FORM 10-KSB

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

         [x]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001, OR

         [ ]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                  SECURITIES EXCHANGE ACT OF 1934

                  For the transition period from _____ to _____.

Commission file number: (333-69270)

                             ONLINE PROCESSING, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)



           Nevada                                               22-3774845
--------------------------------                               -------------
(State of Incorporation)                                        (Tax ID No.)

                 750 East Interstate 30, Suite 100, Texas        75087
--------------------------------------------------------------------------------
                  (Address of principal executive offices)      (ZIP code)

Registrant's telephone number, including area code:          972-771-2305
                                                             ------------
Securities registered pursuant to Section 12(b) of the Act:  NONE
Securities registered pursuant to Section 12(g) of the Act:  Common Stock

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the past
12 months and (2) has been  subject to such filing  requirement  for the past 90
days.
                               X    YES                        NO
                           ---------                 ---------

Aggregate  market  value  of the  voting  stock  held by  non-affiliates  of the
registrant as of December 31, 2001:
                                                       $ -0-

Shares of common stock outstanding at December 31, 2001: 3,200,000


                                        1

<PAGE>



PART I.

ITEM 1            DESCRIPTION OF BUSINESS
-----------------------------------------

         We were incorporated in Nevada on December 4, 2000. The founder, Jeanne
Zachary, transferred to Terri Wonderly, our sole director, officer and employee,
the  3,000,000  shares of  common  stock  which we  issued  to her for  $15,000,
composed of $500 cash and $14,500 of her services.  The stock was transferred to
Terri  Wonderly  becoming  the sole  officer and  director  and assuming all the
responsibilities  and  indemnifying  Jeanne  Zachary for all  liabilities of the
Company.

         We are an internet-based  mortgage loan processing company for mortgage
brokers  and  companies.  The way our service  works is that we contract  with a
mortgage broker to process loans for them. When set up, the mortgage broker,  or
the applicant  themselves,  enters the  applicants  information  directly to his
mortgage loan application software, which can be purchased ready to use. We will
then access his website,  download the information to our software, make sure it
is all in order and submit it to a lender for approval.  Once it is approved, we
receive a fee for the  processing of $350 per loan. The software we use also can
be  purchased  ready to use. We do not have a website at this time but can still
access their website to download the information. Part of the proceeds from this
offering  will be to develop a website  in order to  promote to other  potential
customers.

         Through  November,  we had  processed  63 loans  with  another  31 loan
applications  in process.  Our ordinary  operations  have begun and we expect to
attain normal operations - meaning that our income will cover operating expenses
- within a few  months  by  servicing  the two  customers  we have.  In order to
achieve normal  operations,  we need to process about 35 loans per month, or 420
each year.

         Mortgage  brokers primary focus is generating new business by marketing
their service. In order to provide more time to do this, they can relinquish the
time consuming job of loan processing to the outsourcing  service we offer. Many
mortgage  brokers  find that  whether  they are in a high  volume or low  volume
mortgage  environment,  they can take advantage of the opportunities  that using
our mortgage processing service provides.

         It is the opinion of management that mortgage loan processing  requires
intensive monitoring and management, diverting energy and effort away from every
mortgage  broker's primary business focus - the generating of new business.  The
outsourcing of the loan processing  allows  mortgage  brokers the opportunity to
spend their time soliciting new business rather than spending time in keeping up
with new  mortgage  products,  hiring and training  and keeping  personnel,  and
keeping the overhead  associated  with that staff.  These  benefits  become more
significant in a volatile market since a mortgage broker can convert fixed costs
(employees and office expense) to a variable cost,  that is, a fixed  processing
fee per loan.

         We have chosen to focus on  mortgage  brokers as  customers  because we
believe that small to medium size brokers loan volume typically  fluctuates from
month to month and therefore they carry  expenses for  processing  costs whether
they process one loan or fifty in a month.  Outsourcing the processing to us can
eliminate this cost burden.


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<PAGE>



         At this time, we have developed two relationships with mortgage brokers
who submit a number of loans to us each month.  We are hopeful that over time we
can process all their loans and add new  customers  since our intent is to grow.
In addition, the more customers we have, the less we are dependent on any one of
them for our business revenue.

Online Processing, Inc. offers the following in its processing service.
-----------------------------------------------------------------------
a)       We offer flexibility in how loans are processed.
b)       We are able to maintain  the mortgage  brokers  position as the primary
         customer contact during the processing phase.
c)       We offer fixed per loan pricing.
d)       There is a reimbursement contingency if the loan cancels in process.
e)       We prepare loan package's prepared to the broker's specifications.
f)       We have a system in place for the broker to maintain control over their
         loan files.
g)       Loans can be submitted to any lender of the broker's choosing.
h)       Other services are available within the our company that the broker can
         utilize if needed ; such as a document service.
i)       The broker is able to contact us whenever necessary.
j)       The broker can obtain  information  regarding the loan file at any time
         of day, or day of the week.
k)       The  Broker is kept  informed  every  step of the way  during  the loan
         process.
In addition, it is our opinion that:
------------------------------------
l)       We provide processing for a wide array of loan products.
m)       We are knowledgeable.
n)       The loans are processed fast and accurately

A Step By Step Guide to How We Process Your Loan
------------------------------------------------
         Each  loan  agent  will  be  provided  the  ability  to  download  loan
information  using  the ePASS  system  which  interacts  with our  Genesis  2000
mortgage loan  processing  software.  This will be given to them free of charge.
The loan agent will start by  entering  their  borrower  information  into ePASS
systems  which  has  special  screen  to make  data  entry as easy and  quick as
possible.

