One World (OWOO) 10-Q 2013 Q1 Quarterly report

FORM 10-Q

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 333-177992

ONE WORLD HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization) 87-0429198 (I.R.S. Employer Identification Number)

418 Bridge Crest Boulevard, Houston, Texas 77082

(Address of principal executive offices)

(866) 440-1470

(Registrant’s telephone number, including area code)

n/a

(Former name, former address and former fiscal year, if changed since last report)

Indicate by checkmark whether the registrant (1) 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 check mark 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 check mark 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-2 of the Exchange Act.

Large Accelerated Filer [ ] Accelerated Filer [ ] Non-Accelerated Filer [ ] (Do not check if a smaller reporting company) Smaller Reporting Company [x]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [x]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common units, as of the latest practicable date: 90,100,328 shares of common stock, par value $.001 per share, outstanding as of May 17, 2013.

Transitional Small Business Disclosure Format (Check one): Yes [  ] No [x]

ONE WORLD HOLDINGS, INC.

- INDEX -

			Page(s)
PART I – FINANCIAL INFORMATION:
Item 1.	Financial Statements (unaudited):		F-1
	Consolidated Balance Sheets as of March 31, 2013 (Unaudited) and December 31, 2012		F-3
	Unaudited Consolidated Statements of Operations for the three months Ended March 31, 2013 and 2012 and for the period from inception,October 1, 2010, to March 31, 2013		F-4
	Unaudited Consolidated Statements of Stockholders’ Deficit for the Three months Ended March 31, 2013 and 2012 and for the period from inception,October 1, 2010, to March 31, 2013		F-5
	Unaudited Consolidated Statements of Cash Flows for the Three months Ended March 31, 2013 and 2012 and for the period from inception,October 1, 2010, to March 31, 2013		F-6
	Notes to Consolidated Financial Statements (Unaudited)		F-7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		2
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		14
Item 4A.	Controls and Procedures		14
PART II – OTHER INFORMATION:
Item 1.		Legal Proceedings	14
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3.		Defaults Upon Senior Securities	15
Item 4.		Mine Safety Disclosures	16
Item 5.		Other Information	16
Item 6.		Exhibits	16
Signatures			19

Item  1. Financial Statements

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions for Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

In the opinion of management, the financial statements contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations, and cash flows of the Company for the interim periods presented.

The results for the period ended March 31, 2013 are not necessarily indicative of the results of operations for the full year. These financial statements and related footnotes should be read in conjunction with the financial statements and footnotes thereto included in the Company’s Form 10-K filed with the Securities and Exchange Commission for the period ended December 31, 2012.

ONE WORLD HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012

AND FOR THE PERIOD FROM INCEPTION, OCTOBER 1, 2010, TO MARCH 31, 2013

F-1

ONE WORLD HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
			Page
	Consolidated Balance Sheets as of March 31, 2013 (Unaudited) and
	December 31, 2012		F-3
	Unaudited Consolidated Statements of Operations for the three
		months ended March 31, 2013 and 2012 and for the period from inception,	F-4
		October 1, 2010, to March 31, 2013
	Unaudited Consolidated Statements of Stockholders’ Deficit for the three
		months ended March 31, 2013 and for the period from inception,	F-5
		October 1, 2010, to March 31, 2013
	Unaudited Consolidated Statements of Cash Flows for the three months		F-6
		ended March 31, 2013 and 2012 and for the period from inception, October 1, 2010, to March 31, 2013
	Notes to Consolidated Financial Statements		F-7

F-2

ONE WORLD HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2013 AND DECEMBER 31, 2012
	March 31,
	2013			December 31,
	(UNAUDITED)			2012
ASSETS
Current assets
Cash and cash equivalents	$	2,025		$	2,147
Prepaid consulting services		477,620			549,147
Total current assets		479,645			551,294
Manufacturing equipment (molds to produce dolls)		70,000			70,000
Prepaid consulting services, long-term		111,615			168,479
Total assets	$	661,260		$	789,773
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities
Convertible debentures	$	365,555		$	408,719
Notes payable		10,000			-
Notes payable – related parties		87,000			87,000
Current portion of long-term debt		52,712			45,189
Due to shareholder		18,464			12,964
Derivative liability		71,499			-
Customer deposits		4,606			5,362
Accounts payable and accrued liabilities		629,361			599,672
Accounts payable – related parties		19,598			19,598
Accrued interest payable		87,073			81,867
Total current liabilities		1,345,868			1,260,371
Long-term debt, $130,000 and $130,000 face value,
net of unamortized discount of $37,518 and $42,049		39,770			42,762
Total liabilities		1,385,638			1,303,133
Commitments and contingencies
Stockholders' deficit
Preferred stock: $0.001 par value, 10,000,000 shares authorized,
no shares issued and outstanding		-			-
Unissued preferred stock 200,000 shares		200			-
Common stock: $0.0025  par value, 200,000,000 shares authorized,
86,968,299 and 67,067,849 shares issued and outstanding		217,047			167,795
Unissued common stock, 2,998,695 and 18,125,000 shares		7,497			44,813
Additional paid-in capital		2,549,699			2,150,920
Losses accumulated in the development stage		(3,498,821	)		(2,876,888	)
Total stockholders’ deficit		(724,378	)		(513,360	)
Total liabilities and  stockholders’ deficit	$	661,260		$	789,773
The accompanying notes are an integral part of these consolidated financial statements

F-3

ONE WORLD HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012 AND FOR THE
PERIOD FROM INCEPTION, OCTOBER 1, 2010, TO MARCH 31, 2013
							Inception,
							October 1, 2010
	FOR THE THREE MONTHS ENDED MARCH 31,						To March 31,
	2013			2012			2013
General and administrative expenses:
Professional fees	$	26,429		$	42,580		$	412,251
Consulting fees		188,391			134,959			1,243,825
Contract labor		46,728			3,597			531,547
Salary expense		70,500			70,500			423,000
Marketing and advertising		31,413			9,338			125,942
Computer and internet charges		7,491			3,203			77,242
Research and development		750			28,439			143,729
Other		16,247			12,785			156,317
Total general and administrative expenses		387,949			305,401			3,113,853
Other expenses:
Interest expense		45,393			10,868			164,710
Recapitalization expense		-			-			31,667
Loss on derivative liability valuation		10,143			-			178,448
Loss on extinguishment of debt		178,448			-			10,143
Total other expenses		233,984			10,868			384,968
Provision for federal income taxes		-			-			-
Net loss	$	(621,933	)	$	(316,269	)	$	(3,498,821	)
Net loss per share - basic and diluted		(0.01	)		(0.01	)
Weighted average shares outstanding - basic and diluted		85,192,849			55,117,237

The accompanying notes are an integral part of these consolidated financial statements

F-4

ONE WORLD HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND FOR THE PERIOD
FROM INCEPTION, OCTOBER 1, 2010 TO MARCH 31, 2013
																							Losses
						Unissued										Unissued				Additional			Accumulated in
	Common Stock					Common stock						Preferred Stock				Preferred stock				Paid-in			the Development
	Shares		Amount			Shares			Amount			Shares		Amount		Shares		Amount		Capital			Stage			Total
Balance at October 1, 2010		-	$	-		-			$	-			-	$	-		-	$	-	$	-		$	-		$	-
Founders’ shares		8,785,399		21,963		-				-			-		-		-		-		(16,215	)		-			5,748
Warrants issued for debt origination		-		-		-				-			-		-		-		-		17,648			-			17,648
Common stock issued for debt origination		1,834,272		4,586		-				-			-		-		-		-		14,238			-			18,824
Net loss		-		-			-			-			-		-		-		-		-			(134,882	)		(134,882	)
Balance as December, 31, 2010		10,619,671		26,549			-			-			-		-		-		-		15,671			(134,882	)		(92,662	)
Common stock issued for cash in private placement, net of $10,000		8,295,053		20,738			-			-			-		-		-		-		179,262			-			200,000
Common stock issued for warrant exercise		3,439,260		8,598			-			-			-		-		-		-		81,402			-			90,000
Common stock issued for services		28,705,757		71,764			767,500			1,919			-		-		-		-		705,117			-			535,111
Warrants issued for debt origination							-			-			-		-		-		-		8,824			-			8,824
Common stock issued for debt origination		2,445,696		6,114			-			-			-		-		-		-		23,298			-			29,412
Common stock issued in reverse merger and recapitalization transaction		5,425,592		13,565			-			-			-		-		-		-		(13,565	)		-			-
Obligation forgiven under consulting agreements with related parties		-		-			-			-			-		-		-		-		200,500			-			-
Net loss		-		-			-			-			-		-		-		-		-			(1,483,733	)		(1,483,733	)
Balance as Decemeber 31, 2011		58,931,029		147,328			767,500			1,919			-		-		-		-		1,200,509			(1,618,615	)		(512,548	)
Unissued common stock issued		767,500		1,919			(767,500	)		(1,919	)		-		-		-		-		-			-			-
Common stock issuance for services		7,369,300		18,548			18,125,000			44,813			-		-		--		-		950,411			-			539,835
Net loss		-		-			-			-			-		-		-		-		-			(1,258,273	)		(1,258,273	)
Balance as Decemeber 31, 2012		67,067,829	$	167,795			18,125,000		$	44,813			-		-	$	-	$	-	$	2,150,920		$	(2,876,888	)	$	(1,230,986	)
Unissued common stock issued		18,125,000		44,813			(18,125,000	)		(44,813	)		-		-		-		-		-			-			-
					��
Common stock issued for services		1,500,000		3,750			-			-			-		-		-		-		56,250			-			-
Common stock issued for debt conversion		275,450		689			2,998,695			7,497			-		-		-		-		242,728			-			250,914
Common stock issued for cash		-		-			-			-			-		-		-		-		-			-			-
Preferred stock issued for cash		-		-			-			-			-		-		200,000		200		99,800			-			100,000
Net loss		-		-			-			-			-		-		-		-		-			(621,933	)		(621,933	)
Balance as March 31, 2013		86,968,279	$	217,047			2,998,695		$	7,497			-	$	-		200,000	$	200	$	2,549,698		$	(3,498,821	)	$	(1,313,614	)

