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, 2010February 28, 2011
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.CREENERGY CORPORATION
---------------------
(Exact name of registrant as specified in its charter)
Nevada 98-0479983
- ------------------------------ ------------------------------
State------ ----------
(State or other jurisdiction (IRS Employer
of (I.R.S. Employer incorporation or organization Identification No.)
organization)
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",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 30, 2010: 7,200,000April 10 2011: 96,000,000 shares of common stock
The Company recognized revenues of $2,522$nil during the quarter ended May 31, 2010.February 28,
2011.
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
----
Interim Balance Sheets F-5
Interim Statements of OperationsLoss and Comprehensive Loss F-6 to F-7
Interim Statements of Cash Flows F-8F-7
Interim Statement of Changes in Stockholders' Equity (Deficit) F-9Deficiency F-8
Notes to Interim Financial Statements F-10F-9 to F-11F-13
Item 2. Management's Discussion and Analysis 12or Plan of Operations 14
Item 3 Quantitative and Qualitative Disclosure about Market Risk 1416
Item 4 Controls and Procedures 14
Item 4(A) T. Controls and Procedures 1416
PART II - OTHER INFORMATION
Item 1 Legal Proceedings - Not Applicable 1417
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 1517
Item 3. Defaults upon Senior Securities - Not Applicable 1517
Item 4. Removed and Reserved. 15Reserved 17
Item 5. Other Information 1518
Item 6. Exhibits 1518
SIGNATURES 1619
3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ONLINE ORIGINALS, INC.
INTERIM FINANCIAL STATEMENTS
MAY 31, 2010
(Unaudited)
Page
Financial Statements:
Balance Sheets F-5
Interim Statements of Operations F-6 to F-7
Interim Statements of Cash Flows F-8
Interim Statement of Changes in Stockholders' Equity (Deficit) F-9
Notes to Interim Financial Statements F-10 to F-11
4CREENERGY CORPORATION
(A Development Stage Company)
INTERIM FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited)
FEBRUARY 28, 2011
Financial Statements Page
Balance Sheets F-5
Interim Statements of Loss and Comprehensive Loss F-6
Interim Statements of Cash Flows F-7
Interim Statement of Changes in Stockholders' Deficiency F-8
Notes to Interim Financial Statements F-9 to F-13
F-4
ONLINE ORIGINALS, INC.CREENERGY CORPORATION
(A Development Stage Company)
INTERIM BALANCE SHEETS
May 31,February 28, November 30, 2009
2010
2011
(Unaudited) (See Note 1)(Audited)
ASSETS
Current Assets
Cash and cash equivalents $ 4,5362,039 $ 2,8416,090
Prepaid expense 1,859 109
--------------------------------------
Total Current Assets 6,395 2,950
Computer Equipment, net of depreciation of $6,836 - 476
--------------------------------------
- 476expenseS 200 200
--------------------------------------
TOTAL ASSETS $ 6,3952,239 $ 3,4266,290
======================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)DEFICIENCY
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities (Note 3) $ -18,467 $ 3,900
Accrued liabilities 2,329 8,00013,133
Note payable (Note 4) 16,000 16,000
--------------------------------------
Total Current Liabilities all current 2,329 11,90034,467 29,133
--------------------------------------
Commitments and Contingencies (Note 2)
STOCKHOLDERS' EQUITY (DEFICIT)DEFICIENCY
Capital Stock (Note 6)
Authorized:
75,000,000675,000,000 common shares, par value $0.001 per share
Issued and outstanding:
7,200,00096,000,000 common shares 7,200 3,20096,000 96,000
Additional paid-in capital 89,299 77,29913,000 13,000
Accumulated other comprehensive income 319 312- 333
Accumulated deficit (105,837) (105,837)
Accumulated Deficit (92,752) (89,285)
--------------------------------------during Development Stage (35,391) (26,339)
Total Stockholders' Equity (Deficit) 4,066 (8,474)Deficiency (32,228) (22,843)
--------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)DEFICIENCY $ 6,3952,239 $ 3,4266,290
======================================
The accompanying notes are an integral part of these statements.
