-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N2zbZBbhmM2yAnw9SNyKonnQvsX/QXPAfplzQmkjtpQjoReTLxRN6e0sdmQ+Jl8Q +DQYUD/24Ir+lHm9oPGIbw== 0001072588-09-000288.txt : 20090714 0001072588-09-000288.hdr.sgml : 20090714 20090714124611 ACCESSION NUMBER: 0001072588-09-000288 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20090531 FILED AS OF DATE: 20090714 DATE AS OF CHANGE: 20090714 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ONLINE ORIGINALS, INC CENTRAL INDEX KEY: 0001357878 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 980479983 STATE OF INCORPORATION: NV FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-53230 FILM NUMBER: 09943382 BUSINESS ADDRESS: STREET 1: RPO 163 CITY: SORRENTO STATE: A1 ZIP: V0E 2W0 BUSINESS PHONE: 604 313 9781 MAIL ADDRESS: STREET 1: RPO 163 CITY: SORRENTO STATE: A1 ZIP: V0E 2W0 10-Q 1 ooi10q53109.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 2009 OR [ ] 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 333-133347 ONLINE ORIGINALS, INC. (Exact name of registrant as specified in its charter) Nevada 98-0479983 - ------------------------------- ------------------------- State or other jurisdiction of (I.R.S. Employer incorporation or organization Identification No.) 57113, 2020 Sherwood Drive, Sherwood Park, AB, Canada, T8A 5L7 -------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (780) 668-7422 Indicate by check mark 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 past 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 (ss.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 [ ] 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 definition of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Larger accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] 1 Number of shares issued and outstanding of the registrant's class of common stock as of June 20, 2009: 3,200,000 shares of common stock The Company did not recognize any revenues during the quarter ended May 31, 2009. 2
PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Page ---- Balance Sheets F-5 Interim Statements of Operations F-6 Interim Statements of Cash Flows F-7 - F-8 Interim Statement of Changes in Stockholders' Equity (Deficit) F-9 Notes to Interim Financial Statements F-10 to F-13 Item 2. Management's Discussion and Analysis 14 Item 3 Quantitative and Qualitative Disclosure about Market Risk 16 Item 4. Controls and Procedures 16 Item 4(A) T. Controls and Procedures 16 PART II - OTHER INFORMATION Item 1. Legal Proceedings - Not Applicable 17 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - Not Applicable 17 Item 3. Defaults upon Senior Securities - Not Applicable 17 Item 4. Submission of Matters to a Vote of Security Holders - Not Applicable 17 Item 5. Other Information 17 Item 6. Exhibits 18 SIGNATURES 19
3 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ONLINE ORIGINALS, INC. (A Development Stage Company) INTERIM FINANCIAL STATEMENTS May 31, 2009 (Unaudited) Page Financial Statements: Balance Sheets F-5 Interim Statements of Operations F-6 Interim Statements of Cash Flows F-7 - F-8 Interim Statement of Changes in Stockholders' (Deficit) F-9 Notes to Interim Financial Statements F-10 to F-13 F-4
ONLINE ORIGINALS, INC. (A Development Stage Company) BALANCE SHEETS -------------- May 31, November 30, 2009 2009 (Unaudited) (See Note 1) ASSETS Current Assets Cash $ 1,646 $ 4,904 Prepaid expense 151 93 ------------------------------------------ Total Current Assets 1,797 4,997 Computer Equipment, net of depreciation of $5,220 1,616 2,755 Website Development Costs, net of amortization of $3,935 112 787 ------------------------------------------ 1,728 3,542 ------------------------------------------ TOTAL ASSETS $ 3,525 $ 8,539 ========================================== LIABILITIES AND STOCKHOLDERS' (DEFICIT) LIABILITIES Current Liabilities Accounts payable $ 10,286 $ 4,565 Accrued liabilities 2,900 6,500 ------------------------------------------ Total Liabilities, all current 13,186 11,065 ------------------------------------------ Commitments and Contingencies (Note 4) STOCKHOLDERS' (DEFICIT) Capital Stock Authorized: 75,000,000 common shares, par value $0.001 per share Issued and outstanding: 3,200,000 common shares as at May 31, 2009 and 3,200 3,200 November 20, 2008 Additional paid-in capital 77,299 77,299 Accumulated comprehensive income (140) (129) Deficit Accumulated During the Development Stage (90,020) (82,896) ------------------------------------------ Total Stockholders' (Deficit) (9,661) (2,526) ------------------------------------------ TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 3,525 $ 8,539 ========================================== The accompanying notes are an integral part of these statements. F-5