         Additional  documentation  that has been received from the borrower can
either be scanned into the loan file or it can be faxed. All such images will be
stored as part of our service.  After the  information  on the borrower has been
entered, it is then sent directly to our loan processing software, Genesis 2000.
The file will be  encrypted  so it can be  securely  sent,  and  received on our
master system.  When the loan file is received,  it will automatically be logged
in and a loan number  assigned.  A paper and  electronic  file will be opened to
hold all incoming documentation.

         The  mortgage  broker  will have the option to  designate  which  other
parties  are  granted  access  to view the  information  over the  internet.  In
general, a letter will go out to the borrower to let them know we have a file in
process and how they can access their loan information  over the internet.  They
are provided  with step by step  instructions  and their own  password.  Another
similar letter will go out to any Realtors involved in the transaction.

         We will prepare the required disclosures and send them to the borrower.
We will also order a credit report,  preliminary title report and appraisal. All
verifications  for the loan file will be prepared and sent out. As documentation
is received on the borrower file, it will be scanned and available for view over
the internet.


                                        3

<PAGE>


         We will give  mortgage  brokers  information  as to how they can access
their files with us over the internet. This will enable them to: VIEW THE STATUS
REPORT.  This option is an  excellent  executive  summary of the loan file as it
provides all of the  financial  detail  coupled with missing  information,  loan
status, document status and conditions.
DOWNLOAD AN ENTIRE BORROWER FILE. One can view  everything  about the loan file,
play  "what  if" with the  ratios  or other  calculations,  and even  print  out
documents for those "last minute emergencies" that can sometimes arise.  Another
big benefit is that mortgage brokers can change  information and upload the file
back to us. We'll verify the changes before actually  posting them to our master
files. Only verified and reasonable changes are allowed.
VIEW  DOCUMENTS.  This option allows the mortgage broker to view any document of
the loan file including all returned  verifications,  signed  disclosure  forms,
appraisals,  credit reports,  etc. The entire loan file is available for viewing
which keeps the  mortgage  broker  informed and in control - they can view every
step we make at any time.

         Our  objective is to give our clients  absolute  knowledge  and control
over the entire loan  processing  stage.  Our  research  showed that the primary
roadblock to out sourced loan processing  services was that the mortgage company
would no longer be able to view the physical loan file and they are not kept "in
the know" for every step. We resolve the problem by creating the ability for the
mortgage  broker to view all the documents  online and we expect that technology
will cause the loan  processing  process to become more and more  automated.  In
turn, the  streamlining  will allow loans to be processed in less time and allow
companies  such as ours who  concentrate  on that one part of the whole mortgage
loan process to be more  efficient  and cause change  within the industry in the
same way closing  document  services have done for  out-sourcing  the closing of
loans.


THE UNITED STATES MORTGAGE MARKET:

         According to the Mortgage  Bankers  Association,  outstanding  consumer
mortgage debt exceeded $4.7 trillion at the end of 1999 and $4.3 trillion at the
end of 1998 and loan origination  volume in the U.S. was almost $1.3 trillion in
1999 after  reaching a record high of $1.5  trillion  in 1998,  compared to $834
billion in 1997.

         With  the  advent  of  on-line  and   e-commerce   technologies,   loan
originations can be made  electronically,  resulting in cost and time savings to
consumers  and the  mortgage  brokers who assist those  consumers.  Although the
on-line  mortgage  industry  is still  relatively  new,  it is  expected to grow
rapidly.  According  to  Forrester  Research  the  market for  on-line  mortgage
originations  is expected to grow from an estimated  $18 billion in 1999 to over
$91 billion in 2003,  representing an increase in on-line mortgage  originations
from 1.4% of the existing market in 1999 to 10% of the projected market in 2003.




                                        4

<PAGE>

MARKETING AND GROWTH STRATEGY:

         Our  marketing  strategy is to promote to mortgage  brokers who all can
benefit from a fixed charge loan processing  service. To date, we have relied on
personal contact of our president who has been able to solicit business.

         We also  aspire  to  engage  in a number  of  marketing  activities  in
traditional media such as advertising in print media, on radio and other events.
We also  aspires to  advertise  in a number of targeted  publications,  and also
propose to purchase  advertising  and  sponsorships  on  selected  publications,
events and websites with high traffic and interest of mortgage brokers.

         The ability for us to conduct  business over the internet enables us to
offer our  services  nationwide  and does not require us to establish a physical
presence in new markets. In addition,  we are not required to be licensed by any
state in order to process loans for others. While we currently process loans for
mortgage  brokers in Texas, we expect that the expanded  geographic scope of our
internet  service  capabilities  will cause the proportion of processing we make
outside of Texas to increase.

         It is our objective to be a leading  provider of loan  processing  over
the internet. Key elements of our marketing and growth strategy include:

Plans:
         Direct e-mail. We will e-mail to prompt potential  customers to call us
         about our service;  after we raise funds in this offering and develop a
         website,  the e-mails  will  prompt  potential  customers  to visit our
         website;
         Direct mail to mortgage brokers;
         After our website is developed,  agreements with search engines so that
         our site will be near the top/front of searches for our product;
a)       Build and promote the online service;
         Selected  print media such as  mortgage  publications,  mortgage  trade
         shows,  real estate section of local  newspapers and regional issues of
         the Wall Street Journal;

As mentioned,  we aspire to expand our over the internet business  capability to
include:

         Partnering with industry leaders to quickly acquire customers;
         Pursue  multiple and  recurring  revenue  streams.  In addition to loan
         processing, we intend to expand our product offering to include related
         financial services and products;
         Relationships  and  sponsorships  with events with high mortgage broker
         traffic, for example, mortgage broker trade shows;
         Strategic purchases of online advertising;
         When our  website  is  built,  sponsoring  key  words  on major  search
         engines.  For example,  when a search is made for key words like "loan"
         or "mortgage", an Online banner advertisement may appear;

