UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2009
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ______________
Commission File Number 333-133347
ONLINE ORIGINALS, INC.
(Exact name of registrant as specified in its charter)
Nevada 98-0479983
- ------------------------------- --------------------------
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
57113, 2020 Sherwood Drive, Sherwood Park, AB, Canada T8A 5L7
-------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (780) 668-7422
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Larger accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes [ ] No [X]
1
Number of shares issued and outstanding of the registrant's class of common
stock as of October 1, 2009: 3,200,000 shares of common stock
The Company recognized revenues of $13,110 during the quarter ended August 31,
2009.
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
----
Balance Sheets F-5
Interim Statements of Operations F-6 to F7
Interim Statements of Cash Flows F-8
Interim Statement of Changes in Stockholders' Equity (Deficit) F-9
Notes to Interim Financial Statements F-10 to F-13
Item 2. Management's Discussion and Analysis 14
Item 3 Quantitative and Qualitative Disclosure about Market Rick 16
Item 4. Controls and Procedures 16
Item 4(A) T. Controls and Procedures 16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - Not Applicable 17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - Not Applicable 17
Item 3. Defaults upon Senior Securities - Not Applicable 17
Item 4. Submission of Matters to a Vote of Security Holders - Not Applicable 17
Item 5. Other Information 17
Item 6. Exhibits 17
SIGNATURES 19
3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ONLINE ORIGINALS, INC.
(A Development Stage Company)
INTERIM FINANCIAL STATEMENTS
AUGUST 31, 2009
(Unaudited)
Page
Financial Statements:
Balance Sheets F-5
Interim Statements of Operations F-6 to F7
Interim Statements of Cash Flows F-8
Interim Statement of Changes in Stockholders' Equity (Deficit) F-9
Notes to Interim Financial Statements F-10 to F-13
F-4
ONLINE ORIGINALS, INC.
(A Development Stage Company)
BALANCE SHEETS
--------------
August 31, November 30,
2009 2008
(Unaudited) (See Note 1)
ASSETS
Current Assets
Cash $ 3,825 $ 4,904
Prepaid expense 159 93
------------------------------------------
Total Current Assets 3,984 4,997
Computer Equipment, net of depreciation of $5,790 1,046 2,755
Website Development Costs, net of amortization of $4,048 - 787
------------------------------------------
1,046 3,542
------------------------------------------
TOTAL ASSETS $ 5,030 $ 8,539
------------
==========================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
Current Liabilities
Accounts payable $ 526 $ 4,565
Accrued liabilities 3,400 6,500
------------------------------------------
Total Liabilities, all current 3,926 11,065
------------------------------------------
Commitments and Contingencies (Note 4)
STOCKHOLDERS' EQUITY (DEFICIT)
Capital Stock
Authorized:
75,000,000 common shares, par value $0.001 per share
Issued and outstanding:
3,200,000 common shares as at August 31, 2009 and 3,200 3,200
Additional paid-in capital 77,299 77,299
Accumulated comprehensive income 298 (129)
Deficit Accumulated During the Development Stage (79,693) (82,896)
------------------------------------------
Total Stockholders' Equity (Deficit) 1,104 (2,526)
------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 5,030 $ 8,539
==========================================
The accompanying notes are an integral part of these statements.
F-5
ONLINE ORIGINALS, INC.
(A Development Stage Company)
INTERIM STATEMENTS OF OPERATIONS
--------------------------------
(Unaudited)
Three month period Three month period
ended ended
August 31, August 31,
2009 2008
----------------------------------------------------
Revenue $ 13,110 $ 1,040
----------------------------------------------------
Cost of Goods Sold - -
----------------------------------------------------
13,110 1,040
----------------------------------------------------
Expenses
Amortization 682 907
Consulting - -
Marketing - -
Office and administration 190 493
Organizational costs - -
Professional fees 1,911 3,610
----------------------------------------------------
2,783 5,010
----------------------------------------------------
Net Income (Loss) From Operations 10,327 (3,970)
----------------------------------------------------
Other Income
Interest Income - -
----------------------------------------------------
Net Income (Loss) $ 10,327 $ (3,970)
====================================================
Basic And Diluted Income (Loss) Per
Share $ Nil $ Nil
====================================================
Weighted Average Number Of Shares
Outstanding 3,200,000 3,200,000
====================================================
The accompanying notes are an integral part of these statements.
