UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 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, ALBERTA T8A 3H9
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (780) 668-7422
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
- ----------------------------------------- ---------------------------------
COMMON STOCK, PAR VALUE $0.001 PER SHARE OTCBB
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the Registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes[ ] No[X]
Indicate by check mark if the Registrant is not required to file reports
pursuant to Rule 13 or Section 15(d) of the Exchange Act.
Yes[ ] No[X]
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.
Large 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]
Number of shares issued and outstanding of the registrant's class of common
stock as of March 1, 2010: 3,200,000 shares of common stock
The Company recognized net revenues of $13,110 for its most recent fiscal year.
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TABLE OF CONTENTS
PAGE
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PART I
Item 1. Description of Business 4
Item 1A. Risk Factors 7
Item 1B. Unresolved Staff Comments 9
Item 2. Description of Property 9
Item 3. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security Holders 10
PART II
Item 5. Market For Common Equity and Related Stockholder Matters 10
Item 6. Selected Financial Data 11
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation 11
Item 7A. Quantitative and Qualitative Disclosures of Market Risk 14
Item 8. Financial Statements and Supplementary Data 14
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 26
Item 9A. Controls and Procedures 26
Item 9A(T). Controls and Procedures 26
Item 9B. Other Information 27
PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section
16(a) of the Exchange Act 27
Item 11. Executive Compensation 28
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 29
Item 13. Certain Relationships and Related Transactions and Director Independence 30
Item 14. Principal Accountant Fees and Services 30
Item 15. Exhibits and Financial Statement Schedules 30
Signatures 31
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FORWARD-LOOKING STATEMENTS
IN ADDITION TO HISTORICAL INFORMATION, SOME OF THE INFORMATION PRESENTED IN THIS
ANNUAL REPORT ON FORM 10-K CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 (THE "REFORM
ACT"). ALTHOUGH ONLINE ORIGINALS, INC. ("ONLINE" OR THE "COMPANY," WHICH MAY
ALSO BE REFERRED TO AS "WE," "US" OR "OUR") BELIEVES THAT ITS EXPECTATIONS ARE
BASED ON REASONABLE ASSUMPTIONS WITHIN THE BOUNDS OF ITS KNOWLEDGE OF ITS
BUSINESS AND OPERATIONS: THERE CAN BE NO ASSURANCE THAT ACTUAL RESULTS WILL NOT
DIFFER MATERIALLY FROM OUR EXPECTATIONS. SUCH FORWARD-LOOKING STATEMENTS ARE
SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE ANTICIPATED, INCLUDING BUT NOT LIMITED TO, OUR ABILITY TO
REACH SATISFACTORILY NEGOTIATED SETTLEMENTS WITH OUR OUTSTANDING CREDITORS,
ACHIEVE A LISTING ON THE OVER THE COUNTER BULLETIN BOARD, RAISE DEBT AND/OR
EQUITY TO FUND NEGOTIATED SETTLEMENTS WITH OUR CREDITORS AND TO MEET OUR ONGOING
OPERATING EXPENSES AND MERGE WITH ANOTHER ENTITY WITH EXPERIENCED MANAGEMENT AND
OPPORTUNITIES FOR GROWTH IN RETURN FOR SHARES OF OUR COMMON STOCK TO CREATE
VALUE FOR OUR SHAREHOLDERS. YOU ARE URGED TO CAREFULLY CONSIDER THESE FACTORS,
AS WELL AS OTHER INFORMATION CONTAINED IN THIS ANNUAL REPORT ON FORM 10-K AND IN
OUR OTHER PERIODIC REPORTS AND DOCUMENTS FILED WITH THE SEC.
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
BUSINESS DEVELOPMENT
We incorporated as Online Originals, Inc. (hereinafter referred to as Online) on
November 18th, 2005 in the State of Nevada. Our principal executive offices are
located at 57113 -2020 Sherwood Drive, Sherwood Park, Alberta T8A 3H9. Telephone
number is (780) 668-7422. Our fiscal year end is November 30th.
BUSINESS OF ISSUER
We are developing an online art gallery/auction house that allows members and
customers to bid on and purchase pieces of art. The website presently showcases
varieties of art ranging from paintings, drawings, prints, and sculptures. We
maintain our website at WWW.ARTBYONLINEORIGINALS.COM, which is not incorporated
in and is not a part of this report. Inventory pieces are purchased at wholesale
prices in lots, to be sold at retail prices. Eventually the available artwork
will include paintings, drawings, prints, and sculptures from artists, art
owners and members of the site. Members of the site and one-time users offer art
pieces for sale and we facilitate the sale of these pieces. Fees and commissions
are charged for the services we provide.
Our target clientele continues to be the artistic community and those who enjoy
purchasing, learning, and discussing art. We focus on buyers and art collectors
who are using the internet to find what they are looking for. It is planned that
members will be able to enter the website, log into their account and see pieces
featured for that week.
As we continue to develop, we anticipate that we will have a dialogue on the
pieces giving the history and description, which will act as an educational tool
and encourage individuals to visit the site frequently. Featured artists,
periods of time, and styles are planned to be part of these weekly features. We
believe that having these aspects on the site will boost participation and
facilitate community.
As we continue to develop our site, we will also include a member's only area
where individuals will have access to educational material, special sales, and
useful information about what is happening in the art community. Members will
have the ability to interact with other members and sellers, giving a community
feel to the website. Monthly membership fees will be charged.
PRINCIPAL PRODUCTS AND SERVICES
Currently, our available art are 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.
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As we continue to develop, we will showcase original pieces of art from unknown
artists in the industry as well as established artists. Prints will also be
available for individuals looking for a piece that can otherwise only be found
in a gallery. We will continually add to our collection of art pieces, following
the demand of the members and listening to what they are looking for.
THE MARKET
Our primary target market is North America, but we will be pleased to provide
service to members and clients around the world. The key demographic that we are
targeting will be art purchasers and art enthusiasts - individuals of all ages,
races and social structures. Internet marketing will be used as the primary
source to bring traffic to the website.
COMPETITION AND COMPETITIVE STRATEGY
There are a number of social networking internet sites as well as auction sites,
but few, we believe, that are focused on the creative artist market. We intend
to be differentiated from the other websites by offering services specifically
to art purchasers and art enthusiasts. Members will be able to narrow their
searches by artist, style and/or year. Our competitive advantage will be gained
by providing a high service level and accommodating the wishes of the members
and guests to our website.
In addition, there are various shops and stores that sell art. Our strategy is
to make it as easy as possible for consumers to purchase art pieces without
having to leave the comfort of their home. Rather than spend time going to
different shops in search of a specific item, our members will have the ability
to view thousands of available art pieces from their home computer.
DISTRIBUTION
As present, our competitive position within the industry is weak. The challenge
before us is to build our business and establish it as a viable going concern.
