Quarterly Report (10-q)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended June 30, 2015

¨ 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 August 14, 2015 there were 367,134,423 outstanding shares of the registrant’s common stock.

ONE WORLD HOLDINGS, INC.

FORM 10-Q INDEX

QUARTER ENDED JUNE 30, 2015

	Page Number

PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 2015 (Unaudited) and December 31, 2014	3
Condensed Consolidated Statements of Operations for the Three Months and Six Months Ended June 30, 2015 and 2014 (Unaudited)	4
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2015 and 2014 (Unaudited)	5
Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	22
Item 4. Controls and Procedures	23

PART II – OTHER INFORMATION
Item 1. Legal Proceedings	23
Item 1A. Risk Factors	24
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3. Defaults Upon Senior Securities	25
Item 4. Mine Safety Disclosures	25
Item 5. Other Information	25
Item 6. Exhibits	25
Signature Page

INDEX

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

ONE WORLD HOLDINGS, INC.

Condensed Consolidated Balance Sheets

	June 30, 2015 (Unaudited)			December 31, 2014
ASSETS

Current assets:
Cash	$	-		$	604
Accounts receivable		1,191			9,140
Inventories		194,086			189,234
Prepaid consulting services		67,500			93,442
Prepaid expenses and other current assets		345,688			58,646
Total current assets		608,465			351,066

Long-term prepaid consulting services		-			22,500
Property and equipment, net		45,500			52,500
Other assets		2,701			2,701

Total	$	656,666		$	428,767

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:
Accounts payable and accrued expenses	$	1,526,413		$	1,310,881
Accrued interest payable		429,355			277,264
Convertible debentures, net of discount		1,964,171			1,359,680
Derivative liability		19,969,377			2,718,652
Notes payable		563,828			120,328
Current portion of long-term debt, net of discount		27,625			22,598
Stockholder advances		470,484			569,439
Total current liabilities		24,951,253			6,378,842

Long-term debt, net of current portion and discount		14,352			9,800

Total liabilities		24,965,605			6,388,642

Commitments and contingencies

Stockholders’ deficit:
Preferred stock, $0.001 par value, 10,000,000 shares authorized: Series AA, 80,000 shares issued and outstanding		80			80
Series BB, 186,000 shares issued and outstanding		186			186
Common stock; $0.0025 par value, 500,000,000 shares authorized, 338,162,089 and 170,767,039 shares issued and outstanding, respectively		845,405			426,918
Additional paid-in capital		10,639,478			10,274,683
Accumulated deficit		(35,794,088	)		(16,661,742	)
Total stockholders’ deficit		(24,308,939	)		(5,959,875	)

	$	656,666		$	428,767

See accompanying notes to condensed consolidated financial statements

INDEX

ONE WORLD HOLDINGS, INC.

Condensed Consolidated Statements of Operations

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014

Sales	$	833		$	26,875		$	1,572		$	29,168

Cost of sales		836			17,863			1,904			20,873

Gross margin (deficit)		(3	)		9,012			(332	)		8,295

Operating expenses:
Selling, general and administrative		451,550			2,486,507			943,373			3,032,278
Research and development		3,981			7,332			6,393			8,622
Depreciation		3,500			3,500			7,000			7,000

Total operating expenses		459,031			2,497,339			956,766			3,047,900

Loss from operations		(459,034	)		(2,488,327	)		(957,098	)		(3,039,605	)

Other income (expense):
Interest expense		(451,566	)		(848,109	)		(1,118,515	)		(1,263,056	)
Gain (loss) on derivative liability		(7,126,383	)		(6,987	)		(17,068,588	)		159,093
Gain (loss) on debt settlement		31,616			(583,971	)		11,855			(538,141	)

Total other expense		(7,546,333	)		(1,439,067	)		(18,175,248	)		(1,642,104	)

Loss before income taxes		(8,005,367	)		(3,927,394	)		(19,132,346	)		(4,681,709	)
Provision for income taxes		-			-			-			-

Net loss	$	(8,005,367	)	$	(3,927,394	)	$	(19,132,346	)	$	(4,681,709	)

Net loss per common share – basic and diluted	$	(0.03	)	$	(0.16	)	$	(0.08	)	$	(0.36	)

Weighted average number of common shares outstanding – basic and diluted		279,277,078			24,365,186			253,103,538			12,970,226

