UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934
For the quarterly period ended March 31, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934
For the transition period from ________ to _________
Commission file number: 0-14136
Aries Ventures Inc.
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(Exact name of small business issuer as specified in its charter)
Nevada 84-0987840
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
28720 Canwood Street, Suite 207, Agoura Hills, California 91301
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(Address of principal executive offices)
Issuer's telephone number: (818) 879-6501
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report.)
Check whether the issuer (1) has 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 issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities Act of
1934 subsequent to the distribution of securities under a plan confirmed by a
court.
Yes [X] No [ ]
As of March 31, 2003, the Company had 3,311,981 shares of common stock
issued and outstanding.
Documents incorporated by reference: None.
1
ARIES VENTURES INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets - March 31, 2003 (Unaudited) and
September 30, 2002
Condensed Statements of Operations (Unaudited) - Three Months and
Six Months Ended March 31, 2003 and 2002
Condensed Statements of Cash Flows (Unaudited) - Six Months Ended
March 31, 2003 and 2002
Notes to Condensed Financial Statements (Unaudited) - Three
Months and Six Months Ended March 31, 2003 and 2002
Item 2. Management's Discussion and Analysis or Plan of Operation
Item 3. Controls and Procedures
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
CERTIFICATION
2
Aries Ventures Inc.
Condensed Balance Sheets
March 31, September 30,
2003 2002
------------ ---------------
(Unaudited)
ASSETS
CURRENT
Cash and cash equivalents $ 4,568,417 $ 4,768,749
Due from related entity 14,170 51,075
Prepaid expenses and other
current assets 4,630 46,235
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4,587,217 4,866,059
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PROPERTY AND EQUIPMENT 27,244 25,844
Less: accumulated depreciation
and amortization (25,838) (25,583)
------------ ---------------
1,406 261
------------ ---------------
OTHER
Deposits 2,309 2,309
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$ 4,590,932 $ 4,868,629
============ ===============
(continued)
3
Aries Ventures Inc.
Condensed Balance Sheets (continued)
March 31, September 30,
2003 2002
------------ ---------------
(Unaudited)
LIABILITIES
CURRENT
Accounts payable $ 46,718 $ 68,847
Accrued liabilities - 29,937
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46,718 98,784
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, $0.01 par value
Authorized - 10,000,000 shares
Issued and outstanding - None - -
Common stock, $0.01 par value
Authorized - 50,000,000 shares
Issued and outstanding -
3,311,981 shares at March 31,
2003 and September 30, 2002 33,120 33,120
Additional paid-in capital 1,800,859 1,800,859
Retained earnings 2,710,235 2,935,866
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4,544,214 4,769,845
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$ 4,590,932 $ 4,868,629
============ ===============
See accompanying notes to condensed financial statements.
4
Aries Ventures Inc.
Condensed Statements of Operations (Unaudited)
Three Months Ended March 31,
----------------------------------
2003 2002
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REVENUES $ - $ -
---------------- -----------------
COSTS AND EXPENSES
General and
administrative 84,433 118,440
Legal fees 5,820 3,120
Depreciation and
amortization 156 2,987
Interest expense 27 14,835
Interest income (5,756) (1,175)
Other expense 1,370 1,670
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NET LOSS $ (86,050) $ (139,877)
================ =================
LOSS PER COMMON SHARE -
BASIC AND DILUTED $ (0.03) $ (0.04)
================ =================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
BASIC AND DILUTED 3,311,981 3,594,177
================ =================
See accompanying notes to condensed financial statements.
5
Aries Ventures Inc.
Condensed Statements of Operations (Unaudited)
Six Months Ended March 31,
-------------------------------
2003 2002
---------------- --------------
REVENUES $ - $ -
---------------- --------------
COSTS AND EXPENSES
General and
administrative 213,356 223,964
Legal fees 15,185 25,866
Depreciation and
amortization 254 5,974
Interest expense 274 27,852
Interest income (11,704) (3,189)
Other expense 8,266 3,277
---------------- --------------
NET LOSS $ (225,631) $ (283,744)
================ ==============
LOSS PER COMMON SHARE -
BASIC AND DILUTED $ (0.07) $ (0.08)
================ ==============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
BASIC AND DILUTED 3,311,981 3,584,010
================ ==============
See accompanying notes to condensed financial statements.
6
Aries Ventures Inc.
