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**UNITED STATES
  SECURITIES AND EXCHANGE COMMISSION**
  Washington, D.C. 20549

FORM 10-KSB/A(Amendment No. 1)

(Mark One)xANNUAL 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) 669-7564Issuer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 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.

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2

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

ONLINE INNOVATION, INC.

EXPLANATORY NOTE

This Amendment No. 1 is being filed further to our original Form 10KSB filing for the period ended June 30, 2004.  Other than revisions to Part II Item 6 Plan of Operation and Item 7 Financial Statements, and additional disclosure under Risk Factors
in Item 1 of Part II, as disclosed herein, no other changes were made to the Form 10-KSB, and this Form 10-KSB/A does not otherwise modify or update the disclosure contained in the Form 10-KSB.

The Original Filing has been also been amended to include currently-dated certifications from our principal executive officer and principal financial officer, as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002. The certifications
of our principal executive officer and our principal financial officer are attached to this Form 10-KSB/A as Exhibits 31.1, 31.2.32.1 and 32.2.

PART I

|ITEM 1: | DESCRIPTION OF BUSINESS
|------- | -----------------------

Risk Factors

Our financial statements for the year ended June 30, 2004 were prepared on a going concern basis in accordance with United States generally accepted accounting principles. The going concern basis of presentation assumes that we will continue in
operation for the foreseeable

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3

future and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business. We may not be able to raise additional capital or achieve profitability and as a consequence we may not be able to meet
our liabilities and commitments in the normal course of business, which would jeopardize our ability to continue our business operations in accordance with our business plan or at all.

Our audited financial statements disclose that there is a substantial doubt about our ability to continue as a going concern. We experienced an accumulated deficit of $2,750,161 as at June 30, 2004. As at June 30, 2004 we had a working capital
deficiency of $266,123. Our liquidity and capital resources are limited and we are presently relying on a combination of revenues from sales and equity investment in order to fund continued operations. Our financial condition raises serious
doubt as to our ability to continue operations without additional equity or debt financing as described in the explanatory paragraph of the report of our independent auditor and note 1(c) of our financial statements. The presentation of our
financial statements assumes that we will continue as a going concern and our assets and liabilities are recorded on the basis that the business will continue for the foreseeable future. In order to continue as a going concern, we must carry out our
business plan and achieve profitability, which may not occur in the foreseeable future. If we are unable to continue as a going concern, the proceeds from the liquidation of our assets may not be sufficient to discharge our liabilities as they
become due, placing us at risk of legal proceedings, including bankruptcy proceedings, being initiated by our creditors.  Our inability to continue as a going concern will result in a significant loss of value of our common stock.

PART II

|Item 6: | PLAN OF OPERATION
|------- | -----------------

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.

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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Our financial statements for the year ended June 30, 2004 were prepared on a going concern basis in accordance with United States generally accepted accounting principles. The going concern basis of presentation assumes that we will continue in
operation for the foreseeable future and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business. As at June 30, 2004 we had a working capital deficiency of $266,123. Our financial
condition raises serious doubt as to our ability to continue operations without additional equity or debt financing. Our ability to raise additional capital through debt and equity financing is presently uncertain.

|ITEM 7: | FINANCIAL STATEMENTS
|------- | --------------------

Attached are the registrants audited financial statements for the financial year ended June 30, 2004, with comparative figures for the year ended June 30, 2003, and the Independent Accountants Report thereon.

|ITEM 13: | EXHIBITS
|-------- | --------

Exhibits

|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                                     

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MOEN AND COMPANYCHARTERED ACCOUNTANTS

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

|As Restated by Inclusion
      of        | 
|---------------------------------------- | 
|Going Concern Paragraph                  | 
|And Deletion of Deferred
      Tax Asset | 

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.

The accompanying financial statements have been prepared assuming
  that the Company will continue as a going concern. As discussed in Note 1 to
  the financial statements, conditions exist which raise substantial doubt about
  the Companys ability to continue as a going concern unless it is able
  to generate sufficient cash flows to meet its obligations and sustain its operations.
  Managements plans in regard to these maters are also described in Note
  1. The financial statements do not include any adjustments that might result
  from the outcome of this uncertainty.

| | Moen and Company
      (Signed)
      Chartered Accountants
| | ---------------------------------------------------------------

Vancouver, British Columbia, Canada
  September 21, 2004, and May 16, 2005
     as to Going Concern Paragraph above, and Deletion of Deferred Tax
  Asset,
     and related disclosure in Notes 1 & Note 9, respectively.



