---

**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 December 31, 2004

 ̈  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.
  Yes x   No  ̈

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

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

APPLICABLE ONLY TO CORPORATE ISSUERS

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

As of January 31, 2005, the registrant’s outstanding
  common stock consisted of 17,269,166 shares.

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

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ONLINE INNOVATION, INC.

INDEX TO FORM 10QSB

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

---

PART 1 – FINANCIAL INFORMATION

Item 1 – Financial Statements

Attached are the registrant’s unaudited financial statements
  for the six month period ended December 31, 2004, with comparative figures for
  the six month period ended December 31, 2003, and the Independent Accountant’s
  Report thereon.

3

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MOEN AND COMPANYCHARTERED ACCOUNTANTS

|Member:                                                 |                                     
|------------------------------------------------------- | ------------------------------------
|Canadian Institute of Chartered Accountants             | Securities Commission Building      
|Institute of Chartered Accountants of British Columbia  | PO Box 10129, Pacific Centre        
|Institute of Management Accountants (USA) (From 1965)   | Suite 1400 – 701 West Georgia Street
|                                                        | Vancouver, British Columbia         
|Registered with:                                        | Canada V7Y 1C6                      
|Public Company Accounting Oversight Board (USA) (PCAOB) | Telephone:  (604) 662-8899          
|Canadian Public Accountability Board (CPAB)             | Fax:  (604) 662-8809                
|Canada - British Columbia Public Practice Licence       | Email: moenca@telus.net             

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
  Online Innovation, Inc. (A Delaware Corporation)
  (A Development Stage Company)

We have reviewed the accompanying balance sheet of Online
  Innovation, Inc. (A Delaware Corporation) (A Development Stage Company) as of
  December 31, 2004, and the related consolidated statements of income, retained
  earnings, cash flows and changes in stockholders’ equity for the six month
  periods ended December 31, 2004, and December 31, 2003. These interim financial
  statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of
  the Public Company Accounting Oversight Board (United States). A review of interim
  financial information consists principally of applying analytical procedures
  and making inquiries of persons responsible for financial and accounting matters.
  It is substantially less in scope than an audit conducted in accordance with
  the standards of the Public Company Accounting Oversight Board, the objective
  of which is the expression of an opinion regarding the financial statements
  taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications
  that should be made to the accompanying interim financial statements for them
  to be in conformity with U.S. generally accepted accounting principles.

| | “Moen and Company”   
| | ---------------------
| |                      
| | (“Signed”)           
| |                      
| | Chartered Accountants

Vancouver, British Columbia, Canada 
  January 20, 2005

*“Independent Accountants and Auditors”*

F-1

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|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Balance Sheet 
      December 31, 2004
      (In U.S. Dollars)(With Comparative Figures at June 30, 2004)
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                             

|                                                                         |   | December 31, |   |   | June 30,   |  
|------------------------------------------------------------------------ | - | ------------ | - | - | ---------- | -
|                                                                         |   | 2004         |   |   | 2004       |  
|                                                                         |   | (Unaudited)  |   |   | (Audited)  |  
|                                                                         |   |              |   |   |            |  
|ASSETS                                                                   |  
|                                                                         |   |              |   |   |            |  
|Current Assets                                                           |   |              |   |   |            |  
|Cash                                                                     | $ | 7,294        |   | $ | 3,245      |  
|TOTAL CURRENT ASSETS                                                     |   | 7,294        |   |   | 3,245      |  
|                                                                         |   |              |   |   |            |  
|Deferred tax asset                                                       |   | 52,500       |   |   | 52,500     |  
|Fixed assets                                                             |   |              |   |   |            |  
|Computer equipment, at cost less
      accumulated depreciation (Note 5) |   | 12,001       |   |   | 18,939     |  
|Computer software development(Note 6(b))                                 |   |              |   |   |            |  
|Application development stage costs                                      |   | 250,000      |   |   | 325,000    |  
|                                                                         |   |              |   |   |            |  
|TOTAL ASSETS                                                             | $ | 321,795      |   | $ | 399,684    |  
|                                                                         |   |              |   |   |            |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                     |  
|                                                                         |   |              |   |   |            |  
|Current Liabilities                                                      |   |              |   |   |            |  
|Accounts payable                                                         | $ | 161,494      |   | $ | 96,801     |  
|Management fees payable (Note 4(a))                                      |   | 127,500      |   |   | 102,500    |  
|Loan payable (Note 11)                                                   |   | 25,000       |   |   | 25,000     |  
|Due to related parties (Notes 4(c))                                      |   | 45,067       |   |   | 45,067     |  
|TOTAL CURRENT LIABILITIES                                                |   | 359,061      |   |   | 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)              |   | (2,908,604   | ) |   | (2,697,661 | )
|Cumulative currency translation adjustments (Note
      2(b))            |   | (7,790       | ) |   | (7,790     | )
|TOTAL STOCKHOLDERS' EQUITY                                               |   | (37,266      | ) |   | 130,316    |  
|                                                                         |   |              |   |   |            |  
|TOTAL CURRENT LIABILITIES AND STOCKHOLDERS' EQUITY                       | $ | 321,795      |   | $ | 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 and Independent Accountants' Review
  Report

