UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended August 31, 2007
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.)
RPO 163 Sorrento, British Columbia, Canada, V0E 2W0
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (604) 313-9781
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark whether the 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 July 12, 2007: 3,200,000 shares of common stock
The Company did not recognize any revenue for the quarter ended August 31, 2007.
Transitional Small Business Disclosure Format: Yes [_] No [X]
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm F-1
Balance Sheets - March 31, 2007 and December 31, 2006 F-2
Statements of Operations -
Three months ended March 31, 2007 and 2006 and
From May 25, 1988 (Inception) to March 31, 2007 F-3
Statement of Changes in Stockholders' Deficit -
From May 25, 1988 (Inception) to March 31, 2007 F-4
Statements of Cash Flows -
Three months ended March 31, 2007 and 2006 and
From May 25, 1988 (Inception) to March 31, 2007 F-6
Notes to Financial Statements F-7
Item 2. Management's Discussion and Analysis 1
Item 3. Controls and Procedures 2
Item 3A(T). Controls and Procedures 3
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -Not Applicable 3
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
- Not Applicable 3
Item 3. Defaults Upon Senior Securities - Not Applicable 3
Item 4. Submission of Matters to a Vote of Security Holders - Not Applicable 3
Item 5. Other Information - Not Applicable 3
Item 6. Exhibits 3
SIGNATURES 4
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ONLINE ORIGINALS, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
(Unaudited)
August 31, 2007
Page
Financial Statements:
Balance Sheets F-2
Statements of Operations F-3 to F-4
Statements of Cash Flows F-5
Statement of Stockholders' Equity F-6
Notes to Financial Statements F-7 to F-11
F-1
ONLINE ORIGINALS, INC.
(A Development Stage Company)
BALANCE SHEETS
August 31, 2007 November 30, 2006
(Unaudited) (See Note 1)
ASSETS
Current Assets
Cash $ 23,599 $ 54,596
Prepaid expense 1,343 6,968
Inventory 5,269 2,660
------------------------------------------
Total Current Assets 30,211 64,224
PROPERTY AND EQUIPMENT
Computer Equipment, net of depreciation $1,233 5,603 -
Website Development Costs, net of amortization of $1,574 2,473 3,486
------------------------------------------
$ 8,076 $ 3,486
------------------------------------------
Total Assets $ 38,287 $ 67,710
==========================================
LIABILITIES
Current Liabilities
Accounts payable $ 3,359 $ 798
Accrued liabilities 1,750 4,500
------------------------------------------
Total Liabilities, all current 5,109 5,298
------------------------------------------
Commitments and Contingencies (Notes 4 and 7)
STOCKHOLDERS' EQUITY
Common Stock
Authorized:
75,000,000 common shares, par value $0.001 per share
Issued and outstanding:
3,200,000 common shares at August 31, 2007 and November 30, 2006 3,200 3,200
Additional paid-in capital 77,299 77,299
Accumulated comprehensive (loss) (518) (1,229)
Deficit Accumulated During the Development Stage (46,803) (16,858)
------------------------------------------
Total Stockholders' Equity 33,178 62,412
------------------------------------------
Total Liabilities and Stockholders' Equity $ 38,287 $ 67,710
==========================================
The accompanying notes are an integral part of these statements.
F-6
ONLINE ORIGINALS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
Three-month period Three-month period
ending ending
August 31, 2007 August 31, 2006
----------------------------------------------------
Revenue $ - $ -
----------------------------------------------------
Cost of Goods Sold - -
----------------------------------------------------
- -
----------------------------------------------------
Expenses
Depreciation and amortization 907 225
Consulting 1,875 -
Office and administration 596 216
Organizational costs - -
Marketing - -
Professional fees 3,250 4,100
----------------------------------------------------
6,628 4,541
----------------------------------------------------
Net Loss From Operations (6,628) (4,541)
----------------------------------------------------
Other Income
Interest Income - -
Net Loss For The Period $ (6,628) $ (4,541)
====================================================
Basic And Diluted Loss Per Share
$ * $ *
====================================================
Weighted Average Number Of Shares
Outstanding 3,200,000 2,819,565
====================================================
* Less than $(0.01) per share.