See accompanying notes to condensed consolidated financial statements

INDEX

ONE WORLD HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Six Months Ended June 30,
	2015			2014
Cash flows from operating activities:
Net loss	$	(19,132,346	)	$	(4,681,709	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		7,000			7,000
Amortization of debt discount to interest expense		808,293			700,873
Interest expense added to stockholder advances		28,460			-
Preferred stock issued for services		-			80
Common stock issued for services		2,400			1,500
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		17,068,588			(159,093	)
(Gain) loss on debt settlement		(11,855	)		538,141
Changes in operating assets and liabilities:
Accounts receivable		7,949			-
Inventories		(4,852	)		8,939
Prepaid consulting services		48,442			1,934,483
Prepaid expenses and other current assets		(287,042	)		12,648
Accounts payable and accrued expenses		215,532			295,647
Accrued interest payable		165,585			94,993

Net cash used in operating activities		(1,083,846	)		(576,638	)

Cash flows from investing activities		-			-

Net cash provided by investing activities		-			-

Cash flows from financing activities:
Proceeds from convertible debentures		853,547			607,532
Proceeds from notes payable		468,500			25,000
Proceeds from stockholder advances		15,000			10,000
Payments on convertible debentures		(214,850	)		(67,233	)
Payments on notes payable		(25,000	)		(5,000	)
Payments on stockholder advances		(13,955	)		-

Net cash provided by financing activities		1,083,242			570,299

Net decrease in cash		(604	)		(6,339	)
Cash, beginning of the period		604			6,456

Cash, end of the period	$	-		$	117

See accompanying notes to condensed consolidated financial statements

INDEX

ONE WORLD HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

Six Months Ended June 30, 2015

(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.

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 June 30, 2015 and for the three months and six months ended June 30, 2015 is unaudited, and the balance sheet as of December 31, 2014 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 Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2014. 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 six months ended June 30, 2015 are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2015. 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, 2014.

Certain amounts in the condensed consolidated financial statements for the three months and six ended June 30, 2014 have been reclassified to conform to the current year presentation.

INDEX

NOTE 2 – GOING CONCERN

The Company has incurred operating losses since inception, has only minimal sales of its dolls, and has limited financial resources and a working capital deficit of $24,342,788 at June 30, 2015. 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 $35,794,088 and a total stockholders’ deficit of $24,308,939 at June 30, 2015. The working capital deficit, accumulated deficit and total stockholders’ deficit resulted primarily from the significant derivative liability and debt recorded at June 30, 2015. 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 condensed 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 June 30, 2015 and December 31, 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:

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.

INDEX

Liabilities measured at fair value on a recurring basis are as follows at June 30, 2015:

	Total		Level 1		Level 2		Level 3

Derivative liability	$	19,969,377	$	-	$	-	$	19,969,377
Convertible debentures		1,964,171		-		-		1,964,171
Current portion of long-term debt		27,625		-		-		27,625
Long-term debt, net of current portion		14,352		-		-		14,352

Total liabilities measured at fair value	$	21,975,525	$	-	$	-	$	21,975,525

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 six months ended June 30, 2015 and 2014, our basic weighted average number of common shares outstanding is the same as our diluted weighted average number of common shares outstanding.

At June 30, 2015, 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 AND DERIVATIVE LIABILITY

Through June 30, 2015, we have financed our operations primarily through the issuance of various convertible debentures. For the six months ended June 30, 2015, we received cash proceeds of $853,547 from the issuance of new convertible debentures. We also issued a new convertible debenture with the transfer of $128,460 from stockholder advances.

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 as defined in the debt agreement.

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.

INDEX

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 six months ended June 30, 2015 and 2014, we amortized debt discount of $808,293 and $700,873, respectively, to interest expense. The derivative liability is adjusted periodically according to the stock price fluctuations and other inputs and was $19,969,377 and $2,718,652 at June 30, 2015 and December 31, 2014, respectively. For purpose of estimating the fair value of the convertible debentures, we used the Black Scholes option valuation model.

At June 30, 2015, the convertible debentures and related accrued interest payable were convertible into approximately 2,514,516,000 shares of our common stock. Based on the assumptions used to estimate the fair value of the derivative liability at June 30, 2015 and assuming all lenders convert the notes payable at the June 30, 2015 conversion prices, the Company would have insufficient authorized shares of common stock to complete the debt conversions.

As of June 30, 2015, several of the convertible debentures are delinquent. We believe we have good relationships with most debenture holders, and continue to have discussions with them regarding the extension of maturity dates or settlement of amounts due.