F-6
ONLINE ORIGINALS, INC.
(A Development Stage Company)
INTERIM STATEMENTS OF OPERATIONS
--------------------------------
(Unaudited)
Nine month period Nine month period Date of Inception
ended ended (November 18,
August 31, August 31, 2005) to
2009 2008 August 31, 2009
--------------------------------------------------------------------------
Revenue $ 13,110 $ 2,800 $ 23,193
--------------------------------------------------------------------------
Cost of Goods Sold - - 5,379
--------------------------------------------------------------------------
13,110 2,800 17,814
--------------------------------------------------------------------------
Expenses
Amortization 2,496 2,721 9,838
Consulting - - 7,550
Marketing - - 8,461
Office and administration 566 2,273 9,138
Organizational costs - - 665
Professional fees 6,845 18,414 61,857
--------------------------------------------------------------------------
9,907 23,408 97,509
--------------------------------------------------------------------------
Net Income (Loss) From Operations 3,203 (20,608) (79,695)
--------------------------------------------------------------------------
Other Income
Interest Income - - 2
--------------------------------------------------------------------------
Net Income (Loss) $ 3,203 $ (20,608) $ (79,693)
==========================================================================
Basic And Diluted Income (Loss) Per
Share $ Nil $ (0.01) $ (0.03)
==========================================================================
Weighted Average Number Of Shares
Outstanding 3,200,000 3,200,000 3,070,839
==========================================================================
The accompanying notes are an integral part of these statements.
F-7
ONLINE ORIGINALS, INC.
(A Development Stage Company)
INTERIM STATEMENTS OF CASH FLOWS
--------------------------------
(Unaudited)
Nine month Nine month Date of Inception
period ended period ended (November 18, 2005) to
August 31, 2009 August 31, August 31,
2008 2009
- ------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net Income (Loss) $ 3,203 $ (20,608) $ (79,693)
Adjustments to Reconcile Net Income (Loss) to
Net Cash Used by Operating Activities
Depreciation and amortization 2,496 2,721 9,838
Changes in Operating Assets and Liabilities
Prepaid expenses (66) - (159)
Accounts payable and accrued liabilities (7,139) 1,145 3,926
------------------------------------------------------------------------------
Net Cash Used in Operating Activities (1,506) (16,742) (66,088)
------------------------------------------------------------------------------
Cash Flows from Investing Activity
Additions to capital assets - - (6,836)
Additions to intangibles - - (4,048)
------------------------------------------------------------------------------
Net Cash Used in Investing Activities - - (10,884)
------------------------------------------------------------------------------
Cash Flows From Financing Activity
Issuance of common shares - - 95,000
Offering costs - - (14,501)
Foreign currency translation adjustment 427 (262) 298
------------------------------------------------------------------------------
Net Cash (Used) Provided by Financing
Activities 427 (262) 298
------------------------------------------------------------------------------
Net (Decrease) Increase in Cash during the
Period (1,079) (17,004) 3,825
Cash, Beginning Of Period 4,904 24,667 -
------------------------------------------------------------------------------
Cash, End Of Period $ 3,825 $ 7,663 $ 3,825
==============================================================================
Supplemental Disclosure Of Cash Flow
Cash paid for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
==============================================================================
The accompanying notes are an integral part of these statements.
F-8
ONLINE ORIGINALS, INC.