F-5

ONE WORLD HOLDINGS, INC.
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2013 AND 2012 AND FOR THE PERIOD
FROM INCEPTION, OCTOBER 1, 2010, TO MARCH 31, 2013
								Inception,
	Three Months			Three Months				October 1, 2010
	Ended March 31,			Ended March 31,				to March 31,
	2013			2012				2013
Cash flows from operating activities:
Net loss	$	(621,933	)	$	(316,269	)		$	(3,498,821	)
Adjustments to reconcile net loss to net cash
used by operations
Amortization of discount on notes payable		15,586			4,562				48,245
Common stock issuance for services		188,391			110,559				1,269,085
Forgiveness of obligations by related parties		-			-				200,500
Recapitalization expense incurred through
increase in notes payable		-			-				31,667
Loss on derivative liability valuation		10,143			-				10,143
Changes in operating assets and liabilities:
Customer deposits		(756	)		724				4,606
Loss on extinguishment of debt		178,448			-				178,448
Accounts payable and accrued liabilities		29,691			99,638				601,363
Accounts payable – related parties		-			-				19,598
Accrued interest payable		29,808			16,169				111,675
Net cash used by operating activities		(170,622	)		(84,617,627	)			(1,023,491	)
Cash flows from investing activities:
Purchase of manufacturing equipment		-			-				(42,000	)
Cash received in recapitalization		-			-		��		2,333
Net cash used by investing activities		-			-				(39,667	)
Cash flows from financing activities:
Bank overdraft					(355	)			-
Payment to convertible debentures					-				(781	)
Proceeds from convertible debentures		55,000			77,333				464,500
Proceeds from notes payable		10,000			-				10,000
Proceeds from notes payable – related parties		-			11,000				53,000
Proceeds from long-term debt		-			-				130,000
Proceeds from issuance of common stock
in a private placement, net of expenses		100,000			-				300,000
Proceeds from warrant exercise		-			-				90,000
Proceeds from advances from shareholders		5,500			1,620				38,564
Repayments on advances		-			-				(20,100	)
Net cash provided by financing activities		170,500			89,598				1,065,183
Net increase (decrease) in cash and cash    equivalents		(122	)		4,981				2,025
Cash and cash equivalents at beginning of period		2,147			2,246				-
Cash and cash equivalents at end of period	$	2,025		$	2,735			$	2,025
Interest paid	$	-		$				$	3,733
Income taxes paid	$	-		$	-			$	-

F-6

ONE WORLD HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements of One World Holdings, Inc. (“we” or the “Company”) contain the adjustments, all of which are of a normal recurring nature, necessary to present fairly our financial position at December 31, 2012 and March 31, 2013 and the results of operations for the three months ended March 31, 2012 and 2013, respectively, with the cash flows for each of the three months ended March 31, 2012 and 2013, in conformity with U.S. generally accepted accounting principles.

These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2012. Operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ended December 31, 2013.

(2) 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.  National Fuel and Energy, Inc. (a Texas Corporation) is a fully-owned subsidiary of the Company that was in dormant state at December 31, 2012 and 2011, and for the period from inception, October 1, 2010, to December 31, 2012.  The accompanying consolidated financial statements are presented as if OWDPI was a corporation from inception. Additionally, the reverse merger and recapitalization transaction described in Note 2 and 4 are given retroactive effect in these consolidated financial statements.

(3) Summary of Significant Accounting Policies

Basis of Accounting

The consolidated financial statements of the Company have been prepared on the accrual basis of accounting, in accordance with accounting principles generally accepted in the United States of America ("US GAAP").

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.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash held in banks and on hand and highly liquid investments which are unrestricted as to withdrawal or use, and which have remaining maturities of three months or less when purchased. Cash balances may periodically exceed the federal depository insurance limit, however, the Company believes that risk of loss is minimal due to the strength of the financial institution in which funds are held.

F-7

ONE WORLD HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO  CONSOLIDATED FINANCIAL STATEMENTS

(3) Summary of Significant Accounting Policies, continued

Reverse Merger and Recapitalization

On July 21, 2011, OWDPI entered into a reverse merger with the Company. The reverse merger which resulted in a recapitalization of OWDPI was achieved through a Share Exchange Agreement (the "Share Exchange") with OWDPI's stockholders. The Company is the acquiring legal entity in the transaction, but OWDPI is the reporting entity for accounting purposes because its former shareholders emerged from the transaction with a controlling interest in the Company. The acquisition is treated as a recapitalization of OWDPI because, prior to the transaction, the Company had no significant assets, liabilities or operations.

The recapitalization of OWDPI was achieved by exchanging each share of OWDPI for 15.2856 shares of the Company (taking into consideration a 38.214 for 1 exchange ratio followed by a 1 for 2.5 reverse split of the Company's shares). OWDPI's shareholders received a total of 130,013,584 shares under the Share Exchange, resulting in 143,577,560 outstanding shares (after the reverse split there were 57,431,029 outstanding shares). Accordingly, OWDPI's shareholders control approximately 90% of the Company after the Share Exchange. The share exchange and reverse stock split have been given retroactive effect in these consolidated financial statements.

Fair Value of Financial Instruments

The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value.  When the book value approximates fair value, no additional disclosure is made.

Accounting Standards Codification ("ASC") 820-10 establishes a framework for measuring fair value.  That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure 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).  The three levels of the fair value hierarchy under ASC 820-10 are described below:

Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2 - Inputs to the valuation methodology include:

· Quoted prices for similar assets or liabilities in active markets;

· Quoted prices for identical or similar assets or liabilities in inactive markets;

· Inputs other than quoted prices that are observable for the asset or liability; and

· Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

An asset's or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company currently has no assets or liabilities that are reported under ASC 820-10.

Advertising Costs

The Company expenses advertising costs as incurred. For the three months ended March 31, 2013 and 2012, the Company’s advertising costs were $31,413 and $9,338. For the period from inception, October 1, 2010, to March 31, 2013, the Company's advertising costs were $125,942.

F-8

ONE WORLD HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3) Summary of Significant Accounting Policies, continued

Manufacturing and Production

The Company’s manufacturing and production costs are consistent with customary industry practices that will include three main costing phases: pre-production, production and post-production.  The pre-production phase is a setup process that involves development of all tools and equipment needed to produce the dolls and their accessories including clothes, shoes, jewelry as well as face painting masks.  This setup phase bears the greatest amount of up-front costs but will give us everything needed to produce multiple dolls and accessories from the same set of tools.  To date, Early Light Industrial Company LTD (“Early Light”) has fabricated molds for us to manufacture both the bodies and accessories of our current doll lines.  Our molds and other tooling are developed from high yield metals and synthetics that we believe will yield hundreds of thousands of units before needing replacement.

Mold capacity is based on expected demand considering both annualized and peak monthly demands.  A conservative estimate of actual mold yield and expected mold life is based on experienced estimates generated by One World Doll Project’s retained Engineering Consultant and verified by the supplier, Early Light.

The Company acquired molds for manufacturing dolls for $70,000 during the year ended December 31, 2011, paying $42,000 in cash and recording an account payable for $28,000 due at the initiation of production.  The Company did not acquire any molds for manufacturing dolls in the three months March 31, 2013.

Income Taxes

The Company uses the liability method of accounting for income taxes.  Under this method, deferred income taxes are recorded to reflect the tax consequences on future years of temporary differences between the tax basis of assets and liabilities and their financial amounts at year-end.  The Company provides a valuation allowance to reduce deferred tax assets to their net realizable value.

The Financial Accounting Standards Board (“FASB”) prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company recognizes a tax benefit associated with an uncertain tax position when, in the judgment of management, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, the Company initially and subsequently measures the tax benefit as the largest amount that the Company judges to have a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority. The liability associated with unrecognized tax benefits is adjusted periodically due to changing circumstances, such as the progress of tax audits, case law developments and new or emerging legislation. Such adjustments are recognized entirely in the period in which they are identified. The Company's effective tax rate includes the net impact of changes in the liability for unrecognized tax benefits and subsequent adjustments as considered appropriate by management. The Company has not incurred any interest or penalties related to potential underpaid income taxes and has recognized no assets or liabilities associated with uncertain tax positions as of and for the three months ended March 31, 2013, and 2012, or for the period from inception, October 1, 2010, to March 31, 2013. The Company files a separate federal income tax return in the United States and state tax returns where applicable.

Reclassifications

Certain items in the 2012 consolidated financial statements have been reclassified to conform to the 2013 consolidated financial statements’ presentation.

Loss Per Share

Basic loss per share is calculated based on the weighted average number of common shares outstanding during each period.  Diluted loss per share include shares issuable upon exercise of outstanding stock options, warrants or conversion rights that have exercise or conversion prices below the market value of the Company's common stock.  At March 2013 and 2012, common stock equivalents of 84,541,382 and 55,117,237, related to the conversion option under the convertible debentures, were excluded from the dilutive share calculation because their effect would have been antidilutive.  For the period ended March 31, 2013 and 2012, the Company’s basic and diluted net loss per share was $0.01 and $0.01.

F-9

ONE WORLD HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(3) Summary of Significant Accounting Policies, continued

New Accounting Pronouncements

In December 2011, the FASB issued an Accounting Standard Update “ASU” to the Balance Sheet, Topic 210 of the FASB ASC.  This update was issued to provide enhanced disclosures that willenable users of the financial statements to evaluate the effect or potential effect of netting arrangements on anentity's financial position. The amendments under this ASU, require enhanced disclosures byrequiring entities to disclose both gross information and net information about both instruments andtransactions subject to an agreement similar to a master netting arrangement. This scope would includederivatives, sale and repurchase agreements, reverse sale and repurchase agreements, and securitiesborrowing and lending arrangements. The ASU is effective retrospectively for annual periodsbeginning on or after January 1, 2013, and interim periods within those periods. The Company is evaluatingthe potential impact of the adoption of this new guidance on its consolidated financial statements.

In June 2011, the FASB issued an ASU to the Comprehensive Income, Topic 220 of the FASB ASC.  This update requires the components of net income and the components of other comprehensive income to be presented in either a single continuous statement of comprehensive income or in two separate but consecutive statements. This update eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity. In the two-statement approach, the first statement should present total net income and its components in the statement of net income followed consecutively by a second statement of other comprehensive income that should present total other comprehensive income, the components of other comprehensive income, and a total of comprehensive income. The updated guidance does not change the items that must be reported in comprehensive income. This updated guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and should be applied retrospectively. Early adoption is permitted. The Company currently has no elements of other comprehensive income and accordingly, the adoption of this guidance had no impact on its consolidated financial statements.

