	$	8,891
Long-term note payable, net of discount of $4,098		25,902
Total		34,793
Current portion		20,245
Long-term debt	$	14,548

 The long-term note payable is an unsecured note payable of $30,000 to an individual due July 30, 2016, with interest at 14% per annum.  Payment terms for the note payable are $350 per month for six months and $698 per month for sixty months, including interest. We are in default on the note payable at September 30, 2014 due to our failure to make timely payments in accordance with the terms of the note agreement.

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NOTE 9 – STOCKHOLDERS’ DEFICIT

As discussed in Note 1, stockholders holding a majority of the voting power of the our outstanding voting stock, as well as our Board of Directors, approved an amendment to our Articles of Incorporation dated December 30, 2013 to (a) effect a reverse stock split of our common stock by a ratio of one-for-seven hundred fifty (1:750) and (b) reduce the number of authorized shares of common stock from 1,500,000,000 to 50,000,000.  The Financial Industry Regulatory Authority (“FINRA”) approved the reverse stock split effective January 13, 2014, and the reverse stock split has been given retroactive effect in our consolidated financial statements for all periods presented.

Subsequently on September 24, 2014, stockholders holding a majority of the voting power of the outstanding voting stock of the Company, as well as the Company’s Board of Directors, acted by written consent to approve an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 50,000,000 to 500,000,000.

During the nine months ended September 30, 2014, we issued a total of 37,510,802 shares of our common stock: 39,668 shares at par value for 39,668 unissued common shares; 388 shares valued at $1 for rounding in the reverse stock split; 20,740,000 shares valued at $2,038,345 for services; and 16,730,746 shares with a total value of $1,082,656 for conversion of debt.   We also cancelled 9,300,000 shares of common stock, valued at par value of $23,250, when exchanged by officers and one of our founders for 186,000 shares of Series BB Preferred Stock.

On June 13, 2014, the Company filed a Certificate of Designations, Preferences and Rights (the “Certificate”) with the Nevada Secretary of State to establish a class of preferred stock designated as Series AA Preferred Stock (the “Series AA Preferred Stock”), and has authorized the issuance of up to 1,000,000 shares of such Series AA Preferred Stock.  Among other things, the Series AA Preferred Stock allows holders thereof enhanced voting rights based on ten thousand (10,000) votes per share of the Company’s common stock held by such holders of Series AA Preferred Stock.  The Series AA Preferred Stock is not convertible into common stock, does not pay dividends, and does not include a liquidation preference.

On June 19, 2014, 20,000 shares of Series AA Preferred Stock were issued to each of the four members of the Company’s Board of Directors for services and valued at par value totaling $80.

On July 31, 2014, the Company filed a Certificate of Designations, Preferences and Rights (the “Certificate”) with the Nevada Secretary of State to establish a class of preferred stock designated as Series BB Preferred Stock (the “Series BB Preferred Stock”), and has authorized the issuance of up to 1,000,000 shares of such Series BB Preferred Stock.  Among other things, the Series BB Preferred Stock allows holders thereof voting rights equal to holders of common stock as a single class with respect to all matters submitted to holders of common stock, quarterly dividends payable in arrears in either cash or in kind, liquidation preferences, and is convertible at the option of the holder into 50 common shares of the Company.

On August 15, 2014, a total of 186,000 shares of Series BB Preferred Stock was issued to two officers and one of our founders upon their surrender of a total of 9,300,000 shares of common stock.

NOTE 10 – STOCK OPTIONS AND WARRANTS

During the nine months ended September 30, 2014, we issued warrants to purchase 1,977,267 shares of our common stock to a lender.  The warrants are exercisable for a period of five years at an exercise price of $0.06 per share.  We estimated the value of the warrants using the Black-Scholes pricing model at $394,860 and included this amount in interest expense.

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During the nine months ended September 30, 2014, we issued options to purchase 3,000,000 shares of our common stock to a consultant.  The options are exercisable for a period of five years at an exercise price of $0.01 per share.  We estimated the value of the options using the Black-Scholes pricing model at $240,000 and included this amount in selling, general and administrative expenses.

The following table summarizes the stock option and warrant activity during the nine months ended September 30, 2014:

	Options		Weighted Average Exercise Price		Weighted Average Remaining Contract Term
Outstanding at December 31, 2013		-
Granted		4,977,267	$	0.03
Exercised		-
Expired or cancelled		-
Outstanding, vested and exercisable    at September 30, 2014		4,977,267	$	0.03	4.50

In estimating the fair value of the stock options and warrants issued during the nine months ended September 30, 2014, we used the Black-Scholes pricing model with the following range of assumptions:

Risk-free interest rate	1.58 – 1.75%
Expected life in years	5.0
Dividend yield	0%
Expected volatility	552.0%

On May 12, 2014, the Board of Directors of the Company adopted and approved the One World Holdings Inc. 2014 Stock Option and Stock Award Plan (the “Plan”).  Also, the holders of a majority of the Company’s outstanding common stock voted to approve and authorize adoption of the Plan.  A total of 2,000,000 shares of our common stock are available for issuance under the Plan.  Under the Plan, we may issue options, including incentive stock options and non-statutory stock options, restricted stock grants, or stock appreciation rights.  Awards under the Plan may be granted to employees, consultants, directors and individuals who meet the requirements defined in the Plan.

NOTE 11 – PREPAID CONSULTING SERVICES

We have entered into various consulting agreements for financial and business development services to the Company.  Certain of these consulting agreements provide for cash compensation to the consultants; however, most are based on issuances of shares of our common stock in exchange for services.

Under the consulting agreements that provide for share issuances, shares were generally issued at the inception of the agreements for services provided. There were no specified performance requirements and no provision in the agreements for return of the shares.  During the nine months ended September 30, 2014, total compensation expense paid in common shares was $2,230,850.  Compensation expense is calculated based on the market price of the stock on the effective date of agreement and amortized over the period over which the services are provided to the Company.   As of September 30, 2014, the unamortized compensation was $248,356, reported as a current asset, prepaid consulting services, on our consolidated balance sheet.

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NOTE 12– RELATED PARTY TRANSACTIONS

Several of the consulting agreements discussed in Note 11 are with related parties.  Related parties consist primarily of our executive officers, directors and individuals affiliated through family relationships with our officers and directors.  Compensation expense paid in common shares to related parties was $1,639,775 during the nine months ended September 30, 2014.

In addition to compensation expense paid in stock, we had the following amounts paid for consulting and professional fees to related parties during the nine months ended September 30, 2014:

Founder, stockholder	$	108,287
Family of officers and directors		182,597
Total related parties	$	290,884

As of September 30, 2014, we had convertible debentures of $5,000, $12,500, $46,600 and $8,000, which are further discussed in Note 5, payable to three family members of our executive officers. The outstanding principal and interest are convertible into shares of our common stock at a conversion prices ranging from $0.01 to $30 per share.

Accrued interest payable to these related parties totaled $20,895 at September 30, 2014.

NOTE 13 – SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

During the nine months ended September 30, 2014, we made no cash payments for income taxes.

During the nine months ended September 30, 2014 and 2013, we made cash payments for interest totaling $64,277.

During the nine months ended September 30, 2014, we had the following non-cash financing and investing activities:

· Increased convertible debentures and prepaid consulting services by $60,000.

· Increased additional paid-in capital and debt discount by $730,073 for beneficial conversion feature of convertible notes payable.

· Increased common stock and decreased additional paid-in capital by $1 for rounding up of shares in reverse stock split.

· Increased debt discount and derivative liability by $760,002.

· Decreased unissued common stock and increased common stock by $99.

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· Decreased stockholder advances and increased convertible debentures by $50,000.

· Increased prepaid consulting services by $2,038,345, increased common stock by $51,850 and increased additional paid-in capital by $1,986,495 for common shares issued for services.

· Decreased accrued interest payable by $5,267, decreased convertible debentures by $140,463, decreased debt discount by $69,700, decreased derivative liability by $475,341, increased common stock by $41,828 and increased additional paid-in capital by $1,040,828 for common shares issued in conversion of debt.

· Decreased accrued interest payable and increased convertible debentures by $30,731for accrued interest payable added to debt principal.

· Increased Series BB Preferred stock by $186, decreased common stock by $23,250 and increased additional paid-in capital by $23,064 for issuance of Series BB Preferred shares for common shares.

NOTE 14 – RECENT ACCOUNTING PRONOUNCEMENTS

In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this Update remove the financial statement distinction between development stage entities and other reporting entities from U.S. generally accepted accounting principles (“GAAP”).  In addition, the amendments eliminate the requirements for development stage entities to: (1) present inception-to-date information in the statements of income, cash flows and shareholder equity; (2) label the financial statements as those of a development stage entity; (3) disclose a description of the development stage activities in which the entity is engaged; and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

For public entities, the amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein.  Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued.  The Company adopted the provisions of ASU No. 2014-10 during its third fiscal quarter ended September 30, 2014, with no material impact on its consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 310-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  The amendments in this Update provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures.  In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures.  The amendments are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter.  Early application is permitted.  The Company has not determined the impact of the future adoption of the provisions of ASU No. 2014-15 on its consolidated financial statements.

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NOTE 15 – SUBSEQUENT EVENTS

To fund our operations subsequent to September 30, 2014, we incurred additional indebtedness totaling $68,000, consisting of convertible debentures totaling $50,000 and stockholder advances of $18,000.

Subsequent to September 30, 2014, we issued a total of 19,433,774 shares of our common stock for debt conversions of $34,825.

On November 4, 2014, we were named as a defendant in a civil lawsuit filed by Darling Capital, LLC, (“Darling”) a creditor of ours, in the New York Supreme Court, County of New York.  The plaintiff filed a Motion For Summary Judgment in Lieu of Complaint the same day. The plaintiff alleges, among other things, that we defaulted on our obligations under a Convertible Promissory Note held by Darling. The complaint seeks, among other relief, judgment against us in the amount of $57,627.  We are currently evaluating a response to this motion and intend to defend our interests vigorously.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

As used in this Quarterly Report on Form 10-Q, references to the “Company,” “One World,” “we,” “our” or “us” refer to One World Holdings, Inc., unless the context otherwise indicates.

