---

UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-QSB

(Mark One)

x QUARTERLY REPORT
  UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30,
2005

 ̈ TRANSITION REPORT
  UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT

For the transition period from __________________ to
__________________

Commission File Number: 0-29285

ONLINE INNOVATION,
INC.(Name of Small Business Issuer in its charter)

|Delaware                        | 52-2058364                
|------------------------------- | --------------------------
|(state or other jurisdiction of | (I.R.S. Employer I.D. No.)
|incorporation or organization)  |                           

130  13151 Vanier Place, Richmond, British Columbia V6V
2J1(Address of principal executive offices)

(604) 233-2836Issuers telephone number

_________________________________________________________________
  Former name, former address, and former fiscal year, if changed since last report

Check whether the registrant is a shell company, as defined in Rule
  12b-2 of the Exchange Act: 
  Yes ̈ No x

Check whether the registrant (1) filed all reports required to
  be filed by sections 13 or 15(d) of the 
  Exchange Act 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  ̈

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Check whether the registrant filed all documents and reports required
  to be filed by Section 12, 13 or 15(d) 
  of the Exchange Act after the distribution of securities under a plan confirmed
  by a court.
  YES  ̈ NO  ̈
  N/A

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date:

As of November 14, 2005, the registrants outstanding common
stock consisted of 23,279,166 shares.

Transitional Small Business Disclosure Format (Check one): YES
   ̈ NO x

---

ONLINE INNOVATION, INC.

INDEX TO FORM 10QSB

|                               |         |                                                               | PAGE NO.
|------------------------------ | ------- | ------------------------------------------------------------- | --------
|                               |         |                                                               |         
|PART I  FINANCIAL INFORMATION | 3      
|                               |         |                                                               |         
|                               | Item 1. | Financial Statements                                          | 3       
|                               |         |                                                               |         
|                               | Item 2. | Management Discussion and Analysis
      or Plan of Operation | 4       
|                               |         |                                                               |         
|                               | Item 3. | Controls and Procedures                                       | 7       
|                               |         |                                                               |         
|PART II  OTHER INFORMATION    |        
|                               |         |                                                               |         
|                               | Item 1. | Legal Proceedings                                             | 8       
|                               |         |                                                               |         
|                               | Item 2. | Changes in Securities                                         | 8       
|                               |         |                                                               |         
|                               | Item 3. | Defaults Upon Senior Securities                               | 8       
|                               |         |                                                               |         
|                               | Item 4. | Submission of Matters to a Vote
      of Securities Holders   | 9       
|                               |         |                                                               |         
|                               | Item 5. | Other Information                                             | 9       
|                               |         |                                                               |         
|                               | Item 6. | Exhibits and Reports on Form
      8-K                        | 9       
|                               |         |                                                               |         
|SIGNATURES                     | 10     

2

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PART 1  FINANCIAL INFORMATION

Item 1  Financial Statements

Attached are the registrants unaudited financial statements
  for the three month period ended September 30, 2005, with comparative figures
  for the three month period ended September 30, 2004, and the Independent Accountants
  Report thereon.



3

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|ONLINE INNOVATION, INC.                   
|------------------------------------------
|(A Delaware Corporation)                  
|(A Development Stage Company)             
|Balance Sheets                            
|September 30, 2005                        
|(In U.S. Dollars)                         
|(With Comparative Figures at June 30, 2005
|                                          

|                                                                        |                         | September 30, |   |   | June 30,   |  
|----------------------------------------------------------------------- | ----------------------- | ------------- | - | - | ---------- | -
|                                                                        |                         | 2005          |   |   | 2005       |  
|                                                                        |                         | (Unaudited -  |   |   | (Audited)  |  
|                                                                        | Prepared by Management) |              
|                                                                        |                         |               |   |   |            |  
|**ASSETS**                                                              |                        
|                                                                        |                         |               |   |   |            |  
|Current Assets                                                          |                         |               |   |   |            |  
|Cash                                                                    | $                       | 64,796        |   | $ | 20,522     |  
|TOTAL CURRENT ASSETS                                                    |                         | 64,796        |   |   | 20,522     |  
|                                                                        |                         |               |   |   |            |  
|Fixed assets                                                            |                         |               |   |   |            |  
|Computer equipment, at cost less accumulated depreciation
      (Note 5 |                         | 1,594         |   |   | 5,063      |  
|                                                                        |                         |               |   |   |            |  
|Computer software development(Note 6(b))                                |                         |               |   |   |            |  
|Application development stage costs, less amortization                  |                         | 137,500       |   |   | 175,000    |  
|                                                                        |                         |               |   |   |            |  
|TOTAL ASSETS                                                            | $                       | 203,890       |   | $ | 200,585    |  
|                                                                        |                         |               |   |   |            |  
|LIABILITIES AND STOCKHOLDERS'
      EQUITY                              |                        
|                                                                        |                         |               |   |   |            |  
|                                                                        |                         |               |   |   |            |  
|Current Liabilities                                                     |                         |               |   |   |            |  
|Accounts payable and accrued liabilities                                | $                       | 101,117       |   | $ | 109,687    |  
|Management fees payable (Note 4(a))                                     |                         | 10,000        |   |   | 5,000      |  
|Convertible notes payable (Note
      11)                               |                         | -             |   |   | 50,000     |  
|Loans
      from related parties (Notes 4(c))                           |                         | 45,067        |   |   | 45,067     |  
|TOTAL CURRENT LIABILITIES                                               |                         | 156,184       |   |   | 209,754    |  
|                                                                        |                         |               |   |   |            |  
|Stockholders' Equity                                                    |                         |               |   |   |            |  
|Capital Stock (Note 3)                                                  |                         |               |   |   |            |  
|Authorized:                                                             |                         |               |   |   |            |  
|75,000,000
      common shares at $0.001 par value per share            |                         |               |   |   |            |  
|Issued and outstanding
      - 22,679,166 common shares                 |                         |               |   |   |            |  
|(June 30, 2005
      - 20,679,166 common shares), par value             |                         | 22,679        |   |   | 20,679     |  
|Paid in capital
      in excess of par value of stock                   |                         | 3,400,221     |   |   | 3,202,221  |  
|Share subscription receivable                                           |                         | (21,000       | ) |   |            |  
|Deficit accumulated during development
      stage (Note 1              |                         | (3,345,510    | ) |   | (3,224,279 | )
|Cumulative
      currency translation adjustments (Note 2(b))           |                         | (8,684        | ) |   | (7,790     | )
|TOTAL STOCKHOLDERS' EQUITY                                              |                         | 47,706        |   |   | (9,169     | )
|                                                                        |                         |               |   |   |            |  
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                              | $                       | 203,890       |   | $ | 200,585    |  

|Approved on Behalf of the Board |                                                                         
|------------------------------- | ------------------------------------------------------------------------
|                                |                                                                         
|"Chad
      D. Lee"             | , President and Chief Executive Officer
      and Director              
|                                |                                                                         
|"Marlene
      C. Schluter"     | , Secretary and Treasurer and Chief Financial
      Officer and Director