F-2

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Statement of Income
      December 31, 2004
      (In U.S. Dollars)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                       

|                                       |   | Cumulative From |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|-------------------------------------- | - | --------------- | - | - | ---------------- | - | - | ------------------ | - | - | ---------- | - | - | ---------- | -
|                                       |   | Inception Date  |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|                                       |   | on Aug 1, 1997  |   |   | Six Months Ended |   |   | Three Months Ended |  
|                                       |   | to December 31  |   |   | December 31,     |   |   | December 31,       |  
|                                       |   | 2004            |   |   | 2004             |   |   | 2003               |   |   | 2004       |   |   | 2003       |  
|                                       |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|Interest and Other Income              | $ | 1,264           |   | $ | --               |   | $ | 582                |   | $ | --         |   | $ | 582        |  
|                                       |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|Administration Costs                   |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|Amortization of computer software      |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|development
      stage costs          |   | 75,000          |   |   | 75,000           |   |   |                    |   |   | 37,500     |   |   | --         |  
|Compensation on stock option           |   | 150,000         |   |   |                  |   |   |                    |   |   | --         |   |   | --         |  
|Computer technology and                |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|software
      development-preliminary |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|development
      stage costs          |   | 395,508         |   |   | 2,070            |   |   | 18,679             |   |   | 2,070      |   |   | 10,185     |  
|Depreciation - fixed assets            |   | 105,088         |   |   | 6,938            |   |   | 6,938              |   |   | 3,469      |   |   | 3,469      |  
|Filing and transfer agent fees         |   | 30,282          |   |   | 2,098            |   |   | 1,756              |   |   | 1,607      |   |   | 1,459      |  
|Financing costs                        |   | 22,550          |   |   |                  |   |   |                    |   |   | --         |   |   |            |  
|Funding agreement commitment costs     |   | 345,600         |   |   |                  |   |   |                    |   |   | --         |   |   |            |  
|Interest on loans                      |   | 7,268           |   |   |                  |   |   |                    |   |   | --         |   |   |            |  
|Management and consulting fees         |   | 868,849         |   |   | 86,847           |   |   | 101,313            |   |   | 71,847     |   |   | 77,472     |  
|Office expenses, net                   |   | 230,700         |   |   | 17,373           |   |   | 11,241             |   |   | 10,464     |   |   | 8,158      |  
|Option payment, mineral properties     |   | 30,000          |   |   |                  |   |   |                    |   |   | --         |   |   |            |  
|Professional fees                      |   | 254,239         |   |   | 7,876            |   |   | 8,667              |   |   | 5,226      |   |   |            |  
|Promotion, investor relations,         |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|and
      investor communications      |   | 88,711          |   |   | 845              |   |   | 1,393              |   |   |            |   |   | 1,393      |  
|Travel expenses                        |   | 57,847          |   |   | 7,858            |   |   | 1,625              |   |   | 7,281      |   |   | 1,238      |  
|Website marketing/Banner               |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|advertising costs                      |   | 300,726         |   |   | 4,038            |   |   | 19,447             |   |   |            |   |   | 13,817     |  
|                                       |   | 2,962,368       |   |   | 210,943          |   |   | 171,059            |   |   | 139,464    |   |   | 117,191    |  
|Profit (Loss) Before Income Taxes      |   | (2,961,104      | ) |   | (210,943         | ) |   | (170,477           | ) |   | (139,464   | ) |   | (116,609   | )
|Deferred income taxes                  |   | (52,500         | ) |   | --               |   |   | --                 |   |   | --         |   |   | --         |  
|                                       |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|Net profit (loss) for the period       | $ | (2,908,604      | ) | $ | (210,943         | ) | $ | (170,477           | ) | $ | (139,464   | ) | $ | (116,609   | )
|                                       |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|Weighted Average Share Outstanding     |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|Basic                                  |   |                 |   |   | 17,160,416       |   |   | 16,380,000         |   |   | 17,160,416 |   |   | 16,380,000 |  
|Diluted                                |   |                 |   |   | 19,160,416       |   |   | 17,880,000         |   |   | 19,160,416 |   |   | 17,880,000 |  
|                                       |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|Net loss per common share(Note 8)      |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|Basic                                  |   |                 |   |   | (0.01            | ) |   | (0.01              | ) |   | (0.01      | ) | $ | (0.01      | )
|Diluted                                |   |                 |   |   | (0.01            | ) |   | (0.01              | ) |   | (0.01      | ) | $ | (0.01      | )