Introduction

Management's discussion and analysis of financial condition and results of operations is provided as a supplement to the accompanying consolidated financial statements and related notes to help provide an understanding of our financial condition, the changes in our financial condition and the results of our operations.

Some of the key factors that could cause our future financial results and performance to vary from our expectations include:

· our ability to meet production and sales goals;

· our ability to raise adequate capital to fund operations;

· market developments affecting, and other changes in, the demand for our products or the introduction of competing products;

· increases in the price of raw materials used in the production of our dolls;

· our ability to develop and market our businesses at a level necessary to implement our business strategy and our ability to finance our development;

· the condition of the capital markets generally, which will be affected by interest rates, foreign currency fluctuations and general economic conditions;

· the political and economic climate in the foreign or domestic jurisdictions in which we conduct business; and

· other United States or foreign regulatory or legislative developments which affect the demand for our products generally or increase the cost for our products.

The information contained in this annual report, including the information set forth under the heading “Risk Factors”, identifies additional factors that could cause our results or performance to differ materially from those we express in our forward-looking statements.  Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of these assumptions and, therefore, the forward-looking statements based on these assumptions, could themselves prove to be inaccurate.  In light of the significant uncertainties inherent in the forward-looking statements that are included in this annual report and the exhibits and other documents incorporated herein by reference, our inclusion of this information is not a representation by us or any other person that our objectives and plans will be achieved.

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General

One World Holdings, Inc. (“Holdings”, a Nevada Corporation, formerly known as Environmental Safeguards, Inc.), is a Houston based company that recently released a line of mainstream multicultural dolls aimed at high-end collectors and young pre-teen girls.  Our operations are conducted through our wholly owned subsidiary, The One World Doll Project, Inc., a Texas Corporation (“OWDPI”).  In this discussion Holdings and OWDPI are collectively referred to as “One World” or “Company”.  We commenced sales in October 2013.  For the first year of operations, we focused on direct sales and Internet sales and did not require a storefront for operations.  Manufacturing of our dolls is outsourced to a physical plant facility in the People’s Republic of China owned by a third-party manufacturer we have selected.  We have purchased the requisite molds and equipment to manufacture our dolls and their accessories.  Warehousing of our merchandise inventories and fulfillment of orders here in the United States will be handled by a third-party center in Houston, Texas.

We were invited to showcase The Prettie Girls! Dolls to over 300 HEB store managers in September, and expanded the number of HEB stores placing orders to 119, representing a total order amount of approximately $37,000 as of September 30, 2014.  These orders shipped subsequent to September 30, 2014, resulting in year-to-date sales income through November 12, 2014 of approximately $72,000.

Going Concern Uncertainty

The Company has incurred operating losses since inception, only recently began sales of its dolls, and has limited financial resources and a working capital deficit of $5,382,955 at September 30, 2014.  These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company's condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  In addition, the Company had an accumulated deficit of $15,974,571 and a total stockholders’ deficit of $5,338,802 at September 30, 2014. The Company's ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and, ultimately, achieve profitable operations.  Management’s plans to address the Company’s continuing existence include obtaining debt or equity funding from private or institutional sources or obtaining loans from financial institutions and individuals, where possible.  The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Results of Operations

Sales

Sales of our dolls began in October 2013, and we had total sales of $5,692 for the three months ended September 30, 2014 and $34,860 for the nine months ended September 30, 2014.

Cost of Sales

Our cost of sales includes the cost to manufacture our dolls, inbound shipping costs to the United States and handling, fulfillment and outbound shipping costs incurred by our warehouse and fulfillment center.  Low levels of sales or promotional pricing of our dolls can result in these costs exceeding our sales in any particular period.  Cost of sales for the three months ended September 30, 2014 was $13,988, resulting in a gross loss for the period of $8,296.  Cost of sales for the nine months ended September 30, 2014 was $34,861, resulting in a gross loss for the period of $1.

Operating Expenses

Our selling, general and administrative expenses decreased $37,739 to $550,805 in the three months ended September 30, 2014 from $588,544 in the three months ended September 30, 2013.  Our selling, general and administrative expenses increased $2,124,493 to $3,583,083 in the nine months ended September 30, 2014 from $1,458,590 in the nine months ended September 30, 2013.The increase in these expenses in the current year is due to primarily to common stock and stock options issued for services, an increase in the activities incurred to market the sales of our dolls, and ongoing efforts to raise necessary funding.  Marketing and advertising expenses and contract services increased substantially over levels in the prior year.  We have hired several consultants from time to time to help us establish and market the Company and our products.  In addition, a substantial portion of the compensation paid to officers and directors has been in shares of our common stock, which we have valued at current market prices.  Certain consultants had consulting agreements that provided for share issuances, which shares were issued at the inception of the agreements.  Accordingly, the compensation based on the current market prices of the shares issued was recognized over the life of the consulting agreements.

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The services of a variety of consultants have been integral in developing our business model, furthering our business and ensuring the successful pursuit of our goals.  Our consultants have contributed a wide variety of different services to us.  These services can be classified into several different categories, as follows:

· Business model development and implementation, which consists of advice, counsel and services in the areas of fund raising strategy, corporate structure, hiring needs, office space acquisition and corporate governance;

· Financial and accounting which consists of advice, counsel and services in the areas of developing financial models and corporate accounting systems, corporate structure, quarterly reviews, various day to day accounting and bookkeeping;

· Product development which consists of advice and counsel in the areas of manufacturer selections, development process, engineering reviews, prototype development and testing, quality control, logistical support, safety standards compliance and physical packaging design; and

· Marketing and promotions which consists of advice, counsel and services in the areas of videography, photography, graphic design, printing, marketing and public relations activities, strategic market research and planning, website development and IT support.

Our research and development expenses increased $91,543 to $93,268 for the three months ended September 30, 2014 from $1,725 for the three months ended September 30, 2013.  Our research and development expenses increased $25,869 to $101,890 for the nine months ended September 30, 2014 from $76,021 for the nine months ended September 30, 2013.  The increase in research and development expenses in the current year is due to our continued development and introduction to the market of new dolls.

Depreciation expense is currently not material to our operations.  Our only depreciable assets are currently our molds and equipment to manufacture our dolls and their accessories, and we began to depreciate them in the fourth quarter of 2013.  Depreciation expense was $3,500 and $10,500 for the three months and nine months ended September 30, 2014, respectively.

Other Income (Expense)

Our other expense is comprised of interest expense and the gains or losses associated with accounting for the change in our derivative liability calculated for the variable conversion feature of certain of our convertible debentures and for the loss on debt settlement calculated upon conversion of debt to shares of our common stock.  Our interest expense also includes the amortization of debt discount calculated at the inception of the convertible debentures and recorded with the related derivative liability.

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Interest expense increased to $465,311 in the three months ended September 30, 2014 from $182,084 in the three months ended September 30, 2013, and increased to $1,728,367 in the nine months ended September 30, 2014 from $302,962 in the nine months ended September 30, 2013.  The increase in interest expense in the current year results primarily from the increase in our outstanding debt and amortization of debt discount on our convertible debt to interest expense as discussed above.

Loss on derivative liability was $513,535 for the three months ended September 30, 2014 compared to a loss of $1,188,211 for the three months ended September 30, 2013.  In the nine months ended September 30, 2014, loss on derivative liability was $354,442 compared to a loss of $1,311,620 in the nine months ended September 30, 2013.  The gain or loss on derivative liability will fluctuate each period depending on the market price of our common stock, volatility and other valuation inputs, and the fluctuation may be material.

 Gain on debt settlement was $67,661 for the three months ended September 30, 2014 compared to a loss on debt settlement of $579,310 for the three months ended September 30, 2013.  Loss on debt settlement was $470,480 and $876,484 for the nine months ended September 30, 2014 and 2013, respectively.  The gain or loss on debt settlement results from issuing our common shares in conversion of debt and eliminating corresponding derivative liabilities and debt discount.  The gain or loss on debt settlement will fluctuate each period depending on the amount of debt settled through conversion to common stock, the market price of our common stock, volatility and other valuation inputs, and the fluctuation may be material.

Net Loss

As a result of the factors discussed above, our net loss decreased to $1,567,054 for the three months ended September 30, 2014 from $2,539,874 for the three months ended September 30, 2013, and increased to $6,248,763 for the nine months ended September 30, 2014 from $4,025,677 for the nine months ended September 30, 2013.

Liquidity and Capital Resources

As of September 30, 2014, we had total current assets of $484,456, a significant portion of which consisted of prepaid consulting fees that were paid for by the issuance of shares of our common stock and amortized over the life of the underlying consulting agreements.  We have limited other current assets, including cash of $89,299, inventories of $133,941 and prepaid and other current assets of $12,860.

We had total current liabilities of $5,867,411 and a working capital deficit of $5,382,955 at September 30, 2014.  In addition, we had accumulated losses from inception of $15,974,571 and had a total stockholders’ deficit of $5,338,802 at September 30, 2014.

We do not have sufficient cash at September 30, 2014 to fund future operations. We rely on cash provided by financing activities primarily in the form of convertible debentures, notes and advances from our stockholders. We also have paid substantial consulting fees through the issuance of shares of our common stock, reducing the need for cash to pay these obligations. We believe, however, that we will be required to pay our consultants more in cash as we move forward with our operating plan.

Net cash used in operating activities was $1,015,459 for the nine months ended September 30, 2014 as a result of our net loss of $6,248,763, partially offset by non-cash expenses totaling $2,577,054, decreases in inventories of $12,547, prepaid consulting services of $2,230,849 and prepaid assets and other current assets of $8,710, and increases in accounts payable and accrued expenses of $240,564 and accrued interest payable of $163,580.

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Net cash used in operating activities was $883,036 for the nine months ended September 30, 2013 as a result of our net loss of $4,025,677 and increase in prepaid assets and other current assets of $135,752, partially offset by non-cash expenses totaling $3,044,029, and increases in accounts payable and accrued expenses of $157,505 and accrued interest payable of $76,859.

