---

**UNITED STATESSECURITIES AND EXCHANGE COMMISSION** Washington, 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 **March 31, 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)  |                           

1118 Homer Street, #118, Vancouver, British Columbia
  V6B 6L5
  (Address of principal executive offices)

(604) 669-7564
  
  Issuer’s telephone number

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

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.
  Yesx   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 May 12, 2005, the registrant’s outstanding common
  stock consisted of 17,269,166 shares.

Transitional Small Business Disclosure Format (Check one):
  YES ̈ Nox

---

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    | 8                                                            
|                               |                                                               |         
|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   | 8       
|                               |                                                               |         
|Item 5.                        | Other Information                                             | 8       
|                               |                                                               |         
|Item 6.                        | Exhibits and Reports on Form 8-K                              | 8       
|                               |                                                               |         
|SIGNATURES                     | 9                                                            

2

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PART 1 – FINANCIAL INFORMATION

Item 1 – Financial Statements

Attached are the registrant’s unaudited financial statements
  for the nine month period ended March 31, 2005, with comparative figures for
  the nine month period ended March 31, 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 
      March 31, 2005
      (In U.S. Dollars)(With Comparative Figures at June 30, 2004)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                           

|                                                                        |   | March 31,   |   |   | June 30,   |  
|----------------------------------------------------------------------- | - | ----------- | - | - | ---------- | -
|                                                                        |   | 2005        |   |   | 2004       |  
|                                                                        |   | (Unaudited) |   |   | (Audited)  |  
|                                                                        |   |             |   |   |            |  
|ASSETS                                                                  |  
|                                                                        |   |             |   |   |            |  
|Current Assets                                                          |   |             |   |   |            |  
|Cash                                                                    | $ | 936         |   | $ | 3,245      |  
|TOTAL CURRENT ASSETS                                                    |   | 936         |   |   | 3,245      |  
|                                                                        |   | -           |   |   | 52,500     |  
|Fixed assets                                                            |   |             |   |   |            |  
|Computer equipment, at cost less
      accumulated depreciation (Note 5 |   | 8,532       |   |   | 18,939     |  
|                                                                        |   |             |   |   |            |  
|Computer software development(Note 6(b))                                |   |             |   |   |            |  
|Application
      development stage costs                               |   | 212,500     |   |   | 325,000    |  
|                                                                        |   |             |   |   |            |  
|TOTAL ASSETS                                                            | $ | 221,968     |   | $ | 399,684    |  
|                                                                        |   |             |   |   |            |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                    |  
|                                                                        |   |             |   |   |            |  
|Current Liabilities                                                     |   |             |   |   |            |  
|Accounts payable and accrued liabilities                                | $ | 250,913     |   | $ | 96,801     |  
|Management fees payable (Note 4(a))                                     |   | 157,000     |   |   | 102,500    |  
|Loan payable (Note 11)                                                  |   | 25,000      |   |   | 25,000     |  
|Loans from
      related parties (Notes 4(c))                           |   | 45,067      |   |   | 45,067     |  
|TOTAL CURRENT
      LIABILITIES                                         |   | 477,980     |   |   | 269,368    |  
|                                                                        |   |             |   |   |            |  
|Stockholders' Equity                                                    |   |             |   |   |            |  
|Capital Stock (Note 3)                                                  |   |             |   |   |            |  
|Authorized:                                                             |   |             |   |   |            |  
|75,000,000 common shares at $0.001 par value per
      share            |   |             |   |   |            |  
|Issued
      and outstanding - 17,269,166 common shares                 |   |             |   |   |            |  
|(June 30, 2004 - 17,004,166 common shares), par value                   |   | 17,269      |   |   | 17,004     |  
|Paid
      in capital in excess of par value of stock                   |   | 2,861,859   |   |   | 2,818,763  |  
|Deficit accumulated during development
      stage (Note 1              |   | (3,127,350  | ) |   | (2,697,661 | )
|Cumulative
      currency translation adjustments (Note 2(b)            |   | (7,790      | ) |   | (7,790     | )
|TOTAL STOCKHOLDERS'
      EQUITY                                        |   | (256,012    | ) |   | 130,316    |  
|                                                                        |   |             |   |   |            |  
|TOTAL LIABILITIES
      AND STOCKHOLDERS' EQUITY                        | $ | 221,968     |   | $ | 399,684    |  