See Accompanying Notes and Independent Accountants' Review
  Report

F-3

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Statement of Retained Earnings (Deficit)
      December 31, 2004
      (In U.S. Dollars)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                            



|                                       |   | Cumulative From |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|-------------------------------------- | - | --------------- | - | - | ---------------- | - | - | ------------------ | - | - | ---------- | - | - | ---------- | -
|                                       |   | Inception Date  |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|                                       |   | of Aug 1, 1997  |   |   | Six Months Ended |   |   | Three Months Ended |  
|                                       |   | to December 31  |   |   | December 31,     |   |   | December 31,       |  
|                                       |   | 2004            |   |   | 2004             |   |   | 2003               |   |   | 2004       |   |   | 2003       |  
|                                       |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|Balance (deficit), beginning of period | $ | --              |   | $ | (2,697,661       | ) | $ | (2,381,230         | ) | $ | (2,769,140 | ) | $ | (2,435,098 | )
|                                       |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|Net profit (loss) for the period       |   | (2,908,604      | ) |   | (210,943         | ) |   | (170,477           | ) |   | (139,464   | ) |   | (116,609   | )
|                                       |   |                 |   |   |                  |   |   |                    |   |   |            |   |   |            |  
|Balance (deficit), end of period       | $ | (2,908,604      | ) | $ | (2,908,604       | ) | $ | (2,551,707         | ) | $ | (2,908,604 | ) | $ | (2,551,707 | )

See Accompanying Notes and Independent Accountants' Review
  Report

F-4

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Statement of Cash Flows 
      December 31, 2004
      (In U.S. Dollars)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                            

|                                                  |   | Cumulative From |   |   |                  |   |   |                    |   |  |          |   |   |          |  
|------------------------------------------------- | - | --------------- | - | - | ---------------- | - | - | ------------------ | - |  | -------- | - | - | -------- | -
|                                                  |   | Inception Date  |   |   |                  |   |   |                    |   |  |          |   |   |          |  
|                                                  |   | on Aug 1, 1997  |   |   | Six Months Ended |   |   | Three Months Ended |  
|                                                  |   | to December 31  |   |   | December 31,     |   |   | December 31,       |  
|                                                  |   | 2004            |   |   | 2004             |   |   | 2003               |   |  | 2004     |   |   | 2003     |  
|Cash Provided by (Used for)                       |   |                 |   |   |                  |   |   |                    |   |  |          |   |   |          |  
|Operating Activities                              |   |                 |   |   |                  |   |   |                    |   |  |          |   |   |          |  
|Net profit (loss) for the period                  | $ | (2,908,604      | ) | $ | (210,943         | ) | $ | (170,477           | ) |  | (139,464 | ) | $ | (116,609 | )
|Items not requiring use of cash:                  |   |                 |   |   |                  |   |   |                    |   |  |          |   |   |          |  
|Shares issued for funding
      agreement         |   |                 |   |   |                  |   |   |                    |   |  |          |   |   |          |  
|commitment
      costs                            |   | 345,600         |   |   | --               |   |   | --                 |   |  | --       |   |   | --       |  
|Shares issued for assignment
      of             |   |                 |   |   |                  |   |   |                    |   |  |          |   |   |          |  
|option
      on mineral properties                |   | 30,000          |   |   | --               |   |   | --                 |   |  | --       |   |   | --       |  
|Shares issued for compensation                    |   |                 |   |   |                  |   |   |                    |   |  |          |   |   |          |  
|on
      stock options                            |   | 150,000         |   |   | --               |   |   | --                 |   |  | --       |   |   | --       |  
|Shares issued for private
      business          |   | 200,000         |   |   | --               |   |   | --                 |   |  | --       |   |   | --       |  
|Shares cancellation                               |   | (82,250         | ) |   | --               |   |   | --                 |   |  | --       |   |   | --       |  
|Shares issued for services
      and loan payable |   | 95,417          |   |   | --               |   |   | --                 |   |  | --       |   |   | --       |  
|Depreciation - fixed
      assets                 |   | 105,088         |   |   | 6,938            |   |   | 6,938              |   |  | 3,469    |   |   | 3,469    |  
|Amortization of computer
      software           |   | 75,000          |   |   | 75,000           |   |   |                    |   |  | 37,500   |   |   | --       |  
|Cumulative currency
      translation adjustments |   | (7,790          | ) |   | --               |   |   | (7,356             | ) |  | --       |   |   | (2,214   | )
|Changes in non-cash working capital items         |   |                 |   |   |                  |   |   |                    |   |  |          |   |   |          |  
|Deferred income tax                               |   | (52,500         | ) |   | --               |   |   | --                 |   |  | --       |   |   | --       |  
|Shares subscription
      receivable              |   | --              |   |   | --               |   |   | (7,500             | ) |  | --       |   |   | (7,500   | )
|Accounts payable                                  |   | 161,494         |   |   | 64,693           |   |   | 48,359             |   |  | 65,226   |   |   | 42,300   |  
|Management fees payable                           |   | 127,500         |   |   | 25,000           |   |   | 17,500             |   |  | 10,000   |   |   | 12,500   |  
|Cash used for operating activities                |   | (1,761,045      | ) |   | (39,312          | ) |   | (112,536           | ) |  | (23,269  | ) |   | (68,054  | )
|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                          |   | 2,140,361       |   |   | 43,361           |   |   | 112,500            |   |  | 28,361   |   |   | 112,500  |  
|Loan payable                                      |   | 25,000          |   |   |                  |   |   | 60,000             |   |  | (3,846   | ) |   | 20,000   |  
|Due to related parties                            |   | 45,067          |   |   |                  |   |   | 955                |   |  | --       |   |   |          |  
|Cash provided by financing activities             |   | 2,210,428       |   |   | 43,361           |   |   | 173,455            |   |  | 24,515   |   |   | 132,500  |  
|Cash increase during the period                   |   | 7,294           |   |   | 4,049            |   |   | 60,919             |   |  | 1,246    |   |   | 64,446   |  
|Cash, Beginning of period                         |   | --              |   |   | 3,245            |   |   | 9,806              |   |  | 6,048    |   |   | 6,279    |  
|Cash, End of period                               | $ | 7,294           |   | $ | 7,294            |   | $ | 70,725             |   |  | 7,294    |   | $ | 70,725   |  