During the nine months ended September 30, 2014 and 2013, we had no net cash provided by or used in investing activities.

During the nine months ended September 30, 2014, net cash provided by financing activities was $1,098,302, comprised of proceeds from convertible debentures of $997,235, proceeds from notes payable of $25,000 and net proceeds from stockholder advances of $188,500, partially offset by payments on convertible debentures of $107,433 and payments on notes payable of $5,000.

During the nine months ended September 30, 2013, net cash provided by financing activities was $920,424, comprised of proceeds from convertible debentures of $526,000, proceeds from notes payable of $131,500, proceeds from the issuance of stock of $100,000, and net proceeds from stockholder advances of $182,958, partially offset by payments on convertible debentures of $534 and payments on notes payable of $19,500.

We have incurred losses from operations since inception, have limited financial resources, and at September 30, 2014, have a negative working capital position, an accumulated deficit of $15,974,571 and a total stockholders’ deficit of $5,338,802.  The losses to date represent costs incurred primarily to pay the management team and individuals engaged by us to design and develop our dolls, to negotiate and coordinate the production of the dolls and to develop the marketing strategy to promote the doll line to doll collectors and public markets.  We have also incurred significant administrative expenses, consisting primarily of professional fees and management and consulting services. While professional fees have been paid substantially in cash, the majority of management and consulting costs have been paid through the issuance of shares of our common stock.

Our primary sources of capital since inception have come from either private placement sales of our common stock, the issuance of debt or advances from individuals.  We will be dependent on these sources in the future.

We believe that our operating expenses will increase over the next 12 months and estimate that our capital requirements for the next 12 months will exceed $1.5 million.  Our estimated capital requirements include $300,000 for capital expenditures (product testing, 3rd party inspections, tooling, office furnishing and product warehousing), manufacturing costs and $1.2 million for marketing, public relations, and general and administrative costs (inventory purchases, staff expansion, legal and accounting fees and general office expenses).  We anticipate meeting our capital requirements by raising funds through a combination of private placements of our common stock and/or issuances of notes payable to private investors.  We currently depend primarily on in-kind arrangements and proceeds from the sale of convertible debentures for our month-to-month capital needs.

After a market for our common stock develops, which we hope will develop during 2015, we plan to raise funds through a private offering of our common stock to accredited investors.  However, we can provide no assurances that a market for our common stock will ever develop.  We hope that at such time, if ever, as a market develops for our common stock, we will be in a better position to raise funds through private offerings because we believe that purchasers are more likely to purchase convertible securities in companies that have a public market for their securities.  We anticipate being significantly dependent on third party funding and capital raised through private placements, until such time, if ever, as our operations generate sufficient revenue to support our operating expenses.

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Should we be unable to obtain the capital necessary to fund our expected future working capital needs, we would scale back on marketing, operational and administrative requirements, resulting in slower growth. The amount that we would have to scale back spending would correlate to any deficiency in funding. Such a funding shortage would likely result in an extremely limited budget for advertising and non-essential staff and consultants; however, we would still anticipate meeting our production and product launch deadlines, but we would produce less product initially. If we are able to raise more than $1.5 million during the 12 months following our common stock being listed on the Over-The-Counter Bulletin Board, we expect such capital to increase our marketing efforts and production capabilities.

Since inception we have primarily relied upon in-kind arrangements with various consultants pursuant to which we agreed to issue such consultants shares of common stock in lieu of payment of cash consideration. Services provided by such consultants include media and public relations, business development, product fulfillment, television advertising production, financial, management, corporate compliance, business advisory and employment recruitment consulting services.  We also previously issued certain of our officers and Directors shares of common stock in lieu of the payment of cash consideration.  

Plan of Operations and Related Risks

Sales of our dolls began in October 2013.  All equipment needed for manufacturing and production except for molds and tooling is owned and operated by our third-party manufacturer.  Therefore, we will have no production equipment needs or expenditures other than the production molds and tooling.  We have invested $70,000 in these molds and tooling as of September 30, 2014 and anticipate that additional funds will be invested in these items as we pursue our business plan.  These molds will remain our sole property.  These molds and tooling will be stored in our manufacturer’s warehouse. The molds and tooling can be shipped or transferred as needed if we should ever choose to use a different manufacturer.

Critical Accounting Policies

Our consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The preparation of these consolidated financial statements requires the use of estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. The significant accounting policies that we believe are the most important to aid in fully understanding our financial results are the following:

Inventories

Inventories, consisting primarily of dolls manufactured for resale, are stated at the lower of cost or market, with cost determined using primarily the first-in-first-out (FIFO) method.  We currently purchase substantially all inventories from one foreign supplier, and are dependent on that supplier for substantially all merchandise inventory purchases since we commenced operations.

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Prepaid Consulting Services

Fees for consulting services, generally paid through the issuance of shares of our common stock, are amortized over the life of the underlying consulting contracts.

Property and Equipment

Property and equipment is stated at cost and consists of molds and equipment used by our manufacturer to produce dolls and their accessories, including clothes, shoes, jewelry, as well as face painting masks.  Because we currently are unable to project the number of units to be manufactured from our molds, our property and equipment is depreciated over an estimated useful life of five years using the straight-line method.  

Revenue Recognition

We record revenue from the sales of dolls and accessories in accordance with the underlying sales agreements when the products are shipped, the selling price is fixed and determinable, and collection is reasonably assured.

Research and Development Costs

Research and development costs are expensed as incurred in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification™ (“ASC”) Topic 730, Research and Development.  The costs of materials and other costs acquired for research and development activities are charged to expense as incurred.  

Advertising

Advertising costs are non-direct in nature, and are expensed in the periods in which the advertising takes place.  

Fair Value of Financial Instruments

Disclosures about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value.  As of September 30, 2014, we believe the amounts reported for cash, accounts payable and accrued expenses, accrued interest payable, and notes payable approximate fair value because of the short-term nature of these financial instruments.

We adopted ASC Topic 820 (originally issued as SFAS 157, “Fair Value Measurements”) for financial instruments measured as fair value on a recurring basis.  ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements.

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.  ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements).  These tiers include:

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· Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;

· Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and

· Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Assets and liabilities measured at fair value on a recurring basis are as follows at September 30, 2014:

	Total		Level 1		Level 2		Level 3
Derivative liability	$	2,642,968	$	-	$	-	$	2,642,968
Convertible debentures		1,191,953		-		-		1,191,953
Current portion of long-term debt		20,245		-		-		20,245
Long-term debt, net of current portion		14,548		-		-		14,548
Total liabilities measured at fair value	$	3,869,714	$	-	$	-	$	3,869,714

Income (Loss) per Share

The computation of basic income (loss) per common share is based on the weighted average number of shares outstanding during each year.

The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the year plus the common stock equivalents that would arise from the exercise of stock options and warrants outstanding, using the treasury stock method and the average market price per share during the year.  Common stock equivalents are not included in the diluted loss per share calculation when their effect is anti-dilutive.

Since we had no dilutive effect of stock options and warrants for the three months and nine months ended September 30, 2014 and 2013, our basic weighted average number of common shares outstanding is the same as our diluted weighted average number of common shares outstanding.

Income Taxes

We account for income taxes using the asset and liability method.  Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  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 income in the period that includes the enactment date.

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New Accounting Pronouncements

See the notes to our condensed consolidated financial statements for a discussion of new accounting pronouncements.

Off Balance Sheet Commitments

We lease approximately 1,852 square feet of office space in one building located at 14515 Briar Hills Parkway, Suite 105, Houston, Texas 77077.  The three-year lease has a monthly payment of $2,546.50 from December 1, 2013 through November 30, 2014, $2,623.67 from December 1, 2014 through November 30, 2015, and $2,700.83 from December 1, 2015 through November 30, 2016.  We expect that the current leased premises will be satisfactory until the future growth of our business operations necessitates an increase in office space.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

Item 4.  Controls and Procedures

Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our principal executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2014.  Based on that evaluation, our principal executive officer and chief financial officer concluded that the disclosure controls and procedures employed at the Company were effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting during the fiscal quarter ended September 30, 2014 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

We are not a party to any material legal proceedings, nor have any material proceedings been terminated during the nine months ended September 30, 2014.

On November 4, 2014, we were named as a defendant in a civil lawsuit filed by Darling Capital, LLC, (“Darling”) a creditor of ours, in the New York Supreme Court, County of New York.  The plaintiff filed a Motion For Summary Judgment in Lieu of Complaint the same day. The plaintiff alleges, among other things, that we defaulted on our obligations under a Convertible Promissory Note held by Darling. The complaint seeks, among other relief, judgment against us in the amount of $57,627.  We are currently evaluating a response to this motion and intend to defend our interests vigorously.

Item 1A.  Risk Factors

As of the date of this filing, there have been no material changes to the Risk Factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on April 14, 2014. (the “2013 Form 10-K”).  The Risk Factors set forth in the 2013 Form 10-K should be read carefully in connection with evaluating our business and in connection with the forward-looking statements contained in this Quarterly Report on Form 10-Q.  Any of the risks described in the 2013 Form 10-K could materially adversely affect our business, financial condition or future results and the actual outcome of matters as to which forward-looking statements are made.  These are not the only risks we face.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

During the three months ended September 30, 2014, we issued a total of 12,855,062 shares of our common stock: 4,200,000 shares valued at $378,000 for services and 8,655,062 shares with a total value of $131,551 for conversion of debt.   We also cancelled 9,300,000 shares of common stock, valued at par value of $23,250, when exchanged by officers and one of our founders for 186,000 shares of Series BB Preferred Stock.

All of the issuances of securities described above were restricted share issuances and deemed to be exempt from registration in reliance on Section 4(a)(2) of the Securities Act as transactions by an issuer not involving a public offering.  Each investor represented that they were accredited investors, as defined in Rule 501 of Regulation D and, there was no general solicitation or general advertising used to market the securities.  We made available to each investor with disclosure of all aspects of our business, including providing the investor with press releases, access to our auditors, and other financial, business, and corporate information.  All securities issued were restricted with an appropriate restrictive legend on certificates for notes stating that the securities (and underlying shares) have not been registered under the Securities Act and cannot be sold or otherwise transferred without an effective registration or an exemption therefrom.