The accompany notes are an integral part of these statements
F-3
ONLINE ORIGINALS, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
Cumulative amounts
from Date of
Nine-month period Nine-month period Inception on November
ending August 31, ending August 31, 18 2005 to August 31,
2007 2006 2007
----------------------------------------------------------------------------
Revenue $ - $ - $ 314
----------------------------------------------------------------------------
Cost of Goods Sold - - 110
----------------------------------------------------------------------------
- - 204
----------------------------------------------------------------------------
Expenses
Depreciation and amortization 2,245 225 2,807
Consulting 5,625 - 6,300
Office and administration 1,810 570 4,933
Organizational costs - - 665
Marketing 8,461 - 8,462
Professional fees 11,804 19,788 23,842
----------------------------------------------------------------------------
29,945 20,583 47,009
----------------------------------------------------------------------------
Net Loss From Operations (29,945) (20,583) (46,805)
----------------------------------------------------------------------------
Other Income
Interest Income - 2 2
Net Loss For The Period $ (29,945) $ (20,581) $ (46,803)
============================================================================
Basic And Diluted Loss Per Share $ (0.01) $ (0.01) $ (0.02)
============================================================================
Weighted Average Number Of Shares
Outstanding 3,200,000 2,607,299 2,926,227
============================================================================
The accompanying notes are an integral part of these statements.
F-4
ONLINE ORIGINALS, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the period November 18, 2005 (Date of Inception) to August 31, 2007
(unaudited)
Cumulative amounts
Nine month from Date of
period ended Nine month period Inception on
August 31, 2007 ended August 31, November 18, 2005 to
2006 August 31, 2007
- --------------------------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net loss $ (29,945) $ (20,581) $ (46,803)
Adjustments to Reconcile Net Loss to Net Cash
Used by Operating Activities
Depreciation and amortization 2,245 225 2,807
Inventory (2,609) - (5,269)
Prepaid expenses 5,626 (93) (1,342)
Accounts payable and accrued liabilities
(189) 985 5,109
--------------------------------------------------------------------
Cash Used in Operating Activities (24,872) (19,464) (45,498)
--------------------------------------------------------------------
Cash Flows from Investing Activities
Additions to fixed assets (6,836) (4,048) (10,884)
--------------------------------------------------------------------
Net Cash Used in Investing Activities (6,836) (4,048) (10,884)
--------------------------------------------------------------------
Cash Flows From Financing Activities
Issuance of common shares - 70,000 95,000
Deferred offering costs - - (14,501)
Foreign currency translation adjustment 711 - (518)
--------------------------------------------------------------------
Net Cash Provided by Financing Activities
--------------------------------------------------------------------
(Decrease) Increase in Cash
Cash, Beginning Of Period 54,596 25,085 -
--------------------------------------------------------------------
Cash, End Of Period $ 23,599 $ 71,573 $ 23,599
====================================================================
Supplemental Disclosure Of Cash Flow
Cash paid for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
====================================================================
The accompanying notes are an integral part of these statements.
F-5
ONLINE ORIGINALS, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
For the Period from November 18,
2005 (Date of Inception) to
August 31, 2007 (unaudited)
CAPITAL STOCK DEFICIT
ACCUMULATED ACCUMULATED
----------------------------------------------
ADDITIONAL DURING THE COMPRE-
PAID-IN DEVELOPMENT HENSIVE
SHARES AMOUNT CAPITAL STAGE INCOME (LOSS) TOTAL
---------------------------------------------------------------------------------------------------
November 18, 2005 - Shares
issued for cash at $0.01 1,800,000 $ 1,800 $ 16,200 $ - $ - $ 18,000
November 28, 2005 - Shares
issued for cash at $0.01 700,000 700 6,300 - - 7,000
Net loss for the period
ended November 20, 2005 - - - (2,680) - (2,680)
---------------------------------------------------------------------------------------------------
Balance,
November 30, 2005 2,500,000 2,500 22,500 (2,680) - 22,320
---------------------------------------------------------------------------------------------------
July 21, 2006 - Shares
issued for cash at 0.10, net
of deferred offering costs 700,000 700 54,799 - - 55,499
of $14,501
Foreign currency translation
adjustment - - - - (1,229) (1,229)
Net loss for the period
ended November 30, 2006 - - - (14,178) - (14,178)
---------------------------------------------------------------------------------------------------
Balance,
November 30, 2006 3,200,000 3,200 77,299 (16,858) (1,229) 62,412
---------------------------------------------------------------------------------------------------
Foreign currency translation
adjustment - - - - 711 711
Net loss for the period - - - (29,945) - (29,945)
---------------------------------------------------------------------------------------------------
Balance, August 31, 2007 3,200,000 $ 3,200 $ 77,299 $ (46,803) $ (518) $ 33,178
===================================================================================================
The accompanying notes are an integral part of these statements.