(A Development Stage Company)
INTERIM STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)
AUGUST 31, 2009
(Unaudited)
DEFICIT ACCUMULATED
CAPITAL STOCK ACCUMULATED
---------------------------------------------
ADDITIONAL DURING THE COMPRE-
PAID-IN DEVELOPMENT HENSIVE
SHARES AMOUNT CAPITAL STAGE INCOME TOTAL
---------------------------------------------------------------------------------------------------
November 18, 2005 - Shares
issued for cash at $0.01 1,800,000 $ 1,800 $ 16,200 $ - $ - $ 18,000
November 28, 2005 - Shares
issued for cash at $0.01 700,000 700 6,300 - - 7,000
Net loss for the period
ended November 30, 2005 - - - (2,680) (2,680)
---------------------------------------------------------------------------------------------------
Balance, November 30, 2005 2,500,000 2,500 22,500 (2,680) - 22,320
---------------------------------------------------------------------------------------------------
July 21, 2006 - Shares
issued for cash at 0.10, net 700,000 700 54,799 - - 55,499
of offering costs of $14,501
Foreign currency translation
adjustment - - - - (1,229) (1,229)
Net loss for the year ended
November 30, 2006 - - - (14,178) (14,178)
---------------------------------------------------------------------------------------------------
Balance, November 30, 2006 3,200,000 3,200 77,299 (16,858) (1,229) 62,412
---------------------------------------------------------------------------------------------------
Foreign currency translation
adjustment - - - - 1,836 1,836
Net loss for the year ended
November 30, 2007 - - - (37,588) - (37,588)
---------------------------------------------------------------------------------------------------
Balance, November 30, 2007 3,200,000 3,200 77,299 (54,446) 607 26,660
---------------------------------------------------------------------------------------------------
Foreign currency translation
adjustment - - - - (736) (736)
Net loss for the year ended
November 30, 2008 - - - (28,450) - (28,450)
---------------------------------------------------------------------------------------------------
Balance, November 30, 2008 3,200,000 3,200 77,299 (82,896) (129) (2,526)
---------------------------------------------------------------------------------------------------
Foreign currency translation
adjustment - - - - 427 427
Net profit for the period
ended August 31, 2009 - - - 3,203 - 3,203
---------------------------------------------------------------------------------------------------
Balance, August 31, 2009 3,200,000 $ 3,200 $ 77,299 $ (79,693) $ 298 $ 1,104
---------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
F-9
ONLINE ORIGINALS, INC.
(A Development Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
-------------------------------------
AUGUST 31, 2009
(Unaudited)
1. UNAUDITED STATEMENTS
While the information presented in the accompanying interim financial
statements is unaudited, it includes all adjustments which are, in the
opinion of management, necessary to present fairly the financial
position, results of operations and cash flows for the interim periods
presented. Except as disclosed below, these interim financial
statements follow the same accounting policies and methods of their
application as the Company's audited November 30, 2008 annual financial
statements. It is suggested that these interim financial statements be
read in conjunction with the Company's audited financial statements for
the year ended November 30, 2008, included in the annual report
previously filed with the Securities and Exchange Commission on Form
10-K. The results of operations for the interim periods presented are
not necessarily indicative of the results to be expected for the full
year.
The information as of November 30, 2008 is taken from the audited
financial statements of that date.
2. NATURE AND CONTINUENCE OF OPERATIONS
a) Organization
Online Originals ("the Company") was incorporated in the State of
Nevada, United States of America, on November 18, 2005. The Company's
year end is November 30th.
b) Development Stage Activities
The Company is in the development stage and has realized minimal
revenues. The Company's business plan is to develop a membership based
website art gallery/auction house specifically focused on displaying
and selling original artwork.
Based upon their business plan, the Company is a development stage
enterprise. Accordingly, financial statements are presented in
conformity with the accounting principles generally accepted in the
United States of America that apply in establishing operating
enterprises. As a development stage enterprise, the Company discloses
the deficit accumulated during the development stage and the cumulative
statements of operations and cash flows from inception to the current
balance sheet date.
3. SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist
in understanding the Company's financial statements. The financial
statements and notes are representations of management who is
responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles in the
United States of America and have been consistently applied in the
preparation of the financial statements. The financial statements are
stated in United States of America dollars.
a) Income Taxes
The Company uses the asset and liability method of accounting of
income taxes. Under the asset and liability method, 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.
b) Basic and Diluted Income (Loss) per Share
Basic income (loss) per common share is computed by dividing net
income (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
F-10
ONLINE ORIGINALS, INC.