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On July 31, 2014, the Company filed a Certificate of Designations, Preferences and Rights (the “Certificate”) with the Nevada Secretary of State to establish a class of preferred stock designated as Series BB Preferred Stock (the “Series BB Preferred Stock”), and has authorized the issuance of up to 1,000,000 shares of such Series BB Preferred Stock.  Among other things, the Series BB Preferred Stock allows holders thereof voting rights equal to holders of common stock as a single class with respect to all matters submitted to holders of common stock, quarterly dividends payable in arrears in either cash or in kind, liquidation preferences, and is convertible at the option of the holder into 50 common shares of the Company.

On August 15, 2014, a total of 186,000 shares of Series BB Preferred Stock was issued to two officers and one of our founders upon their surrender of a total of 9,300,000 shares of common stock.

The issuance of the shares of Series BB Preferred Stock was made in reliance upon an exemption from registration pursuant to Section 4(a)(2) under the Securities Act. The Company’s reliance upon Section 4(a)(2) of the Securities Act was based in part upon the following factors: (a) the issuance of the securities was in connection with isolated private transactions which did not involve any public offering; (b) there were a limited number of offerees; (c) there were no subsequent or contemporaneous public offerings of the securities by us; (d) the securities were not broken down into smaller denominations; and (e) the negotiations for the sale of the securities took place directly between the offeree and the Company.

Item 3.  Defaults Upon Senior Securities

As indicated in Note 5 to our condensed consolidated financial statements, several of our convertible debentures are delinquent as of September 30, 2014.  We believe we have good relationships with the debenture holders, and continue to have discussions with them regarding the extension of maturity dates.

Item 4.  Mine Safety Disclosures

Not applicable.

Item 5.  Other Information

On September 24, 2014, stockholders holding a majority of the voting power of the outstanding voting stock of the Company, as well as the Company’s Board of Directors, acted by written consent to approve an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 50,000,000 to 500,000,000.

Item 6.  Exhibits

Exhibit No.	Description
2.1	Share Exchange Agreement (Incorporated by reference from Exhibit 2.1 to Form S-1/A filed with the SEC on February 13, 2012).
3.1	Articles of Incorporation, as amended. (Incorporated by reference from Exhibit 3.1 to Form 10-KSB filed with SEC on March 31, 1998).

26

3.2	Certificate of Amendment to Articles of Incorporation (dated July 15, 2011) (Incorporated by reference from Exhibit 2.1 to Form S-1 filed with SEC on November 10, 2011).
3.3	Certificate of Change filed Pursuant to NRS 78.209 (filed July 26, 2011) (Incorporated by reference from Exhibit 2.1 to Form S-1 filed with SEC on November 10, 2011).
3.4	Bylaws (Incorporated by reference from Exhibit 3.2 to Form 10-KSB filed with SEC on March 31, 1998).
3.5	Amended and Restated Bylaws (Incorporated by reference from Exhibit 3.9 to Form 8-K filed with the SEC on June 20, 2014).
3.6	Certificate of Amendment to Articles of Incorporation, dated September 4, 2014 (Incorporated by reference from Exhibit 3.1 to Form 8-K filed with the SEC on September 30, 2014.
3.7	Certificate of Designation of Rights, Preferences and Privileges for Series AA Preferred Stock (incorporated by reference from Exhibit 3.8 to Form 8-K filed with the SEC on June 20, 2014).
3.8	Certificate of Designation of Rights, Preferences and Privileges for Series BB Preferred Stock (Incorporated by reference from Exhibit 3.7 to Form 10-Q filed with the SEC on August 14, 2014).
10.1	Form of 14% Convertible Debenture (Incorporated by reference from Exhibit 10.7 to Form 10-K filed with SEC on April 14, 2014).
31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14.*
31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14*
32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.*
101.INS	XBRL Instance**
101.SCH	XBRL Schema**
101.CAL	XBRL Calculations**
101.DEF	XBRL Definitions**
101.LAB	XBRL Label**
101.PRE	XBRL Presentation**

*Filed herewith.

** The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

27

SIGNATURES

Pursuant to the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ONE WORLD HOLDINGS, INC.
Date:           November 12, 2014	By:	/s/ Corinda Joanne Melton
		Name:  Corinda Joanne Melton
		Title:  President and Chief Executive Officer
Date:           November 12, 2014	By:	/s/ Dennis P. Gauger
		Name:  Dennis P. Gauger
		Title:  Chief Financial Officer

28

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Corinda J. Melton, certify that:

1.   I have reviewed this Quarterly Report of One World Holdings, Inc. on Form 10-Q for the period ending September 30, 2014;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:           November 12, 2014	By: /s/ Corinda Joanne Melton
	Corinda Joanne Melton
	President and Chief Executive Officer       (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Dennis P. Gauger, certify that:

1.   I have reviewed this Quarterly Report of One World Holdings, Inc. on Form 10-Q for the period ending September 30, 2014;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:           November 12, 2014	By: /s/ Dennis P. Gauger
	Dennis P. Gauger
	Chief Financial Officer
	(Principal Accounting and Financial Officer)

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of One World Holdings, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Corinda Joanne Melton, Chief Executive Officer, and Dennis P. Gauger, Chief Financial Officer, on the date indicated below, hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

1.           The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date:  November 12, 2014	By: /s/ Corinda Joanne Melton
	Corinda Joanne Melton
	President and Chief Executive Officer
	(Principal Executive Officer)

Date:  November 12, 2014	By: /s/ Dennis P. Gauger
	Dennis P. Gauger
	Chief Financial Officer
	(Principal Accounting and Financial Officer)

A signed original of this written statement required by Section 906, or other document authentications, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to One World Holdings, Inc. and will be retained by One World Holdings, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Note 10 - Stock Options and Warrants: Schedule of Stock Option and Warrant, Activity (Details) (USD $)	9 Months Ended
	Sep. 30, 2014
Granted	3,000,000
Stock Options and Warrants
Outstanding, Beginning Balance	0
Outstanding, Weighted Average Exercise Price, Beginning Balance	$ 0
Granted	4,977,267
Granted, Weighted Average Exercise Price	$ 0.03
Exercised	0
Exercised, Weighted Average Exercise Price	$ 0
Cancelled	0
Cancelled, Weighted Average Exercise Price	$ 0
Outstanding, Vested and Exercisable, Ending Balance	4,977,267
Outstanding, Vested and Exercisable, Weighted Average Exercise Price, Ending Balance	$ 0.03
Outstanding, Vested and Exercisable, Weighted Average Remaining Term in Years	4 years 6 months

XML

Note 6 - Notes Payable (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Notes payable	$ 116,000	$ 91,000
Minimum
Interest Rate	0.00%
Maximum
Interest Rate	16.00%

XML

Note 10 - Stock Options and Warrants: Fair Value Assumptions Text Block (Tables) (Stock Options and Warrants)

9 Months Ended

Sep. 30, 2014

Stock Options and Warrants

Fair Value Assumptions Text Block

Risk-free interest rate	1.58 - 1.75%
Expected life in years	5.0
Dividend yield	0%
Expected volatility	552.0%

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Note 12- Related Party Transactions (Details) (USD $)	6 Months Ended			9 Months Ended
	Jun. 30, 2014	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Founder, stockholder	Sep. 30, 2014 Family of officers and directors	Sep. 30, 2014 Total related parties	Sep. 30, 2014 Family member of Executive Officers 1	Sep. 30, 2014 Family member of Executive Officers 2	Sep. 30, 2014 Family member of Executive Officers 3	Sep. 30, 2014 Family member of Executive Officers 3A	Sep. 30, 2014 Family member of Executive Officers	Sep. 30, 2014 Family member of Executive Officers Minimum	Sep. 30, 2014 Family member of Executive Officers Maximum
Professional Fees	$ 1,639,775			$ 108,287	$ 182,597	$ 290,884
Convertible debentures, net of discount		1,191,953	592,095				5,000	12,500	46,600	8,000
Conversion Price												$ 0.01	$ 30
Accrued interest payable		$ 240,951	$ 113,369								$ 20,895

XML

Note 9 - Stockholders' Deficit (Details) (USD $)				9 Months Ended
	Sep. 30, 2014	Sep. 23, 2014	Dec. 31, 2013	Sep. 30, 2014 Common Stock	Sep. 30, 2014 Series BB Preferred Stock	Sep. 30, 2014 Series AA Preferred Stock
Common Stock, shares authorized	500,000,000	50,000,000	500,000,000
Total shares issued during the period				37,510,802		20,000
Common Stock, Shares Subscribed but Unissued	0		39,668	39,668
Stock Issued During Period, Shares, Reverse Stock Splits				388
Stock Issued During Period, Shares, Issued for Services				20,740,000
Stock Issued During Period, Value, Issued for Services				$ 2,038,345
Stock Issued During Period, Shares, Conversion of Convertible Securities				16,730,746
Increased common stock for common shares issued in conversion of debt				1,082,656
Conversion of Stock, Shares Converted				9,300,000
Conversion of Stock, Amount Converted				23,250
Shares of Preferred Stock in Exchange for Common Stock					186,000
Preferred Stock, Shares Authorized	10,000,000		10,000,000		1,000,000	1,000,000
Preferred Stock, Terms						Series AA Preferred Stock allows holders thereof enhanced voting rights based on ten thousand (10,000) votes per share of the Company’s common stock held by such holders of Series AA Preferred Stock. The Series AA Preferred Stock is not convertible into common stock, does not pay dividends, and does not include a liquidation preference.
Stock Issued During Period, Value, New Issues						$ 80
Convertible Preferred Stock, Shares Issued upon Conversion					50

XML

Note 4 - Income (loss) Per Share

9 Months Ended

Sep. 30, 2014

Notes

Note 4 - Income (loss) Per Share

NOTE 4 – INCOME (LOSS) PER SHARE

The computation of basic income (loss) per common share is based on the weighted average number of shares outstanding during each period.

