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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION** Washington, D.C. 20549

FORM 10-KSB

(Mark One) **x******ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
  ACT OF 1934
  For the fiscal year ended June 30, 2004

** ̈******TRANSITION
  REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT 
  For the transition period from _________ to __________________

Commission File Number:**0-29285**

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

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

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

(604) 669-7564
  Issuer's telephone number

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

Securities registered pursuant to Section 12(b) of the Act:
  
  None

Securities registered pursuant to Section 12(g) of the Act:
  
  Common Stock

Check whether the issuer (1) filed all reports required to
  be filed by sections 13 or 15(d) of the Exchange Act during the past 12 months
  (or for such shorter period that the registrant was required to file such reports),
  and (2) has been subject to such filing requirements for the past 90 days. Yes**x****** No** ̈******

Check if there is no disclosure of delinquent filers in response
  to Item 405 of Regulation S-B is not contained in this form, and no disclosure
  will be contained, to the best of the

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registrant's knowledge, in definitive proxy or information
  statements incorporated by reference in Part III of this Form 10-KSB or any
  amendment to this Form 10-KSB.**x******

The registrant earned revenues of $1,264 in the financial year
  ended June 30, 2004.

As of September 24, 2004, the aggregate market value of the
  voting common equity held by non-affiliates of the registrant was $3,241,499
  based on the closing trade reported on the NASD Over the Counter Bulletin Board.
  Shares of common stock by each officer and director and by each person who owns
  5% or more of the outstanding common stock have been excluded from this calculation
  as such persons may be considered to be affiliated with the registrant.

PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

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

APPLICABLE ONLY TO CORPORATE ISSUERS

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

As of September 24, 2004 the registrant's outstanding common
  stock consisted of 17,004,166 shares.

DOCUMENTS INCORPORATED BY REFERENCE

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

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ONLINE INNOVATION, INC.

FORM 10KSB
  TABLE OF CONTENTS

|Part | Item(s) |                                                                                                                      | Page No.
|---- | ------- | -------------------------------------------------------------------------------------------------------------------- | --------
|     |         |                                                                                                                      |         
|I    | 1       | Description of Business                                                                                              | 4       
|     | 2       | Description of Property                                                                                              | 17      
|     | 3       | Legal Proceedings                                                                                                    | 18      
|     | 4       | Submission of Matters to a Vote of Security
      Holders                                                            | 18      
|II   | 5       | Market for Common Equity and Related Stockholder
      Matters                                                       | 18      
|     | 6       | Plan of Operation                                                                                                    | 21      
|     | 7       | Financial Statements                                                                                                 | 26      
|     | 8       | Changes In and Disagreements With Accountants
      on Accounting and Financial Disclosure                           | 27      
|     | 8A      | Controls and Procedures                                                                                              | 27      
|III  | 9       | Directors, Executive Officers, Promoters
      and Control Persons; Compliance with Section16(a) of the Exchange Act | 27      
|     | 10      | Executive Compensation                                                                                               | 30      
|     | 11      | Security Ownership of Certain Beneficial
      Owners and Management                                                 | 31      
|     | 12      | Certain Relationships and Related Transactions                                                                       | 32      
|     | 13      | Exhibits and Reports on Form 8-K                                                                                     | 32      
|     | 14      | Principal Accounting Fees and Services                                                                               | 35      
|     |         |                                                                                                                      |         
|     |         | Signatures                                                                                                           | 36      

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PART I

ITEM 1:            DESCRIPTION
  OF BUSINESS

Business Development


Online Innovation, Inc. (the "Company") is a web asset development
  company. The Company has created a website that is designed to facilitate social
  interaction between single adults, with an emphasis on entertainment and matchmaking.
  The Company's website enables site visitors to interact socially in a variety
  of contexts. The Company's flagship website located on the worldwide web at
  www.VirtuallyDating.com, provides real time communication, entertainment and
  matchmaking between single adults. The target market for VirtuallyDating is
  single North American men and women over the age of 18 that have exhausted the
  traditional ways of meeting new people.

The website was launched on September 3, 2002. Since that
  time, the Company has continued throughout the fiscal year to develop new content
  and functionality for the website and to upgrade existing content and functionality.
  In addition to ongoing website development, the Company focused its energies
  on securing equity financing to fund its ongoing operations and to fund planned
  marketing of the website. During the most recently completed fiscal year, the
  Company also commenced development of a new web property known as "Urban Flirt".

The website was launched on September 3, 2002. The Company
  is currently offering free 10-day trials and an introductory special in which
  users may purchase a 1-year membership for $19.95. This introductory offer was
  originally made for a 30 day period but has been extended by the Company for
  an indefinite period. The Company intends to continue the introductory offer
  until it has been able to carry out marketing activities to promote the website.
  After the introductory offer has been completed, memberships will be available
  for $10.95 per month, $29.95 for three months, $49.95 for 6 months and $79.95
  for 1 year. As of September 24, 2004, the website had 76,161 registered members
  (including members on 10 day trials). In addition to generating revenue through
  the sale of memberships, the Company intends to generate revenue through banner
  advertising and the sale of merchandise through the website.

The Company was incorporated on May 7, 1997 pursuant to the
  General Corporation Law of the State of Delaware, U.S.A. under the name Micro
  Millennium Inc. The Company changed its name from Micro Millennium, Inc., to
  Sinaloa Gold Corp. on October 16, 1997 and operated as a mineral exploration
  and development company until January of 1999. Early in 1999, the Company decided
  to withdraw its interest in its mineral properties and to acquire and develop
  its current website development business. Pursuant to an agreement dated April
  2, 1999, the Company acquired from Online Innovation, a non-reporting private
  unincorporated entity, a 100% interest in all of its proprietary and intellectual
  property associated with its business plan and concepts and its worldwide web
  site domain name, www.VirtuallyDating.com. As consideration for the acquisition
  of the assets of Online Innovation, the Company issued 400,000 common shares
  at a deemed value of $0.50 per share to Mr. Darin Wong, the sole proprietor
  of Online Innovation. The Company changed its name from Sinaloa Gold Corp. to
  Online Innovation, Inc. on April 8, 1999, after acquiring the

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assets of Online Innovation as described above. Since the
  acquisition the Company has developed and continues to develop the property
  and concepts acquired from Online Innovation. In addition, it has been forging
  partnerships and strategic alliances in the Internet industry and seeking financing
  to further its development goals.

Business of the Company Principal Products and Services


The Company's principal product/service is a website on the
  worldwide web (www.VirtuallyDating.com) which Internet users can utilize to
  engage in various forms of social interaction with other users. The focus is
  on entertainment and matchmaking for single adults. The website is multi-faceted
  and allows users to interact socially in a number of different forums, described
  in greater detail below. The main webpage, located at www.VirtuallyDating.com,
  provides links to the other pages that comprise the site. These pages contain
  the various interactive/entertainment functions and services offered by the
  Company. In order to utilize the website, visitors are required to become members.
  Once an individual becomes a member, he or she can access the various WebPages
  created by the Company to interact with other members.

The website offers several ways for members to interact, meet,
  and have fun through its many features, while always maintaining privacy and
  discretion. While the intention may be for members to find a love connection
  or friendship, the site's primary focus is entertainment. The interactive entertainment
  features of the site may also lead to or enhance a friendship or romantic liaison.

The website was launched on September 3, 2002. Prior to full
  launch the website was available for use free of charge and had developed an
  established user base of approximately 39,000 members. Members who registered
  prior to full launch were given 30 days to determine whether to continue as
  members and pay to use the site. The Company is currently offering free 10-day
  trials and an introductory special in which users may purchase a 1-year membership
  for $19.95. This introductory offer was originally made for a 30 day period
  but has been extended by the Company for an indefinite period. The Company intends
  to continue the introductory offer until it has been able to carry out marketing
  activities to adequately promote the website. After the introductory offer has
  been completed, memberships will be available for $10.95 per month, $29.95 for
  three months, $49.95 for 6 months and $79.95 for 1 year.

The Company has incurred expenditures of approximately $545,000
  over the past 4 fiscal years related to the design and development of the website.
  Approximately $325,000 was incurred in the fiscal year ended June 30, 2001,
  approximately $125,000 was incurred in the fiscal year ended June 30, 2002,
  approximately $65,000 was incurred in the fiscal year ended June 30, 2003 and
  approximately $30,000 in new development costs was incurred in the fiscal year
  ended June 30, 2004. In addition to the foregoing, the Company incurred partial
  expenditures of $10,000 in connection with the development of the proposed "Urban
  Flirt" website.

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Member Profiles

Members of the site complete a survey in which they submit
  information such as gender, height, geographic location, lifestyle choices,
  interests, hopes, dreams and desires. This information provides a personal profile
  for each member. Once the member completes the survey, the information is incorporated
  into a personal profile and is entered into a database with other users. Members
  have the option of personalizing their profile by including up to (3) three
  photographs. The personal profile is then posted in a member profile viewing
  gallery. All information from the member profiles is placed in a searchable
  database that other members can utilize to find suitable companions.

AutoMatch
  Function


The AutoMatch option allows members to match automatically
  with other members who have similar interests. This function allows members
  to create a personal "short list" of member profiles to view and serves as an
  alternative to completing a more time-consuming survey of each member in the
  viewing gallery.

Searching
  Member Profiles


In addition to the AutoMatch function, an advanced search
  feature enables members to search the database for a suitable companion. Members
  engaging in such a search are required to identify the key qualities they are
  seeking in a companion. Utilizing the criteria set out by the member, the search
  engine searches the database and the member is provided with other member profiles
  that meet his/her criteria.

Internal
  Messaging Service

Each member is provided with an internal messaging function
  that operates throughout the website. Privacy is maintained because home and
  office e-mail addresses are not utilized. Once a member selects the profile
  of a person whom he or she wishes to contact, the member can send a personal
  electronic message to that member as a first means of direct communication.
  The recipient can retrieve the message and respond at his or her own discretion.

Chat
  Rooms


Chat rooms are sites where large numbers of members interact
  through real time messaging. All members participating in a chat room discussion
  can read messages that are sent to other participants in the room. Chat rooms
  provide "chatters" with the opportunity to discuss common interests and themes.
  Chat rooms also provide an alternative to the static member profile gallery
  as a means of meeting other members. For those members who are shy, and for
  whom connecting for the first time through internal messaging is too direct,
  the chat rooms provide the opportunity to get to know members first, before
  escalating the communication to a one-on-one basis.

The Company provides three different sets of chat rooms organized
  around three different themes. The chat rooms emulate a natural setting in which
  people tend to meet, and are graphically enhanced to look and feel like an actual
  themed environment.

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The Friendship/Companionship set of chat rooms are designed
  to attract members who are looking to meet others who have the same interests
  and are not looking for romantic involvement. There are four themed chat rooms
  available to these types of members.

Romance
  & Love Chat Rooms


The Romance & Love set of chat rooms are designed to attract
  members who are serious about finding a love match and embarking on an experience
  of romance. Four themed chat rooms emulate the environments where singles could
  possibly look for love in the real world.

The
  Red Light District


In these chat rooms members can discuss more personal issues
  that are quite possibly sexual in nature. The Company hopes that by providing
  a separate set of chat rooms for sexual discussions, it will help prevent this
  type of interaction from occurring in the Friendship/Companionship and Romance
  & Love chat rooms.

Private
  Rooms


If a member connects with someone special in a chat room,
  he or she has the option of forming a private discussion where the two can send
  real time messages and interact one-on-one. The room is completely private.
  Only the two members involved are able to read the other's messages and participate
  in the conversation.

The
  Dressing Room


The Dressing Room allows members to design their own "avatar",
  a personalized caricature that represents the member throughout the site. Members
  enter the Dressing Room and have a selection of graphic representations of body
  parts and other accessories with which to create their own caricature. By utilizing
  simple navigation methods, members are easily guided through the creation of
  their avatar, choosing from a library of components (eyes, hair, body type,
  accessories, etc.). The avatar represents the member in all interactive sections
  of the Virtually Dating site. In chat rooms, multi-player games, video chat
  or on the member's personal profile, the avatar serves to introduce members
  to other members and provide another way in which members can express themselves.

Multi
  Player Avatar Based Games

The website contains an interactive Games Lounge in which
  members can congregate to play games with one another. Current games include
  a multi player card game and one on one backgammon board game. Each player/member
  participating in these games are represented by their avatar. Members utilizing
  this area of the site also have the ability to chat in real time with one another.

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Live Video Chat

The website features a live video chat function for members
  whose personal computers have the capacity to perform video conferencing/interaction.
  Members can carry out real time video conferencing using this feature.

Send
  a Gift


The Company hopes to eventually develop the website to allow
  users to combine online dating with online shopping. This would allow members,
  once they had found that special someone, to send a gift to that person. Gifts
  would range from greeting cards or "virtual" bouquets of flowers that are sent
  electronically, to merchandise which would be mailed to the recipient. Currently,
  animated greeting cards and virtual gifts are available to be sent within the
  website. Members are able to customize a message and then send it along with
  a virtual card or a virtual gift from their VirtuallyDating mailbox (10 animated
  cards to start with and future plans to increase the Gallery's inventory).

When merchandise becomes available, members will be able to
  view a select inventory of Private Collection gifts with the click of a mouse
  and purchase the gift directly, without having to leave the site. The Company's
  initial plan is to keep the recipient mailing information so that privacy of
  the member's location will be maintained. The sender will never know the address
  of the recipient, and vice versa. All gifts in the Private Collection will be
  tasteful and in the spirit of romance so that intended recipients need not fear
  receiving something offensive in the mail.