F-5
ONLINE ORIGINALS, INC.CREENERGY CORPORATION
(A Development Stage Company)
INTERIM STATEMENTS OF OPERATIONSLOSS AND COMPREHENSIVE LOSS
(Unaudited)
Three month period Three monthCumulative Amounts from
For the three-month For the re-entering of
period ended three-month development stage on
February 28, 2011 period ended May 31, May 31,June 26, 2010 2009
---------------------------------------------------to
February 28, 2010 February 28, 2011
---------------------------------------------------------------------------
Revenue $ 2,522 $ -
---------------------------------------------------
2,522 -
---------------------------------------------------
Expenses
Depreciation and amortization - 907
Office and administration 827 146394 160 2,674
Professional fees 4,418 3,251
---------------------------------------------------
5,245 4,304
---------------------------------------------------8,991 2,835 33,050
---------------------------------------------------------------------------
9,385 2,995 35,724
---------------------------------------------------------------------------
Net Loss Frombefore Other Item (9,385) (2,995) (35,724)
Other Item
Foreign exchange gain 333 - 333
---------------------------------------------------------------------------
Net loss from Continuing Operations (2,723) (4,304)
---------------------------------------------------(9,052) (2,995) (35,391)
---------------------------------------------------------------------------
Discontinued Operations (Note 8)
Net Profit from discontinued operations - 2,551 -
---------------------------------------------------------------------------
Net Loss $ (2,723) $ (4,304)
===================================================
Basic And DilutedFor The Period (9,052) (744) (35,391)
===========================================================================
Other Comprehensive Income (Loss)
Per
ShareForeign currency translation adjustment (333) - (333)
---------------------------------------------------------------------------
Comprehensive Loss For the Period $ Nil(9,385) $ Nil
===================================================(744) $ (35,724)
===========================================================================
Loss per share from continuing operations -
Basic and diluted $ (0.00) $ (0.00)
Earnings (loss) per share from discontinued
operations - Basic and diluted $ (0.00) $ 0.00
==============================================
Weighted Average Number Ofof Shares Outstanding
3,721,739 3,200,000
===================================================96,000,000 96,000,000
==============================================
F-6
The accompanying notes are an integral part of these statements
F-6
ONLINE ORIGINALS, INC.
INTERIM STATEMENTS OF OPERATIONS
(Unaudited)
Six month Six month
period ended period ended
May 31, May 31,
2010 2009
---------------------------------------------------
Revenue $ 6,042 $ -
---------------------------------------------------
6,042 -
---------------------------------------------------
Expenses
Depreciation and amortization 477 1,814
Office and administration 1,779 375
Professional fees 7,253 4,934
---------------------------------------------------
9,509 7,123
---------------------------------------------------
Net Loss From Operations (3,467) (7,123)
---------------------------------------------------
Net Loss $ (3,467) $ (7,123)
===================================================
Basic And Diluted Income (Loss) Per
Share $ Nil $ Nil
===================================================
Weighted Average Number Of Shares
Outstanding 3,463,736 3,200,000
===================================================
The accompanying notes are an integral part of these statements.
F-7
ONLINE ORIGINALS, INC.CREENERGY CORPORATION
(A Development Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
Six month Six monthCumulative from
Three-month Three-month re-entering of
period ended period ended May 31, May 31,development stage on
February 28, February 28, June 26, 2010 2009
- --------------------------------------------------------------------------------------------------to
2011 2010 February 28, 2011
Cash Flows from Operating Activities
Net Lossloss $ (3,467)(9,052) $ (7,124)(744) $ (35,391)
Adjustments to Reconcile Net Loss to Net Cash
Used by Operating Activities
Depreciation and amortization 476 1,814
Changes in Operating Assets and Liabilities- 477 -
Prepaid expenses (1,750) (58)- (50) 2,509
Accounts payable and accrued liabilities (9,571) 2,121
------------------------------------------
Net5,334 (2,276) 17,718
-----------------------------------------------------------------
Cash (Used)Used in Operating Activities (14,312) (3,247)
------------------------------------------
Cash Flows from Investing Activity
Additions to capital assets - -
Additions to intangibles - -
------------------------------------------
Net Cash From Investing Activities - -
------------------------------------------(3,718) (2,593) (15,164)
Cash Flows From Financing Activity
Issuance of common shares 16,000Activities
Contribution by related party - Foreign currency translation adjustment 7 (11)
------------------------------------------- 13,000
-----------------------------------------------------------------
Net Cash Provided (Used) by (Used in) Financing
Activities 16,007 (11)
------------------------------------------
Net Increase (Decrease)- - 13,000
Decrease in Cash during the Period 1,695 (3,258)(3,718) (2,593) (2,164)
Effect of Exchange Rate Changes on Cash (333) - (333)
-----------------------------------------------------------------
Cash, Beginning ofOf Period 6,090 2,841 4,904
------------------------------------------4,536
-----------------------------------------------------------------
Cash, End Of Period $ 4,5362,039 $ 1,646
==========================================248 $ 2,039
=================================================================
Supplemental Disclosure ofOf Cash Flow Information
Cash paid for:
Interest $ - $ - $ -
Income taxes $ - $ - ==========================================$ -
=================================================================
The accompanying notes are an integral part of these statements.
F-7
The accompanying notes are an integral part of these statements.