The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the common stock equivalents that would arise from the exercise of stock options and warrants outstanding, using the treasury stock method and the average market price per share during the period.  Common stock equivalents are not included in the diluted loss per share calculation when their effect is anti-dilutive.

Since we had no dilutive effect of stock options and warrants for the three months and nine months ended September 30, 2014 and 2013, our basic weighted average number of common shares outstanding is the same as our diluted weighted average number of common shares outstanding.

At September 30, 2014, we had outstanding stock options and warrants for a total of 4,977,267 shares of common stock that would have a potential dilutive effect on our calculation of income (loss) per share.

XML

Note 13 - Supplemental Statement of Cash Flows Information (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Income Taxes Paid	$ 0
Interest Paid	64,277
Increase in convertible debentures and prepaid consulting services	60,000
Increase in additional paid-incapital and debt discount	730,073
Adjustments to Additional Paid in Capital, Stock Split	(1)
Increase (Decrease) In Debt Discount and Derivative Liabilities	760,002
Increase in prepaid consulting	2,038,345
Decrease in accrued interest payable	(163,580)	(76,859)
Decreased convertible debentures	107,433	534
Decrease in derivative liabilities	475,341
Non-cash Financing Activities
Decrease in accrued interest payable	5,267
Decreased convertible debentures	140,463
Decreased debt discount	69,700
Stockholder Advances
Increased convertible debentures	50,000
Accrued Interest Payable | Non-cash Financing Activities
Increased convertible debentures	30,731
Common Stock
Increased common stock	99
Increase in prepaid consulting	51,850
Increased common stock for common shares issued in conversion of debt	1,082,656
Conversion of Stock, Amount Converted	23,250
Common Stock | Non-cash Financing Activities
Increased common stock for common shares issued in conversion of debt	41,828
Increase to additional paid-in capital for shares issued during period	1,040,828
Conversion of Stock, Amount Converted	23,250
Additional Paid-in Capital
Increase in prepaid consulting	1,986,495
Series BB Preferred Stock | Non-cash Financing Activities
Increased common stock	186
Increase to additional paid-in capital for shares issued during period	$ 23,064

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Note 4 - Income (loss) Per Share (Details) (Stock Options and Warrants)	9 Months Ended
	Sep. 30, 2014
Stock Options and Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	4,977,267

XML

Note 3 - Fair Value of Financial Instruments (Details) (USD $)	Sep. 30, 2014
Liabilities, Fair Value Disclosure, Recurring	$ 3,869,714
Fair Value, Inputs, Level 1
Liabilities, Fair Value Disclosure, Recurring	0
Fair Value, Inputs, Level 2
Liabilities, Fair Value Disclosure, Recurring	0
Fair Value, Inputs, Level 3
Liabilities, Fair Value Disclosure, Recurring	3,869,714
Derivative Financial Instruments, Liabilities
Liabilities, Fair Value Disclosure, Recurring	2,642,968
Derivative Financial Instruments, Liabilities | Fair Value, Inputs, Level 1
Liabilities, Fair Value Disclosure, Recurring	0
Derivative Financial Instruments, Liabilities | Fair Value, Inputs, Level 2
Liabilities, Fair Value Disclosure, Recurring	0
Derivative Financial Instruments, Liabilities | Fair Value, Inputs, Level 3
Liabilities, Fair Value Disclosure, Recurring	2,642,968
Convertible debentures
Liabilities, Fair Value Disclosure, Recurring	1,191,953
Convertible debentures | Fair Value, Inputs, Level 1
Liabilities, Fair Value Disclosure, Recurring	0
Convertible debentures | Fair Value, Inputs, Level 2
Liabilities, Fair Value Disclosure, Recurring	0
Convertible debentures | Fair Value, Inputs, Level 3
Liabilities, Fair Value Disclosure, Recurring	1,191,953
Current portion of long-term debt
Liabilities, Fair Value Disclosure, Recurring	20,245
Current portion of long-term debt | Fair Value, Inputs, Level 1
Liabilities, Fair Value Disclosure, Recurring	0
Current portion of long-term debt | Fair Value, Inputs, Level 2
Liabilities, Fair Value Disclosure, Recurring	0
Current portion of long-term debt | Fair Value, Inputs, Level 3
Liabilities, Fair Value Disclosure, Recurring	20,245
Long-term debt
Liabilities, Fair Value Disclosure, Recurring	14,548
Long-term debt | Fair Value, Inputs, Level 1
Liabilities, Fair Value Disclosure, Recurring	0
Long-term debt | Fair Value, Inputs, Level 2
Liabilities, Fair Value Disclosure, Recurring	0
Long-term debt | Fair Value, Inputs, Level 3
Liabilities, Fair Value Disclosure, Recurring	$ 14,548

XML

Note 15 - Subsequent Events (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Proceeds from convertible debentures	$ 997,235	$ 526,000
Subsequent Event
Proceeds from Issuance of Debt	68,000
Proceeds from convertible debentures	50,000
Debt Conversion, Original Debt, Amount	34,825
Loss Contingency, Damages Sought, Value	57,627
Subsequent Event | Common Stock
Debt Conversion, Converted Instrument, Shares Issued	19,433,774
Subsequent Event | Investor
Proceeds from Issuance of Debt	$ 18,000

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Note 5 - Convertible Debentures (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Proceeds from convertible debentures	$ 997,235	$ 526,000
Amortization of debt discount to interest expense	1,068,942	203,919
Derivative liability	2,642,968		2,104,849
Common Stock
Debt Instrument, Convertible, Number of Equity Instruments	241,019,000
Minimum
Interest Rate	0.00%
Maximum
Interest Rate	16.00%
Services
Debt Instrument, Face Amount	95,000
Stockholder Advances
Debt Instrument, Face Amount	50,000
Accrued Interest Payable
Debt Instrument, Face Amount	30,731
Original Issue Discount
Debt Instrument, Face Amount	$ 46,000
Convertible debentures | Minimum
Interest Rate	6.00%
Conversion Price	$ 0.0025
Convertible debentures | Maximum
Interest Rate	22.00%
Conversion Price	$ 30.00

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Note 5 - Convertible Debentures: Schedule of Derivative Liabilities (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Derivative liability	$ 2,642,968		$ 2,642,968		$ 2,104,849
Gain (Loss) on Derivative Liability			354,442	1,311,620
Interest expense	465,311	182,084	1,728,367	302,962
Convertible debentures
Derivative liability	2,642,968		2,642,968		2,104,849
Debt Discount	(787,970)		(787,970)		(408,194)
Gain (Loss) on Derivative Liability			354,442
Gain on Extinguishment of Debt			(470,480)
Interest expense			(1,061,124)
Convertible debentures | Adjustment to derivative liability
Derivative liability	(1,093,610)		(1,093,610)
Debt Discount	0		0
Gain (Loss) on Derivative Liability			1,093,610
Gain on Extinguishment of Debt			0
Interest expense			0
Convertible debentures | Debt discount
Derivative liability	2,208,054		2,208,054
Debt Discount	(801,502)		(801,502)
Gain (Loss) on Derivative Liability			(1,448,052)
Gain on Extinguishment of Debt			0
Interest expense			0
Convertible debentures | Original Issue Discount
Derivative liability	0		0
Debt Discount	(4,500)		(4,500)
Gain (Loss) on Derivative Liability			0
Gain on Extinguishment of Debt			0
Interest expense			0
Convertible debentures | Beneficial Conversion Feature
Derivative liability	0		0
Debt Discount	(730,073)		(730,073)
Gain (Loss) on Derivative Liability			0
Gain on Extinguishment of Debt			0
Interest expense			0
Convertible debentures | Amortization of debt discount to interest expense
Derivative liability	0		0
Debt Discount	1,061,124		1,061,124
Gain (Loss) on Derivative Liability			0
Gain on Extinguishment of Debt			0
Interest expense			(1,061,124)
Convertible debentures | Debt conversions and repayments
Derivative liability	(576,325)		(576,325)
Debt Discount	95,175		95,175
Gain (Loss) on Derivative Liability			0
Gain on Extinguishment of Debt			(470,480)
Interest expense			$ 0

XML

Note 3 - Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2014

Notes

Note 3 - Fair Value of Financial Instruments

NOTE 3 – FAIR VALUE OF FINANCIAL INSTRUMENTS

Disclosures about fair value of financial instruments require disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value.  As of September 30, 2014 and December 31, 2013, we believe the amounts reported for cash, accounts payable and accrued expenses, accrued interest payable, and notes payable approximate fair value because of the short-term nature of these financial instruments.

We adopted ASC Topic 820 (originally issued as SFAS 157, “Fair Value Measurements”) for financial instruments measured as fair value on a recurring basis.  ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States, and expands disclosures about fair value measurements.

