UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2009
Commission file number 333-154455
ARES VENTURES CORP.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
4600 Lamont Street #4-327
San Diego, CA 92109-3535
(Address of principal executive offices, including zip code.)
(858)408-2457
(Telephone number, including area code)
Shane Ellis
Ares Ventures Corp.
4600 Lamont Street #4-327
San Diego, CA 92109-3535
Telephone & Facsimile (858)408-2457
(Name and Address of Agent for Service)
Check whether the issuer (1) filed all reports required to be filed by Section
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 last 90 days. YES [X] 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
the definitions of "large accelerated filer, "accelerated filer,"
"non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 6,000,000 shares as of February 16,
2010
ITEM 1. FINANCIAL STATEMENTS
The financial statements for the quarter ended December 31, 2009 immediately
follow.
2
ARES VENTURES CORP.
(An Exploration Stage Company)
Balance Sheet
--------------------------------------------------------------------------------
As of As of
December 31, September 30,
2009 2009
-------- --------
ASSETS
CURRENT ASSETS
Cash $ 32,102 $ 47,758
Deposits 8,000 --
-------- --------
TOTAL CURRENT ASSETS 40,102 47,758
-------- --------
TOTAL ASSETS $ 40,102 $ 47,758
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ -- $ 4,000
-------- --------
TOTAL CURRENT LIABILITIES -- 4,000
TOTAL LIABILITIES -- 4,000
STOCKHOLDERS' EQUITY
Common stock, ($0.001 par value, 75,000,000 shares authorized;
6,000,000 shares issued and outstanding as of December 31, 2009
and September 30, 2009) 6,000 6,000
Additional paid-in capital 69,000 69,000
Deficit accumulated during development stage (34,898) (31,242)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 40,102 43,758
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 40,102 $ 47,758
======== ========
See Notes to Financial Statements
3
ARES VENTURES CORP.
(An Exploration Stage Company)
Statement of Operations
--------------------------------------------------------------------------------
September 25, 2008
Three Months Three Months (inception)
ended ended through
December 31, December 31, December 31,
2009 2008 2009
---------- ---------- ----------
REVENUES
Revenues $ -- $ -- $ 0
---------- ---------- ----------
TOTAL REVENUES -- -- 0
OPERATIONG EXPENSES
Office and Administration 157 2,752 6,288
Mineral Exploration Expenses -- 7,000 15,611
Professional Fees 3,500 5,000 13,000
---------- ---------- ----------
TOTAL OPERATING EXPENSES (3,657) (14,752) (34,899)
Provision for Income Taxes -- -- --
---------- ---------- ----------
NET INCOME (LOSS) $ (3,657) $ (14,752) $ (34,898)
========== ========== ==========
BASIC EARNINGS (LOSS) PER SHARE $ (0.00) $ (0.00)
========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 6,000,000 3,000,000
========== ==========
See Notes to Financial Statements
4
ARES VENTURES CORP.
(An Exploration Stage Company)
Statement of Cash Flows
--------------------------------------------------------------------------------
September 25, 2008
Three Months Three Months (inception)
ended ended through
December 31, December 31, December 31,
2009 2008 2009
-------- -------- --------
OPERATING ACTIVITIES
Net income (loss) $ (3,657) $(14,752) $(34,898)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Changes in operating assets and liabilities:
(Increase) Decrease in Deposits (8,000) -- (8,000)
Increase (decrease) in Accounts Payable (4,000) (515) --
Increase (decrease) in Loan from Director -- 350 --
-------- -------- --------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (15,657) (14,917) (42,898)
INVESTING ACTIVITIES
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES -- -- --
FINANCING ACTIVITIES
Issuance of common stock -- -- 75,000
Stock Subscription Receivable -- 13,000 --
-------- -------- --------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES -- 13,000 75,000
-------- -------- --------
NET INCREASE (DECREASE) IN CASH (15,657) (1,917) 32,102
CASH AT BEGINNING OF PERIOD 47,758 2,000 --
-------- -------- --------
CASH AT END OF PERIOD $ 32,102 $ 83 $ 32,102
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during period for:
Interest $ -- $ -- $ --
======== ======== ========
Income Taxes $ -- $ -- $ --
======== ======== ========
See Notes to Financial Statements
5
ARES VENTURES CORP.
