-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IT8ykKToJ9fZRyNfVFvgWzDsNtmTePnGpJkwEghE1yJIrJuXTCyGu9L8bAbTBOh+ ce9kPcVldIDdWdV4FXvOAQ== 0001065949-10-000034.txt : 20100310 0001065949-10-000034.hdr.sgml : 20100310 20100310154954 ACCESSION NUMBER: 0001065949-10-000034 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20091130 FILED AS OF DATE: 20100310 DATE AS OF CHANGE: 20100310 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ONLINE ORIGINALS, INC CENTRAL INDEX KEY: 0001357878 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 980479983 STATE OF INCORPORATION: NV FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-53230 FILM NUMBER: 10670514 BUSINESS ADDRESS: STREET 1: RPO 163 CITY: SORRENTO STATE: A1 ZIP: V0E 2W0 BUSINESS PHONE: 604 313 9781 MAIL ADDRESS: STREET 1: RPO 163 CITY: SORRENTO STATE: A1 ZIP: V0E 2W0 10-K 1 online10k2009.txt 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 -------------------------------------------------------- (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. -2-
TABLE OF CONTENTS PAGE ---- 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
-3- 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. -4- 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. -5- 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. -6- ITEM 1A. RISK FACTORS - --------------------- 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 -7- 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 - ---------------------------------- 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. - -------------------------------------------------------------------------------- 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. -26- 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. -27- 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. -28- 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. -29- 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 -31- EX-31.1 2 ex311.txt EXHIBIT 31.1 CERTIFICATION PURSUANT TO 18 U.S.C. SS. 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Shari Sookarookoff, certify that: 1. I have reviewed this annual report on Form 10-K of Online Originals, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. As the registrant's certifying officer, I have disclosed, based on the most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls. Date: March 10, 2010 By: /s/ Shari Sookarookoff ----------------------- Shari Sookarookoff President/Chief Executive Officer and Chief Financial (Accounting) Officer EX-32.1 3 ex321.txt EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of ONLINE ORIGINALS, INC. (the "Company") on Form 10-K for the period ended November 30, 2009, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Shari Sookarookoff, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (a) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (b) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: March 10, 2010 By: /s/ Shari Sookarookoff ----------------------- Shari Sookarookoff President/Chief Executive Officer and Chief Financial (Accounting) Officer -----END PRIVACY-ENHANCED MESSAGE-----