F-6
ONLINE ORIGINALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 2007
(Unaudited)
1. UNAUDITED STATEMENTS
While the information presented in the accompanying interim financial
statements in 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, 2006 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, 2006, included in the annual report
previously filed with the Securities and Exchange Commission ("SEC") on
Form 10-KSB. 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, 2006 is taken from the audited
financial statements of that date.
2. NATURE AND CONTINUENCE OF OPERATIONS
a) Organization
Online Originals, Inc. ("The Company") was incorporated in the State
of Nevada on November 18, 2005. The Company's year end is November 30.
b) Development Stage Activities
The Company is in the development stage and has realized minimal
revenues from its planned operations. Online Originals' business plan
is to develop a membership based website art gallery/auction house
specifically focused on displaying and selling original artwork.
Based upon the Company's business plan, it is a development stage
enterprise. Accordingly, the Company presents its financial statements
in conformity with the accounting principles generally accepted in the
United States of America that apply in establishing operating
enterprises. As a development stage enterprise, the Company discloses
the deficit accumulated during the development stage and the cumulative
statements of operations and cash flows from inception to the current
balance sheet date.
3. SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist
in understanding the Company's financial statements. The financial
statements and notes are representations of the Company's 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 has adopted the Statement of Financial Accounting
Standards No. 109 - "Accounting for Income Taxes" (SFAS 109). SFAS
109 requires the use of the asset and liability method of
accounting of income taxes. Under the asset and liability method
of SFAS 109, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to temporary
differences between the financial statements carrying amounts of
F-7
ONLINE ORIGINALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 2007
(Unaudited)
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.
c) Basic and Diluted Loss per Share
In accordance with SFAS No. 128 - "Earnings per Share," the basic
loss per common share is computed by dividing net loss available
to common stockholders by the weighted average number of common
shares outstanding. Diluted loss per common share is computed
similar to basic loss per common share except that the denominator
is increased to include the number of additional common shares
that would have been outstanding, if the potential common shares
had been issued and if the additional common shares were dilutive.
At August 31, 2007, 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, inventory, accounts payable
and accrued liabilities approximate their fair value due to the
short-term maturity of such instruments. Unless otherwise noted,
it is management's opinion that the Company is not exposed to
significant interest, currency or credit risks arising from these
financial statements.
e) Revenue Recognition
The company has had minimal revenues to date. It is the Company's
policy that revenues will be recognized in accordance with SEC
Staff Accounting Bulletin (SAB) No. 104, "Revenue Recognition."
Under SAB 104, product revenues (or service revenues) are
recognized when persuasive evidence of an arrangement exists,
delivery has occurred (or service has been performed), the sales
price is fixed and determinable and collectibility is reasonably
assured.
f) Inventory
Inventory is stated at the lower of cost or market. 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's 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 pre-
vailing 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.
F-8
ONLINE ORIGINALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 2007
(Unaudited)
h) Comprehensive Income (Loss)
The Company has adopted Statement of Financial Accounting
Standards (SFAS) No. 130, "Reporting Comprehensive Income". SFAS
130 requires that the components and total amounts of
comprehensive income be displayed in the financial statements
beginning in 1998. Comprehensive income includes net income and
all changes in equity during a period that arises from non-owner
sources, such as foreign currency items and unrealized gains and
losses on certain investments in equity securities.
i) Use of Estimates
The preparation of the Company's financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts reported in these financial statements and accompanying
notes. Actual results could differ from those estimates.
j) Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with an
original maturity of three months or less 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
l) Website Development Costs
Website development costs representing capitalized costs of
design, configuration, coding, installation and testing of the
Company's website are capitalized until initial implementation.
Upon implementation, the asset is amortized to expense over its
estimated useful life of three years using the straight-line
method. Accumulated amortization at August 31, 2007 was $1,574,
and amortization expense for the year ended November 30, 2006 was
$562. Ongoing website post-implementation costs of operation,
including training and application maintenance, will be expensed
as incurred.
m) Concentrations
Financial instruments that potentially subject the company to
concentrations of credit risk consist principally of cash and cash
equivalents. At August 31, 2007, the Company had $995 US Funds in
deposit in a business bank account which is not insured and US
equivalent of $22,604 in Canadian funds in a business bank account
which are insured by a Federal Government agency.
n) Recent Accounting Pronouncements
There were various accounting standards and interpretations issued
during 2007 and 2006, none of which are expected to have a
material impact on the Company's financial position, operations or
cash flows.
o) Other
The Company consists of one reportable business segment. The
Company paid no dividends during the periods presented.
