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, 2002, 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:  NONE

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, 2002:
                                      $ -0-

Shares of common stock outstanding at December 31, 2002:  3,613,900




<PAGE>



PART I.

ITEM 1            DESCRIPTION OF BUSINESS

         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.

         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.

         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.

                                        2

<PAGE>



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

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.

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.

         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.

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

                                        3

<PAGE>



2001 for this arrangement.  The $18,000 value was charged to expense over twelve
months.  Since April 2002,  the company  has  contributed  the office  space and
equipment for one year in order to facilitate the company's success.  The $1,500
per month was shown as paid in capital.


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
2002.














                                        4

<PAGE>



PART II.

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


         a.       Market Information.

There was no established  public trading market for the Company's stock in 2002,
as we were  cleared  for trading on  December  23,  2002 and started  trading in
January 2003. Therefore, no stock price data is included in this Form 10-KSB.

         b.       Holders.

         There are approximately 100 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 2002

Our  business is  detailed  in Section 1 above and a summary of 2002  activities
follow:

In 2002, our company continued to service its two established clients upon which
to build upon. Our revenues more than doubled from $26,800 in 2001 to $60,758 in
2002, while our expenses increased from $37,380 in 2001 to $131,082 in 2002. The
increase in our volume of business caused us to have to add another processor to
our staff which  doubled the amount we paid for labor in 2002 over 2001. We also
spent  $49,825 on  advertising  and  promotion  which were  expenses  outlaid to
generate new business.  Although we did not engage any new clients, we hope that
the funds  spent  will  generate  new  clients  in the  future.  We were able to
renegotiate  our rent and equipment  lease and negotiate an increase in the term
for the same amount of stock  issued in 2001 which was not a cash outlay for us,
although we had the benefit of the facilities.

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. We raised  $94,000
after expenses in that offering,  and our cash position  increased  $32,697 from
$37,104 at the end of 2001 to $69,801 at the end of 2002,  due to the funds that
we raised in our offering. We are engaged in marketing and sales of

                                        5

<PAGE>



establishing  new  contacts  and  garnering  new  clients to provide  the online
processing service and market our service 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.

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) 71-2305

ITEM 7            FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


         Report of Independent Certified Public Accountant is attached hereto.

                                        6

<PAGE>




ITEM 8            CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND
                  FINANCIAL DISCLOSURES

         J.S  Osborn,  P.C.  was the  auditor for the Company for the year ended
December 31, 2001.  For the year ended  December 31, 2002,  we engaged  Malone &
Bailey, PLLC because of their SEC experience.  We had no disagreements with J.S.
Osborn,  P.C. on accounting or financial  disclosure  issues and filed an 8-K in
February 2003 to disclose the change in auditors.  We have had no  disagreements
with Malone & Bailey, PLLC on accounting or financial disclosure issues.


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 2002 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 2002. 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 the Stock of the Registrant.


                                        7

<PAGE>



Title of        Name and address              Amount of shares      % of class
Securities       of owner                                             owned
------------------------------------------------------------------------------
Common         Terri Wonderly                    3,000,000            83.01%
               703 Village Green
               Rockwall, Texas 75087
------------------------------------------------------------------------------
Common         All Officers, Directors &         3,000,000            83.01%
               Beneficial Holders as a Group


ITEM 12           CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The Company had no transactions with related persons in 2002.


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, 2002

         Statement of Operations-Twelve Months Ended December 31, 2002 and 2001

         Statement of Stockholders' Equity-Two Years Ended December 31, 2002

         Statement of Cash Flows-Twelve Months Ended December 31, 2002 and 2001

         Notes to the Financial Statements

(b) The Company filed no reports on Form 8-K in 2002 or 2001.

(c) The Company is not filing any exhibits.








                                        8

<PAGE>




                                 CERTIFICATIONS

I, Terri Wonderly, certify that:



    1.    I  have   reviewed  this  annual  report  on  Form  10-KSB  of  Online
          Processing, Inc.

    2.    Based on my knowledge,  this annual report does not contain any untrue
          statement  of a  material  fact  or  omit to  state  a  material  fact
          necessary to make the statements  made, in light of the  circumstances
          under which such  statements were made, not misleading with respect to
          the period covered by this annual report; and

    3.    Based on my knowledge,  the financial statements,  and other financial
          information  included in this  annual  report,  fairly  present in all
          material respects the financial  condition,  results of operations and
          cash flows of the registrant as of, and for, the periods  presented in
          this annual report.