ONLINE ORIGINALS, INC. (A Development Stage Company) INTERIM STATEMENTS OF OPERATIONS -------------------------------- (Unaudited) Three month period Three month period ended ended May 31, May 31, 2009 2008 ---------------------------------------------------- Revenue $ - $ - ---------------------------------------------------- Cost of Goods Sold - - - - ---------------------------------------------------- Expenses Amortization 907 907 Consulting - - Marketing - - Office and administration 146 322 Organizational costs - - Professional fees 3,251 6,482 ---------------------------------------------------- 4,304 7,711 ---------------------------------------------------- Net Loss From Operations (4,304) (7,711) ---------------------------------------------------- Other Income Interest Income - - ---------------------------------------------------- Net Loss $ (4,304) $ (7,711) ==================================================== Basic And Diluted Loss Per Share $ Nil $ Nil ==================================================== Weighted Average Number Of Shares Outstanding 3,200,000 3,200,000 ==================================================== The accompanying notes are an integral part of these statements. F-6
ONLINE ORIGINALS, INC. (A Development Stage Company) INTERIM STATEMENTS OF OPERATIONS -------------------------------- (Unaudited) Six month period Six month period Date of Inception ended ended (November 18, May 31, May 31, 2005) to 2009 2008 May 31, 2009 -------------------------------------------------------------------------------- Revenue $ - $ 1,760 $ 10,083 -------------------------------------------------------------------------------- Cost of Goods Sold - - 5,379 -------------------------------------------------------------------------------- - 1,760 4,704 -------------------------------------------------------------------------------- Expenses Amortization 1,814 1,814 9,156 Consulting - - 7,550 Marketing - - 8,461 Office and administration 376 1,780 8,948 Organizational costs - - 665 Professional fees 4,934 14,803 59,946 -------------------------------------------------------------------------------- 7,124 18,397 94,726 -------------------------------------------------------------------------------- Net Loss From Operations (7,124) (16,637) (90,022) -------------------------------------------------------------------------------- Other Income Interest Income - - 2 -------------------------------------------------------------------------------- Net Loss $ (7,124) $ (16,637) $ (90,020) ================================================================================ Basic And Diluted Loss Per Share $ Nil $ (0.01) $ (0.03) ================================================================================ Weighted Average Number Of Shares Outstanding 3,200,000 3,200,000 3,061,521 ================================================================================ The accompanying notes are an integral part of these statements. F-7
ONLINE ORIGINALS, INC. (A Development Stage Company) INTERIM STATEMENTS OF CASH FLOWS -------------------------------- (Unaudited) Six month Six month Date of Inception period ended period ended (November 18, 2005) to May 31, 2009 May 31, 2008 May 31, 2009 - ------------------------------------------------------------------------------------------------------------------------------ Cash Flows from Operating Activities Net loss $ (7,124) $ (16,637) $ (90,020) Adjustments to Reconcile Net Loss to Net Cash Used by Operating Activities Depreciation and amortization 1,814 1,814 9,156 Changes in Operating Assets and Liabilities Prepaid expenses (58) - (151) Accounts payable and accrued liabilities 2,121 1,189 13,186 ----------------------------------------------------------------------------- Net Cash Used in Operating Activities (3,247) (13,634) (67,829) ----------------------------------------------------------------------------- Cash Flows from Investing Activity Additions to capital assets - - (6,836) Additions to intangibles - - (4,048) ----------------------------------------------------------------------------- Net Cash Used in Investing Activities - - (10,884) ----------------------------------------------------------------------------- Cash Flows From Financing Activity Issuance of common shares - - 95,000 Offering costs - - (14,501) Foreign currency translation adjustment (11) 18 (140) ----------------------------------------------------------------------------- Net Cash (Used) Provided by Financing Activities (11) 18 80,359 ----------------------------------------------------------------------------- Net (Decrease) Increase in Cash during the Period (3,258) (13,616) 1,646 Cash, Beginning Of Period 4,904 24,667 - ----------------------------------------------------------------------------- Cash, End Of Period $ 1,646 $ 11,051 $ 1,646 ============================================================================= Supplemental Disclosure Of Cash Flow Cash paid for: Interest $ - $ - $ - Income taxes $ - $ - $ - ============================================================================= The accompanying notes are an integral part of these statements. F-8