See Accompanying Notes and Independent Accountants' Review
  Report

F-5

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Statement of Stockholders' Equity
      From Date of Inception on August 1, 1997 to December 31, 2004
      (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        |  
|                                            |            |  |   |        |  |   |            |  |   |           |  |   |           |   |  |             |   |   |               |  
|Net loss for eleven month                   |            |  |   |        |  |   |            |  |   |           |  |   |           |   |  |             |   |   |               |  
|period ended June
      30, 1998            |            |  |   |        |  |   |            |  |   |           |  | $ | (144,175  | ) |  |             |   | $ | (144,175      | )
|Issued for cash, @$0.01                     |            |  |   |        |  |   |            |  |   |           |  |   |           |   |  |             |   |   |               |  
|October 23, 1997                            | 1,500,000  |  | $ | 1,500  |  | $ | 13,500     |  | $ | 15,000    |  |   |           |   |  |             |   |   | 15,000        |  
|Issued for cash, @$0.001                    |            |  |   |        |  |   |            |  |   |           |  |   |           |   |  |             |   |   |               |  
|May 8, 1997                                 | 500,000    |  |   | 500    |  |   |            |  |   | 500       |  |   |           |   |  |             |   |   | 500           |  
|Issued for assignment of option on          |            |  |   |        |  |   |            |  |   |           |  |   |           |   |  |             |   |   |               |  
|mineral properties,
      @$0.0035          |            |  |   |        |  |   |            |  |   |           |  |   |           |   |  |             |   |   |               |  
|September 30, 1997                          | 8,500,000  |  |   | 8,500  |  |   | 21,500     |  |   | 30,000    |  |   |           |   |  |             |   |   | 30,000        |  
|                                            | 10,500,000 |  |   | 10,500 |  |   | 35,000     |  |   | 45,500    |  |   | (144,175  | ) |  |             |   |   | (98,675       | )
|Shares subscribed and fully                 |            |  |   |        |  |   |            |  |   |           |  |   |           |   |  |             |   |   |               |  
|paid and issued, @$0.50                     |            |  |   |        |  |   |            |  |   |           |  |   |           |   |  |             |   |   |               |  
|April 6, 1999                               | 85,000     |  |   | 85     |  |   | 42,415     |  |   | 42,500    |  |   |           |   |  |             |   |   | 42,500        |  
|Balance, June 30, 1998                      | 10,585,000 |  |   | 10,585 |  |   | 77,415     |  |   | 88,000    |  |   | (144,175  | ) |  |             |   |   | (56,175       | )
|Net loss for year ended June 30, 1999       |            |  |   |        |  |   |            |  |   |           |  |   | (478,497  | ) |  |             |   |   | (478,497      | )
|Compensation on stock options               |            |  |   |        |  |   | 120,000    |  |   | 120,000   |  |   |           |   |  |             |   |   | 120,000       |  
|Cumulative currency translation adjustments |            |  |   |        |  |   |            |  |   |           |  |   |           |   |  | (1,055      | ) |   | (1,055        | )
|Issued for cash, @$0.50                     |            |  |   |        |  |   |            |  |   |           |  |   |           |   |  |             |   |   |               |  
|April 6, 1999                               | 20,000     |  |   | 20     |  |   | 9,980      |  |   | 10,000    |  |   |           |   |  |             |   |   | 10,000        |  
|Issued for cash, @$0.50                     |            |  |   |        |  |   |            |  |   |           |  |   |           |   |  |             |   |   |               |  
|April 6, 1999                               | 100,000    |  |   | 100    |  |   | 49,900     |  |   | 50,000    |  |   |           |   |  |             |   |   | 50,000        |  
|Issued for private business, @$0.50         |            |  |   |        |  |   |            |  |   |           |  |   |           |   |  |             |   |   |               |  
|April 2, 1999                               | 400,000    |  |   | 400    |  |   | 199,600    |  |   | 200,000   |  |   |           |   |  |             |   |   | 200,000       |  
|Issued for cash, @$0.50                     |            |  |   |        |  |   |            |  |   |           |  |   |           |   |  |             |   |   |               |  
|April 15, 1999                              | 1,600,000  |  |   | 1,600  |  |   | 798,400    |  |   | 800,000   |  |   |           |   |  |             |   |   | 800,000       |  