The Company originally hoped to develop the website to permit
  the purchase and delivery of merchandise within the first year of launch of
  the e-commerce component of the site but has been unable to do so. The Company
  still intends to develop this aspect of its business but has been focusing on
  raising capital for use in marketing the website and developing other features.
  Currently, therefore, the Company does not foresee implementing merchandising
  infrastructure until funds for marketing have been made available and a larger
  member base has been established

Dear
  Bridgette


The website features a section which offers "Dear Abby" style
  editorial content, addressing dating questions or dilemmas. Within this section,
  paid users may have one on one dating or relationship type questions answered
  directly by the Company's in-house relationship coach known on the site as "Bridgette".
  Members can ask questions directly to Bridgette, who in turn sends the member
  her advice or reply. The reply is sent directly to the member's personal mailbox
  hosted on the www.virtuallydating.com website.

The Company has negotiated an agreement with KnowledgeWeb,
  Inc. ("KnowledgeWeb"), pursuant to which the horoscope content of KnowledgeWeb's
  website will be made available to the Company's members. KnowledgeWeb provides
  an online horoscope service through its website located at www.Astrology.net.
  The Company entered into an Affiliate Agreement

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with KnowledgeWeb on November 8, 1999. Pursuant to the terms
  of the Affiliate Agreement, the Company is permitted to provide its members
  with access to content provided on the Astrology.net website. Access is provided
  by direct links from the Company's website to the Astrology.net website. Astrology.net
  provides some horoscope content to its users free of charge (e.g. daily horoscopes)
  and charges users for other content (e.g. personalized charts). KnowledgeWeb
  pays the Company commissions on purchases of content/services provided by Astrology.net
  made by persons who are linked to the Astrology.net website directly from the
  Company's website (10% for aggregate purchases of up to $1,000 in any given
  month and 20% for aggregate purchases exceeding $1,000 per month).

Banner
  Advertising

In addition to membership fees and online shopping, the Company
  hopes to generate revenue through the sale of banner advertising. Once traffic
  on the Company's website reach 1,000,000 page views per month, the website will
  be marketable to major corporations for banner advertising. A page view is the
  number of times each page throughout the site has been viewed by multiple users.

Competition

The Company competes with numerous entities that provide matchmaking/dating
  services to the public in a variety of manners. The Company has identified four
  sources of competition: traditional "offline" dating agencies, personal advertisements,
  telepersonals and other online dating services.



The Company competes with traditional "offline" dating agencies
  that provide matchmaking services to single adults. These are typically local
  services which serve defined and limited geographic areas. These services typically
  charge clients a fee for their service and do not facilitate interaction beyond
  introducing their clients to one another. By virtue of delivering its services
  via the Internet, the Company can reach a market that is international in scope.
  Marketing efforts will initially focus primarily on Canada and the U.S., but
  the Company is in a position to deliver its services anywhere in the world.
  This represents a significant advantage for the Company relative to traditional
  local dating agencies. In addition, the Company offers a range of services and
  forums that facilitate interaction between single people prior to them actually
  meeting in person. This type of service has generally not been provided by traditional
  dating agencies. Finally, the Company's internet based service allows delivery
  of the service directly to an individual's home computer This allows members
  to interact socially from the comfort of their own home, until such time as
  they wish to interact with other members in a more direct fashion. The primary
  competitive disadvantage for the Company relative to "offline" dating services,
  is the Company's reliance on the Internet to deliver its services, which limits
  the Company's market to personal computer users with Internet access. Traditional
  dating services have no such market restriction. Nonetheless, for the reasons
  discussed above, the Company believes that its use of the Internet as a means
  of service/product delivery is also the Company's primary competitive advantage
  over traditional dating services. In addition, the Company expects the use of
  the Internet to

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increase dramatically in the coming years, significantly offsetting
  any advantage "offline" dating agencies may have in this regard.



Single adults seeking companionship or romance often place
  personal advertisements in newspapers and other periodical publications. The
  Company thus competes with newspapers and other periodicals for a portion of
  the market share. Similar to "offline" dating agencies, periodicals are subject
  to geographic restrictions with respect to the market they can operate in. They
  can be costly and do not have an interactive component as the Company's Internet
  based service does. Without an interactive component, participants are forced
  to communicate directly, either via telephone or in person, perhaps more quickly
  than they would like. As discussed above, the Company's Internet based service
  allows members to interact from the comfort and security of their homes prior
  to arranging person to person contact with a prospective companion. Personal
  advertisements also have the advantage of being accessible to individuals without
  computers and Internet access. As discussed above, however, the Company believes
  that the use of the Internet will increase dramatically in the coming years,
  thereby offsetting a significant portion of the advantage of offline services
  in this regard.



Telepersonal services enable users to record personal advertisements
  that can then be accessed by other individuals over the telephone. Fees are
  often based on time spent using the service. Telepersonal advertisements have
  some of the same drawbacks relative to the Company's Internet based service
  that the other services described above have. They do not facilitate any social
  interaction prior to a person to person or telephone meeting with a prospective
  companion. Telephone use is, however, much more widespread than Internet use,
  providing telepersonal matchmaking service providers with an advantage over
  the Company in terms of accessibility of the service. This competitive advantage
  will only be overcome if Internet use becomes as widespread as telephone use,
  making the Company's products and services as accessible as those of telepersonal
  matchmaking services.

Online Dating Services

There are many other websites that provide services similar
  to those that are provided by the Company. The information below provides a
  summary of what the Company believes to be the most successful direct competition.

Match.com


Match.com was purchased in 1999 by Ticket Master for a reported
  $50 million. Match.com is considered a leading online matchmaking and dating
  service that targets single adults and provides them with a convenient and private
  environment for meeting other singles. Match.com and their networks claim that
  their service served approximately 857,000 paying subscribers and has attracted
  more than 18 million members.

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MatchMaker.com

MatchMaker.com was purchased in August 2000 by Lycos for a
  reported $45 million (Lycos was subsequently purchased by Terra Networks SA
  and is now Terra Lycos). Matchmaker.com can be considered a leading online matchmaking
  and dating service that offers single adults a convenient and private environment
  for meeting other singles. Matchmaker.com claims that there are over 3 million
  members who regularly visit the site. MatchMaker.com derives the majority of
  its revenue from subscription fees and advertising sales.

MatchNet,
  PLC


MatchNet, PLC considers itself to be 1 of the 3 top online
  dating and romance companies worldwide. They report more than 7.0 million registered
  users throughout their network of online dating and romance websites. MatchNet,
  PLC's network consists of a number of sites worldwide: AmericanSingles.com catering
  to the United States; MatchNet.de catering to Germany; MatchNet.co.uk catering
  to the United Kingdom; MatchNet.com.au catering to Australia, CollegeLuv.com
  targeting college age members, Glimpse.com targets the gay and lesbian community.
  MatchNet, PLC also owns and operates Jdate.com targeting the Jewish online dating
  population. MatchNet, PLC derives the majority of its revenue from subscription
  fees and advertising sales generated across its network of sites.

G eneral


While the Company provides certain products and services that
  management believes are not currently being provided by the Company's online
  competitors, the Company is still at a competitive disadvantage relative to
  the online competitors listed above because of their established market presence.
  The Company will have to capture a market share before it can effectively compete
  with established online competitors. Established competitors have revenues to
  further develop and enhance their products and services, while the Company is
  dependent on additional financing to do so. Refer to "Assessment of Competition"
  below for a discussion of the relative competitive advantages of established
  online matchmaking service providers.



The Company's primary competition comes from other online
  dating services. The Company's management is of the view that online matchmaking/dating
  services are superior to services provided by offline competitors and that the
  major barrier to their success relative to offline competitors is that internet
  use, despite having expanded rapidly in recent years, is still not universally
  available in the Company's target market. Management is of the view that once
  Internet access becomes more widespread, online matchmaking services should
  displace offline competition. The interactive component of the online service,
  particularly the potential to foster extensive interaction prior to person to
  person meetings, should make use of online services more appealing than offline
  services to single adults seeking companionship. There is no guarantee, however,
  that access to and use of the Internet will increase. Even if access to and
  use of the Internet do increase, there is no guarantee that online services
  will displace offline competitors or that the Company will capture a substantial
  portion of the online market.

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The Company's website is currently functional, but membership
  recruitment is at a very early stage. Established competitors therefore have
  an advantage over the Company in that they have already captured a share of
  the market and thus have an established market presence. The Company has been
  focusing its efforts on raising equity capital to invest in marketing of its
  services, which it hopes will increase membership. Lack of equity funding has
  prevented the Company from making significant investments in marketing to date.

Achieving critical mass with respect to market share is critical
  for a business of the nature of the Company's. The Company's service will only
  be useful to consumers once a certain level of membership is attained. Competitors
  who already have an established market share are, therefore, in a better competitive
  position than the Company. The Company hopes to offset any such competitive
  advantages by offering products and services that are superior in quality and
  more appealing than those of their competitors and by launching an effective
  marketing campaign. There is no guarantee, however, that the Company will be
  able to accomplish this. Given the Company's current financial resources it
  will be difficult for the Company to compete effectively with established online
  competitors. Management hopes, however, that the quality of the Company's products
  and services will enable it to compete with more established competitors over
  the long term.

The Company's primary objectives in the immediate future are
  to market its products/services and attain a broadly based diverse membership.
  To do so will require capital. The Company relies on equity financing to acquire
  capital for marketing and product development. There is no guarantee that financing
  sufficient to enable the Company to meet its objectives will be available in
  the future. The Company will thus be at a competitive disadvantage relative
  to more established competitors with greater access to capital. Established
  competitors with cash flow from revenues may be in a better position to capture
  a share of the available market.

Intellectual Property Rights


The Company relies on copyrights, trademarks, trade secret
  laws and contractual restrictions to establish and protect its proprietary rights
  in its services and products. The Company does not at this time have any patented
  technology that would prevent competitors from entering into its market. In
  addition, the Company has not registered any of its copyrighted software or
  trademarks. There can, therefore, be no assurance that the Company will be able
  to protect its proprietary rights from use by its competitors. The Company's
  management believes, however, that the steps taken by the Company to protect
  its intellectual property are consistent with industry standards for online
  businesses. The Company protects proprietary software primarily by maintaining
  secrecy with respect to source codes and other information pertaining to the
  Company's software. Consultants conducting development work on the Company's
  technology are bound by confidentiality clauses that restrict dissemination
  of proprietary technical information related to the Company's products. The
  Company also relies on third party software licenses in the conduct of its business.

To date, the Company has received no notification that its
  services or products infringe the proprietary rights of third parties. Third
  parties could, however, make such claims of infringement in the future. Any
  future claims that do occur may have a material adverse effect on the Company
  and its business. Refer to "Risk Factors" herein.

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13

Government Regulation

As at the date of filing, there are few laws and regulations
  that apply specifically to access to or commerce on the Internet. Due to the
  increasing popularity of use of the internet, however, it is possible that laws
  and regulations with respect to the internet may be adopted at federal, state
  and even local levels, covering issues such as user privacy, freedom of expression,
  pricing, characteristics and quality of products and services, taxation, advertising,
  intellectual property rights, information security and the convergence of traditional
  telecommunications services with Internet communications. Such future regulations
  may end up having a material adverse affect on the Company and its business.
  Refer to "Risk Factors" herein.

Employees and Consultants


The Company has no full or part time employees. The Company
  retains consultants to provide it with services related to the administration,
  management and development of the Company. The Company pays $2,500 per month
  to MCS Management Ltd., a private company wholly owned by Marlene Schluter,
  director, secretary and treasurer of the Company, for management and administrative
  services provided by MCS Management Ltd. The Company pays $2,500 per month to
  Netgain Management Solutions Inc., a private company wholly owned by Chad Lee,
  director and president of the Company, for management and administrative services
  provided by Netgain Management Solutions Inc.

The Company retains the services of 3 web-programming consultants
  to perform maintenance and additional development work on an as needed basis.
  The consultants work under the Company's direct supervision and their payment
  is tied to and based on the completion of specific tasks. No written agreements
  have been entered into between the Company and the consultants. The Company
  has no obligations to the consultants, and the consultants have no obligations
  to the Company, beyond the completion of each specified task or segment of development
  work.

Risk Factors


Prospective investors should consider carefully the following
  risk factors, in addition to the other information contained in this Report
  concerning the Registrant and its business, before making any investment in
  the Registrant's securities.

Potential for Failure of the Company's Business

The Company may not be successful in its effort to further
  its business. Even if the Company was to successfully meet the goals it has
  set for itself the aforesaid goals may not be achieved within the respective
  time frames set for them herein. The limited extent of the Company's assets
  and the Company's stage of development as well as the Company's limited operating
  history make it subject to the risks associated with start-up companies. For
  example, the Company, like many start-up companies, does not have significant
  revenues and may experience cash flow difficulties. It may, therefore, be required
  to rely on equity or bank financing to meet any cash needs in the short term.
  Such financing may not be available. In

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14

addition, the Company does not have an established presence
  in its target market and its name is not well known to consumers in that market.
  There is no guarantee that the Company will ever establish a significant presence
  in its target market. Earning revenue depends on successful development of products
  and services. The Company may require additional financing to fully develop
  its products and services and, as discussed above, such financing may not be
  available when required. Any or all of these factors may cause the Company's
  business to fail.