ONLINE ORIGINALS, INC. (A Development Stage Company) INTERIM STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT) ------------------------------------------------------- MAY 31, 2009 (Unaudited) DEFICIT ACCUMULATED CAPITAL STOCK ACCUMULATED ----------------------------------------------- ADDITIONAL DURING THE COMPRE- PAID-IN DEVELOPMENT HENSIVE SHARES AMOUNT CAPITAL STAGE INCOME TOTAL --------------------------------------------------------------------------------------------------- November 18, 2005 - Shares issued for cash at $0.01 1,800,000 $ 1,800 $ 16,200 $ - $ - $ 18,000 November 28, 2005 - Shares issued for cash at $0.01 700,000 700 6,300 - - 7,000 Net loss for the period ended November 30, 2005 - - - (2,680) (2,680) --------------------------------------------------------------------------------------------------- Balance, November 30, 2005 2,500,000 2,500 22,500 (2,680) - 22,320 --------------------------------------------------------------------------------------------------- July 21, 2006 - Shares issued for cash at 0.10, net 700,000 700 54,799 - - 55,499 of offering costs of $14,501 Foreign currency translation adjustment - - - - (1,229) (1,229) Net loss for the year ended November 30, 2006 - - - (14,178) (14,178) --------------------------------------------------------------------------------------------------- Balance, November 30, 2006 3,200,000 3,200 77,299 (16,858) (1,229) 62,412 --------------------------------------------------------------------------------------------------- Foreign currency translation adjustment - - - - 1,836 1,836 Net loss for the year ended November 30, 2007 - - - (37,588) - (37,588) --------------------------------------------------------------------------------------------------- Balance, November 30, 2007 3,200,000 3,200 77,299 (54,446) 607 26,660 --------------------------------------------------------------------------------------------------- Foreign currency translation adjustment - - - - (736) (736) Net loss for the year ended November 30, 2008 - - - (28,450) - (28,450) --------------------------------------------------------------------------------------------------- Balance, November 30, 2008 3,200,000 3,200 77,299 (82,896) (129) (2,526) --------------------------------------------------------------------------------------------------- Foreign currency translation adjustment - - - - (11) (11) Net loss for the period - - - (7,124) - (7,124) ended May 31, 2009 --------------------------------------------------------------------------------------------------- Balance, May 31, 2009 3,200,000 $ 3,200 $ 77,299 $ (90,020) $ (140) $ (9,661) --------------------------------------------------------------------------------------------------- The accompany notes are an integral part of these statements. F-9
ONLINE ORIGINALS, INC. (A Development Stage Company) NOTES TO INTERIM FINANCIAL STATEMENTS ------------------------------------- MAY 31, 2009 (Unaudited) 1. UNAUDITED STATEMENTS While the information presented in the accompanying interim financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented. Except as disclosed below, these interim financial statements follow the same accounting policies and methods of their application as the Company's audited November 30, 2008 annual financial statements. It is suggested that these interim financial statements be read in conjunction with the Company's audited financial statements for the year ended November 30, 2008, included in the annual report previously filed with the Securities and Exchange Commission on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year. The information as of November 30, 2008 is taken from the audited financial statements of that date. 2. NATURE AND CONTINUENCE OF OPERATIONS a) Organization Online Originals ("The Company") was incorporated in the State of Nevada, United States of America, on November 18, 2005. The Company's year end is November 30th. b) Development Stage Activities The Company is in the development stage and has realized minimal revenues. The Company's business plan is to develop a membership based website art gallery/auction house specifically focused on displaying and selling original artwork. Based upon their business plan, the Company is a development stage enterprise. Accordingly, financial statements are presented in conformity with the accounting principles generally accepted in the United States of America that apply in establishing operating enterprises. As a development stage enterprise, the Company discloses the deficit accumulated during the development stage and the cumulative statements of operations and cash flows from inception to the current balance sheet date. 3. SIGNIFICANT ACCOUNTING POLICIES This summary of significant accounting policies is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of management who is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the United States of America and have been consistently applied in the preparation of the financial statements. The financial statements are stated in United States of America dollars. a) Organizational and Start-up Costs Costs of start-up activities, including organizational costs, are expensed as incurred in accordance with SOP 98-5. b) Income Taxes The Company adopted the Statement of Financial Accounting Standards No. 109 - "Accounting for Income Taxes" (SFAS 109). SFAS 109 requires the use of the asset and liability method of accounting of income