|Balance, June 30, 1999                      | 12,705,000 |  |   | 12,705 |  |   | 1,255,295  |  |   | 1,268,000 |  |   | (622,672  | ) |  | (1,055      | ) |   | 644,273       |  
|(Carried forward to next page)              |            |  |   |        |  |   |            |  |   |           |  |   |           |   |  |             |   |   |               |  

See Accompanying Notes and Independent Accountants' Review
  Report

F-6

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Statement of Stockholders' Equity
      From Date of Inception on August 1, 1997 to December 31, 2004
      (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, 1999                      | 12,705,000 |  |  | 12,705 |  |  | 1,255,295  |  |  | 1,268,000 |  |  | (622,672   | ) |  | (1,055      | ) |  | 644,273       |  
|Cumulative currency translation adjustments |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  | 543         |   |  | 543           |  
|Shares subscribed and                       |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|fully paid, @$0.50                          |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|January 4, 2000                             | 450,000    |  |  | 450    |  |  | 224,550    |  |  | 225,000   |  |  |            |   |  |             |   |  | 225,000       |  
|Net loss for year ended                     |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|June 30, 2000                               |            |  |  |        |  |  |            |  |  |           |  |  | (503,489   | ) |  |             |   |  | (503,489      | )
|Issued for exercise of option               |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|@ $0.50, March
      13, 2000               | 100,000    |  |  | 100    |  |  | 49,900     |  |  | 50,000    |  |  |            |   |  |             |   |  | 50,000        |  
|Compensation on stock options               |            |  |  |        |  |  | 30,000     |  |  | 30,000    |  |  |            |   |  |             |   |  | 30,000        |  
|Exercise of warrants @ $0.50                |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|May 9, 2000                                 | 50,000     |  |  | 50     |  |  | 24,950     |  |  | 25,000    |  |  |            |   |  |             |   |  | 25,000        |  
|Exercise of warrants @ $0.60                |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|June 16, 2000                               | 66,667     |  |  | 67     |  |  | 39,933     |  |  | 40,000    |  |  |            |   |  |             |   |  | 40,000        |  
|Balance, June 30, 2000                      | 13,371,667 |  |  | 13,372 |  |  | 1,624,628  |  |  | 1,638,000 |  |  | (1,126,161 | ) |  | (512        | ) |  | 511,327       |  
|Exercise of warrants @$0.60                 |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|August 17, 2000                             | 83,333     |  |  | 83     |  |  | 49,917     |  |  | 50,000    |  |  |            |   |  |             |   |  | 50,000        |  
|Exercise of warrants @$0.60                 |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|February 9, 2001                            | 250,000    |  |  | 250    |  |  | 149,750    |  |  | 150,000   |  |  |            |   |  |             |   |  | 150,000       |  
|Issued for services at an ascribed          |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|price of $0.47
      per share on           |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|June 11, 2001                               | 200,000    |  |  | 200    |  |  | 93,800     |  |  | 94,000    |  |  |            |   |  |             |   |  | 94,000        |  
|Issue for cash, @$0.75                      |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|June 19, 2001                               | 50,000     |  |  | 50     |  |  | 37,450     |  |  | 37,500    |  |  |            |   |  |             |   |  | 37,500        |  
|Issued as commitment                        |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|shares at an ascribed                       |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|price of $0.54
      per share on           |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|June 25, 2001                               | 640,000    |  |  | 640    |  |  | 344,960    |  |  | 345,600   |  |  |            |   |  |             |   |  | 345,600       |  
|Net loss for year ended June 30, 2001       |            |  |  |        |  |  |            |  |  |           |  |  | (796,776   | ) |  |             |   |  | (796,776      | )
|Cumulative currency translation adjustments |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  | 592         |   |  | 592           |  
|Balance, June 30, 2001                      | 14,595,000 |  |  | 14,595 |  |  | 2,300,505  |  |  | 2,315,100 |  |  | (1,922,937 | ) |  | 80          |   |  | 392,243       |  
|(Carried forward to next page)              |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  