See Accompanying Notes to Financial Statements

F-1

---

|ONLINE INNOVATION, INC.                   
|------------------------------------------
|(A Delaware Corporation)                  
|(A Development Stage Company)             
|Statements of Operations                  
|(In U.S. Dollars)                         
|(Unaudited - Prepared
      by Management)

Cumulative FromInception Dateon Aug 1, 1997
      
      
      Three Months Endedto September 30,
      
      
      September 30,2005
      
      
      2005
      
      
      2004General and Administrative ExpensesAmortization of computer softwaredevelopment stage
        costs
      $
      187,500
      
      $
      37,500
      
      $
      37,500Compensation on stock issued
      
      150,000
      
      
      -
      
      
      -Computer technology andsoftware development-preliminarydevelopment
        stage costs
      
      397,647
      
      
      2,139
      
      
      -Depreciation - fixed assets
      
      115,495
      
      
      3,469
      
      
      3,469Filing and transfer agent fees
      
      33,352
      
      
      1,175
      
      
      491Financing costs
      
      22,550
      
      
      -
      
      
      -Funding agreement commitment
        costs
      
      345,600
      
      
      -
      
      
      -Interest on loans
      
      7,268
      
      
      -
      
      
      -Management and consulting fees
      
      1,025,265
      
      
      48,861
      
      
      15,000Office expenses, net
      
      240,146
      
      
      3,872
      
      
      6,909Option payment, mineral properties
      
      30,000
      
      
      -
      
      
      -Professional fees
      
      283,430
      
      
      5,833
      
      
      2,650Promotion, investor relations,and investor communications
      
      88,711
      
      
      -
      
      
      845Travel expenses
      
      101,238
      
      
      17,507
      
      
      577Website marketing/Banneradvertising costs
      
      318,947
      
      
      1,250
      
      
      4,038Total General and Administration Expenses
      
      3,347,149
      
      
      121,606
      
      
      71,479Non Operating IncomeInterest
        and other income
      
      1,639
      
      
      375
      
      
      -Net income (loss)
        for the period
      $
      (3,345,510
      )
      $
      (121,231
      )
      $
      (71,479
      )Net loss per common shareBasic and diluted
      
      
      
      
      ($0.01
      )
      
      ($0.00
      )


See Accompanying Notes to Financial Statements

F-2

---

|ONLINE INNOVATION, INC.                   
|------------------------------------------
|(A Delaware Corporation)                  
|(A Development Stage Company)             
|Statements of Retained Earnings (Deficit  
|(In U.S. Dollars)                         
|(Unaudited - Prepared
      by Management)

|                                       |   | Cumulative From  |   |   |                    |   |   |            |  
|-------------------------------------- | - | ---------------- | - | - | ------------------ | - | - | ---------- | -
|                                       |   | Inception Date   |   |   |                    |   |   |            |  
|                                       |   | of Aug 1, 1997   |   |   | Three Months Ended |  
|                                       |   | to September 30, |   |   | September 30,      |  
|                                       |   | 2005             |   |   | 2005               |   |   | 2004       |  
|                                       |   |                  |   |   |                    |   |   |            |  
|Balance (deficit), beginning           |   |                  |   |   |                    |   |   |            |  
|of period                              | $ | -                |   | $ | (3,224,279         | ) | $ | (2,697,661 | )
|                                       |   |                  |   |   |                    |   |   |            |  
|Net income (loss)
      for the period |   | (3,345,510       | ) |   | (121,231           | ) |   | (71,479    | )
|                                       |   |                  |   |   |                    |   |   |            |  
|Balance (deficit),
      end of period | $ | (3,345,510       | ) |   | (3,345,510         | ) | $ | (2,769,140 | )

See Accompanying Notes to Financial Statements

F-3

---

|ONLINE INNOVATION, INC.                   
|------------------------------------------
|(A Delaware Corporation)                  
|(A Development Stage Company)             
|Statements of Cash Flows                  
|(In U.S. Dollars)                         
|(Unaudited - Prepared
      by Management)

|                                                             |   | Three Months Ended |  
|------------------------------------------------------------ | - | ------------------ | -
|                                                             |   | September 30,      |  
|                                                             |   | 2005               |  
|Cash Provided by (Used for)                                  |   |                    |  
|Operating Activities                                         |   |                    |  
|Net income (loss) for the period                             | $ | (121,231           | )
|Adjustments to reconcile net income (loss) to
      net cash |   |                    |  
|provided by (used
      in) operating activities             |   |                    |  
|Depreciation - fixed assets                                  |   | 3,469              |  
|Amortization of
      computer software                      |   | 37,500             |  
|Cumulative currency translation
      adjustments            |   | (894               | )
|Changes in operating assets and
      liabilities, net of    |   |                    |  
|effects from acquired companies                              |   |                    |  
|Accounts payable
      and accrued liabilities               |   | (8,570             | )
|Management fees payable                                      |   | 5,000              |  
|Net cash provided by (used in) operating activities          |   | (84,726            | )
|Investing Activities                                         |   |                    |  
|Net cash provided by (used in) investing purposes            |   | -                  |  
|Financing Activities                                         |   |                    |  
|Capital stock subscribed for cash                            |   | 179,000            |  
|Convertible
      notes payable                              |   | (50,000            | )
|Net cash provided by financing activities                    |   | 129,000            |  
|Cash increase (decrease)                                     |   |                    |  
|during the period                                            |   | 44,274             |  
|Cash, Beginning
      of period                              |   | 20,522             |  
|Cash, End of period                                          | $ | 64,796             |  