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|ONLINE INNOVATION, INC.                           | As Restated                          
|------------------------------------------------- | -------------------------------------
|(A Delaware Corporation)                          | by Inclusion of                      
|(A Development Stage Company)                     | Going Concern in Note 1 and          
|Balance Sheet                                     | Deletion Deferred Tax Asset in Note 9
|June 30, 2004                                     |                                      
|(In U.S. Dollars)                                 |                                      
|(With Comparative
      Figures at June 30, 2003) |                                      

|                                                                         |                                      | June 30,   |     
|------------------------------------------------------------------------ | ------------------------------------ | ---------- | ----
|                                                                         | ASSETS                               |            | 2004
|Current Assets                                                           |                                      |            |     
|Cash                                                                     | $                                    | 3,245      |     
|TOTAL CURRENT ASSETS                                                     |                                      | 3,245      |     
|Deferred tax asset                                                       |                                      | -          |     
|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                                                       | $                                    | 347,184    |     
|                                                                         |                                      |            |     
|                                                                         |                                      |            |     
|                                                                         | 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)              |                                      | (2,750,161 | )   
|Cumulative
      currency translation adjustments (Note 2(b))            |                                      | (7,790     | )   
|TOTAL STOCKHOLDERS' EQUITY                                               |                                      | 77,816     |     
|                                                                         |                                      |            |     
|TOTAL CURRENT LIABILITIES AND STOCKHOLDERS' EQUITY                       | $                                    | 347,184    |     

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

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|ONLINE INNOVATION, INC.       | As Restated                          
|----------------------------- | -------------------------------------
|(A Delaware Corporation)      | by Inclusion of                      
|(A Development Stage Company) | Going Concern in Note 1 and          
|Statement of Income           | Deletion Deferred Tax Asset in Note 9
|(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     |   |   | -                  |   |   | 52,500     |   |   | -          |  
|                                       |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Net profit (loss)
      for the period | $ | (2,750,161      | ) | $ | (368,931   | ) | $ | (323,016           | ) | $ | (109,947   | ) | $ | (69,709    | )
|                                       |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Weighted Average Share Outstanding     |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Basic                                  |   |                 |   |   | 16,433,752 |   |   | 15,345,000         |   |   | 16,433,752 |   |   | 15,345,000 |  
|Diluted                                |   |                 |   |   | 19,633,752 |   |   | 16,845,000         |   |   | 19,633,752 |   |   | 16,845,000 |  
|                                       |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Net loss per common share(Note 8)      |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Basic                                  |   |                 |   | $ | (0.02      | ) | $ | (0.02              | ) | $ | (0.01      | ) | $ | (0.00      | )
|Diluted                                |   |                 |   | $ | (0.02      | ) | $ | (0.02              | ) | $ | (0.01      | ) | $ | (0.00      | )

See Accompanying Notes and Independent Auditors' Report

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|ONLINE INNOVATION, INC.       | As Restated                          
|----------------------------- | -------------------------------------
|(A Delaware Corporation)      | by Inclusion of                      
|(A Development Stage Company) | Going Concern in Note 1 and          
|Statement of Cash Flows       | Deletion Deferred Tax Asset in Note 9
|(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                  | $ | (2,750,161      | ) | $ | (368,931   | ) | $ | (323,016           | ) | $ | (109,947 | ) | $ | (69,709 | )
|Items not requiring use of cash:                  |   |                 |   |   |            |   |   |                    |   |   |          |   |   |         |  
|Deferred income
      taxes                       |   | 52,500          |   |   | 52,500     |   |   | -                  |   |   | 52,500   |   |   | -       |  
|Shares issued for funding agreement               |   |                 |   |   |            |   |   |                    |   |   |          |   |   |         |  
|commitment
      costs                            |   | 345,600         |   |   | -          |   |   | -                  |   |   | -        |   |   | -       |  
|Shares issued for assignment of                   |   |                 |   |   |            |   |   |                    |   |   |          |   |   |         |  
|option
      on mineral properties                |   | 30,000          |   |   | -          |   |   | -                  |   |   | -        |   |   | -       |  
|Shares issued for compensation                    |   |                 |   |   |            |   |   |                    |   |   |          |   |   |         |  
|on
      stock options                            |   | 150,000         |   |   | -          |   |   | -                  |   |   | -        |   |   | -       |  
|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
      taxes                       |   | (52,500         | ) |   | -          |   |   | -                  |   |   | -        |   |   | -       |  
|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                |   | (1,934,900      | ) |   | (207,433   | ) |   | (309,843           | ) |   | (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                          |   | 2,310,167       |   |   | 112,500    |   |   | 395,000            |   |   | -        |   |   | 60,000  |  
|Loan payable (repayment)                          |   | 25,000          |   |   | 87,417     |   |   | (52,000            | ) |   | 25,000   |   |   | -       |  
|Loan from Fusion Capital (repayment)              |   | -               |   |   | -          |   |   | (50,000            | ) |   | -        |   |   | -       |  
|Due to related parties                            |   | 45,067          |   |   | 955        |   |   | 14,112             |   |   | -        |   |   | -       |  
|Cash provided by financing
      activities       |   | 2,380,234       |   |   | 200,872    |   |   | 307,112            |   |   | 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