See Accompanying Notes and Independent Accountants' Review
  Report

F-7

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Statement of Stockholders' Equity
      From Date of Inception on August 1, 1997 to December 31, 2004
      (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 six month period ended     |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   |             |   |   |               |  
|December 31, 2004                           |            |   |   |        |   |   |            |   |   |           |   |   | (210,943   | ) |   |             |   |   | (210,943      | )
|Balance, December 31, 2004                  | 17,269,166 |   | $ | 17,269 |   | $ | 2,861,859  |   | $ | 2,879,128 |   | $ | (2,908,604 | ) | $ | (7,790      | ) | $ | (37,266       | )

See Accompanying Notes and Independent Accountants' Review
  Report

F-8

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements
      December 31, 2004
      (In U.S. Dollars)(Unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                            

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

F-9

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements
      December 31, 2004
      (In U.S. Dollars)(Unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                            

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

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

| | 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. Amortization of this cost of $75,000 has
        been charged to operations for the six month period ended December 31,
        2004. The balance of $250,000 is 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-10

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements
      December 31, 2004
      (In U.S. Dollars)(Unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                            

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

| |  | December 31, 2004                        |   | Canada   |   |   | U.S.  |  |   | Total    |  
| |  | ---------------------------------------- | - | -------- | - | - | ----- |  | - | -------- | -
| |  | Current assets                           | $ | 7,294    |   | $ | 0     |  | $ | 7,294    |  
| |  | Deferred tax assets                      |   | 52,500   |   |   | 0     |  |   | 52,500   |  
| |  | Net fixed assets                         |   | 12,001   |   |   | 0     |  |   | 12,001   |  
| |  | Computer software development            |   | 250,000  |   |   | 0     |  |   | 250,000  |  
| |  | Total Assets                             | $ | 321,795  |   | $ | 0     |  | $ | 321,795  |  
| |  | Six Month Period Ended December 31, 2004 |   |          |   |   |       |  |   |          |  
| |  | Revenue                                  | $ | 0        |   |   | 0     |  |   | 0        |  
| |  | Administration costs                     |   | 210,943  |   |   | 0     |  |   | 210,943  |  
| |  | Net (loss) for the period                | $ | (210,943 | ) | $ | 0     |  | $ | (210,943 | )
| |  |                                          |   |          |   |   |       |  |   |          |  
| |  | June 30, 2004                            |   | Canada   |   |   | U.S.  |  |   | Total    |  
| |  | Current assets                           | $ | 3,245    |   | $ | 0     |  | $ | 3,245    |  
| |  | Deferred tax assets                      |   | 52,500   |   |   | 0     |  |   | 52,500   |  
| |  | Net fixed assets                         |   | 18,939   |   |   | 0     |  |   | 18,939   |  
| |  | Computer software development            |   | 325,000  |   |   | 0     |  |   | 325,000  |  
| |  | Total Assets                             | $ | 399,684  |   | $ | 0     |  | $ | 399,684  |  
| |  | Year Ended June 30, 2004                 |   |          |   |   |       |  |   |          |  
| |  | Revenue                                  | $ | 0        |   |   | 1,264 |  |   | 1,264    |  
| |  | Administration costs                     |   | 317,695  |   |   | 0     |  |   | 317,695  |  
| |  | Net (loss) for the year                  | $ | (317,695 | ) | $ | 1,264 |  | $ | (316,431 | )
| |  |                                          |   |          |   |   |       |  |   |          |  
| |  | December 31, 2003                        |   | Canada   |   |   | U.S.  |  |   | Total    |  
| |  | Current assets                           | $ | 78,225   |   | $ | 0     |  | $ | 78,225   |  
| |  | Deferred tax assets                      |   | 52,500   |   |   | 0     |  |   | 52,500   |  
| |  | Net fixed assets                         |   | 25,877   |   |   | 0     |  |   | 25,877   |  
| |  | Computer software development            |   | 325,000  |   |   | 0     |  |   | 325,000  |  
| |  | Total Assets                             | $ | 481,602  |   | $ | 0     |  | $ | 481,602  |  
| |  | Six Month Period Ended December 31, 2004 |   |          |   |   |       |  |   |          |  
| |  | Revenue                                  | $ | 582      |   |   | 0     |  |   | 582      |  
| |  | Administration costs                     |   | 171,059  |   |   | 0     |  |   | 171,059  |  
| |  | Net (loss) for the period                | $ | (170,477 | ) | $ | 0     |  | $ | (170,477 | )

