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EX-31 - Eternelle Skincare Products Inc.ex31-1.txt
EX-32 - Eternelle Skincare Products Inc.ex32-1.txt

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

                                    FORM 10-Q

(Mark One)

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

                For the quarterly period ended February 28, 2010

                                       OR

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

           For the transition period from __________ to ______________

                        Commission File Number 333-133347

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


             Nevada                                           98-0479983
---------------------------------                      -------------------------
 State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization                            Identification No.)


         57113, 2020 Sherwood Drive, Sherwood Park, AB, Canada T8A 5L7
        ---------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (780) 668-7422

Indicate by check mark whether the registrant (1) filed all reports  required to
be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 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.    [X]  Yes     No  [ ]

Indicate by check mark whether the registrant has submitted  electronically  and
posted on its corporate Web site, if any, every  Interactive  Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter)  during the  preceding 12 months (or for such shorter  period that
the registrant was required to submit and post such files). Yes [ ]   No [ ]

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated filer, a non-accelerated  filer, or a smaller reporting company. See
definition  of "large  accelerated  filer",  "accelerated  filer"  and  "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Larger accelerated filer [ ]                      Accelerated filer [ ]
Non-accelerated filer  [ ]                        Smaller reporting company [X]

Indicate by check mark whether registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).     Yes [ ]   No [X]