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|ONLINE INNOVATION, INC.                  | As Restated                          
|---------------------------------------- | -------------------------------------
|(A Delaware Corporation)                 | by Inclusion of                      
|(A Development Stage Company)            | Going Concern in Note 1 and          
|Statement of Retained Earnings (Deficit) | Deletion Deferred Tax Asset in Note 9
|(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               |   | (2,750,161      | ) |   | (368,931   | ) |   | (323,016           | ) |   | (109,947   | ) |   | (69,709    | )
|                                               |   |                 |   |   |            |   |   |                    |   |   |            |   |   |            |  
|Balance (deficit), end of year                 | $ | (2,750,161      | ) | $ | (2,750,161 | ) | $ | (2,381,230         | ) |   | (2,750,161 | ) | $ | (2,381,230 | )

See Accompanying Notes and Independent Auditors' Report

---

|ONLINE INNOVATION, INC.                                   | As Restated                          
|--------------------------------------------------------- | -------------------------------------
|(A Delaware Corporation)                                  | by Inclusion of                      
|(A Development Stage Company)                             | Going Concern in Note 1 and          
|Statement of Stockholders' Equity                         | Deletion Deferred Tax Asset in Note 9
|From 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       |  
|(Carried forward to next
      page)              |  |            |  |  |        |  |  |            |  |  |           |          |   |           |        |   |             |          |   |               |  

See Accompanying Notes and Independent Auditors' Report

---

|ONLINE INNOVATION, INC.                                   | As Restated                          
|--------------------------------------------------------- | -------------------------------------
|(A Delaware Corporation)                                  | by Inclusion of                      
|(A Development Stage Company)                             | Going Concern in Note 1 and          
|Statement of Stockholders' Equity                         | Deletion Deferred Tax Asset in Note 9
|From 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       |  
|(Carried forward to next page)              |  |            |  |  |        |  |  |            |  |  |           |          |   |            |     |  |             |          |   |               |  

See Accompanying Notes and Independent Auditors' Report

---

|ONLINE INNOVATION, INC.                                   | As Restated                          
|--------------------------------------------------------- | -------------------------------------
|(A Delaware Corporation)                                  | by Inclusion of                      
|(A Development Stage Company)                             | Going Concern in Note 1 and          
|Statement of Stockholders' Equity                         | Deletion Deferred Tax Asset in Note 9
|From 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                               |  |            |   |   |        |   |   |            |   |   |           |          |   | (368,931   | )      |   |             |          |   | (368,931      | )
|Cumulative currency translation adjustments |  |            |   |   |        |   |   |            |   |   |           |          |   |            | (9,190 | ) |             | (9,190   | )
|Balance, June 30, 2004                      |  | 17,004,166 |   | $ | 17,004 |   | $ | 2,818,763  |   | $ | 2,835,767 |          | $ | (2,750,161 | )      | $ | (7,790      | )        | $ | 77,816        |  