Date: February 20, 2003



By:  /s/ Terri Wonderly
     ------------------
         Terri Wonderly





Name: Terri Wonderly
Title: Chairman, Chief Executive Officer and Chief Financial Officer


         Pursuant  to 18  U.S.C.ss.1350,  as  created  by  Section  906  of  the
Sarbanes-Oxley Act of 2002, the undersigned  officer of Online Processing,  Inc.
(the Company) hereby certifies, to such officers knowledge, that:



          (i) the  accompanying  Annual Report on Form 10-KSB of the Company for
    the fiscal year ended December 31, 2002 (the Report) fully complies with the
    requirements  of  Section  13(a) or Section  15(d),  as  applicable,  of the
    Securities Exchange Act of 1934, as amended; and

          (ii) the information  contained in the Report fairly presents,  in all
    material respects,  the financial condition and results of operations of the
    Company.


Date: February 20, 2003



By:  /s/ Terri Wonderly
     ------------------
         Terri Wonderly




Name: Terri Wonderly
Title: Chairman, Chief Executive Officer  and Chief Financial Officer




                                        9

<PAGE>



                          INDEPENDENT AUDITORS' REPORT

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

We have audited the accompanying balance sheet of Online Processing,  Inc. as of
December 31,  2002,  and the related  statements  of  operations,  stockholders'
equity, and cash flows for the year then ended.  These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we 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.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Online Processing,  Inc. as of
December 31, 2002,  and the results of its operations and its cash flows for the
year then ended, in conformity with accounting  principles generally accepted in
the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 2 to the
financial  statements,  the Company has  incurred  losses from  December 4, 2000
(inception) through December 31, 2002 totaling $95,769. The Company will require
additional  working capital to develop its business until the Company either (1)
achieves a level of revenues  adequate to  generate  sufficient  cash flows from
operations; or (2) obtains additional financing necessary to support its working
capital  requirements.   This  condition  raises  substantial  doubt  about  the
Company's ability to continue as a going concern.  Management's  plans in regard
to  this  matter  are  also  described  in Note 2.  The  accompanying  financial
statements do not include any adjustments  that might result from the outcome of
these uncertainties.

/s/  Malone & Biley, PLLC
-------------------------
     Malone & Bailey, PLLC
     Houston, Texas
     www.malone-bailey.com

February 4, 2003




<PAGE>



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

I  have  audited  the  statements  of  operations,   stockholders'   equity  and
accumulated  deficit, and cash flows for the year ended December 31, 2001. 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,  in  conformity  with
accounting principles generally accepted in the United States.


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

Dallas, Texas
April 15, 2002


<PAGE>


                             ONLINE PROCESSING, INC.
                                  BALANCE SHEET
                                December 31, 2002


                                     ASSETS
Current assets:
  Cash                                                          $        69,801
  Accounts receivable, net                                                4,950
  Advances                                                               10,000
                                                                ---------------
    Total current assets                                                 84,751

Note receivable, including interest of $14,025                           54,025
                                                                ---------------
                                                                $       138,776

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued expenses                         $        47,870
                                                                ---------------
    Total current liabilities                                            47,870

Note payable, including interest of $14,025                              54,025
                                                                ---------------
                                                                        101,895

Commitments

STOCKHOLDERS' EQUITY:
  Common stock, $.001 par value, 25,000,000 shares
  authorized, 3,613,900 shares issued and outstanding                     3,614
Additional paid in capital                                              129,036
Accumulated deficit                                                     (95,769)
                                                                ---------------
  Total Stockholders' Equity                                             36,881
                                                                ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $       138,776
                                                                ===============









                See accompanying summary of accounting policies
                       and notes to financial statements.

                                                                             F-1

<PAGE>

<TABLE>

<CAPTION>

                             ONLINE PROCESSING, INC.
                             STATEMENT OF OPERATIONS


                                                         For the years ended
                                                             December 31,
                                                             ------------
                                                       2002                   2001
                                                -----------------      -----------------
<S>                                             <C>                    <C>


Revenue                                         $          60,758      $          26,800

Operating expenses:
  Consulting                                                    -                 23,533
  Employee leasing                                         59,330                      -
  Advertising                                              49,825                      -
  Office and equipment rent                                18,000                 13,500
  Other general and administrative                          3,927                    347
                                                -----------------      -----------------
                                                          131,082                 37,380
                                                -----------------      -----------------

Loss from operations                                      (70,324)               (10,580)

Other income (expense)
  Interest income                                           7,200                  6,825
  Interest expense                                         (7,200)                (6,825)
                                                -----------------      -----------------
                                                                -                      -
                                                -----------------      -----------------
                                                -----------------      -----------------

Net loss                                        $         (70,324)     $         (10,580)
                                                =================      =================

Net loss per share:
  Basic and diluted                             $           (0.02)     $           (0.00)
                                                =================      =================

Weighted average shares outstanding:
  Basic and diluted                                     3,338,086              3,189,041
                                                =================      =================

</TABLE>













                 See accompanying summary of accounting policies
                       and notes to financial statements.