At this time, our focus is internet marketing through our website. When we have
available cash from sales revenue, we will focus on alternate forms of
marketing. They may include several key forms of internet advertising such as
pay-per click and cross promotions with other websites who are targeting the
same demographic groups. We believe these forms of advertising are much more
specific and cost effective than a newspaper ad or other forms of advertising.
By having a strong presence on the Internet, our marketing costs will remain low
and cross promotions will allow our name and services to reach a wide audience.
We also plan to participate in special interest mailing lists to gain visibility
among targeted audiences as well as generate traffic for the website. Special
interest mailing lists are not direct lists, but instead are similar to email
newsletters or on-going dialogues dedicated to special interests. We plan to
send E-mail messages to specific mailing lists targeting the individuals
currently viewing art and showing a visible interest in art.
We plan to participate in industry related newsgroups to gain visibility and
develop relationships with targeted markets.
Finally, we will seek to create a media presence and work towards establishing a
name for itself in the artistic community. Print and direct mail of marketing
and promotions and will be placed in art magazines, art stores, and art
galleries and theaters.
SOURCES AND AVAILABILITY OF PRODUCTS AND SUPPLIES
We believe that we will have unlimited sources and availability of products and
supplies. Our inventory will come from creative artists. These individuals will
supply original art. We intend to showcase the works of art on the website for
sale to other artists and buyers and will offer advertising/promotional services
for new works being introduced.
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DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS
We are not dependant on one or a few major customers because our website will
target all art purchasers and art enthusiasts who have access to the internet.
PATENT, TRADEMARK, LICENSE & FRANCHISE RESTRICTIONS AND CONTRACTUAL OBLIGATIONS
& CONCESSIONS
There are no inherent factors or circumstances associated with this industry, or
any of the products or services that we plan to provide that would give cause
for any patent, trademark or license infringements or violations. We have not
entered into any franchise agreements or other contracts that have given, or
could give rise to obligations or concessions. This is original art and we will
recognize the artists and copy rites if and when they are necessary.
GOVERNMENTAL CONTROLS AND APPROVALS
In regards to both the retail and the customer service aspects of our business,
the major area for government control or need for government approval would be
local business licensing. All of the products being offered for sale will be
purchased from reputable artists and suppliers and will carry the necessary
government and industry standard approvals. We do not intend to promote products
or services of any business that are restricted in Canada and the United States.
EXISTING OR PROBABLE GOVERNMENT REGULATIONS
Other than the licensing requirements discussed above, there are no other types
of government regulations existing nor are we aware of any such regulations
being contemplated that adversely affect our ability to operate.
RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS
We have not incurred any costs to date relating to research and development and
have no plans to undertake any research and development activities within the
next twelve months.
COMPLIANCE WITH ENVIRONMENTAL LAWS
There are no environmental laws that have been enacted that would affect our
business, nor are we aware of any such laws being contemplated in the future
that address issues specific to our business.
FACILITIES
We do not own or rent facilities of any kind. At present operations are being
conducted from the offices of our President, and she provides this space free of
charge. We will continue to use this space for executive offices for the
foreseeable future.
EMPLOYEES
Our officers and directors are responsible for planning, developing and
operational duties and will continue to do so throughout the early stages of our
growth. We have no intentions in hiring any employees until our business has
sufficient and reliable revenue from operations. Human resources planning will
be part of an ongoing process that will include constant evaluation of
operations and revenue realization. We do not expect to hire any employees
during the next year of operations.
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ITEM 1A. RISK FACTORS
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RISKS RELATED TO OUR BUSINESS AND INDUSTRY
THE COMPANY HAS A LACK OF REVENUE HISTORY AND HAS HAD A LIMITED HISTORY OF
OPERATIONS.
Online was formed on November 18, 2005 for the purpose of engaging in any lawful
business and have adopted a plan to engage the sale of art work over the
internet. The Company has had minimal revenues over the last five years. The
Company is not profitable. Online must be regarded as a venture with all of the
unforeseen costs, expenses, problems, risks and difficulties to which such
ventures are subject.
ONLINE CAN GIVE NO ASSURANCE OF SUCCESS OR PROFITABILITY TO THE COMPANY'S
INVESTORS.
There is no assurance that Online will ever operate profitably. There is no
assurance that the Company will generate revenues or profits, or that the market
price of the Company's common stock will be increased thereby.
ONLINE MAY HAVE A SHORTAGE OF WORKING CAPITAL IN THE FUTURE WHICH COULD
JEOPARDIZE THE COMPANY'S ABILITY TO CARRY OUT ITS BUSINESS PLAN.
The Company's capital needs consist primarily of expenses related to the
development of and management of its website and other such expenses incurred
with maintaining its reporting status and could exceed $35,000 in the next
twelve months. Such funds are not currently committed, and Online's cash as of
the date of this Annual Report on Form 10K of approximately $2,500.
ONLINE'S OFFICERS AND DIRECTORS MAY HAVE CONFLICTS OF INTEREST WHICH MAY NOT BE
RESOLVED FAVORABLY TO THE COMPANY.
Certain conflicts of interest may exist between Online and its officers and
directors. The Company's Officers and Directors have other business interests to
which they devote their attention and may be expected to continue to do so
although management time should be devoted to Online business. As a result,
conflicts of interest may arise that can be resolved only through exercise of
such judgment as is consistent with fiduciary duties to Online. See "Directors
and Executive Officers" (page 27). Online's officers are spending part-time in
this business - up to a maximum of 5 hours per week.
THE COMPANY WILL NEED ADDITIONAL FINANCING FOR WHICH ONLINE HAS NO COMMITMENTS,
AND THIS MAY JEOPARDIZE EXECUTION OF THE COMPANY'S BUSINESS PLAN.
Online has limited funds, and such funds may not be adequate to carry out the
business plan. The Company's ultimate success depends upon its ability to raise
additional capital. The Company has not investigated the availability, source,
or terms that might govern the acquisition of additional capital and will not do
so until it determines a need for additional financing. If the Company needs
additional capital, it has no assurance that funds will be available from any
source or, if available, that they can be obtained on terms acceptable to the
Company. If not available, Online's operations will be limited to those that can
be financed with its modest capital.
THE COMPANY MAY IN THE FUTURE ISSUE MORE SHARES WHICH COULD CAUSE A LOSS OF
CONTROL BY ITS PRESENT MANAGEMENT AND CURRENT STOCKHOLDERS.
Online may issue further shares as consideration for the cash or assets or
services out of its authorized but unissued common stock that would, upon
issuance, represent a majority of the voting power and equity of the Company.
The result of such an issuance would be those new stockholders and management
would control the Company, and persons unknown could replace the Company's
management at this time. Such an occurrence would result in a greatly reduced
percentage of ownership of Online by its current shareholders, which could
present significant risks to investors.