For purpose of determining the fair market value of the derivative liability, we used the Black Scholes option valuation model. The significant assumptions used in the Black Scholes valuation of the derivative liability at June 30, 2015 are as follows:


Stock price on the valuation date	$0.0083
Conversion price for the debt	$0.00025- $0.0062
Dividend yield	0.00	%
Years to maturity	0.25 – 1.18
Risk free rate	0.01% - 0.28	%
Expected volatility	289.97% - 405.02	%

These assumptions are subject to significant changes and market fluctuations from period to period; therefore, the estimated fair value of the derivative liability will fluctuate from period to period and the fluctuation may be material.

During the six months ended June 30, 2015, the Company had the following activity in its derivative liability account:

Derivative liability at December 31, 2014	$	2,718,652
Addition to liability for new debt issued		812,321
Elimination of liability on conversion		(630,184	)
Change in fair value		17,068,588

Derivative liability at June 30, 2015	$	19,969,377

INDEX

NOTE 6 – NOTES PAYABLE

As of June 30, 2015, we had short-term notes payable to certain individuals or companies totalling $563,828. These notes are unsecured, payable to non-related parties and bear interest at rates 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 June 30, 2015, stockholder advances totalled $470,484.

NOTE 8 – LONG-TERM DEBT

Our long-term debt consisted of the following at June 30, 2015:

Long-term convertible debentures, net of discount of $23,818 (see Note 5)	$	13,702

Long-term note payable, net of discount of $1,725		28,275

Total		41,977
Current portion		27,625

Long-term debt	$	14,352

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 June 30, 2015 due to our failure to make timely payments in accordance with the terms of the note agreement.

NOTE 9 – STOCKHOLDERS’ DEFICIT

We currently have 10,000,000 shares of $0.001 par value preferred stock authorized and 500,000,000 shares of $0.0025 par value common stock authorized.

We have authorized the issuance of up to 1,000,000 shares of 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. In June 2014, 20,000 shares of Series AA Preferred Stock were issued to each of the four members of the Company’s Board of Directors.

We have also authorized the issuance of up to 1,000,000 shares of 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 shares of common stock of the Company. In August 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.

INDEX

During the six months ended June 30, 2015, we issued a total of 167,395,050 shares of our common stock with a total value of $711,522 for conversion of debt.

As of June 30, 2015, we had several convertible debentures and related accrued interest payable that were convertible into approximately 2,514,516,000 shares of our common stock. We had 500,000,000 common shares authorized and 338,162,089 common shares issued and outstanding. We will be required to increase the number of authorized shares of common stock in the event all convertible debt is converted into shares of our common stock.

NOTE 10 – STOCK OPTIONS AND WARRANTS

During the six months ended June 30, 2015, we did not issue any new stock options or warrants.

The following table summarizes the stock option and warrant activity during the six months ended June 30, 2015:

	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contract Term

Outstanding at December 31, 2014		4,977,267	$	0.03
Granted		-
Exercised		-
Expired or cancelled		-

Outstanding, vested and exercisable at June 30, 2015		4,977,267	$	0.03	3.75

In May 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, including agreements with our officers and directors. 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 generally are no specified performance requirements and no provision in the agreements for return of the shares. During the three months and six months ended June 30, 2015, total compensation expense paid in common shares was $22,500 and $48,442, respectively. 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 June 30, 2015, the unamortized compensation was $67,500 reported as a current asset, prepaid consulting services, on our condensed consolidated balance sheet.

INDEX

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. There was no compensation expense paid in common shares to related parties during the six months ended June 30, 2015.

In addition to compensation expense paid in stock, we had the following amounts paid for consulting and professional fees to related parties during the six months ended June 30, 2015:

Founder, stockholder	$	82,658

Family of officers and directors		54,439

Total related parties	$	137,097

As of June 30, 2015, we had convertible debentures of $5,000, $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 $21,599 at June 30, 2015.

As of June 30, 2015, we had stockholder advances payable to related parties totaling $90,164.

NOTE 13 – SUPPLEMENTAL STATEMENT OF CASH FLOWS INFORMATION

During the six months ended June 30, 2015, we made no cash payments for income taxes.

During the six months ended June 30, 2015, we made cash payments for interest totaling $78,552.

During the six months ended June 30, 2015, we had the following non-cash financing and investing activities:

Increased additional paid-in capital and debt discount by $71,760 for beneficial conversion feature of convertible notes payable.

Increased debt discount and derivative liability by $812,321.

Decreased stockholder advances and increased convertible debentures by $128,460.