COMPETITION:

         There are a few  competitors  in the on-line  mortgage loan  processing
market.  However,  no one  company has  emerged as the  'leader'  and we are not
currently  competing to be one of the leaders in the field.  Our success depends



                                        5

<PAGE>


upon capturing and  maintaining a share of mortgage  brokers who will out source
their loan  processing in which we have an advantage by charging a flat $350 per
loan whereas in a company that  performs all areas of the mortgage loan process,
the cost  approximates  $500 per  loan.  In order  to  capture  the  outsourcing
business,  we must  continue  to build on our low cost  advantage,  continue  to
increase  awareness  among  potential  customers  of the  efficiency,  speed and
privacy  of  our  system,  establish  additional  strategic  relationships,  and
continually upgrade our technology.  Many of our current  competitors,  however,
have longer  operating  histories,  greater name  recognition,  larger  customer
bases, and significantly greater financial,  technical,  and marketing resources
than we do. In addition,  participants in other areas of the financial  services
industry may enter the consumer loan marketplace.

OPERATIONS AND TECHNOLOGY:

         Our  operations  are very simple  because  our system is  significantly
automated.  We developed  our system so that our  customers  information  can be
transmitted and they can access their information twenty four hours a day. It is
not only simple to use by our  customers,  but we also designed it so that it is
easy for us to administrate on our end.

         Prior to the advent of automated processing and underwriting,  it would
take two to three weeks to get a loan file ready for  underwriting,  which would
include:
         the loan officer (or borrower) hand writing the application
         the processor keying the information into the computer
         the processor sending out verification  forms to the borrowers' bank(s)
         and employer(s)
         ordering and receiving an appraisal, title commitment, and survey
         Correcting all of the  information  on the loan  application to reflect
         the information actually verified, and
         producing a "final, types application".

         After this process was completed,  the underwriter  would then have the
loan for a few days,  and then would  respond  with an  approval,  usually  with
conditions to be met by the processor. The processor would take another three to
five days to meet the conditions and return the file to the  underwriter.  After
another few days,  the  underwriter  would respond with a clear approval and the
loan would then proceed to closing.

Utilizing our process:
         the  loan  officer  (or  borrower)  completes  the  application  on the
         computer
         the  information  is  electronically  picked up or  transmitted  to the
         processor (no need to rekey information in)
         the  processor,  after a check to make sure  everything  is filled  out
         correctly,  transmits the file  electronically to a computer which acts
         as an  underwriter  and makes the credit  decision  for the loan (FNMA,
         FHLMC, as well as numerous large investors maintain these systems)
         the computer  responds within a time frame of minutes with the required
         documentation  for the loan.  Verbal  verification  of income  and last
         statement  verification  of bank  information  eliminates  the need for
         mailed verifications and speeds process
         the processor  gets the  information  and orders the  appraisal,  title
         commitment  and  survey.  If the  file  is  actually  seen  by a  human
         underwriter,  it is only to verify that the  processor has received all
         of the documentation required by the computer. Many files will never be
         seen by a human underwriter.


                                       6

<PAGE>

         This process has been  instrumental  in reducing the average  processor
time  spends  on each  file form  approximately  nine  hours to three and a half
hours, and the whole process has been reduced from five weeks to one.

         We are dependent on mortgage broker  relationships  to send us business
since  we  provide  the  service  to  them.  However,  the  loss of any of these
relationships coupled with the failure to add new mortgage broker relationships,
would have a material  adverse  impact on our business and could cause the value
of your investment to decline or become worthless.

         We have built a complete processing system to handle all phases of loan
processing  for  our   customers.   The  market  in  which  the  we  compete  is
characterized by rapidly changing markets, evolving industry standards, frequent
new  service and  product  announcements,  introductions  and  enhancements  and
changing  customer demands.  Accordingly,  our future success will depend on our
ability to adapt to rapidly  changing  technologies,  to adapt its  services  to
evolving industry standards and to continually improve the performance, features
and  reliability of its service in response to  competitive  service and product
offerings and evolving demands of the marketplace. The failure of the Company to
adapt to such  changes  would harm the  company's  business.  In  addition,  the
widespread   adoption  of  new  internet,   networking   or   telecommunications
technologies   or  other   technological   changes  could  require   substantial
expenditures  by the company to modify or adapt its services or  infrastructure.
If we only raise a small  amount in this  offering  and  technology  changes too
rapidly,  we may not  have the  funds to  devote  to these  changes  and if this
happens, your investment may become worthless.

ITEM 2            DESCRIPTION OF PROPERTY
-----------------------------------------

         Our  corporate  facilities  are shared with an unrelated  company which
includes the use of  telephones,  equipment  and the internet for  $1,500.00 per
month.  This arrangement  started in April 2001 and is for a period of one year.
We issued  200,000  shares  valued at $0.09 per share in  January  2001 for this
arrangement. The $18,000 value is being charged to expense over twelve months.


ITEM 3            LEGAL PROCEEDINGS
-----------------------------------

The Company is not involved in any legal proceedings.

ITEM 4            SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------------------------

The Company did not submit any matters for a vote to the security holders during
2001.



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PART II.

ITEM 5            MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
-------------------------------------------------------------------
                  STOCKHOLDER MATTERS
                  -------------------

         a.       Market Information.

There is no  established  public  trading  market for the Company's  stock.  The
Company has filed a registration statement with the U.S. Securities and Exchange
Commission  under Form SB-1 of the Securities Act of 1933. The offering for this
registration  is  effective  and has not been closed.  The offering  will end on
September 30, 2002.

         b.       Holders.