F-8
ONLINE ORIGINALS, INC.CREENERGY CORPORATION
(A Development Stage Company)
INTERIM STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)DEFICIENCY
For the Period from November 30, 2008 through May 31, 2010
(unaudited)February 28, 2011
(Unaudited)
CAPITAL STOCK -------------------------------------------------ACCUMULATED
---------------------------------------------------
ADDITIONAL DEFICIT DURING ACCUMULATED
PAID-IN ACCUMULATED OMPREHENSIVEDEVELOPMENT COMPREHENSIVE
SHARES AMOUNT CAPITAL DEFICIT NCOMESTAGE INCOME (LOSS) TOTAL
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Balance, November
30, 2008 3,200,00096,000,000 $ 3,20096,000 $ 77,299- $ (82,896)(98,397) $ - $ (129) $ (2,526)
---------------- -------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Foreign currency
translation
adjustment - - - - - 441 441
Net loss for the
year ended November 30, 2009 - - - (6,389) - - (6,389)
---------------- -------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Balance, November
30, 2009 3,200,000 3,200 77,299 (89,285)96,000,000 96,000 - (104,786) - 312 (8,474)
---------------- -------------- ---------------------------------------------------------------------
May 20, 2010-------------------------------------------------------------------------------------------------------------
Common shares issued
- Shares issued for
cash at $0.004 4,000,000 4,000 12,000($0.004) per
share) (Note 6) 120,000,000 120,000 - (104,000) - - 16,000
Common shares
cancelled (120,000,000) (120,000) - 104,000 - - (16,000)
Contribution by
related party - - 13,000 - - - 13,000
(Note 5)
Foreign currency
translation
adjustment - - - - 7 7- 21 21
Net loss for the
year - - - (1,051) (26,339) - (27,390)
-------------------------------------------------------------------------------------------------------------
Balance, November
30, 2010 96,000,000 96,000 13,000 (105,837) (26,339) 333 (22,843)
-------------------------------------------------------------------------------------------------------------
Foreign currency
translation
adjustment - - - - - (333) (333)
Net loss for the
period ended
May 31, 2010 - - - (3,467) - (3,467)
---------------- -------------- ---------------------------------------------------------------------(9,052) - (9,052)
=============================================================================================================
Balance, May 31,
2010 7,200,000February
28, 2011 96,000,000 $ 7,20096,000 $ 89,29913,000 $ (92,752)(105,837) $ 319(35,391) $ 4,066
=====================================================================================================- $ (32,228)
=============================================================================================================
The accompanying notes are an integral part of these statements.
F-8
The accompanying notes are an integral part of these statements.
F-9
ONLINE ORIGINALS, INC.CREENERGY CORPORATION
(A Development stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
May 31, 2010February 28, 2011
(Unaudited)
1. UNAUDITED STATEMENTSNATURE AND CONTINUANCE OF OPERATIONS
a) Organization
CREENERGY Corporation (formerly Online Originals, Inc.) (the
"Company") was incorporated in the State of Nevada, United States of
America, on November 18, 2005. On July 29, 2010, the Company's name
was changed from Online Originals, Inc. to CREENERGY Corporation. The
Company's year end is November 30.
b) Nature of Operations and Change in Business
Since the date of inception on November 18, 2005, the Company's
business plan was to develop a membership-based website art
gallery/auction house specifically focused on displaying and selling
original artwork.
The Company changed its status from a development stage company to an
operating company on November 30, 2009. Management realized that the
results of operations from the sale of artwork lacks luster and decided
to change the Company's business focus and plan for other strategic
opportunities and discontinued the sale of artwork with effect from
June 25, 2010. Accordingly, the Company has disclosed these activities
as discontinued operations in the accompanying interim financial
statements. Effective June 26, 2010, the Company became a development
stage company focusing on new business development in the form of
obtaining leases for the exploration and production of oil and gas in
areas of northern Alberta, Canada.
c) 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, 20092010 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, 2009,2010, 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, 20092010 is taken from the audited
financial statements as of that date.
2. BASIS OF PRESENTATION - GOING CONCERNd) Basis of Presentation
The accompanying consolidatedinterim financial statements have been prepared in
conformity with generally accepted accounting principles in the United
States of America, which contemplates ourthe continuation of the Company
as a going concern. However, the Company has negative working capital
and stockholders' deficiency at February 28, 2011 and has losses to
date of approximately $92,752.$141,000. These matters raise substantial doubt
about ourits ability to continue as a going concern. In view of these
matters, realization of certain of the assets in the accompanying
consolidated balance sheet is dependent upon the Company'sits ability to meet its financing
requirements, raise additional capital, and the success of its future
operations. The Company is seeking additional means of financing to
fund its business plan. There is no assurance that the Companyfuture capital raising plans
will be successful in raisingobtaining sufficient funds to assure theits eventual
profitabilityprofitability. Management is actively seeking to add new products
and/or services in order to show profitability. In addition, one of the
Company. Management believesmembers of the board of directors has agreed to loan funds to the
Company if needed. To date, due to the continued economic conditions,
they have not yet been able to find products and services that would
contribute to their business. We believe that actions planned and
F-9
CREENERGY CORPORATION
(A Development stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
February 28, 2011
(Unaudited)
presently being taken to revise the Company'sits operating and financial
requirements will provide the opportunity for the Company to continue
as a going concern. The consolidatedinterim financial statements do not include any
adjustments that might result from these uncertainties.