ONLINE IS NOT DIVERSIFIED AND IT IS DEPENDENT ON ONLY ONE BUSINESS.
Because of the limited financial resources that the Company has, it is unlikely
that the Company will be able to diversify its operations. Online's probable
inability to diversify its activities into more than one area will subject the
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Company to economic fluctuations within the internet industry and therefore
increase the risks associated with the Company's operations due to lack of
diversification.
ONLINE WILL DEPEND UPON MANAGEMENT BUT IT WILL HAVE LIMITED PARTICIPATION OF
MANAGEMENT.
The Company currently has two individuals who are serving as its officers and
directors for up to 5 hours per week each on a part-time basis. The Company's
directors are also acting as its officers. The Company will be heavily dependent
upon their skills, talents, and abilities, as well as several consultants to
Online, to implement the Company's business plan, and may, from time to time,
find that the inability of the officers, directors and consultants to devote
their full-time attention to Online business results in a delay in progress
toward implementing the Company's business plan.
THE COMPANY'S OFFICERS AND DIRECTORS ARE NOT EMPLOYED FULL-TIME BY ONLINE WHICH
COULD BE DETRIMENTAL TO THE BUSINESS.
Online directors and officers are, or may become, in their individual
capacities, officers, directors, controlling shareholder and/or partners of
other entities engaged in a variety of businesses. Thus, Online's officers and
directors may have potential conflicts including their time and efforts involved
in participation with other business entities. Each officer and director of
Online's business is engaged in business activities outside of the Company's
business, and the amount of time they devote as Officers and Directors to its
business will be up to 5 hours per week.
Online does not know of any reason other than outside business interests that
would prevent them from devoting full-time to its Company, when the business may
demand such full-time participation.
THE COMPANY'S OFFICERS AND DIRECTORS MAY HAVE CONFLICTS OF INTERESTS AS TO
CORPORATE OPPORTUNITIES WHICH IT MAY NOT BE ABLE OR ALLOWED TO PARTICIPATE IN.
Presently there is no requirement contained in the Company's Articles of
Incorporation, Bylaws, or minutes which requires officers and directors of its
business to disclose to the Company's business opportunities which come to their
attention. Online officers and directors do, however, have a fiduciary duty of
loyalty to the Company to disclose to it any business opportunities which come
to their attention, in their capacity as an officer and/or director or
otherwise. Excluded from this duty would be opportunities which the person
learns about through his involvement as an officer and director of another
company. Online has no intention of merging with or acquiring business
opportunity from any affiliate or officer or director.
IF THE COMPANY IS NOT ABLE TO ADAPT TO RAPID TECHNOLOGY CHANGES AFFECTING ITS
WEBSITE AND CONTINUALLY UPGRADE THE SERVICES AND OFFERINGS OF ITS WEBSITE, THE
COMPANY MAY NOT BE ABLE TO ATTRACT OR RETAIN CUSTOMERS AND OUR BUSINESS WILL
FAIL.
The market for websites such as Online's is subject to rapid technological
changes; frequent new service offerings and changes in customer requirements.
The Company may be unable to respond quickly or effectively to these changes. If
the Company is unable to update and refine its website and services in response
to technological changes, it may then not be able to attract or retain customers
and the business will fail.
BECAUSE MS. SHARI SOOKAROOKOFF, ONE OF THE COMPANY'S DIRECTORS AND OUR SOLE
OFFICER, CONTROLS APPROXIMATELY 78% OF THE OUTSTANDING COMMON STOCK, SHE WILL
CONTROL AND MAKE CORPORATE DECISIONS AND INVESTORS WILL HAVE LIMITED ABILITY TO
AFFECT CORPORATE DECISIONS.
Ms. Shari Sookarookoff controls approximately 78% of the outstanding shares of
the Company's common stock. Accordingly, she has almost complete influence in
determining the outcome of all corporate transactions and business decisions.
The interests of Ms. Sookarookoff may differ from the interests of the other
stockholders, and since she has the ability to control most decisions through
her control of the Company's common stock, our investors will have limited
ability to affect decisions made by management.
-8-
THE REGULATION OF PENNY STOCKS BY SEC AND FINRA MAY DISCOURAGE THE TRADABILITY
OF OUR SECURITIES.
The Company is a "penny stock" company. None of our securities currently trade
in any market and, if ever available for trading, will be subject to a
Securities and Exchange Commission rule that imposes special sales practice
requirements upon broker-dealers who sell such securities to persons other than
established customers or accredited investors. For purposes of the rule, the
phrase "accredited investors" means, in general terms, institutions with assets
in excess of $5,000,000, or individuals having a net worth in excess of
$1,000,000 or having an annual income that exceeds $200,000 (or that, when
combined with a spouse's income, exceeds $300,000). For transactions covered by
the rule, the broker-dealer must make a special suitability determination for
the purchaser and receive the purchaser's written agreement to the transaction
prior to the sale. Effectively, this discourages broker-dealers from executing
trades in penny stocks. Consequently, the rule will affect the ability of
shareholders to sell their securities in any market that might develop therefore
because it imposes additional regulatory burdens on penny stock transactions.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks". Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange
Act of 1934, as amended. Because our securities constitute "penny stocks" within
the meaning of the rules, the rules would apply to us and to our securities. The
rules will further affect the ability of owners of shares to sell our securities
in any market that might develop for them because it imposes additional
regulatory burdens on penny stock transactions.
Shareholders should be aware that, according to Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.
THE COMPANY WILL PAY NO FORESEEABLE DIVIDENDS IN THE FUTURE.
The Company has not paid dividends on our common stock and do not ever
anticipate paying such dividends in the foreseeable future.
OUR INVESTORS MAY SUFFER FUTURE DILUTION DUE TO ISSUANCES OF SHARES FOR VARIOUS
CONSIDERATIONS IN THE FUTURE.
There may be substantial dilution to our shareholders a result of future
decisions of the Board to issue shares without shareholder approval for cash,
services, or acquisitions.
ITEM 1B. UNRESOLVED STAFF COMMENTS
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Not applicable.
ITEM 2. DESCRIPTION OF PROPERTY
- --------------------------------
We do not own or rent facilities of any kind. At present we are operating from
our principal office that is located within the offices of our President, who
provides this space free of charge.
We do not have any manufacturing plants and have minimal equipment for the
operation of our business.
-9-
INVESTMENT POLICIES
We do not have any investments in real estate or interest in real estate or
investments real estate mortgages. We also do not have any investments in any
securities of or interests in persons primarily engaged in real estate
activities.