         There are two shareholders.

         c.       Dividends

         Registrant  has not paid a dividend to the holders of its common  stock
and does not anticipate paying dividends in the near future.

         d.       Warrants

         Registrant has no warrants outstanding.


ITEM 6            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
---------------------------------------------------------------------------

SUMMARY OF 2001

Our  accomplishments  in 2001 are detailed in Section 1 above. In summary,  they
are as follows:

In 2000, our company has two established clients upon which to build upon.

The Company filed a registration statement under Form SB-1 of the Securities Act
of  1933,  and the  offering  will  close on  September  30,  2002.  Our plan of
operations  is based upon the amount of  capital we raise in this  offering.  We
will be  engaged  in  marketing  and  sales of  establishing  new  contacts  and
garnering new clients to provide the online processing service. We are currently
seeking to raise between  $50,000 and $500,000 to expand our  business.  We will
market our business directly to mortgage brokers.

Online  Processing,  Inc.  will  provide  an  annual  report  including  audited
statements without charge on request made by any shareholder to the Secretary of
the Company,  Online  Processing,  Inc. 750 East Interstate 30, Suite 100, Texas
75087.

Online Processing, Inc. files quarterly reports with the SEC.

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Public may read and copy any materials filed by Online Processing, Inc. with the
SEC at the SEC's Public  Reference Room at 450 Fifth Street,  N.W.,  Washington,
D.C.  20549.  Public  may  obtain  information  on the  operation  of the Public
Reference  Room by calling  the SEC at 1-800-  SEC-0330.  The SEC  maintains  an
Internet site that contains reports, proxy and information statements, and other
information   regarding  issuers  that  file  electronically  with  the  SEC  at
www.sec.gov.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This discussion may contain certain "forward-looking" statements as such term is
defined in the Private Securities  Litigation Reform Act of 1995 and information
relating to the Company  and its  subsidiaries  that are based on the beliefs of
the  Company's  management  as  well  as  assumptions  made  by and  information
currently available to the Company's management.  When used in this release, the
words "anticipate,"  "believe,"  "estimate,"  "expect" and "intend" and words or
phrases of similar import,  as they relate to the Company or its subsidiaries or
Company management,  are intended to identify forward-looking  statements.  Such
statements reflect the current risks,  uncertainties and assumptions  related to
certain factors including,  without limitations,  changes or anticipated changes
in regulatory  environments,  competitive factors,  general economic conditions,
customer relations,  relationships with vendors,  the interest rate environment,
governmental  regulation and  supervision,  seasonally,  distribution  networks,
product introductions and acceptance,  technological change, changes in industry
practices,  onetime events and other factors described herein and in other press
releases to the public or filings  made by the company with the  Securities  and
Exchange  Commission,   the  ability  to  secure  partnership  or  joint-venture
relationships  with other entities,  the ability to raise additional  capital to
finance   expansion,   and  the  risks  inherent  in  new  product  and  service
introductions  and the entry into new  geographic  markets.  Based upon changing
conditions,  should any one or more of these risks or uncertainties materialize,
or should any underlying  assumptions  prove incorrect,  actual results may vary
materially from those  described  herein as  anticipated,  believed,  estimated,
expected or  intended.  The  Company  does not intend to update  these  forward-
looking statements. For further information, which could cause actual results to
differ from the Company's  expectations,  as well as other factors,  which could
affect the Company's financial statements,  please refer to the Company's report
filed with the Securities and Exchange Commission.

Online Processing, Inc.
(972) 771-2305


ITEM 7            FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------------------------

         Report of Independent Certified Public Accountant is attached hereto.

ITEM 8            CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
--------------------------------------------------------------------------
                  DISCLOSURES
                  -----------

         J.S Psborn,  P.C. is the auditor for the Company and there have been no
disagreements with our auditor on accounting or financial disclosure issues.



                                        9

<PAGE>



PART III.

ITEM 9            DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
----------------------------------------------------------------

The following persons serve as directors and officers of Registrant:

Terri Wonderly    President,  Secretary,  Chief  Financial  Officer and Director
                  Served  since  January  2002 and  expires  at the next  annual
                  meeting

TERRI WONDERLY. Ms. Wonderly has more than nineteen years experience in the real
estate industry working for mortgage companies,  banks and title companies.  She
has performed  various duties,  including  taking loan  applications all the way
thru processing,  underwriting - including performing the physical and automated
underwriting - preparing loan packages,  physically  closing loans,  funding the
loans and shipping the files to the funding sources.

         Ms.  Wonderly  was an  Underwriter  and  Senior  Loan  Specialist  with
Ameri-National  Mortgage,  Inc. form 1991 to 1996, an Underwriter  and Closer at
Columbian Bank and Trust in 1996, a Processor and Personnel Trainer at Universal
Mortgage in 1997, a Loan  Specialist  at the Bank of Jacomo in 1998, a Processor
and  Personnel  Trainer at  Regional  Investments  in 1999,  performed  Database
Maintenance  for  Chappell  &  Associates,  Inc.  in  2000,  a  Loan  Processing
Specialist for Discount Mortgage Source, Inc. from 2001 to the present.

         Ms.  Wonderly  is a member  of the  National  Association  of  Mortgage
Brokers.


ITEM 10           EXECUTIVE COMPENSATION
----------------------------------------

The  Company  paid  $3,000 per month to its sole  officer  and  director  in the
calendar year 2001. The Company has no retirement or stock option or bonus plan.