See Accompanying Notes to Financial Statements

F-4

---

|ONLINE INNOVATION, INC.                            
|---------------------------------------------------
|(A Delaware Corporation)                           
|(A Development Stage Company)                      
|Statements of Stockholders' Equity                 
|For Period from June 30, 2001 to September 30, 2005
|(In U.S. Dollars)                                  
|(Unaudited - Prepared
      by Management)         

|                                            |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        | Cumulative  |   |        |               |  
|------------------------------------------- | ---------- | - | - | ------ | - | - | ---------- | - | - | --------- | - | - | ---------- | - | ------ | ----------- | - | ------ | ------------- | -
|                                            | Number of  |   |   |        |   |   | Additional |   |   | Total     |   |   | Retained   |   |        | Currency    |   |        | Total         |  
|                                            | Common     |   |   | par    |   |   | Paid-in    |   |   | Capital   |   |   | Earnings   |   |        | Translation |   |        | Stockholders' |  
|                                            | Shares     |   |   | Value  |   |   | Capital    |   |   | Stock     |   |   | (Deficit)  |   |        | Adjustments |   |        | Equity        |  
|Balance, June 30, 2001                      | 14,595,000 |   | $ | 14,595 |   | $ | 2,300,505  |   | $ | 2,315,100 |   | $ | (1,922,937 | ) | $      | 80          |   | $      | 392,243       |  
|Cancellation of 175,000 shares on           |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|August 23, 2001                             | (175,000   | ) |   | (175   | ) |   | (82,075    | ) |   | (82,250   | ) |   |            |   |        |             |   |        | (82,250       | )
|Cumulative currency translation adjustments |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        | 194         |   |        | 194           |  
|Net loss for year ended June 30, 2002       |            |   |   |        |   |   |            |   |   |           |   |   | (135,277   | ) |        |             |   |        | (135,277      | )
|Balance, June 30, 2002                      | 14,420,000 |   |   | 14,420 |   |   | 2,218,430  |   |   | 2,232,850 |   |   | (2,058,214 | ) |        | 274         |   |        | 174,910       |  
|Issued for cash @ $0.30                     |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|July 22, 2002                               | 100,000    |   |   | 100    |   |   | 29,900     |   |   | 30,000    |   |   |            |   |        |             |   |        | 30,000        |  
|Issued for cash @ $0.30                     |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|July 26, 2002                               | 600,000    |   |   | 600    |   |   | 179,400    |   |   | 180,000   |   |   |            |   |        |             |   |        | 180,000       |  
|Issued for loan payable @ $0.30             |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|August 31, 2002                             | 110,000    |   |   | 110    |   |   | 32,890     |   |   | 33,000    |   |   |            |   |        |             |   |        | 33,000        |  
|Shares subscribed and                       |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|paid for cash @$0.50                        |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|November 6, 2002                            | 250,000    |   |   | 250    |   |   | 124,750    |   |   | 125,000   |   |   |            |   |        |             |   |        | 125,000       |  
|Issued for cash @ $0.40                     |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|April 25, 2003                              | 100,000    |   |   | 100    |   |   | 39,900     |   |   | 40,000    |   |   |            |   |        |             |   |        | 40,000        |  
|Issued for cash @ $0.40                     |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|April 25, 2003                              | 50,000     |   |   | 50     |   |   | 19,950     |   |   | 20,000    |   |   |            |   |        |             |   |        | 20,000        |  
|Cumulative currency translation adjustments |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        | 1,126       |   |        | 1,126         |  
|Net loss for year ended                     |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|June 30, 2003                               |            |   |   |        |   |   |            |   |   |           |   |   | (323,016   | ) |        |             |   |        | (323,016      | )
|Balance, June 30, 2003                      | 15,630,000 |   |   | 15,630 |   |   | 2,645,220  |   |   | 2,660,850 |   |   | (2,381,230 | ) |        | 1,400       |   |        | 281,020       |  
|Issued for cash @ $0.15                     |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|November 1, 2003                            | 700,000    |   |   | 700    |   |   | 104,300    |   |   | 105,000   |   |   |            |   |        |             |   |        | 105,000       |  
|Issued for cash @ $0.15                     |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|December 31, 2003                           | 50,000     |   |   | 50     |   |   | 7,450      |   |   | 7,500     |   |   |            |   |        |             |   |        | 7,500         |  
|Issued for notes payable                    |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|January 4, 2004                             | 624,166    |   |   | 624    |   |   | 61,793     |   |   | 62,417    |   |   |            |   |        |             |   |        | 62,417        |  
|Net loss for year ended                     |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|June 30, 2004                               |            |   |   |        |   |   |            |   |   |           |   |   | (368,931   | ) |        |             |   |        | (368,931      | )
|Cumulative currency translation adjustments |            |   |   |        |   |   |            |   |   |           |   |   |            |   | (9,190 | )           |   | (9,190 | )            
|Balance, June 30, 2004                      | 17,004,166 |   |   | 17,004 |   |   | 2,818,763  |   |   | 2,835,767 |   |   | (2,750,161 | ) |        | (7,790      | ) |        | 77,816        |  
|Warrants exercised @$0.15                   | 250,000    |   |   | 250    |   |   | 37,250     |   |   | 37,500    |   |   |            |   |        |             |   |        | 37,500        |  
|Issued for cash @$0.39                      | 15,000     |   |   | 15     |   |   | 5,846      |   |   | 5,861     |   |   |            |   |        |             |   |        | 5,861         |  
|Issued for management fees payable          |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|May 23, 2005                                | 850,000    |   |   | 850    |   |   | 84,150     |   |   | 85,000    |   |   |            |   |        |             |   |        | 85,000        |  
|Issued for accounts payable                 | 220,000    |   |   | 220    |   |   | 21,497     |   |   | 21,717    |   |   |            |   |        |             |   |        | 21,717        |  
|May 23, 2005                                |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|Issued for management fees payable          |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|May 23, 2005                                | 820,000    |   |   | 820    |   |   | 81,180     |   |   | 82,000    |   |   |            |   |        |             |   |        | 82,000        |  
|Issued for accounts payable                 |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|May 23, 2005                                | 1,310,000  |   |   | 1,310  |   |   | 128,745    |   |   | 130,055   |   |   |            |   |        |             |   |        | 130,055       |  
|Issued for convertible notes payable        |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|May 23, 2005                                | 210,000    |   |   | 210    |   |   | 24,790     |   |   | 25,000    |   |   |            |   |        |             |   |        | 25,000        |  
|Net loss for the year ended                 |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|June 30, 2005                               |            |   |   |        |   |   |            |   |   |           |   |   | (474,118   | ) |        |             |   |        | (474,118      | )
|Balance, June 30, 2005                      | 20,679,166 |   |   | 20,679 |   |   | 3,202,221  |   |   | 3,222,900 |   |   | (3,224,279 | ) |        | (7,790      | ) |        | (9,169        | )
|Issued for cash                             | 2,000,000  |   |   | 2,000  |   |   | 198,000    |   |   | 200,000   |   |   |            |   |        |             |   |        | 200,000       |  
|Net loss for the period ended               |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        |               |  
|September 30, 2005                          |            |   |   |        |   |   |            |   |   |           |   |   | (121,231   | ) |        | (894        | ) |        | (122,125      | )
|Share subscription receivable               |            |   |   |        |   |   |            |   |   |           |   |   |            |   |        |             |   |        | (21,000       | )
|Balance, September 30, 2005                 | 22,679,166 |   | $ | 22,679 |   | $ | 3,400,221  |   | $ | 3,422,900 |   | $ | (3,345,510 | ) | $      | (8,684      | ) | $      | 47,706        |  