(An Exploration Stage Company)
Notes to Financial Statements
December 31, 2009
--------------------------------------------------------------------------------
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by Ares Ventures Corp.
(the "Company") without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations, and cash flows at December 31,
2009, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted. It is suggested
that these condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's September 30,
2009 audited financial statements. The results of operations for the period
ended December 31, 2009 are not necessarily indicative of the operating results
for the full year.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles in the United States of America applicable to a going
concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has not yet
established an ongoing source of revenues sufficient to cover its operating
costs and allow it to continue as a going concern. The ability of the Company to
continue as a going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable. If the Company is
unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other
things, additional capital resources. Management's plan is to obtain such
resources for the Company by obtaining capital from management and other
investors sufficient to meet its minimal operating expenses and seeking equity
and/or debt financing. However management cannot provide any assurances that the
Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events from the balance sheet date through
January 18, 2010 and determined there are no items to disclose.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements that involve risk and
uncertainties. We use words such as "anticipate", "believe", "plan", "expect",
"future", "intend", and similar expressions to identify such forward-looking
statements. Investors should be aware that all forward-looking statements
contained within this filing are good faith estimates of management as of the
date of this report and actual results may differ materially from historical
results or our predictions of future results.
RESULTS OF OPERATIONS
We are still in our exploration stage and have generated no revenue to date.
We incurred operating expenses of $3,657 and $14,752 for the three months ended
December 31, 2009 and 2008, respectively. These expenses consisted of general
operating expenses and professional fees, and for the three months ended
December 31, 2008 we also incurred $7,000 in exploration expenses.
Our net loss from inception (September 25, 2008) through December 31, 2009 was
$34,898.
In September, 2008, a total of 3,000,000 shares of common stock were issued in
exchange for $15,000 US, or $.005 per share. These securities were issued to
Shane Ellis, the officer and director of the company. On May 12, 2009 the
Company completed its S-1 offering, selling 3,000,000 common shares at $.02 per
share for total proceeds of $60,000.
The following table provides selected financial data about our company for the
period ended December 31, 2009.
Balance Sheet Data: 12/31/09
------------------- --------
Cash $32,102
Total assets $ 8,000
Total liabilities $ 0
Shareholders' equity $40,102
LIQUIDITY AND CAPITAL RESOURCES
Our cash balance at December 31, 2009 was $32,102. If we experience a shortage
of funds in the next twelve months we may utilize funds from our director, who
has agreed to advance funds for operations, however he has no formal commitment,
arrangement or legal obligation to advance or loan funds to us.
PLAN OF OPERATION
Our plan of operation for the twelve months is to complete Phases 2 and 3 of the
exploration program, if warranted by the results of Phase 1A. In addition to the
$34,500 we anticipate spending for the remainder of the exploration program as
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outlined below, we anticipate spending an additional $10,000 on professional
fees, including fees payable in complying with reporting obligations, and
general administrative costs. Total expenditures over the next 12 months are
therefore expected to be approximately $44,500.
The following work program has been recommended by the consulting geologist who
prepared the geology report.
PHASE 1 (COMPLETED)
Detailed prospecting, mapping and soil geochemistry.
The estimated cost for this program is all inclusive.
The timeline for accomplishing this phase of fieldwork
including the turn-around time on analyses is approximately
two months $ 8,500 paid
PHASE 1A (FIELDWORK COMPLETED)
Fill-n MMI sampling to establish a more exact pattern of
Anomalies found in Phase 1. $ 8,000 paid
PHASE 2
Magnetometer and VLF electromagnetic, grid
controlled surveys over the areas of interest
determined by the Phase 1 survey. Included in this
estimated cost is transportation, accommodation,
board, grid installation, two geophysical surveys,
maps and report 9,500
PHASE 3
Induced polarization survey over grid controlled
anomalous area of interest outlined by Phase 1&2
fieldwork. Hoe or bulldozer trenching, mapping and
sampling of bedrock anomalies. Includes assays, maps
and reports 25,000
-------
Total $51,000
=======
Each phase following phase 1 is contingent upon favorable results from the
previous phase.