                                       1


Number of shares issued and outstanding of the registrant's class of common stock as of April 10, 2010: 3,200,000 shares of common stock The Company recognized revenues of $3,520 during the quarter ended February 28, 2010. 2
PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Page ---- Balance Sheets F-5 Interim Statements of Operations F-6 Interim Statements of Cash Flows F-7 Interim Statement of Changes in Stockholders' Deficit F-8 Notes to Interim Financial Statements F-9 to F-10 Item 2. Management's Discussion and Analysis 11 Item 3 Quantitative and Qualitative Disclosure about Market Risk 13 Item 4. Controls and Procedures 13 Item 4(A) T. Controls and Procedures 13 PART II - OTHER INFORMATION Item 1. Legal Proceedings - Not Applicable 14 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - Not Applicable 14 Item 3. Defaults upon Senior Securities - Not Applicable 14 Item 4. Removed and Reserved 14 Item 5. Other Information 14 Item 6. Exhibits 14 SIGNATURES 15 3
PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ONLINE ORIGINALS, INC. INTERIM FINANCIAL STATEMENTS FEBRUARY 28, 2010 (Unaudited) Page Financial Statements: Balance Sheets F-5 Interim Statements of Operations F-6 Interim Statements of Cash Flows F-7 Interim Statement of Changes in Stockholders' Deficit F-8 Notes to Interim Financial Statements F-9 to F-10 F-4
ONLINE ORIGINALS, INC. BALANCE SHEETS February 28, 2010 November 30, 2009 (Unaudited) (See Note 1) ASSETS Current Assets Cash $ 248 $ 2,841 Prepaid expense 159 109 ----------------------------------------------- Total Current Assets 407 2,950 Computer Equipment, net of depreciation of $6,836 - 476 ----------------------------------------------- - 476 ----------------------------------------------- TOTAL ASSETS $ 407 $ 3,426 =============================================== LIABILITIES AND STOCKHOLDERS' DEFICIT LIABILITIES Current Liabilities Accounts payable $ 3,339 $ 3,900 Accrued liabilities 6,285 8,000 ----------------------------------------------- Total Liabilities, all current 9,624 11,900 ----------------------------------------------- Commitments and Contingencies (Note 2) STOCKHOLDERS' DEFICIT Capital Stock Authorized: 75,000,000 common shares, par value $0.001 per share Issued and outstanding: 3,200,000 common shares 3,200 3,200 Additional paid-in capital 77,299 77,299 Accumulated comprehensive income 313 312 Accumulated Deficit (90,029) (89,285) ----------------------------------------------- Total Stockholders' Deficit (9,217) (8,474) ----------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 407 $ 3,426 =============================================== The accompanying notes are an integral part of these statements. F-5
ONLINE ORIGINALS, INC. INTERIM STATEMENTS OF OPERATIONS (Unaudited) Three month period Three month period ended ended February 28 February 28, 2010 2009 -------------------------------------------------------- Revenue $ 3,520 $ - -------------------------------------------------------- 3,520 - -------------------------------------------------------- Expenses Depreciation and amortization 477 907 Office and administration 952 230 Professional fees 2,835 1,683 -------------------------------------------------------- 4,264 2,820 -------------------------------------------------------- Net Loss From Operations (744) (2,820) -------------------------------------------------------- Net Loss $ (744) $ (2,820) ======================================================== Basic And Diluted Income (Loss) Per Share $ Nil $ Nil ======================================================== Weighted Average Number Of Shares Outstanding 3,200,000 3,200,000 ======================================================== The accompanying notes are an integral part of these statements. F-6
ONLINE ORIGINALS, INC. INTERIM STATEMENTS OF CASH FLOWS (Unaudited) Three month Three month period ended period ended February 28, 2010 February 28, 2009 ------------------------------------------------------------------------------------------------------ Cash Flows from Operating Activities Net Loss $ (744) $ (2,820) Adjustments to Reconcile Net Loss to Net Cash Used by Operating Activities Depreciation and amortization 477 907 Changes in Operating Assets and Liabilities Prepaid expenses (50) (83) Accounts payable and accrued liabilities (2,276) (584) ----------------------------------------------- Net Cash (Used) in Operating Activities (2,593) (2,580) ----------------------------------------------- Cash Flows from Investing Activity Additions to capital assets - - Additions to intangibles - - ----------------------------------------------- Net Cash From Investing Activities - - ----------------------------------------------- Cash Flows From Financing Activity Issuance of common shares - - Foreign currency translation adjustment - (71) ----------------------------------------------- Net Cash (Used) Provided by Financing Activities - (71) ----------------------------------------------- Net (Decrease) in Cash during the Period (2,593) (2,651) Cash, Beginning of Period 2,841 4,904 ----------------------------------------------- Cash, End Of Period $ 248 $ 2,253 =============================================== Supplemental Disclosure of Cash Flow Information Cash paid for: Interest $ - $ - Income taxes $ - $ - =============================================== The accompanying notes are an integral part of these statements. F-7
ONLINE ORIGINALS, INC. STATEMENT OF STOCKHOLDERS' (DEFICIT) For the Period from November 30, 2008 through February 28, 2010 CAPITAL STOCK ------------------------------------------------------- ADDITIONAL ACCUMULATED PAID-IN ACCUMULATED COMPREHENSIVE SHARES AMOUNT CAPITAL DEFICIT INCOME (LOSS) TOTAL ---------------------------------------------------------------------------------------------------- Balance, November 30, 2008 3,200,000 $ 3,200 $ 77,299 $ (82,896) $ (129) $ (2,526) ---------------------------------------------------------------------------------------------------- Foreign currency translation adjustment - - - - 441 441 Net loss for the year ended November 30, 2009 - - - (6,389) - (6,389) ---------------------------------------------------------------------------------------------------- Balance, November 30, 2009 3,200,000 3,200 77,299 (89,285) 312 (8,474) ---------------------------------------------------------------------------------------------------- Foreign currency translation adjustment - - - - 1 1 Net loss for the period ended February 28, 2010 - - - (744) - (744) ---------------------------------------------------------------------------------------------------- Balance, February 28, 2010 3,200,000 $ 3,200 $ 77,299 $ (90,029) $ 313 $ (9,217) ==================================================================================================== The accompanying n otes are an interal part of these statements. F-8