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

F-1

---

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

|                                       |   | Cumulative From |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|-------------------------------------- | - | --------------- | - | - | ----------------- | - | - | ------------------ | - | - | -------- | - | - | ------- | -
|                                       |   | Inception Date  |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|                                       |   | on Aug 1, 1997  |   |   | Nine Months Ended |   |   | Three Months Ended |  
|                                       |   | to March 31     |   |   | March 31,         |   |   | March 31,          |  
|                                       |   | 2005            |   |   | 2005              |   |   | 2004               |   |   | 2005     |   |   | 2004    |  
|                                       |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|Interest and Other Income              | $ | 1,264           |   | $ | -                 |   | $ | 1,089              |   | $ | -        |   | $ | 507     |  
|                                       |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|Administration Costs                   |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|Amortization of computer software      |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|development
      stage costs          |   | 112,500         |   |   | 112,500           |   |   | -                  |   |   | 37,500   |   |   | -       |  
|Compensation on stock issued           |   | 150,000         |   |   | -                 |   |   | -                  |   |   | -        |   |   | -       |  
|Computer technology and                |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|software
      development-preliminary |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|development
      stage costs          |   | 395,508         |   |   | 2,070             |   |   | 23,369             |   |   | -        |   |   | 4,690   |  
|Depreciation - fixed assets            |   | 108,557         |   |   | 10,407            |   |   | 10,407             |   |   | 3,469    |   |   | 3,469   |  
|Filing and transfer agent fees         |   | 31,072          |   |   | 2,888             |   |   | 1,756              |   |   | 790      |   |   | -       |  
|Financing costs                        |   | 22,550          |   |   | -                 |   |   | -                  |   |   | -        |   |   | -       |  
|Funding agreement commitment costs     |   | 345,600         |   |   | -                 |   |   | -                  |   |   | -        |   |   | -       |  
|Interest on loans                      |   | 7,268           |   |   | -                 |   |   | 2,417              |   |   | -        |   |   | 2,417   |  
|Management and consulting fees         |   | 961,404         |   |   | 179,402           |   |   | 119,483            |   |   | 92,555   |   |   | 18,170  |  
|Office expenses, net                   |   | 234,455         |   |   | 21,128            |   |   | 24,102             |   |   | 3,755    |   |   | 12,861  |  
|Option payment, mineral properties     |   | 30,000          |   |   | -                 |   |   | -                  |   |   | -        |   |   | -       |  
|Professional fees                      |   | 258,378         |   |   | 12,015            |   |   | 11,587             |   |   | 4,139    |   |   | 2,920   |  
|Promotion, investor relations,         |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|and
      investor communications      |   | 88,711          |   |   | 845               |   |   | 845                |   |   | -        |   |   | (548    | )
|Travel expenses                        |   | 69,581          |   |   | 19,592            |   |   | 2,625              |   |   | 11,734   |   |   | 1,000   |  
|Website marketing/Banner               |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|advertising costs                      |   | 313,030         |   |   | 16,342            |   |   | 63,482             |   |   | 12,304   |   |   | 44,035  |  
|                                       |   | 3,128,614       |   |   | 377,189           |   |   | 260,073            |   |   | 166,246  |   |   | 89,014  |  
|Profit (Loss) Before Income Taxes      |   | (3,127,350      | ) |   | (377,189          | ) |   | (258,984           | ) |   | (166,246 | ) |   | (88,507 | )
|Deferred income taxes                  |   | -               |   |   | 52,500            |   |   | --                 |   |   | 52,500   |   |   | --      |  
|                                       |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|Net profit (loss) for the period       | $ | (3,127,350      | ) | $ | (429,689          | ) | $ | (258,984           | ) | $ | (218,746 | ) | $ | (88,507 | )