3. INCOME TAXES
The Company is subject to foreign2. RECENT ACCOUNTING PRONOUNCEMENTS
In January 2010, the Financial Accounting Standards Board ("FASB")
issued Accounting Standards Update ("ASU") 2010-06, "Improving
Disclosures about Fair Value Measurements". This update requires
additional disclosure within the roll forward of activity for assets
and domestic income taxes. The
Company has net lossesliabilities measured at fair value on a recurring basis, including
transfers of $92,752 since inception,assets and therefore has
paid no income tax.
Deferred income taxes arise from temporary timing differencesliabilities between Level 1 and Level 2 of the
fair value hierarchy and the separate presentation of purchases, sales,
issuances and settlements of assets and liabilities within Level 3 of
the fair value hierarchy. In addition, the update requires enhanced
disclosures of the valuation techniques and inputs used in the recognitionfair
value measurements within Levels 2 and 3. The new disclosure
requirements are effective for interim and annual periods beginning
after 15 December 2009, except for the disclosure of incomepurchases, sales,
issuances and settlements of Level 3 measurements. Those disclosures
are effective for fiscal years beginning after 15 December 2010. As ASU
2010-06 only requires enhanced disclosures, the Company does not expect
that the adoption of this update will have a material effect on its
financial statements.
3. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Accounts payable and accrued liabilities are non-interest bearing,
unsecured and have settlement dates within one year.
4. NOTE PAYABLE
As of February 28, 2011, the Company had $16,000 note payable to an
unrelated party for expenses for financial reporting and tax
purposes. The Company's deferred tax assets consist entirelypaid on behalf of the benefit from net operating loss (NOL) carry-forwards.Company. The NOL carry
forwards expire in various years through 2030. The Company's deferred
tax assets are offset bynote
payable is unsecured, non-interest bearing, and has no fixed terms of
repayment.
5. RELATED PARTY TRANSACTIONS
During the three month period ended February 28, 2011, 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 ownershipdirector 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, 2009 89,285 Various 22,321 (1,597) -
May 31, 3,467 2030 867 (867) -
F-10
ONLINE ORIGINALS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
May 31, 2010
(Unaudited)
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%
==========
4 COMMON STOCK
On May 21, 2010, the Company issued 4,000,000 shares of its restricted
common stock to Mr. David Calahasen , a directorshareholder of the Company at a
pricemade cash contribution in the amount of $0.004 per share for cash totalling $16,000.
Prior to the issuance, the Company had 3,200,000$Nil
(February 28, 2010 - $Nil, Cumulative - $13,000).
6. CAPITAL STOCK
Authorized
The Company's authorized common stock consists of 675,000,000 shares of
common stock issued and outstanding. After the issuance, the Company has 7,200,000
shareswith a par value of common stock issued and outstanding.
As a result of the issuance, Mr. Calahasen owns approximately 55.55% of
the issued and outstanding common stock of the Company and is the majority
shareholder of the Company.
As a result of the issuance, the ownership of Ms. Shari Sookarookoff, the
Chief Executive Office and Director of the Company was decreased from
78.13% to 34.72%.
5 SUBSEQUENT EVENTS$0.001 per share. On July 6,August 10, 2010,
the Company filed a Definitive Information Statement on
Schedule 14C to amendincreased the articlesnumber of incorporation as follows:
1. To authorize the Company to change the name to CREENERGY CORPORATION,
2. To authorize a forward split of common stock issued and outstanding on
a thirty (30) new shares for one (1) old shares basis, and
3. To increase the authorized common shares of the companyshare capital from
75,000,000 shares of common stock to 675,000,000 shares of common stock.
Such proposals have been approved bystock
with the majority shareholderssame par value of $0.001 per share.
Issued and outstanding
On June 2, 2010, and effective August 10, 2010, the directors of the
Company approved a forward split of the common stock of the Company on
a basis of 30 new common shares for 1 old common share. As a result of
the forward stock split, 208,800,000 additional shares were issued.
Capital and will become effective upon the filingadditional paid-in capital have been adjusted accordingly.