Ability to Retain Qualified Management Personnel

The Company's present management structure, although adequate
  for the early stage of its operations, will likely have to be significantly
  augmented as operations commence and expand. The ability of the Company to recruit
  and retain capable and effective individuals is unknown. The loss of the services
  of its current officers, or the inability of the Company to attract, motivate
  and retain highly qualified executive personnel in the future could result in
  failure of or cause serious disruption to the Company's business.

Competition in the Online and Offline Matchmaking Service
  Market

The Company intends to enter into the internet/e-commerce
  market. This market is subject to intense competition from both private and
  public businesses nationally and/or around the world, many of who have greater
  financial and technical resources than the Company. The Company competes with
  more established competitors in the Internet matchmaking and e-commerce businesses
  and may have difficulty establishing a significant market presence. In addition,
  the Company competes with the more established offline matchmaking/dating services
  industry. Competition from these sources as well as any other future competition
  may be insurmountable for the Company. If the Company is unable to compete in
  this marketplace, its business may fail. Refer to the section entitled "Competition"
  herein.

Adverse Effects of Incorrect Financial Assumptions

The Company will rely on internally prepared forecasted financial
  statements, which are predicated on certain assumptions, including assumptions
  of revenue and expense and the occurrence of certain future events, which in
  turn were based on management's considered assessment of prevailing conditions
  and management's best estimates of future events. Should, for example, product
  yields or prices deviate from the levels assumed in the internal forecasted
  statements, then the Company's projected revenue and profits will be less than
  projected. Similarly, should the Company's actual costs exceed the assumed levels,
  then the Company's projected profits would likewise be less than projected.
  In the final analysis, any return to an investor in the Company will in large
  part be determined by management's ability to execute the Company's plan as
  projected, and there can be no assurances provided of their success with respect
  thereto. There can be no assurances whatsoever as to the future financial performance
  of the Company. Projections are based upon current information and certain extrinsic
  factors, some of which are beyond the control of the Company, and/or subject
  to various assumptions, such as the Company's ability to obtain additional financing
  and its ability to implement its plan.

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15

Absence of Operating History

The Company was incorporated on May 7, 1997. As discussed above,
  however, the Company was previously a mineral exploration company and it has
  not had an extensive operating history in the internet/e-commerce business.
  Most of its efforts to date have been focused on the development and marketing
  of its website. The Company has no revenues from operations and has yet to produce
  a profit. Failure to achieve projected rates of market penetration could significantly
  affect the Company's pattern of revenues and expense, and accordingly future
  cash flow. Therefore, the Company's stockholders should be prepared to bear
  the economic risk of losing their entire investment.

Designation as a Penny Stock


The Company's securities may be deemed "penny stock" as defined
  in Rule 3a51-1 of the Securities and Exchange Act of 1934, as amended. Such
  a designation could have a material adverse effect on the development of the
  public market for shares of the Company's common stock or, if such a market
  develops, its continuation, since broker-dealers are required to personally
  determine whether an investment in such securities is suitable for customers
  prior to any solicitation of any offer to purchase these securities. Compliance
  with procedures relating to sale by broker-dealers of "penny stocks" may make
  it more difficult for purchasers of the Company's common stock to resell their
  shares to third parties or to otherwise dispose of such shares.

Ability To Raise Additional Capital


The Company may not be able to raise additional funds for
  expansion and/or growth. If such funds are not available the Company's business
  may fail and investors may lose their entire investment. Additional financing
  may come in the form of securities offerings or from bank financing. If additional
  shares are issued to raise capital, existing shareholders will suffer a dilution
  of their stock ownership in the Company. In the event the Company has not achieved
  certain milestones, or consummated further financings, the Company will have
  severe cash flow and liquidity problems and may cease at that point to be a
  viable commercial entity. Refer to the section entitled "Plan of Operation 
  Cash Requirements" for a discussion of the Company's finances.

Potential Conflicts Of Interest


There are various interrelationships between the officers
  and directors of the Company that may create conflicts of interest that may
  be detrimental to the Company. The Company's directors and officers will deal
  with any such conflicts of interest, should they arise, in accordance with applicable
  corporate law principles.

No Foreseeable Dividends

The Company does not anticipate paying dividends on its common
  stock in the foreseeable future but plans to retain earnings, if any, for the
  operation, growth and expansion of its business.

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16

Failure to Obtain Permits and Licenses

The operations of the Company may require licenses and permits
  from various governmental authorities. There can be no assurance that the Company
  will be able to obtain all necessary licenses and permits that may be required
  to carry out its plan.

Loss of Interest in Intellectual Property / Claims of Infringement
  by Third Parties

The Company does not have any patents for its technology and
  has not registered any of its copyrighted software or trademarks. There can,
  therefore, be no assurance that the Company will be able to protect its proprietary
  rights from use by its competitors. The commercial success of the Company may
  also depend upon its products and services not infringing any intellectual property
  rights of others and upon no such claims of infringement being made. Management
  is currently unaware of any such infringement or actual or potential claim of
  infringement. It is possible, however, that such infringements or claims exist.
  If any claims of infringement are made, the Company may be held liable for damages
  for such infringement and be required to pay cash compensation. The Company
  may also be forced to stop using technology upon which it is currently dependent
  if use of that technology is found to infringe proprietary rights held by others.

Currency Fluctuation


The Company's potential operations make it subject to foreign
  currency fluctuation and such fluctuation may adversely affect the Company's
  financial position and results. There can be no assurance that steps taken by
  management to address foreign currency fluctuations will eliminate all adverse
  effects and accordingly, the Company may suffer losses due to adverse foreign
  currency fluctuation. Such fluctuations may also influence future contribution
  margins.

Access to Technology by Competitors


The technology necessary to create a service such as the one
  the Company will be offering exists today and is readily accessible. The Company's
  line of business may, therefore, be easily entered by would-be competitors.

Lack of Market Acceptance of the Internet as a Means of
  Conducting Commercial Transactions

In management's view, use of the Internet by consumers, despite
  having expanded rapidly in recent years, is still at an early stage of development.
  Market acceptance of the Internet as a commercial medium is, therefore, subject
  to a high level of uncertainty. The Company expects to experience significant
  fluctuations in operating results in future periods due to a variety of factors,
  including, but not limited to:

market acceptance of the Internet as a commercial medium for consumers;
    the Company's ability to create and deliver internet content in order
      to attract users to its websites to purchase its product and/or services,
      and to attract advertisers to its website


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17

- the ability of the Company to produce content which
      will be attractive to a sufficient number of users to generate significant
      revenues;
- intense competition from other providers of related
      content over the Internet;
- delays or errors in the Company's ability to effect
      electronic commerce transactions;
- the Company's ability to upgrade and develop its systems
      and infrastructure in a timely and effective manner;
- technical difficulties, and/or system downtime;
- the Company's ability to attract customers at a steady
      rate and maintainc ustomer satisfaction;
- seasonality of the industry;
- seasonality of advertising sales;
- Company promotions and sales programs;
- the amount and timing of operating costs and capital
      expenditures relating to expansion of the Company's business, operations
      and infrastructure and the implementation of marketing programs, key agreements
      and strategic alliances;
- the level of returns experienced by the Company; and
- general economic conditions and economic conditions
      specific to the Internet, on-line commerce industry.

Dependence on Telecommunication Infrastructure

The Company's services are dependent on the use of the Internet
  and telephone connections. Any interruptions, delays or capacity problems experienced
  on the Internet or with the telephone connection could adversely affect the
  ability of the Company to provide its services. The telecommunications industry
  is subject to regulatory control. Amendments to current regulations could disrupt
  or adversely affect the profitability of the Company's business. The Company's
  business is highly dependent on its computer and telecommunications systems
  for the operation and quality of its services. The temporary or permanent loss
  of all or a portion of either system, or significant replacement delays, for
  whatever reason, could cause disruption of the Company's business activities
  and result in loss of revenues.

ITEM 2:            DESCRIPTION
  OF PROPERTY

Office Space


Pursuant to a Lease Agreement between the Company and S&W
  97 Enterprises Ltd. dated effective November 1, 2001, the Company formerly leased
  826 square feet of office space from S&W Enterprises Ltd. The lease was
  for a one-year term and was renewed for an additional year. The renewal term
  expired on November 1, 2003. After the expiry of the renewal term, the Company
  reduced the amount of office space and negotiated a commensurate reduction in
  the monthly rent. The Company now rents 488 square feet of office space on a
  month to month basis and pays a total of $900 (Canadian) per month rent plus
  7% Goods and Services Tax.

Computer Equipment


The Company owns the following computer equipment:

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18

- Compaq Proliant 1600R Pentium 3 - 500 Megahertz Servers (3)
- Sun Microsystems E450 Server (1)
- Sun Microsystems Netra T-1 Server (3)
- Campus Pentium Celeron 366MMX Processors (3)
- Campus Pentium 3- 500 Megahertz Processor (1)
- HP 8200CD Writer (1)
- 17" Hansol Flat Screen SVGA Color Monitors(1)
- 17" Samsung Flat Screen SVGA Color Monitor(2)
- Sun Microsystems Ultra 5 Server (1)
- APC AP9004 Back Up Power Supply (1)
- Seagate 8Gb Travan Tape Back Up (1)
- Xerox DocuPrint Color Printer
- 17" Flat Screen SVGA Color Monitors (2)
- Hewlett Packard Scanjet 4200C Printer (1)
- 60 Watt Power Amplified Speakers (2)
- Cannon B640 Fax Machine

ITEM 3:LEGAL
  PROCEEDINGS

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

ITEM 4:            SUBMISSION
  OR MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during
  the fourth quarter of the fiscal year covered by this report, through the solicitation
  of proxies or otherwise.

PART II

ITEM 5:            MARKET
  FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Principal Markets

The Company's common shares are traded on the over the counter
  market, with quotations posted on the NASD Over-the-Counter Bulletin Board under
  the ticker symbol ONIN. Prior to May 5, 1999, the common shares of the Company
  traded under the ticker symbol SLOG, reflecting the previous name of the Company,
  Sinaloa Gold Corp. On May 5, 1999, the Company began trading under the ticker
  symbol ONIN.

The Company's shares are also listed to trade on the Third
  Market Segment (the Regulated Unofficial Market) of the Frankfurt Stock Exchange
  under the symbol ONN, although trading of the Company's shares on this exchange
  is very sporadic.

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19

High and Low Bid Information

The common shares of the Company began trading on February
  24, 1998 under the ticker symbol SLOG on the OTCBB. Between April 6, 2000 and
  October 23, 2000, the Company's shares were not eligible for quotation on the
  OTCBB and were quoted only on the NQSB Pink Sheet Quotation System. Since October
  23, 2000, the Company's shares have been quoted on the OTCBB. The Company's
  shares are also listed to trade on the Third Market Segment (the Regulated Unofficial
  Market) of the Frankfurt Stock Exchange under the symbol ONN. The following
  table sets out high and low sale prices for the Company's common shares for
  each quarter within the last two fiscal years.

|Quarter Ended      | High | Low  
|------------------ | ---- | -----
|June 30, 2002      | 0.47 | 0.38 
|September 30, 2002 | 0.66 | 0.38 
|December 31, 2002  | 0.75 | 0.41 
|March 31, 2003     | 0.80 | 0.40 
|June 30, 2003      | 0.60 | 0.08 
|September 30,2003  | 0.35 | 0.145
|December 31, 2003  | 0.44 | 0.145
|March 31, 2004     | 0.51 | 0.30 
|June 30, 2004      | 0.72 | 0.26 

Quote data is obtained from Canada Stockwatch. Quotations
  posted on the OTCBB and the NQSB Pink Sheet quotation system reflect inter-dealer
  prices, without retail mark-up, mark-down or commission and may not necessarily
  represent actual transactions.

Holders

As at September 24 2004 there were approximately 59 stockholders
  of record holding 17,004,166 common shares of the Company.

Dividends

The Company has not declared any cash dividends on its common
  shares for the last 2 fiscal years or any subsequent interim period. The Company
  does not intend to pay cash dividends in the foreseeable future.

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20

Securities Offered For Issuance Under Equity Compensation Plans

|Plan Category                                                          | (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrantsand Rights | (b)Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | (c) Number of Securities Remaining Available ForFuture IssuanceUnder EquityCompensationPlans (Excluding Securities Reflected in Column (a))
|---------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------
|Equity Compensation Plans Approved by
      Security Holders           | Nil                                                                                            | N/A                                                                            | 1,500,000                                                                                                                                  
|Equity   Compensation Plans  
      Not Approved by   Security Holders | Nil                                                                                            | N/A                                                                            | Nil                                                                                                                                        
|Total:                                                                 | Nil                                                                                            | N/A                                                                            | 1,500,000                                                                                                                                  

At its annual meeting of stockholders held on December 4,
  2000, a 2000 Incentive Stock Option Plan (the "Plan") was approved by the Company's
  stockholders. Pursuant to a directors' resolution dated October 20, 2000, the
  Plan was adopted by the Company's directors subject only to receipt of stockholder
  approval. The plan authorizes the granting of options to purchase up to 1,500,000
  of the Company's common shares. Pursuant to the Plan, options may be granted
  to directors, officers, employees, consultants and other service providers.
  The aggregate fair market value of options that may be held by any one optionee
  at any given time may not exceed $100,000. The exercise price of an option granted
  must be at least equal to the fair market value of a share of common stock of
  the Company on the date the option is granted. No options have yet been granted
  pursuant to the Plan, to directors or officers of the Company or to any other
  entities.