F-11

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements
      December 31, 2004
      (In U.S. Dollars)(Unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                            

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

F-12

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements
      December 31, 2004
      (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, September 30, 2004 | 17,269,166 |  | $ | 2,879,128

| | c) | Warrants outstanding as at December 31, 2004 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)                        
|        |                           
|        |                           
|        |                           
|        |                           
|        |                           
|        | b)                        

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

F-13

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements
      December 31, 2004
      (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 annum. The cost and
        accumulated depreciation are as follows:
|        |                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

| |  |                          |   | December 31, |   |   | June 30, |  
| |  | ------------------------ | - | ------------ | - | - | -------- | -
| |  |                          |   | 2004         |   |   | 2003     |  
| |  | Cost                     | $ | 117,089      |   | $ | 117,089  |  
| |  | Accumulated depreciation |   | (105,088     | ) |   | (91,212  | )
| |  | Net balance              | $ | 12,001       |   | $ | 25,877   |  

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

F-14

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements
      December 31, 2004
      (In U.S. Dollars)(Unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                            

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

| |  |                                                                 |   | December 31, |  
| |  | --------------------------------------------------------------- | - | ------------ | -
| |  |                                                                 |   | 2004         |  
| |  | Balance, June 30, 2004                                          | $ | 325,000      |  
| |  | Amortization during the six month period ended October 31, 2004 |   | (75,000      | )
| |  | Balance, December 31, 2004                                      | $ | 250,000      |  

|Note 7. | STOCK BASED COMPENSATION/ PENSION PLAN
|------- | --------------------------------------
|        |                                       
|        | a)                                    
|        |                                       
|        | b)                                    

F-15

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements
      December 31, 2004
      (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:
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |          | December 31,
| |  | -------- | ------------
| |  |          | 2004        
| |  | Basic    | 17,160,416  
| |  | Warrants | 500,000     
| |  | Options  | 1,500,000   
| |  | Diluted  | 19,160,416  

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

| |                              |   | December 31, |  
| | ---------------------------- | - | ------------ | -
| |                              |   | 2004         |  
| | Net loss per share - Basic   | $ | (0.01        | )
| | Net loss per share - Diluted | $ | (0.01        | )

|Note 9.  | INCOME TAXES
      The Company has losses carried forward to future years
        of $2,908,604. The potential tax benefit has not been recorded, as
        an equivalent reserve has been provided due to uncertainty of application
        of the losses.                                                                                                                                                                                                                                                                                                                                                            
|-------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Note 10. | FINANCIAL INSTRUMENTS
      The Company’s financial instruments consist of
        cash, accounts payable, management fees payable, loan payable, and due
        to 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.

F-16

---

|ONLINE INNOVATION, INC. 
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements
      December 31, 2004
      (In U.S. Dollars)(Unaudited)
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                            

|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 December 31, 2004
        is $62,000, and this amount is included in accounts payable at December
        31, 2004.
|-------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-17

---

Item 2 – Plan of Operation

General

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

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

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

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

Forward Looking Statements

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

4

---

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 December 31, 2004, the website had 76,839 registered
  members. 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 its flagship property.
  The Company’s ability to undertake marketing activities in the upcoming
  12 months will be dependent on its ability to secure financing. Readers should
  refer to the section entitled “Cash Requirements” for a discussion
  of the Company’s attempts to raise capital in the past quarter and its
  plans to raise capital in the upcoming year.