ITEM 11           SECURITY OWNERSHIP OF MANAGEMENT AND BENEFICIAL OWNERS
------------------------------------------------------------------------

         Set forth below is the direct ownership of Registrant's common Stock by
management and any owner of 5% or more of Stock of Registrant.

Title of          Name and address             Amount of shares       % of class
Securities        of owner                                                 owned

--------------------------------------------------------------------------------
Common            Terri Wonderly                      3,000,000           93.75%
                  606 Kampmann Blvd.
                  San Antonio, Texas 78201
--------------------------------------------------------------------------------
Common            All Officers, Directors &           3,000,000           93.75%
                  Beneficial Holders as a Group


ITEM 12           CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------------------------

         The Company had no transactions with related persons in 2001.


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<PAGE>


PART IV.

ITEM 13           EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
------------------------------------------------------------------------

(a)      The following documents are filed as a part of this report:
         Included in Part II, Item 8 of this report:

         Report of Independent Public Accountant

         Balance Sheet as of December 31, 2001 and 2000

         Statement  of  Operations - Twelve  Months Ended  December 31, 2001 and
         Period December 4, 2000 (date of inception) to December 31, 2000

         Statement of Stockholders'  Equity - Period from December 4, 2000 (date
         of inception) to December 31, 2001

         Statement  of Cash Flows - Twelve  Months  Ended  December 31, 2001 and
         Period December 4, 2000 (date of inception) to December 31, 2000

         Notes to the Financial Statements

(b)      The Company filed no reports on Form 8-K in 2001.

(c)      The Company is not filing any exhibits.












                                       11

<PAGE>


SIGNATURES.

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned there unto duly authorized.

                                   Online Processing, Inc.
                                   Registrant

                                   By:  /s/  Terri Wonderly
                                        -------------------
                                             Terri Wonderly
                                   Its:  President, Secretary, Chief Financial
                                         Officer and Director











                                       12

<PAGE>



                               J. S. OSBORN, P.C.
                           CERTIFIED PUBLIC ACCOUNTANT
                         17430 CAMPBELL ROAD, SUITE 114
                               DALLAS, TEXAS 75252
                          972-735-0033 FAX 972-735-0035
                               JOSBORN@JSOCPA.COM
                ================================================




                     REPORT OF INDEPENDENT PUBLIC ACCOUNTANT
                     ---------------------------------------


To the Board of Directors and Stockholders
of Online Processing, Inc.
Rockwall, Texas

I have audited the  accompanying  balance  sheet of Online  Processing,  Inc. (A
Nevada  corporation)  as of  December  31, 2001 and the  related  statements  of
operations, stockholders' equity and accumulated deficit, and cash flows for the
year  ended  December  31,  2001 and for the  period  December  4, 2000 (date of
inception)  to  December  31,  2000.   These   financial   statements   are  the
responsibility of the Company's  management.  My responsibility is to express an
opinion on these consolidated financial statements based on my audit.

I conducted my audit in accordance with auditing standards generally accepted in
the United States.  Those standards require that I plan and perform the audit to
obtain reasonable  assurance about whether the financial  statements are free of
material  misstatement.  An audit includes examining,  on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  I  believe  that my audit  provides  a  reasonable  basis  for my
opinion.

In my opinion,  based on my audit,  the financial  statements  referred to above
present  fairly,  in all material  respects,  the  financial  position of Online
Processing, Inc. as of December 31,2001, and the results of their operations and
their  cash  flows  for the year  ended  December  31,  2001 and for the  period
December 4, 2000 (date of  inception)  to December 31, 2000 in  conformity  with
accounting principles generally accepted in the United States.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a going  concern.  As  discussed  in  Note-H  to the
financial  statements,  the  Company  incurred  a loss for the  period,  has not
generated significant revenues,  and has no capital resources.  These conditions
raise  substantial  doubt  about its  ability to  continue  as a going  concern.
Management's  plans  regarding  those matters also are described in Note-H.  The
financial  statements do not include any adjustments  that might result from the
outcome of this uncertainty.



/s/  J.S. Osborn, P.C.
     -----------------
     J.S. Osborn, P.C.

Dallas, Texas
April 15, 2002



                                       F-1

<PAGE>

                             ONLINE PROCESSING, INC.

                                  Balance Sheet
                                DECEMBER 31, 2001


                                     ASSETS
                                     ------

CURRENT ASSETS:
  Cash                                                                 $ 11,423
  Accounts receivable                                                     4,900
  Interest receivable                                                     6,825
  Prepaid lease                                                           4,500
                                                                        --------
    Total Current Assets                                                 27,648

OTHER ASSETS:
 Note receivable                                                         40,000
                                                                       --------
    Total Other Assets                                                   40,000

                                                                        --------
TOTAL ASSETS                                                           $ 67,648
                                                                       ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY


CURRENT LIABILITIES:
  Accounts payable                                                     $ 12,903
  Loan payable - related party                                            3,715
  Interest payable                                                        6,825
                                                                       --------
    Total Current Liabilities                                            23,443

OTHER LIABILITIES:
  Note payable                                                           40,000
                                                                       --------
    Total Other Liabilities                                              40,000

STOCKHOLDERS' EQUITY:
  Common stock, $0.001 par value; 25,000,000 shares authorized;
   3,200,000 shares issued and outstanding                                3,200
  Additional paid-in capital                                             26,450
  Accumulated deficit                                                   (25,445)
                                                                       --------
    Total Stockholders' Equity                                            4,205
                                                                       --------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $ 67,648
                                                                       ========




           See accountant's report and notes to financial statements.

                                       F-2
<PAGE>

<TABLE>

                             ONLINE PROCESSING, INC.