4. BASIS OF PRESENTATION - GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles in the United States of
America, which contemplates continuation of the Company as a going
F-9
ONLINE ORIGINALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 2007
(Unaudited)
concern. However, the Company has minimal business operations to date
and has an accumulated deficit at August 31, 2007 of approximately
$46,803. These matters raise substantial doubt about the Company's
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 the Company's ability to meet its financing
requirements, raise additional capital, and the success of its future
operations. The Company acquired additional operating capital through
equity offerings to the public to fund its business plan. There is no
assurance that the equity offerings will be successful in raising
sufficient funds to assure the eventual profitability of the Company.
Management believes that actions planned and presently being taken to
revise the Company's operating and financial requirements 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.
5. COMMON STOCK
During the nine months ended August 31, 2007, the Company did not issue
any shares of its common stock. The Company's authorized common stock
consists of 75,000,000 shares with a par value of $0.001 per share.
On July 21, 2006, the Company issued 700,000 shares of common stock at
a price of $0.10 for cash totalling $70,000. The Company incurred
deferred offering costs of $14,501 related to this offering, resulting
in net proceeds of $55,499.
6. INCOME TAXES
The Company is subject to foreign and domestic income taxes. The
Company has had minimal 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 net operating
loss carry forwards expire in various years through 2027. The Company's
deferred tax assets are offset by a valuation allowance due to the
uncertainty of the realization of the net operating loss
carry-forwards. Net operating loss 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, 2005 2,680 2026 670 (670) (670) -
November 30, 2006 16,858 2027 4,215 (4,215) (3,545) -
August 31, 2007 46,803 2028 11,701 (11,701) (7,486) -
Income taxes at the statutory rate are reconciled to the Company's
actual income taxes as follows:
F-10
ONLINE ORIGINALS, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 2007
(Unaudited)
Income tax benefit at statutory rate resulting from net operating
loss carry forward (25%)
Deferred income tax valuation allowance 25%
---------------
Actual tax rate 0%
===============
7. RELATED PARTY TRANSACTIONS
The Company uses the offices of its President for its minimal office
facility needs for no consideration. No provision for these costs has been
provided since it has been determined that they are immaterial.
8. CONSULTING AGREEMENT
Effective October 23, 2006, the Company entered into a non-exclusive
agreement with an entity, whereby the entity would provide consulting
services in exchange for $7,500 cash. In addition, in the case of a
successful merger or acquisition, the entity will receive an additional fee
based on the gross value of a merger. The term of the agreement is for one
year. A portion of the $7,500 fee is included in prepaid expenses and will
be amortized over the remainder of the term.
F-11
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 statement sin 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 independent registered public accounting firm's report on the Company's
financial statements as of November 30, 2006, 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 2 to the unaudited quarterly
financial statements.
Operations
We are establishing a business, which provides a website where members and
customers are able to bid on and purchase pieces of art. Our target cliental is
the artistic community and those who enjoy purchasing, learning, and discussing
art. We are developing an online art gallery/auction house where members are
able to bid and purchase art pieces online. Currently the art available is from
Online Original's inventory. We also represent pieces from artists, art owners,
and members of the site, as well as one-time users looking to sell a single
piece through our gallery/auction website. The website,
www.artbyonlineoriginals.com, will showcase varieties of art ranging from
paintings, drawings, prints, and sculptures. We intend to bring together artists
and art enthusiasts who are purely interested in art. The website will allow
people to read about the artists, past sales and reviews, quality of service,
and other aspects individuals want to know before doing business over the
Internet. Members will have the ability to interact with other members in an
open forum or online chat room on our website. We intend to develop a community
of art enthusiasts through this site that will have profiles of other members
and member's comments on other sellers so individuals feel comfortable
purchasing online.
12
Plan of Operation
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-QSB, our Quarterly
Report on Form 10-QSB filed July 23, 2007, our Quarterly Report on Form 10-QSB
filed April 16, 2007, our Annual Report on Form 10-KSB filed March 5, 2007, and
our Registration Statement on Form SB-2 filed on April 18, 2006.