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.  ASC Topic 820 established a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements).  These tiers include:

• Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
• Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
• Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Liabilities measured at fair value on a recurring basis are as follows at September 30, 2014:

	Total	Level 1	Level 2	Level 3
Derivative liability	$2,642,968	$-	$-	$2,642,968
Convertible debentures	1,191,953	-	-	1,191,953
Current portion of long-term debt	20,245	-	-	20,245
Long-term debt, net of current portion	14,548	-	-	14,548
Total liabilities measured at fair value	$3,869,714	$-	$-	$3,869,714

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Note 5 - Convertible Debentures: Fair Value Assumptions Text Block (Details) (Derivative Liability, USD $)	9 Months Ended
	Sep. 30, 2014
Dividend yield	0.00%
Minimum
Risk-free interest rate	0.02%
Expected life in years	3 months
Expected volatility	266.99%
Maximum
Risk-free interest rate	0.58%
Expected life in years	1 year 11 months 5 days
Expected volatility	514.66%
Common Stock
Share Price	$ 0.0189

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Note 10 - Stock Options and Warrants: Fair Value Assumptions Text Block (Details) (Stock Options and Warrants)	9 Months Ended
	Sep. 30, 2014
Expected life in years	5 years
Dividend yield	0.00%
Expected volatility	552.00%
Minimum
Risk-free interest rate	1.58%
Maximum
Risk-free interest rate	1.75%

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Condensed Consolidated Balance Sheets (Unaudited) (USD $)	Sep. 30, 2014		Dec. 31, 2013
Current assets:
Cash	$ 89,299		$ 6,456
Inventories	133,941		146,488
Prepaid consulting services	248,356		380,860
Prepaid expenses and other current assets	12,860		21,570
Total current assets	484,456		555,374
Property and equipment, net	56,000		66,500
Other assets	2,701		2,701
Total	543,157		624,575
Current liabilities:
Accounts payable and accrued expenses	1,110,855		870,291
Accrued interest payable	240,951		113,369
Convertible debentures, net of discount	1,191,953		592,095
Derivative liability	2,642,968		2,104,849
Notes payable	116,000		91,000
Current portion of long-term debt, net of discount	20,245		13,979
Stockholder advances	544,439		405,939
Total current liabilities	5,867,411		4,191,522
Long-term debt, net of current portion and discount	14,548		9,106
Total liabilities	5,881,959		4,200,628
Stockholders' deficit:
Common stock; $0.0025 par value, 500,000,000 shares authorized, 29,435,392 and 1,224,590 shares issued and outstanding, respectively	73,589		3,061
Preferred Stock, $0.001 par value, 10,000,000 shares authorized	266
Unissued common stock, 0 and 39,668 shares, respectively			99
Additional paid-in capital	10,561,914		6,146,595
Accumulated deficit	(15,974,571)		(9,725,808)
Total stockholders' deficit	(5,338,802)		(3,576,053)
Total Liabilities And Stockholders' Deficit	543,157		624,575
Series AA Preferred Stock
Stockholders' deficit:
Preferred Stock, $0.001 par value, 10,000,000 shares authorized	80	[1]		[1]
Series BB Preferred Stock
Stockholders' deficit:
Preferred Stock, $0.001 par value, 10,000,000 shares authorized	$ 186	[2]		[2]

[1] Preferred stock, $0.001 par value, 10,000,000 shares authorized: Series AA, 80,000 and 0 shares issued and outstanding, respectively

[2] Series BB, 186,000 and 0 shares issued and outstanding, respectively

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Note 1 - Description of Business and Basis of Financial Statement Presentation

9 Months Ended

Sep. 30, 2014

Notes

Note 1 - Description of Business and Basis of Financial Statement Presentation

NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF FINANCIAL STATEMENT PRESENTATION

Organization, Nature of Business

One World Holdings, Inc. (the "Company"), a Nevada Corporation, is a Houston based company focused on doll design and marketing.  Substantially all of the Company's operations are conducted through its wholly owned subsidiary, The One World Doll Project, Inc. (a Texas Corporation - "OWDPI"). OWDPI began operations on October 1, 2010, and on January 14, 2011, OWDPI was incorporated in the State of Texas.  The accompanying consolidated financial statements are presented as if OWDPI was a corporation from inception.  National Fuel and Energy, Inc. (a Texas Corporation) is a wholly owned subsidiary of the Company that has been dormant since its inception on October 1, 2010. Additionally, on July 21, 2011, we completed a reverse merger whereby OWDPI was recapitalized and became the reporting entity for accounting purposes.  In October 2013, we received our first shipment of dolls from our manufacturer and commenced sales of dolls.

Reverse Stock Split and Increase in the Number of Authorized Common Shares

Stockholders holding a majority of the voting power of the outstanding voting stock of the Company, as well as the Company’s Board of Directors, acted by written consent to approve an amendment to the Company’s Articles of Incorporation dated December 30, 2013 to (a) effect a reverse stock split of the Company’s common stock by a ratio of one-for-seven hundred fifty (1:750) and (b) reduce the number of authorized shares of common stock from 1,500,000,000 to 50,000,000.  The Financial Industry Regulatory Authority (“FINRA”) approved the reverse stock split effective January 13, 2014  The reverse stock split has been given retroactive effect in our consolidated financial statements.

Subsequently on September 24, 2014, stockholders holding a majority of the voting power of the outstanding voting stock of the Company, as well as the Company’s Board of Directors, acted by written consent to approve an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 50,000,000 to 500,000,000.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, OWDPI and National Fuel and Energy, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.

Interim Financial Information

The interim financial information of the Company as of September 30, 2014 and for the three months and nine months ended September 30, 2014 and 2013 is unaudited, and the balance sheet as of December 31, 2013 is derived from audited financial statements.  The accompanying condensed consolidated financial statements have been prepared in accordance with U. S. generally accepted accounting principles for interim financial statements.  Accordingly, they omit or condense notes and certain other information normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles.  The accounting policies followed for quarterly financial reporting conform with the accounting policies disclosed in Note 2 to the Notes to Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2013.  In the opinion of management, all adjustments necessary for a fair presentation of the financial information for the interim periods reported have been made.  All such adjustments are of a normal recurring nature.  The results of operations for the three months and nine months ended September 30, 2014 are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2014.  The unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013.

Certain amounts in the condensed consolidated financial statements for the three months and nine months ended September 30, 2013 have been reclassified to conform to the current year presentation.

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Note 8 - Long-term Debt: Schedule of Debt (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Details
Long-term convertible debenture, net of discount of $85,109(Note 5)	$ 8,891
Long-term note payable, net of discount of $4,098	25,902
Total	34,793
Current portion	20,245	13,979
Long-term debt	$ 14,548	$ 9,106

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Note 5 - Convertible Debentures: Fair Value Assumptions Text Block (Tables) (Derivative Liability)

9 Months Ended

Sep. 30, 2014

Derivative Liability

Fair Value Assumptions Text Block

Market price of stock	$0.0189
Risk-free interest rate	0.02% - 0.58%
Expected life in years	0.25 - 1.93
Dividend yield	0%
Expected volatility	266.99% - 514.66%

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Note 8 - Long-term Debt (Details) (USD $)	9 Months Ended
	Sep. 30, 2014
Note 1
Debt Instrument, Face Amount	$ 30,000
Debt Instrument, Payment Terms	Payment terms for the note payable are $350 per month for six months and $698 per month for sixty months, including interest.
Unsecured Debt
Interest Rate	14.00%

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Note 10 - Stock Options and Warrants: Schedule of Stock Option and Warrant, Activity (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Schedule of Stock Option and Warrant, Activity

	Options	Weighted Average Exercise Price	Weighted Average Remaining Contract Term
Outstanding at December 31, 2013	-	-
Granted	4,977,267	$0.03
Exercised	-	-
Expired or cancelled	-	-
Outstanding, vested and exercisable    at September 30, 2014	4,977,267	$0.03	4.50

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Note 2 - Going Concern

9 Months Ended

Sep. 30, 2014

Notes

Note 2 - Going Concern

NOTE 2 – GOING CONCERN

The Company has incurred operating losses since inception, only recently began sales of its dolls, and has limited financial resources and a working capital deficit of $5,382,955 at September 30, 2014.  These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company's condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  In addition, the Company had an accumulated deficit of $15,974,571 and a total stockholders’ deficit of $5,338,802 at September 30, 2014. The Company's ability to continue as a going concern is dependent upon its ability to develop additional sources of capital and, ultimately, achieve profitable operations.  Management’s plans to address the Company’s continuing existence include obtaining debt or equity funding from private or institutional sources or obtaining loans from financial institutions and individuals, where possible.  The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Common Stock, par or stated value	$ 0.0025	$ 0.0025
Common Stock, shares authorized	500,000,000	500,000,000
Common Stock, shares issued	29,435,392	1,224,590
Common Stock, shares outstanding	29,435,392	1,224,590
Common Stock, unissued	0	39,668
Preferred Stock, Par Value	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Series AA Preferred Stock
Preferred Stock, Par Value	$ 0.001	$ 0.001
Preferred Stock, shares issued	80,000	0
Preferred Stock, shares outstanding	80,000	0
Series BB Preferred Stock
Preferred Stock, Par Value	$ 0.001	$ 0.001
Preferred Stock, shares issued	186,000	0
Preferred Stock, shares outstanding	186,000	0

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Note 12- Related Party Transactions

9 Months Ended

Sep. 30, 2014

Notes

Note 12- Related Party Transactions

NOTE 12– RELATED PARTY TRANSACTIONS

Several of the consulting agreements discussed in Note 11 are with related parties.  Related parties consist primarily of our executive officers, directors and individuals affiliated through family relationships with our officers and directors.  Compensation expense paid in common shares to related parties was $1,639,775 during the nine months ended September 30, 2014.

            In addition to compensation expense paid in stock, we had the following amounts paid for consulting and professional fees to related parties during the nine months ended September 30, 2014:

Founder, stockholder	$108,287
Family of officers and directors	182,597
Total related parties	$290,884

As of September 30, 2014, we had convertible debentures of $5,000, $12,500, $46,600 and $8,000, which are further discussed in Note 5, payable to three family members of our executive officers. The outstanding principal and interest are convertible into shares of our common stock at a conversion prices ranging from $0.01 to $30 per share.

Accrued interest payable to these related parties totaled $20,895 at September 30, 2014.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 14, 2014
Document and Entity Information:
Entity Registrant Name	ONE WORLD HOLDINGS, INC.
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Amendment Flag	false
Entity Central Index Key	0001017616
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Entity Common Stock, Shares Outstanding		48,869,166
Date of Incorporation	Jan. 14, 2011

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Note 13 - Supplemental Statement of Cash Flows Information

9 Months Ended

Sep. 30, 2014

Notes

Note 13 - Supplemental Statement of Cash Flows Information

NOTE 13 – SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

            During the nine months ended September 30, 2014, we made no cash payments for income taxes.

            During the nine months ended September 30, 2014 and 2013, we made cash payments for interest totaling $64,277.

            During the nine months ended September 30, 2014, we had the following non-cash financing and investing activities:

·         Increased convertible debentures and prepaid consulting services by $60,000.

·         Increased additional paid-in capital and debt discount by $730,073 for beneficial conversion feature of convertible notes payable.