taxes. Under the asset and liability method of SFAS 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. F-10 ONLINE ORIGINALS, INC. (A Development Stage Company) NOTES TO INTERIM FINANCIAL STATEMENTS ------------------------------------- MAY 31, 2009 (Unaudited) c) Basic and Diluted Loss per Share In accordance with SFAS No. 128 - "Earnings per Share", the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. At May 31, 2009, the Company had no stock equivalents that were anti-dilutive and excluded in the earnings per share computation. d) Estimated Fair Value of Financial Instruments The carrying value of the Company's financial instruments, consisting of cash, prepaid expense, accounts payable and accrued liabilities approximate their fair value due to the short-term maturity of such instruments. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial statements. e) Revenue Recognition It is the Company's policy that revenue is recognized in accordance with SEC Staff Accounting Bulletin (SAB) No. 104, "Revenue Recognition." Under SAB 104, product revenues (or service revenues) are recognized when persuasive evidence of an arrangement exists, delivery has occurred (or service has been performed), the sales price is fixed and determinable and collectability is reasonably assured. f) Foreign Currency Translations The Company uses the Canadian dollar and the U.S. dollar as its functional currency. The Company's reporting currency is the U.S. dollar. All transactions initiated in other currencies are re- measured into the functional currency as follows: Monetary assets and liabilities at the rate of exchange in effect at the balance sheet date, ii) Non-monetary assets and liabilities, and equity at historical rates, and iii) Revenue and expense items at the average rate of exchange prevailing during the period. Gains and losses on re-measurement are included in determining net income for the period. Translation of balances from the functional currency into the reporting currency is conducted as follows: Assets and liabilities at the rate of exchange in effect at the balance sheet date, ii) Equity at historical rates, and iii) Revenue and expense items at the average rate of exchange prevailing during the period. Translation adjustments resulting from translation of balances from functional to reporting currency are accumulated as a separate component of shareholders' equity as a component of comprehensive income or loss. g) Comprehensive Income (Loss) The Company adopted Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income". SFAS 130 requires that the components and total amounts of comprehensive income be displayed in the financial statements beginning in 1998. Comprehensive income includes net income and all changes in equity during a period that arises from non-owner sources, such as foreign currency items and unrealized gains and losses on certain investments in equity securities. F-11 ONLINE ORIGINALS, INC. (A Development Stage Company) NOTES TO INTERIM FINANCIAL STATEMENTS ------------------------------------- MAY 31, 2009 (Unaudited) h) Use of Estimates The preparation of the Company's financial statements are in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. Actual results could differ from those estimates. i) Cash and Cash Equivalents All highly liquid debt instruments with an original maturity of three months or less are considered to be cash equivalents. j) Equipment Property and equipment are recorded at cost and depreciated over their estimated useful lives. The Company uses the straight-line method of depreciation. A summary of the estimated useful lives follows: Computer equipment 3 years k) Website Development Costs Website development costs representing capitalized costs of design, configuration, coding, installation and testing of the Company's website is capitalized until initial implementation. Upon implementation, the asset is amortized to expense over its estimated useful life of three years using the straight-line method. Accumulated amortization at May 31, 2009, was $3,935 and amortization expense for the three months ended May 31, 2009 was $337. Ongoing website post-implementation costs of operation, including training and application maintenance, will be charged to expense as incurred. l) Concentrations Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. At May 31, 2009, approximately $1,646 of cash or cash equivalents that were not insured by agencies of the U.S. Government. m) Recent Accounting Pronouncements There were various accounting standards and interpretations issued during 2009 and 2008, none of which are expected to have a material impact on the Company's financial position, operations or cash flows. n) Other The Company consists of one reportable business segment. The Company paid no dividends during the periods presented. 