                             STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2001



                                                                                                   Accumulated
                                                                                                      Since
                                                                                                    Inception
                                                                                                December 4, 2000
                                                                     ---------------            --------------------
<S>                                                                  <C>                        <C>

REVENUE:
  Fee income                                                              $ 26,800                         $ 5,800
                                                                     ---------------            --------------------

OPERATING EXPENSE:
  Contract labor                                                                 -                          14,500
  Consulting                                                                23,533                           3,926
  Office and equipment rent                                                 13,500                           6,000
  Other                                                                        347                             365
                                                                    ---------------            --------------------
   Total Operating Expense                                                  37,380                          24,791

OPERATING (LOSS):                                                          (10,580)                        (18,991)


OTHER INCOME (EXPENSE):
  Interest income                                                            6,825                               -
  Interest expense                                                          (6,825)                              -
                                                                    ---------------            --------------------
   Total other income (expense)                                                  -                               -


                                                                    ---------------            --------------------
NET LOSS:                                                                $ (10,580)                      $ (18,991)
                                                                    ===============            ====================


Basic/diluted weighted average number of shares outstanding              3,189,041                       3,000,000
                                                                    ===============            ====================



Basic/diluted net loss per share                                             $0.00                           $0.00
                                                                    ===============            ====================

</TABLE>









           See accountant's report and notes to financial statements.

                                       F-3

<PAGE>

<TABLE>

<CAPTION>

                            ONLINE PROCESSING, INC.

            STATEMENT OF STOCKHOLDERS' EQUITY AND ACCUMULATED DEFICIT
          Period December 4, 2000 (Date of Inception), to July 31, 2001



                                             Common Stock                Paid In        Accumulated
                                        Shares         Amount            Capital          Deficit
                                     -----------------------------    --------------   --------------
<S>                                     <C>            <C>            <C>              <C>

 Balance,
    December 4, 2000
    (date of inception)                   -0-            -0-               -0-              -0-

Shares issued on
    December 4, 2000
      for Cash                             100,000          $ 100             $ 400
      for Services                       2,900,000          2,900            11,600

Net Loss
    December 31, 2000                                                                        (14,865)

Shares issued on
    January 20, 2001
      for Expenses                         200,000            200            17,800

Filing Fees with SEC                                                         (3,350)


Net Loss                                                                                     (10,580)

                                     -----------------------------    --------------   --------------
Balance
   December 31, 2001                     3,200,000        $ 3,200          $ 26,450        $ (25,445)
                                     =============================    ==============   ==============

</TABLE>














           See accountant's report and notes to financial statements.

                                       F-4

<PAGE>

<TABLE>

<CAPTION>

                             ONLINE PROCESSING, INC.

                             STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 2001
        THE PERIOD DECEMBER 4, 2000 (DATE OF INCEPTION), TO JULY 31, 2001


                                                                                                   Accumulated
                                                                                                      Since
                                                                                                    Inception
                                                                      December 31, 2001         December 4, 2000
                                                                     --------------------     ----------------------
<S>                                                                  <C>                      <C>

 CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                                           $           (10,580)     $             (14,865)
   Items not requiring cash:
     Stock issued for services                                                                               14,500
     Stock issued for expenses                                                    13,500                          -
  Changes in operating assets and liabilities:                                                                    -
   Increase in accounts receivable                                                (4,900)                         -
   Increase in interest receivable                                                (6,825)                         -
   Increase in accounts payable                                                   12,538                        365
   Increase in interest payable                                                    6,825                          -
                                                                     --------------------     ----------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES:                                        10,558                          -

CASH FLOWS FROM INVESTING ACTIVITIES:
  Note receivable                                                                (40,000)                         -
                                                                     --------------------     ----------------------
NET CASH USED FROM INVESTING ACTIVITIES:                                         (40,000)                         -

CASH FLOWS FROM FINANCING ACTIVITIES:
  Stock issued                                                                         -                        500
  Loan                                                                             3,715                          -
  Registration costs                                                              (3,350)                         -
  Loan proceeds                                                                   40,000                          -
                                                                     --------------------     ----------------------
NET CASH PROVIDED FROM FINANCING ACTIVITIES:                                      40,365                        500


NET INCREASE  IN CASH:                                                            10,923                        500


CASH AT BEGINNING OF YEAR:                                                           500                          -
                                                                     --------------------     ----------------------


CASH AT END OF YEAR:                                                 $            11,423      $                 500
                                                                     ====================     ======================
</TABLE>


SUPPLEMENTAL DISCLOSURE:
  No interest paid for the period
  No taxes paid for the period
 Stock issued for office space and equipment rental - $18,000

           See accountant's report and notes to financial statements.

                                       F-5

<PAGE>


                             ONLINE PROCESSING, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2001


NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
---------------------------------------------------------------------------

History:
-------
The Company was organized  December 4, 2000, as a Nevada  corporation  under the
name of Online  Processing,  Inc. The Company is in the  business of  processing
mortgage  loans  via the  Internet.  Operations  are in  effect  and as such the
Company is no longer in the development stage.

Basis of Presentation:
---------------------
It is the Company's  policy to prepare its  financial  statements on the accrual
basis of accounting in conformity with accounting  principles generally accepted
in the United States. The Company's year end is December 31.

Revenue Recognition:
-------------------
Revenues are recorded as income in the period the processing fees are earned and
expenses  are  recognized  in the  period  in which  the  related  liability  is
incurred. Processing fees are earned at the time of closing of the loan.

Use of Estimates:
----------------
In  order  to  prepare  financial   statements  in  conformity  with  accounting
principals  generally  accepted  in the  United  States,  management  must  make
estimates,  judgments and  assumptions  that affect the amounts  reported in the
financial statements and determine whether contingent assets and liabilities, if
any, are  disclosed in the  financial  statements.  The ultimate  resolution  of
issues requiring these estimates and assumptions could differ significantly from
resolution  currently  anticipated  by  management  and on which  the  financial
statements are based.