ONLINE ORIGINALS, INC. NOTES TO INTERIM FINANCIAL STATEMENTS FEBRUARY 28, 2010 (Unaudited) 1. UNAUDITED STATEMENTS While the information presented in the accompanying interim financial statements is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented. Except as disclosed below, these interim financial statements follow the same accounting policies and methods of their application as the Company's audited November 30, 2009 annual financial statements. It is suggested that these interim financial statements be read in conjunction with the Company's audited financial statements for the year ended November 30, 2009, included in the annual report previously filed with the Securities and Exchange Commission on Form 10-K. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the full year. The information as of November 30, 2009 is taken from the audited financial statements of that date. 2. BASIS OF PRESENTATION - GOING CONCERN The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America, which contemplates our continuation as a going concern. However, the Company has negative working capital and a stockholders' deficit and has losses to date of approximately $90,029. These matters raise substantial doubt about our ability to continue as a going concern. In view of these matters, realization of certain of the assets in the accompanying consolidated balance sheet is dependent upon the Company's ability to meet its financing requirements, raise additional capital, and the success of its future operations. The Company is seeking additional means of financing to fund its business plan. There is no assurance that the Company will be successful in raising sufficient funds to assure the eventual profitability of the Company. Management believes that actions planned and presently being taken to revise the Company's operating and financial requirements provide the opportunity for the Company to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from these uncertainties. 3. INCOME TAXES The Company is subject to foreign and domestic income taxes. The Company has net losses of $90,029 since inception, and therefore has paid no income tax. Deferred income taxes arise from temporary timing differences in the recognition of income and expenses for financial reporting and tax purposes. The Company's deferred tax assets consist entirely of the benefit from net operating loss (NOL) carry-forwards. The NOL carry forwards expire in various years through 2030. The Company's deferred tax assets are offset by a valuation allowance due to the uncertainty of the realization of the NOL carry-forwards. NOL carry-forwards may be further limited by a change in company ownership and other provisions of the tax laws. The Company's deferred tax assets, valuation allowance, and change in valuation allowance are as follows: Estimated Tax Change in Estimated NOL Benefit from Valuation Valuation Net Tax Period Ending Carry-forward NOL Expires NOL Allowance Allowance Benefit November 30, 2009 89,285 Various 22,321 (1,597) - February 28, 744 2030 186 186 - F-9
ONLINE ORIGINALS, INC. NOTES TO INTERIM FINANCIAL STATEMENTS FEBRUARY 28, 2010 (Unaudited) Income taxes at the statutory rate are reconciled to the Company's actual income taxes as follows: Income tax benefit at statutory rate resulting from net operating loss carry forward (25%) Deferred income tax valuation allowance 25% ----------- Actual tax rate 0% =========== 4 SUBSEQUENT EVENTS The Company has evaluated its activities subsequent to the period ended February 28, 2010 and through the date the financial statements were available to be issued, and has found that there were no reportable subsequent events. F-10
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The following discussion should be read in conjunction with our unaudited financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic, and competitive, uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or on our behalf. We disclaim any obligation to update forward-looking statements. The following discussion of the plan of operation, financial condition, results of operations, cash flows and changes in financial position of our Company should be read in conjunction with our most recent financial statements and notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed on March 10, 2010. The independent registered public accounting firm's report on the Company's financial statements as of November 30, 2009, and for each of the years in the two-year period then ended; include a "going concern" explanatory paragraph that describes substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to the factors prompting the explanatory paragraph are discussed below and also in Note 2 to the unaudited quarterly financial statements. Operations We are establishing a business, which provides a website where members and customers are able to bid on and purchase pieces of art. Our target cliental is the artistic community and those who enjoy purchasing, learning, and discussing art. We also represent pieces from artists, art owners, and members of the site, as well as one-time users looking to sell a single piece through our gallery/auction website. The website, www.artbyonlineoriginals.com, showcases a variety of art ranging from paintings, drawings, prints, and sculptures. We intend to develop a community of art enthusiasts through this site that will have profiles of other members and member's comments on other sellers so individuals feel comfortable purchasing online. We are showcasing original pieces of art from unknown artists in the industry as well as established artists. Prints are also available for individuals looking for a piece that can otherwise only be found in a gallery. We attempt to continually add to our collection of art pieces, following the demand of the members and listening to what they are looking for. Buyers are able to purchase art pieces from the website using different forms of payment. We are focusing on buyers and art collectors who are using the Internet to find what they are looking for. Members are able to enter the website and log into their account. Principal Products and Services ------------------------------- We are developing an online art gallery/auction house that allows members and users to purchase original art pieces online. We currently do not have an inventory of art pieces. Eventually, the available artwork will include paintings, drawings, prints, and sculptures from artists, art owners and members of the site. Members of the site, one-time users and we will sell these pieces. Fees and commissions will be charged for the services we provide. 11