Condensed Statements of Cash Flows (Unaudited)
Six Months Ended March 31,
---------------------------------
2003 2002
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OPERATING ACTIVITIES
Net loss $ (225,631) $ (283,744)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Depreciation and
amortization 254 5,974
Common stock issued
for services - 1,830
Changes in operating
assets and
liabilities:
Decrease in:
Prepaid expenses
and other
current assets 41,606 26,991
Increase
(decrease) in:
Accounts payable (22,129) (119,646)
Accrued liabilities (29,937) 5,412
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Net cash used in operating
activities (235,837) (363,183)
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INVESTING ACTIVITIES
Payment from related entity 51,075 -
Increase in amount due from
related entity (14,170) (18,040)
Purchase of property and
equipment (1,400) -
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Net cash provided by (used
in) investing activities 35,505 (18,040)
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(continued)
7
Aries Ventures Inc.
Condensed Statements of Cash Flows (Unaudited) (continued)
Six Months Ended March 31,
--------------------------------
2003 2002
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FINANCING ACTIVITIES
Proceeds from issuance
of notes payable $ - $ 500,000
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Net cash provided by
financing activities - 500,000
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CASH AND CASH EQUIVALENTS:
Net increase (decrease) (200,332) 118,777
At beginning of period 4,768,749 68,616
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At end of period $ 4,568,417 $ 187,393
============== ================
See accompanying notes to condensed financial statements.
8
Aries Ventures Inc.
Notes to Condensed Financial Statements (Unaudited)
Three Months and Six Months Ended March 31, 2003 and 2002
1. Organization and Basis of Presentation
Basis of Presentation - The accompanying condensed financial statements include
the operations of Aries Ventures Inc., a Nevada corporation ("Aries" or the
"Company"), the successor to Casmyn Corp., a Colorado corporation ("Casmyn").
The condensed financial statements have been prepared in accordance with
generally accepted accounting principles in the United States.
Comments - The accompanying interim condensed financial statements are
unaudited, but in the opinion of management of the Company, contain all
adjustments, which include normal recurring adjustments, necessary to present
fairly the financial position at March 31, 2003, the results of operations for
the three months and six months ended March 31, 2003 and 2002, and cash flows
for the six months ended March 31, 2003 and 2002. The balance sheet as of
September 30, 2002 is derived from the Company's audited financial statements.
Certain information and footnote disclosures normally included in financial
statements that have been prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission, although management of
the Company believes that the disclosures contained in these financial
statements are adequate to make the information presented therein not
misleading. For further information, refer to the financial statements and the
notes thereto included in the Company's Annual Report on Form 10-KSB for the
fiscal year ended September 30, 2002, as filed with the Securities and Exchange
Commission.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
The results of operations for the three months and six months ended March 31,
2003 are not necessarily indicative of the results of operations to be expected
for the full fiscal year ending September 30, 2003.
Business - The Company currently has no business operations. The Company's
efforts are focused on seeking a new business opportunity and maintaining the
corporate entity. The acquisition of a new business opportunity may result in a
change in name and in control of the Company.
Income (Loss) Per Share - Basic income (loss) per share is calculated by
dividing net income (loss) by the weighted average number of common shares
outstanding during the period. Diluted income per share is calculated assuming
the issuance of common shares, if dilutive, resulting from the exercise of stock
options and warrants. These potentially dilutive securities were not included
in the calculation of loss per share for the three months and six months ended
March 31, 2003 and 2002 because the Company incurred a loss during such periods
and thus their effect would have been anti-dilutive. Accordingly, basic and
diluted loss per share are the same for the three months and six months ended
March 31, 2003 and 2002. As of March 31, 2003, potentially dilutive securities
consisted of outstanding Series A common stock purchase warrants and stock
options to acquire 3,250,981 shares and 353,318 shares, respectively.
9
Comprehensive Income (Loss) - Since the Company had no items of comprehensive
income (loss) during the three months and six months ended March 31, 2003 and
2002, a statement of comprehensive income (loss) is not presented.
Pro Forma Financial Disclosure - The fair value of stock options granted under
the Company's Employee Stock Option Plan and Management Incentive Stock Option
Plan on November 1, 2000 were estimated on the grant date using the
Black-Scholes option pricing model. Had such stock options been accounted for
pursuant to SFAS No. 123, the effect on the Company's results of operations
would have been as follows:
For the three months ended March 31, 2003 and 2002, the Company would have
recorded $5,031 as additional compensation expense, resulting in a net loss of
$91,081 and $144,908, respectively, and a net loss per common share of $0.03 and
$0.04, respectively.
For the six months ended March 31, 2003 and 2002, the Company would have
recorded $10,062 as additional compensation expense, resulting in a net loss of
$235,693 and $293,806, respectively, and a net loss per common share of $0.07
and $0.08, respectively.