DESCRIPTION OF REAL ESTATE AND OPERATING DATA
None
ITEM 3. LEGAL PROCEEDINGS
- --------------------------
We are not a party to any legal proceedings, nor are we aware of any
contemplated or pending legal proceedings against us.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
We have not yet held our annual shareholders' meeting or submitted any matters
to a vote of shareholders during the fiscal year to which this Annual Report
pertains.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
- -----------------------------------------------------------------------------
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(A) MARKET INFORMATION
Our Common Stock is presently traded on the over-the-counter market on the OTC
Bulletin Board maintained by the Financial Industry Regulatory Authority
("FINRA"). On August 7, 2008, we began trading on the over the counter bulletin
board under the symbol "OLOI." During the period of August 7, 2008 through
November 30, 2009, our shares have not traded. As of March 1, 2010, no trades
for our stock have taken place on the OTC/BB.
(B) HOLDERS
As of March 1, 2010, there were approximately forty-three (43) holders of record
of our common stock.
(C) DIVIDEND POLICY
We have never declared or paid dividends on our common stock. We intend to
retain earnings, if any, to support the development of our business and
therefore do not anticipate paying cash dividends for the foreseeable future.
Payment of future dividends, if any, will be at the discretion of our board of
directors after taking into account various factors, including current financial
condition, operating results and current and anticipated cash needs.
(D) SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
None.
RECENT SALES OF UNREGISTERED SECURITIES
During the years ended November 30, 2009, 2008 and 2007, the Company made no
sales of its unregistered securities.
-10-
DESCRIPTION OF SECURITIES
COMMON STOCK
We are authorized to issue up to 75,000,000 shares of Common Stock, $.001 par
value. At present, we are not authorized to issue any series or shares of
preferred stock. The holders of our Common Stock are entitled to one vote per
share held and have the sole right and power to vote on all matters on which a
vote of stockholders is taken. Voting rights are non-cumulative. Common
stockholders are entitled to receive dividends when, as, and if declared by the
Board of Directors, out of funds legally available therefore and to share pro
rata in any distribution to stockholders. Upon liquidation, dissolution, or the
winding up of our Company, common stockholders are entitled to receive the net
assets of our Company in proportion to the respective number of shares held by
them after payment of liabilities which may be outstanding. The holders of
Common Stock do not have any preemptive right to subscribe for or purchase any
shares of any class of stock of the Company. The outstanding shares of Common
Stock will not be subject to further call or redemption and are fully paid and
non-assessable. To the extent that additional common shares are issued, the
relative interest of existing stockholders will likely be diluted.
STOCK PURCHASE WARRANTS
None.
STOCK PURCHASE OPTIONS
None.
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
NONE.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
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CAUTIONARY AND FORWARD-LOOKING STATEMENTS
In addition to statements of historical fact, this Form 10-K contains
forward-looking statements. The presentation of future aspects of Online
Originals, Inc. (the "Company" or "Issuer") found in these statements is subject
to a number of risks and uncertainties that could cause actual results to differ
materially from those reflected in such statements. Readers are cautioned not to
place undue reliance on these forward-looking statements, which reflect
management's analysis only as of the date hereof. Without limiting the
generality of the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "intend," or "could" or the negative variations thereof or
comparable terminology are intended to identify forward-looking statements.
These forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause the Company actual results to be materially
different from any future results expressed or implied by the Company in those
statements. Important facts that could prevent the Company from achieving any
stated goals include, but are not limited to, the following:
(a) volatility or decline of the Company's stock price;
(b) potential fluctuation in quarterly results;
(c) failure of the Company to earn revenues or profits;
(d) inadequate capital to continue or expand its business, inability to
raise additional capital or financing to implement its business plans;
-11-
(e) failure to make sales on an increasing basis;
(f) rapid and significant changes in markets;
(g) litigation with or legal claims and allegations by outside parties;
(h) insufficient revenues to cover operating costs.
There is no assurance that the Company will be profitable, the Company may not
be able to successfully develop, manage or market its products and services, the
Company may not be able to attract or retain qualified executives and personnel,
the Company's products and services may become obsolete, government regulation
may hinder the Company's business, additional dilution in outstanding stock
ownership may be incurred due to the issuance of more shares, warrants and stock
options, or the exercise of warrants and stock options, and other risks inherent
in the Company's businesses.
The Company undertakes no obligation to publicly revise these forward-looking
statements to reflect events or circumstances that arise after the date hereof.
Readers should carefully review the factors described in other documents the
Company files from time to time with the Securities and Exchange Commission,
including the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K
filed by the Company.
PLAN OF OPERATION FOR THE NEXT TWELVE (12) MONTHS
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 Form 10-K; our Form 10-Q filed on October 14,
2009, our Form 10-Q filed on July 14, 2009, and our Form 10-Q filed on April 20,
2009.
Our registered public accounting firm's audit report on our consolidated
financial statements as of November 30, 2009, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph
that describes substantial doubt about our ability to continue as a going
concern. Management's plans in regard to the factors prompting the explanatory
paragraph are discussed below.
During the year ended November 30, 2009, we continued operations that earned
revenue in the form of commission sales. We are continuing the management of our
website which is our main source of promotion and facilitation for our members.
It outlines the services, description of art pieces, artists, and ordering
instructions. We are continuing to contact both experienced and unpublished
artists in order to introduce our marketing plan. It is planned that we will
develop a membership program. We will once again contact the local tourist
bureau in order to market our products though their international contacts.
As soon as funds are available, we are planning to rework and update our website
to better reflect current social network trends. We are actively seeking to add
new products and/or services that we can offer through our website. One of our
directors, Ms. Saunders, plans to assist us in putting together a new marketing
strategy.
We have no employees at the present time. We will continue to operate with very
limited administrative support as our current officers continue to be
responsible for developing and operational duties, without compensation, for at
least the next 12 months.
Our continuing operations are dependent upon the identification and successful
completion of additional long-term or permanent equity financing, the support of
creditors and shareholders, and, ultimately, the achievement of profitable
operations. There can be no assurances that we will be successful, which would
in turn significantly affect our ability to complete our business plan. If not,
we will likely be required to reduce operations or liquidate assets. We will
continue to evaluate our projected expenditures relative to our available cash
and to seek additional means of financing in order to satisfy our working
capital and other cash requirements.
We believe we do not have sufficient cash resources to satisfy our needs through
the end of February 2010. Our ability to satisfy cash requirements thereafter
and the need for additional funding is dependent on our ability to generate
revenue from our business in sufficient quantity and on a profitable basis. To
the extent that we require additional funds to support our operations or the
-12-
expansion of our business, we may attempt to sell additional equity shares or
issue debt. Any sale of additional equity securities will result in dilution to
our stockholders. Should we require additional cash in the future, there can be
no assurance that we will be successful in raising additional debt or equity
financing on terms acceptable to us, if at all.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
FINANCIAL CONDITION
At November 30, 2009, we had a working capital deficit of $8,950 compared to
working capital deficit of $6,068 at November 30, 2008. At November 30, 2009,
our total assets consisted of cash of $2,841, prepaid expenses of $109 and
capital assets of $476. This compares with our total assets at November 30,
2008, which consisted of cash of $4,904, prepaid expenses of $93 and capital
assets of $3,542.