When adjusted retroactively, there was a $119,501 shortage of
additional paid-in capital; thus an Amendmentadjustment to accumulated deficit
of $104,000 was recorded on May 21, 2010 (the date of issuance of
120,000,000 shares) and $15,501 to the Articlesbeginning balance. The interim
financial statements contained herein reflect the appropriate values
for capital stock and accumulated deficit. Unless otherwise noted, all
references in the accompanying interim financial statements to the
number of Incorporationcommon shares and per share amounts have been retroactively
restated to reflect the forward stock split.
F-10
CREENERGY CORPORATION
(A Development stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
February 28, 2011
(Unaudited)
The total issued and outstanding capital stock is 96,000,000 common
shares with a par value of $0.001 per common share. The Company's
common stock issuances to date are as follows:
i) On November 18, 2005, 54,000,000 shares of the SecretaryCompany's common
stock were issued to a former director and officer of Statethe Company
for cash proceeds of Nevada.$18,000.
ii) On November 28, 2005, 21,000,000 shares of the Company's common
stock were issued to a former director and officer of the company
for cash proceeds of $7,000.
iii) On July 21, 2006, the Company completed a public offering and
issued 21,000,000 shares of the Company's common stock for cash
totaling $70,000. The Company incurred offering costs of $14,501
related to this offering, resulting in net proceeds of $55,499.
iv) On May 21, 2010, 120,000,000 shares of the Company's restricted
common stock, valued at $16,000, were issued to a former director
and officer of the Company. On October 29, 2010, the 120,000,000
restricted common shares of the Company previously issued to a
former director and officer of the Company were returned to
treasury for no consideration. The shares were cancelled on 2
November 2010.
7. INCOME TAXES
The Company has losses carry forward for income tax purposes to
February 28, 2011. There are no current or deferred tax expenses for
the period ended February 28, 2011 due to the Company's loss position.
The Company has fully reserved for any benefits of these losses. The
deferred tax consequences of temporary differences in reporting items
for financial statement and income tax purposes are recognized, as
appropriate. Realization of the future tax benefits related to the
deferred tax assets is dependent on many factors, including the
Company's ability to generate taxable income within the net operating
loss carryforward period. Management has considered these factors in
reaching its conclusion as to the valuation allowance for financial
reporting purposes.
The provision for refundable federal income tax consists of the
following:
For the
three-month
period ended
-----------------
February 28, February 28
2011 2010
-----------------------------------------
Deferred tax asset
attributable to
Current operations $ 3,168 $ 186
Less: Change in
valuation allowance (3,168) (186)
---------------------------------------------
Net refundable amount $ - $ -
---------------------------------------------
F-11
CREENERGY CORPORATION
(A Development stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
February 28, 2011
(Unaudited)
The composition of the Company's deferred tax asset as at February 28,
2011 and November 30, 2010 are as follows:
November 30, 2010
February 28, 2011 (Audited)
-----------------------------------------
Net operation loss carry-forward $ 125,727 116,675
Statutory federal income tax rate 35% 35%
Deferred tax assets 44,004 40,836
Less: Valuation allowance (44,004) (40,836)
-----------------------------------------
Net Deferred Tax Assets $ - $ -
-----------------------------------------
The potential income tax benefit of these losses has been offset by a
full valuation allowance.
As at February 28, 2011, the Company has an unused net operating loss
carry forward balance of approximately $125,727 that is available to
offset future taxable income. This unused net operation loss carry
forward balance for income tax purposes expires as follows:
$
2025 2,680
2026 14,178
2027 37,588
2028 28,450
2029 6,389
2030 27,390
2031 9,052
---------------------
125,727
---------------------
8. DISCONTINUED OPERATIONS AND NEW DEVELOPMENTS
The Company's attempts over the past years to build a business that
provides a website where members and customers are able to bid on and
purchase pieces of art had not come to fruition so management decided
to change the business focus and look for other opportunities.
Therefore, management decided to discontinue selling art pieces and
reflect such discontinuance in its operating statement and cash flow
statements effective June 25, 2010.
Management decided on that date to focus on new business development in
the form of obtaining leases for the exploration and production of oil
and gas in First Nation areas of northern Alberta, Canada.
F-12
CREENERGY CORPORATION
(A Development stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
February 28, 2011
(Unaudited)
During the three month period ended February 28, 2011 and the three
month period ended February 28, 2010, the Company had $Nil and $3,520
in revenue, respectively, related to its discontinued operations.
For the three For the three
month period month period
ended ended
February 28, 2011 February 28, 2010
Revenue $ - $ 3,520
-----------------------------------
Expenses
Depreciation and amortization - 477
Office and administration - 792
-----------------------------------
- 1,269
-----------------------------------
Net Profit from Discontinued Operations $ - $ 2,251
===================================
9. CONTINGENCY
On November 22, 2010, the Company was served with a claim filed by a
former director and officer of the Company. The claim alleges that the
former director and officer of the Company suffered losses and damages
as a result of the failure of the Company in providing him with
corporate documents and implementing a change of the board of
directors. The Company has retained legal counsel to address the claim.