In May 2011, the FASB issued an ASU to the Fair Value Measurement Topic 820 of the FASB ASC. This update was issued in order to achieve common fair value measurement and disclosure requirements in U.S. GAAP and International Financial Reporting Standards. The update clarifies that (i) the highest and best use concept applies only to the fair value measurement of nonfinancial assets, (ii) specific requirements pertain to measuring the fair value of instruments classified in a reporting entity’s stockholders’ equity and, (iii) a reporting entity should disclose quantitative information about unobservable inputs used in a fair value measurement that is categorized within Level 3 of the fair value hierarchy. The update changes requirements with regard to the fair value of financial instruments that are managed within a portfolio and with regard to the application of premiums or discounts in a fair value measurement. In addition, the update increased disclosure requirements regarding Level 3 fair value measurements to include the valuation processes used by the reporting entity and the sensitivity of the fair value measurement to changes in unobservable inputs and the interrelationships between the unobservable inputs, if any. This amendment is effective during interim and annual periods beginning after December 15, 2011. Early adoption is not permitted. The Company’s adoption of this ASU did not have a material impact on its disclosures, consolidated results of operations or financial position.

 (4) Going Concern Consideration

The Company has incurred operating losses of $ 3,113,853 since inception, has limited financial resources and a working capital deficit of $866,223 at March 31, 2013. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company's consolidated financial statements for the period from inception, October 1, 2010, to March 31, 2013, 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. The Company currently has losses accumulated in the development stage of $3,498,821, through March 31, 2013. 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.

F-10

ONE WORLD HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(5) Reverse Merger and Recapitalization

The Company was formerly a public shell company with no significant assets, liabilities or operations. In July 2011, the Company's prior management and existing stockholders took steps to prepare the Company for a reverse merger/recapitalization transaction with OWDPI as follows:

On July 14, 2011, the former CEO, who owned all of the Company's Series D Convertible Preferred Stock, converted his Series D Convertible Shares and related accrued but unpaid dividends of $1,429,000 into 3,630,258 shares of the Company's common stock.

On July 15, 2011, the Company's stockholders approved a change in the Company's name from Environmental Safeguards, Inc. to One World Holdings, Inc. and an increase in authorized shares of common stock from 20,000,000 to 100,000,000 shares.

At July 21, 2011, the Company entered into significant transactions and agreements that have and will continue to have a major impact on the Company's financial position and results of operations. Such transactions and agreements are as follows:

The Company acquired OWDPI in an acquisition that was achieved through a Share Exchange Agreement (the "Share Exchange") with the stockholders of OWDPI. The result of the Share Exchange was a reverse merger treated as a recapitalization of OWDPI. The Company is the acquiring legal entity, but OWDPI is the reporting entity for accounting purposes because its shareholders emerged from the transaction with a controlling interest in the Company. The acquisition is treated as a recapitalization of OWDPI because, prior to the transaction, the Company had no significant assets, liabilities or operations.

The Company entered into a Share and Debt Cancellation Agreement (the "Cancellation Agreement") with its former CEO, under which the former CEO agreed to and performed the following:

· Cancelled his 1,818,364 of Series B Convertible Preferred Stock, representing 100% of the outstanding Series B Shares.

· Cancelled 6,256,760 shares of his common stock, representing approximately 32% of the total outstanding shares of the Company prior to the Share Exchange.

· Cancelled $533,000 of accrued but unpaid interest on accrued but unpaid preferred stock dividends. This cancellation was treated as a capital contribution.

· Cancelled $250,000 of notes payable, and related accrued but unpaid interest of $442,000. The total, $692,000,  was treated as a capital contribution.

The recapitalization of the Company was achieved by issuing 15.2856 shares of the Company for each share of OWDPI (taking into consideration a 38.214 for 1 exchange ratio followed by a 1 for 2.5 reverse split of the Company's shares [see below]). The Company issued a total of 52,005,437 shares under the Share Exchange, resulting in 57,431,029 outstanding shares. Accordingly, the former shareholders of OWDPI control approximately 90% of the Company after the Share Exchange.

The then current officers and directors of the Company resigned and were replaced by the officers and directors of OWDPI.

On July 21, 2011, the Company's board of directors approved a 1 for 2.5 reverse stock split. All information presented above gives retroactive application to the reverse stock split.

F-11

ONE WORLD HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(6) Manufacturing Equipment

The Company acquired molds for manufacturing dolls for $70,000 during the year ended December 31, 2011, paying $42,000 in cash and recording an account payable for $28,000 due at the initiation of production.  As of March 31, 2012 production has not begun, and therefore no depreciation has been recognized.  Upon the start of production, the molds will be depreciated using a straight-line method over their estimated useful life of five years.

(7) Notes Payable-Related Parties

On July 21, 2011, the Company received proceeds under a $20,000 short-term note payable to an individual shareholder. This note is uncollateralized, and originally bore no interest and was due two months from the date of issue. The note includes provisions for an extension period of an additional two months with interest at 15% per year, which period expired on November 21, 2011. As of December 31, 2012, the Company is currently in default on this note and is subject to the legal costs of up to $10,600, should the note holder elect to pursue collection as per the terms of the note. Interest on this note is currently being expensed and accrued monthly at a rate of 15% per year.

.

On July 21, 2011, the Company also assumed accounts payable to former officers and directors totaling $34,000. These accounts payable were converted to uncollateralized notes payable that bear interest of 16% per year and were due July 21, 2012. The notes are currently in default and interest is currently being expensed and accrued monthly at a rate of 16% per year.  The holders of these notes are shareholders in the Company.

On February 24, 2012, the Company received proceeds under a $33,000 short-term note payable to Stacey McBride-Irby, the Chief Product Development Officer and a Director. This note is uncollateralized, originally bore interest at a rate of 15% per year and was due two months from the date of issue. The note matured on April 18, 2012. The Company is currently in default on this note and is subject to legal costs of up to $7,590, should the note holder elect to pursue collection as per the terms of the note. Interest on the note is currently being expensed and accrued monthly at a rate of 16% per year.

(8) Convertible Debentures

During the period from August 24, 2011 to March 31, 2012, the Company issued various Convertible Debentures in the total amount of $161,000. During the three months ended March 31, 2013, the Company issued various Convertible Debentures in the total amount of $55,000. All debentures bear simple interest of 14% per annum with a one year maturity.  The outstanding principal and interest of the debenture is convertible into shares of common stock at a conversion price of $0.04 per share.  The conversion rate was based upon the market price of the Company's common stock as determined by reference to recent cash sales.  The Directors of the Company have approved the registration of 120% of the shares of common stock issuable upon conversion of the principal amount of the debentures issued in the year ending December 31, 2011 to allow for conversion of principal and interest on such debentures into shares of common stock.

Following is an analysis of the convertible debentures outstanding as of March 31, 2013 and 2012:

Description	Date of Agreement	Cost basis at Conversion		Original Amount		Unpaid principal balance		Term	Interest Rate
Debenture 1	8/24/2011	$	0.04	$	100,000	$	100,000	12 Months		14	%
Debenture 2	9/27/2011		0.04		10,000		9,219	12 Months		14	%
Debenture 3	10/10/2011		0.04		25,000		25,000	12 Months		14	%
Debenture 4	12/20/2011		0.04		6,000		6,000	12 Months		14	%
Debenture 5	2/17/2012		0.04		10,000		10,000	12 Months		14	%
Debenture 6	3/9/2012		0.04		5,000		5,000	12 Months		14	%
Debenture 7	3/19/2012		0.04		5,000		5,000	12 Months		14	%
At March 31, 2012				$	161,000	$	$160,219

F-12

ONE WORLD HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8) Convertible Debentures, continued

Description	Date of Agreement	Cost basis at Conversion		Original Amount		Unpaid principal balance			Term	Interest Rate
Debenture 8	4/29/2012		0.04		5,000		5,000		12 Months		14	%
Debenture 9	4/25/2012		0.04		10,000		10,000		12 Months		14	%
Debenture 10	7/1/2012		0.04		25,000		25,000		12 Months		14	%
Debenture 11	7/1/2012		0.04		25,000		25,000		12 Months		14	%
Debenture 12	7/21/2012		0.04		25,000		25,000		12 Months		14	%
Debenture 13	7/20/2012		0.04		62,000		62,000		12 Months		14	%
Debenture 14	7/29/2012		0.04		10,000		10,000		12 Months		14	%
Debenture 15	9/28/2012		0.04		25,000		25,000		12 Months		14	%
Debenture 16	9/01/2012		0.04		10,000		10,000		12 Months		14	%
Debenture 17	8/09/2012		0.04		15,000		15,000		12 Months		14	%
Debenture 18	10/9/2012		0.04		5,000		5,000		12 Months		14	%
Debenture 19	10/31/2012		0.04		12,500		12,500		12 Months		14	%
Debenture 20	11/20/2012		0.04		5,000		5,000		12 Months		14	%
Debenture 21	11/20/2012		0.04		2,000		2,000		12 Months		14	%
Debenture 22	11/20/2012		0.04		2,000		2,000		12 Months		14	%
Debenture 23	11/20/2012		0.04		5,000		5,000		12 Months		14	%
Debenture 24	12/11/12		0.04		2,500		2,500		12 Months		14	%
Debenture 25	12/29/12		0.04		2,500		2,500		12 Months		14	%
Debenture 26	1/5/13		0.04		2,500		2,500		12 Months		14	%
Debenture 27	1/6/13		0.04		50,000		50,000		12 Months		14	%
Debenture 28	2/21/13		0.04		2,500		2,500		12 Months		14	%
Debenture 1	8/24/2011		0.04		-		(38,644	)	12 Months		14	%
Debenture 2	9/27/2011		0.04		-		(9,219	)	12 Months		14	%
At March 31, 2013				$	464,500	$	415,856

Under the terms of the Convertible Debentures, the interest rate is increased to 16% if the Company fails to make payments when due. As of March 31, 2013, the Company had failed to make required payments on convertible cebentures totaling $51,000.

On January 18, 2013 debenture 2 totaling $9,219 was converted to 275,450 shares of common stock.

On March 11, 2013, the Company allowed a securities transfer on debenture 1 totaling $100,000 to five note holders.  On May 15 a partial conversion of $50,000 occurred which resulted in a derivate liability of $178,448 and a loss on debt settlement of $10,143.  We evaluated the financing transactions in accordance with ASC Topic 815, Derivatives and Hedging, and determined that the conversion feature of the convertible promissory note was not afforded the exemption for conventional convertible instruments due to its variable conversion rate. The note has 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. The Company elected to recognize the note under paragraph 815-15-25-4, whereby, there would be a separation into a host contract and derivative instrument. The Company elected to initially and subsequently measure the note in its entirety at fair value, with changes in fair value recognized in earnings. The Company recorded a derivative liability representing the imputed interest associated with the embedded derivative. The debt discount is amortized over the life of the note and recognized as interest expense. For the period ended March 31, 2013, the Company recognized $11,055 as interest expense. The derivative liability is adjusted periodically according to the stock price fluctuations. At the time of conversion, any remaining derivative liability will be charged to additional paid-in capital. For purpose of determining the fair value of the note, the Company used the Black Scholes option valuation model.