See Accompanying Notes and Independent Auditors' Report

---

|ONLINE INNOVATION, INC.       | As Restated by Inclusion of       
|----------------------------- | ----------------------------------
|(A Delaware Corporation)      | Going Concern Paragraph           
|(A Development Stage Company) | And Deletion of Deferred Tax Asset
|Notes to Financial Statements |                                   
|June 30, 2004                 |                                   
|(In U.S. Dollars)             |                                   

|Note 1. | BUSINESS OPERATIONS
|------- | -------------------

| | a) | The Company was incorporated on May 7, 1997 under the
        Company Act of the State of Delaware, U.S.A., and commenced inception
        of business on August 1, 1997. The Company changed its name from
        Micro Millennium, Inc. to Sinaloa Gold Corp. on October 16, 1997 and subsequently
        changed its name from Sinaloa Gold Corp. to Online Innovation, Inc.
        on April 8, 1999.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | b) | The Company is in its development stage in the internet/e-commerce
        industry as a website development company and was previously in the mining
        resource industry and has not generated any significant revenues from
        its planned operations. The deficit has been accumulated during the development
        stage.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | c) | Going Concern                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| |    | These financial statements have been prepared in accordance
        with generally accepted accounting principles in the United States of
        America applicable to a going concern which assume that the Company will
        realize its assets and discharge its liabilities in the normal course
        of business. The Company has incurred losses since inception of $2,697,661
        to June 30, 2004 and has working capital deficiency of $266,123 as at
        June 30, 2004. These factors create doubt as to the ability of the Company
        to continue as a going concern. Realization values may be substantially
        different from the carrying values as shown in these financial statements
        should the Company be unable to continue as a going concern. Management
        is in the process of identifying sources for additional financing to fund
        the ongoing development of the Companys business.

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

| | a) | Administration Costs                                                                                                                                                                                                
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                     
| |    | Administration costs are written off to operations when
        incurred.                                                                                                                                           
| |    |                                                                                                                                                                                                                     
| | b) | Translation of Foreign Currency                                                                                                                                                                                     
| |    |                                                                                                                                                                                                                     
| |    | Both the functional currency and the reporting currency
        of the Company are the United States Dollar.                                                                                                        
| |    | The assets, liabilities, and operations of the Company
        are expressed in the United States Dollar, in conformity with US GAAP.                                                                               
| |    | Monetary assets and liabilities are translated at the
        current rate of exchange.                                                                                                                             
| |    | The weighted average exchange rate for the period is
        used to translate revenue, expenses, and gains or losses from the functional
        currency to the reporting currency.                               
| |    | The gain or loss on translation is reported as a separate
        component of stockholders equity and not recognized in net income.
        Gains or losses on remeasurement are recognized in current net income.
| |    | Gains or losses from foreign currency transactions are
        recognized in current net income. Fixed assets are measured at historical
        exchange rates that existed at the time of the transaction.        
| |    | Depreciation is measured at historical exchange rates
        that existed at the time the underlying related asset was acquired.                                                                                   

---

|ONLINE INNOVATION, INC.       | As Restated by Inclusion of       
|----------------------------- | ----------------------------------
|(A Delaware Corporation)      | Going Concern Paragraph           
|(A Development Stage Company) | And Deletion of Deferred Tax Asset
|Notes to Financial Statements |                                   
|June 30, 2004                 |                                   
|(In U.S. Dollars)             |                                   

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

| | b) | Translation of Foreign Currency (contd)                                                                                                                                                                        
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                 
| |    | Capital accounts are translated at their historical
        exchange rates when the capital stock is issued.                                                                                                    
| |    |                                                                                                                                                                                                                 
| |    | The effect of exchange rate changes on cash balances
        is reported in the statement of cash flows as a separate part of the reconciliation
        of change in cash and cash equivalents during the year.
| |    |                                                                                                                                                                                                                 
| |    | An analysis of the changes in the cumulative currency
        translation adjustments as disclosed as part of stockholders equity,
        is as follows:                                                      

| |                                         |   | 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.       | As Restated by Inclusion of       
|----------------------------- | ----------------------------------
|(A Delaware Corporation)      | Going Concern Paragraph           
|(A Development Stage Company) | And Deletion of Deferred Tax Asset
|Notes to Financial Statements |                                   
|June 30, 2004                 |                                   
|(In U.S. Dollars)             |                                   