Recent Sales of Unregistered Securities


Other than as disclosed herein, no equity securities were
  sold by the Company during the quarter ended June 30, 2004. Details with respect
  to equity securities sold by the Company in the three preceding quarters of
  the fiscal year ended June 30, 2004 are set out in the Company's quarterly reports
  on Form 10QSB for those periods. The Company's quarterly reports were filed
  via EDGAR and are available online.

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21

ITEM 6:            PLAN
  OF OPERATION

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

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

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

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

Forward Looking Statements


All statements, other than statements of historical facts,
  included in this report that address activities, events or developments that
  the Company expects, believes, intends or anticipates will or may occur in the
  future, are forward-looking statements. Forward-looking statements are inherently
  subject to risks and uncertainties, many of which cannot be predicted with accuracy
  and some of which might not even be anticipated. Future events and actual results,

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22

financial and otherwise, could differ materially from those
  set forth in or contemplated by the forward-looking statements herein. These
  risks and uncertainties include, but are not limited to, the Company's reliance
  on current revenues; the uncertainties associated with the introduction of new
  products/services; management of growth, including the ability to attract and
  retain qualified employees; the ability to integrate acquisitions made by the
  Company and the costs associated with such acquisitions; dependence on its principal
  executive officer; substantial competition from larger companies with greater
  financial and other resources than the Company; the success of its marketing
  strategy; its dependence on suppliers for some of its products; currency fluctuations
  and other risks associated with foreign sales and foreign operations; quarterly
  fluctuations in revenues, income and overhead expense; and potential product
  liability risk associated with its existing and future products. Readers are
  cautioned not to put undue reliance on forward-looking statements. The Company
  disclaims any intent or obligation to update publicly these forward-looking
  statements, whether as a result of new information, future events or otherwise.

Marketing Strategies

General

Management believes that marketing will be the key to the
  Company's success in the short term and in the long term. As a result, management
  intends to focus as much of its energies as possible in the upcoming 12 months
  on marketing activities. The Company intends to advertise online, through print
  media and possibly, depending on the resources available, through television,
  radio and billboards. The Company's goal is to capture 50,000 subscribing members
  in each of the three years following the launch of the website, for a total
  of 150,000 members within three years of launch. The target market for the Company's
  service is single adults, aged 18-49, with basic computer skills and access
  to the Internet. The Company intends to focus on the North American market in
  the short term and consider other markets at a later date.

As of September 24, 2004, the website had 76,161 registered
  members. The Company hopes to increase this number once it has secured the financing
  necessary to undertake more intensive marketing activities. The Company's inability
  to secure adequate financing since the launch of the website has limited its
  ability to invest money into marketing its flagship property. The Company's
  ability to undertake marketing activities in the upcoming 12 months will be
  dependent on its ability to secure financing. Readers should refer to the section
  entitled "Cash Requirements" for a discussion of the Company's attempts to raise
  capital in the past quarter and its plans to raise capital in the upcoming year.

Online Advertising

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

Affiliations with other websites also provide an avenue for
  marketing for Internet companies. Companies with similar markets can form various
  types of strategic alliances to promote one another's products and services.
  The key component is usually a link to the affiliate

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23

company's website. In the upcoming 12 months, the Company
  will continue with its efforts to forge strategic partnerships with key industry
  players. The Company hopes that by doing so it will be able to increase traffic
  on its website.

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

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

Print Media, T.V., Radio and Billboards


While management is of the view that online advertising is
  the most cost-effective marketing tool, it also believes that other, more traditional
  methods of marketing will be effective and must be developed to the fullest
  extent possible. Management envisions placing advertisements in the personals
  sections of major newspapers and in high circulation magazines with general
  readership to brand the VirtuallyDating name and to expose the Company to a
  wider audience. Determination as to whether these types of advertisements will
  be placed will depend on funds available in the upcoming 12 months. In addition,
  advertisements on television, radio and on billboards will be considered and
  utilized if the Company has the capital available to purchase advertising space/time
  from these sources.

Current Marketing Efforts


In the period covered by this report the Company focused its
  marketing efforts on pay per click search engine placements to drive traffic
  to the website with several of the major and smaller search engine providers.
  The Company also explored and tested small opt-in (permission based) email campaigns
  as a way to expose the Company's product to a broad audience. These marketing
  activities were arranged by the Company and by marketing consultants retained
  by the Company as described below.

On August 1, 2002, the Company entered into an agreement with
  Fortune Capital Management (USA) Inc. ("Fortune"), pursuant to which Fortune
  has agreed to provide sales and marketing services to the Company. Under the
  terms of the agreement, Fortune is to provide marketing concepts for the VirtuallyDating
  website, explore strategic partnerships for the website and provide conceptual
  design for marketing materials to advertise the website. The Company pays $2,500
  per month to Fortune and reimburses Fortune for expenses incurred in carrying
  out its duties under the agreement. The Agreement was originally for a term
  of 12 months but is being continued on a month to month basis by mutual agreement
  between the parties.

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24

Additional Website Development

The Company retains the services of 3 web-programming consultants
  to perform maintenance and additional development work on an as needed basis.
  The consultants work under the Company's direct supervision and their payment
  is tied to and based on the completion of specific tasks. The Company currently
  intends to continue to develop new features which will make the website more
  attractive to prospective members when and if funds are available. Proposed
  features may include a webpage entitled "Hey Bartender" which will provide recipes
  for alcoholic cocktails. Members will be invited to post their own favorite
  recipes on the page. Another section entitled "Postcards From Stanley" may be
  created. This section would feature travel reviews of destinations geared towards
  singles.

Urban Flirt


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

Purchase of Equipment


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

Employees

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

Cash Requirements


The Company currently has sufficient working capital to meet
  its operating requirements until October 31, 2004. In order to fund business
  activity beyond this date, the Company will need to arrange additional financing.
  Website development and marketing efforts will be dependent on the Company's
  ability to raise such additional financing. Specific plans related to marketing
  and any additional website development which may occur in the upcoming months
  will be devised once financing has been completed and management knows what
  funds will be available for these purposes.

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25

On April 25, 2004, the Company negotiated a loan in the amount
  of $25,000 from Fortune Capital Management, Inc. The loan is due and payable
  on October 25, 2004 and is secured by a convertible promissory note. The loan
  bears interest at a rate of 10% per annum. The promissory note is convertible
  at the option of the noteholder at any time after October 25, 2004 into shares
  of common stock of the Company at a conversion price of $0.25 per share. The
  conversion rights may be exercised at any time after October 25, 2004, but must
  be exercised prior to payment in full of the principal amount of the loan and
  any accrued interest. The Company has the right to prepay the loan at any time
  upon 15 days written notice to the noteholder.

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

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26

ITEM 7:            FINANCIAL
  STATEMENTS







---

MOEN AND COMPANYCHARTERED ACCOUNTANTS

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

INDEPENDENT AUDITORS' REPORT

To the Directors and Shareholders of 
  Online Innovation, Inc. (A Delaware Corporation) 
  (A Development Stage Company)

We have audited the accompanying Balance Sheets of Online
  Innovation, Inc. (A Delaware Corporation) (A Development Stage Company) as of
  June 30, 2004, and June 30, 2003, and the related Statements of Income, Retained
  Earnings, Cash Flows, and Changes in Stockholders' Equity for the years 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 audits.

We conducted our audits in accordance with auditing standards
  generally accepted in the United States of America. Those standards require
  that we plan and perform the audits 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 audits provide
  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 Innovation,
  Inc. (A Delaware Corporation) (A Development Stage Company) as of June 30, 2004
  and 2003, and the results of its operations and its cash flows for the years
  then ended in conformity with accounting principles generally accepted in the
  United States of America.

|                                    | "Moen and Company"   
|----------------------------------- | ---------------------
|                                    | ("Signed")           
|                                    |                      
|                                    | Chartered Accountants
|Vancouver, British Columbia, Canada |                      
|September 21, 2004                  |                      

*"Independent Accountants and Auditors"*

---

|ONLINE INNOVATION, INC.
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Balance Sheet 
      June 30, 2004 
      (In U.S. Dollars)(With Comparative Figures at June 30, 2003)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                         



|                                                                         |   | June 30,   |  
|------------------------------------------------------------------------ | - | ---------- | -
|                                                                         |   |            |  
|                                                                         |   | 2004       |  
|                                                                         |   |            |  
|ASSETS                                                                   |  
|Current Assets                                                           |   |            |  
|Cash                                                                     | $ | 3,245      |  
|TOTAL CURRENT ASSETS                                                     |   | 3,245      |  
|Deferred tax asset                                                       |   | 52,500     |  
|Fixed assets                                                             |   |            |  
|Computer equipment,
      at cost less accumulated depreciation (Note 5) |   | 18,939     |  
|Computer software development(Note 6(b))                                 |   |            |  
|Application development stage costs                                      |   | 325,000    |  
|                                                                         |   |            |  
|TOTAL ASSETS                                                             | $ | 399,684    |  
|                                                                         |   |            |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                     |  
|                                                                         |   |            |  
|Current Liabilities                                                      |   |            |  
|Accounts payable                                                         | $ | 96,801     |  
|Management fees payable
      (Note 4(a))                                |   | 102,500    |  
|Loan payable (Note
      11)                                             |   | 25,000     |  
|Due to related parties (Notes 4(c))                                      |   | 45,067     |  
|TOTAL CURRENT LIABILITIES                                                |   | 269,368    |  
|Stockholders' Equity                                                     |   |            |  
|Capital Stock (Note
      3)                                             |   |            |  
|Authorized:                                                              |   |            |  
|75,000,000 common
      shares at $0.001 par value per share             |   |            |  
|Issued and outstanding - 17,004,166 common shares                        |   |            |  
|(2003 - 15,630,000
      common shares)                                  |   | 17,004     |  
|Paid in capital in excess of par value of stock                          |   | 2,818,763  |  
|Deficit accumulated
      during development stage (note 1)              |   | (2,697,661 | )
|Cumulative currency translation adjustments
      (Note 2(b))            |   | (7,790     | )
|TOTAL STOCKHOLDERS' EQUITY                                               |   | 130,316    |  
|                                                                         |   |            |  
|TOTAL CURRENT LIABILITIES AND STOCKHOLDERS'
      EQUITY                 | $ | 399,684    |  

Approved on Behalf of the Board

|"Chad D. Lee"         |  | , President and Chief Executive Officer and Director             
|--------------------- |  | -----------------------------------------------------------------
|                      |  |                                                                  
|"Marlene C. Schluter" |  | ,Secretary and Treasurer and Chief Financial Officer and Director

See Accompanying Notes and Independent Auditors' Report

---

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

|                                         |   | Cumulative From |   |   |            |   |   |                    |   |   |            |   |   |            |  
|---------------------------------------- | - | --------------- | - | - | ---------- | - | - | ------------------ | - | - | ---------- | - | - | ---------- | -
|                                         |   | Inception Date  |   |   |            |   |   |                    |   |   |            |   |   |            |  
|                                         |   | on Aug 1, 1997  |   |   | Year Ended |   |   | Three Months Ended |  
|                                         |   | to June 30,     |   |   | June 30,   |   |   | June 30,           |  
|                                         |   | 2004            |   |   | 2004       |   |   | 2003               |   |   | 2004       |   |   | 2003       |  
|                                         |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Interest and Other Income                | $ | 1,264           |   | $ | 1,264      |   | $ | --                 |   | $ | 175        |   | $ | --         |  
|                                         |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Administration Costs                     |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Compensation on stock
      option       | $ | 150,000         |   | $ | --         |   | $ | --                 |   | $ | --         |   | $ | --         |  
|Funding agreement
      commitment costs |   | 345,600         |   |   | --         |   |   | --                 |   |   | --         |   |   | --         |  
|Depreciation                             |   | 98,150          |   |   | 13,876     |   |   | 13,876             |   |   | 3,469      |   |   | 3,469      |  
|Filing and transfer
      agent fees     |   | 28,184          |   |   | 2,427      |   |   | 5,413              |   |   | 671        |   |   | 749        |  
|Financing costs                          |   | 22,550          |   |   | --         |   |   | --                 |   |   | --         |   |   | --         |  
|Interest on loans                        |   | 7,268           |   |   | 2,417      |   |   | 4,851              |   |   | --         |   |   | --         |  
|Management and consulting
      fees     |   | 782,002         |   |   | 134,483    |   |   | 139,726            |   |   | 15,000     |   |   | 31,261     |  
|Office expenses, net                     |   | 213,327         |   |   | 32,108     |   |   | 29,422             |   |   | 8,006      |   |   | 7,541      |  
|Option payment,
      mineral properties |   | 30,000          |   |   |            |   |   | --                 |   |   | --         |   |   | --         |  
|Professional fees                        |   | 246,363         |   |   | 17,901     |   |   | 19,279             |   |   | 6,314      |   |   | 9,244      |  
|Promotion, investor
      relations,     |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|and investor communications              |   | 87,866          |   |   | 741        |   |   | 2,521              |   |   | (104       | ) |   | --         |  
|Computer technology
      and            |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|software development-preliminary         |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|development stage costs                  |   | 393,438         |   |   | 39,349     |   |   | 64,418             |   |   | 15,980     |   |   | 9,282      |  
|Website marketing/Banner                 |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|advertising costs                        |   | 296,688         |   |   | 64,330     |   |   | 35,614             |   |   | 848        |   |   | 8,163      |  
|Travel expenses                          |   | 49,989          |   |   | 10,063     |   |   | 7,896              |   |   | 7,438      |   |   | --         |  
|                                         |   | 2,751,425       |   |   | 317,695    |   |   | 323,016            |   |   | 57,622     |   |   | 69,709     |  
|Profit Before Income Taxes               |   | (2,750,161      | ) |   | (316,431   | ) |   | (323,016           | ) |   | (57,447    | ) |   | (69,709    | )
|Deferred income taxes                    |   | (52,500         | ) |   | --         |   |   | --                 |   |   | --         |   |   | --         |  
|                                         |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Net profit (loss) for the period         | $ | (2,697,661      | ) | $ | (316,431   | ) | $ | (323,016           | ) | $ | (57,447    | ) | $ | (69,709    | )
|                                         |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Weighted Average Share Outstanding       |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Basic                                    |   |                 |   |   | 16,433,752 |   |   | 15,345,000         |   |   | 16,433,752 |   |   | 15,345,000 |  
|Diluted                                  |   |                 |   |   | 17,933,752 |   |   | 16,845,000         |   |   | 17,933,752 |   |   | 16,845,000 |  
|                                         |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Net loss per common share(Note 8)        |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Basic                                    |   |                 |   | $ | (0.02      | ) | $ | (0.02              | ) | $ | (0.00      | ) | $ | (0.00      | )
|Diluted                                  |   |                 |   | $ | (0.02      | ) | $ | (0.02              | ) | $ | (0.00      | ) | $ | (0.00      | )