·         Increased common stock and decreased additional paid-in capital by $1 for rounding up of shares in reverse stock split.

·         Increased debt discount and derivative liability by $760,002.

·         Decreased unissued common stock and increased common stock by $99.

·         Decreased stockholder advances and increased convertible debentures by $50,000.

·         Increased prepaid consulting services by $2,038,345, increased common stock by $51,850 and increased additional paid-in capital by $1,986,495 for common shares issued for services.

·         Decreased accrued interest payable by $5,267, decreased convertible debentures by $140,463, decreased debt discount by $69,700, decreased derivative liability by $475,341, increased common stock by $41,828 and increased additional paid-in capital by $1,040,828 for common shares issued in conversion of debt.

·         Decreased accrued interest payable and increased convertible debentures by $30,731 for accrued interest payable added to debt principal.

·         Increased Series BB Preferred stock by $186, decreased common stock by $23,250 and increased additional paid-in capital by $23,064 for issuance of Series BB Preferred shares for common shares.

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Condensed Consolidated Statements of Operations (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Statement
Sales	$ 5,692		$ 34,860
Cost of sales	13,988		34,861
Gross deficit	(8,296)		(1)
Operating expenses:
Selling, general and administrative	550,805	588,544	3,583,083	1,458,590
Research and development	93,268	1,725	101,890	76,021
Depreciation	3,500		10,500
Total operating expenses	647,573	590,269	3,695,473	1,534,611
Loss from operations	(655,869)	(590,269)	(3,695,474)	(1,534,611)
Other income (expense):
Interest expense	(465,311)	(182,084)	(1,728,367)	(302,962)
Loss on derivative liability	(513,535)	(1,188,211)	(354,442)	(1,311,620)
Gain (loss) on debt settlement	67,661	(579,310)	(470,480)	(876,484)
Total other expense	(911,185)	(1,949,605)	(2,553,289)	(2,491,066)
Loss before income taxes	(1,567,054)	(2,539,874)	(6,248,763)	(4,025,677)
Provision for income taxes
Net loss	$ (1,567,054)	$ (2,539,874)	$ (6,248,763)	$ (4,025,677)
Net loss per common share - basic and diluted	$ (0.06)	$ (6.80)	$ (0.36)	$ (20.80)
Weighted average number of common shares outstanding - basic and diluted	25,635,511	373,373	17,238,381	193,538

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Note 7 - Stockholder Advances

9 Months Ended

Sep. 30, 2014

Notes

Note 7 - Stockholder Advances

NOTE 7 – STOCKHOLDER ADVANCES

Since the inception of the Company, we have relied on cash advances from certain stockholders to fund our operations.  These advances generally have no specified repayment terms and no stated rate of interest.  All advances are considered by us to be due on demand until such time as the advances are converted into notes payable, issuances of shares of our common stock or other formal repayment arrangements.  At September 30, 2014, stockholder advances totalled $544,439.

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Note 6 - Notes Payable

9 Months Ended

Sep. 30, 2014

Notes

Note 6 - Notes Payable

NOTE 6 – NOTES PAYABLE

As of September 30, 2014, we had short-term notes payable to six individuals totalling $116,000.  These notes are unsecured, payable to non-related parties and bear interest ranging from 0% to 16% per annum.

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Note 8 - Long-term Debt: Schedule of Debt (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Schedule of Debt

Long-term convertible debentures,    net of discount of $58,109 (see Note 5)	$8,891
Long-term note payable, net of discount of $4,098	25,902
Total	34,793
Current portion	20,245
Long-term debt	$14,548

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Note 14 - Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2014

Notes

Note 14 - Recent Accounting Pronouncements

NOTE 14 – RECENT ACCOUNTING PRONOUNCEMENTS

In June 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. The amendments in this Update remove the financial statement distinction between development stage entities and other reporting entities from U.S. generally accepted accounting principles (“GAAP”).  In addition, the amendments eliminate the requirements for development stage entities to: (1) present inception-to-date information in the statements of income, cash flows and shareholder equity; (2) label the financial statements as those of a development stage entity; (3) disclose a description of the development stage activities in which the entity is engaged; and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.

For public entities, the amendments are effective for annual reporting periods beginning after December 15, 2014, and interim periods therein.  Early application of each of the amendments is permitted for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued.  The Company adopted the provisions of ASU No. 2014-10 during its third fiscal quarter ended September 30, 2014, with no material impact on its consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 310-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.  The amendments in this Update provide guidance in GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures.  In doing so, the amendments are intended to reduce diversity in the timing and content of footnote disclosures.  The amendments are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter.  Early application is permitted.  The Company has not determined the impact of the future adoption of the provisions of ASU No. 2014-15 on its consolidated financial statements.

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Note 10 - Stock Options and Warrants

9 Months Ended

Sep. 30, 2014

Notes

Note 10 - Stock Options and Warrants

NOTE 10 – STOCK OPTIONS AND WARRANTS

            During the nine months ended September 30, 2014, we issued warrants to purchase 1,977,267 shares of our common stock to a lender.  The warrants are exercisable for a period of five years at an exercise price of $0.06 per share.  We estimated the value of the warrants using the Black-Scholes pricing model at $394,860 and included this amount in interest expense.

During the nine months ended September 30, 2014, we issued options to purchase 3,000,000 shares of our common stock to a consultant.  The options are exercisable for a period of five years at an exercise price of $0.01 per share.  We estimated the value of the options using the Black-Scholes pricing model at $240,000 and included this amount in selling, general and administrative expenses.

The following table summarizes the stock option and warrant activity during the nine months ended September 30, 2014:

	Options	Weighted Average Exercise Price	Weighted Average Remaining Contract Term
Outstanding at December 31, 2013	-	-
Granted	4,977,267	$0.03
Exercised	-	-
Expired or cancelled	-	-
Outstanding, vested and exercisable    at September 30, 2014	4,977,267	$0.03	4.50

In estimating the fair value of the stock options and warrants issued during the nine months ended September 30, 2014, we used the Black-Scholes pricing model with the following range of assumptions:

Risk-free interest rate	1.58 - 1.75%
Expected life in years	5.0
Dividend yield	0%
Expected volatility	552.0%

On May 12, 2014, the Board of Directors of the Company adopted and approved the One World Holdings Inc. 2014 Stock Option and Stock Award Plan (the “Plan”).  Also, the holders of a majority of the Company’s outstanding common stock voted to approve and authorize adoption of the Plan.  A total of 2,000,000 shares of our common stock are available for issuance under the Plan.  Under the Plan, we may issue options, including incentive stock options and non-statutory stock options, restricted stock grants, or stock appreciation rights.  Awards under the Plan may be granted to employees, consultants, directors and individuals who meet the requirements defined in the Plan.

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Note 8 - Long-term Debt

9 Months Ended

Sep. 30, 2014

Notes

Note 8 - Long-term Debt

NOTE 8 – LONG-TERM DEBT

Our long-term debt consisted the following at September 30, 2014:

Long-term convertible debentures,    net of discount of $58,109 (see Note 5)	$8,891
Long-term note payable, net of discount of $4,098	25,902
Total	34,793
Current portion	20,245
Long-term debt	$14,548

 The long-term note payable is an unsecured note payable of $30,000 to an individual due July 30, 2016, with interest at 14% per annum.  Payment terms for the note payable are $350 per month for six months and $698 per month for sixty months, including interest. We are in default on the note payable at September 30, 2014 due to our failure to make timely payments in accordance with the terms of the note agreement.

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Note 9 - Stockholders' Deficit

9 Months Ended

Sep. 30, 2014

Notes

Note 9 - Stockholders' Deficit

NOTE 9 – STOCKHOLDERS’ DEFICIT

As discussed in Note 1, stockholders holding a majority of the voting power of the our outstanding voting stock, as well as our Board of Directors, approved an amendment to our Articles of Incorporation dated December 30, 2013 to (a) effect  a reverse stock split of our common stock by a ratio of one-for-seven hundred fifty (1:750) and (b) reduce the number of authorized shares of common stock from 1,500,000,000 to 50,000,000.  The Financial Industry Regulatory Authority (“FINRA”) approved the reverse stock split effective January 13, 2014, and the reverse stock split has been given retroactive effect in our consolidated financial statements for all periods presented.

Subsequently on September 24, 2014, stockholders holding a majority of the voting power of the outstanding voting stock of the Company, as well as the Company’s Board of Directors, acted by written consent to approve an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 50,000,000 to 500,000,000.

During the nine months ended September 30, 2014, we issued a total of 37,510,802 shares of our common stock: 39,668 shares at par value for 39,668 unissued common shares; 388 shares valued at $1 for rounding in the reverse stock split; 20,740,000 shares valued at $2,038,345 for services; and 16,730,746 shares with a total value of $1,082,656 for conversion of debt.   We also cancelled 9,300,000 shares of common stock, valued at par value of $23,250, when exchanged by officers and one of our founders for 186,000 shares of Series BB Preferred Stock.

On June 13, 2014, the Company filed a Certificate of Designations, Preferences and Rights (the “Certificate”) with the Nevada Secretary of State to establish a class of preferred stock designated as Series AA Preferred Stock (the “Series AA Preferred Stock”), and has authorized the issuance of up to 1,000,000 shares of such Series AA Preferred Stock.  Among other things, the Series AA Preferred Stock allows holders thereof enhanced voting rights based on ten thousand (10,000) votes per share of the Company’s common stock held by such holders of Series AA Preferred Stock.  The Series AA Preferred Stock is not convertible into common stock, does not pay dividends, and does not include a liquidation preference.

On June 19, 2014, 20,000 shares of Series AA Preferred Stock were issued to each of the four members of the Company’s Board of Directors for services and valued at par value totaling $80.