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

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

| | June 30, 2004                       |   | Canada   |   |   | U.S.   |  |   | Total    |  
| | ----------------------------------- | - | -------- | - | - | ------ |  | - | -------- | -
| | Current assets                      | $ | 3,245    |   | $ | -      |  | $ | 3,245    |  
| | Net fixed assets                    |   | 18,939   |   |   | -      |  |   | 18,939   |  
| | Computer software development       |   | 325,000  |   |   | -      |  |   | 325,000  |  
| | Total Assets                        | $ | 347,184  |   | $ | -      |  | $ | 347,184  |  
| |                                     |   |          |   |   |        |  |   |          |  
| | Revenue                             | $ | -        |   |   | 1,264  |  |   | 1,264    |  
| | Administration costs                |   | 317,695  |   |   | -      |  |   | 317,695  |  
| | Deferred income taxes               |   | -        |   |   | 52,500 |  |   | 52,500   |  
| | Net (loss) for the year             | $ | (317,695 | ) | $ | 53,764 |  | $ | (368,931 | )
| |                                     |   |          |   |   |        |  |   |          |  
| |                                     |   |          |   |   |        |  |   |          |  
| | June 30, 2003                       |   | Canada   |   |   | U.S.   |  |   | Total    |  
| | Current assets                      | $ | 9,806    |   | $ | -      |  | $ | 9,806    |  
| | Deferred tax assets                 |   | 52,500   |   |   | -      |  |   | 52,500   |  
| | Net fixed assets                    |   | 32,815   |   |   | -      |  |   | 32,815   |  
| | Computer software
      development |   | 325,000  |   |   | -      |  |   | 325,000  |  
| | Total Assets                        | $ | 420,121  |   | $ | -      |  | $ | 420,121  |  
| |                                     |   |          |   |   |        |  |   |          |  
| | Revenue                             | $ | -        |   |   | -      |  |   | -        |  
| | Administration costs                |   | 323,016  |   |   | -      |  |   | 323,016  |  
| | Net (loss) for the year             | $ | (323,016 | ) | $ | -      |  | $ | (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.       | As Restated by Inclusion of       
|----------------------------- | ----------------------------------
|(A Delaware Corporation)      | Going Concern Paragraph           
|(A Development Stage Company) | And Deletion of Deferred Tax Asset
|Notes to Financial Statements |                                   
|June 30, 2004                 |                                   
|(In U.S. Dollars)             |                                   

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

| | (g) | Recent Accounting Pronouncements (contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | In November, 2002, the EITF reached a consensus on Issue
        No. 00-21 Revenue Arrangements with Multiple Deliverables
        (EITF 00-21). This issue addresses certain aspects of accounting
        for arrangement whereby a vendor performs multiple revenue-generating
        activities. This issue addresses how to determine whether an arrangement
        involving multiple deliverables contains more than one unit of accounting
        and how the related revenue should be measured and allocated to the separate
        units of accounting. This issue is effective for revenue arrangements
        entered into for fiscal periods beginning after June 15, 2003. There is
        no effect on the Company of EITF 00-21 on the Companys results of
        operations, financial position or liquidity as the Company currently has
        no multiple deliverable revenue arrangements.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | In December of 2002, the FASB issued Statement of Financial
        Accounting Standards No. 148, Accounting for Stock-Based Compensation
        and Disclosure (SFAS148). SFAS 148 addresses additional
        disclosure rules concerning stock-based compensation and three alternative
        methods for companies to choose from for those companies that have chosen
        to expense stock options under the fair value method prescribed by SFAS
        123. The Company has not issued any stock options by March 31, 2004. (See
        Note 8 Stock-Based Compensation / Pension Plan)                                                                                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | In May 2003, the FASB issued SFAS No. 150, Accounting
        for Certain Financial Instruments with Characteristics of Both Liabilities
        and Equity. It established standards for how an issuer classified
        and measures certain financial instruments with characteristics of both
        liabilities and equity. This standard was effective for financial instruments
        entered into or modified after June 30, 2003, with no material effect
        on the Companys financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                               

|Note 3. | CAPITAL STOCK
|------- | -------------

| | a) | Authorized: 75,000,000 common shares at $0.001 par value
        per share.
| | -- | ---------------------------------------------------------------------------
| |    |                                                                            
| | b) | Common shares issued and outstanding are as follows:                       

| |                              |  | 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.       | As Restated by Inclusion of       
|----------------------------- | ----------------------------------
|(A Delaware Corporation)      | Going Concern Paragraph           
|(A Development Stage Company) | And Deletion of Deferred Tax Asset
|Notes to Financial Statements |                                   
|June 30, 2004                 |                                   
|(In U.S. Dollars)             |                                   

