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 June 30, 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 June 30, 2003, the Company had 3,311,981 shares of common stock
issued and outstanding.
Documents incorporated by reference: None.
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ARIES VENTURES INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets - June 30, 2003 (Unaudited) and
September 30, 2002
Condensed Statements of Operations (Unaudited) - Three Months and
Nine Months Ended June 30, 2003 and 2002
Condensed Statements of Cash Flows (Unaudited) - Nine Months
Ended June 30, 2003 and 2002
Notes to Condensed Financial Statements (Unaudited) - Three
Months and Nine Months Ended June 30, 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
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Aries Ventures Inc.
Condensed Balance Sheets
June 30, September 30,
2003 2002
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(Unaudited)
ASSETS
CURRENT
Cash and cash equivalents $ 4,464,169 $ 4,768,749
Due from related entity 33,591 51,075
Prepaid expenses and other
current assets 63,076 46,235
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4,560,836 4,866,059
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PROPERTY AND EQUIPMENT 27,244 25,844
Less: accumulated depreciation
and amortization (26,019) (25,583)
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1,225 261
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OTHER
Deposits 2,309 2,309
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$ 4,564,370 $ 4,868,629
========== ==========
(continued)
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Aries Ventures Inc.
Condensed Balance Sheets (continued)
June 30, September 30,
2003 2002
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(Unaudited)
LIABILITIES
CURRENT
Accounts payable $ 50,033 $ 68,847
Accrued liabilities 52,701 29,937
Income taxes payable 33,587 -
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136,321 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, $0.01 par value
Authorized - 50,000,000 shares
Issued and outstanding -
3,311,981 shares at June 30,
2003 and September 30, 2002 33,120 33,120
Additional paid-in capital 1,800,859 1,800,859
Retained earnings 2,594,070 2,935,866
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4,428,049 4,769,845
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$ 4,564,370 $ 4,868,629
========== ==========
See accompanying notes to condensed financial statements.
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Aries Ventures Inc.
Condensed Statements of Operations (Unaudited)
Three Months Ended June 30,
---------------------------
2003 2002
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REVENUES $ - $ -
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COSTS AND EXPENSES
General and
administrative 88,074 125,542
Legal fees 20 10,435
Depreciation and
amortization 182 1,533
Interest expense 492 15,420
Interest income (5,751) (588)
Other expense 104 470
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Net loss before
income taxes (83,121) (152,812)
State income taxes 33,044 -
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NET LOSS $(116,165) $(152,812)
======= =======
LOSS PER COMMON SHARE -
BASIC AND DILUTED $(0.04) $(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.
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Aries Ventures Inc.
Condensed Statements of Operations (Unaudited)
Nine Months Ended June 30,
--------------------------
2003 2002
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REVENUES $ - $ -
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COSTS AND EXPENSES
General and
administrative 301,430 349,506
Legal fees 15,205 36,301
Depreciation and
amortization 436 7,507
Interest expense 766 43,272
Interest income (17,455) (3,777)
Other expense 8,370 3,747
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Net loss before
income taxes (308,752) (436,556)
State income taxes 33,044 -
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NET LOSS $(341,796) $(436,556)
======= =======
LOSS PER COMMON SHARE -
BASIC AND DILUTED $(0.10) $(0.12)
==== ====
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING -
BASIC AND DILUTED 3,311,981 3,587,399
========= =========
See accompanying notes to condensed financial statements.
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Aries Ventures Inc.
Condensed Statements of Cash Flows (Unaudited)
Nine Months Ended June 30,
--------------------------
2003 2002
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OPERATING ACTIVITIES
Net loss $ (341,796) $(436,556)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Depreciation and
amortization 436 7,507
Common stock issued
for services - 1,830
Changes in operating
assets and
liabilities:
Increase in:
Prepaid expenses
and other
current assets (16,841) (20,090)
Increase
(decrease) in:
Accounts payable (18,814) (109,605)
Accrued liabilities 22,764 72,477
Income taxes payable 33,587 -
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Net cash used in operating
activities (320,664) (484,437)
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INVESTING ACTIVITIES
Payment from related entity 65,245 77,393
Increase in amount due from
related entity (47,761) (45,865)
Purchase of property and
equipment (1,400) -
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Net cash provided by
investing activities 16,084 31,528
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(continued)
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Aries Ventures Inc.
Condensed Statements of Cash Flows (Unaudited) (continued)
Nine Months Ended June 30,
--------------------------
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) (304,580) 47,091
At beginning of period 4,768,749 68,616
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At end of period $ 4,464,169 $ 115,707
========= =======
See accompanying notes to condensed financial statements.
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Aries Ventures Inc.