See Accompanying Notes and Independent Auditors' Report

---

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

|                                                |   | Cumulative From |   |   |            |   |   |                    |   |   |         |   |   |         |  
|----------------------------------------------- | - | --------------- | - | - | ---------- | - | - | ------------------ | - | - | ------- | - | - | ------- | -
|                                                |   | Inception Date  |   |   |            |   |   |                    |   |   |         |   |   |         |  
|                                                |   | on Aug 1, 1997  |   |   | Year Ended |   |   | Three Months Ended |  
|                                                |   | to June 30,     |   |   | June 30,   |   |   | June 30,           |  
|                                                |   | 2004            |   |   | 2004       |   |   | 2003               |   |   | 2004    |   |   | 2003    |  
|Cash Provided by (Used for)                     |   |                 |   |   |            |   |   |                    |   |   |         |   |   |         |  
|Operating Activities                            |   |                 |   |   |            |   |   |                    |   |   |         |   |   |         |  
|Net profit (loss) for
      the period          | $ | (2,697,661      | ) | $ | (316,431   | ) | $ | (323,016           | ) | $ | (57,447 | ) | $ | (69,709 | )
|Items not requiring
      use of cash:          |   |                 |   |   |            |   |   |                    |   |   |         |   |   |         |  
|Shares issued for funding agreement             |   |                 |   |   |            |   |   |                    |   |   |         |   |   |         |  
|commitment costs                                |   | 345,600         |   |   | --         |   |   | --                 |   |   | --      |   |   | --      |  
|Shares issued for assignment of                 |   |                 |   |   |            |   |   |                    |   |   |         |   |   |         |  
|option on mineral
      properties              |   | 30,000          |   |   | --         |   |   | --                 |   |   | --      |   |   | --      |  
|Shares issued for compensation                  |   |                 |   |   |            |   |   |                    |   |   |         |   |   |         |  
|on stock options                                |   | 150,000         |   |   | --         |   |   | --                 |   |   | --      |   |   | --      |  
|Shares issued for private business              |   | 200,000         |   |   | --         |   |   | --                 |   |   | --      |   |   | --      |  
|Shares cancellation                             |   | (82,250         | ) |   | --         |   |   | --                 |   |   | --      |   |   | --      |  
|Shares issued for services and loan payable     |   | 95,417          |   |   | 62,417     |   |   | 3,000              |   |   | --      |   |   | --      |  
|Depreciation                                    |   | 98,150          |   |   | 13,876     |   |   | 13,876             |   |   | 3,469   |   |   | 3,469   |  
|Cumulative currency translation adjustments     |   | (7,790          | ) |   | (9,190     | ) |   | 1,126              |   |   | (1,834  | ) |   | --      |  
|Changes in non-cash
      working capital items |   |                 |   |   |            |   |   |                    |   |   |         |   |   |         |  
|Deferred income tax                             |   | (52,500         | ) |   | --         |   |   | --                 |   |   | --      |   |   | --      |  
|Share subscriptions receivable                  |   | --              |   |   | --         |   |   | --                 |   |   |         |   |   | --      |  
|Prepaid expense                                 |   | --              |   |   | --         |   |   | 2,209              |   |   | --      |   |   |         |  
|Accounts payable                                |   | 96,801          |   |   | 56,812     |   |   | (6,538             | ) |   | 689     |   |   | 7,952   |  
|Management fees payable                         |   | 102,500         |   |   | 47,500     |   |   | 2,500              |   |   | 15,000  |   |   |         |  
|Cash used for operating activities              |   | (1,721,733      | ) |   | (145,016   | ) |   | (306,843           | ) |   | (40,123 | ) |   | (58,288 | )
|Investing Activities                            |   |                 |   |   |            |   |   |                    |   |   |         |   |   |         |  
|Computer software development                   |   |                 |   |   |            |   |   |                    |   |   |         |   |   |         |  
|Application development stage costs             |   | (325,000        | ) |   | --         |   |   | --                 |   |   | --      |   |   | --      |  
|Fixed assets purchased                          |   | (117,089        | ) |   | --         |   |   | (435               | ) |   | --      |   |   | --      |  
|Cash used for investing purposes                |   | (442,089        | ) |   | --         |   |   | (435               | ) |   | --      |   |   | --      |  
|Financing Activities                            |   |                 |   |   |            |   |   |                    |   |   |         |   |   |         |  
|Capital stock subscribed                        |   | 2,097,000       |   |   | 112,500    |   |   | 395,000            |   |   | --      |   |   | 60,000  |  
|Loan payable (repayment)                        |   | 25,000          |   |   | 25,000     |   |   | (55,000            | ) |   | 25,000  |   |   | --      |  
|Loan from Fusion Capital
      (repayment)      |   | --              |   |   | --         |   |   | (50,000            | ) |   | --      |   |   | --      |  
|Due to related parties                          |   | 45,067          |   |   | 955        |   |   | 14,112             |   |   | --      |   |   |         |  
|Cash provided by financing activities           |   | 2,167,067       |   |   | 138,455    |   |   | 304,112            |   |   | 25,000  |   |   | 60,000  |  
|Cash increase (decrease)                        |   |                 |   |   |            |   |   |                    |   |   |         |   |   |         |  
|during the period                               |   | 3,245           |   |   | (6,561     | ) |   | (3,166             | ) |   | (15,123 | ) |   | 1,712   |  
|Cash, Beginning of period                       |   | --              |   |   | 9,806      |   |   | 12,972             |   |   | 18,368  |   |   | 8,094   |  
|                                                |   |                 |   |   |            |   |   |                    |   |   |         |   |   |         |  
|Cash, End of period                             | $ | 3,245           |   | $ | 3,245      |   | $ | 9,806              |   | $ | 3,245   |   | $ | 9,806   |  

See Accompanying Notes and Independent Auditors' Report

---

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

|                                     |   | Cumulative From |   |   |            |   |   |                    |   |   |            |   |   |            |  
|------------------------------------ | - | --------------- | - | - | ---------- | - | - | ------------------ | - | - | ---------- | - | - | ---------- | -
|                                     |   | Inception Date  |   |   |            |   |   |                    |   |   |            |   |   |            |  
|                                     |   | of Aug 1, 1997  |   |   | Year Ended |   |   | Three Months Ended |  
|                                     |   | to June 30,     |   |   | June 30,   |   |   | June 30,           |  
|                                     |   | 2004            |   |   | 2004       |   |   | 2003               |   |   | 2004       |   |   | 2003       |  
|                                     |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Balance (deficit), beginning of year | $ | --              |   | $ | (2,381,230 | ) | $ | (2,058,214         | ) | $ | (2,640,214 | ) | $ | (2,311,521 | )
|                                     |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Net profit (loss) for the period     |   | (2,697,661      | ) |   | (316,431   | ) |   | (323,016           | ) |   | (57,447    | ) |   | (69,709    | )
|                                     |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Balance (deficit), end of year       | $ | (2,697,661      | ) | $ | (2,697,661 | ) | $ | (2,381,230         | ) | $ | (2,697,661 | ) | $ | (2,381,230 | )

See Accompanying Notes and Independent Auditors' Report

---

|ONLINE INNOVATION, INC.
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Statement of Stockholders' EquityFrom Date of Inception on August
      1, 1997 to June 30, 2004
      (In U.S. Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                           

|                                                  |            |  |   |        |  |   |            |  |   |           |  |   |           |   |   | Cumulative  |   |   |               |  
|------------------------------------------------- | ---------- |  | - | ------ |  | - | ---------- |  | - | --------- |  | - | --------- | - | - | ----------- | - | - | ------------- | -
|                                                  | Number of  |  |   |        |  |   | Additional |  |   | Total     |  |   | Retained  |   |   | Currency    |   |   | Total         |  
|                                                  | Common     |  |   | par    |  |   | Paid-in    |  |   | Capital   |  |   | Earnings  |   |   | Translation |   |   | Stockholders' |  
|                                                  | Shares     |  |   | Value  |  |   | Capital    |  |   | Stock     |  |   | (Deficit) |   |   | Adjustments |   |   | Equity        |  
|                                                  |            |  |   |        |  |   |            |  |   |           |  |   |           |   |   |             |   |   |               |  
|Net loss for eleven
      month                   |            |  |   |        |  |   |            |  |   |           |  |   |           |   |   |             |   |   |               |  
|period ended June 30, 1998                        |            |  |   |        |  |   |            |  |   |           |  | $ | (144,175  | ) | $ |             |   | $ | (144,175      | )
|Issued for cash, @$0.01                           |            |  |   |        |  |   |            |  |   |           |  |   |           |   |   |             |   |   |               |  
|October 23, 1997                                  | 1,500,000  |  | $ | 1,500  |  | $ | 13,500     |  | $ | 15,000    |  |   |           |   |   |             |   |   | 15,000        |  
|Issued for cash, @$0.001                          |            |  |   |        |  |   |            |  |   |           |  |   |           |   |   |             |   |   |               |  
|May 8, 1997                                       | 500,000    |  |   | 500    |  |   |            |  |   | 500       |  |   |           |   |   |             |   |   | 500           |  
|Issued for assignment
      of option on          |            |  |   |        |  |   |            |  |   |           |  |   |           |   |   |             |   |   |               |  
|mineral properties, @$0.0035                      |            |  |   |        |  |   |            |  |   |           |  |   |           |   |   |             |   |   |               |  
|September
      30, 1997                          | 8,500,000  |  |   | 8,500  |  |   | 21,500     |  |   | 30,000    |  |   |           |   |   |             |   |   | 30,000        |  
|                                                  | 10,500,000 |  |   | 10,500 |  |   | 35,000     |  |   | 45,500    |  |   | (144,175  | ) |   |             |   |   | (98,675       | )
|Shares subscribed and
      fully                 |            |  |   |        |  |   |            |  |   |           |  |   |           |   |   |             |   |   |               |  
|paid and issued, @$0.50                           |            |  |   |        |  |   |            |  |   |           |  |   |           |   |   |             |   |   |               |  
|April 6, 1999                                     | 85,000     |  |   | 85     |  |   | 42,415     |  |   | 42,500    |  |   |           |   |   |             |   |   | 42,500        |  
|Balance, June 30, 1998                            | 10,585,000 |  |   | 10,585 |  |   | 77,415     |  |   | 88,000    |  |   | (144,175  | ) |   |             |   |   | (56,175       | )
|Net loss for
      year ended June 30, 1999       |            |  |   |        |  |   |            |  |   |           |  |   | (478,497  | ) |   |             |   |   | (478,497      | )
|Compensation on stock
      options               |            |  |   |        |  |   | 120,000    |  |   | 120,000   |  |   |           |   |   |             |   |   | 120,000       |  
|Cumulative currency
      translation adjustments |            |  |   |        |  |   |            |  |   |           |  |   |           |   |   | (1,055      | ) |   | (1,055        | )
|Issued for cash, @$0.50                           |            |  |   |        |  |   |            |  |   |           |  |   |           |   |   |             |   |   |               |  
|April 6, 1999                                     | 20,000     |  |   | 20     |  |   | 9,980      |  |   | 10,000    |  |   |           |   |   |             |   |   | 10,000        |  
|Issued for cash, @$0.50                           |            |  |   |        |  |   |            |  |   |           |  |   |           |   |   |             |   |   |               |  
|April 6, 1999                                     | 100,000    |  |   | 100    |  |   | 49,900     |  |   | 50,000    |  |   |           |   |   |             |   |   | 50,000        |  
|Issued for private
      business, @$0.50         |            |  |   |        |  |   |            |  |   |           |  |   |           |   |   |             |   |   |               |  
|April 2, 1999                                     | 400,000    |  |   | 400    |  |   | 199,600    |  |   | 200,000   |  |   |           |   |   |             |   |   | 200,000       |  
|Issued for cash, @$0.50                           |            |  |   |        |  |   |            |  |   |           |  |   |           |   |   |             |   |   |               |  
|April 15, 1999                                    | 1,600,000  |  |   | 1,600  |  |   | 798,400    |  |   | 800,000   |  |   |           |   |   |             |   |   | 800,000       |  
|Balance, June 30, 1999                            | 12,705,000 |  |   | 12,705 |  |   | 1,255,295  |  |   | 1,268,000 |  |   | (622,672  | ) |   | (1,055      | ) |   | 644,273       |  