|Note 3. | CAPITAL STOCK (Contd)
|------- | ----------------------

| | c) | Warrants outstanding as at June 30, 2004 are as follows:
| | -- | --------------------------------------------------------

| |                            | Units     |  | Exercise Price |  | Maturity Date                      
| | -------------------------- | --------- |  | -------------- |  | -----------------------------------
| | 482047 B.C. Ltd.           | 500,000   |  | $0.15 / $0.20  |  | November 4, 2004 / November 4, 2005
| | Admiralty Fund Ltd.        | 50,000    |  | $0.15          |  | December 31, 2005                  
| | Gary Carson Delf           | 250,000   |  | $0.20          |  | November 6, 2004                   
| | Gary Carson Delf           | 100,000   |  | $0.39          |  | July 16, 2004                      
| | Lenora Gates               | 100,000   |  | $0.15          |  | November 1, 2005                   
| | Noble Larsen               | 100,000   |  | $0.15          |  | November 1, 2005                   
| | SKN
      Holdings Limited | 600,000   |  | $0.39          |  | July
      16, 2004                
| |                            | 1,700,000 |  |                |  |                                    

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

| | a) | Management fees payable - $102,500                                                                                                        
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                           
| |    | (i)                                                                                                                                       
| |    |                                                                                                                                           
| |    |                                                                                                                                           
| |    |                                                                                                                                           
| |    | (ii)                                                                                                                                      
| |    |                                                                                                                                           
| | b) | Directors and Officers of the Company are
        beneficial owners of common shares of the Company, as follows, at June
        30, 2004:

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

| | d) | 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.       | As Restated by Inclusion of       
|----------------------------- | ----------------------------------
|(A Delaware Corporation)      | Going Concern Paragraph           
|(A Development Stage Company) | And Deletion of Deferred Tax Asset
|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) | Acquisition From Online Innovation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | b) | Computer Software Costs capitalized                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |    | By agreement dated July 30, 1999 between the
        Company and Stratford Internet Technologies (Stratford), Stratford
        had been engaged to create, maintain, upgrade and supply artwork, computer
        files, and coding for a website at www.virtuallydating.com for the amount
        of $400,000 US, less unpaid amount of $75,000 reversed in these financial
        statement for the quarter ended September 30, 2001, due to the receivership
        of Stratford, for a net amount of $325,000, which is capitalized in these
        financial statements.

|Note 7. | STOCK BASED COMPENSATION/ PENSION PLAN
|------- | --------------------------------------

| | a) | The Company has an Incentive Stock Plan that was approved
        in 2000 that provides for the grant, at the discretion of the Board of
        Directors, or a Committee appointed by it, of options and rights to purchase
        an aggregate of not to exceed 1,500,000 common shares of common shares
        of the Company to officers, directors, employees and consultants of the
        Company. No options have been exercised relating to this plan up to June
        30, 2004.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | b) | There are no liabilities for pension costs at June 30,
        2004, as the Company does not have a pension plan.                                                                                                                                                                                                                                                                                                                                                                              

---

|ONLINE INNOVATION, INC.       | As Restated by Inclusion of       
|----------------------------- | ----------------------------------
|(A Delaware Corporation)      | Going Concern Paragraph           
|(A Development Stage Company) | And Deletion of Deferred Tax Asset
|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 | 
| | Warrants |  | 1,700,000  | 
| | Options  |  | 1,500,000  | 
| | Diluted  |  | 19,633,752 | 

| | 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 $2,750,161. There are no current or deferred tax expenses
        for the year ended June 30, 2004, due to the Company's loss position.
        The Company has fully reserved for any benefits of these losses. The deferred
        tax consequences of temporary differences in reporting items for financial
        statement and income tax purposes are recognized, as appropriate. Realization
        of the future tax benefits related to the deferred tax assets is dependent
        on many factors, including the Company's ability to generate taxable income
        within the net operating loss carryforward period. Management has considered
        these factors in reaching its conclusion as to the valuation allowance
        for financial reporting purposes. The income tax effect of temporary differences
        comprising the deferred tax assets and deferred tax liabilities on the
        accompanying consolidated balance sheets is a result of the following:

| |                         |   | June
      30, 2004 |  
| | ----------------------- | - | ------------------- | -
| | Deferred tax assets     | $ | 935,055             |  
| | Valuation allowance     | $ | (935,055            | )
| | Net deferred tax assets | $ | -                   |  

| | The financial statements initially reported included
        Deferred Tax Asset of $52,500 as an asset in the balance sheet. This financial
        statement has amended that disclosure and eliminated the deferred tax
        asset by a write off to operations.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|ONLINE INNOVATION, INC.       | As Restated by Inclusion of       
|----------------------------- | ----------------------------------
|(A Delaware Corporation)      | Going Concern Paragraph           
|(A Development Stage Company) | And Deletion of Deferred Tax Asset
|Notes to Financial Statements |                                   
|June 30, 2004                 |                                   
|(In U.S. Dollars)             |                                   

|Note 9. | INCOME TAXES (Contd)                                                                                                                                                             
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|        |                                                                                                                                                                                   
|        | A reconciliation between the statutory
        federal income tax rate and the effective income rate of income tax expense
        for the year ended June 30, 2004 is as follows:

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

|Note 10. FINANCIAL INSTRUMENTS
|------------------------------

The Companys financial instruments consist of cash, accounts
  payable, management fees payable, loan payable, and due to related parties.
  It is managements opinion that the Company is not exposed to significant
  interest, currency or credit risks arising from these financial instruments.
  The fair value of these financial instruments approximates their carrying values.

|Note 11. | LOANS PAYABLE             
|-------- | --------------------------
|         |                           
|         | Converted to Common Shares

| | (a)                     | On July 4, 2003, the Company arranged financing of $40,000
        and issued Convertible Bridge Financing Notes, whereby the Company promises
        to pay $20,000 each to Ross Kraemer and Fortune Capital Management, respectively,
        with interest at 10% per annum, and maturity date of January 4, 2004.
        After January 4, 2004, the Holders shall have the right, at their options
        to convert the principal amount of the notes, together with all accrued
        interest into fully paid and non-assessable shares of the Companys
        common stock at a conversion price of $0.10 per share. These convertible
        bridge financing notes have been converted to common shares during the
        year ended June 30, 2004.                                    
| | ----------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (b)                     | On October 1, 2003, November 1, 2003, the Company arranged
        financing of $20,000 and issued Convertible Bridge Financing Notes, whereby
        the Company promises to pay $10,000 each to Michael-John James Ross and
        Fortune Capital Management Inc., respectively with interest at 10% per
        annum, and maturity date of January 1, 2004. After January 4, 2004, the
        Holders shall have the right, at their options to convert the principal
        amount of the notes, together with all accrued interest into fully paid
        and non-assessable shares of the Companys common stock at a conversion
        price of $0.10 per share. These convertible bridge financing notes have
        been converted to common shares during the year ended June 30, 2004.
| |                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | Unpaid at June 30, 2004

| | (c) | On April 25, 2004, the Company arranged financing of
        $25,000 and issued Convertible Bridge Financing Notes, whereby the Company
        promises to pay $25,000 to Fortune Capital Management Inc. with interest
        at 10% per annum, and maturity date of October 25, 2004.            
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                      
| |     | After October 25 2004, the Holders shall have the right,
        at their options to convert the principal amount of the notes, together
        with all accrued interest into fully paid and non- assessable shares of
        the Companys common stock at a conversion price of $0.25 per share.

---

|ONLINE INNOVATION, INC.       | As Restated by Inclusion of       
|----------------------------- | ----------------------------------
|(A Delaware Corporation)      | Going Concern Paragraph           
|(A Development Stage Company) | And Deletion of Deferred Tax Asset
|Notes to Financial Statements |                                   
|June 30, 2004                 |                                   
|(In U.S. Dollars)             |                                   

|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.

---

5

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.

|      | ONLINE INNOVATION, INC.
|----- | -----------------------
|      |                        
|Date: | By:                    
|      |                        
|      |                        
|      |                        
|      |                        
|      |                        
|      | By:                    
|      |                        
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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. LeeChad D. Lee, President, Director,
  Principal Executive Officer

Date: September 1, 2005



By:  /s/ Marlene C. Schluter
  Marlene C. Schluter, Director,
  Principal Financial Officer

Date:  September 1, 2005

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