Cash and Cash Equivalents:
-------------------------
For purposes of the  statement of cash flows,  the Company  considers all highly
liquid  debt  instruments  with  maturity  of  three  months  or less to be cash
equivalents.

Property and Equipment:
----------------------
Property  and  equipment  is carried at cost.  Depreciation  is  provided by the
straight-line method over each asset's estimated useful life. Upon retirement or
disposal,  the asset cost and related accumulated  depreciation are removed from
the accounts and any resulting gain or loss is included in the  determination of
net income.

Long-Lived Assets:
-----------------
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 121,
Accounting for the impairment of Long-Lived Assets and for Long -Lived Assets to
be  Disposed  of,  the  Company  records   impairment  losses  when  events  and
circumstances  indicate  that the assets might be impaired and the  undiscounted
projected  cash flows  associated  with those  assets are less than the carrying
amounts of those assets. Impairment loss on a long-lived asset is measured based
on the excess of the  carrying  amount of the asset over the asset's fair value,
generally determined based upon discounted estimates of future cash flows.



                                       F-6

<PAGE>

                             ONLINE PROCESSING, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2001


NOTE A - NATURE OF  BUSINESS  AND  SUMMARY OF  SIGNIFICANT  ACCOUNTING  POLICIES
--------------------------------------------------------------------------------
(CONTINUED):
-----------

Net loss per Share:
------------------
Basic net loss per share excludes  dilution and is computed by dividing net loss
by the  weighted  average  number of common  shares  outstanding  for the period
presented.  Diluted net loss per common share was the same as basic net loss per
common  share for the period  presented  since the  Company  has no  potentially
dilutive securities and because of the Company's net loss.

Stock based compensation:
------------------------
The Company  accounts for stock based  compensation in accordance with SFAS 123,
Accounting  for  Stock-Based  Compensation.  It  introduces  the  use  of a fair
value-based  method of accounting for stock based  compensation.  It encourages,
but does not require,  companies to recognize stock-based  compensation expenses
to  employees  based on the new fair value  accounting  rules.  The  Company has
adopted the new fair value  accounting rule and records the issuance of stock at
the fair value of the consideration received.

Start-Up Costs:
--------------
The Company expensed the costs of start-up  activities and organization costs as
they  were  incurred,  in  accordance  with SOP 98-5,  Reporting  on the Cost of
Start-up Activities.

Income Tax:
----------
The Company is subject to the greater of federal income taxes computed under the
regular system or the alternative  minimum tax system. The Company uses an asset
and liability approach for the accounting and financial  reporting of income tax
as required by SFAS No. 109,  Accounting  for Income  Taxes.  Under this method,
deferred  tax  assets  and  liabilities   are  determined   based  on  temporary
differences  between the financial  carrying amounts and the tax bases of assets
and  liabilities  using  enacted  tax  rates in effect in the years in which the
temporary  differences  are  expected  to  reverse.   Valuation  allowances  are
established  when necessary to reduce  deferred tax asset to the amount expected
to be "more likely than not" realized in future returns.


NOTE B - FINANCIAL INSTRUMENTS:
------------------------------

Accounts Receivable:
-------------------
The Company is engaged in processing mortgage loans using the Internet presently
in Texas only. The Company performs ongoing credit evaluations of its customers'
financial condition and requires no collateral from its customers.

Customer Concentration:
----------------------
The majority of the loans  processed have been for companies owned or affiliated
with the same owner.  Although the Company is widening its customer  base,  this
concentration could adversely affect the Company.





                                       F-7

<PAGE>

                             ONLINE PROCESSING, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2001


NOTE B - FINANCIAL INSTRUMENTS (CONTINUED):
-----------------------------------------

Fair Value of Financial Instruments:
The fair  value of the  Company's  cash and cash  equivalents  is equal to their
carrying value at December 31, 2001.  The Company  estimates that the fair value
of notes  receivable and payable  reflected in the balance sheet at December 31,
2001,  does not differ  materially  from the  carrying  values  recorded  in the
accompanying  balance sheet.  Considerable  judgement is necessarily required to
develop the  estimates of fair value,  and,  accordingly,  the estimates are not
necessarily  indicative  of the  amounts  that the  Company  could  realize in a
current market  exchange.  The fair value of the Company's other monetary assets
and  liabilities  approximate  carrying value due to the  relatively  short term
nature of these items.

NOTE C - PREPAID EXPENSES:
-------------------------

The Company  issued  200,000  shares for the use of office space,  computers and
internet on January 20,  2001,  valued at $18,000.  The lease  covers the period
April  2001 to March  2002 and is  charged  to expense at the rate of $1,500 per
month starting in April 2001. The balance is carried as prepaid  expenses in the
current asset section of the balance sheet.

In March 2000, the Financial  Accounting  Standards Board issued  Interpretation
No. 44, Accounting for Certain  Transactions  Involving Stock  Compensation,  an
interpretation  of APB Opinion No. 25,  which was  effective  July 1, 2000.  The
expense were paid for by issuing  200,000 shares of common stock valued at $0.09
per  share.  Since  there  was no  readily  determinable  market  value  for the
Company's common stock, the per share price was negotiated and determined by the
fair value of services received.

NOTE D - NOTE RECEIVABLE AND PAYABLE:
------------------------------------

The company holds a note  receivable  and a note payable of equal  amounts.  The
loan was taken out and then  lent out in order to  secure  its first  processing
account. The loans have the same maturity date of January 18, 2006 and carry the
same interest rate of 18%.