See Accompanying Notes

F-2

---

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

|                                 |   | Cumulative From |   |   |                   |   |   |                    |   |   |            |   |   |            |  
|-------------------------------- | - | --------------- | - | - | ----------------- | - | - | ------------------ | - | - | ---------- | - | - | ---------- | -
|                                 |   | Inception Date  |   |   |                   |   |   |                    |   |   |            |   |   |            |  
|                                 |   | of Aug 1, 1997  |   |   | Nine Months Ended |   |   | Three Months Ended |  
|                                 |   | to March 31     |   |   | March 31,         |   |   | March 31,          |  
|                                 |   | 2005            |   |   | 2005              |   |   | 2004               |   |   | 2005       |   |   | 2004       |  
|                                 |   |                 |   |   |                   |   |   |                    |   |   |            |   |   |            |  
|Balance (deficit), beginning     |   |                 |   |   |                   |   |   |                    |   |   |            |   |   |            |  
|of period                        | $ | -               |   | $ | (2,697,661        | ) | $ | (2,381,230         | ) | $ | (2,908,604 | ) | $ | (2,551,707 | )
|                                 |   |                 |   |   |                   |   |   |                    |   |   |            |   |   |            |  
|Net profit (loss) for the period |   | (3,127,350      | ) |   | (429,689          | ) |   | (258,984           | ) |   | (218,746   | ) |   | (88,507    | )
|                                 |   |                 |   |   |                   |   |   |                    |   |   |            |   |   |            |  
|Balance (deficit), end of period | $ | (3,127,350      | ) | $ | (3,127,350        | ) | $ | (2,640,214         | ) | $ | (3,127,350 | ) | $ | (2,640,214 | )

See Accompanying Notes

F-3

---

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

|                                                  |   | Cumulative From |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|------------------------------------------------- | - | --------------- | - | - | ----------------- | - | - | ------------------ | - | - | -------- | - | - | ------- | -
|                                                  |   | Inception Date  |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|                                                  |   | on Aug 1, 1997  |   |   | Nine Months Ended |   |   | Three Months Ended |  
|                                                  |   | to March 31     |   |   | March 31,         |   |   | March 31,          |  
|                                                  |   | 2005            |   |   | 2005              |   |   | 2004               |   |   | 2005     |   |   | 2004    |  
|Cash Provided by (Used for)                       |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|Operating Activities                              |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|Net profit (loss) for the period                  | $ | (3,127,350      | ) | $ | (429,689          | ) | $ | (258,984           | ) | $ | (218,746 | ) | $ | (88,507 | )
|Items not requiring use of cash:                  |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|Deferred
      income taxes                       |   | 52,500          |   |   | 52,500            |   |   | -                  |   |   | 52,500   |   |   | -       |  
|Shares
      issued for funding agreement         |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|commitment costs                                  |   | 345,600         |   |   | -                 |   |   | -                  |   |   | -        |   |   | -       |  
|Shares
      issued for assignment of             |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|option on mineral properties                      |   | 30,000          |   |   | -                 |   |   | -                  |   |   | -        |   |   | -       |  
|Shares
      issued for compensation              |   | 150,000         |   |   | -                 |   |   | -                  |   |   | -        |   |   | -       |  
|Depreciation
      - fixed assets                 |   | 108,557         |   |   | 10,407            |   |   | 10,407             |   |   | 3,469    |   |   | 3,469   |  
|Amortization
      of computer software           |   | 112,500         |   |   | 112,500           |   |   | -                  |   |   | 37,500   |   |   | -       |  
|Cumulative
      currency translation adjustments |   | (7,790          | ) |   | -                 |   |   | (7,356             | ) |   | -        |   |   | -       |  
|Changes in non-cash working capital
      items   |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|Deferred
      income tax                         |   | (52,500         | ) |   | -                 |   |   | --                 |   |   | -        |   |   | -       |  
|Shares
      subscription receivable              |   | -               |   |   | -                 |   |   |                    |   |   | -        |   |   | 7,500   |  
|Accounts
      payable and accrued liabilities    |   | 250,913         |   |   | 154,112           |   |   | 56,123             |   |   | 89,419   |   |   | 7,764   |  
|Management fees payable                           |   | 157,000         |   |   | 54,500            |   |   | 32,500             |   |   | 29,500   |   |   | 15,000  |  
|Cash used for operating activities                |   | (1,980,570      | ) |   | (45,670           | ) |   | (167,310           | ) |   | (6,358   | ) |   | (54,774 | )
|Investing Activities                              |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|Computer software development                     |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|Application
      development stage costs         |   | (325,000        | ) |   | -                 |   |   | -                  |   |   | -        |   |   | -       |  
|Fixed assets
      purchased                      |   | (117,089        | ) |   | -                 |   |   | -                  |   |   | -        |   |   | -       |  
|Cash used for investing purposes                  |   | (442,089        | ) |   | -                 |   |   | -                  |   |   | -        |   |   | -       |  
|Financing Activities                              |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|Capital stock subscribed for cash                 |   | 2,353,528       |   |   | 43,361            |   |   | 174,917            |   |   |          |   |   | 62,417  |  
|Loan payable                                      |   | 25,000          |   |   | -                 |   |   | -                  |   |   | -        |   |   | (60,000 | )
|Loans from
      related parties                  |   | 45,067          |   |   | -                 |   |   | 955                |   |   | -        |   |   | -       |  
|Cash provided by financing activities             |   | 2,423,595       |   |   | 43,361            |   |   | 175,872            |   |   | -        |   |   | 2,417   |  
|Cash increase (decrease)                          |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|during the period                                 |   | 936             |   |   | (2,309            | ) |   | 8,562              |   |   | (6,358   | ) |   | (52,357 | )
|Cash, Beginning of period                         |   | -               |   |   | 3,245             |   |   | 9,806              |   |   | 7,294    |   |   | 70,725  |  
|Cash, End of period                               | $ | 936             |   | $ | 936               |   | $ | 18,368             |   | $ | 936      |   | $ | 18,368  |  
|                                                  |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  
|Supplemental Cash Flow Information (Note 13)      |   |                 |   |   |                   |   |   |                    |   |   |          |   |   |         |  