4. BASIS OF PRESENTATION - GOING CONCERN The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates continuation of the Company as a going concern. However, the Company has minimal business operations to date and has accumulated deficit of $90,020 at May 31, 2009. These matters raise substantial doubt about its ability to continue as a going concern. In view of these matters, realization of certain of the assets in the accompanying balance sheet is dependent upon its ability to meet its financing requirements, raise additional capital, and the success of its future operations. There is no assurance that future capital raising plans will be successful in obtaining sufficient funds to assure its eventual profitability. Management believes that actions planned and presently being taken to revise its operating and financial requirements provide the opportunity for the Company to continue as a F-12 ONLINE ORIGINALS, INC. (A Development Stage Company) NOTES TO INTERIM FINANCIAL STATEMENTS ------------------------------------- MAY 31, 2009 (Unaudited) going concern. The financial statements do not include any adjustments that might result from these uncertainties. 5. COMMON STOCK The Company's authorized common stock consists of 75,000,000 shares with a par value of $0.001 per share. During the six months ended May 31, 2009, the Company did not issue any shares of its common stock. 6. INCOME TAXES The Company is subject to foreign and domestic income taxes. The Company has minimal income with net losses of $90,020 since inception, and therefore has paid no income tax. Deferred income taxes arise from temporary timing differences in the recognition of income and expenses for financial reporting and tax purposes. The Company's deferred tax assets consist entirely of the benefit from net operating loss (NOL) carry-forwards. The NOL carry forwards expire in various years through 2028. The Company's deferred tax assets are offset by a valuation allowance due to the uncertainty of the realization of the NOL carry-forwards. NOL carry-forwards may be further limited by a change in company ownership and other provisions of the tax laws. The Company's deferred tax assets, valuation allowance, and change in valuation allowance are as follows:
Estimated Tax Change in Estimated NOL Benefit from Valuation Valuation Net Tax Period Ending Carry-forward NOL Expires NOL Allowance Allowance Benefit November 30, 2008 82,896 Various 20,724 (20,724) - May 31, 7,124 2029 1,781 (1,781) -
Income taxes at the statutory rate are reconciled to the Company's actual income taxes as follows: Income tax benefit at statutory rate resulting from net operating loss carry forward (25%) Deferred income tax valuation allowance 25% --------- Actual tax rate 0% ========= 7. RELATED PARTY TRANSACTIONS The Company uses the offices of its President for minimal office facility needs for no consideration. No provision for these costs has been provided since it has been determined that they are immaterial. F-13 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The following discussion should be read in conjunction with our unaudited financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic, and competitive, uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on our behalf. We disclaim any obligation to update forward-looking statements. The following discussion of the plan of operation, financial condition, results of operations, cash flows and changes in financial position of our Company should be read in conjunction with our most recent financial statements and notes appearing elsewhere in this Quarterly Report on Form 10-Q, our Quarterly Report on Form 10-Q filed April 20, 2009, and our Amended Annual Report on Form 10-K/A filed May 28, 2009. The independent registered public accounting firm's report on the Company's financial statements as of November 30, 2008, and for each of the years in the two-year period then ended; include a "going concern" explanatory paragraph that describes substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to the factors prompting the explanatory paragraph are discussed below and also in Note 4 to the unaudited quarterly financial statements. Operations We are establishing a business, which provides a website where members and customers are able to bid on and purchase pieces of art. Our target cliental is the artistic community and those who enjoy purchasing, learning, and discussing art. We also represent pieces from artists, art owners, and members of the site, as well as one-time users looking to sell a single piece through our gallery/auction website. The website, www.artbyonlineoriginals.com, showcases a variety of art ranging from paintings, drawings, prints, and sculptures. We intend to develop a community of art enthusiasts through this site that will have profiles of other members and member's comments on other sellers so individuals feel comfortable purchasing online. We are showcasing original pieces of art from unknown artists in the industry as well as established artists. Prints are also available for individuals looking for a piece that can otherwise only be found in a gallery. We attempt to continually add to our collection of art pieces, following the demand of the members and listening to what they are looking for. Buyers are able to purchase art pieces from the website using different forms of payment. We are focusing on buyers and art collectors who are using the Internet to find what they are looking for. Members are able to enter the website and log into their account. Principal Products and Services - ------------------------------- We are developing an online art gallery/auction house that allows members and users to purchase original art pieces online. We currently do not have an inventory of art pieces. Eventually, the available artwork will include paintings, drawings, prints, and sculptures from artists, art owners and members of the site. Members of the site, one-time users and we will sell these pieces. Fees and commissions will be charged for the services we provide. 