(A Development Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
-------------------------------------
AUGUST 31, 2009
(Unaudited)
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, 2009, the Company had
no stock equivalents that were anti-dilutive and excluded in the
earnings per share computation.
c) 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.
d) Revenue Recognition
It is the Company's policy that revenue is 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.
e) 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.
f) Use of Estimates
The preparation of the Company's financial statements are in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts reported in these financial statements and accompanying
notes. Actual results could differ from those estimates.
g) Cash and Cash Equivalents
All highly liquid debt instruments with an original maturity of
three months or less are considered to be cash equivalents.
F-11
ONLINE ORIGINALS, INC.
(A Development Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
-------------------------------------
AUGUST 31, 2009
(Unaudited)
h) 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
i) Website Development Costs
Website development costs representing capitalized costs of
design, configuration, coding, installation and testing of the
Company's website is capitalized until initial implementation.
Upon implementation, the asset is amortized to expense over its
estimated useful life of three years using the straight-line
method. Accumulated amortization at August 31, 2009, was $4,048
and amortization expense for the months ended August 31, 2009 was
$112. Ongoing website post-implementation costs of operation,
including training and application maintenance, will be charged to
expense as incurred.
j) Concentrations
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash and cash
equivalents. At August 31, 2009, approximately $3,825 of cash or
cash equivalents that were not insured by agencies of the U.S.
Government.
k) Recent Accounting Pronouncements
There were various accounting standards and interpretations issued
during 2009 and 2008, none of which are expected to have a
material impact on the Company's financial position, operations or
cash flows.
l) Other
The Company consists of one reportable business segment. The
Company paid no dividends during the periods presented.
4. BASIS OF PRESENTATION - GOING CONCERN
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles in the United States of
America, which contemplates continuation of the Company as a going
concern. However, the Company has minimal working capital and has an
accumulated deficit of $79,700 at August 31, 2009. These matters raise
substantial doubt about its ability to continue as a going concern. In
view of these matters, realization of certain of the assets in the
accompanying balance sheet is dependent upon its ability to meet its
financing requirements, raise additional capital, and the success of
its future operations. There is no assurance that future capital
raising plans will be successful in obtaining sufficient funds to
assure its eventual profitability. Management believes that actions
planned and presently being taken to revise its operating and financial
requirements provide the opportunity for the Company to continue as a
going concern. The financial statements do not include any adjustments
that might result from these uncertainties.
5. COMMON STOCK
The Company's authorized common stock consists of 75,000,000 shares
with a par value of $0.001 per share.
During the nine months ended August 31, 2009, the Company did not issue
any shares of its common stock.
6. INCOME TAXES
The Company is subject to foreign and domestic income taxes. The
Company has minimal income with net losses of $79,700 since inception,
and therefore has paid no income tax.
F-12
ONLINE ORIGINALS, INC.
(A Development Stage Company)
NOTES TO INTERIM FINANCIAL STATEMENTS
-------------------------------------
AUGUST 31, 2009
(Unaudited)
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) (20,724) -
August 31, 2009 79,693 Various 19,923 (19,923) 801 -
Income taxes at the statutory rate are reconciled to the Company's
actual income taxes as follows:
Income tax benefit at statutory rate resulting from net operating
loss carry forward (25%)
Deferred income tax valuation allowance 25%
---------
Actual tax rate 0%
=========
7. RELATED PARTY TRANSACTIONS
The Company uses the offices of its President for minimal office facility
needs for no consideration. No provision for these costs has been provided
since it has been determined that they are immaterial.
F-13
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following discussion should be read in conjunction with our unaudited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results, or other developments.
Forward-looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic, and competitive,
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward-looking
statements made by, or on our behalf. We disclaim any obligation to update
forward-looking statements.
The following discussion of the plan of operation, financial condition, results
of operations, cash flows and changes in financial position of our Company
should be read in conjunction with our most recent financial statements and
notes appearing elsewhere in this Quarterly Report on Form 10-Q, our Quarterly
Report on Form 10-Q filed July 14, 2009, our Quarterly Report on Form 10-Q filed
April 20, 2009, and our Amended Annual Report on Form 10-K/A filed May 28, 2009.