F-13

ONE WORLD HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(8) Convertible Debentures, continued

The significant assumptions used in the Black Scholes valuation are as follows:

Stock price on the valuation date $ 0.03- $ 0.05

Conversion price for the notes $ 0.0150 - $ 0.0250

Years to maturity 3 mos - 0.30

Risk free rate 0.100% - 0.080 %

Expected volatility 162.380% - 182.131 %

The change in derivative liability recognized in the financial statements as of March 31, 2013 was $71,499.

(9) Long-term Debt

In December 2010 and January 2011, the Company issued three $30,000 face value notes, bearing interest at 14% and due in monthly installments of principal and interest through July 2016. Each note was issued with a commitment to issue 917,136 shares of the Company's common stock and five year warrants to acquire 1,146,420 shares of the Company's common stock at $0.03271 per share. Each $30,000 note was issued with common stock and warrants valued at $18,236 and treated as a discount to be amortized over the term of the debt of 66 months, resulting in an effective interest rate on the debt of approximately 75%. The value of the shares, notes and detachable warrants was determined using their relative fair values as follows:  The notes were assigned a value equal to their face value; the common stock was assigned a value of $0.02617 per share based on sales of common stock to investors near the date of the notes and; the warrants were valued using the Black Scholes option pricing model with a term of five years, an exercise price of $0.03271, a market price at the date of grant of $0.02617, a risk free interest rate of 2.02%, an expected volatility of 100% and a dividend yield of 0%.

In March 2011, the Company issued a $40,000 face value note, bearing interest at 14% and due in monthly installments of principal and interest through April 2015. The note was issued with a commitment to issue 1,528,560 shares of the Company's common stock. The common stock issued with the note was assigned a relative value of $20,000 and treated as a discount to be amortized over the term of the debt of 48 months, resulting in an effective interest rate on the debt of approximately 69%.  The fair value assigned to stock was based upon the market price of the Company's common stock as determined by reference to recent cash sales.

Following is an analysis of the debt transactions:

	Date of	Principal		Interest
Description	Agreement	Amount		Rate			Term	Payment Terms
Note 1	December 2010	$	30,000		14	%	66 Months	$350 per month for 6
								months and $698 per
								month for 60 months,
								including interest
Note 2	December 2010		30,000		14	%	66 Months	$350 per month for 6
								months and $698 per
								month for 60 months,
								including interest
Note 3	January 2011		30,000		14	%	66 Months	$350 per month for 6
								months and $698 per
								month for 60 months,
								including interest
Note 4	March 2011		40,000		14	%	48 Months	$467 per month for 6
								months and $1,210 per
								month for 42 months,
								including interest

F-14

ONE WORLD HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(9) Long-term Debt, continued

To originate the notes payable, the Company issued common stock and warrants as follows:

			Warrants
	Date of	Shares		Exercise
Description	Agreement	Issued	Shares	Price		Term
Note 1	December 2010	917,136	1,146,420	$	0.03271	5 years
Note 2	December 2010	917,136	1,146,420		0.03271	5 years
Note 3	January 2011	917,136	1,146,420		0.03271	5 years
Note 4	March  2011	1,528,560	-		-	-

Following is an analysis of the note payable transactions:

	March 31,			December 31,
	2013			2012
Face value of notes	$	130,000		$	130,000
Proceeds from notes payable	$	130,000		$	130,000
Less value associated with common stock issued in connection with
origination of notes		(48,236	)		(48,236	)
Less value of detachable warrants issued in connection with
origination of notes		(26,472	)		(26,472	)
Net value of notes at date of origination		55,292			55,292
Amortization of discount associated with common stock and detachable warrants		37,190			32,659
Net long-term debt	$	92,482		$	87,951
Payments not made in accordance with note terms	$	37,518		$	39,652

Following is an analysis of future annual maturities of long-term debt at March 31, 2013:

		Contractual		Amortization		Annual
Year Ending		Principal		Of		Principal
December 31,		Payments		Discount		Maturities
2013			59,223		17,584		41,639
2014			31,727		14,407		17,320
2015			25,052		8,256		16,796
2016			13,998		1,802		12,196
2017			-		-		-
	Total future contractual payments	$	130,000	$	42,049	$	87,951

At March 31, 2013, the Company was in default on its long-term debt due its failure to make payments due under the terms of debt agreements.  Holders of notes did not express desire to declare entire principal balances due immediately, and note balances are reported with original maturities.

F-15

ONE WORLD HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(10) Advances from shareholder

Since its inception, the Company has relied on notes payable and advances from a shareholder to fund its ongoing operations. These advances have no specified repayment terms and no stated rate of interest. All advances are considered by the Company to be due on demand.  At March 31, 2013 and December 31, 2012, the advances from individuals were $18,464 and $12,964, respectively.

 (11) Stockholders' Deficit

On July 21, 2011, the Company's board of directors approved a 1 for 2.5 reverse stock split. All information presented below gives retroactive application to the reverse stock split.

During the period from October 1, 2010 to January 14, 2011, the OWDPI operated as an unincorporated entity, and filed its articles of incorporation as a Texas corporation on January 14, 2011. The accompanying consolidated financial statements present the operations of the Company from inception, as if the incorporation of OWDPI occurred at October 1, 2010. The shares issued to founders were originally valued at $0.01 per share ($0.0006542 post reverse merger- See Note 2) and were issued for services in establishing the Company. Following is an analysis of common stock transactions entered into by the Company during the period from inception, October 1, 2010, to December 31, 2012:

									Services
	Shares		Shares				Cash		and
Description	Issued		Unissued		Value		Proceeds		Incentive		Total
Founders’ shares at
at December 31, 2010		8,785,399		-	$	0.00065	$	-	$	5,748	$	5,748
Shares issued in reverse merger
and recapitalization transaction
(See Note 4)		5,425,592		-		-		-		-		-
Warrants issued for debt origination		-		-		-		17,648		-		17,648
Shares included in common stock
at December 31, 2010 and issued
with debt agreements		1,834,272		-		0.01026		18,824		-		18,824
Shares issued with debt		917,136		-		0.01026		9,412				9,412
agreements in 2011		1,528,560		-		0.01308		20,000		-		20,000
Shares issued for cash,		7,295,053		-		0.02481		181,000		-		181,000
net of expenses		1,000,000		-		0.01900		19,000		-		19,000
Shares issued for services to
consultants, management and		28,205,757		-		0.02617		-		738,100		738,100
directors and employees		500,000		-		0.02000		-		10,000		10,000
Unissued shares for services
to professional		-		767,500		0.04000		-		30,700		30,700
Shares issued for warrant
exercises		3,439,260		-		0.02617		90,000		-		90,000
Warrants issued with new debt
agreements		-		-		0.00785		8,824		-		8,824

F-16

ONE WORLD HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(11)           Stockholders' Deficit, continued

										Services
	Shares		Shares					Cash		and
Description	Issued		Unissued			Value		Proceeds		Incentive		Total
Obligation forgiven under consulting   agreements with related parties		-		-			-		-		200,500		200,500
Shares issued for services to   consultants, management and   directors and employees		7,369,300		-			0.04000		-		294,772		294,772
Unissued shares for services to   consultants, management and   directors and employees		-		18,125,000			0.04000		-		725,000		725,000
Issuances of shares unissued
at December 31, 2011		767,500		(767,500	)	$	-	$	-	$	-	$	-
Shares issued for services to   consultants, management and   directors and employees		1,500,000		-			.04000		-		60,000		60,000
Unissued shares for debt conversion		275,450		2,998,695					-				-
Unissued Class A Preferred stock		-		200,000			.50000		100,000				100,000
Issuances of shares unissued
at March 31, 2013		18,125,000		(18,125,000	)
March 31, 2013		86,968,299		3,198,695					464,708		2,064,820		2,529,528

(12) Income Taxes

We account for income taxes in accordance with the asset and liability method of accounting for income taxes prescribed by ASC Topic 740. 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 the taxable income in the years in which those temporary differences are expected to be recovered or settled.

(13) Consulting Agreements

The Company has 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 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 between January 1, 2011 and March 31, 2013. There were no specified performance requirements and no provision in the agreements for return of the shares.  At March 31, 2013, the compensation associated with the shares was $1,858,572. Compensation expense is calculated based on price of stock on the effective date of agreement and amortized over the period over which the services are provided to the Company. At March 31, 2012, the unamortized compensation associated with the shares was $589,235 reported as current and long-term prepaid consulting services on the balance sheet.

F-17

ONE WORLD HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(13) Consulting Agreements continued

For the three months ended March 31, 2013 and 2012, the compensation associated with the shares recognized and expensed was $188,391 and $134,959; and $1,669,848 for the period from inception, October 1, 2010, to March 31, 2013; and the remaining unamortized expense of $589,902 is reported under unamortized portion of stock issued for services.
 

(14) Related Party Transactions

Since its inception, the Company has operated without rent from the home of its Chairman and Chief Executive Officer. The value of the rent is believed by management to be immaterial to the consolidated financial statements.

Daniel Melton Media, Inc. owned by Corinda Melton, the Company CEO and a shareholder, and Trent Daniel, a shareholder, performed graphic design and web related services for the company and received cash payments of $3,250 for the period ending March 31, 2013, $3,553 for the period ending March 31, 2012, and $34,180 for the period

from inception, October 1, 2010 to March 31, 2013.

In addition, Daniel Melton Media, Inc. advanced to the Company $11,060 during the period ended March 31, 2013, $2,540 during the period ended March 31, 2012, and $33,064 for the period from inception, October 1, 2010 to March 31, 2013. These funds are reflected on the balance sheet under balances due to shareholders.

On July 21, 2011, the Company received proceeds under a $20,000 short-term note payable to an individual who is also a shareholder of the Company. This note is uncollateralized, and bears interest of 15% per year. The Company is currently in default on this note and is subject to legal costs of up to $10,600, which are considered a default fee under the terms of the note. As of the date of this filing, the note has not been demanded, however, the default fee is currently recorded on the balance sheet as part of accrued liabilities, and interest on the outstanding principal continues to be expensed monthly.

On July 21, 2011, the Company assumed accounts payable to former officers and directors totaling $34,000. These accounts payable were converted to uncollateralized notes payable that bear interest of 16% per year and were due July 21, 2012. These notes are recorded on the Balance Sheets under notes payable – related parties under current liabilities. The notes are currently in default and interest is currently being expensed monthly. Under the terms of these notes payable, there are no additional fees or costs associated with default by the Company.