On July 31, 2014, the Company filed a Certificate of Designations, Preferences and Rights (the “Certificate”) with the Nevada Secretary of State to establish a class of preferred stock designated as Series BB Preferred Stock (the “Series BB Preferred Stock”), and has authorized the issuance of up to 1,000,000 shares of such Series BB Preferred Stock.  Among other things, the Series BB Preferred Stock allows holders thereof voting rights equal to holders of common stock as a single class with respect to all matters submitted to holders of common stock, quarterly dividends payable in arrears in either cash or in kind, liquidation preferences, and is convertible at the option of the holder into 50 common shares of the Company.

            On August 15, 2014, a total of 186,000 shares of Series BB Preferred Stock was issued to two officers and one of our founders upon their surrender of a total of 9,300,000 shares of common stock.

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Note 11 - Prepaid Consulting Services

9 Months Ended

Sep. 30, 2014

Notes

Note 11 - Prepaid Consulting Services

NOTE 11 – PREPAID CONSULTING SERVICES

We have entered into various consulting agreements for financial and business development services to the Company.  Certain of these consulting agreements provide for cash compensation to the consultants; however, most are based on issuances of shares of our common stock in exchange for services.

Under the consulting agreements that provide for share issuances, shares were generally issued at the inception of the agreements for services provided. There were no specified performance requirements and no provision in the agreements for return of the shares.  During the nine months ended September 30, 2014, total compensation expense paid in common shares was $2,230,850.  Compensation expense is calculated based on the market price of the stock on the effective date of agreement and amortized over the period over which the services are provided to the Company.   As of September 30, 2014, the unamortized compensation was $248,356, reported as a current asset, prepaid consulting services, on our consolidated balance sheet.

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Note 7 - Stockholder Advances (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Details
Stockholder advances	$ 544,439	$ 405,939

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Note 5 - Convertible Debentures: Schedule of Derivative Liabilities (Tables)

9 Months Ended

Sep. 30, 2014

Tables/Schedules

Schedule of Derivative Liabilities

	Derivative Liability	Debt Discount	Gain (Loss) on Derivative Liability	Gain on Extinguishment of Debt	Interest Expense
Balance at December 31, 2013	$2,104,849	$(408,194)
Adjustment to derivative liability	(1,093,610)	-	$1,093,610	$-	$-
New debt – debt discount	2,208,054	(801,502)	(1,448,052)	-	-
New debt – original issue discount	-	(4,500)	-	-	-
New debt – beneficial conversion feature	-	(730,073)	-	-	-
Amortization of debt discount to interest    expense	-	1,061,124	-	-	(1,061,124)
Debt conversions and repayments	(576,325)	95,175	-	(470,480)	-
Balance at September 30, 2014	$2,642,968	$(787,970)	$354,442	$(470,480)	$(1,061,124)

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Note 1 - Description of Business and Basis of Financial Statement Presentation (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 23, 2014
Details
Date of Incorporation	Jan. 14, 2011
Stockholders' Equity Note, Stock Split		a reverse stock split of the Company’s common stock by a ratio of one-for-seven hundred fifty (1:750) and (b) reduce the number of authorized shares of common stock from 1,500,000,000 to 50,000,000. The Financial Industry Regulatory Authority (“FINRA”) approved the reverse stock split effective January 13, 2014
Common Stock, shares authorized	500,000,000	500,000,000	50,000,000

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Note 11 - Prepaid Consulting Services (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Details
Allocated Share-based Compensation Expense	$ 2,230,850
Prepaid consulting services	$ 248,356	$ 380,860

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Cash flows from operating activities:
Net loss	$ (6,248,763)	$ (4,025,677)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	10,500
Amortization of debt discount to interest expense	1,068,942	203,919
Preferred stock issued for services	80
Common stock issued for services	2,750	652,006
Warrants issued for interest expense	394,860
Stock options issued for services	240,000
Notes payable issued for services	35,000
(Gain) loss on derivative liability	354,442	1,311,620
(Gain) loss on debt settlement	470,480	876,484
Changes in operating assets and liabilities:
Decrease in inventories	12,547
Decrease in prepaid consulting services	2,230,849
(Increase) decrease in prepaid assets and other current assets	8,710	(135,752)
Increase in accounts payable and accrued expenses	240,564	157,505
Increase in accrued interest payable	163,580	76,859
Net cash used in operating activities	(1,015,459)	(883,036)
Cash flows from investing activities
Net cash provided by investing activities
Cash flows from financing activities:
Proceeds from convertible debentures	997,235	526,000
Proceeds from notes payable	25,000	131,500
Proceeds from issuance of stock		100,000
Proceeds from stockholder advances	188,500	182,958
Payments on convertible debentures	(107,433)	(534)
Payments on notes payable	(5,000)	(19,500)
Net cash provided by financing activities	1,098,302	920,424
Net increase in cash	82,843	37,388
Cash, beginning of the period	6,456	2,147
Cash, end of the period	$ 89,299	$ 39,535

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Note 5 - Convertible Debentures

9 Months Ended

Sep. 30, 2014

Notes

Note 5 - Convertible Debentures

NOTE 5 – CONVERTIBLE DEBENTURES

            Through September 30, 2014, we have financed our operations through the issuance of various convertible debentures.  For the nine months ended September 30, 2014, we received cash proceeds of $997,235 from the issuance of new convertible debentures.  We also issued new convertible debentures for $95,000 in services, the transfer of $50,000 from stockholder advances, the transfer of accrued interest payable of $30,731 and original issue discount of $46,000.

The debentures are generally unsecured and bear interest ranging from 6% to 22% per annum, with maturities ranging from two months to two years.  The outstanding principal and accrued interest of the debentures are convertible into shares of the Company’s common stock at a fixed conversion price ranging from $0.0025 to $30.00 per share or variable discounted pricing based on the market price of the Company’s common stock.

We evaluated the convertible debentures in accordance with ASC Topic 815, “Derivatives and Hedging,” and determined that the conversion feature of the convertible promissory notes with variable conversion prices were not afforded the exemption for conventional convertible instruments due to their variable conversion rates.  The notes have no explicit limit on the number of shares issuable so they did not meet the conditions set forth in current accounting standards for equity classification. We elected to recognize the notes under paragraph 815-15-25-4, whereby there would be a separation into a host contract and derivative instrument. We elected to initially and subsequently measure the notes in their entirety at fair value, with changes in fair value recognized in earnings.  We recorded a derivative liability and debt discount representing the imputed interest associated with the embedded derivative. 

For those convertible debentures with fixed conversion prices, we recorded a beneficial conversion feature at the inception of the debt to additional paid-in capital and to debt discount where the conversion price was less that the market price of the stock.

The debt discount is amortized over the life of the note and recognized as interest expense.  For the nine months ended September 30, 2014 and 2013, we amortized debt discount of $1,068,942 and $203,919, respectively, to interest expense.  The derivative liability is adjusted periodically according to the stock price fluctuations and was $2,642,968 and $2,104,849 at September 30, 2014 and December 31, 2013, respectively.  For purpose of estimating the fair value of the convertible debentures, we used the Black Scholes option valuation model.

At September 30, 2014, the convertible debentures and related accrued interest payable were convertible into approximately 241,019,000 shares of our common stock.

As of September 30, 2014, several of the convertible debentures are delinquent.  We believe we have good relationships with the debenture holders, and continue to have discussions with them regarding the extension of maturity dates.

During the nine months ended September 30, 2014, we had the following activity in the accounts related to the convertible debentures:

	Derivative Liability	Debt Discount	Gain (Loss) on Derivative Liability	Gain on Extinguishment of Debt	Interest Expense
Balance at December 31, 2013	$2,104,849	$(408,194)
Adjustment to derivative liability	(1,093,610)	-	$1,093,610	$-	$-
New debt – debt discount	2,208,054	(801,502)	(1,448,052)	-	-
New debt – original issue discount	-	(4,500)	-	-	-
New debt – beneficial conversion feature	-	(730,073)	-	-	-
Amortization of debt discount to interest    expense	-	1,061,124	-	-	(1,061,124)
Debt conversions and repayments	(576,325)	95,175	-	(470,480)	-
Balance at September 30, 2014	$2,642,968	$(787,970)	$354,442	$(470,480)	$(1,061,124)

In estimating the fair value of the derivatives and calculating the adjustment to the derivative liability as of September 30, 2014, we used the Black-Scholes pricing model with the following range of assumptions:

Market price of stock	$0.0189
Risk-free interest rate	0.02% - 0.58%
Expected life in years	0.25 - 1.93
Dividend yield	0%
Expected volatility	266.99% - 514.66%

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Note 2 - Going Concern (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Details
Working Capital	$ (5,382,955)
Accumulated deficit	(15,974,571)	(9,725,808)
Total stockholders' deficit	$ (5,338,802)	$ (3,576,053)

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Note 10 - Stock Options and Warrants (Details) (USD $)	9 Months Ended
	Sep. 30, 2014
Exercise Price of Warrant	$ 0.06
Options, Issued	3,000,000
Options, Exercisable, Weighted Average Exercise Price	$ 0.01
Options, Exercisable, Aggregate Intrinsic Value	$ 240,000
Stock Options and Warrants
Options, Issued	4,977,267
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Method Used	Black-Scholes pricing model
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	2,000,000
Warrant
Warrants Issued	1,977,267
Value of warrants issued	$ 394,860

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Note 15 - Subsequent Events

9 Months Ended

Sep. 30, 2014

Notes

Note 15 - Subsequent Events

NOTE 15 – SUBSEQUENT EVENTS

To fund our operations subsequent to September 30, 2014, we incurred additional indebtedness totaling $68,000, consisting of convertible debentures totaling $50,000 and stockholder advances of $18,000.

Subsequent to September 30, 2014, we issued a total of 19,433,774 shares of our common stock for debt conversions of $34,825.

On November 4, 2014, we were named as a defendant in a civil lawsuit filed by Darling Capital, LLC, (“Darling”) a creditor of ours, in the New York Supreme Court, County of New York.  The plaintiff filed a Motion For Summary Judgment in Lieu of Complaint the same day. The plaintiff alleges, among other things, that we defaulted on our obligations under a Convertible Promissory Note held by Darling. The complaint seeks, among other relief, judgment against us in the amount of $57,627.  We are currently evaluating a response to this motion and intend to defend our interests vigorously.