See Accompanying Notes

F-4

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Statements of Stockholders' EquityFor Period from June 30, 2001 to March 31, 2005
      (In U.S. Dollars)(Unaudited)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                        

|                                                  |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   | 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                               |            |   |   |        |   |   |            |   |   |           |   |   | (316,431   | ) |   |             |   |   | (316,431      | )
|Cumulative
      currency translation adjustments |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   | (9,190      | ) |   | (9,190        | )
|Balance, June 30, 2004                            | 17,004,166 |   |   | 17,004 |   |   | 2,818,763  |   |   | 2,835,767 |   |   | (2,697,661 | ) |   | (7,790      | ) |   | 130,316       |  
|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         |  
|Net loss for the nine month period
      ended    |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   |             |   |   |               |  
|March 31, 2005                                    |            |   |   |        |   |   |            |   |   |           |   |   | (429,689   | ) |   |             |   |   | (429,689      | )
|Balance, March 31, 2005                           | 17,269,166 |   | $ | 17,269 |   | $ | 2,861,859  |   | $ | 2,879,128 |   | $ | (3,127,350 | ) | $ | (7,790      | ) | $ | (256,012      | )

See Accompanying Notes

F-5

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements 
      March 31, 2005 
      (In U.S. Dollars)
      (Unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                  

|Note 1. | BUSINESS OPERATIONS            
|------- | -------------------------------
|        |                                
|        | a)                             
|        |                                
|        | b)                             
|        |                                
|        | c)                             
|        |                                
|Note 2. | SIGNIFICANT ACCOUNTING POLICIES
|        |                                
|        | a)                             
|        |                                
|        | c)                             

| |  |                                             |   | Nine Months Ended |  
| |  | ------------------------------------------- | - | ----------------- | -
| |  |                                             |   | March 31,         |  
| |  |                                             |   | 2004              |  
| |  | Beginning balance, June 30, 2004 & 2003     | $ | (7,790            | )
| |  | Change during the period                    |   | --                |  
| |  | Ending balance,
      March 31, 2005 & 2004 | $ | (7,790            | )

F-6

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements 
      March 31, 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 $112,500 has been charged to operations leaving a
        balance of $215,500 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 adopt EITF Issued
        04-8to 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 
      March 31, 2005 
      (In U.S. Dollars)
      (Unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                  