At November 30, 2009, our total current liabilities, consisting of accounts
payable of $3,900 and accrued liabilities of $8,000, increased to $11,900 from
$11,065 consisting of accounts payable of $4,565 and accrued liabilities of
$6,500 at November 30, 2008.
We recognized $13,110 in revenues during the fiscal year ending November 30,
2009, compared to revenues of $2,800 during the year ended November 30, 2008. We
have recognized $23,193 in revenue since our inception. Our short and long term
survival is dependent on funding from increased sales of products and services,
sales of securities as necessary or from shareholder loans.
RESULT OF OPERATIONS
We recognized $13,110 in revenues during the fiscal year ending November 30,
2009, compared to revenues of $2,800 during the year ended November 30, 2008.
The $10,310 increase in revenue was a result of our increased sales during the
year ended November 30, 2009. During the year ended November 30, 2009, our gross
margin was $13,100 compared with a gross margin of $2,800 during the year ended
November 30, 2008. During the years ended November 30, 2009 and November 30,
2008, there was no cost of goods sold since the revenue was from commission
sales.
During the year ended November 30, 2009, we incurred expenses of $19,499
compared to expenses of $31,250 for the year ended November 30, 2008. The
decrease of $11,751 was a result of decreased operations over the prior year.
The principal component of losses in 2009 was professional fees of $15,733,
office and administration expenses of $700 and depreciation and amortization
costs of $3,066 compared with the principal component losses in 2008 being
professional fees of $24,318, office and administration expenses of $3,304 and
amortization costs of $3,628.
We recognized a net loss of $6,389 for the year ended November 30, 2009 compared
to a net loss of $28,450 for the year ended November 30, 2008. From inception to
November 30, 2009, we have incurred a net loss of $89,285. The principal
components of losses were professional fees of $70,745, office and
administration expenses of $9,272, marketing costs of $8,461, cost of goods sold
of $5,379, consulting fees of $7,550, organizational costs of $665 and
depreciation and amortization of $10,408.
As of January 10, 2010, our net cash balance is approximately $421. In addition,
we have prepaid expenses of $109. 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.
We believe our existing cash balance is not sufficient to carry our normal
operations for the next 12 months. To the extent that we require additional
funds to support our operations or the expansion of our business, we may attempt
to sell additional equity shares or issue debt. Any sale of additional equity
securities will result in dilution to our stockholders. There can be no
assurance that additional financing, if required, will be available to our
company or on acceptable terms.
-13-
OFF BALANCE SHEET ARRANGEMENTS.
None.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
- ------------------------------------------------------------------
We believe our market risk exposures arise primarily from exposures to
fluctuations in interest rates and exchange rates. We presently only transact
business in Canadian and US Dollars. We believe that the exchange rate risk
surrounding the future transactions of the Company will not materially or
adversely affect our future earnings. We do not believe that we are subject to
any seasonal trends. We do not use derivative financial instruments to manage
risks or for speculative or trading purposes.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- -----------------------------------------------------
The financial statements required by this Item begin on Page F-15 of this Form
10-K, and include:
Report of Independent Registered Public Accounting Firm;
Balance Sheets;
Statements of Operations, Statements of Cash Flows, Statement of Stockholders'
Equity (Deficit); and
Notes to Financial Statements.
-14-
ONLINE ORIGINALS, INC.
FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
November 30, 2009
PAGE
----
Report of Independent Registered Public Accounting Firm F-16
Financial Statements:
Balance Sheets F-17
Statements of Operations F-18
Statements of Cash Flows F-19
Statement of Stockholders' (Deficit) F-20
Notes to Financial Statements F-21 to F-25
F-15
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Online Originals, Inc.
We have audited the accompanying balance sheets of Online Originals, Inc., as of
November 30, 2009 and 2008, and the related statements of operations,
stockholders' (deficit), and cash flows for the two years ended November 30,
2009 and 2008. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The company is not
required to have, nor were we engaged to perform an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Online Originals, Inc. as of
November 30, 2009 and 2008, and the results of its operations and cash flows for
the two years ended November 30, 2009 and 2008, in conformity with accounting
principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 3, the Company
has negative working capital and stockholders' deficits at November 30, 2009,
and has losses to date of approximately $89,300, which raise substantial doubt
about its ability to continue as a going concern. Management's plans in regard
to this matter are also discussed in Note 3. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
SCHUMACHER & ASSOCIATES, INC.
/s/Schumacher & Associates, Inc.
Denver, Colorado
March 4, 2010
F-16
ONLINE ORIGINALS, INC.
BALANCE SHEETS
NOVEMBER 30, 2009 NOVEMBER 30, 2008
----------------- -------------------
ASSETS
CURRENT ASSETS
Cash $ 2,841 $ 4,904
Prepaid expense 109 93
----------------- -------------------
Total Current Assets 2,950 4,997
COMPUTER EQUIPMENT, NET OF DEPRECIATION OF $6,360 AND 4,081 476 2,755
WEBSITE DEVELOPMENT COSTS, NET OF AMORTIZATION OF $4,048 AND 3,261 - 787
----------------- -------------------
TOTAL ASSETS $ 3,426 $ 8,539
------------
================= ===================
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
LIABILITIES
CURRENT LIABILITIES
Accounts payable $ 3,900 $ 4,565
Accrued liabilities 8,000 6,500
----------------- -------------------
Total Liabilities, all current 11,900 11,065
----------------- -------------------
Commitments and Contingencies (Notes 3, 5 and 6)
STOCKHOLDERS' (DEFICIT)
CAPITAL STOCK
Authorized:
75,000,000 common shares, par value $0.001 per share
Issued and outstanding:
3,200,000 common shares 3,200 3,200
Additional paid-in capital 77,299 77,299
Accumulated comprehensive income (loss) 312 (129)
ACCUMULATED DEFICIT (89,285) (82,896)
----------------- -------------------
(8,474) (2,526)
----------------- -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 3,426 $ 8,539
--------------------------------------------- ================= ===================
F-17
ONLINE ORIGINALS, INC.