The geologist completed Phase 1 in October 2009 and recommended a followup Phase
1 at a cost of $8,000. He completed the field work for the followup Phase 1A in
November 2009, we are currently reviewing his recommendation regarding further
exploration.
The above program costs are management's estimates based upon the
recommendations of the professional consulting geologist's report and the actual
project costs may exceed our estimates.
8
Following phase one of the exploration program, if it proves successful in
identifying mineral deposits, we intend to proceed with phase two of our
exploration program. The estimated cost of this program is $9,500 and will take
approximately 3 weeks to complete and an additional two to three months for the
consulting geologist to receive the results from the assay lab and prepare his
report.
Following phase two of the exploration program, if it proves successful, we
intend to proceed with phase three of our exploration program. The estimated
cost of this program is $25,000 and will take approximately one month to
complete and an additional two to three months for the consulting geologist to
receive the results from the assay lab and prepare his report.
We anticipate commencing the second phase of our exploration program in spring
2010 and phase 3 in summer 2010, if warranted. We have a verbal agreement with
Western Minerals Inc., the consulting geology company who prepared the geology
report on our claim, to retain their services for our planned exploration
program. We cannot provide investors with any assurance that we will be able to
raise sufficient funds to proceed with any work after the exploration program if
we find mineralization.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
ITEM 4. CONTROLS AND PROCEDURES
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange
Act of 1934 as a process designed by, or under the supervision of, the company's
principal executive and principal financial officers and effected by the
company's board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America and
includes those policies and procedures that:
- Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of the
assets of the company;
- Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with accounting principles generally accepted in the United States of
America and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and
directors of the company; and
9
- Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the company's
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. 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. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation. Because of the
inherent limitations of internal control, there is a risk that material
misstatements may not be prevented or detected on a timely basis by internal
control over financial reporting. However, these inherent limitations are known
features of the financial reporting process. Therefore, it is possible to design
into the process safeguards to reduce, though not eliminate, this risk.
As of December 31, 2009 management assessed the effectiveness of our internal
control over financial reporting based on the criteria for effective internal
control over financial reporting established in Internal Control--Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission ("COSO") and SEC guidance on conducting such assessments. Based on
that evaluation, they concluded that, during the period covered by this report,
such internal controls and procedures were not effective to detect the
inappropriate application of US GAAP rules as more fully described below. This
was due to deficiencies that existed in the design or operation of our internal
controls over financial reporting that adversely affected our internal controls
and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that our management
considered to be material weaknesses under the standards of the Public Company
Accounting Oversight Board were: (1) lack of a functioning audit committee due
to a lack of a majority of independent members and a lack of a majority of
outside directors on our board of directors, resulting in ineffective oversight
in the establishment and monitoring of required internal controls and
procedures; (2) inadequate segregation of duties consistent with control
objectives; and (3) ineffective controls over period end financial disclosure
and reporting processes. The aforementioned material weaknesses were identified
by our Chief Executive Officer in connection with the review of our financial
statements as of December 31, 2009.
Management believes that the material weaknesses set forth in items (2) and (3)
above did not have an effect on our financial results. However, management
believes that the lack of a functioning audit committee and the lack of a
majority of outside directors on our board of directors results in ineffective
oversight in the establishment and monitoring of required internal controls and
procedures, which could result in a material misstatement in our financial
statements in future periods.
MANAGEMENT'S REMEDIATION INITIATIVES
In an effort to remediate the identified material weaknesses and other
deficiencies and enhance our internal controls, we have initiated, or plan to
initiate, the following series of measures:
10
We will create a position to segregate duties consistent with control objectives
and will increase our personnel resources and technical accounting expertise
within the accounting function when funds are available to us. And, we plan to
appoint one or more outside directors to our board of directors who shall be
appointed to an audit committee resulting in a fully functioning audit committee
who will undertake the oversight in the establishment and monitoring of required
internal controls and procedures such as reviewing and approving estimates and
assumptions made by management when funds are available to us.