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

| | (g) | Segmented Information
      Segmented information of the Company’s identifiable
        assets and operating activities, is as follows:
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------

| |  | March 31, 2005                         |   | Canada   |   |   | U.S.  |  |   | Total    |  
| |  | -------------------------------------- | - | -------- | - | - | ----- |  | - | -------- | -
| |  | Current assets                         | $ | 936      |   | $ | -     |  | $ | 936      |  
| |  | Net fixed assets                       |   | 8,532    |   |   | -     |  |   | 8,532    |  
| |  | Computer software
      development    |   | 212,500  |   |   | -     |  |   | 212,500  |  
| |  | Total Assets                           | $ | 221,968  |   | $ | -     |  | $ | 221,968  |  
| |  | Nine Month Period Ended March 31, 2005 |   |          |   |   |       |  |   |          |  
| |  | Revenue                                | $ | -        |   |   | -     |  |   | -        |  
| |  | Administration costs                   |   | (429,689 | ) |   | -     |  |   | (429,689 | )
| |  | Net (loss) for the
      period        | $ | (429,689 | ) | $ | -     |  | $ | (429,689 | )
| |  |                                        |   |          |   |   |       |  |   |          |  
| |  |                                        |   |          |   |   |       |  |   |          |  
| |  | June 30, 2004                          |   | Canada   |   |   | U.S.  |  |   | Total    |  
| |  | Current assets                         | $ | 3,245    |   | $ | -     |  | $ | 3,245    |  
| |  | Deferred tax assets                    |   | 52,500   |   |   | -     |  |   | 52,500   |  
| |  | Net fixed assets                       |   | 18,939   |   |   | -     |  |   | 18,939   |  
| |  | Computer software development          |   | 325,000  |   |   | -     |  |   | 325,000  |  
| |  | Total Assets                           | $ | 399,684  |   | $ | -     |  | $ | 399,684  |  
| |  | Year Ended June 30, 2004               |   |          |   |   |       |  |   |          |  
| |  | Revenue                                | $ | -        |   |   | 1,264 |  |   | 1,264    |  
| |  | Administration costs                   |   | (317,695 | ) |   | -     |  |   | (317,695 | )
| |  | Net (loss) for the
      year          | $ | (317,695 | ) | $ | 1,264 |  | $ | (316,431 | )
| |  |                                        |   |          |   |   |       |  |   |          |  
| |  |                                        |   |          |   |   |       |  |   |          |  
| |  | March 31, 2004                         |   | Canada   |   |   | U.S.  |  |   | Total    |  
| |  | Current assets                         | $ | 18,368   |   | $ | -     |  | $ | 18,368   |  
| |  | Deferred tax assets                    |   | 52,500   |   |   | -     |  |   | 52,500   |  
| |  | Net fixed assets                       |   | 22,408   |   |   | -     |  |   | 22,408   |  
| |  | Computer software development          |   | 325,000  |   |   | -     |  |   | 325,000  |  
| |  | Total Assets                           | $ | 418,276  |   | $ | -     |  | $ | 418,276  |  
| |  | Nine Month Period Ended March 31, 2004 |   |          |   |   |       |  |   |          |  
| |  | Revenue                                | $ | -        |   |   | 1,089 |  |   | 1,089    |  
| |  | Administration costs                   |   | (260,073 | ) |   | -     |  |   | (260,073 | )
| |  | Net (loss) for the
      period        | $ | (260,073 | ) | $ | 1,089 |  | $ | (258,984 | )

F-8

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements 
      March 31, 2005 
      (In U.S. Dollars)
      (Unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                  