                                                                             F-2

<PAGE>

<TABLE>

<CAPTION>

                                          ONLINE PROCESSING, INC.
                                     STATEMENT OF STOCKHOLDERS' EQUITY
                                 For the two years ended December 31, 2002


                                            Common stock             Additional
                                   -----------------------------       paid in            Accumulated
                                     Shares            Amount          capital              deficit            Total
                                   ------------   --------------    ----------------  -----------------  ---------------
<S>                                <C>            <C>               <C>               <C>                <C>

Balance,
  December 31, 2000                3,000,000         $    3,000     $        12,000   $        (14,865)  $         135


Common shares issued for
services at $0.09 per share          200,000                200              17,800                  -               -


Net loss                                                      -                   -            (10,580)        (10,580)
                                  ------------   --------------    ----------------  -----------------   ---------------
Balance,
  December 31, 2001                3,200,000              3,200              26,450            (25,445)          4,205


Sale of common stock at
$0.25 per share, net of
expenses                             413,900                414              93,586                  -          94,000


Expenses paid by
shareholder                                -                  -               9,000                  -           9,000


Net loss                                   -                  -                   -            (70,324)        (70,324)
                                  ------------   --------------    ----------------  -----------------   ---------------

Balance,
  December 31, 2002                3,613,900     $        3,614    $        129,036  $        (95,769)   $      36,881
                                  ============   ==============    ================  =================   ===============


</TABLE>






                 See accompanying summary of accounting policies
                       and notes to financial statements.

                                                                             F-3



<PAGE>

<TABLE>

<CAPTION>

                             ONLINE PROCESSING, INC.
                             STATEMENT OF CASH FLOWS


                                                                  For the years ended
                                                                      September 30,
                                                                      -------------
                                                                 2002                 2001
                                                            ----------------    -----------------
<S>                                                         <C>                 <C>

Cash flows from operating activities:
  Net loss                                                  $       (70,324)    $       (10,580)
  Adjustments to reconcile net loss to cash
  used in operating activities:
    Expenses paid by shareholder                                      9,000                   -
    Common stock issued for services                                      -              13,500
Changes in assets and liabilities:
  Accounts receivable                                                   (50)             (4,900)
  Advances                                                          (10,000)                  -
  Prepaid expenses                                                    4,500                   -
  Accounts payable and accrued expenses                              34,967              12,538
                                                            ---------------     ---------------

Net cash provided by (used in) operating
activities                                                          (31,907)             10,558
                                                            ---------------     ---------------

Cash flows from investing activities:
  Investment in note receivable                                           -             (40,000)
  Increase in interest receivable                                    (7,200)             (6,825)
                                                            ---------------     ---------------

Net cash used in investing activities                                (7,200)            (46,825)
                                                            ---------------     ---------------

Cash flows from financing activities:
  Proceeds from note payable                                              -              43,715
  Increase in interest on note payable                                7,200               6,825
  Payments on notes payable                                          (3,715)             (3,350)
  Proceeds from sale of common stock, net                            94,000                   -
                                                            ---------------     ---------------

Net cash provided by financing activities                            97,485              47,825
                                                            ---------------     ---------------

Net increase in cash                                                 58,378              10,923
Cash, beg. of period                                                 11,423                 500
                                                            ---------------     ---------------
Cash, end of period                                         $        69,801     $        11,423
                                                            ===============     ===============

Supplemental information:
  Income taxes paid                                         $             -     $             -
  Interest paid                                             $             -     $             -

</TABLE>




                 See accompanying summary of accounting policies
                       and notes to financial statements.



                                                                             F-4

<PAGE>


                             ONLINE PROCESSING, INC.
                          NOTES TO FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF ACCOUNTING POLICIES

Nature of business.  On December 4, 2000 Online Processing,  Inc. ("Online") was
incorporated  under  the laws of the  State of  Nevada.  Online  is  engaged  in
processing mortgage loans using the Internet. Online operations are currently in
the State of Texas. Online performs ongoing credit evaluations of its customers'
financial condition and requires no collateral from its customers.