On December 8, 2010, the Company filed a Statement of Defense
requesting that the claim be dismissed. In the opinion of management,
this claim is without merit and the Company intends to defend this
claim vigorously. As a loss is not deemed probable, and as such, no
accruals have been made as of February 28, 2011.
10. COMPARATIVE FIGURES
Certain comparative figures have been adjusted to conform to the
current period's presentation.
11. SUBSEQUENT EVENT
There are no reportable events during the period from the three month
period ended February 28, 2011 to the date the interim financial
statements are available to be issued on April 8, 2011.
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 Schedule
14C Information Statement filed July 7, 2010, our Quarterly Report on Form 10-Q
filed on July 19, 2010, our Quarterly Report on Form 10-Q filed on April 13,
2010, and our Annual Report on Form 10-K filed on March 10, 2010.11, 2011.
The independent registered public accounting firm's reportfirms' reports on the Company's
financial statements as of November 30, 2009,2010, 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 21 to the unaudited quarterly
financial statements.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
OverDISCONTINUED OPERATIONS AND NEW DEVELOPMENTS
Since inception, the last two (2) years, we have continuedCompany's business plan was to establishdevelop a business, which
providesmembership based
website art gallery/auction house specifically focused on displaying and selling
original artwork. The Company changed its status from a website where members and customers are abledevelopment stage
company to bidan operating company on and purchase
piecesNovember 30, 2009. Management realized that
the results of art. Our target cliental was the artistic community and those who
enjoy purchasing, learning, and discussing art. We represented 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. We showcased
original pieces of art from unknown artists in the industry as well as
established artists. Prints were available for individuals looking for a piece
that can otherwise only be found in a gallery. Buyers were able to purchase art
piecesoperations from the website using different formssale of payment. We focused on buyersartwork was lack-luster, and art collectors who are using the Internetit was
decided to find what they were looking
for.
However, we believe that we need to enlarge our business activity. With this in
mind, the name Online Originals, Inc. has been perceived by management as
limitingchange the Company's ability to pursuebusiness focus and plan for other strategic
opportunities and in management's
opinion may have limited awarenessdiscontinued the sale of artwork to be effective June 25,
2010. Effective June 26, 2010, the internet sales arena. The proposed
change ofCompany started to focus on a new business
development. On July 29, 2010, the Company's name changed from Online Originals,
Inc. to CREENERGY Corporation isCreenergy Corporation. The name change was intended to convey a sense of
the Company's new business focus as it looks to pursue other opportunities.
Specifically, the Company intends to obtain leases for the exploration and
production of oil and gas in First Nation areas of
northern Alberta, Canada. Though atCanada and the United States. At the date
of this filing,Quarterly Report, the Company has not identified any prospects or
entered into any leases or agreements.
On May 21, 2010,Creenergy Corporation is a development stage oil and gas company that is engaged
in the development and exploration for natural resources. The Company is active
in Canada and the United States and is seeking to acquire properties that are
prospective for petroleum and natural gas and related hydrocarbons. The
prospects the Company issued 4,000,000 shares of its restricted common
stockintends to Mr. David Calahasen, a directortarget are those properties that are generally
under leases and include partial and full working interests. It is intended that
in all of the Company, atcore properties, Creenergy will be the operator and majority
interest owner. It is understood that, the prospects are subject to varying
royalties due to the state, province, territory, or federal governments and, in
some instances, to other royalty owners in the prospect.
Principal Products and Services
-------------------------------
Currently, we have not acquired any leases or working interests. We do not have
any production.
14
Markets.
-------
The availability of a ready market for oil and gas discovered, if any, will
depend on numerous factors beyond the Company's control, including the proximity
and capacity of refineries, pipelines, and the effect of provincial regulation
of production and of regulations of products sold in interstate commerce, and
recent intrastate sales. The market price of $0.004
per share for cash totalling $16,000. As a result of such transaction, Mr.
Calahassen becameoil and gas are volatile and beyond
the Company's majority shareholder, holding approximately
55.5%control. The market for natural gas is also unsettled, and gas
prices have increased dramatically in the past four years with substantial
fluctuation, seasonally and annually.