Management believes that the appointment of one or more outside directors, who
shall be appointed to a fully functioning audit committee, will remedy the lack
of a functioning audit committee and a lack of a majority of outside directors
on our Board.
We anticipate that these initiatives will be at least partially, if not fully,
implemented by December 31, 2010. Additionally, we plan to test our updated
controls and remediate our deficiencies by December 31, 2010.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, which has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
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PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSURE
(a) Dismissal of Moore & Associates Chartered
On August 4, 2009, Board of Directors of the Registrant dismissed Moore &
Associates Chartered, its independent registered public account firm. On the
same date, August 4, 2009, the accounting firm of Seale and Beers, CPAs was
engaged as the Registrant's new independent registered public account firm. The
Board of Directors of the Registrant and the Registrant's Audit Committee
approved of the dismissal of Moore & Associates Chartered and the engagement of
Seale and Beers, CPAs as its independent auditor. None of the reports of Moore &
Associates Chartered on the Company's financial statements for the year or
subsequent interim period contained an adverse opinion or disclaimer of opinion,
or was qualified or modified as to uncertainty, audit scope or accounting
principles, except that the Registrant's audited financial statements contained
in its Form 10-K for the fiscal year ended September 30, 2008 a going concern
qualification in the registrant's audited financial statements.
During the registrant's most recent fiscal year and the subsequent interim
periods thereto, there were no disagreements with Moore and Associates,
Chartered whether or not resolved, on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to Moore and Associates, Chartered's satisfaction, would
have caused it to make reference to the subject matter of the disagreement in
connection with its report on the registrant's financial statements.
The registrant requested that Moore and Associates, Chartered furnish it with a
letter addressed to the Securities and Exchange Commission stating whether it
agreed with the above statements. On September 2, 2009, Moore and Associates
declined our request for the letter.
On September 2, 2009 the registrant was advised by the Securities and Exchange
Commission that the Public Company Accounting Oversight Board (PCAOB) had
revoked the registration of Moore and Associates, Chartered on August 27, 2009
because of violations of PCAOB rules and auditing standards in auditing the
financial statements, PCAOB rules and quality controls standards, and Section
10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and
non-cooperation with a Board investigation.
As Moore and Associates, Chartered is no longer registered with the PCAOB; the
registrant may no longer include Moore and Associates, Chartered's audit reports
or consents in filings with the Commission made on or after August 27, 2009. We
were required to have Seale and Bears, CPA's, our new independent accoutant,
re-audit the financial statements for the year ended September 30, 2008.
b) Engagement of Seale and Beers, CPAs
On August 4, 2009, the registrant engaged Seale and Beers, CPAs as its
independent accountant. During the most recent fiscal year and the interim
periods preceding the engagement, the registrant has not consulted Seale and
Beers, CPAs regarding any of the matters set forth in Item 304(a)(2)(i) or (ii)
of Regulation S-B.
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ITEM 6. EXHIBITS
Exhibit No. Exhibit Incorporated by Reference or Filed Herewith
----------- ------- -------------------------------------------
3.1 Articles of Incorporation Incorporated by reference to the Registration
Statement on Form S-1 filed with the SEC on
October 20, 2008, File No. 333-154455
3.2 Bylaws Incorporated by reference to the Registration
Statement on Form S-1 filed with the SEC on
October 20, 2008, File No. 333-154455
31.1 Section 302 Certification of Filed herewith
Chief Executive Officer
31.2 Section 302 Certification of Filed herewith
Chief Financial Officer
32 Section 906 Certification of Filed herewith
Chief Executive Officer and
Chief Financial Officer
SIGNATURES
Pursuant to the requirements 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.
February 16, 2010 Ares Ventures Corp.
/s/ Shane Ellis
---------------------------------------------------
By: Shane Ellis
(Chief Executive Officer, Chief Financial Officer,
Principal Accounting Officer, President, Secretary,
Treasurer & Sole Director)
13