On February 24, 2012, the Company entered into a promissory note in the total amount of $33,000, with Stacey McBride Irby, a Director of the Company. The note has a sixty-day maturity, and bears interest of 15% per year starting on September 21, 2011. The Company is currently in default on this note and is subject to legal costs of up to $7,590, which are considered a default fee under the terms of the note. As of the date of this filing, the note has not been demanded, however, the default fee is currently recorded on the balance sheet as part of accrued liabilities, and interest on the outstanding principal continues to be expensed monthly.

On March 9, 2012 the Company issued a $5,000 convertible debenture to Inez McBride, mother of Director Stacey McBride-Irby.  The debenture bears simple interest of 14% per annum with a one-year maturity.  The outstanding principal and interest of the debenture is convertible into shares of common stock at a conversion price of $0.04 per share.  The conversion rate was based upon the market price of the Company's common stock as determined by reference to recent cash sales.

On March 9, 2012, the Company granted 219,300 shares of common stock to Sherman Walker, brother of Corinda Melton, CEO, for payment on an invoice for services valued at $8,772. The cost basis of the stock is $0.04 per share.  The conversion rate was based upon the market price of the Company's common stock as determined by reference to recent cash sales

On July 2, 2012 the Company received proceeds under a $25,000 short term note payable to Sonya Carothers who is a shareholder of the Company. This note is uncollateralized, bears a simple interest rate of 14% per annum and has one year maturity.  The outstanding principal and interest of the debenture is convertible into shares of common stock at a conversion price of $0.04 per share. The conversion rate was based upon the market price of the Company's common stock as determined by reference to recent cash sales.

F-18

ONE WORLD HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(14) Related Party Transactions, continued

The Company paid Trent Daniel, a shareholder, for contract services related to marketing, graphic design, business and relationship development. The payments totaled $42,936 for the three months ended March 31, 2013, $7,903 during the three months ended March 31, 2013 and $204,876 for the period from inception October 1, 2010 to March 31, 2013.

As of March 31, 2013, the Company had issued and unissued shares of stock to the following related parties:

Stockholder	Shares issued		Unissued Shares		Value ($)		Relationship	Nature of Services
Henderson J. Smith, Jr.		2,674,980		-		30,000	Brother-in-law of company founder Trent Daniel	Business Development services
Sarah Marie Daniel		1,389,280		-		45,000	Wife of company founder Trent Daniel	Creative writing services
Nedra Hall		1,007,140		-		35,000	Sister-in-law of company founder Trent Daniel	Bookkeeping services
Bradley Melton		3,929,405				93,200	Son of Corinda Melton, CEO	Purchased shares and provided business development services
Sherman Walker		601,440		-		18,772	Brother of Corinda Melton, CEO	Purchased  shares for cash
Wilma Delaney		687,852		-		18,000	Director and sister of Corinda Melton, CEO	Director related services
Robert Hines		1,452,132		-		38,000	Director	Director related services and financial consulting
Stacey McBride-Irby		6,381,738		-		167,000	Chief Product Development Officer	Cash purchase and company employee
Corinda Melton		4,707,965		-		3,080	CEO	Employee
Trent Daniel		9,077,434				202,668	Founder	Marketing and relationship development services

(15) Non-Cash Investing and Financing Activities

Following is analysis of non-cash investing and financing activities during the three months ended March 31, 2013 and 2012, and for the period from inception, October 1, 2010, to March 31, 2013:

							Inception,
	Three Months			Three Months			October 1, 2010
	Ended			Ended			to March 31,
	March 31, 2013			March 31, 2012			2013
Debt discount associated with long-term debt
issuance		$	-		$	7,467		$	37,190
Debt discount associated with derivative liability     in accounts payable		$	50,301		$	-		$	50,301

F-19

ONE WORLD HOLDINGS, INC.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(16)    Contingencies

From time to time, the Company may be involved in various claims and legal actions arising in the ordinary course of business. Management, along with the assistance of counsel, will determine the ultimate disposition and potential impact

these matters on the Company's financial condition, liquidity or results from operations.  As of March 31, 2013, there were no pending claims or legal actions in which the Company was involved.

(17)    Subsequent Events

On April 19, 2013 the Company entered into a one year Convertible debenture with Asher Enterprises, Inc. in the amount of $32,500.  The note bears an interest rate of 8% per annum.

On April 2, 2013, the Company entered into a 60-day promissory note in the total amount of $50,000, with Curtis and Janet Threat. The note bears an interest rate of 16% per annum.

During April and May 2013, the Company allowed several of its convertible debenture holders to transfer their convertible debentures totaling $90,000 through a Securities Purchase agreement. On April 18, 2013 a partial conversion of $5,000 was approved by the board of directors however the conversion has not occurred as of the date of this report, resulting in unissued common stock totaling 333,334.

On April 10, 2013, the Company entered into a four month Strategic Consulting agreement with Mosaic Media Group, LLC covering business planning, marketing and advertising advice and planning and public relations and investor relations services.  Consideration is in the form of a cash payment of $12,500.

On May 1, 2013, the Company entered into a two-year media and marketing services agreement with Shade Global. Consideration for this contract will be in the form of cash and warrants.

On May 3, 2013, the Company changed auditing firms and retained HJ & Associates, LLC to provide future audit services.  Form 8k reflecting the change was filed with the SEC on May 9, 2013.

F-20

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

As used in this 10Q, 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 operations.

Some of the key factors which could cause our future financial results and performance to vary from those expected 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 which 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.

General

One World Holdings, Inc. (“Holdings”, a Nevada Corporation, formerly known as Environmental Safeguards, Inc.), is a Houston based development stage company with plans to release a line of mainstream multicultural dolls aimed at high-end collectors and young pre-teen girls. The Company’s operations are conducted through its 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”. For the first year of operations, One World will be focused on direct sales and Internet sales and we will not require a storefront for operations.  Manufacturing of our dolls will be outsourced to a physical plant facility in the People’s Republic of China owned by a third-party manufacturer we have selected.

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Reverse Merger and Recapitalization

On July 21, 2011, Holdings entered into a reverse merger/recapitalization transaction with OWDPI. The reverse merger which resulted in a recapitalization of OWDPI was achieved through a Share Exchange Agreement (the "Share Exchange") between the shareholders of One World and OWDPI. Holdings was the acquiring legal entity in the transaction, but OWDPI is the surviving reporting entity for accounting purposes because its former shareholders emerged from the transaction with a controlling interest. The acquisition is treated as a recapitalization of OWDPI because, prior to the transaction, Holdings had no significant assets, liabilities or operations.

The recapitalization of OWDPI was achieved by exchanging each share of the OWDPI for 15.2856 shares of Holdings (taking into consideration a 38.214 for 1 exchange ratio followed by a 1 for 2.5 reverse split of the Holding’s shares). OWDPI's shareholders received a total of 52,005,437 shares under the Share Exchange, resulting in 57,431,040 outstanding shares (after the reverse split). Accordingly, OWDPI's former shareholders control approximately 90% of the Company after the Share Exchange. The share exchange and reverse stock split have been given retroactive effect in this discussion and in the accompanying consolidated financial statements.

Results of Operations

During the period from inception, October 1, 2010, to March 31, 2013, substantially all of our efforts have been focused on fundraising, developing a management team and positioning the Company to manufacture our dolls.  

Results of Operations For The Three-Month Period Ended March 31, 2013 Compared To The Three-Month Period Ended March 31, 2012.

The following is an analysis of our operating results for the three-months ended March 31, 2013 and 2012. 

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	Quarter			Quarter
	Ended			Ended
	March 31,			March 31,			Increase
	2013			2012			(Decrease)
General and administrative expenses:
Professional fees	$	26,429		$	42,580		$	(16,151)	)
Consulting fees		188,391			134,959			53,432
Contract labor		46,728			3,597			43,131	)
Salary Expense		70,500			70,500			-
Marketing and advertising		31,413			9,338			22,075	)
Computer and internet charges		7,491			3,203			4,288	)
Research and development		750			28,439			(27,689)	)
Other		16,247			12,785			3,462
Total general and administrative expenses		1,178,653			1,413,927			(235,274	)
Other expenses:
Interest expense		79,620			38,139			41,481
Recapitalization expense		-			31,667			31,667
Total other expenses		79,620			69,806			9,814
Net loss	$	(1,258,273	)	$	(1,483,733	)	$	(225,460)

Professional fees decreased $16,151 to $26,429 for the three-months ended March 31, 2013, compared to $42,580 for the three-month period ended March 31, 2012.  The decrease in professional fees relates primarily to the decrease in legal and accounting services as we had reduced work performed in connection with our registration statement during the three-month period ended March 31, 2013, compared to the prior period.

Consulting fees increased $53,432 to $188,391 for the three-month period ended March 31, 2013 compared to $134,959 for the three-month period ended March 31, 2012.   Consulting fees were incurred primarily in the form of stock issuances to consultants. We have hired over 20 consultants from time to time to help us establish and market our Company and our products.  Certain consultants had consulting agreements that provided for share issuances, which shares were issued at the inception of the agreements.  Accordingly, the compensation associated with the shares was recognized immediately, based on the estimated fair value of the shares issued.   The number of consultants has generally increased in the past periods.  The Company will continue to incur consulting fees in the future, but such fees are expected to be at reduced levels.

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:

1.      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;

2.      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;

4

3.      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

4.      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.

We incurred contract labor expenses of $46,728 and $3,597 for the three-months ended March 31, 2013 and March 31, 2012, for payments to our management team. Contract labor fees will continue as primary expenses in future periods, and the Company currently expects the expenses to be at similar levels for the near term. However, such fees may increase as the Company matures.

We incurred research and development expenses of $750 and $28,439 for the three-month period ended March 31, 2013 and for the three-month period ended March 31, 2012, primarily related to the initial sculpture design, development and testing of the doll prototypes. We expect to incur additional research and development costs of approximately $10,000 relating to the release of our first twelve doll designs.

We had salary expense of $70,500 for the three-month period ended March 31, 2013, compared to $70,500 for the three-month period ended March 31, 2012.   Salary expense was associated with fees paid and accrued for officer salaries pursuant to the employment agreements described in greater detail below under “Current Levels of Executive Compensation and Employment Agreements”.

Marketing and advertising expenses increased by $22,075 to $31,413 for the three-month period ended March 31, 2013 compared to $9,338 for the three-month period ended March 31, 2012.   We plan to spend an additional $300,000 on an extensive media marketing and advertising campaign once the capital to fund such a campaign is raised and the dolls are ready for release to the doll collector and public markets.

Other general and administrative expenses increased $3,462 to $16,247 for the three-month period ended March 31, 2013 from $12,785 for the three-month period ended March 31, 2012 due to reduced working capital.   We will continue to incur other general and administrative expenses on an ongoing basis and expect these costs to increase as we launch our doll line and our operations mature.