Decreased accrued interest payable by $11,547, decreased convertible debentures by $127,085, decreased debt discount by $47,839, decreased derivative liability by $630,184, increased common stock by $418,487 and increased additional paid-in capital by $293,035 for common shares issued in conversion of debt.

Decreased accrued interest payable by $1,947 and increased convertible debentures by $1,947.

INDEX

NOTE 14 – RECENT ACCOUNTING PRONOUNCEMENTS

In July 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, “Inventory (Topic 330), Simplifying the Measurement of Inventory.” An entity is required to measure inventory within the scope of this Update at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Other than the change in the subsequent measurement guidance from the lower of cost or market to the lower of cost and net realizable value for inventory within the scope of this Update, there are no other substantive changes to the guidance on measurement of inventory. For public companies, the amendments in this Update are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The amendments in this Update are to be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. We are currently unable to determine the impact on our consolidated financial statements of the adoption of this new accounting pronouncement.

In April 2015, the FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30), Simplifying the Presentation of Debt Issuance Costs.” To simplify presentation of debt issuance costs, the amendments in this Update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this Update. For public companies, the amendments in this Update are effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption of the amendments in this Update is permitted for financial statements that have not been previously issued. We are currently unable to determine the impact on our consolidated financial statements of the adoption of this new accounting pronouncement.

NOTE 15 – CONTINGENCIES

From time to time, we may be involved in various claims and legal actions arising in the ordinary course of business, including claims relating to our past due debt. Management, along with the assistance of counsel, will determine the ultimate disposition and potential impact of these matters on our financial condition, liquidity or results of operations.

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 negotiating a settlement with Darling that is in the best interest of both parties.

On or about February 19, 2015, Gel Properties, LLC (“Gel”) filed a complaint against the Company in the United States District Court, Southern District of New York alleging, among other things, breach of contract, anticipatory breach and conversion relating to a convertible promissory note in the original principal amount of $50,000. Following various hearings, on May 12, 2015, Gel and the Company entered into a stipulation and agreement of settlement, which agreement was filed with the court, whereby the Company agreed to pay Gel the sum of $98,000. The settlement agreement allows for three payments with the first payment due May 21, 2015 and the final payment of $33,000 due on August 13, 2015. The Company is current on the payments and plans to make the final payment in compliance with the terms of the settlement agreement.

On February 11, 2015, LG Capital Funding, LLC filed a complaint against the Company in the United States District Court, Eastern District of New York alleging breach of contract, anticipatory breach of contract and conversion relating to three convertible promissory notes totaling approximately $186,158 in principal and accrued interest. Following various hearings, on August 7, 2015, the Company was ordered by the court to pay $296,086 in settlement for breach of contract on the three convertible promissory notes. We are in the process of responding to this order and intend to vigorously defend our interests.

INDEX

NOTE 16 – SUBSEQUENT EVENTS

To fund our operations subsequent to June 30, 2015, we incurred additional indebtedness totaling $213,500, consisting of proceeds from convertible debentures totaling $121,000 and proceeds from short-term notes payable totaling $92,500.

Subsequent to June 30, 2015, we issued a total of 28,972,334 shares of our common stock for debt conversions of $35,100 principal and $2,926 accrued interest payable.

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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. and its wholly-owned subsidiaries, 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 condensed 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 Quarterly Report 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 Quarterly 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.

INDEX

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 the “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 is handled by a third-party center in Houston, Texas.

Going Concern Uncertainty

Results of Operations

Sales

We had total sales of $833 and $26,875 for the three months ended June 30, 2015 and 2014, respectively, and $1,572 and $29,168 for the six months ended June 30, 2015 and 2014, respectively. The sales of our dolls are seasonal, with lower sales levels expected for the first few months of each calendar year. We believe sales in the current year will increase for seasonal buying and for our new line of Tween Scene dolls. As of June 30, 2015, we had prepaid $300,000 to our manufacturer for the production of the Tween Scene dolls; however none of the dolls had been shipped. The $300,000 prepayment was financed by a short-term promissory note. In May 2015, we received a purchase order from a major retailer totaling approximately $5,000. Subsequent to June 30, 2015, we received purchase orders from a major retailer totaling approximately $830,000 and a second major retailer totaling approximately $20,000.

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 June 30, 2015 and 2014 were $836 and $17,863, respectively, and $1,904 and $20,873 for the six months ended June 30, 2015 and 2014, respectively. Because of the lower levels of sales in the current year, we reported a gross deficit on sales for the three months and six months ended June 30, 2015.