The independent registered public accounting firm's report on the Company's
financial statements as of November 30, 2008, and for each of the years in the
two-year period then ended; include a "going concern" explanatory paragraph that
describes substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to the factors prompting the explanatory
paragraph are discussed below and also in Note 4 to the unaudited quarterly
financial statements.
Operations
We are establishing a business, which provides a website where members and
customers are able to bid on and purchase pieces of art. Our target cliental is
the artistic community and those who enjoy purchasing, learning, and discussing
art. We also represent pieces from artists, art owners, and members of the site,
as well as one-time users looking to sell a single piece through our
gallery/auction website.
The website, www.artbyonlineoriginals.com, showcases a variety of art ranging
from paintings, drawings, prints, and sculptures. We intend to develop a
community of art enthusiasts through this site that will have profiles of other
members and member's comments on other sellers so individuals feel comfortable
purchasing online.
We are showcasing original pieces of art from unknown artists in the industry as
well as established artists. Prints are also available for individuals looking
for a piece that can otherwise only be found in a gallery. We attempt to
continually add to our collection of art pieces, following the demand of the
members and listening to what they are looking for.
Buyers are able to purchase art pieces from the website using different forms of
payment. We are focusing on buyers and art collectors who are using the Internet
to find what they are looking for. Members are able to enter the website and log
into their account.
Principal Products and Services
- -------------------------------
We are developing an online art gallery/auction house that allows members and
users to purchase original art pieces online. We currently do not have an
inventory of art pieces. Eventually, the available artwork will include
paintings, drawings, prints, and sculptures from artists, art owners and members
of the site. Members of the site, one-time users and we will sell these pieces.
Fees and commissions will be charged for the services we provide.
14
Plan of Operation
We are continuing to contact both experienced and unpublished artists in order
to introduce our marketing plan. We will continue to develop our membership
program and have contacted the local tourist bureau in order to market our
products though their international contacts.
We are continuing the sale of memberships and inventory items when available. We
have no employees at the present time. We will continue to operate with very
limited administrative support. Our current officers will continue without
compensation, for at least the next three months. This will enable us to
continue to preserve capital during this stage of our development.
On June 30, 2009, Gregory Adams resigned as Secretary/Treasurer and as a
director of the Company. In addition, on June 30, 2009, Shari Sookarookoff,
President and Chief Executive Officer of the Company, was appointed
Secretary/Treasurer and Chief Financial Officer of the Company.
We do not anticipate making any major purchases of capital assets, or conducting
any research and development. Our current corporate employee count is expected
to remain the same for the next year.
We are actively seeking to add new products and/or services that we can offer
through our website. A new marketing strategy will be developed as new products
and services are identified.
Liquidity
At August 31, 2009, our cash balance was $3,825. In addition, we have prepaid
expenses of $159. Cash on hand is currently our only source of liquidity. We do
not have any lending arrangements in place with banking or financial
institutions and we do not anticipate that we will be able to secure these
funding arrangements in the near future.
At August 31, 2009, we had working capital of $58 compared to working capital
deficit of $6,068 at November 30, 2008. At August 31, 2009, our total assets
consisted of cash of $3,825, prepaid expenses of $159 and capital assets of
$1,046. This compares with total assets at November 30, 2008 consisting of cash
of $4,904, prepaid expenses of $93 and capital assets of $3,542.
At August 31, 2009, our total current liabilities decreased to $3,926 from
$11,065 at November 30, 2008. During the nine months ended August 31, 2009,
accounts payable and accrued liabilities decreased by $7,139.
We recognized revenues of $13,110 from operations during the nine months ending
August 31, 2009. We believe our existing cash balances will not be sufficient to
carry our normal operations over the next three (3) months. Our short and
long-term survival is dependent on funding from sales of securities as necessary
or from shareholder loans, and thus, to the extent that we require additional
funds to support our operations or the expansion of our business, we will
attempt to sell additional equity shares or issue debt. Any sale of additional
equity securities will result in dilution to our stockholders. Recent events in
worldwide capital markets may make it more difficult for us to raise additional
equity or capital. There can be no assurance that additional financing, if
required, will be available to us or on acceptable terms.