See Accompanying Notes to Financial Statements

F-5

---

|ONLINE INNOVATION, INC.      
|-----------------------------
|(A Delaware Corporation)     
|(A Development Stage Company)
|Notes to Financial Statements
|September 30, 2005           
|(In U.S. Dollars)            
|**(Unaudited)**              
|                             
|                             

|Note 1. | BUSINESS OPERATIONS
|------- | -------------------

| | a) | The Company was incorporated on May 7, 1997 as Micro
        Millennium, Inc., under the Company Act of the State of Delaware, U.S.A.,
        and commenced inception of business on August 1, 1997. The Company changed
        its name from Micro Millennium, Inc. to Sinaloa Gold Corp. on October
        16, 1997 and changed its name from Sinaloa Gold Corp. to Online
        Innovation, Inc. on April 8, 1999.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | b) | The Company is in its development stage in the internet/e-commerce
        industry as a website development company and was previously in the mining
        resource industry and has not generated any significant revenues from
        its planned operations. The deficit has been accumulated during the development
        stage.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | c) | Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |    | These financial statements have been prepared in accordance
        with generally accepted accounting principles in the United States of
        America applicable to a going concern which assume that the Company will
        realize its assets and discharge its liabilities in the normal course
        of business. The Company has incurred losses since inception of $3,345,510
        to September 30, 2005 and has a working capital deficiency of $91,388
        as at September 30, 2005. These factors create doubt as to the ability
        of the Company to continue as a going concern. Realization values may
        be substantially different from the carrying values as shown in these
        financial statements should the Company be unable to continue as a going
        concern. Management is in the process of identifying sources for additional
        financing to fund the ongoing development of the Companys business.

|Note 2. | SIGNIFICANT ACCOUNTING POLICIES
|------- | -------------------------------

| | a) | Administration Costs                                                                                                                                      
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                           
| |    | Administration costs are written off to operations when
        incurred.                                                                                 
| |    |                                                                                                                                                           
| | b) | Translation of Foreign Currency                                                                                                                           
| |    |                                                                                                                                                           
| |    | The functional currency is the Canadian dollar and reporting
        currency is the US dollar.                                                           
| |    |                                                                                                                                                           
| |    | An analysis of the changes in the cumulative currency
        translation adjustments as disclosed as part of stockholders equity,
        is as follows:

| |                                           |   | Three Months Ended |  
| | ----------------------------------------- | - | ------------------ | -
| |                                           |   | September 30,      |  
| |                                           |   | 2004               |  
| | Beginning balance, June 30, 2005 & 2004   | $ | (7,790             | )
| | Change during the
      period            |   | (894               | )
| | Ending balance, September 30, 2005 & 2004 | $ | (8,684             | )

F-6

---

|ONLINE INNOVATION, INC.      
|-----------------------------
|(A Delaware Corporation)     
|(A Development Stage Company)
|Notes to Financial Statements
|September 30, 2005           
|(In U.S. Dollars)            
|**(Unaudited)**              
|                             
|                             

|Note 2. | SIGNIFICANT ACCOUNTING POLICIES (Contd)
|------- | ----------------------------------------

| | c)  | Amortization of Computer Software                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | Development  Application
        Development Stage Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Amortization of computer
        software costs of $325,000 commenced on July 1, 2004. The amortization
        period is for twenty-six months on a straight-line basis. Accumulated
        Amortization of $187,500 has been charged to operations leaving a balance
        of $150,000 to be amortized over future periods at the rate of $37,500
        per quarter.                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
|
|
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | d)  | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The preparation of
        financial statements in conformity with accounting principles generally
        accepted in the United States of America requires management to make estimates
        and assumptions that affect the reported amounts of assets and liabilities
        and disclosure of contingent assets and liabilities at the date of the
        financial statements and the reported amounts of sales and expenses during
        the reporting periods. Areas where significant judgment are made include,
        but are not limited to: revenue recognition, price protection and rebate
        reserves, and marketing program accruals. Actual results could differ
        materially from these estimates.                                                                                                  
|
|
|
|
|
|
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (e) | Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Cash is represented by funds
        on deposit with the Companys bankers and is unrestricted as to                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     | use.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (f) | Earnings or Loss Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | Basic earnings or loss
        per share are based on the weighted average number of common shares outstanding.
        Diluted earnings or loss per share is based on the weighted average number
        of common shares outstanding and dilutive common stock equivalents. Basic
        earnings/loss per share is computed by dividing income/loss (numerator)
        applicable to common stockholders by the weighted average number of common
        shares outstanding (denominator) for the period. All earnings or loss
        per share amounts in the financial statements are basic earnings or loss
        per share, as defined by SFAS No. 128, Earnings Per Share.
        Diluted earnings or loss per share does not differ materially from basic
        earnings or loss per share for all periods presented.
|
|
|
|
|
|
|
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | The Company adopted
        EITF Issued 04-8 to include in the computation of diluted earnings per
        share, if dilutive, all instruments with embedded conversion features
        without considering whether the market conditions for conversion have
        been met, if conversion of these instruments is contingent on market conditions
        indexed to the price of the issuers shares.                                                                                                                                                                                                                                                                                                                                                                                                                               
|
|

F-7

---

|ONLINE INNOVATION, INC.      
|-----------------------------
|(A Delaware Corporation)     
|(A Development Stage Company)
|Notes to Financial Statements
|September 30, 2005           
|(In U.S. Dollars)            
|**(Unaudited)**              
|                             
|                             

|Note 2. | SIGNIFICANT ACCOUNTING POLICIES (Contd)
|------- | ----------------------------------------

| | (g) | Segmented Information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | All of assets are located in Canada and
        all of operating activities incurred in Canada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (h) | Share-based Payment  Company is Assessing
        the Effect of FAS-123R on its Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | In December 2004, the Financial Accounting
        Standards Board issued Statement of Financial Accounting Standards No.
        123R (FAS-123R), Share-Based Payment, which is a revision of Statement
        of Financial Accounting Standards No. 123 (FAS-123), Accounting for stock-Based
        Compensation. In addition to requiring supplemental disclosures, FAS-123R
        addresses the accounting for share-based payment transactions in which
        a company receives goods or services in exchange for (a) equity instruments
        of the company or (b) liabilities that are based on the fair value of
        the companys equity instruments. FAS-123R focuses primarily on accounting
        for transactions in which a company obtains employee services in share-based
        payment transactions. The statement eliminates the ability to account
        for share-based compensation transactions using Accounting Principles
        Board Opinion NO. 25(APB-25), Accounting for Stock Issued to Employees,
        and generally requires that such transactions be accounted for using a
        fair value based method. Accordingly, proforma disclosure is no longer
        an alternative.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Under FAS-123R, the Company is required
        to recognize compensation costs for the portion of outstanding awards
        previously accounted for under the provisions of APB-25 for which the
        requisite service had not been rendered as of the adoption date for this
        Statement. The Statement also requires companies to estimate forfeitures
        of stock compensation awards as of the grant date of the award. Because
        the Companys current policy is to recognize forfeitures as they
        occur, a cumulative effect of a change in accounting principle will be
        recognized in income based on the estimate of remaining forfeitures for
        awards outstanding as of the date FAS-123R is adopted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | FAS-123R permits public companies that
        used the fair-value method for either recognition or pro forma disclosure
        under FAS-123 to adopt its requirements using a modified prospective method
        or a modified retrospective method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | The Company expects to adopt FAS-123R from
        January 1, 2006. The Company is currently assessing the final impact of
        this standards on its results of operations, financial position, and cash
        flows. This assessment includes evaluating option valuation methodologies
        and assumptions, as well as potential changes to the Companys compensation
        strategies.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