INDEX

Operating Expenses

Our selling, general and administrative expenses decreased $2,034,957 to $451,550 in the three months ended June 30, 2015 from $2,486,507 in the three months ended June 30, 2014, and decreased $2,088,905 to $943,373 in the six months ended June 30, 2015 from $3,032,278 in the six months ended June 30, 2014. The decrease in these expenses in the current year is due to primarily to a decrease in compensation expense paid in shares of our common stock in the current 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 have 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 is recognized over the life of the consulting agreements.

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 are currently not material to our business and totalled $3,981 and $7,332 for the three months ended June 30, 2015 and 2014, respectively, and $6,393 and $8,622 for the six months ended June 30, 2015 and 2014, respectively.

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. Depreciation expense was $3,500 for each of the three-month periods ended June 30, 2015 and 2014, and $7,000 for each of the six-month periods ended June 30, 2015 and 2014.

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.

INDEX

Interest expense decreased to $451,566 in the three months ended June 30, 2015 from $848,109 in the three months ended June 30, 2014, and to $1,118,515 in the six months ended June 30, 2015 from $1,263,056 in the six months ended June 30, 2014. We have experienced a decrease in interest expense in the current year primarily as a result of the debt discount on a substantial portion of our convertible debentures being fully amortized to interest expense. This decrease is partially offset by amortization of debt discount and additional interest expense on new indebtedness.

Loss on derivative liability was $7,126,383 for the three months ended June 30, 2015 compared to a loss of $6,987 for the three months ended June 30, 2014. Loss on derivative liability was $17,068,588 for the six months ended June 30, 2015 compared to a gain of $159,093 for the six months ended June 30, 2014. The gain or loss on derivative liability will fluctuate each period depending on the market price of our common stock, volatility, conversion prices, and other valuation inputs, and the fluctuation may be material.

We reported a gain on debt settlement of $31,616 and $11,855 for the three months and six months ended June 30, 2015, respectively. By comparison, we reported a loss on debt settlement of $583,971 and $538,141 for the three months and six months ended June 30, 2014, 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, conversion prices, and other valuation inputs, and the fluctuation may be material.

Net Loss

As a result of the factors discussed above, our net loss increased to $8,005,367 for the three months ended June 30, 2015 from $3,927,394 for the three months ended June 30, 2014, and increased to $19,132,346 for the six months ended June 30, 2015 from $4,681,709 for the six months ended June 30, 2014.

Liquidity and Capital Resources

As of June 30, 2015, we had total current assets of $608,465, including accounts receivable of $1,191, inventories of $194,086 and prepaid expenses totaling $413,188. We had no cash as of June 30, 2015.

We had total current liabilities of $24,951,253 and a working capital deficit of $24,342,788 at June 30, 2015. In addition, we had accumulated losses from inception of $35,794,088 and had a total stockholders’ deficit of $24,308,939 at June 30, 2015. Our working capital deficit, accumulated deficit and total stockholders’ deficit as of June 30, 2015 were materially impacted by our non-cash derivative liability of $19,969,377.

We do not have sufficient cash at June 30, 2015 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 $1,083,846 for the six months ended June 30, 2015 as a result of our net loss of $19,132,346, non-cash gain of $11,855 and increases in inventories of $4,852 and prepaid expenses and other current assets of $287,042, partially offset by non-cash expenses totaling $17,914,741, decreases in accounts receivable of $7,949 and prepaid consulting services of $48,442, and increases in accounts payable and accrued expenses of $215,532 and accrued interest payable of $165,585.

INDEX

Net cash used in operating activities was $576,638 for the six months ended June 30, 2014 as a result of our net loss of $4,681,709 and a non-cash gain of $159,093, partially offset by non-cash expenses totaling $1,917,454, decreases in inventories of $8,939, prepaid consulting services of $1,934,483 and prepaid expenses and other current assets of $12,648, and increases in accounts payable and accrued expenses of $295,647 and accrued interest payable of $94,993.

During the six months ended June 30, 2015 and 2014, we had no net cash provided by or used in investing activities.

During the six months ended June 30, 2015, net cash provided by financing activities was $1,083,242, comprised of proceeds from convertible debentures of $853,547, proceeds from notes payable of $468,500, and proceeds from stockholder advances of $15,000, partially offset by payments on convertible debentures of $214,850, payments on notes payable of $25,000 and payments on stockholder advances of $13,955.