See Accompanying Notes and Independent Auditors' Report

---

|ONLINE INNOVATION, INC.
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Statement of Stockholders' EquityFrom Date of Inception on August
      1, 1997 to June 30, 2004 
      (In U.S. Dollars)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                            

|                                                  |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  | Cumulative  |   |  |               |  
|------------------------------------------------- | ---------- |  |  | ------ |  |  | ---------- |  |  | --------- |  |  | ---------- | - |  | ----------- | - |  | ------------- | -
|                                                  | Number of  |  |  |        |  |  | Additional |  |  | Total     |  |  | Retained   |   |  | Currency    |   |  | Total         |  
|                                                  | Common     |  |  | par    |  |  | Paid-in    |  |  | Capital   |  |  | Earnings   |   |  | Translation |   |  | Stockholders' |  
|                                                  | Shares     |  |  | Value  |  |  | Capital    |  |  | Stock     |  |  | (Deficit)  |   |  | Adjustments |   |  | Equity        |  
|Balance, June 30, 1999                            | 12,705,000 |  |  | 12,705 |  |  | 1,255,295  |  |  | 1,268,000 |  |  | (622,672   | ) |  | (1,055      | ) |  | 644,273       |  
|Cumulative currency
      translation adjustments |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  | 543         |   |  | 543           |  
|Shares subscribed and                             |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|fully paid, @$0.50                                |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|January 4, 2000                                   | 450,000    |  |  | 450    |  |  | 224,550    |  |  | 225,000   |  |  |            |   |  |             |   |  | 225,000       |  
|Net loss for year ended                           |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|June 30, 2000                                     |            |  |  |        |  |  |            |  |  |           |  |  | (503,489   | ) |  |             |   |  | (503,489      | )
|Issued for exercise
      of option               |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|@ $0.50, March 13, 2000                           | 100,000    |  |  | 100    |  |  | 49,900     |  |  | 50,000    |  |  |            |   |  |             |   |  | 50,000        |  
|Compensation on stock
      options               |            |  |  |        |  |  | 30,000     |  |  | 30,000    |  |  |            |   |  |             |   |  | 30,000        |  
|Exercise of warrants
      @ $0.50                |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|May 9, 2000                                       | 50,000     |  |  | 50     |  |  | 24,950     |  |  | 25,000    |  |  |            |   |  |             |   |  | 25,000        |  
|Exercise of warrants
      @ $0.60                |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|June 16, 2000                                     | 66,667     |  |  | 67     |  |  | 39,933     |  |  | 40,000    |  |  |            |   |  |             |   |  | 40,000        |  
|Balance, June 30, 2000                            | 13,371,667 |  |  | 13,372 |  |  | 1,624,628  |  |  | 1,638,000 |  |  | (1,126,161 | ) |  | (512        | ) |  | 511,327       |  
|Exercise of warrants
      @$0.60                 |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|August 17, 2000                                   | 83,333     |  |  | 83     |  |  | 49,917     |  |  | 50,000    |  |  |            |   |  |             |   |  | 50,000        |  
|Exercise of warrants
      @$0.60                 |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|February 9, 2001                                  | 250,000    |  |  | 250    |  |  | 149,750    |  |  | 150,000   |  |  |            |   |  |             |   |  | 150,000       |  
|Issued for services
      at an ascribed          |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|price of $0.47 per share on                       |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|June 11, 2001                                     | 200,000    |  |  | 200    |  |  | 93,800     |  |  | 94,000    |  |  |            |   |  |             |   |  | 94,000        |  
|Issue for cash, @$0.75                            |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|June 19, 2001                                     | 50,000     |  |  | 50     |  |  | 37,450     |  |  | 37,500    |  |  |            |   |  |             |   |  | 37,500        |  
|Issued as commitment                              |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|shares at an ascribed                             |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|price of $0.54 per share on                       |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  |             |   |  |               |  
|June 25, 2001                                     | 640,000    |  |  | 640    |  |  | 344,960    |  |  | 345,600   |  |  |            |   |  |             |   |  | 345,600       |  
|Net loss for
      year ended June 30, 2001       |            |  |  |        |  |  |            |  |  |           |  |  | (796,776   | ) |  |             |   |  | (796,776      | )
|Cumulative currency translation adjustments       |            |  |  |        |  |  |            |  |  |           |  |  |            |   |  | 592         |   |  | 592           |  
|Balance, June 30, 2001                            | 14,595,000 |  |  | 14,595 |  |  | 2,300,505  |  |  | 2,315,100 |  |  | (1,922,937 | ) |  | 80          |   |  | 392,243       |  

See Accompanying Notes and Independent Auditors' Report

---

|ONLINE INNOVATION, INC.
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Statement of Stockholders' EquityFrom Date of Inception on August
      1, 1997 to June 30, 2004
      (In U.S. Dollars)
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                           

|                                                  |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   | Cumulative  |   |   |               |  
|------------------------------------------------- | ---------- | - | - | ------ | - | - | ---------- | - | - | --------- | - | - | ---------- | - | - | ----------- | - | - | ------------- | -
|                                                  | Number of  |   |   |        |   |   | Additional |   |   | Total     |   |   | Retained   |   |   | Currency    |   |   | Total         |  
|                                                  | Common     |   |   | par    |   |   | Paid-in    |   |   | Capital   |   |   | Earnings   |   |   | Translation |   |   | Stockholders' |  
|                                                  | Shares     |   |   | Value  |   |   | Capital    |   |   | Stock     |   |   | (Deficit)  |   |   | Adjustments |   |   | Equity        |  
|Balance, June 30, 2001                            | 14,595,000 |   |   | 14,595 |   |   | 2,300,505  |   |   | 2,315,100 |   |   | (1,922,937 | ) |   | 80          |   |   | 392,243       |  
|Cancellation of 175,000
      shares on           |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   |             |   |   |               |  
|August 23, 2001                                   | (175,000   | ) |   | (175   | ) |   | (82,075    | ) |   | (82,250   | ) |   |            |   |   |             |   |   | (82,250       | )
|Cumulative currency
      translation adjustments |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   | 194         |   |   | 194           |  
|Net loss for year ended June 30,
      2002       |            |   |   |        |   |   |            |   |   |           |   |   | (135,277   | ) |   |             |   |   | (135,277      | )
|Balance, June 30, 2002                            | 14,420,000 |   |   | 14,420 |   |   | 2,218,430  |   |   | 2,232,850 |   |   | (2,058,214 | ) |   | 274         |   |   | 174,910       |  
|Issued for cash @ $0.30                           |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   |             |   |   |               |  
|July 22, 2002                                     | 100,000    |   |   | 100    |   |   | 29,900     |   |   | 30,000    |   |   |            |   |   |             |   |   | 30,000        |  
|Issued for cash @ $0.30                           |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   |             |   |   |               |  
|July 26, 2002                                     | 600,000    |   |   | 600    |   |   | 179,400    |   |   | 180,000   |   |   |            |   |   |             |   |   | 180,000       |  
|Issued for loan payable
      @ $0.30             |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   |             |   |   |               |  
|August 31, 2002                                   | 110,000    |   |   | 110    |   |   | 32,890     |   |   | 33,000    |   |   |            |   |   |             |   |   | 33,000        |  
|Shares subscribed and                             |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   |             |   |   |               |  
|paid for cash @$0.50                              |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   |             |   |   |               |  
|November 6, 2002                                  | 250,000    |   |   | 250    |   |   | 124,750    |   |   | 125,000   |   |   |            |   |   |             |   |   | 125,000       |  
|Issued for cash @ $0.40                           |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   |             |   |   |               |  
|April 25, 2003                                    | 100,000    |   |   | 100    |   |   | 39,900     |   |   | 40,000    |   |   |            |   |   |             |   |   | 40,000        |  
|Issued for cash @ $0.40                           |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   |             |   |   |               |  
|April 25, 2003                                    | 50,000     |   |   | 50     |   |   | 19,950     |   |   | 20,000    |   |   |            |   |   |             |   |   | 20,000        |  
|Cumulative currency
      translation adjustments |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   | 1,126       |   |   | 1,126         |  
|Net loss for year ended                           |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   |             |   |   |               |  
|June 30, 2003                                     |            |   |   |        |   |   |            |   |   |           |   |   | (323,016   | ) |   |             |   |   | (323,016      | )
|Balance, June 30, 2003                            | 15,630,000 |   | $ | 15,630 |   | $ | 2,645,220  |   | $ | 2,660,850 |   | $ | (2,381,230 | ) | $ | 1,400       |   | $ | 281,020       |  
|Issued for cash @ $0.15                           |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   |             |   |   |               |  
|November 1, 2003                                  | 700,000    |   |   | 700    |   |   | 104,300    |   |   | 105,000   |   |   |            |   |   |             |   |   | 105,000       |  
|Issued for cash @ $0.15                           |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   |             |   |   |               |  
|December 31, 2003                                 | 50,000     |   |   | 50     |   |   | 7,450      |   |   | 7,500     |   |   |            |   |   |             |   |   | 7,500         |  
|Issued for notes payable                          |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   |             |   |   |               |  
|January 4, 2004                                   | 624,166    |   |   | 624    |   |   | 61,793     |   |   | 62,417    |   |   |            |   |   |             |   |   | 62,417        |  
|Net loss for year ended                           |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   |             |   |   |               |  
|June 30, 2004                                     |            |   |   |        |   |   |            |   |   |           |   |   | (316,431   | ) |   |             |   |   | (316,431      | )
|Cumulative currency translation adjustments       |            |   |   |        |   |   |            |   |   |           |   |   |            |   |   | (9,190      | ) |   | (9,190        | )
|Balance, June 30, 2004                            | 17,004,166 |   | $ | 17,004 |   | $ | 2,818,763  |   | $ | 2,835,767 |   | $ | (2,697,661 | ) | $ | (7,790      | ) | $ | 130,316       |  

See Accompanying Notes and Independent Auditors' Report

---

|ONLINE INNOVATION, INC.
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements June 30, 2004 
      (In U.S. Dollars)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                       

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

---

|ONLINE INNOVATION, INC.
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements June 30, 2004 
      (In U.S. Dollars)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                       

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

| |  |                                         |   | Year Ended
| |  | --------------------------------------- | - | ----------
| |  |                                         |   | June 30,  
| |  |                                         |   | 2004      
| |  | Beginning balance, June 30, 2003 & 2002 | $ | 1,400     
| |  | Change during the year                  |   | (9,190    
| |  | Ending balance, June 30, 2004 & 2003    | $ | (7,790    

| | c)  | Amortization of Computer
        Software                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     | Development  Application
        Development Stage Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | The company is in the application
        development stage relating to the development of computer software, and
        accordingly, costs are capitalized. When the company is in the post- implementation
        / operation stage, costs will be expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Amortization of computer
        software costs of $325,000 will commence when the software service is
        available to be marketed. The amortization period is for twenty-six months
        on a straight-line basis. The software is not available to be marketed
        as at June 30, 2004, and therefore no amortization of this cost has been
        charged to operations for the year ended June 30, 2004.                                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | d)  | Use of Estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | The preparation of financial
        statements in conformity with accounting principles generally accepted
        in the United States of America requires management to make estimates
        and assumptions that affect the reported amounts of assets and liabilities
        and disclosure of contingent assets and liabilities at the date of the
        financial statements and the reported amounts of sales and expenses during
        the reporting periods. Areas where significant judgment are made include,
        but are not limited to: revenue recognition, price protection and rebate
        reserves, and marketing program accruals. Actual results could differ
        materially from these estimates.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (e) | Cash                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Cash is represented by funds
        on deposit with the Company's bankers and is unrestricted as to use.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               



---

|ONLINE INNOVATION, INC.
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements June 30, 2004 
      (In U.S. Dollars)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                       

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

| |  | June 30, 2004                 |   | Canada   |   |   | U.S.  |  |   | Total    |  
| |  | ----------------------------- | - | -------- | - | - | ----- |  | - | -------- | -
| |  | Current assets                | $ | 3,245    |   | $ | 0     |  | $ | 3,245    |  
| |  | Deferred tax assets           |   | 52,500   |   |   | 0     |  |   | 52,500   |  
| |  | Net fixed assets              |   | 18,939   |   |   | 0     |  |   | 18,939   |  
| |  | Computer software development |   | 325,000  |   |   | 0     |  |   | 325,000  |  
| |  | Total Assets                  | $ | 399,684  |   | $ | 0     |  | $ | 399,684  |  
| |  |                               |   |          |   |   |       |  |   |          |  
| |  | Revenue                       | $ | 0        |   |   | 1,264 |  |   | 1,264    |  
| |  | Administration costs          |   | 317,695  |   |   | 0     |  |   | 317,695  |  
| |  | Net (loss) for the year       | $ | (317,695 | ) | $ | 1,264 |  | $ | (316,431 | )
| |  |                               |   |          |   |   |       |  |   |          |  
| |  | June 30, 2003                 |   | Canada   |   |   | U.S.  |  |   | Total    |  
| |  | Current assets                | $ | 9,806    |   | $ | 0     |  | $ | 9,806    |  
| |  | Deferred tax assets           |   | 52,500   |   |   | 0     |  |   | 52,500   |  
| |  | Net fixed assets              |   | 32,815   |   |   | 0     |  |   | 32,815   |  
| |  | Computer software development |   | 325,000  |   |   | 0     |  |   | 325,000  |  
| |  | Total Assets                  | $ | 420,121  |   | $ | 0     |  | $ | 420,121  |  
| |  |                               |   |          |   |   |       |  |   |          |  
| |  | Revenue                       | $ | 0        |   |   | 0     |  |   | 0        |  
| |  | Administration costs          |   | 323,016  |   |   | 0     |  |   | 323,016  |  
| |  | Net (loss) for the year       | $ | (323,016 | ) | $ | 0     |  | $ | (323,016 | )

| | (g) | Recent Accounting Pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     | In August, 2001, the FASB issued Statement of Financial
        Accounting Standards No. 143, "Accounting for Asset Retirement Obligations"
        ("SFAS 143"). SFAS 143 addresses financial accounting and reporting for
        obligations associated with the retirement of tangible long-lived assets
        and the associated asset retirement costs. SFAS 143 applies to all entities.
        It applies to legal obligations associated with the retirement of long-lived
        assets that result from the acquisition, construction, development and
        / or the normal operation of a long-lived asset, except for certain obligations
        of lessees. SFAS 143 requires that the fair value of a liability for an
        asset retirement obligation be recognized in the period in which it is
        incurred if a reasonable estimate of fair value can be made. The associated
        asset retirement costs are capitalized as part of the carrying amount
        of the long-lived asset. SFAS 143 is effective for financial statements
        issued for fiscal years beginning after June 15, 2002. The Company adopted
        SFAS 143. SFAS 143 does not have a material effect on the Company's results
        of operations, financial position or liquidity.