STATEMENTS OF OPERATIONS
YEAR ENDED Year Ended
NOVEMBER 30, November 30, 2008
2009
--------------------------- ---------------------------
REVENUE $ 13,110 $ 2,800
- ------- --------------------------- ---------------------------
COST OF GOODS SOLD - -
--------------------------- ---------------------------
13,110 2,800
--------------------------- ---------------------------
EXPENSES
Depreciation and amortization 3,066 3,628
Consulting - -
Marketing - -
Office and administration 700 3,304
Organizational costs - -
Professional fees 15,733 24,318
--------------------------- ---------------------------
19,499 31,250
--------------------------- ---------------------------
NET LOSS FROM OPERATIONS (6,389) (28,450)
--------------------------- ---------------------------
OTHER INCOME
Interest Income - -
NET LOSS FOR THE PERIOD $ (6,389) $ (28,450)
=========================== ===========================
BASIC AND DILUTED LOSS PER SHARE $ (0.00) $ (0.01)
=========================== ===========================
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 3,200,000 3,200,000
=========================== ===========================
F-18
ONLINE ORIGINALS, INC.
STATEMENTS OF CASH FLOWS
Year ended Year ended
November 30 2009 November 30, 2008
--------------------------- -------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (6,389) $ (28,450)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
USED BY OPERATING ACTIVITIES:
Depreciation and amortization 3,066 3,628
Prepaid expenses (16) -
Accounts payable and accrued liabilities
835 5,795
--------------------------- -------------------------
Cash (Used in) Operating Activities (2,504) (19,027)
--------------------------- -------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to capital assets - -
Additions to intangibles - -
--------------------------- -------------------------
Net Cash (Used in) Investing Activities - -
--------------------------- -------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common shares - -
Offering costs - -
Foreign currency translation adjustment 441 (736)
--------------------------- -------------------------
Net Cash Provided by (Used in) Financing
Activities 441 (736)
--------------------------- -------------------------
(DECREASE) INCREASE IN CASH DURING THE PERIOD
(2,063) (19,763)
CASH, BEGINNING OF PERIOD 4,904 24,667
--------------------------- -------------------------
CASH, END OF PERIOD $ 2,841 $ 4,904
=========================== =========================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for:
Interest $ - $ -
Income taxes $ - $ -
=========================== =========================
F-19
ONLINE ORIGINALS, INC.
STATEMENT OF STOCKHOLDERS' (DEFICIT)
FOR THE PERIOD FROM NOVEMBER 30, 2007 THROUGH NOVEMBER 30, 2009
CAPITAL STOCK
-----------------------------------------------
ADDITIONAL ACCUMULATED
PAID-IN ACCUMULATED COMPREHENSIVE
SHARES AMOUNT CAPITAL DEFICIT INCOME (LOSS) TOTAL
------------ --- ---------- --- --------------- -- ------------- -- --------------- --- ----------
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 - - - - 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) $ 312 $ (8,474)
============ === ========== === =============== == ============= == =============== === ==========
F-20
ONLINE ORIGINALS, INC.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 2009
1. 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's business plan is to develop a membership based website
art gallery/auction house specifically focused on displaying and
selling original artwork.
In prior years the Company was considered to be a development stage
enterprise. The Company is no longer considered to be in the
development stage since it has recognized significant revenues in the
year ended November 30, 2009.
2. 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 Accounting Standards Codification
Financial Accounting No. 740 - "Accounting for Income Taxes" (ASC
740). ASC 740 requires the use of the asset and liability method
of accounting of income taxes. Under the asset and liability
method of ASC 740, 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. A valuation allowance is established when necessary to
reduce deferred tax assets to the amount expected to be realized.
c) BASIC AND DILUTED LOSS PER SHARE
In accordance with ASC 260 - "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.
Diluted earnings per share is not shown for periods in which the
Company incurs a loss because it would be anti-dilutive. At
November 30, 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.
F-21
e) 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.
f) INVENTORY
Inventory is stated at the lower of cost or market. We generally
determine the costs by the first-in first-out or average cost
methods. Cost includes all costs of purchase, cost of conversion
and other costs incurred in bringing the inventory to its present
location and condition.
g) 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.
h) COMPREHENSIVE INCOME (LOSS)
The Company adopted Accounting Standards Codification Financial
Accounting (ASC) No. 220, "REPORTING COMPREHENSIVE INCOME". ASC
220 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.
i) USE OF ESTIMATES
The preparation of the Company's financial statements are in
conformity with generally accepted accounting principles which
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.
j) CASH AND CASH EQUIVALENTS
All highly liquid debt instruments with an original maturity of
three months or less are considered to be cash equivalents.
k) 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
F-22
l) 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. The Website is fully amortized at November 30, 2009.
Accumulated amortization at November 30, 2009 was $4,048. Ongoing
website post-implementation costs of operation, including training
and application maintenance, will be charged to expense as
incurred.
m) CONCENTRATIONS
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and cash
equivalents. At November 30, 2009, approximately $2,841 of cash or
cash equivalents were not insured by agencies of the U.S.
Government.
n) RECENT ACCOUNTING PRONOUNCEMENTS
In May 2009, the FASB issued a pronouncement, "Subsequent Events".
This pronouncement establishes standards for accounting for and
disclosing subsequent events (events which occur after the balance
sheet date but before financial statements are issued or are
available to be issued). The pronouncement requires an entity to
disclose the date subsequent events were evaluated and whether
that evaluation took place on the date financial statements were
issued or were available to be issued. It is effective for interim
and annual periods ending after June 15, 2009. The adoption of the
pronouncement did not have a material impact on the Company's
financial condition or results of operation.
In June 2009, the FASB issued a pronouncement, "Accounting for
Transfers of Financial Assets". The pronouncement is intended to
improve the relevance, representational faithfulness, and
comparability of the information that a reporting entity provides
in its financial statements about a transfer of financial assets:
the effects of a transfer on its financial position, financial
performance, and cash flows: and a transferor's continuing
involvement, if any, in transferred financial assets. This
statement must be applied as of the beginning of each reporting
entity's first annual reporting period that begins after November
15, 2009. The adoption of the pronouncement did not have an impact
on the Company's results of operations, financial condition or
cash flows.
In June 2009, the FASB issued a pronouncement, "Amendments to FASB
Interpretation No. 46(R)". The pronouncement is intended to (1)
address the effects on certain provisions of the prior
pronouncement, CONSOLIDATION OF VARIABLE INTEREST ENTITIES, as a
result of the elimination of the qualifying special-purpose entity
concept, and (2) constituent concerns about the application of
certain key provisions of the prior pronouncement, including those
in which the accounting and disclosures under the Interpretation
do not always provided timely and useful information about an
enterprise's involvement in a variable interest entity. This
statement must be applied as of the beginning of each reporting
entity's first annual reporting period that begins after November
15, 2009. The adoption of the pronouncement did not have an impact
on the Company's results of operations, financial condition or
cash flows.