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 at the date of the balance  sheet.  Actual results could differ from
those estimates.

Cash and Cash Equivalents

Cash  and  cash  equivalents  include  cash  and  all  highly  liquid  financial
instruments with purchased maturities of three months or less.

Revenue Recognition

Online  recognizes  revenue when persuasive  evidence of an arrangement  exists,
delivery  has  occurred,   the  sales  price  is  fixed  or   determinable   and
collectibility is probable.

Revenue earned from services,  which primarily include  performing online credit
evaluations is recognized as the services are performed.

Income Taxes

Income taxes are computed using the asset and liability method.  Under the asset
and liability method,  deferred income tax assets and liabilities are determined
based on the differences between the financial reporting and tax bases of assets
and liabilities and are measured using the currently enacted tax rates and laws.
A valuation  allowance  is provided  for the amount of deferred tax assets that,
based on available evidence, are not expected to be realized.

Advertising Costs

Advertising costs are charged to operations when incurred.  Advertising expenses
for 2002 and 2001 were $49,825 and $0, respectively.

Basic Loss Per Share

Basic loss per share has been calculated based on the weighted average number of
shares of common stock outstanding during the period.


                                                                             F-5

<PAGE>


Recent Accounting Pronouncements

Online does not expect the adoption of recently issued accounting pronouncements
to have a significant  impact on the Online's  results of operations,  financial
position or cash flow.


NOTE 2 - FINANCIAL CONDITION AND GOING CONCERN

For the years ended December 31, 2002,  Online incurred losses totaling  $70,324
and $10,580.  Because of these losses,  Online will require  additional  working
capital to develop its business  operations.  These conditions raise substantial
doubt  about  Online's  ability to continue as a going  concern.  The  financial
statements do not include any  adjustments  relating to the  recoverability  and
classification  of asset carrying  amounts or the amount and  classification  of
liabilities  that might be  necessary  should  Online be unable to continue as a
going concern.


NOTE 3 - ACCOUNTS RECEIVABLE

Online's  trade  accounts  receivable  are shown net of  allowance  for doubtful
accounts of $0 at December 31, 2002.

Online maintains allowances for doubtful accounts for estimated losses resulting
from the inability of its customers to make required payments.  If the financial
condition of Online's customers were to deteriorate,  resulting in an impairment
of their ability to make payments, additional allowances may be required.


NOTE 4 - NOTE RECEIVABLE AND PAYABLE

Online  has a $40,000  note  receivable  and a $40,000  note  payable.  The note
payable  was entered  into and paid out in order to secure its first  processing
account.  The note  receivable  and note payable have the same  maturity date of
January 18, 2006 and bear interest rate of 18%.


NOTE 5 - INCOME TAXES

Online has not yet realized  income as of the date of this report,  no provision
for income  taxes has been made.  At December  31, 2002 a deferred tax asset has
not been recorded due to Online's  limited  history to provide income to use the
net operating loss carryover of $96,000 that expires in years 2020 through 2022.


NOTE 6 - MAJOR CUSTOMERS

Online  has two  and one  customer  that  accounted  for  more  than  10% of net
revenues,  and collectively,  these customers  accounted for 99% and 100% of net
revenues for the year ended  December 31, 2002 and 2001,  respectively.  Both of
these  customers are affiliated  with the majority  shareholder  of Online.  The
breakdown is as follows at December 31:


                                                                             F-6

<PAGE>



Customer                     2002               2001
----------------------   -------------      -------------
A                                  37%               100%
B                                  62%                n/a


NOTE 7 - STOCKHOLDERS' EQUITY

Common Stock:

Online 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. Online has not paid a
dividend to its shareholders.

Online  issued  200,000  shares  of common  stock  for the use of office  space,
computers  and Internet  access on January 20, 2001,  valued at $18,000 or $0.09
per share. The lease was for April 2001 through March 2002.

In August through  December  2002,  Online issued 413,900 shares of common stock
for cash proceeds of $94,000, net of expenses of $9,475 or $0.25 per share.


NOTE 8 - COMMITMENTS

Online leases its office and equipment under a one year non-cancelable agreement
which expires March 2003. The lease  provides for monthly  payments of base rent
and an unallocated  portion of equipment costs and Internet access.  The rent is
being contributed by a shareholder to Online.

Minimum future lease rentals are $4,500 for 2003.

Rent expense was $18,000 and $13,500 for the years ending  December 31, 2002 and
2001, respectively.






                                                                             F-7