There generally are only a limited number of gas transmission companies with
existing pipelines in the vicinity of a gas well or wells. In the event that
producing gas properties are not subject to purchase contracts or that any such
contracts terminate and other parties do not purchase the Company's gas
production, there is no assurance that Creenergy will be able to enter into
purchase contracts with any transmission companies or other purchasers of
natural gas and there can be no assurance regarding the price which such
purchasers would be willing to pay for such gas. There presently exists an
oversupply of gas in the certain areas of the issuedmarketplace due to pipeline
capacity, the extent and outstanding common stockduration of which is not known. Such oversupply may
result in restrictions of purchases by principal gas pipeline purchasers.
Effect of Changing Industry Conditions on Drilling Activity.
-----------------------------------------------------------
Lower oil and gas prices have caused a decline in drilling activity in the Company.
On May 24, 2010, Mr. David Callahasen was appointedU.S.
from time to time. However, such reduced activity has also resulted in a decline
in drilling costs, lease acquisition costs and equipment costs, and an
improvement in the Board of Directors ofterms under which drilling prospects are generally available.
Creenergy cannot predict what oil and gas prices will be in the Company.
12
On July 6, 2010,future and what
effect those prices may have on drilling activity in general, or on its ability
to generate economic drilling prospects and to raise the Company filed a Definitive Information Statement on
Schedule 14Cnecessary funds with
which to amend the articles of incorporation as follows:
1. To authorize the Company to change the name to CREENERGY CORPORATION,
2. To authorize a forward split of common stock issued and outstanding on
a thirty (30) new shares for one (1) old shares basis, and
3. To increase the authorized common shares of the company from
75,000,000 shares of common stock to 675,000,000 shares of common
stock.
Such proposals have been approved by the majority shareholders of the Company
and will become effective upon the filing of an Amendment to the Articles of
Incorporation with the Secretary of State of Nevada.
Since we intend to operate with very limited administrative support, our
officers will continue to be responsible for these tasks for at least the next
six (6) months.drill them.
Material Changes in Financial Condition
At May 31, 2010,February 28, 2011, our cash balance was $4,536.$2,039. In addition, we have prepaid
expenses of $1,859.$200. 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, 2010,February 28, 2011, we had a working capital deficit of $4,066$32,228 compared to a
working capital deficit of $8,950$22,843 at November 30, 2009.2010. At May 31, 2010,February 28, 2011,
our total assets consisted of cash of $4,536$2,039 and prepaid expenses of $1,859.$200. This
compares with total assets at November 30, 20092010, which consisted of cash of
$2,841,$6,090, and prepaid expenses of $109 and capital assets of $476.$200.
At May 31, 2010,February 28, 1011, our total current liabilities decreasedincreased to $2,329$34,467 from
$11,900$29,133 at November 30, 2009.2010. During the sixthree months ended May 31, 2010,February 28, 2011,
accounts payable and accrued liabilities decreasedincreased by $9,571.
On May 21, 2010, the Company issued 4,000,000 shares of its restricted common
stock to Mr. David Calahasen , a director of the Company, at a price of $0.004
per share for cash totaling $16,000. Such funds are to be used to support the
Company's operational activities.
We recognized revenues of $6,042 from operations during the six months ending
May 31, 2010.$5,334.
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 revenues from commission sales or 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. RecentContinuing 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.
Result of Operations
For The Three Months Ended May 31, 2010February 28, 2011 Compared To The Three Months Ended
May
31, 2009.February 28, 2010.
We recognized nil revenues of $2,522 from operational sales during the three months ending
May 31, 2010, compared to nil revenues duringFebruary 28, 2011. We do not show any cumulative revenue amounts since
re-entering the three months ended May
31, 2009.development stage on June 26, 2010.
During the three months ended May 31, 2010,February 28, 2011, operating expenses were $5,245$9,385
compared to $4,304$2,995 for the three months ended May 31, 2009.February 28, 2010. The increase of
$941$6,390 was due to an increase in our operational activities over the prior period.
Operating expenses during the three months ended May 31, 2010,February 28, 2011, consisted of
professional fees of $4,418,$8,991 and office and administration costs of $827,$394 compared
15
to professional fees of $3,251, amortization and depreciation of $907$2,835 and office and administration costsfees of $146,$160
incurred for the three months ended May 31,
2009.
13
February 28, 2010.
We recognized a net loss of $2,723$9,385 for the three months ended May 31, 2010,February 28, 2011,
compared to a net loss of $4,304$2,995 for the three months ended May 31, 2009.February 28, 2010.
The decrease in thecumulative loss of $1,581 was a result of the increase in operational sales
coupled with an increase in operational expenses as discussed above.
For The Six Months Ended May 31, 2010, Compared To The Six Months End May 31,
2009.
We recognized revenues of $6,042 from operational sales during the six months
ending May 31, 2010, compared to nil revenues during the six months ended May
31, 2009.