F-8

---

|ONLINE INNOVATION, INC.      
|-----------------------------
|(A Delaware Corporation)     
|(A Development Stage Company)
|Notes to Financial Statements
|September 30, 2005           
|(In U.S. Dollars)            
|**(Unaudited)**              
|                             
|                             

|Note 3. | CAPITAL STOCK
|------- | -------------

| | a) | Authorized: 75,000,000 common shares at $0.001 par value per share.
| | -- | -------------------------------------------------------------------
| |    |                                                                    
| | b) | Common shares issued and outstanding are as follows:               

| |                                     |  | Shares     |  |   | $         |  
| | ----------------------------------- |  | ---------- |  | - | --------- | -
| | Balance, June 30, 2005              |  | 20,679,166 |  | $ | 3,222,900 |  
| | Private placement                   |  | 2,000,000  |  |   | 179,000   |  
| |                                     |  | 22,679,166 |  | $ | 3,401,900 |  
| | Share subscription
      receivable |  |            |  |   | (21,000   | )
| | Balance, September 30, 2005         |  | 22,679,166 |  | $ | 3,380,900 |  

| | c) | Warrants outstanding as at September 30, 2005 are as follows:
| | -- | -------------------------------------------------------------

| |                         | Shares    | Exercise Price | Maturity Date     |                   
| | ----------------------- | --------- | -------------- | ----------------- | ------------------
| | Jillian Henderson       | 15,000    | $0.40          | October 14, 2005  | ,and thereafter to
| |                         |           | $0.50          | October 14, 2006  |                   
| | Admiralty Fund Ltd.     | 100,000   | $0.15          | February 24, 2006 |                   
| | Fortune Capital Managem | 500,000   | $0.15          | March 7, 2006     |                   
| | Alex Gusola             | 100,000   | $0.15          | March 7, 2006     |                   
| | Brian Kask              | 100,000   | $0.15          | March 1, 2006     |                   
| | James Longo             | 210,000   | $0.15          | March 29, 2006    |                   
| | Don Malman              | 100,000   | $0.15          | February 20, 2006 |                   
| | Allen McLeod            | 190,000   | $0.15          | February 17, 2006 |                   
| | Blake Ponuick           | 200,000   | $0.15          | March 1, 2006     |                   
| | Synapse Ventures        | 250,000   | $0.15          | March 1, 2006     |                   
| | Tryon M. William        | 250,000   | $0.15          | February 12, 2006 |                   
| | 482047 B.C. Ltd.        | 500,000   | $0.20          | November 4, 2005  |                   
| |                         | 2,515,000 |                |                   |                   

|Note 4. | RELATED PARTY TRANSACTIONS
|------- | --------------------------

| | a) | Management fees payable - $10,000
| | -- | ---------------------------------
| |    |                                  
| |    | (i)                              
| |    |                                  
| |    | (ii)                             

F-9

---

|ONLINE INNOVATION, INC.      
|-----------------------------
|(A Delaware Corporation)     
|(A Development Stage Company)
|Notes to Financial Statements
|September 30, 2005           
|(In U.S. Dollars)            
|**(Unaudited)**              
|                             
|                             

|Note 4. | RELATED PARTY TRANSACTIONS (contd)
|------- | -----------------------------------

| | b) | Directors and Officers of the Company and their companies
        are beneficial owners of common shares of the Company, as at September
        30, 2005, as follows:
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Marlene C. Schluter and   |  |          
|------------------------- |  | ---------
|MCS Management Ltd.       |  | 5,040,000
|Chad D. Lee and Netgain   |  |          
|Management Sulutions Inc. |  | 4,850,000
|Total common shares owned |  | 9,890,000

| | c) | Loans to the Company unpaid as
        at September 30, 2005 are as follows:
| | -- | ----------------------------------------------------------------------------

Netgain Management Solutions Inc.
      $
      7,660Chad D. Lee
      
      20,000Snowy Creek Resources Ltd.
      
      7,407Marlene C. Schluter
      
      10,000$
      45,067


Netgain Management Solutions Inc. is
  a Company owned by Mr. Chad D. Lee, Chief Executive Officer, Director and a
  shareholder of the company. Snowy Creek Resources Ltd. is a Company owned by
  Ms. Marlene C. Schluter, Chief Financial Officer, Director, Secretary, and Treasurer
  and a shareholder of the company. These loans are non interest bearing, are
  unsecured, and have no specific terms of repayment, and are disclosed as current
  liabilities in these financial statements.

|Note 5. | FIXED ASSETS - COMPUTER EQUIPMENT                                                                                                                                                  
|------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                    
|        | The Company depreciates
        its computer equipment using the declining-balance basis at the rate of
        30% per year. The cost and accumulated depreciation are as follows:
|

September 30,2005
      
      
      2004Cost
      $
      117,089
      
      $
      117,089Accumulated depreciation
      
      (115,495
      )
      
      (101,619
      )Net balance
      $
      1,594
      
      $
      15,470 F-10


---

|ONLINE INNOVATION, INC.      
|-----------------------------
|(A Delaware Corporation)     
|(A Development Stage Company)
|Notes to Financial Statements
|September 30, 2005           
|(In U.S. Dollars)            
|**(Unaudited)**              
|                             
|                             

|Note 6. | COMPUTER TECHNOLOGY AND WEBSITE COSTS
|------- | -------------------------------------

| | a) | Acquisition From Online Innovation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | b) | Computer Software Costs capitalized                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | By agreement dated July 30, 1999 between the
        Company and Stratford Internet Technologies (Stratford), Stratford
        had been engaged to create, maintain, upgrade and supply artwork, computer
        files, and coding for a website at www.virtuallydating.com for the amount
        of $400,000 US, less unpaid amount of $75,000 reversed in these financial
        statement for the quarter ended September 30, 2001, due to the receivership
        of Stratford, for a net amount of $325,000, which is capitalized in these
        financial statements. The computer software costs of $187,500 have been
        expensed to September 30, 2005,. (See Note 2(c)).