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

| | (h) | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     | In August, 2001, the FASB issued Statement of Financial
        Accounting Standards No. 143, “Accounting for Asset Retirement Obligations”
        (“SFAS 143”). SFAS 143 addresses financial accounting and
        reporting for obligations associated with the retirement of tangible long-lived
        assets and the associated asset retirement costs. SFAS 143 applies to
        all entities. It applies to legal obligations associated with the retirement
        of long-lived assets that result from the acquisition, construction, development
        and / or the normal operation of a long-lived asset, except for certain
        obligations of lessees. SFAS 143 requires that the fair value of a liability
        for an asset retirement obligation be recognized in the period in which
        it is incurred if a reasonable estimate of fair value can be made. The
        associated asset retirement costs are capitalized as part of the carrying
        amount of the long-lived asset. SFAS 143 is effective for financial statements
        issued for fiscal years beginning after June 15, 2002. The Company adopted
        SFAS 143. SFAS 143 does not have a material effect on the Company’s
        results of operations, financial position or liquidity.
|
| |     | In November, 2002, the EITF reached a consensus
        on Issue No. 00-21 “Revenue Arrangements with Multiple Deliverables”
        (“EITF 00-21”). This issue addresses certain aspects of accounting
        for arrangement whereby a vendor performs multiple revenue-generating
        activities. This issue addresses how to determine whether an arrangement
        involving multiple deliverables contains more than one unit of accounting
        and how the related revenue should be measured and allocated to the separate
        units of accounting. This issue is effective for revenue arrangements
        entered into for fiscal periods beginning after June 15, 2003. There is
        no effect on the Company of EITF 00-21 on the Company’s results
        of operations, financial position or liquidity as the Company currently
        has no multiple deliverable revenue arrangements.                                                                                                                                                                                                                                                                                                                                                                                
|
| |     | In December of 2002, the FASB issued Statement of
        Financial Accounting Standards No. 148, “Accounting for Stock-Based
        Compensation and Disclosure” (“SFAS148”). SFAS 148 addresses
        additional disclosure rules concerning stock-based compensation and three
        alternative methods for companies to choose from for those companies that
        have chosen to expense stock options under the fair value method prescribed
        by SFAS 123. The Company has not issued any stock options by March 31,
        2004. (See Note 8 Stock-Based Compensation / Pension Plan)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |     | In May 2003, the FASB issued SFAS No. 150, “Accounting
        for Certain Financial Instruments with Characteristics of Both Liabilities
        and Equity.” It established standards for how an issuer classified
        and measures certain financial instruments with characteristics of both
        liabilities and equity. This standard was effective for financial instruments
        entered into or modified after June 30, 2003, with no material effect
        on the Company’s financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| | (i) | Restatement of Comparative Figures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |     | Certain of the comparative figures have been restated
        to conform to the disclosure in this financial statement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

F-9

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements 
      March 31, 2005 
      (In U.S. Dollars)
      (Unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                  

|Note 3. | CAPITAL STOCK
|------- | -------------
|        |              
|        | a)           
|        |              
|        | b)           

| |  |                         | Shares     |  |   | $        
| |  | ----------------------- | ---------- |  | - | ---------
| |  | Balance, June 30, 2004  | 17,004,166 |  | $ | 2,835,767
| |  | Private placement       | 15,000     |  |   | 5,861    
| |  | Warrants exercised      | 250,000    |  |   | 37,500   
| |  | Balance, March 31, 2005 | 17,269,166 |  | $ | 2,879,128

| | c) | Warrants outstanding as at March 31, 2005 are as follows:
| | -- | ---------------------------------------------------------

| |  |                   | Units   |  | Exercise Price |  | Maturity Date   
| |  | ----------------- | ------- |  | -------------- |  | ----------------
| |  | Jillian Henderson | 15,000  |  | $0.40          |  | October 14, 2005
| |  |                   |         |  | $0.50          |  | October 14, 2006
| |  |                   |         |  |                |  |                 
| |  | 482047 B.C. Ltd.  | 500,000 |  | $0.20          |  | November 4, 2005
| |  |                   | 515,000 |  |                |  |                 

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

| | a) | Management fees payable - $157,000                                                                                                         
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------
|
| |    | (i)                                                                                                                                        
|
| |    | (ii)                                                                                                                                       
|
| | b) | Directors and Officers of the Company
        are beneficial owners of common shares of the Company, as follows, at
        March 31, 2004:

| |  |  | Chad D. Lee         | 4,000,000 | common shares
| |  |  | ------------------- | --------- | -------------
| |  |  | Marlene C. Schluter | 4,000,000 | common shares
| |  |  |                     | 8,000,000 |              

F-10

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements 
      March 31, 2005 
      (In U.S. Dollars)
      (Unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                  

|Note 4. | RELATED PARTY TRANSACTIONS (Cont’d)
|------- | -----------------------------------
|        |                                    
|        | c)                                 

| | Netgain Management Solutions Inc. | $ | 7,660 
| | --------------------------------- | - | ------
| | Chad D. Lee                       |   | 20,000
| | Snowy Creek Resources Ltd.        |   | 7,407 
| | Marlene 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:

| |                          |   | March 31, |   |   | June 30, |  
| | ------------------------ | - | --------- | - | - | -------- | -
| |                          |   | 2005      |   |   | 2004     |  
| | Cost                     | $ | 117,089   |   | $ | 117,089  |  
| | Accumulated depreciation |   | (108,557  | ) |   | (94,681  | )
| | Net balance              | $ | 8,532     |   | $ | 22,408   |  