---

|ONLINE INNOVATION, INC.
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements June 30, 2004 
      (In U.S. Dollars)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                       

|Note 2. | SIGNIFICANT ACCOUNTING POLICIES
|------- | -------------------------------
|        | (g)                            
|        |                                
|        |                                
|        |                                
|        |                                
|        |                                
|        |                                
|        |                                
|Note 3. | CAPITAL STOCK                  
|        |                                
|        | a)                             
|        |                                
|        | b)                             

| |  |                          | Shares     |  |   | $        
| |  | ------------------------ | ---------- |  | - | ---------
| |  | Balance, June 30, 2003   | 15,630,000 |  | $ | 2,660,850
| |  | Issued for cash          | 750,000    |  |   | 112,500  
| |  | Issued for notes payable | 624,166    |  |   | 62,417   
| |  | Balance, June 30, 2004   | 17,004,166 |  | $ | 2,835,767



---

|ONLINE INNOVATION, INC.
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements June 30, 2004 
      (In U.S. Dollars)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                       

|Note 4. | RELATED PARTY
        TRANSACTIONS
|------- | ----------------------------------
|        |                                   
|        | a)                                
|        |                                   
|        |                                   
|        |                                   
|        |                                   
|        |                                   
|        | b)                                

| |  |  |  | Chad D. Lee         | 5,500,000 | common shares
| |  |  |  | ------------------- | --------- | -------------
| |  |  |  | Marlene C. Schluter | 2,500,000 | common shares
| |  |  |  |                     | 8,000,000 |              



| | c) | Loans to the Company unpaid as at June 30, 2004 are as follows:
| | -- | ---------------------------------------------------------------

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

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

---

|ONLINE INNOVATION, INC.
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements June 30, 2004 
      (In U.S. Dollars)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                       

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

| |                          |   | June 30, |  
| | ------------------------ | - | -------- | -
| |                          |   | 2004     |  
| | Cost                     | $ | 117,089  |  
| | Accumulated depreciation |   | (98,150  | )
| | Net balance              | $ | 18,939   |  



|Note 6. | COMPUTER TECHNOLOGY
        AND WEBSITE COSTS 
|------- | ----------------------------------------------
|        |                                               
|        | a)                                            
|        |                                               
|        |                                               
|        |                                               
|        |                                               
|        | b)                                            
|        |                                               
|        |                                               
|Note 7. | STOCK BASED
        COMPENSATION/ PENSION PLAN
|        |                                               
|        | a)                                            
|        |                                               
|        | b)                                            

---

|ONLINE INNOVATION, INC.
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements June 30, 2004 
      (In U.S. Dollars)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                       

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

| |         | June 30,  
| | ------- | ----------
| |         | 2004      
| | Basic   | 16,433,752
| | Options | 1,500,000 
| | Diluted | 17,933,752

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

| |                              |   | June 30, |  
| | ---------------------------- | - | -------- | -
| |                              |   | 2004     |  
| | Net loss per share - Basic   | $ | (0.02    | )
| | Net loss per share - Diluted | $ | (0.02    | )



|Note 9.  | INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                 
|-------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                                                                                                                                                                                                                                              
|         | The Company has losses carried
        forward to future years of $2,697,661. The potential tax benefit  has
        not been recorded, as an equivalent reserve has been provided due to uncertainty
        of application  of the losses.                                                                                                                                                                                 
|         |                                                                                                                                                                                                                                                                                                                                                                                                                              
|Note 10. | FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                        
|         |                                                                                                                                                                                                                                                                                                                                                                                                                              
|         | The Company's financial instruments
        consist of cash, accounts payable, management fees payable,  loan
        payable, and due to related parties. It is management's opinion that the
        Company is not  exposed to significant interest, currency or credit
        risks arising from these financial instruments.  The fair value of
        these financial instruments approximates their carrying values.

---

|ONLINE INNOVATION, INC.
      (A Delaware Corporation) 
      (A Development Stage Company) 
      Notes to Financial Statements June 30, 2004 
      (In U.S. Dollars)
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                       

|Note 11. | LOANS PAYABLE                                                                                                                                                                                                   
|-------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                                 
|         | Converted to Common Shares                                                                                                                                                                                      
|         |                                                                                                                                                                                                                 
|         | (a)                                                                                                                                                                                                             
|         |                                                                                                                                                                                                                 
|         | (b)                                                                                                                                                                                                             
|         |                                                                                                                                                                                                                 
|         | Unpaid at June
        30, 2004                                                                                                                                                                                 
|         |                                                                                                                                                                                                                 
|         | (c)                                                                                                                                                                                                             
|         |                                                                                                                                                                                                                 
|Note 12. | CONSULTING AGREEMENTS                                                                                                                                                                                           
|         |                                                                                                                                                                                                                 
|         | A consulting agreement
        between Fortune Capital Management and the Company is effective on August
        1, 2002. The Company agrees to pay the Consultant a consulting fee of
        $2,500 per month.

---

27

ITEM 8:            CHANGES
  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

The Company had no changes in or disagreements with accountants
  on accounting and financial disclosure of the type referred to in Item 304 of
  Regulation S-K.

ITEM 8A:         CONTROLS
  AND PROCEDURES

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

There were no significant changes in the Company's internal
  controls or in other factors that could significantly affect these controls
  subsequent to the date of their evaluation, including any significant deficiencies
  or material weaknesses of internal controls that would require corrective action.
  There were no changes in the Company's internal control over financial reporting
  identified in connection with the Company's evaluation of its disclosure controls
  and procedures and the effectiveness of those procedures in the last fiscal
  quarter.

PART III

ITEM 9:            DIRECTORS,
  EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A)
  OFTHE EXCHANGE ACT

Directors and Executive Officers


The following table sets forth, as of the date of this registration
  statement, the name, age, and position of the officers and directors of the
  Company and the date of appointment of such officer or director:

|Name            | Age | Position (1)               
|--------------- | --- | ---------------------------
|Chad D. Lee (2) | 36  | Director, President and CEO
|                |     |                            

---

28

|Marlene Schluter(3) | 40 | Director, Secretary and Treasurer
|------------------- | -- | ---------------------------------
|Harvey H. Cohen (4) | 78 | Director and Vice President      

|(1) | Pursuant to the Company's Bylaws, all directors
        serve until such time as their successor has been elected, until they
        resign or until they are removed by majority vote at a meeting of the
        Company's shareholders. Officers are elected by the Company's directors
        and serve until such time as their successor is appointed, until they
        resign or until they are removed by the directors. None of the Company's
        directors and officers hold positions with other reporting companies.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | Marlene Schluter was appointed as Secretary and
        Treasurer of the Company on October 27, 1997.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   
|(3) | Chad Lee was appointed as President of the Company
        on April 15, 1998. Prior to being appointed as President, Mr. Lee acted
        as Vice-President of the Company from October 24, 1997 until he was appointed
        as President.                                                                                                                                                                                                                                                                                          
|   
|(4) | Harvey H. Cohen was appointed as Vice-President
        of the Company on April 15, 1998.                                                                                                                                                                                                                                                                                                                                                                                                                                               

Chad D. Lee

Mr. Lee, the founder of what is now Online Innovation, Inc.,
  is a graduate of the University of British Columbia where he focused his studies
  on the field of Urban Land Economics. He has used his skills in strategic management,
  financial analysis and planning, contract negotiation, and business planning
  to develop new companies and to assist established companies. Mr. Lee is also
  the Principal of Netgain Management Solutions Inc. where he has developed and
  implemented multi-media marketing strategies for several publicly traded companies.
  Mr. Lee brings to the Company expertise in strategic management, demonstrating
  strong leadership in visioning, corporate strategy development and deployment
  with a clear focus on achieving results. Utilizing his expertise in strategic
  visioning, he has diversified the company's focus to the communications and
  hi-tech Internet sectors with the acquisition and further development of the
  Company's technology assets.

Ms. Marlene C. Schluter


Ms. Schluter is a graduate of Simon Fraser University with
  a Bachelor of Education (B Ed.). She was employed by the public school system
  at the elementary and secondary school levels, specializing in Business and
  Math. In addition, she was also an active member in the school counseling programs.
  Ms. Schluter has furthered her professional career by attending courses in the
  Master of Business Administration Program at the University of British Columbia
  concentrating in the areas of International Trade and Finance. With this education,
  she went on to work in the Financial Industry with Yorkton Securities where
  she completed the Canadian Securities Course (CSC) and Series 63 and 67 for
  qualification in the United States. Ms. Schluter acted as a Broker's Assistant
  and as a Broker with Yorkton Securities Inc. She was employed by Yorkton Securities
  Inc. from April 1991 to December 1996. From February 1997 to July 1997, Ms.
  Schluter acted as executive assistant and performed investor relations services
  for CKD Ventures Ltd., a Vancouver, British Columbia based mineral exploration
  company. She has acted as director, corporate secretary and treasurer of the
  Company since October of 1997.

---

29

Harvey H. Cohen

Mr. Cohen graduated from the University of British Columbia
  with a Bachelor's degree in Physical Sciences / Mining Engineering. He has been
  a registered member of the Association of Professional Engineers and Geoscientists
  of British Columbia since 1954 and is also a lifetime member of the Canadian
  Institute of Mining, Metallurgy and Petroleum. During the course of his career
  he has acted for numerous publicly traded companies in the mining sector. Mr.
  Cohen has been semi-retired for approximately ten years and was involved with
  the Company at the outset to provide advice on matters related to its mineral
  properties.

Significant Employees


The Company has no employees. All services are performed by
  consultants. Refer to the section headed "Employees and Consultants" under "Business
  of the Company" above.

Family Relationships


There are no family relationships among the Company's directors or officers.

During the past five years, no director or officer of the Company has been:

- a general partner or executive officer of a business
      against which a bankruptcy petition was filed;
- convicted in a criminal proceeding or is currently subject
      to a pending criminal proceeding;
- subject to any order, judgement or decree of any court
      of competent jurisdiction permanently or temporarily enjoining, barring,
      suspending him/her from, or otherwise limiting his/her involvement in, any
      type of business, securities or banking activities; or
- found by a court of competent jurisdiction (in a civil
      action), the Securities and Exchange Commission or the Commodity Futures
      Trading Commission to have violated a federal or state securities or commodities
      law.

Code Of Ethics


The Company has not adopted a formal written code of ethics
  applicable to its principal executive officer and principal financial officer.
  As noted under item 8A above, the Company is managed exclusively by its principal
  executive officer and principal financial officer, both of whom are directors
  of the Company. The Company does not have management or employees which are
  separate from these 2 individuals. All work related to the Company is performed
  by a small number of consultants who are under the direct supervision of the
  principal executive officer and principal financial officer. All of the Company's
  finances are controlled by the principal executive officer and principal financial
  officer and all decisions related to the Company's affairs are made by these
  2 individuals. Since they also comprise a majority on the board of directors
  of the Company, are directly

---

30

accountable to the Company's shareholders and are subject
  to the all of the legal duties, obligations and liabilities applicable to directors
  of public companies, management is of the view that the adoption of a written
  code of ethics is not necessary.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Exchange Act requires executive officers
  and directors of the Company and persons who beneficially own more than ten
  percent of the Company's Common Stock to file with the Securities and Exchange
  Commission certain reports, and to furnish copies thereof to the Company, with
  respect to each such person's beneficial ownership of the Company's equity securities.
  Based solely upon a review of the copies of such reports furnished to the Company
  and certain representations of such persons, all such persons have complied
  with the applicable reporting requirements.