In June 2009, the FASB issued a pronouncement, "The FASB
Accounting Standards Codification and the Hierarchy of Generally
Accepted Accounting Principles". The pronouncement became the
source of authoritative U.S. generally accepted accounting
principles (GAAP) recognized by the FASB to be applied by
nongovernmental entities. Rules and interpretive releases of the
Securities and Exchange Commission (SEC) under authority of
federal securities laws are also sources of authoritative GAAP for
SEC registrants. On the effective date of this Statement, the
Codification will supersede all then-existing non-SEC accounting
and reporting standards. All other nongrandfathered non-SEC
accounting literature not included in the Codification will become
nonauthoritative. This statement is effective for financial
statements issued for interim and annual periods ending after
September 15, 2009. The adoption of the pronouncement did not have
an impact on the Company's results of operations, financial
condition or cash flows.
F-23
There were various other accounting standards and interpretations
recently issued, and became effective during 2008 and 2009, none
of which are expected to have a material impact on the Company's
financial position, results of operations or cash flows.
o) OTHER
The Company consists of one reportable business segment. The
Company paid no dividends during the periods presented.
3. 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 negative working capital and
stockholders' deficits at November 30, 2009 and has losses to date of
approximately $89,300. 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 is actively seeking to add new products and/or services in
order to show profitability. In addition, one of the members 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 presently being taken to
revise its operating and financial requirements will provide the
opportunity for the Company to continue as a going concern. The
financial statements do not include any adjustments that might result
from these uncertainties.
4. COMMON STOCK
The Company's authorized common stock consists of 75,000,000 shares
with a par value of $0.001 per share. There were 3,200,000 shares of
common stock issued and outstanding on November 30, 2010.
5. INCOME TAXES
The Company is subject to foreign and domestic income taxes. The
Company has had no income, 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 2029. 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) (7,112) -
November 30, 2009 6,389 2029 1,597 (1,597) (1,597) -
F-24
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%
==============
6. 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.
7. SUBSEQUENT EVENTS
The Company has evaluated its activities subsequent to the year ended
November 30, 2009 and through the date the financial statements were
available to be issued, and has found that there were no reportable
subsequent events.
F-25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
- --------------------------------------------------------------------------------
None.
ITEM 9A. CONTROLS AND PROCEDURES
- --------------------------------
DISCLOSURE CONTROLS AND PROCEDURES
The Company, under the supervision and with the participation of the Company's
management, including the Company's President and Chief Financial Officer,
performed an evaluation of the effectiveness of the design and operation of the
Company's disclosure controls and procedures as of December 4, 2009. Based on
that evaluation, the Company's management concluded that the Company's
disclosure controls and procedures were effective as of November 30, 2009.
ITEM 9(A)T. INTERNAL CONTROLS AND PROCEDURES
- --------------------------------------------------
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act). Our internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the United States.
Because of its inherent limitations, internal controls over financial reporting
may not prevent or detect misstatements. Therefore, even those systems
determined to be effective can provide only reasonable assurance of achieving
their control objectives. Furthermore, smaller reporting companies face
additional limitations. Smaller reporting companies employ fewer individuals and
find it difficult to properly segregate duties. Smaller reporting companies tend
to utilize general accounting software packages that lack a rigorous set of
software controls.
Our management, with the participation of the President and Chief Financial
Officer, evaluated the effectiveness of the Company's internal control over
financial reporting as of November 30, 2009. In making this assessment, our
management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control --
Integrated Framework. Based on that evaluation, our management concluded that,
as of November 30 2009, 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.
Accordingly, while the Company has identified certain material weaknesses in its
system of internal control over financial reporting, it believes that it has
taken reasonable steps to ascertain that the financial information contained in
this report is in accordance with generally accepted accounting principles.
Management has determined that current resources would be appropriately applied
elsewhere and when resources permit, they will alleviate material weaknesses
through various steps.
This Annual 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.
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CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in internal control over financial reporting that occurred
during the last fiscal quarter covered by this report that have materially
affected, or are reasonably likely to affect, the Company's internal control
over financial reporting.
ITEM 9B. OTHER INFORMATION
- --------------------------
None.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE
GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
- --------------------------------------------------------------------------------
DIRECTORS AND EXECUTIVE OFFICERS
Effective June 30, 2009, Gregory Adams resigned as Secretary/Treasurer and as a
director of the Company. Also effective June 30, 2009, Shari Sookarookoff,
President and CEO of the Company, was appointed Secretary, Treasurer and Chief
Financial Officer or the Company.
The following table sets forth the names, ages and positions of the current
directors and executive officers of the Company, as of the date of this filing:
NAME AGE OFFICES HELD
-----------------------------------------------------------------------------
Shari Sookarookoff 33 Director, CEO, President, Secretary/Treasurer
Ruth Saunders 35 Director
SHARI SOOKAROOKOFF, CEO, CFO, PRESIDENT, SECRETARY/TREASURER, MEMBER OF THE
BOARD
Shari Sookarookoff has served as President and Director since September 12,
2008. Ms. Sookarookoff has also served as Secretary/Treasurer and Chief
Financial Officer of the Company since June 30, 2009. The term of her office is
for two years and is thereafter renewable on an annual basis.
Since 1994, Ms. Sookarookoff has been employed by Alberta Forest Products
Shippers Association, a freight broker located in Edmonton, Alberta, Canada that
is dedicated to facilitate the freight requirements of numerous lumber mills in
the Province of Alberta, Canada. In June 1999, she was promoted to traffic
coordinator.
In July 2002, Ms. Sookarookoff left Alberta Forest Products Shippers Association
for her present position with Spruce Land Millworks (located in Spruce Grove,
Alberta, Canada) as manager of the shipping department. Resourcing her
accumulated knowledge within the truck brokerage industry.
Ms. Sookarookoff is not an officer or director of any other reporting company
that files annual, quarterly or periodic reports with the United States
Securities and Exchange Commission.
RUTH SAUNDERS, MEMBER OF THE BOARD,
Ruth Saunders has served as Director since September 12, 2008. The term of her
office is for two years and is thereafter renewable on an annual basis.
Since graduating in the spring of 2008 with a Diploma in Public Relations from
Grant MacEwan College in Edmonton, Ms. Saunders has been employed by Alberta
Health and Wellness in their public relations department.
After having received a Journalism Diploma in 1997 from Grant MacEwan College,
Ms. Saunders was a Journalist for ten (10) years. She worked first with the
Hinton Parklander in Hinton, Alberta, for 3 years and then with the Wetaskiwin
Times Advertiser in Wetaskiwin, Alberta, from 2001 through 2007.
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Ms. Saunders is not an officer or director of any other reporting company that
files annual, quarterly, or periodic reports with the United States Securities
and Exchange Commission.
SIGNIFICANT EMPLOYEES
None.