| |                                      |   | September 30, |  
| | ------------------------------------ | - | ------------- | -
| |                                      |   | 2005          |  
| | Balance, June 30, 2005 and 2004      | $ | 325,000       |  
| | Accumulated amortization             |   | (187,500      | )
| | Balance, September 30, 2005 and 2004 | $ | 137,500       |  

|Note 7. | STOCK BASED COMPENSATION/ PENSION PLAN
|------- | --------------------------------------

| | a) | The Company has an Incentive Stock Plan that was approved
        in 2000 that provides for the grant, at the discretion of the Board of
        Directors, or a Committee appointed by it, of options and rights to purchase
        an aggregate of not to exceed 1,500,000 common shares of common shares
        of the Company to officers, directors, employees and consultants of the
        Company. No options have been issued or exercised relating to this plan
        up to September 30, 2005.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | b) | There are no liabilities for pension costs at September
        30, 2005, as the Company does not have a pension plan.                                                                                                                                                                                                                                                                                                                                                                                        

F-11

---

|ONLINE INNOVATION, INC.      
|-----------------------------
|(A Delaware Corporation)     
|(A Development Stage Company)
|Notes to Financial Statements
|September 30, 2005           
|(In U.S. Dollars)            
|**(Unaudited)**              
|                             
|                             

|Note 8. | NET LOSS PER SHARE                                                                                                                         
|------- | -------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                            
|        | Net loss per common
        share is computed by dividing net loss by the weighted average of shares
        outstanding during the period.
|
|        |                                                                                                                                            
|        | Computation of basic and diluted weighted average
      number of shares outstanding:                                                      

| |                                                          |  | September 30, |  
| | -------------------------------------------------------- |  | ------------- | -
| |                                                          |  | 2005          |  
| | Net income                                               |  | ($121,606     | )
| | Basic                                                    |  | 22,179,166    |  
| | Warrants                                                 |  | 2,515,000     |  
| | Stock plan options                                       |  | 1,500,000     |  
| | Dilutive                                                 |  | 26,194,166    |  
| | Diluted - same as
      Basic, due to loss on operations |  | 22,179,166    |  

Computation of net loss per share:

| |                              |   | September 30, |  
| | ---------------------------- | - | ------------- | -
| |                              |   | 2005          |  
| | Net loss per share - Basic   | $ | ($0.01        | )
| | Net loss per share - Diluted | $ | ($0.01        | )

|Note 9. | INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|        | The Company has losses
        carried forward to future years of $3,345,510. There are no current or
        deferred tax expenses for the period ended September 30, 2005, due to
        the Company's loss position. The Company has fully reserved for any benefits
        of these losses. The deferred tax consequences of temporary differences
        in reporting items for financial statement and income tax purposes are
        recognized, as appropriate. Realization of the future tax benefits related
        to the deferred tax assets is dependent on many factors, including the
        Company's ability to generate taxable income within the net operating
        loss carryforward period. Management has considered these factors in reaching
        its conclusion as to the valuation allowance for financial reporting purposes.
        The income tax effect of temporary differences comprising the deferred
        tax assets and deferred tax liabilities on the accompanying consolidated
        balance sheets is a result of the following:
|
|
|
|
|
|
|
|
|

| |                         |   | September 30, |  
| | ----------------------- | - | ------------- | -
| |                         |   | 2005          |  
| | Deferred tax assets     | $ | 1,137,473     |  
| | Valuation allowance     | $ | (1,137,473    | )
| | Net deferred tax assets | $ | -             |  

F-12

---

|ONLINE INNOVATION, INC.      
|-----------------------------
|(A Delaware Corporation)     
|(A Development Stage Company)
|Notes to Financial Statements
|September 30, 2005           
|(In U.S. Dollars)            
|**(Unaudited)**              
|                             
|                             

|Note 9. | INCOME TAXES (contd)                                                                                                                                                                  
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                        
|        | A reconciliation between
        the statutory federal income tax rate and the effective income rate of
        income tax expense for the year ended September 30, 2005 is as follows:
|

| |                                   |  | Period Ended  | 
| | --------------------------------- |  | ------------- | 
| |                                   |  | September 30, | 
| |                                   |  | 2005          | 
| | Statutory federal income tax rate |  | -34.0%        | 
| | Valuation allowance               |  | 34.0%         | 
| | Effective income tax rate         |  | 0.0%          | 

|Note 10. | FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|         | The Companys
        financial instruments consist of cash, accounts payable and accrued liabilities,
        management fees payable, convertible notes payable, and loans from related
        parties. It is managements opinion that the Company is not exposed
        to significant interest, currency or credit risks arising from these financial
        instruments. The fair value of these financial instruments approximates
        their carrying values.
|
|
|
|

F-13

---

Item 2 - Plan of Operation

General

The Company's business is conducted through its website,
www.VirtuallyDating.com. The primary focus of the www.VirtuallyDating.com
website is matchmaking. In addition to providing matchmaking services for single
adults through a specialized search engine for members, the site provides
various interactive, entertainment related components that facilitate social
interaction between members.

The Companys website has been fully operational since
September 3, 2002. The Company hopes to generate revenues through the sale of
memberships which will permit users to access the website. Prior to the full
launch of the website, memberships were offered free of charge. Since the site
became fully operational the Company has been working towards developing a user
base through the sale of memberships. The Company is currently offering free
10-day trials and an introductory special in which users may purchase a 1-year
membership for $19.95. The Company intends to continue the introductory offer
until it has been able to carry out marketing activities to promote the website.
After the introductory offer has been completed, memberships will be available
for $10.95 per month, $29.95 for three months, $49.95 for 6 months and $79.95
for 1 year.

After the website was launched the Companys intention was to
promote the sale of memberships through various forms of marketing. The nature
and extent of the Companys marketing efforts since the launch of the website
have been determined in large part by the availability of capital to conduct
marketing activities. Since the Companys revenue stream from the sale of
memberships has been limited, the Company has had to rely on small equity
financings to provide it with working capital for ongoing operations, including
continuing website development and marketing. Funds available for marketing
have, therefore, been somewhat limited. Nonetheless, the Company intends to
continue to focus such capital as it has at its disposal on marketing the
website with a view to increasing revenues through the sale of memberships.
Available capital will also be utilized for maintenance and ongoing development
of the Companys www.VirtuallyDating.com
website as well as the development of its second revenue generating website,
www.UrbanFlirt.com (discussed in further
detail below).

The Companys initial focus over the next 12 months will be to
secure financing on favorable terms. Once the Companys financial situation is
clearer to management, management will make the necessary strategic decisions
respecting marketing efforts and other uses of financial resources. Specific
marketing strategies and website development plans are listed below. The Company
will implement these strategies based on cost-effectiveness as resources become
available.