Interest expense increased $34,525 to $45,393 for the three-month period ended March 31, 2013 from $10,868 for the three-month period ended March 31, 2012.   The increase in interest expense relates to increased borrowings pursuant to convertible debentures and the increased amount of interest which accrued on such convertible debentures. Due to the lack of revenues, we have primarily funded our operations by borrowing, typically at relatively high interest rates.

Net loss increased by $305,664 to $621,933 for the three-month period ended March 31, 2013, compared to a net loss of $316,269 for the three-month period ended March 31, 2012.  The increase in net loss is principally due to the commencement of losses on derivatives in connection with our issued of debentures.

Liquidity and Capital Resources

As of March 31, 2013, we had total assets of $661,260, consisting substantially of prepaid consulting fees which were primarily paid for by the issuance of our common equity. We have limited other assets, such as cash of $2,025 and approximately $70,000 of molds to produce dolls.

5

We had total liabilities of $1,385,638 as of March 31, 2013, which included current liabilities of $1,345,868, including, convertible debentures of $464,500 (described in greater detail below), notes payable to related parties of $87,000, current portion of long-term debt of $52,712, amounts due to shareholders of $18,646, customer deposits of $4,606, accounts payable and accrued liabilities of $629,361, and accrued interest payable of $87,073. 

Included in notes payable related parties as of March 31, 2013, was $20,000 owed under a note payable, originally due on September 21, 2011, which accrues interest at the rate of 15% per annum. The Company is currently in default on this note and is subject to the legal costs of up to $10,600, should the note holder elect to pursue collection as per the terms of the note. Interest on this note is currently being expensed and accrued monthly. The holder of this note is a shareholder in the Company. Additionally included in notes payable related parties was $34,000 assumed on July 21, 2011, relating to accounts payable to former officers and directors which were converted to uncollateralized notes payable which bear interest of 16% per year and were due July 21, 2012. The notes are currently in default and interest is currently being expensed and accrued monthly.  The holders of these notes are shareholders in the Company.  Finally, notes payable related parties included the $33,000 short term note payable to Stacey McBride-Irby, our Chief Product Development Officer and Director, described in greater detail below.

We had negative working capital of $866,843 and total losses accumulated during the development stage of $3,498,821.

We had $170,622 of net cash used by operating activities for the three-month period ended March 31, 2013, which was mainly due to a net loss offset by common stock issued for services and an increase in accounts payable and accrued liabilities. 

We had $170,500 of net cash provided by financing activities for the three-month period ended March 31, 2013, which was mainly due to $55,000 of proceeds from the sale of convertible debentures and a $100,000 private placement.

Liabilities and Commitments

During the period from inception, October 1, 2010, to December 31, 2010, we issued two $30,000 unsecured face value notes, bearing interest at 14% and due in monthly installments of interest only of $350, each, for the first six months and interest and principal of $698, each, for the remaining 60 months.

In January 2011, we issued a $30,000 unsecured face value note, bearing interest at 14% and due in monthly installments of interest only of $350 for the first six months and  interest and principal of $698 for the remaining 60 months.

In March 2011, we issued a $40,000 unsecured face value note, bearing interest at 14% and due in monthly installments of interest only of $467 for the first six months and interest and principal of $1,210 for the remaining 42 months.

On July 21, 2011, the Company issued a $20,000 short-term note payable to an individual. This note is uncollateralized, originally bore no interest and was originally due two months from the date of issue. The note includes provisions for an extension period of an additional two months with interest at 15% per year, which period expired on November 21, 2011. The company is currently in default on this note and is subject to legal costs of up to $10,600, should the note holder elect to pursue collection.  Interest on this note is currently being expensed and accrued monthly, and the default fee is being accrued in current liabilities.

6

On July 21, 2011, the Company also assumed accounts payable to former officers and directors totaling $34,000. These accounts payable were converted to uncollateralized notes payable that bear interest of 16% per year and were due July 21, 2012.  The notes are currently in default and interest is currently being expensed and accrued monthly. The holders of these notes are shareholders in the Company.

On February 4, 2012 the Company received proceeds under a $33,000 short term note payable to Stacey McBride-Irby, our Chief Product Development Officer and Director. This note is uncollateralized, originally bore an interest rate of 15% and was originally due two months from the date of issue. The note matured on April 18, 2012. The Company is currently in default on this note and is subject to the legal costs of $7,590, should the note holder elect to pursue collection as per the terms of the note. Interest on this note is currently being expensed and accrued monthly.

During the period from August 24, 2011 to March 31, 2012, the Company issued various Convertible Debentures in the total amount of $161,000. During the three months ended March 31, 2013, the Company issued various Convertible Debentures in the total amount of $55,000. All debentures bear simple interest of 14% per annum with a one year maturity.  The outstanding principal and interest of the debenture is convertible into shares of common stock at a conversion price of $0.04 per share.  The conversion rate was based upon the market price of the Company's common stock as determined by reference to recent cash sales.  The Directors of the Company have approved the registration of 120% of the shares of common stock issuable upon conversion of the principal amount of the debentures issued in the year ending December 31, 2011 to allow for conversion of principal and interest on such debentures into shares of common stock.

Following is an analysis of the convertible debentures outstanding as of March 31, 2013 and 2012:

Description	Date of Agreement	Cost basis at Conversion		Original Amount		Unpaid principal balance		Term	Interest Rate
Debenture 1	8/24/2011	$	0.04	$	100,000	$	100,000	12 Months		14	%
Debenture 2	9/27/2011		0.04		10,000		9,219	12 Months		14	%
Debenture 3	10/10/2011		0.04		25,000		25,000	12 Months		14	%
Debenture 4	12/20/2011		0.04		6,000		6,000	12 Months		14	%
Debenture 5	2/17/2012		0.04		10,000		10,000	12 Months		14	%
Debenture 6	3/9/2012		0.04		5,000		5,000	12 Months		14	%
Debenture 7	3/19/2012		0.04		5,000		5,000	12 Months		14	%

Debenture 8	4/29/2012	0.04		5,000		5,000		12 Months	14	%
Debenture 9	4/25/2012	0.04		10,000		10,000		12 Months	14	%
Debenture 10	7/1/2012	0.04		25,000		25,000		12 Months	14	%
Debenture 11	7/1/2012	0.04		25,000		25,000		12 Months	14	%
Debenture 12	7/21/2012	0.04		25,000		25,000		12 Months	14	%
Debenture 13	7/20/2012	0.04		62,000		62,000		12 Months	14	%
Debenture 14	7/29/2012	0.04		10,000		10,000		12 Months	14	%
Debenture 15	9/28/2012	0.04		25,000		25,000		12 Months	14	%
Debenture 16	9/01/2012	0.04		10,000		10,000		12 Months	14	%
Debenture 17	8/09/2012	0.04		15,000		15,000		12 Months	14	%
Debenture 18	10/9/2012	0.04		5,000		5,000		12 Months	14	%
Debenture 19	10/31/2012	0.04		12,500		12,500		12 Months	14	%
Debenture 20	11/20/2012	0.04		5,000		5,000		12 Months	14	%
Debenture 21	11/20/2012	0.04		2,000		2,000		12 Months	14	%
Debenture 22	11/20/2012	0.04		2,000		2,000		12 Months	14	%
Debenture 23	11/20/2012	0.04		5,000		5,000		12 Months	14	%
Debenture 24	12/11/12	0.04		2,500		2,500		12 Months	14	%
Debenture 25	12/29/12	0.04		2,500		2,500		12 Months	14	%
Debenture 26	1/5/13	0.04		2,500		2,500		12 Months	14	%
Debenture 27	1/6/13	0.04		50,000		50,000		12 Months	14	%
Debenture 28	2/21/13	0.04		2,500		2,500		12 Months	14	%
Debenture 1	8/24/2011	0.04		-		(38,644	)	12 Months	14	%
Debenture 2	9/27/2011	0.04		-		(9,219	)	12 Months	14	%
At March 31, 2013			$	464,500	$	415,856

7

Under the terms of the Convertible Debentures, the interest rate is increased to 16% if the Company fails to make payments when due. As of March 31, 2013, the Company had failed to make required payments on convertible debentures totaling $51,000.

On January 18, 2013 debenture 2 totaling $9,219 was converted to 275,450 shares of common stock.

On March 11, 2013, the Company allowed a securities transfer on debenture 1 totaling $100,000 to five note holders.  On May 15 a partial conversion of $50,000 occurred which resulted in a derivate liability of $178,448 and a loss on debt settlement of $10,143.

Need For Funding And Prior Sources of Capital

The Company has incurred losses from operations since inception, has limited financial resources, has a negative working capital position at March 31, 2013 and has total losses accumulated in the development stage of $3,498,821 as of March 31, 2013. The losses to date represent costs incurred primarily to pay the management team and individuals engaged by the Company to design and develop the Company’s 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. Through March 31, 2013, the Company has recorded $1,258,273 of expense applicable to services, primarily management and consulting services, the majority of which was paid through the issuance of common stock.

The Company’s primary sources of capital since inception have come from either private placement sales of common stock, the issuance of debt or advances from individuals. Through December 31, 2012, the Company had received capital from the following sources:

Source	Amount
Payment to convertible debentures		(781	)
Proceeds from convertible debentures		464,500
Proceeds from notes payable		10,000
Proceeds from notes payable – related parties		53,000
Proceeds from long-term debt		130,000
Proceeds from issuance of common stock
in a private placement, net of expenses		300,000
Proceeds from warrant exercise		90,000
Proceeds from advances from shareholders		38,564
Repayments on advances		(20,100	)
Net cash provided by financing
activities		1,065,183

8

We estimate that we are currently using approximately $31,300 per month in our operations.  We believe that our capital requirements for the next 12 months will be approximately $1.5 million. Our 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.  Along these lines we have received services including marketing and branding, photography services, business development consulting, video production, accounting services, corporate compliance consulting, and corporate strategic development services in exchange for 54,987,557 shares of stock, which were committed of which 36,842,557 shares were granted prior to December 31, 2012.  We have also received $464,500 in connection with the sale of convertible debentures through March 31, 2013.

After a market for our common stock develops, which we hope will develop during the mid to late 2013, we plan to raise funds through a private offering of our common stock to accredited investors.  We can provide no assurances that a market for our common stock will ever develop however.  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 which 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.

We currently do not have the financing to implement the strategies discussed herein and throughout this report.  Although we do not have definitive plans to obtain such funds, after a market for our common stock develops, we plan to seek to raise funds through a private offering of our common stock and/or notes payable to accredited investors.  We currently have no commitments or letters of intent with any third party, and we are not currently under negotiations with any third party related to a private offering to accredited investors.