Online Advertising

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

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

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

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

Print Media, T.V., Radio and Billboards

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

5

---

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 3 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 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

---

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 February 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.

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.

7

---

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.

On September 17th, 2004, the Company completed a sale of 100,000
  shares of its common stock at a price of $0.15 per share to Ms. Lenora Gates,
  for aggregate proceeds of $15,000. The shares were sold pursuant to the
  exercise of warrants issued to Ms. Gates in connection with a unit financing
  on November 1, 2003. The shares were issued without registration under the Securities
  Act in reliance on the safe harbor provisions of Regulation S promulgated under
  the Securities Act. None of the purchasers of the securities was a “U.S.
  person” as that term is defined in Rule 902(o) of Regulation S and the
  sale of the securities constituted an “offshore transaction” as
  that term is defined in Rule 902(i) of Regulation S.

On October 14, 2004, the Company completed a sale of 15,000
  units at a price of $0.39 per unit for aggregate cash proceeds of $5,846.00.
  The units were issued to Ms. Jillian Henderson and each unit consisted of one
  share of the Company’s common stock and one share purchase warrant. Each
  warrant entitles the purchaser to purchase one additional share of the Company’s
  common stock at a price of $0.40 at any time during the first year after
  the purchase of the units or at a price of $0.50 at any time during the
  second year after the purchase of the units. The warrants are exercisable for
  a period of two years after the purchase of the units. The units were issued
  without registration under the Securities Act in reliance on the safe harbor
  provisions of Regulation S promulgated under the Securities Act. None of the
  purchasers of the securities was a “U.S. person” as that term is
  defined in Rule 902(o) of Regulation S and the sale of the securities constituted
  an “offshore transaction” as that term is defined in Rule 902(i)
  of Regulation S.

On October 14, 2004, the Company completed a sale of 100,000
  shares of its common stock at a price of $0.15 per share to Mr. Noble Larsen,
  for aggregate proceeds of $15,000. The shares were sold pursuant to the
  exercise of warrants issued to Mr. Larsen in connection with a unit financing
  on November 1, 2003. The shares were issued without registration under the Securities
  Act in reliance on the safe harbor provisions of Regulation S promulgated under
  the Securities Act. None of the purchasers of the securities was a “U.S.
  person” as that term is defined in Rule 902(o) of Regulation S and the
  sale of the securities constituted an “offshore transaction” as
  that term is defined in Rule 902(i) of Regulation S.

On October 22, 2004, the Company completed a sale of 50,000
  shares of its common stock at a price of $0.15 per share to Admiralty Fund
  Ltd., for aggregate proceeds of $15,000. The shares were sold pursuant to
  the exercise of warrants issued in connection with a unit financing on December
  31, 2003. The shares were issued without registration under the Securities Act
  in reliance on the safe harbor provisions of Regulation S promulgated under
  the Securities Act. None of the purchasers of the securities was a “U.S.
  person” as that term is defined in Rule 902(o) of Regulation S and the
  sale of the securities constituted an “offshore transaction” as
  that term is defined in Rule 902(i) of Regulation S.

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.

8

---

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                                                                               
|    |                                                                                  
|    | 31.1                                                                             
|    |                                                                                  
|    | 31.2                                                                             
|    |                                                                                  
|    | 32.1                                                                             
|    |                                                                                  
|    | 32.2                                                                             
|    |                                                                                  
|(b) | No reports on form 8-K were filed during the period covered
      by this report.

9

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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: | February 11, 2005 |     | ONLINE INNOVATION, INC.          
|----- | ----------------- | --- | ---------------------------------
|      |                   |     | (Registrant)                     
|      |                   |     |                                  
|      |                   |     |                                  
|      |                   | By: | /s/ Chad D. Lee                  
|      |                   |     | Chad D. Lee, President, Director,
|      |                   |     | Principal Executive Officer      
|      |                   |     |                                  
|      |                   |     |                                  
|      |                   | By: | /s/ Marlene C. Schluter          
|      |                   |     | Marlene C. Schluter, Director,   
|      |                   |     | Principal Financial Officer      

In accordance with 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: | February 11th, 2005               | 
|      |                                   | 
|      |                                   | 
|      |                                   | 
|      |                                   | 
|By:   | /s/ Marlene C. Schluter           | 
|      | Marlene C. Schluter, Director,    | 
|      | Principal Financial Officer       | 
|      |                                   | 
|Date: | February 11, 2005                 | 

10

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