The following should be read jointly with the financial statements, related
notes, and the cautionary statement regarding forward-looking statements, which
appear elsewhere in this filing.
We have begun operations; the sale of membership and inventory items has begun.
We have no employees at the present time. We will continue to operate with very
limited administrative support, and our current officers will continue to be
responsible for all planning, developing and operational duties, without
compensation, for at least to the end of the first year of operations. This will
enable us to preserve capital during the early stages of company development.
Milestones
We are continuing the development of our website which will be ongoing over the
next two (2) months. Our website 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. We will continue to develop our membership
program and have contacted the local tourist bureau in order to market our
products though their international contacts.
Expenditures
We have $9,225 remaining from the net proceeds of our offering. Over the next
three (3) months to November 30, 2007, our year end, we plan to concentrate on
promoting and marketing our services using these available funds.
We do not anticipate making any major purchases of capital assets, or conducting
any research and development. Our current corporate employee count is expected
to remain the same for the next year.
We believe we have sufficient cash resources to satisfy our needs to the end of
November. 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. 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
our company, if at all.
Management Discussion and Analysis
At August 31, 2007, we had working capital of $25,102 compared to working
capital of $58,926, at November 30, 2006. At August 31, 2007, our total assets
consisted of cash $23,599, prepaid expenses of $1,343, inventory of $5,269 and
capital assets of $8,076. This compares with total assets at November 30, 2006
consisting of cash of $54,596, prepaid expenses of $6,968, inventory of $2,660
and capital assets of $3,486.
At August 31, 2007, our total current liabilities decreased to $5,109 from
$5,298 at November 30, 2006.
During the nine months ended August 31, 2007, we used $6,836 in the purchase of
computer equipment in connection with our ongoing operations.
We have had $314 in revenue from inception. Our short and long term survival is
dependent on funding from sales of securities as necessary or from shareholder
loans.
13
Result of Operations
We recognized a net loss of $6,628 for the nine months ended August 31, 2007
compared to a net loss of $4,541 for the nine months ended August 31, 2006. The
increase of $2,087 was due to an increase in expenses. The principal components
of losses were professional fees of $23,842, marketing costs of $8,462, office
and administration expenses of $4,933, consulting fees of $6,300, depreciation
and amortization of $2,807, organizational costs of $665 and cost of good sold
of $110.
At August 31, 2007, our net cash balance is $23,599. 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 balances are sufficient to carry our normal
operations to November 30, 2007 due to increased operation activities, our year
end. 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
require, will be available to our company or on acceptable terms.
Off-Balance Sheet Arrangements
We currently do not have any off-balance sheet arrangements.
ITEM 3. CONTROLS AND PROCEDURES
a. Evaluation of Disclosure Controls and Procedures
The management of the Company has evaluated the effectiveness of the Issuer's
disclosure controls and procedures as of the end of the period of the report
dated August 31, 2007 and have concluded that the disclosure controls, internal
controls, and procedures are adequate and effective based upon their evaluation
as of the evaluation date.
b. Changes in Internal Control over Financial Reporting
There were no changes in the small business issuer's internal control over
financial reporting identified in connection with the Company evaluation
required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act
that occurred during the small business issuer's last fiscal quarter that has
materially affected or is reasonably likely to materially affect the small
business issuer's internal control over financial reporting.
ITEM 3(A). CONTROLS AND PROCEDURES
There have been no changes in the small business issuer's internal control over
financial reporting identified in connection with the evaluation required by
paragraph (d) of Rule 240.15d-15 that occurred during the small business
issuer's last fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the small business issuer's internal control over
financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
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Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits
(a) Pursuant to Rule 601 of Regulation SB, the following exhibits are included
herein.
Exhibit
Number Description
31.1 Section 302 Certification - Chief Executive Officer
31.2 Section 302 Certification - 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.
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 -
Chief Financial Officer.
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 15th day of
October, 2007.
ONLINE ORIGINALS, INC.
Date: October 15, 2007 By: /s/ Gaye Adams
--------------
Name: Gaye Adams
Title: President/CEO, principal executive
officer
Date: October 15, 2007 By: /s/ Gregory Adams
-----------------
Name: Gregory Adams
Title: Chief Financial Officer, principal
financial officer and principal
accounting officer
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