14 Plan of Operation We are continuing to contact both experienced and unpublished artists in order to introduce our marketing plan. We will continue to develop our membership program and have contacted the local tourist bureau in order to market our products though their international contacts. We are continuing the sale of memberships and inventory items when available. We have no employees at the present time. We will continue to operate with very limited administrative support. Our current officers will continue without compensation, for at least the next three months. This will enable us to continue to preserve capital during this stage of our development. On June 30, 2009, Gregory Adams resigned as Secretary/Treasurer and as a director of the Company. In addition, on June 30, 2009, Shari Sookarookoff, President and Chief Executive Officer of the Company, was appointed Secretary/Treasurer and Chief Financial Officer of the Company. We do not anticipate making any major purchases of capital assets, or conducting any research and development. Our current corporate employee count is expected to remain the same for the next year. We are actively seeking to add new products and/or services that we can offer through our website. A new marketing strategy will be developed as new products and services are identified. Liquidity At May 31, 2009, our cash balance was $1,646. In addition, we have prepaid expenses of $151. Cash on hand is currently our only source of liquidity. We do not have any lending arrangements in place with banking or financial institutions and we do not anticipate that we will be able to secure these funding arrangements in the near future. At May 31, 2009, we had working capital deficit of $11,389 compared to working capital deficit of $6,068 at November 30, 2008. At May 31, 2009, our total assets consisted of cash of $1,646, prepaid expenses of $151 and capital assets of $1,728. This compares with total assets at November 30, 2008 consisting of cash of $4,904, prepaid expenses of $93 and capital assets of $3,542. At May 31, 2009, our total current liabilities increased to $13,186 from $11,065 at November 30, 2008. During the six months ended May 31, 2009, accounts payable and accrued liabilities increased by $2,121. We did not recognize any revenues from operations during the six months ending May 31, 2009. We believe our existing cash balances will not be sufficient to carry our normal operations over the next three (3) months. Our short and long-term survival is dependent on funding from sales of securities as necessary or from shareholder loans, and thus, to the extent that we require additional funds to support our operations or the expansion of our business, we will attempt to sell additional equity shares or issue debt. Any sale of additional equity securities will result in dilution to our stockholders. Recent events in worldwide capital markets may make it more difficult for us to raise additional equity or capital. There can be no assurance that additional financing, if required, will be available to us or on acceptable terms. In addition, the United States is experiencing severe instability in the commercial and investment banking systems which is likely to continue to have far-reaching effects on the economic activity in the country for an indeterminable period. The long-term impact on the United States economy and the Company's operating activities and ability to raise capital cannot be predicted at this time, but may be substantial. Result of Operations For The Three Months Ended May 31, 2009 Compared To The Three Months Ended May 31, 2008. We did not recognize any revenues from operational sales during the three months ending May 31, 2009. During the three months ended May 31, 2008, we did not recognize any revenues from operational activity. 