ITEM 10:          EXECUTIVE
  COMPENSATION

The following table provides a summary of the compensation
  paid to the Company's Chief Executive Officer for the last three fiscal years.
  No officers of the Company received in excess of $100,000 in annual salary and
  bonus. The Company's Chief Executive Officer has received no compensation other
  than salary.

Summary Compensation Table


|Name and Principal Position     | Year Ended                                | Annual
      Compensation       
|------------------------------- | ----------------------------------------- | --------------------------------
|Salary                         
|Chad Lee , President & Director | June 30, 2004 June 30, 2003 June 30, 2002 | $30,000(1) $30,000(1) $30,000(1)

|(1) | The cash compensation shown was paid to Mr. Lee pursuant to management
      agreements between the Company and a company wholly owned by Mr. Lee.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------

As of the date of this report, the Company has not paid any
  bonuses or granted any stock awards, options or stock appreciation rights to
  any officer, director or employee. The Company has no arrangements for the compensation
  of directors and officers for their services as directors and officers.

---

31

ITEM 11:          SECURITY
  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding
  the beneficial ownership of the Company's issued and outstanding common stock
  as of September 24, 2004 by i) each person who is known to the Company to be
  the beneficial owner of more than 5 percent of the Company's common stock; (ii)
  named directors and executive officers; and (iii) all directors and executive
  officers of the Company as a group:

|Name and address of beneficial owner                                                                                                           | Amount and nature of  beneficial
      owner | Percent of class(1)
|---------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------- | -------------------
|Chad D. Lee   (President, Chief Executive
      Officer and   Director)   61-12411 Jack Bell Drive 
       Richmond, British Columbia   Canada | 5,500,000(2)                                 | 32.3%              
|Marlene C. Schluter   (Secretary, Treasurer
      and Director)   2215 Inglewood Avenue   West Vancouver,
      British Columbia   Canada      | 2,500,000(2)                                 | 14.7%              
|Harvey H. Cohen   (Vice President and
      Director)   8278 Tugboat Place   Vancouver, British Columbia 
       Canada                        | 0(2)                                         | 0.0%               
|Directors and Officers as a Group (3 persons)                                                                                                  | 8,000,000                                    | 47%                

|(1) | Beneficial ownership is determined in accordance
        with the rules of the Securities and Exchange Commission and generally
        includes voting or investment power with respect to securities.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) | The persons named in the table have sole voting
        and investment power with respect to all shares of common stock shown
        as beneficially owned by them.                                   

At its annual meeting of stockholders held on December 4,
  2000, a 2000 Incentive Stock Option Plan (the "Plan") was approved by the Company's
  stockholders. Pursuant to a directors' resolution dated October 20, 2000, the
  Plan was adopted by the Company's directors subject only to receipt of stockholder
  approval. The plan authorizes the granting of options to purchase up to 1,500,000
  of the Company's common shares. Pursuant to the Plan, options may be granted
  to directors, officers, employees, consultants and other service providers.
  The aggregate fair market value of options that may be held by any one optionee
  at any given time may not exceed $100,000. The exercise price of an option granted
  must be at least equal to the fair market value of a share of common stock of
  the Company on the date

---

32

the option is granted. No options have yet been granted pursuant
  to the Plan, to directors or officers of the Company or to any other entities.

ITEM 12:          CERTAIN
  RELATIONSHIPS AND RELATED TRANSACTIONS

Pursuant to a management agreement made effective as of November
  1, 1997, the Company pays $2,500 per month to MCS Management Ltd., a company
  wholly owned by Ms. Marlene C. Schluter, director, secretary and treasurer of
  the Company, for management services provided to the Company by MCS Management
  Ltd.

Pursuant to a management agreement made effective as of July
  1, 1999, the Company pays $2,500 per month to Netgain Management Solutions Inc.,
  a company wholly owned by Mr. Chad D. Lee, president and director of the Company,
  for management services provided to the Company by Netgain Management Solutions
  Inc.

The Company has not been a party to any other transactions
  during the past two years, and is not currently a party to any other transaction,
  in which any directors, officers or holders of greater than five percent of
  the Company's securities, or any immediate family members of any of the foregoing,
  have any direct or indirect material interest.

ITEM 13:          EXHIBITS
  AND REPORTS ON FORM 8-K

(a) Exhibits

|Exhibit    | Description                                                                                                                                                       
|---------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number     |                                                                                                                                                                   
|           |                                                                                                                                                                   
|3(i)[5]    | Certificate of Incorporation dated May
        7, 1997; Certificate of Amendment dated October 16, 1997; and Certificate
        of Amendment dated April 8, 1999.
|           |                                                                                                                                                                   
|3(ii).1[5] | Bylaws of Micro Millennium, Inc.                                                                                                                                  
|           |                                                                                                                                                                   
|3(ii).2[5] | Resolution of the board of directors
        approving amendment to the  By-Laws of Micro Millenium, Inc.                                                         
|           |                                                                                                                                                                   
|10.1       | Convertible
        Promissory Note dated April 25, 2004 in favor of  Fortune Capital
        Management (USA) Inc.                                               
|           |                                                                                                                                                                   
|10.2       | Consulting
        Agreement dated November 24, 2003 between the  Company and Westport
        Strategic Partners, Inc.                                           
|           |                                                                                                                                                                   
|10.3       | Consulting
        Agreement dated February 23, 2004 between the  Company and The R.H.
        Barsom Company Inc.                                                
|           |                                                                                                                                                                   
|10.4       | Consulting
        Agreement dated January 9, 2004 between the Company  and CEOCast
        Inc.                                                                  
|           |                                                                                                                                                                   
|10.4[1]    | Termination Notice dated June 5, 2003
        respecting the Loan Agreement between the Company and Fusion Capital Fund
        II, LLC                           

---

33

|         | dated April 30, 2002                                                                                                                                                                                 
|-------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                      
|10.5[1]  | Convertible Promissory Note dated July
        4, 2003 in favor of Fortune Capital Management (USA) Inc.                                                                                             
|         |                                                                                                                                                                                                      
|10.6[1]  | Convertible Promissory Note dated July
        4, 2003 in favor of Ross Kraemer                                                                                                                      
|         |                                                                                                                                                                                                      
|10.7[2]  | Loan Agreement between the Company and
        Fusion Capital Fund II, LLC dated April 30, 2002                                                                                                      
|         |                                                                                                                                                                                                      
|10.8[2]  | Consulting Agreement between the Company
        and Damon Hoy dated June 15, 2002                                                                                                                   
|         |                                                                                                                                                                                                      
|10.9[2]  | Convertible Promissory Note dated January
        10, 2002 in favor of Richard L. Coglon                                                                                                             
|         |                                                                                                                                                                                                      
|10.10[2] | Convertible Bridge Financing Note dated
        November 7, 2001 in favor of CK Dragon Trust                                                                                                         
|         |                                                                                                                                                                                                      
|10.11[2] | Convertible Bridge Financing Note dated
        August 29, 2001 in favor of Progressive Contracting Ltd.                                                                                             
|         |                                                                                                                                                                                                      
|10.12[2] | 2000 Incentive Stock Option Plan                                                                                                                                                                     
|         |                                                                                                                                                                                                      
|10.13[4] | Common Stock Purchase Agreement between
        Fusion Capital Fund II, LLC and the Company dated June 25, 2001.                                                                                     
|         |                                                                                                                                                                                                      
|10.14[3] | Promotion Agreement between Action Stocks,
        Inc. and the Company dated June 11, 2001.                                                                                                         
|         |                                                                                                                                                                                                      
|10.15[5] | Consulting Agreement between National
        Financial Communications Corp. and the Company dated February 1, 2000.                                                                                 
|         |                                                                                                                                                                                                      
|10.16[5] | Custom Affiliate Agreement between KnowledgeWeb,
        Inc. and the Company, dated November 8, 1999.                                                                                               
|         |                                                                                                                                                                                                      
|10.17[5] | Lease Agreement between 570679 B.C. Ltd.
        as Lessor and the Company as Lessee, dated November 1, 1999.                                                                                        
|         |                                                                                                                                                                                                      
|10.18[5] | Agreement between Netgain Management
        Solutions Inc. and the Company, dated November 1, 1999, for management
        and administrative services provided by Netgain Management Solutions Inc.
|         |                                                                                                                                                                                                      
|10.19[5] | Agreement between 535424 B.C. Ltd., the
        Company, dated April 1, 1999, for professional media buying/marketing
        services provided by 535424 B.C. Ltd.                                  
|         |                                                                                                                                                                                                      
|10.20[5] | Agreement between Stratford Internet
        Technologies, Inc. and the Company dated July 30, 1999, for services related
        to the development,                                                

---

34

|         | design and maintenance of
        the Company's internet based products and  services.                                                                                   
|-------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                          
|10.21[5] | Purchase Agreement between
        Sinaloa Gold Corp. and Online Innovation, dated April 2, 1999.                                                                        
|         |                                                                                                                                                                          
|10.22[5] | Option Agreement between
        Fordee Management Company and the Company, dated February 2, 1999.                                                                      
|         |                                                                                                                                                                          
|10.23[5] | Agreement between MCS Management
        Ltd. and the Company, dated November 1, 1998, for management and administrative
        services provided by MCS Management Ltd.
|         |                                                                                                                                                                          
|10.24[5] | Agreement in Principle between
        Minera Fuerte Mayo and CL Communications Group, dated September 30, 1997.                                                         
|         |                                                                                                                                                                          
|10.25[5] | Assignment Agreement between
        Sinaloa Gold Corp. and CL Communications Group, dated September 30, 1997.                                                           
|         |                                                                                                                                                                          
|31.1     | Certification of Principal Executive Officer Pursuant to Rule 13a-14 of
        the Securities Exchange Act of 1934                                                      
|         |                                                                                                                                                                          
|31.2     | Certification of Principal Financial Officer Pursuant to Rule 13a-14 of
        the Securities Exchange Act of 1934                                                      
|         |                                                                                                                                                                          
|32.1     | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section
        1350                                                                                  
|         |                                                                                                                                                                          
|32.2     | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section
        1350                                                                                  

|[1] | Incorporated by reference from the Company's Form 10KSB filed with the Commission on September 26, 2003.                                       
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------
|   
|[2] | Incorporated by reference from the Company's Form 10KSB filed with the Commission on September 27, 2002.                                       
|   
|[3] | Incorporated by reference from the Company's Form 10KSB filed with the Commission on September 28, 2001.                                       
|   
|[4] | Incorporated by reference from the Company's Form 8-K filed on July 10, 2001, as amended.                                                      
|   
|[5] | Incorporated by reference from the Registration Statement on Form 10SB of the Company filed with the Commission on February 1, 2000 as amended.
|   

(b) Reports on Form 8K

No reports on Form 8-K were filed during the period covered by this report.

---

35

ITEM 14:          PRINCIPAL
  ACCOUNTING FEES AND SERVICES

Moen & Company, Chartered Accountants ("Moen & Company"),
  are the Company's independent auditors and examined the financial statements
  of the Company for the fiscal years ending June 30, 2004 and June 30, 2003.
  Moen & Company performed the services listed below and was paid the fees
  listed below for the fiscal years ended June 30, 2004 and June 30, 2003.

Audit Fees


Moen & Company was paid aggregate fees of approximately
  $12,000 for the fiscal year ended June 30, 2003 and approximately $12,000 for
  the fiscal year ended June 30, 2004 for professional services rendered for the
  audit of the Company's annual financial statements and for the reviews of the
  financial statements included in the Company's quarterly reports on Form 10-QSB
  during these fiscal years.

Audit-Related Fees


Moen & Company was not paid additional fees for either
  of the fiscal years ended June 30, 2003 or June 30, 2004 for assurance and related
  services reasonably related to the performance of the audit or review of the
  Company's financial statements.

Tax Fees

Moen & Company was not paid any fees for the fiscal year
  ended June 30, 2003 or for the fiscal year ended June 30, 2004 for professional
  services rendered for tax compliance, tax advice and tax planning.

All Other Fees

Moen & Company was not paid any other fees for professional
  services during the fiscal years ended June 30, 2003 and June 30, 2004.

Audit Committee Policies and Procedures


The audit and review services provided to the Company by Moen
  & Company in the fiscal years ended June 30, 2004 and June 30, 2003 were
  pre-approved by the Company's audit committee. Prior to engaging Moen &
  Company to perform audit and review services, the Company's audit committee
  reviews the service to be provided and the fee to be paid by the Company for
  such service and assesses the impact of the service on the auditor's independence.

---

36

SIGNATURES

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

|Date: | September 27, 2004 |  | ONLINE INNOVATION, INC.
|----- | ------------------ |  | -----------------------
|      |                    |  |                        
|      |                    |  |                        
|      |                    |  |                        
|      |                    |  | By:                    
|      |                    |  |                        
|      |                    |  |                        
|      |                    |  |                        
|      |                    |  |                        
|      |                    |  | By:                    
|      |                    |  |                        
|      |                    |  |                        

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

|By:                               | /s/ Chad D. Lee         | 
|--------------------------------- | ----------------------- | 
|Chad D. Lee, President, Director, |                        
|Principal Executive Officer       |                        
|                                  |                         | 
|Date:                             | September 27, 2004      | 
|                                  |                         | 
|                                  |                         | 
|                                  |                         | 
|                                  |                         | 
|By:                               | /s/ Marlene C. Schluter | 
|Marlene C. Schluter, Director,    |                        
|Principal Financial Officer       |                        
|                                  |                         | 
|Date:                             | September 27, 2004      | 

---