For the six months ended May 31, 2010, operating expenses were $9,509 compared
to $7,123$35,724 is for the six months ended May 31, 2009. The increase of $2,386 was dueperiod June 26, 2010, to an increase in our operational activities over the prior period. Operating
expenses during the six months ended May 31, 2010, consisted of professional
fees of $7,253, amortization and depreciation of $477 and office and
administration costs of $1,779, compared to professional fees of $4,934,
amortization and depreciation of $1,814 and office and administration costs of
$375, for the six months ended May 31, 2009.
We recognized a net loss of $3,467 for the six months ended May 31, 2010,
compared to a net loss of $7,123 for the six months ended May 31, 2009. The
decrease in the loss of $3,656 was a result of the increase in operational sales
coupled with an increase in operational expenses as discussed above.February 28,
2011,
Off-Balance Sheet Arrangements
We currently do not have any off-balance sheet arrangements.
Critical Accounting Policies and Estimates
The preparation of the Company's financial statements in conformity with
generally accepted accounting principles in the United States requires
management to make assumptions and estimates that affect the reported amounts of
assets, liabilities, revenues and expenses as well as the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period. The
following is a summary of the significant accounting policies and related
estimates that affect the Company's financial disclosures.
Revenue Recognition
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. Revenue recognition from consignment inventory consists of
commission income.
Foreign Currency Translations
The functional currency is the Canadian dollar and the reporting
currency is the U.S. dollar. At each balance sheet date, assets and
liabilities that are denominated in a currency other than U.S. dollars
are adjusted to reflect the current exchange rate which may give rise
to a foreign currency translation adjustment accounted for as a
separate component of shareholders' equity and included in other
comprehensive loss.
Revenues and expenses are translated at the average daily rate for the
year covering the financial statement year to approximate the rate of
exchange on the transaction date. Exchange gains and losses are
included in the determination of net income (loss) for the period.
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.16
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.
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,
2010.February
28, 2011. We believe that our internal control over financial reporting was not
effective due to material weaknesses in the system of internal control.
14
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, 2010,February 28, 2011, 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.On November 22, 2010, the Company was served with a claim filed by a former
director and officer of the Company. The claim, filed in the court of Queen's
Bench of Alberta, Canada, alleges that the former director and officer of the
Company suffered losses and damages as a result of the failure of the Company in
providing him with corporate documents and implementing a change of the board of
directors. The Company has retained legal counsel to address the claim. On
December 8, 2010, the Company filed a Statement of Defense requesting that the
claim be dismissed. The Company intends to defend this claim vigorously.
Other then the above preceding, the Company is not a party to any other pending
legal proceedings, nor is the Company aware of any civil proceeding or
government authority contemplating any legal proceeding as of the date of this
filing.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On May 21, 2010, the Company issued 4,000,000 shares of its restricted common
stock to Mr. David Calahasen in exchange for cash of $16,000. Prior to the
issuance, the Company had 3,200,000 shares of common stock issued and
outstanding. After the issuance, the Company has 7,200,000 shares of common
stock issued and outstanding.
As a result of the issuance, Mr. Calahasen owns approximately 55.55% of the
issued and outstanding common stock of the Company and is the majority
shareholder of the Company.
As a result of the issuance, the ownership of Ms. Shari Sookarookoff, the Chief
Executive Officer and Director of the Company was decreased from 78.13% to
34.72%.
All of the sales by the Company of its unregistered securities were made by the
Company in reliance upon Section 4(2) of the Securities Act of 1933, as amended
(the "1933 Act"). All of the individuals listed above that purchased the
unregistered securities were known to the Company and its management, through
pre-existing business relationships, as long standing business associates and
employees. All purchasers were provided access to all material information,
which they requested, and all information necessary to verify such information
and were afforded access to management of the Company in connection with their
purchases. All purchasers of the unregistered securities acquired such
securities for investment and not with a view toward distribution, acknowledging
such intent to the Company. All certificates or agreements representing such
securities that were issued contained restrictive legends, prohibiting further
transfer of the certificates or agreements representing such securities, without
such securities either being first registered or otherwise exempt from
registration in any further resale or disposition.None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
15
Item 4. REMOVED AND RESERVED.
17
Item 5. Other InformationOTHER INFORMATION
None.
Item 6. ExhibitsEXHIBITS
(a) Pursuant to Item 601 of Regulation S-K, the following exhibits are included
herein.
Exhibit
Number Description
31.1 Section 302 Certification - Chief Executive Officer /and Chief
Financial OfficerOfficer.
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 /and Chief Financial Officer.
16
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 15th12 day of July,
2010.
ONLINE ORIGINALS, INC.April,
2011.
CREENERGY CORPORATION
Date: April 12, 2011 By: /s/ Shari Sookarookoff
----------------------
Name: Shari Sookarookoff
Title: President/Chief Executive Officer and
Chief Financial (Accounting) Officer
17
19