2. Due from Related Entity
During the six months ended March 31, 2003 and 2002, the Company allocated
certain common corporate services aggregating $14,170 and $18,040, respectively,
to Resource Ventures, Inc. ("Resource"), the Company's former wholly-owned
Nevada subsidiary engaged in gold-mining activities in Zimbabwe. The Company
spun-off and distributed all of the common stock of Resource to the Company's
shareholders on July 1, 2000. As of March 31, 2003 and September 30, 2002,
amounts due from Resource aggregated $14,170 and $51,075, respectively. During
the three months and six months ended March 31, 2003, the September 30, 2002
balance of $51,075 was paid.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Cautionary Statement Pursuant to Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995:
This Quarterly Report on Form 10-QSB for the quarterly period ended March 31,
2003 contains "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended, including statements that include the
words "believes", "expects", "anticipates", or similar expressions. These
forward-looking statements include, but are not limited to, statements
concerning the Company's expectations regarding its working capital
requirements, financing requirements, business prospects, and other statements
of expectations, beliefs, future plans and strategies, anticipated events or
trends, and similar expressions concerning matters that are not historical
facts. The forward-looking statements in this Quarterly Report on Form 10-QSB
for the quarterly period ended March 31, 2003 involve known and unknown risks,
uncertainties and other factors that could cause the actual results, performance
or achievements of the Company to differ materially from those expressed in or
implied by the forward-looking statements contained herein.
General Overview:
As of March 31, 2003, the Company had no business operations. The Company's
efforts are focused on seeking a new business opportunity and maintaining the
corporate entity. The acquisition of a new business opportunity may result in a
change in name and in control of the Company.
Results of Operations:
Three Months Ended March 31, 2003 and 2002:
General and Administrative. General and administrative expenses were $84,433
and $118,440 for the three months ended March 31, 2003 and 2002, respectively.
Significant components of general and administrative expenses include management
and directors' compensation, insurance costs, accounting fees and office
expenses. The decrease in expenses in 2003 as compared to 2002 was primarily a
result of reduced management compensation and office expenses.
Legal Fees. Legal fees were $5,820 and $3,120 for the three months ended March
31, 2003 and 2002, respectively. The increase in legal fees in 2003 as compared
to 2002 was a result of the Company efforts to have the Bankruptcy Court close
the Company's Chapter 11 bankruptcy case and issue a final decree. The Company
expects legal fees to decrease from these levels in subsequent quarters.
Depreciation and Amortization. Depreciation and amortization was $156 and
$2,987 for the three months ended March 31, 2003 and 2002, respectively.
Interest Expense. Interest expense was $27 and $14,835 for the three months
ended March 31, 2003 and 2002, respectively. The decrease in interest expense
in 2003 as compared to 2002 was a result of the repayment in August 2002 of
notes payable of $500,000, which the Company originally borrowed in October
2001.
Interest Income. Interest income was $5,756 and $1,175 for the three months
ended March 31, 2003 and 2002, respectively, as a result of increased
interest-bearing cash balances during the fiscal year ending September 30, 2003.
Other Expense. Other expense was $1,370 and $1,670 for the three months ended
March 31, 2003 and 2002, respectively.
Net Loss. Net loss was $86,050 and $139,877 for the three months ended March
31, 2003 and 2002, respectively.
11
Six Months Ended March 31, 2003 and 2002:
General and Administrative. General and administrative expenses were $213,356
and $223,964 for the six months ended March 31, 2003 and 2002, respectively.
Significant components of general and administrative expenses include management
and directors' compensation, insurance costs, accounting fees and office
expenses. The decrease in expenses in 2003 as compared to 2002 was primarily a
result of reduced management compensation and office expenses. The Company
expects general and administrative expenses to decrease from these levels in
subsequent quarters.
Legal Fees. Legal fees were $15,185 and $25,866 for the six months ended March
31, 2003 and 2002, respectively. The decrease in legal fees in 2003 as compared
to 2002 was a result of the Company concluding legal settlements with respect to
all litigation and claims that it had been pursuing in various jurisdictions
against the Company's former officers, directors, auditors and legal counsel
during the three months ended September 30, 2002. The Company expects legal
fees to decrease from these levels in subsequent quarters.
Depreciation and Amortization. Depreciation and amortization was $254 and
$5,974 for the six months ended March 31, 2003 and 2002, respectively.
Interest Expense. Interest expense was $274 and $27,852 for the six months
ended March 31, 2003 and 2002, respectively. The decrease in interest expense
in 2003 as compared to 2002 was a result of the repayment in August 2002 of
notes payable of $500,000, which the Company originally borrowed in October
2001.
Interest Income. Interest income was $11,704 and $3,189 for the six months
ended March 31, 2003 and 2002, respectively, as a result of increased
interest-bearing cash balances during the fiscal year ended September 30, 2003.
Other Expense. Other expense was $8,266 and $3,277 for the six months ended
Mach 31, 2003 and 2002, respectively.