15 For the three months ended May 31, 2009, operating expenses were $4,304 compared to $7,711 for the three months ended May 31, 2008. The decrease of $3,407 was due to a decrease in our operational activities over the prior period. Operating expenses during the three months ended May 31, 2009, consisted of professional fees of $3,251, amortization and depreciation of $907 and office and administration costs of $146, compared to professional fees of $6,482, amortization and depreciation of $907 and office and administration costs of $322, for the three months ended May 31, 2008. We recognized a net loss of $4,304 for the three months ended May 31, 2009, compared to a net loss of $7,711 for the three months ended May 31, 2008. The decrease of $3,407 was a result of the decrease in operational expenses as discussed above. For The Six Months Ended May 31, 2009 Compared To The Six Months Ended May 31, 2008 We did not recognize revenues from operational sales during the six months ended May 31, 2009 compared with revenues of $1,760 from operational activity during the six months ended May 31, 2008. During the six months ended May 31, 2009, we incurred operating expenses of $7,124 compared to operating expenses of $18,397 during the six months ended May 31, 2008. The decrease of $11,273 is a result of our decreased operational activities. During the six months ended May 31, 2009, operational expenses consisted of professional fees of $4,934, depreciation and amortization costs of $1,814, and office and administrative expenses of $376. This compares with operational expenses consisted of $14,803 in professional fees, $1,780 in office and administrative expenses and $1,814 in depreciation and amortization costs for the six months ended May 31, 2008. During the six months ended May 31, 2009, we recognized a net loss of $7,124 compared to a net loss of $16,637 for the six month period ended May 31, 2008. The decreased loss is a result of a decrease in professional fees of $9,869, and a decrease in office and administration of $1,404. Revenues for the period also decreased by $1,760. Off-Balance Sheet Arrangements We currently do not have any off-balance sheet arrangements. ITEM 3. QUANTATIVE 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 As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the 1934 Act). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. ITEM 4T. CONTROLS AND PROCEDURES Management's Quarterly Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed 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. 16 Management's assessment of the effectiveness of the small business issuer's internal control over financial reporting is as of the quarter ended May 31, 2009. We believe that our internal control over financial reporting was not effective due to material weaknesses in the system of internal control. Specifically, management identified the following control deficiency: The Company has installed accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and does not provide an adequate audit trail of entries made in the accounting software. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, 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 or procedures may deteriorate. This quarterly report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report. There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended May 31, 2009, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. PART II - OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. Item 3. DEFAULTS UPON SENIOR SECURITIES None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information On June 30, 2009, Gregory Adams resigned as Secretary/Treasurer and as a director of the Company. On June 30, 2009, Shari Sookarookoff, President and Chief Executive Officer of the Company, has been appointed Secretary/Treasurer and Chief Financial Officer or the Company. 17 Item 6. Exhibits (a) Pursuant to Item 601 of Regulation S-K, the following exhibits are included herein or incorporated by reference. Exhibit Number Description ------- ----------- 31.1 Section 302 Certification - Chief Executive Officer / Chief Financial Officer 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Executive Officer / Chief Financial Officer. 18 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this ___ day of July, 2009. ONLINE ORIGINALS, INC. Date: July 11, 2009 By: /s/ Shari Sookarookoff ---------------------- Name: Shari Sookarookoff Title: President/Chief Executive Officer and Chief Financial (Accounting) Officer 19 EX-31.1 2 ex31-1.txt EXHIBIT 31.1 CERTIFICATION PURSUANT TO 18 U.S.C. ss. 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Shari Sookarookoff, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Online Originals, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and I have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. As the registrant's certifying officer, I have disclosed, based on the most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. Date: July 11, 2009 By: /s/ Shari Sookarookoff --------------------------- Shari Sookarookoff President/Chief Executive Officer and Chief Financial (Accounting) Officer EX-32.1 3 ex32-1.txt EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of ONLINE ORIGINALS, INC. (the "Company") on Form 10-Q for the period ended May 31, 2009, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Shari Sookarookoff, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (a) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: July 11, 2009 By: /s/ Shari Sookarookoff ----------------------- Shari Sookarookoff President/Chief Executive Officer and Chief Financial (Accounting) Officer -----END PRIVACY-ENHANCED MESSAGE-----