FAMILY RELATIONSHIPS
None.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
None.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934 requires any person who
is a director or executive officer or who beneficially holds more than ten
percent (10%) of any class of our securities which have been registered with the
Securities and Exchange Commission, to file reports of initial ownership and
changes in ownership with the Securities and Exchange Commission. These persons
are also required under the regulations of the Securities and Exchange
Commission to furnish us with copies of all Section 16(a) reports they file.
To our knowledge, based solely on our review of the copies of the Section 16(a)
reports furnished to us and a review of our shareholders of record for the
fiscal year ended November 30, 2008, there were no filing delinquencies.
CODE OF ETHICS
We have not yet prepared a written code of ethics and employment standards. We
expect to implement a Code of Ethics during the current fiscal year.
CORPORATE GOVERNANCE; AUDIT COMMITTEE FINANCIAL EXPERT
We currently do not have an audit committee financial expert or an independent
audit committee expert due to the fact that our Board of Directors currently
does not have an independent audit committee. Our Board of Directors currently
has only one (1) independent member, and thus, does not have the ability to
create a proper independent audit committee.
ITEM 11. EXECUTIVE COMPENSATION
- -------------------------------
The Executive Officers have not received any compensation since the date of
incorporation of our Company, and we did not accrue any compensation. There are
no securities authorized for issuance under any equity compensation plan, or any
options, warrants, or rights to purchase our common stock.
COMPENSATION OF DIRECTORS
We do not compensate our directors for their time spent on behalf of our
Company, but they are entitled to receive reimbursement for all out of pocket
expenses incurred for attendance at our Board of Directors meetings.
PENSION AND RETIREMENT PLANS
Currently, we do not offer any annuity, pension or retirement benefits to be
paid to any of our officers, directors or employees, in the event of retirement.
There are also no compensatory plans or arrangements with respect to any
individual named above which results or will result from the resignation,
retirement or any other termination of employment with our company, or from a
change in the control of our Company.
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EMPLOYMENT AGREEMENTS
We do not have written employment agreements with any of our key employees.
AUDIT COMMITTEE
Presently the Board of Directors is performing the duties that would normally be
performed by an audit committee. We intend to form a separate audit committee,
and are seeking potential independent directors. We are seeking experienced
business people and plan to appoint an individual qualified as an audit
committee financial expert.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
- --------------------------------------------------------------------------------
The following table sets forth certain information, as of January 18, 2010 with
respect to any person (including any "group", as that term is used in Section
13(d)(3) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) who is known to the Company to be the beneficial owner of more than five
percent of any class of the Company's voting securities, and as to those shares
of the Company's equity securities beneficially owned by each its director, the
executive officers of the company and all of its directors and executive
officers of the Company and all of its directors and executive officers as a
group. Unless otherwise specified in the table below, such information, other
than information with respect to the directors and officers of the Company, is
based on a review of statements filed, with the Securities and Exchange
commission (the "Commission") pursuant to Sections 13 (d), 13 (f), and 13 (g) of
the Exchange Act with respect to the Company's Common Stock. As of November 30,
2009, there were 3,200,000 shares of Common Stock outstanding.
The number of shares of Common Stock beneficially owned by each person is
determined under the rules of the Commission and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rules, beneficial ownership includes any shares as to which such person has sole
or shared voting power or investment power and also any shares which the
individual has the right to acquire within 60 days after the date hereof,
through the exercise of any stock option, warrant or other right. Unless
otherwise indicated, each person has sole investment and voting power (or shares
such power with his or her spouse) with respect to the shares set forth in the
following table. The inclusion herein of any shares deemed beneficially owned
does not constitute an admission of beneficial ownership of those shares.
The table also shows the number of shares beneficially owned as of November 30,
2009 by each of the individual directors and executive officers and by all
directors and executive officers as a group.
========== ================================================== ============= =============
TITLE OF NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT AND
CLASS NATURE OF PERCENT OF
BENEFICIAL CLASS(1)
OWNERSHIP
---------- -------------------------------------------------- ------------- -------------
Common Shari Sookarookoff 2,500,000 78.125%
CEO, President & member of the Board of Directors
328 Twin Brooks Dr NW
Edmonton AB, Canada, T6J 6S5
---------- -------------------------------------------------- ------------- -------------
Common Ruth Saunders 0 0.00%
Director
3508 - 48 Street
Edmonton, AB, Canada, T6L 3R4
---------- -------------------------------------------------- ------------- -------------
Common Directors and officers as a group (2 individuals) 2,500,000 78.125%
========== ================================================== ============= =============
(1) Percent of Ownership is calculated in accordance with the Securities and
Exchange Commission's Rule 13(d) - 13(d)(1). Based on 3,200,000 shares of common
stock issued and outstanding.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE.
- --------------------------------------------------------------------------------
We have not entered into any transaction nor are there any proposed transactions
in which any director, executive officer, shareholder of our company or any
member of the immediate family of any of the foregoing had or is to have a
direct or indirect material interest.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
- -----------------------------------------------
AUDIT FEES.
The aggregate fees billed by our auditors, for professional services rendered
for the audit of our annual financial statements, and for the reviews of the
financial statements included in our Quarterly Reports on Form 10-Q during the
fiscal years ended November 30, 2009 and 2008, were $9,200 and $8,050
respectively.
AUDIT RELATED FEES.
We incurred nil fees to auditors for audit related fees during the fiscal year
ended November 30, 2009 and 2008.
TAX FEES.
We incurred nil fees to auditors for tax compliance, tax advice or tax
compliance services during the fiscal year ended November 30, 2009 and 2008.
ALL OTHER FEES.
We did not incur any other fees billed by auditors for services rendered to our
Company, other than the services covered in "Audit Fees" for the fiscal year
ended November 30, 2009 and 2008.
The Board of Directors has considered whether the provision of non-audit
services is compatible with maintaining the principal accountant's independence.
Since there is no audit committee, there are no audit committee pre-approval
policies and procedures.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
- ----------------------------------------------------
The following is a complete list of exhibits filed as part of this Form 10K.
Exhibit number corresponds to the numbers in the Exhibit table of Item 601 of
Regulation S-K.
EXHIBIT INDEX
3.1 Articles of Incorporation(1)
3.2 Bylaws(1)
31.1 Section 302 Certification - Chief Executive Officer and 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.*
- ----------
* File herewith.
(1)Incorporated by reference to our SB-2 Registration Statement, file number
333-133347, filed on April 18, 2006.
-30-
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 10th day of March,
2010.
ONLINE ORIGINALS, INC.
Date: March 10, 2010 By: /s/ Shari Sookarookoff
--------------------------
Name: Shari Sookarookoff
Title: President/Chief Executive Officer and
Chief Financial (Accounting) Officer
Date: March 10, 2010 By:/s/ Ruth Saunders
--------------------
Name: Ruth Saunders
Title: Director
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