Forward Looking Statements

All statements, other than statements of historical facts, included
  in this report that address activities, events or developments that the Company
  expects, believes, intends or anticipates will or may occur in the future, are
  forward-looking statements. Forward-looking statements are inherently subject
  to risks and uncertainties, many of which cannot be predicted with accuracy
  and some of which might not even be anticipated. Future events and actual results,
  financial and otherwise, could differ materially from those set forth in or
  contemplated by the forward-looking statements herein. These risks and uncertainties
  include, but are not limited to, the Company's reliance on current revenues;
  the uncertainties associated with the introduction of new products/services;
  management of growth, including the ability to attract and retain qualified
  employees; the ability to integrate acquisitions made by the Company and the
  costs associated with such acquisitions; dependence on its principal executive
  officer; substantial competition from larger companies with greater financial
  and other resources than the Company; the success of its marketing strategy;
  its dependence on suppliers for some of its products; currency fluctuations
  and other risks associated with foreign sales and foreign operations; quarterly
  fluctuations in revenues, income and

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overhead expense; and potential product liability risk associated with its existing and future products. Readers are cautioned not to put undue reliance on forward-looking statements. The Company disclaims any intent or obligation to update publicly
these forward-looking statements, whether as a result of new information, future events or otherwise.

Marketing Strategies

General

Management believes that marketing will be the key to the Company's success in the short term and in the long term. As a result, management intends to focus as much of its energies as possible in the upcoming 12 months on marketing activities.  The
Company intends to advertise online, through print media and possibly, depending on the resources available, through television, radio and billboards. The target market for the Company's service is single adults, aged 18-49, with basic computer
skills and access to the Internet. The Company intends to focus on the North American market in the short term and consider other markets at a later date.

As of November 10, 2005, the website had 80,769 registered profiles. The Company hopes to increase this number once it has secured the financing necessary to undertake more intensive marketing activities. The Companys inability to secure
adequate financing since the launch of the website has limited its ability to invest money into marketing its flagship property. The Companys ability to undertake marketing activities in the upcoming 12 months will be dependent on its ability
to secure financing. Readers should refer to the section entitled Cash Requirements for a discussion of the Companys attempts to raise capital in the past quarter and its plans to raise capital in the upcoming year.

Online Advertising

Online advertising can take a number of different forms. Banner advertising is the most common form. The Company intends to place banner advertisements on those websites which management believes will enable the Company to most effectively reach its
target market.

Affiliations with other websites also provide an avenue for marketing for Internet companies. Companies with similar markets can form various types of strategic alliances to promote one another's products and services. The key component is usually a
link to the affiliate company's website.  In the upcoming 12 months, the Company will continue with its efforts to forge strategic partnerships with key industry players. The Company hopes that by doing so it will be able to increase traffic on its
website.

Another form of online advertising being considered by the Company involves sponsoring e-mails or newsletters sent by other Internet companies. Through payment of a sponsorship fee, the Company would be shown as the sponsor of a particular e-mail or
newsletter sent by an entity to its members. By selecting an entity with a large membership, the Company can reach large target markets. A message identifying the sponsor and a link to the sponsor's website are provided.

Management is exploring the various forms of online advertising available and intends to focus its initial energy on this sector because of the relatively low cost and the ability to reach its target market (i.e. personal computer users)
effectively. It will, however, assess other marketing tools and utilize those which it feels will enable it to reach its target market in the most efficient and cost effective manner.

Print Media, T.V., Radio and Billboards

While management is of the view that online advertising is
  the most cost-effective marketing tool, it also believes that other, more traditional
  methods of marketing will be effective and must be developed to the

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fullest extent possible. Management envisions placing advertisements in the personals sections of major newspapers and in high circulation magazines with general readership to brand the VirtuallyDating name and to expose the Company to a wider
audience.  Determination as to whether these types of advertisements will be placed will depend on funds available in the upcoming 12 months. In addition, advertisements on television, radio and on billboards will be considered and utilized if the
Company has the capital available to purchase advertising space/time from these sources.

Current Marketing Efforts

In the period covered by this report the Company focused its marketing efforts on pay per click search engine placements to drive traffic to the website with several of the major and smaller search engine providers.  These marketing activities were
arranged by the Company and by marketing consultants retained by the Company as described below.

The Company retains the services of Fortune Capital Management (USA) Inc. (Fortune), to provide sales and marketing services on a month to month basis.  Fortune provides marketing concepts for the VirtuallyDating website, explores
strategic partnerships for the website and provides conceptual design for marketing materials to advertise the website.  The Company pays $2,500 per month to Fortune and reimburses Fortune for expenses incurred in carrying out its duties under
the agreement.

During the period covered by this report, the Company entered into a consulting agreement with Nicole Crozier pursuant to which Nicole Crozier agreed to provide marketing, communication and branding services to the Company on a month to month basis.
 Crozier is paid $3,000 per month for services rendered pursuant to the agreement and reimbursed for expenses incurred in connection with performing the services required under the agreement. The agreement may be terminated by either party on 30
days notice.

Additional Website Development

The Company retains the services of 1 web-programming consultant to perform maintenance and additional development work on an as needed basis. The consultant works under the Companys direct supervision and his payment is tied to and based on
the completion of specific tasks.

Urban Flirt

Development is underway in connection with a proposed second revenue generating web property which will be known as UrbanFlirt and will be located on the web at www.urbanflirt.com. This web based community will feature the traditional
online matchmaking components that have pioneered the Online Dating Industry to date. The site will feature core functionality such as photo upload, messaging capabilities, compatibility indicators, detailed matching and distance calculators. The
Company's intentions are to design the site to appeal to the over 25-45 crowd. This demographic represents the highest users of Online Dating Services on the Internet today. The UrbanFlirt website is currently functional and is being subjected to
internal testing by the Company. The launch of this product has been postponed by the Company until adequate equity financing is successfully raised to complete the final necessary programming and marketing to properly roll out this new
property.

Purchase of Equipment

At this time, the Company does not anticipate the purchase
  of any significant equipment.

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Employees

The Company currently has no full or part time employees. The Company retains consultants to provide it with services related to the administration, management and development of the Company. At this time, the Company does not anticipate any
significant changes in staffing.

Cash Requirements

The Company currently has sufficient working capital to meet its operating requirements until December 31, 2005. In order to fund business activity beyond this date, the Company will need to arrange additional financing. Website development and
marketing efforts will be dependent on the Companys ability to raise such additional financing. Specific plans related to marketing and any additional website development which may occur in the upcoming months will be devised once financing
has been completed and management knows what funds will be available for these purposes.

During the period covered by this report the Company repaid a loan of $50,000 to Fortune Capital Management (USA) Inc. The loan was originally made on May 10, 2005 and was repayable on August 10, 2005.