In addition, the United States is experiencing severe instability in the
commercial and investment banking systems which is likely to continue to have
far-reaching effects on the economic activity in the country for an
indeterminable period. The long-term impact on the United States economy and the
Company's operating activities and ability to raise capital cannot be predicted
at this time, but may be substantial.
Result of Operations
For The Three Months Ended August 31, 2009 Compared To The Three Months Ended
August 31, 2008.
15
We recognized revenues of $13,110 from operational sales during the three months
ending August 31, 2009, compared to revenues of $1,040 during the three months
ended August 31, 2008.
For the three months ended August 31, 2009, operating expenses were $2,783
compared to $5,010 for the three months ended August 31, 2008. The decrease of
$2,227 was due to a decrease in our operational activities over the prior
period. Operating expenses during the three months ended August 31, 2009,
consisted of professional fees of $1,911, amortization and depreciation of $682
and office and administration costs of $190, compared to professional fees of
$3,610, amortization and depreciation of $907 and office and administration
costs of $493, for the three months ended August 31, 2008.
We recognized a net income of $10,327 for the three months ended August 31,
2009, compared to a net loss of $3,970 for the three months ended August 31,
2008. The positive increase of $14,297 was a result of the increase in
operational sales and a decrease in operational expenses as discussed above.
For The Nine Months Ended August 31, 2009 Compared To The Nine Months Ended
August 31, 2008
We recognized revenues of $13,110 from operational sales during the nine months
ended August 31, 2009 compared with revenues of $2,800 from operational activity
during the nine months ended August 31, 2008.
During the nine months ended August 31, 2009, we incurred operating expenses of
$9,907 compared to operating expenses of $23,408 during the nine months ended
August 31, 2008. The decrease of $13,501 is a result of our decreased
operational activities. During the nine months ended August 31, 2009,
operational expenses consisted of professional fees of $6,845, amortization
costs of $2,496, and office and administrative expenses of $566. This compares
with operational expenses consisted of $18,414 in professional fees, $2,273 in
office and administrative expenses and $2,721 in amortization costs for the nine
months ended August 31, 2008.
During the nine months ended August 31, 2009, we recognized a net income of
$3,203 compared to a net loss of $20,608 for the nine months ended August 31,
2008. The profit is a result of increased revenues of $10,301 for the period
along with a decrease in professional fees of $11,569, a decrease in office and
administration of $1,707, and a decrease in amortization of $225.
Off-Balance Sheet Arrangements
We currently do not have any off-balance sheet arrangements.
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the
Company is not required to provide information required by this Item.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this report, we conducted an evaluation,
under the supervision and with the participation of our Chief Executive Officer
and Chief Financial Officer, of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the 1934 Act). Based on this
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures are effective to ensure that
information required to be disclosed by us in reports that we file or submit
under the 1934 Act is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission rules and
forms.
ITEM 4T. CONTROLS AND PROCEDURES
Management's Quarterly Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control
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over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles.
Management's assessment of the effectiveness of the small business issuer's
internal control over financial reporting is as of the quarter ended August 31,
2009. We believe that our internal control over financial reporting was not
effective due to material weaknesses in the system of internal control.
Specifically, management identified the following control deficiency:
The Company has installed accounting software that does not prevent
erroneous or unauthorized changes to previous reporting periods and
does not provide an adequate audit trail of entries made in the
accounting software.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
This quarterly report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this annual report.
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended August 31, 2009, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
None.
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Item 6. Exhibits
(a) Pursuant to Item 601 of Regulation S-K, the following exhibits are included
herein or incorporated by reference.
Exhibit
Number Description
31.1 Section 302 Certification - Chief Executive Officer / Chief
Financial Officer
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 - Chief Executive Officer / Chief Financial Officer.
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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 13th day of
October, 2009.
ONLINE ORIGINALS, INC.
Date: October 13, 2009 By: /s/ Shari Sookarookoff
----------------------
Name: Shari Sookarookoff
Title: President/Chief Executive Officer and
Chief Financial (Accounting) Officer
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