Net Loss. Net loss was $225,631 and $283,744 for the six months ended March 31,
2003 and 2002, respectively.
Financial Condition - March 31, 2003:
Liquidity and Capital Resources:
Overview. The Company had cash and cash equivalents of $4,568,417 at March 31,
2003, as compared to $4,768,749 at September 30, 2002, a decrease of $200,332.
As of March 31, 2003, the Company had working capital of $4,540,499, as compared
to working capital of $4,767,275 at September 30, 2002.
Operating. The Company's operations utilized cash resources of $235,837 and
$363,183 during the six months ended March 31, 2003 and 2002, respectively.
As of March 31, 2003, the Company had no business operations. The Company's
efforts are focused on seeking a new business opportunity and maintaining the
corporate entity.
The Company anticipates that its working capital resources are adequate to fund
anticipated costs and expenses at least through the remainder of the fiscal year
ending September 30, 2003.
Investing. During the six months ended March 31, 2003, net cash provided by
investing activities was $35,505, consisting of the payment from a related
entity of $51,075, reduced by an increase in the amount due from the related
entity of $14,170 and the purchase of property and equipment of $1,400. During
12
the six months ended March 31, 2002, net cash used in investing activities was
$18,040, consisting of an increase in the amount due from the related entity.
Financing. During October 2001, the Company borrowed $500,000 pursuant to
unsecured notes payable, with interest at 12% per annum, both principal and
interest payable on September 30, 2002. The lender also received 85,000 Class A
common stock purchase warrants that had been originally issued to an affiliate
of the Company. The Company was obligated to pay the notes from the net
proceeds received by the Company from the settlement of its legal claims against
other parties that aggregated in excess of $500,000. During August 2002, the
notes were paid in full, with interest. Since the exercise price of the Series
A common stock purchase warrants was substantially in excess of the market value
of the underlying common stock, the warrants had nominal intrinsic value, and
therefore no accounting value was ascribed to the warrants for financial
statement purposes.
13
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information
required to be disclosed in the reports filed or submitted under the Exchange
Act of 1934 is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms of the Securities and Exchange
Commission. Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to be
disclosed in the reports filed under the Exchange Act of 1934 is accumulated and
communicated to the Company's management, including its principal executive and
financial officers, as appropriate, to allow timely decisions regarding required
disclosure.
Within the 90 days prior to the filing of this report, the Company carried out
an evaluation, under the supervision and with the participation of the Company's
management, including its principal executive and financial officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. Based upon and as of the date of that evaluation, the Company's
principal executive and financial officer concluded that the Company's
disclosure controls and procedures are effective to ensure that information
required to be disclosed in the reports the Company files and submits under the
Exchange Act of 1934 is recorded, processed, summarized and reported as and when
required.
(b) Changes in Internal Controls
There were no changes in the Company's internal controls or in other factors
that could have significantly affected those controls subsequent to the date of
the Company's most recent evaluation.
14
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
A list of exhibits required to be filed as part of this report is set
forth in the Index to Exhibits, which immediately precedes such
exhibits, and is incorporated herein by reference.
(b) Reports on Form 8-K
Three Months Ended March 31, 2003:
The Company filed a Current Report on Form 8-K on January 14, 2003 and
a Current Report on Form 8-K/A on January 22, 2003 to report that it
changed its independent accountants.
The Company filed a Current Report on Form 8-K on January 31, 2003 to
report that the Company had filed documents with the Bankruptcy Court
requesting that it enter an order granting the Company a final decree
and closing the Company's Chapter 11 bankruptcy case, which order was
entered on February 19, 2003.
15
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
ARIES VENTURES INC.
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(Registrant)
/s/ ROBERT N. WEINGARTEN
DATE: May 12, 2003 By: ------------------------
Robert N. Weingarten
President and Chief
Financial Officer
(Duly Authorized Officer
and Chief Financial
Officer)
16
CERTIFICATION
I, Robert N. Weingarten, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Aries Ventures Inc.
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report.
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report.
4. I am responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and I have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to me by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report my conclusions about the
effectiveness of the disclosure controls and procedures based on my
evaluation as of the Evaluation Date.
5. I have disclosed, based on my most recent evaluation, to the registrant's
auditors and the audit committee of registrant's board of directors (or
persons performing the equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls.
6. I have indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors that could
significantly affect internal controls subsequent to the date of my most
recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
/s/ ROBERT N. WEINGARTEN
Date: May 12, 2003 By: ------------------------
Robert N. Weingarten
President and Chief
Financial Officer
17
INDEX TO EXHIBITS
Exhibit
Number Description of Document
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99.1 Certification pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
18