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

| | a) | Acquisition From Online Innovation
| | -- | ----------------------------------
|
| |    | i)                                
|
| |    | ii)                               

F-11

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements 
      March 31, 2005 
      (In U.S. Dollars)
      (Unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                  

|Note 6. | COMPUTER TECHNOLOGY AND WEBSITE COSTS (Cont’d)
|------- | ----------------------------------------------

| | 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. During the nine month period
        ended March 31, 2005, the computer software costs of $112,500 have
        been expensed. (See Note 2(c)).

| |  |                                                                      |   | March 31, |  
| |  | -------------------------------------------------------------------- | - | --------- | -
| |  |                                                                      |   | 2005      |  
| |  | Balance, June 30, 2004                                               | $ | 325,000   |  
| |  | Amortization during the nine month
      period ended March 31, 2005 |   | (112,500  | )
| |  | Balance, March 31,
      2005                                        | $ | 212,500   |  

|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 March 31, 2005.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) | There are no liabilities for pension costs at March
        31, 2005, as the Company does not have a pension plan.                                                                                                                                                                                                                                                                                                                                                                                        

F-12

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements 
      March 31, 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:
|------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                                          | March 31, 
| | -------------------------------------------------------- | ----------
| |                                                          | 2005      
| | Basic                                                    | 17,160,416
| | Convertible Notes $25,000 @ $0.25                        | 100,000   
| | Warrants                                                 | 500,000   
| | Options                                                  | 1,500,000 
| | Dilutive                                                 | 19,260,416
| | Diluted - same as Basic, due to loss
      on operations | 17,160,416

| | Computation of net loss per share:
| | ----------------------------------

| |                              | March 31, |  
| | ---------------------------- | --------- | -
| |                              | 2005      |  
| | Net loss per share - Basic   | ($0.02    | )
| | Net loss per share - Diluted | ($0.02    | )

|Note 9. | INCOME TAXES
      The Company has losses carried forward to future years
        of $3,127,350. There are no current or deferred tax expenses for the
        quarter ended March 31, 2004, 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:
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                         |   | March 31,  |   |   | June 30, |  
| | ----------------------- | - | ---------- | - | - | -------- | -
| |                         |   | 2005       |   |   | 2004     |  
| | Deferred tax assets     | $ | 1,063,299  |   | $ | 917,205  |  
| | Valuation allowance     | $ | (1,063,299 | ) |   | (917,205 | )
| | Net deferred tax assets | $ | -          |   | $ | -        |  

F-13

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements 
      March 31, 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 quarter
        ended March 31, 2005 is as follows:
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                   | Quarter Ended |  | Year Ended | 
| | --------------------------------- | ------------- |  | ---------- | 
| |                                   | March 31,     |  | June 30,   | 
| |                                   | 2005          |  | 2004       | 
| |                                   |               |  |            | 
| | Statutory federal income tax rate | -34.0%        |  | -34.0%     | 
| | Valuation allowance               | 34.0%         |  | 34.0%      | 
| | Effective income tax rate         | 0.0%          |  | 0.0%       | 

|Note 10. | FINANCIAL INSTRUMENTS
      The Company’s financial instruments consist of
        cash, accounts payable and accrued liabilities, management fees payable,
        loan 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.                                                                                                                                                                                                                                                                                                                                                                                                                             
|-------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Note 11. | LOAN PAYABLE
      On April 25, 2004, the Company arranged financing of
        $25,000 and issued Convertible Bridge Financing Notes, whereby the
        Company promises to pay $25,000 to Fortune Capital Management Inc.
        with interest at 10% per annum, and maturity date of October 25, 2004.
        After October 25 2004, the Holders shall have the right, at their options
        to convert the principal amount of the notes, together with all accrued
        interest into fully paid and non-assessable shares of the Company’s
        common stock at a conversion price of $0.25 per share.
      Conversion privilege expired by October 25, 2004. The
        Company proposes to extend the conversion period from October 25, 2004.
        The market price on that date was $0.23 per share, resulting in no
        discount from the conversion price of $0.25 per share.
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Note 12. | CONSULTING AGREEMENTS
      A consulting agreement between Fortune Capital Management
        and the Company is effective on August 1, 2002. The Company agrees to
        pay the Consultant a consulting fee of $2,500 per month. The unpaid
        portion of these consulting fees and expenses, as at March 31, 2005 is
        $125,055, and this amount is included in accounts payable at March
        31, 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