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.

Our business plan currently anticipates our first sales of dolls to begin in the third quarter of 2013, and our first inventory expenditures to occur in the second quarter of 2013, funding permitting; however, we anticipate a loss from operations in 2013.  We hope to raise needed equity or debt financing. The sale of our common stock through any future private offering will have a dilutive impact on existing common stockholders.

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.   As of March 31, 2013, we had expensed in excess of $1 million in connection with common stock issued for services rendered.

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As of the filing of this document, the Company has two consulting agreements that require cash payments for services rendered, one with Jacob Heikes Enterprises LLC with monthly payments of $1,500, and one with Trent Daniel with monthly payments up to $11,500 per month.  In order to keep the cash portion of Mr. Daniel’s agreement from negatively affecting the Company’s liquidity, payments are made based on the Company’s ability to pay and thus his average monthly payment has averaged $6,409.   Mr. Daniel will receive payments of $11,500 per month when the Company has the ability to pay that amount and meet its other expenses in the discretion of the Board of Directors.  In addition, no amounts over the actual payments previously made to Mr. Daniel are accrued or owed.  Although these cash payments have had a substantial impact on the Company’s liquidity, the services provided by these consultants are vital to the growth of the Company.  These cash payments are included in the Company’s operating expenses and the $31,300 of monthly expenses we anticipate needing to continue our operations as described in greater detail above.

Plan of Operations and Related Risks

We are currently implementing our plan to manufacture and market our line of dolls in the United States. We currently have two sets of prototypes of our dolls on hand, each set consisting of two collectible dolls, and five fashion dolls.

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 March 31, 2013 and anticipate that an additional $50,000 will be invested in these items that 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.

As described above, we believe that our capital requirements for the next 12 months will be approximately $1.5 million.  If we are able to raise this amount of capital, we anticipate using the funds as follows:

Use of Funds
Capital Expenditures:
Production/Tooling/Warehousing	$	126,000
Furnishings/Improvements	$	24,000
Cost of Capital	$	150,000
			$	300,000
Working Capital
Administrative/Office Expense:	$	80,000
Inventory Purchases	$	250,000
Staff Expansion	$	350,000
Audit/Board/Legal	$	200,000
Marketing and PR Activities	$	320,000
			$	1,200,000

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Target MarketAccording to childstats.org, there are 25 million children in the U.S. between the ages of 6-11. Our first year goal is to capture at least 0.73% (182,500) of this market and to obtain at least 2.36% (590,000) of this market by the end of year three. The percentage of 0.73%  for year one has been calculated based on the amount of dolls One World intends to manufacture and sell (200,000) upon funding.  Our target for year three of 2.36% is based upon implementing the Company’s marketing and public relations plan upon funding, which includes repeat customers.

With a primary focus on African-American broadcast and print outlets, we believe we can quickly capture a significant portion of the African-American target market.  In order to accomplish this, we will maintain two first year marketing and public relations focal points.  The first will be African-American mass media, and the second will be through web and social media. 

Business Strategy Our goal is to be the leading provider of multi-cultural doll products to the specialty, affinity, and mass merchandise retail marketplace through a focus on direct and online sales models.  Key elements of our strategy include:

1. Developing a strong online presence for One World. By focusing our core sales on internet and catalog sales, we believe we will be able to capture our market while eliminating the “eye level competition” we would face in the retail stores.

2. Driving business by utilizing the celebrity of our lead doll designer to promote the products globally. We will be conducting a major global Public Relations (“PR”) campaign around Stacey McBride-Irby, our doll creator.

3. Using the power of celebrity partners and PR to develop relationships with major store chains and affinity organizations.  In year two,we intend to conduct celebrity VIP meet and greets to introduce and promote One World to major store chains.

Product Launch and Implementation   One World is expected to be nationally introduced to consumers in the first half of 2013 largely through a very comprehensive, strategic, and highly targeted public relations effort.  We will use a national media relations campaign to launch the Company and our products, emphasizing the creative background and depth of our business team and the cultural impact of our products.  Our marketing campaign will include major print, online and broadcast news media.  Other grassroots and social media campaigns will be coordinated and directed at the creation of a significant groundswell of interest and word-of-mouth buzz.

To begin our entry into the market place, we anticipate releasing our first five doll designs in in the second quarter of 2013.  In the second quarter of 2013, we also plan to begin our mass marketing and public relations campaign around the initial designs, funding permitting. Our ability to implement this campaign will depend on our ability to raise adequate capital. 

In order to produce the highest quality dolls we have engaged a third-party manufacturer in China to manufacture our initial inventory of dolls, taking advantage of its experience and more than 25 million square feet of production and warehousing space.  Our manufacturer’s client base include some of the world’s biggest toy and game developers including Mattel, Fisher-Price, MGA Entertainment, Lego, Hasbro, Playskool, MTV, Lionel, Disney and many more.

Manufacturing is dependent on a third-party manufacturer.  We will be dependent on a third-party manufacturer, and if our relationship with the manufacturer is harmed or if they independently encounter difficulties in the manufacturing of our dolls, we could experience product defects, production delays, cost overruns or an inability to fulfill orders on a timely basis, any of which could adversely affect our business, financial condition and results of operations.

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In the future, we may depend on multiple third-party manufacturers. Our manufacturers will develop, provide and use the tools, dies and molds that we own to manufacture our products. We have limited control over the manufacturing processes themselves. As a result, any difficulties encountered by the third-party manufacturers that result in product defects, production delays, cost overruns or the inability to fulfill orders on a timely basis could adversely affect our business, financial condition and results of operations.

Manufacturing operations will be outside of the United States, subjecting the Company to risks common to international operations.We will use a third-party manufacturer located principally in China which may subject us to the risks normally associated with international operations, including; political instability, civil unrest and economic instability; greater difficulty enforcing intellectual property rights and weaker laws protecting such rights; complications in complying with laws in varying jurisdictions and changes in governmental policies; greater difficulty and expenses associated with recovering from natural disasters; transportation delays and interruptions; the potential imposition of tariffs; and challenges to the pricing of intercompany transactions made by taxing authorities in the United States, with potential increases in income taxes.

Our reliance on external sources of manufacturing can be shifted, over a period of time, to alternative sources of supply, should such changes be necessary. However, if we are prevented from obtaining products or components for a material portion of our product line due to political, labor or other factors beyond our control, our operations will be disrupted while alternative sources of products are secured. Also, the imposition of trade sanctions by the United States against a class of products imported by us from China, or the loss of “normal trade relation” status by China, could significantly increase our cost of products imported from that nation. Because of the importance of our international sourcing of manufacturing to our business, our financial condition and results of operations could be significantly and adversely affected if any of the risks described above occurred.

Production Process.  The production process for the units will take approximately 10 weeks from the time that tooling, engineering specifications and prototypes have been approved. Once production starts, we anticipate having the capacity to produce up to 40,000 dolls per week, as our needs require. We have already completed many of the production first steps and are now in the process of testing the tooling. This is estimated to take roughly 5-7 weeks and is planned to put us on track to start full scale production in the fourth quarter of 2013, funding permitting.

Manufacturing issues that may affect our planned production time frame are typically experienced during the early stages of the production process and many of those early stage activities have been completed successfully. Accordingly, we do not anticipate any significant delaying factors unless they occur at the production (assembly line) stage. These factors and their contingencies have been vetted by our manufacturer and based on their production experience, clientele and success in the market place we believe that our manufacturer has adequately planned for these factors and is capable of addressing them to our satisfaction.

If the need arises for us to fulfill rush orders, we believe that our manufacturer can increase production with limited out-of-pocket cost to us, other than the increased shipping costs that would occur from air shipping as opposed to normal sea lane shipping.

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Quality Control Measures.  Our manufacturer provides inspection services.  However, as an additional level of protection, prior to the release of the first few shipments of our product, we plan to use a third party inspector located in China to ensure that we are compliant with all safety requirements associated with the age grading for our products.  Our third-party inspector will perform tests of our product for the presence of unsafe chemicals or heavy metals and tests for unsafe physical attributes of our product.  Our products will comply with EN-71-1 standards for toy safety established by the European Committee for Standardization and can be sold in the US, Europe, and Canada.

Shipping.  Product is purchased FOB (Freight-on-Board) common carrier and is our property once each shipment is transferred to a selected air or ocean carrier.

Inventory/Warehousing. Initially, inventory will be maintained at a corporate warehouse that we plan to lease in the fourth quarter of 2013, funding permitting.  Inventory will be tracked using a computerized database.

Distribution.  We will distribute our products from a corporate warehouse in Houston, Texas. We will implement a fulfillment and delivery system that we will use to record and track all orders placed via our online point of sale system and we expect to have those orders fulfilled and shipped within 48 hours of order receipt.

Costs.  Our costs are consistent with customary industry practices and will include three main costing phases: pre-production, production and post-production.  The pre-production phase is a setup process that involves development of all tools and equipment needed to produce the dolls and their accessories including clothes, shoes, jewelry as well as face painting masks.  This setup phase bears the greatest amount of up-front costs but should provide us everything needed to produce multiple dolls and accessories from the same set of tools.  Our molds and other tooling are developed from high yield metals and synthetics that we believe will yield hundreds of thousands of units before needing replacement. The Company has estimated the yield capacity of the molds by taking into consideration the past experience of management and certain engineering estimates provided by Early Light.  Additionally, Early Light has warranted our molds for a minimum of 400,000 units.  We have invested $70,000 in these molds and tooling, as of March 31, 2013 and anticipate that an additional $50,000 will be invested in these items.  We do not yet have a committed source of funding to cover this anticipated capital expenditure.

The second phase, production, will include the actual production, assembly and packaging of the dolls. This process will also include testing of the dolls for safety requirements set by the U.S. government. The third phase will include shipping and further safety and hazards testing. In the event that any safety requirements are not met, there are risks of delays in getting the dolls to market in the expected timeframe.   We do not yet have a committed source of funding to finance the second or third phases described above.

Trademarks, Copyrights and PatentsWe anticipate most of our products being sold under trademarks, trade names, and copyrights, and some products may incorporate patented devices or designs. Such intellectual property could become significant assets in that they will provide product recognition.  We intend on seeking patent, trademark, or copyright protection covering our products.  We will use our best efforts to ensure the rights to these properties are adequately protected, but there can be no assurance that our rights can be successfully asserted in the future or will not be invalidated, circumvented, or challenged.