Plan of Operation As soon as funds are available, we are planning to rework and update our website to better reflect current social network trends. We are continuing to contact both experienced and unpublished artists in order to introduce our marketing plan. We will continue to develop our membership program and have contacted the local tourist bureau in order to market our products though their international contacts. We are continuing the sale of memberships and inventory items when available. We have no employees at the present time. We will continue to operate with very limited administrative support. Our current officers will continue without compensation, for at least the next three months. This will enable us to continue to preserve capital during this stage of our development. We do not anticipate making any major purchases of capital assets, or conducting any research and development. Our current corporate employee count is expected to remain the same for the next year. We are actively seeking to add new products and/or services that we can offer through our website. A new marketing strategy will be developed as new products and services are identified. Liquidity At February 28, 2010, our cash balance was $248. In addition, we have prepaid expenses of $159. Cash on hand is currently our only source of liquidity. We do not have any lending arrangements in place with banking or financial institutions and we do not anticipate that we will be able to secure these funding arrangements in the near future. At February 28, 2010, we had a working capital deficit of $9,217 compared to a working capital deficit of $8,950 at November 30, 2009. At February 28, 2010, our total assets consisted of cash of $248 and prepaid expenses of $159. This compares with total assets at November 30, 2009 consisted of cash of $2,841, prepaid expenses of $109 and capital assets of $476. At February 28, 2010, our total current liabilities decreased to $9,624 from $11,900 at November 30, 2009. During the three months ended February 28, 2010, accounts payable and accrued liabilities decreased by $2,276. We recognized revenues of $3,520 from operations during the three months ending February 28, 2010. We believe our existing cash balances will not be sufficient to carry our normal operations over the next three (3) months. Our short and long-term survival is dependent on revenues from commission sales or funding from sales of securities as necessary or from shareholder loans, and thus, to the extent that we require additional funds to support our operations or the expansion of our business, we will attempt to sell additional equity shares or issue debt. Any sale of additional equity securities will result in dilution to our stockholders. Recent events in worldwide capital markets may make it more difficult for us to raise additional equity or capital. There can be no assurance that additional financing, if required, will be available to us or on acceptable terms. Result of Operations For The Three Months Ended February 28, 2010 Compared To The Three Months Ended February 28, 2009. We recognized revenues of $3,520 from operational sales during the three months ending February 28, 2010, compared to nil revenues during the three months ended February 28, 2009. For the three months ended February 28, 2010, operating expenses were $4,264 compared to $2,820 for the three months ended February 28, 2009. The increase of $1,444 was due to an increase in our operational activities over the prior 12
period. Operating expenses during the three months ended February 28, 2010, consisted of professional fees of $2,835, amortization and depreciation of $477 and office and administration costs of $952, compared to professional fees of $1,683, amortization and depreciation of $907 and office and administration costs of $230, for the three months ended February 28, 2009. We recognized a net loss of $744 for the three months ended February 28, 2010, compared to a net loss of $2,820 for the three months ended February 28, 2009. The decrease in the loss of $2,076 was a result of the increase in operational sales coupled with an increase in operational expenses as discussed above. Off-Balance Sheet Arrangements We currently do not have any off-balance sheet arrangements. ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item. ITEM 4. CONTROLS AND PROCEDURES As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the 1934 Act). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms. ITEM 4T. CONTROLS AND PROCEDURES Management's Quarterly Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the company in accordance with as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Management's assessment of the effectiveness of the small business issuer's internal control over financial reporting is as of the quarter ended February 28, 2010. We believe that our internal control over financial reporting was not effective due to material weaknesses in the system of internal control. Specifically, management identified the following control deficiency: The Company has installed accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and does not provide an adequate audit trail of entries made in the accounting software. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. This quarterly report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's 13
registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report. There was no change in our internal control over financial reporting that occurred during the fiscal quarter ended February 28, 2010, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. PART II - OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None. Item 3. Defaults Upon Senior Securities None. Item 4. Removed and Reserved None. Item 5. Other Information None. Item 6. Exhibits (a) Pursuant to Item 601 of Regulation S-K, the following exhibits are included herein or incorporated by reference. Exhibit Number Description 31.1 Section 302 Certification - Chief Executive Officer / Chief Financial Officer 32.1 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Executive Officer / Chief Financial Officer. 14
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 12th day of April, 2010. ONLINE ORIGINALS, INC. Date: April 12, 2010 By: /s/ Shari Sookarookoff ---------------------- Name: Shari Sookarookoff Title: President/Chief Executive Officer and Chief Financial (Accounting) Officer 15