During the six months ended June 30, 2014, net cash provided by financing activities was $570,299, comprised of proceeds from convertible debentures of $607,532, proceeds from notes payable of $25,000, and proceeds from stockholder advances of $10,000, partially offset by payments on convertible debentures of $67,233 and payments on stockholder advances of $5,000.

We have incurred losses from operations since inception, have limited financial resources, and at June 30, 2015, have a negative working capital position, an accumulated deficit of $35,794,088 and a total stockholders’ deficit of $24,308,939. 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 working capital deficit, accumulated deficit and total stockholders’ deficit as of June 30, 2015 were materially impacted by our non-cash derivative liability of $19,969,377.

Our primary sources of capital since inception have come from private placement sales of our common stock, the issuance of debt or advances from individuals or institutional investors. 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.

INDEX

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.

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.

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.

INDEX

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. Our revenues are recorded net of returns and allowances.

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 June 30, 2015, 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.

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

Liabilities measured at fair value on a recurring basis are as follows at June 30, 2015:

INDEX

	Total		Level 1		Level 2		Level 3

Derivative liability	$	19,969,377	$	-	$	-	$	19,969,377
Convertible debentures		1,964,171		-		-		1,964,171
Current portion of long-term debt		27,625		-		-		27,625
Long-term debt, net of current portion		14,352		-		-		14,352

Total liabilities measured at fair value	$	21,975,525	$	-	$	-	$	21,975,525

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.

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.

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 lease currently has a monthly payment of $3,802 and expires in December 2019. Beginning on December 1, 2015, the monthly payment will increase to $3,925, and will increase incrementally through the end of the lease. 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.

INDEX

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 June 30, 2015. Based on that evaluation, our principal executive officer and chief financial officer concluded that the disclosure controls and procedures employed at the Company were not effective to provide reasonable assurance 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.

We continue to operate with a limited number of accounting and financial personnel. Although we added the services of a contract Chief Financial Officer during 2014, we have been unable to implement proper segregation of duties over certain accounting and financial reporting processes, including review procedures for key accounting schedules and timely and proper documentation of material transactions and agreements. We believe these control deficiencies represent material weaknesses in internal control over financial reporting.

Despite the material weaknesses in financial reporting noted above, we believe that our consolidated financial statements included in this report fairly present our financial position, results of operations and cash flows as of and for the periods presented in all material respects.

We are committed to the establishment of effective internal controls over financial reporting and will place emphasis on quarterly and year-end closing procedures, timely documentation and internal review of accounting and financial reporting consequences of material contracts and agreements, and enhanced review of all schedules and account analyses by experienced accounting department personnel or independent consultants.

Changes in Internal Control Over Financial Reporting

Other than the matter discussed above, there was no change in our internal control over financial reporting during the fiscal quarter ended June 30, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

INDEX

Item 1A. Risk Factors

As of the date of this filing, other than discussed above, 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, 2014, filed with the SEC on April 14, 2015 (the “2014 Form 10-K”). The Risk Factors set forth in the 2014 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 2014 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

On July 2, 2015, we issued a convertible debenture (the “Debenture”) for $175,000. The Debenture matures on June 2, 2016 and bears interest at fourteen percent (14%) per annum. The Debenture is convertible into the Company’s common stock at $0.0025 per share, subject to certain adjustments described in the debenture agreement.

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 and warrants issued 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

INDEX

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 June 30, 2015. We believe we have good relationships with most debenture holders, and continue to have discussions with them regarding the extension of maturity dates or settlement of amounts due.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.	Description

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.

INDEX

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: August 14, 2015	By:	/s/ Corinda Joanne Melton
		Name: Corinda Joanne Melton
		Title: President and Chief Executive Officer

Date: August 14, 2015	By:	/s/ Dennis P. Gauger
		Name: Dennis P. Gauger
		Title: Chief Financial Officer

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 June 30, 2015;

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: August 14, 2015	By: /s/ Corinda Joanne Melton
	Corinda Joanne Melton
	President and Chief Executive Officer (Principal Executive Officer)

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 June 30, 2015;

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: August 14, 2015	By: /s/ Dennis P. Gauger
	Dennis P. Gauger
	Chief Financial Officer
	(Principal Accounting and Financial Officer)

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 June 30, 2015, 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: August 14, 2015	By: /s/ Corinda Joanne Melton
	Corinda Joanne Melton
	President and Chief Executive Officer
	(Principal Executive Officer)




Date: August 14, 2015	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.

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