Government Regulations.  Any dolls we sell in the United States will be subject to the provisions of the Consumer Product Safety Act, the Federal Hazardous Substances Act, and the Consumer Product Safety Improvement Act of 2008, and may also be subject to the requirements of the Flammable Fabrics Act or the Food, Drug, and Cosmetics Act, and the regulations promulgated pursuant to such statutes. These statutes ban from the market consumer products that fail to comply with applicable product safety regulations. The Consumer Product Safety Commission (“CPSC”) may require the recall, repurchase, replacement, or repair of any such banned products or products that otherwise create a substantial risk of injury and may seek penalties for regulatory noncompliance under certain circumstances.  Similar laws exist in some states and in many international markets.

We will attempt to maintain a high level of quality control to help ensure compliance with various federal, state, and applicable foreign product safety requirements, if any.  We may in the future, however, experience issues in products that result in recalls, withdrawals, or replacements of products. A product recall could have a material adverse effect on our results of operations and financial condition.  A product recall could also negatively affect our reputation and the sales of our other products.

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Off Balance Sheet Arrangements – We have no off-balance sheet arrangements.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, Ms. Melton, evaluated the effectiveness of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports, such as this report, that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, Ms. Melton concluded that because of the material weakness in internal control over financial reporting described below, our disclosure controls and procedures were not effective as of March 31, 2013.

(b) Management’s annual report on internal control over financial reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company.  “Internal Control Over Financial Reporting” is defined in Exchange Act Rules 13a -15(f) and 15d - 5(f) as a process designed by, or under the supervision of, an issuer’s principal executive and principal financial officers, or persons performing similar functions, and effected by an issuer’s board of directors, management and other personnel, 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. It includes those policies and procedures that:

▪ pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of an issuer;

▪ provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and

▪ provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the issuer’s assets that could have a material adverse effect on the financial statements.

During March 2013, management conducted an evaluation of the effectiveness of our internal control over financial reporting as of March 31, 2013 based on the framework set forth in the report entitled Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on the evaluation, management concluded that our internal control over financial reporting as of March 31, 2013 was not effective.  Management identified the following material weaknesses as of March 31, 2013:

▪ There existed a lack of segregation of duties in regard to the Company’s financial reporting, procedures for depositing of funds, procedures for cash disbursements, procedures for checkbook entries, period close procedures, and procedures for financial statement preparation.

Our management is not aware that the material weakness in our internal control over financial reporting causes them to believe that any material inaccuracies or errors existed in our financial statement as of March 31, 2013, however certain items in the 2011 consolidated financial statements have been reclassified to conform to the 2012 consolidated financial statements’ presentation.  The reclassifications have no impact on net loss or stockholders’ deficit as previously reported.  We are not aware of any instance where such reportable conditions or other identified areas of weakness have resulted in a material misstatement of omission in any report we have filed with or submitted to the Commission.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

This quarterly report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting.

Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this report.

(c) Changes in internal control over financial reporting

There were no changes in our internal controls over financial reporting during the quarter ended March 31, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

To the best knowledge of the officers and directors, the Company is not a party to any legal proceeding or litigation.

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Item 1A.  Risk Factors.

Not required.

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

During the three month period ended March 31, 2013, the Company issued a total of 19,900,470 shares of common stock as follows: 18,125,000 shares of common stock to 12 people for consulting services. The shares were valued at $44,813. In addition, during the period, the Company also issued 1,775,470 shares in connection with a $100,000 convertible debenture which was originally issued August 2011.

During the three month period ended March 31, 2013, the Company also entered into a one year Convertible debenture with Asher Enterprises, Inc. in the amount of $32,500 and funding occurred on April 19, 2013.  The note bears an interest rate of 8% per annum.

The securities described above were issued to consultants under an exemption from registration provided by Section 4(2) of the Securities Act and the rules and regulations promulgated thereunder.  The issuance of the securities did not involve a “public offering” based upon the following factors: (i) the issuance of the securities were isolated private transactions; (ii) a limited number of securities were issued to offerees in separate transactions; (iii) there was no public solicitation; and (iv) the securities were issued as “restricted securities” pursuant to Rule 144 of the Securities Act.

All of the issuances of securities described above were restricted share issuances and deemed to be exempt from registration in reliance on Rule 506 of Regulation D and/or Section 4(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.

Item 3. Defaults Upon Senior Securities.

On July 21, 2011, the Company assumed accounts payable to former officers and directors totaling $34,000. These accounts payable were converted to uncollateralized notes payable that bear interest of 16% per year and were due July 21, 2012. The notes are currently in default and interest is currently being expensed and accrued monthly at a rate of 16% per year.  The holders of these notes are shareholders in the Company.

On February 24, 2012, the Company received proceeds under a $33,000 short-term note payable to Stacey McBride-Irby, the Chief Product Development Officer and a Director. This note is uncollateralized, originally bore interest at a rate of 15% per year and was due two months from the date of issue. The note matured on April 18, 2012. The Company is currently in default on this note and is subject to legal costs of up to $7,590, should the note holder elect to pursue collection as per the terms of the note. Interest on the note is currently being expensed and accrued monthly at a rate of 16% per year.

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At March 31, 2013, the Company was in default on its long-term debt due its failure to make payments due under the terms of debt agreements.  Holders of notes did not express desire to declare entire principal balances due immediately, and note balances are reported with original maturities.

On July 21, 2011, the Company received proceeds under a $20,000 short-term note payable to an individual who is also a shareholder of the Company. This note is uncollateralized, and bears interest of 15% per year. The Company is currently in default on this note and is subject to legal costs of up to $10,600, which are considered a default fee under the terms of the note. As of the date of this filing, the note has not been demanded, however, the default fee is currently recorded on the balance sheet as part of accrued liabilities, and interest on the outstanding principal continues to be expensed monthly.

On July 21, 2011, the Company assumed accounts payable to former officers and directors totaling $34,000. These accounts payable were converted to uncollateralized notes payable that bear interest of 16% per year and were due July 21, 2012. These notes are recorded on the Balance Sheets under notes payable – related parties under current liabilities. The notes are currently in default and interest is currently being expensed monthly. Under the terms of these notes payable, there are no additional fees or costs associated with default by the Company.

On February 24, 2012, the Company entered into a promissory note in the total amount of $33,000, with Stacey McBride Irby, a Director of the Company. The note has a sixty-day maturity, and bears interest of 15% per year starting on September 21, 2011. The Company is currently in default on this note and is subject to legal costs of up to $7,590, which are considered a default fee under the terms of the note. As of the date of this filing, the note has not been demanded, however, the default fee is currently recorded on the balance sheet as part of accrued liabilities, and interest on the outstanding principal continues to be expensed monthly.

Item 4. Mine Safety Disclosures.

None, not applicable.

Item 5. Other Information.

None; not applicable.

Item 6. Exhibits.

The following Exhibits have been previously filed in the below referenced filings or have been attached hereto, and in any case, as is stated on the cover of this Report, all of the below Exhibits are incorporated herein by reference.

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)
3.2	Certificate of Designations of Series A Preferred Stock (September 10, 1993) (Incorporated by reference from Exhibit 3.2 to Form S-1/A filed with the SEC on September 27, 2012)
3.3	Certificate of Designations of Series B and C Preferred Stock (December 19, 1997) (Incorporated by reference from Exhibits 4.1 and 4.2 to Form 8-K filed with the SEC on December 30, 1997)

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3.4	Certificate of Designations of Series D Preferred Stock (August 31, 2000) (Incorporated by reference from Exhibit 3.4 to Form S-1/A filed with the SEC on September 27, 2012)
3.5	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)
3.6	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)
3.7	Bylaws (Incorporated by reference from Exhibit 3.2 to Form 10-KSB filed with SEC on March 31, 1998)
5.1	Opinion and consent of The Law Office of Rodney E. Moton LLC re: the legality of the shares being registered
10.1	Share and Debt Cancellation Agreement (Incorporated by reference from Exhibit 2.1 to Form S-1 filed with the SEC on November 10, 2011)
10.2	Employment Agreement with Stacey McBride-Irby (Incorporated by reference from Exhibit 2.1 to Form S-1 filed with the SEC on November 10, 2011)
10.3	Employment Agreement with Corinda Joanne Melton (Incorporated by reference from Exhibit 2.1 to Form S-1 filed with the SEC on November 10, 2011)
10.4	14% Convertible Debenture with Michael and Jacquelyn Emmers, dated August 24, 2011 (Incorporated by reference from Exhibit 10.4 to Form S-1/A filed with the SEC on February 13, 2012)
10.5	14% Convertible Debenture with Heath O’Neal Redwine, dated September 27, 2011 (Incorporated by reference from Exhibit 10.5 to Form S-1/A filed with the SEC on February 13, 2012)
10.6	14% Convertible Debenture with Carolyn Austin, dated October 10, 2011 (Incorporated by reference from Exhibit 10.6 to Form S-1/A filed with the SEC on February 13, 2012)
10.7	14% Convertible Debenture with William and Barbara Pharr, dated December 20, 2011 (Incorporated by reference from Exhibit 10.7 to Form S-1/A filed with the SEC on September 27, 2012)
10.8	Consulting Agreement with Trent Daniel, dated February 1, 2011 (Incorporated by reference from Exhibit 10.7 to Form S-1/A filed with the SEC on February 13, 2012)

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10.9	Promissory Note (as amended)($40,000 with Bradley D. Melton, dated March 31, 2011) and Security Agreement (Incorporated by reference from Exhibit 10.9 to Form S-1/A filed with the SEC on November 6, 2012)
10.10	Promissory Note ($33,000) with Stacey McBride-Irby, dated February 24, 2012 (Incorporated by reference from Exhibit 10.9 to Form S-1/A filed with the SEC on November 6, 2012)
10.11	Consulting Agreement with Robert Hines, dated April 1, 2011 (Incorporated by reference from Exhibit 10.9 to Form S-1/A filed with the SEC on November 6, 2012)
21.1	Subsidiaries of One World Holdings, Inc. (Incorporated by reference from Exhibit 2.1 to Form S-1 filed with the SEC on November 10, 2011)

This 10-Q
31.1	Certification of principal executive officer and principal financial officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 executed by Corinda Joanne Melton
32.1	Certification of principal executive officer and principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 executed by Corinda Joanne Melton

101.INS	XBRL Instance Document*
101.PRE.	XBRL Taxonomy Extension Presentation Linkbase*
101.LAB	XBRL Taxonomy Extension Label Linkbase*
101.DEF	XBRL Taxonomy Extension Definition Linkbase*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase*
101.SCH	XBRL Taxonomy Extension Schema*

*Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under these sections.

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 20, 2013

ONE WORLD HOLDINGS, INC.

By: /s/ Corinda Joanne Melton

Corinda Joanne Melton, Chief Executive Officer and Director (Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer)

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