The Company intends to use available finances to fund ongoing operations.  Funds will be utilized for general and administrative expenses, website maintenance and development and marketing.

The Companys financial statements for the year ended June 30, 2005 were prepared on a going concern basis in accordance with United States generally accepted accounting principles. The going concern basis of presentation assumes that the
Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business. As at September 30, 2005 the Company had a working capital
deficiency of $91,388.  The Companys financial condition raises serious doubt as to its ability to continue operations without additional equity or debt financing. The Companys ability to raise additional capital through debt and
equity financing is presently uncertain.

Item 3  Controls And Procedures

The Company is managed exclusively by its principal executive officer and principal financial officer. The Company does not have management or employees which are separate from these 2 individuals. As a result, all disclosure decisions are made
directly by the principal executive officer and principal financial officer of the Company and are based on direct knowledge of the Companys affairs held by them. These individuals also carry out all bookkeeping and other record keeping
activities undertaken by the Company and make all business decisions for the Company.  While the Company retains the services of a small number of consultants, none of these individuals has control over formal disclosure decisions or disclosure
contained in documents such as press releases and financial reports. All formal disclosure documents are reviewed and approved by the Companys principal executive officer and principal financial officer and are based on first hand knowledge of
these individuals (as opposed to knowledge derived from reports from employees, consultants or managers). As a consequence, the Companys principal executive officer and principal financial officer are of the view that the Companys
disclosure controls and procedures are effective and result in full and true disclosure of material facts related to the Companys affairs.

There were no significant changes in the Companys internal
  controls or in other factors that could significantly affect these controls
  subsequent to the date of their evaluation, including any significant deficiencies
  or material weaknesses of internal controls that would require corrective action.
  There were no changes in the Companys internal control over financial
  reporting identified in connection with the

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Companys evaluation of its disclosure controls and procedures
and the effectiveness of those procedures in the last fiscal quarter.

PART II  OTHER INFORMATION

Item 1  Legal Proceedings

There are no legal proceedings reportable pursuant to this
section. As of the date of this report, the Company has not been served with
notice of any legal proceedings and does not contemplate undertaking any legal
proceedings.

Item 2 - Change in Securities

No instruments defining the rights of the holders of any class
of registered securities were modified during the period covered by this report.
No rights evidenced by any class of registered securities were materially
limited or qualified by the issuance or modification of any other class of
securities during the period covered by this report.

During the period covered by this report, the Company completed
a sale of 2,000,000 units at a price of $0.10 per unit for aggregate cash
proceeds of $200,000. Each unit consisted of one share of the Companys common
stock and one share purchase warrant. Each warrant entitles the purchaser to
purchase one additional share of the Companys common stock at a price of $0.15
for 6 months after the purchase of the units. The units were issued without
registration under the Securities Act in reliance on the safe harbor provisions
of Regulation S promulgated under the Securities Act. None of the purchasers of
the securities was a U.S. person as that term is defined in Rule 902(o) of
Regulation S and the sale of the securities constituted an offshore
transaction as that term is defined in Rule 902(i) of Regulation S. The units
were issued in the following amounts to the following persons:

Admiralty Fund Ltd.
    100,000 unitsFortune Capital Management (USA) Inc.
    500,000 unitsAlex
      Gusola
    100,000 unitsBrian Kask
    100,000 unitsJames Longo
    210,000 unitsDon
      Malman
    100,000 unitsAllen McLeod
    190,000 unitsBlake Ponuik
    200,000 unitsSynapse Ventures
    250,000 unitsTryon M. William
    250,000 units


Item 3  Defaults Upon Senior Securities

There have been no material defaults in the payment of
principal, interest, sinking or purchase fund installments or any other material
defaults with respect to indebtedness of the Company exceeding 5% of the total
assets of the Company. No material arrearage in the payment of dividends and no
delinquency with respect to any preferred stock of the Company have
occurred.

Item 4  Submission of Matters to a Vote of Security
Holders

No matters have been submitted to a vote of security holders
  during the period covered by this report, through the solicitation of proxies
  or otherwise.

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Item 5  Other Information

During the period covered by this report, the Company entered
into an agreement with Travis Taylor pursuant to which Travis Taylor agreed to
provide operation and marketing management services to the Company on a month to
month basis. Taylor is paid $5,000 per month for services rendered pursuant to
the agreement and reimbursed for expenses incurred in connection with performing
the services required under the agreement. The agreement may be terminated by
either party on 30 days notice.

During the period covered by this report the Company moved its
head office to Suite 130  13151 Vanier Place, Richmond, B.C. The Company
terminated its previous lease, which was a month to month lease, on September 1,
2005. The Companys new premises are also leased on a month to month basis. The
Company pays monthly rent of $2,000 on the premises.

Item 6 - Exhibits and Reports on Form 8-K

|(a) | Exhibits
|--- | --------

| | 31.1 | Rule 13a-14(a)/15d-14(a) Certification of Principal
      Executive Officer
| | ---- | ---------------------------------------------------------------------------
| |      |                                                                            
| | 31.2 | Rule 13a-14(a)/15d-14(a) Certification of Principal
      Financial Officer
| |      |                                                                            
| | 32.1 | Section 1350 Certification of Principal Executive
      Officer            
| |      |                                                                            
| | 32.2 | Section 1350 Certification
      of Principal Financial Officer            

|(b) | The Company filed a form 8K (October 18, 2005), a form
      8K/A (October 19, 2005) and an additional form 8K/A (November 1, 2005).
      All of the forms were filed in connection with a restatement of the audit
      report on the Companys June 30, 2004 financial statements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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SIGNATURES

In accordance with the requirements of section 13 or 15(d) of
the Exchange Act, the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

|Date: | November 14, 2005 |  | **ONLINE INNOVATION,
      INC.**
|----- | ----------------- |  | ---------------------------------
|      |                   |  | (Registrant)                     
|      |                   |  |                                  
|      |                   |  |                                  
|      |                   |  | By:                              
|      |                   |  |                                  
|      |                   |  |                                  
|      |                   |  |                                  
|      |                   |  |                                  
|      |                   |  | By:                              
|      |                   |  |                                  
|      |                   |  |                                  

In accordance with the requirements of the Exchange Act, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

|By:   | /s/
      Chad D. Lee             | 
|----- | --------------------------------- | 
|      | Chad D. Lee, President, Director, | 
|      | Principal Executive Officer       | 
|      |                                   | 
|Date: | November 14, 2005                 | 
|      |                                   | 
|      |                                   | 
|      |                                   | 
|      |                                   | 
|By:   | /s/
      Marlene C. Schluter     | 
|      | Marlene C. Schluter, Director,    | 
|      | Principal Financial Officer       | 
|      |                                   | 
|Date: | November 14, 2005                 | 

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