NOTE E - STOCKHOLDERS' EQUITY:
-----------------------------

Common Stock:
------------
The Company is  authorized to issue  25,000,000  common shares of stock at a par
value of $0.001 per share. These shares have full voting rights. At December 31,
2001,  there were  3,200,000  shares  outstanding.  The  Company  has not paid a
dividend to its shareholders.

Common stock issuances:
----------------------
On December 5, 2000,  the Company issued  3,000,000  shares to the President for
$15,000,  comprised of $500 cash and $14,500 of his services.  The services were
valued at $14,500 and the stock issued at 0.005 per share.  The common stock was
issued upon formation of the Company for services  performed before,  during and
after formation of the Company.




                                       F-8

<PAGE>

                             ONLINE PROCESSING, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2001


NOTE E - STOCKHOLDERS' EQUITY (CONTINUED):
-----------------------------------------

The Company  issued  200,000  shares for the use of office space,  computers and
internet on January 20,  2001,  valued at $18,000.  The lease  covers the period
April  2001 to March  2002 and is  charged  to expense at the rate of $1,500 per
month starting in April 2001. The balance is carried as prepaid  expenses in the
current asset section of the balance  sheet.  The value assigned of to the lease
was fair  market  value but the  number of shares  issued for this  website  was
negotiated and determined by the Company and the developers of the website since
there was no readily  determinable  market  value for the shares.  The basis for
valuing the shares at $0.09 per share, which is substantially below the offering
price per share to the  public,  is that the  lessors  were  giving  services in
exchange for stock before  offering shares to the public and the facilities were
a  prerequisite  for the  Company to start in  business  which then  allowed the
Company to offer shares to the public. The value  substantially below the public
offering  price was negotiated  since the lessors were not  guaranteed  that the
Company  would be able to sell  stock to the public  and no  guarantee  that the
Company would be successful. The value of $0.09 per share is substantially above
the  price the  President  paid a month and a half  before  since the  President
developed  the plan for the Company  over a period of time,  formed the Company,
and purchased shares immediately upon formation; the plan included the filing of
a  registration  statement with the U.S.  Securities and Exchange  Commission to
raise funds at $0.25 per share.


NOTE F - INCOME TAXES:
---------------------

The Company has a net operating  loss of $25,445 for the periods  presented.  No
deferred  tax asset has been  recognized  for the  operating  loss as it is more
likely  than not that all or a  portion  of the net  operating  loss will not be
realized and any valuation allowance would reduce the benefit to zero.
         Operating losses expire:  2020        $14,865
         Operating losses expire:  2021        $10,580

The  components  of the  provision  (benefit)  for income taxes  included in the
financial statements as of December 31, 2001 are as follows:
         Deferred tax assets:
         Net operating loss carryforwards            $(25,445)
         Valuation allowance                           25,445
                                                     ---------
         Total deferred income tax assets                 -0-
         Total deferred income tax liabilities            -0-
                                                     ---------
         Net deferred income tax assets              $    -0-

The  Company's  effective tax rate on a pre-tax  income  (loss) from  continuing
operations differs from the U.S federal statutory rate as follows:
         U.S. federal statutory rate                                    (  34)%
         Increase (decrease) in rates resulting from:
                Change in valuation allowance for deferred tax asset        34 %
                                                                        --------
         Effective tax rate                                                  0 %




                                       F-9

<PAGE>

                             ONLINE PROCESSING, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2001


NOTE G - RELATED PARTY TRANSACTIONS:
-----------------------------------

In  December  2000,  the Company  issued to its  President  3,000,000  shares in
consideration  for $15,000,  comprised of $500 cash and $14,500 of her services.
The stock was issued at $0.005 per share.


NOTE H - GOING CONCERN:
----------------------

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a going  concern.  Although  the Company has a small
positive cash flow from operations, it is a newly formed company and has not yet
generated  significant  revenues.  The Company has funded its operations to date
from the issuance of shares.  These  matters raise  substantial  doubt about its
ability to continue as a going concern.

The  company has  minimal  capital  resources  available  to offset  losses from
operating and other obligations expected to be incurred. The continued existence
is dependent upon several factors, including its ability to generate significant
revenue and to generate operating capital.

Management  of the  Company  is  engaged  in  filing  a Form  SB-1  registration
statement  to raise a minimum of $100,000 and a maximum of $500,000 to cover its
anticipated expenses and provide working capital.

The Company plans to generate sufficient revenue by:

Develop Targeted e-mail Marketing Campaign:
------------------------------------------
Targeted  e-mail  marketing  campaigns  are  highly  focused  marketing  efforts
designed to sell its services to a defined business group - mortgage brokers and
bankers.  The design of each  campaign  includes  the  creation of a  electronic
brochure  with a  description  of our  services and  following up with  personal
contact.  The Company's  approach will be to target smaller  mortgage brokers at
first and work its way  through  the  middle and larger  mortgage  brokers.  The
Company  believes  that  this  approach  to  e-mail  marketing  campaigns  is an
effective and efficient means to generate sales revenue.

Customer Segmentation & Targeted Advertising:
--------------------------------------------
The Company  seeks to increase its  customer  base  through  targeted  mailings,
specifically  to mortgage  brokers and bankers.  The Company  plans to develop a
website,  allowing potential  customers to view the benefits and cost savings of
processing loans via the internet.

Accordingly,  the Company's continued existence is dependent upon the successful
raising of capital, successful results from the Company's plan of operations, or
obtaining  financing.  There  can be no  assurance  that  the  Company  will  be
successful in its efforts to raise sufficient operating capital,  achieve future
profitable operations, or obtain additional funding. The financial statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.






                                      F-10