F-14

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|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements 
      March 31, 2005 
      (In U.S. Dollars)
      (Unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                  

|Note 13. | SUPPLEMENTAL CASH FLOW INFORMATION
      Supplemental information regarding other non-cash transactions is as
        follows:
|-------- | ------------------------------------------------------------------------------------------------------------------------------

| |                                                            |   | Cumulative From   |  |   |               
| | ---------------------------------------------------------- | - | ----------------- |  | - | --------------
| |                                                            |   | Inception Date    |  |   | Nine Month    
| |                                                            |   | on August 1, 1997 |  |   | Period Ended  
| |                                                            |   | March 31, 2005    |  |   | March 31, 2005
| | Shares issued for funding agreement commitment
      costs | $ | 345,600           |  | $ | -             
| | Shares issued for assignment of opton expense              |   |                   |  |   |               
| | on
      mineral properties                                | $ | 30,000            |  | $ | -             
| | Shares issued for compensation                             | $ | 150,000           |  | $ | -             
| | Shares issued for notes payable                            | $ | 62,417            |  | $ | -             
| | Shares issued for loan payable                             | $ | 33,000            |  | $ | -             

F-15

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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 prime 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 overhead expense; and potential product
  liability risk associated with its existing and future products.

4

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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 Company’s goal is to capture 50,000 subscribing
  members in each of the three years following the launch of the website, for
  a total of 150,000 members within three years of launch. 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 March 31, 2005, the website had 78,269 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 seriously
  limited its ability to invest capital into marketing the service to a wide audience
  and prospective users. The Company’s ability to undertake marketing activities
  in the upcoming 12 months will be highly 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.

5

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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 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 suspended
  all pay per click search engine marketing in order to preserve capital.

On August 1, 2002, the Company entered into an agreement with
  Fortune Capital Management (USA) Inc. (“Fortune”), pursuant to which
  Fortune has agreed to provide sales and marketing services to the Company. Under
  the terms of the agreement, Fortune is to provide marketing concepts for the
  VirtuallyDating website, explore strategic partnerships for the website and
  provide 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. The Agreement
  was originally for a term of 12 months but is being continued on a month to
  month basis by mutual agreement between the parties.

Additional Website Development

The Company retains the services of 2 web-programming consultants
  to perform maintenance and additional development work on an as needed basis.
  The consultants work under the Company’s direct supervision and their
  payment is tied to and based on the completion of specific tasks. The Company
  currently intends to continue to develop new features which will make the website
  more attractive to prospective members when and if funds are available. Proposed
  features may include a webpage entitled "Hey Bartender" which will provide recipes
  for alcoholic cocktails. Members will be invited to post their own favorite
  recipes on the page. Another section entitled "Postcards From Stanley" may be
  created. This section would feature travel reviews of destinations geared towards
  singles.

Urban Flirt

The Company also announced that development is underway in
  connection with a 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 indefinitely 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.

6

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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 June 15th, 2005. In order to fund business
  activity beyond this date, the Company will need to arrange additional financing.
  Any further 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.

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.

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

7

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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.

No securities were sold or issued by the Company during the
  period covered by this report.

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.

Item 5 – Other Information

There is no information reportable pursuant to this section.

Item 6 - Exhibits and Reports on Form 8-K

|(a) | Exhibits                                                                          |                                                                            
|--- | --------------------------------------------------------------------------------- | ---------------------------------------------------------------------------
|    |                                                                                   |                                                                            
|    | 15                                                                                | Letter on Unaudited Financial Information                                  
|    |                                                                                   |                                                                            
|    | 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) | No reports on form 8-K were filed during the period covered
      by this report.

8

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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: | May 13, 2005 |  | ONLINE INNOVATION, INC.
|----- | ------------ |  | -----------------------
|      |              |  |                        
|      |              |  |                        
|      |              |  |                        
|      |              |  | 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: | May 13, 2005                      | 
|      |                                   | 
|      |                                   | 
|      |                                   | 
|      |                                   | 
|By:   | /s/ Marlene C. Schluter           | 
|      | Marlene C. Schluter, Director,    | 
|      | Principal Financial Officer       | 
|      |                                   | 
|Date: | May 13, 2005                      | 

9

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