Notes to Condensed Financial Statements (Unaudited)
Three Months and Nine Months Ended June 30, 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.
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 June 30, 2003, the results of operations for the three months and nine months
ended June 30, 2003 and 2002, and cash flows for the nine months ended June 30,
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 nine months ended June 30,
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 nine months ended
June 30, 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 nine months ended
June 30, 2003 and 2002. As of June 30, 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.
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Comprehensive Income (Loss) - Since the Company had no items of comprehensive
income (loss) during the three months and six months ended June 30, 2003 and
2002, a statement of comprehensive income (loss) is not presented.
Stock-Based Compensation - The Company may periodically issue shares of common
stock for services rendered or for financing costs. Such shares are valued based
on the market price on the transaction date.
The Company may periodically issue stock options and warrants to employees and
non-employees in non-capital raising transactions for services and for financing
costs.
The Company has adopted Statement of Financial Accounting Standards ("SFAS") No.
123, "Accounting for Stock-Based Compensation", which establishes a fair value
method of accounting for stock-based compensation plans.
The provisions of SFAS No. 123 allow companies to either record an expense in
the financial statements to reflect the estimated fair value of stock options or
warrants to employees, or to continue to follow the intrinsic value method set
forth in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees", but to disclose on an annual basis the pro forma effect on
net income (loss) and net income (loss) per common share had the fair value of
the stock options and warrants been recorded in the financial statements. SFAS
No. 123 was amended by SFAS No. 148, which now requires companies to disclose in
interim financial statements the pro forma effect on net income (loss) and net
income (loss) per common share of the estimated fair market value of stock
options or warrants issued to employees. The Company has elected to continue to
account for stock-based compensation plans utilizing the intrinsic value method.
Accordingly, compensation cost for stock options and warrants is measured as the
excess, if any, of the fair market price of the Company's common stock at the
date of grant above the amount an employee must pay to acquire the common stock.
In accordance with SFAS No. 123, the cost of stock options and warrants issued
to non-employees is measured at the grant date based on the fair value of the
award. The fair value of the stock-based award is determined using the
Black-Scholes option pricing model. The resulting amount is charged to expense
on the straight-line basis over the period in which the Company expects to
receive benefit, which is generally the vesting period.
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 June 30, 2003 and 2002, the Company would have
recorded $5,031 as additional compensation expense, resulting in a net loss of
$121,196 and $157,843, respectively, and a net loss per common share of $0.04
and $0.04, respectively.
For the nine months ended June 30, 2003 and 2002, the Company would have
recorded $15,093 as additional compensation expense, resulting in a net loss of
$356,889 and $451,649, respectively, and a net loss per common share of $0.11
and $0.13, respectively.
2. Due from Related Entity
During the nine months ended June 30, 2003 and 2002, the Company allocated
certain common corporate services aggregating $47,761 and $45,865, respectively,
to Resource Ventures, Inc. ("Resource"), the Company's former wholly-owned
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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 June 30, 2003 and September 30, 2002,
amounts due from Resource aggregated $33,591 and $51,075, respectively. During
the three months and nine months ended June 30, 2003, Resource paid the Company
$14,170 and $65,245, respectively.
-11-
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 June 30,
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 June 30, 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 June 30, 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 June 30, 2003 and 2002:
General and Administrative. General and administrative expenses were $88,074 and
$125,542 for the three months ended June 30, 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, accounting fees and insurance costs.
Legal Fees. Legal fees were $20 and $10,435 for the three months ended June 30,
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 year ended September 30, 2002.
Depreciation and Amortization. Depreciation and amortization was $182 and $1,533
for the three months ended June 30, 2003 and 2002, respectively.
Interest Expense. Interest expense was $492 and $15,420 for the three months
ended June 30, 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 $5,751 and $588 for the three months ended
June 30, 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 $104 and $470 for the three months ended June
30, 2003 and 2002, respectively.
-12-
Net Loss Before Income Taxes. Net loss before income taxes was $83,121 and
$152,812 for the three months ended June 30, 2003 and 2002, respectively.
State Income Taxes. At June 30, 2003, the Company accrued $33,044 of state
income tax expense for the California alternative minimum tax relating to the
proceeds from the legal settlements received in September 2002, which was paid
in July 2003. The Company does not expect to be subject to this tax in
subsequent periods. The Company did not have any state income tax expense in
2002.
Net Loss. Net loss was $116,165 and $152,812 for the three months ended June 30,
2003 and 2002, respectively.
Nine Months Ended June 30, 2003 and 2002:
General and Administrative. General and administrative expenses were $301,430
and $349,506 for the nine months ended June 30, 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, offset in part by
increased accounting fees and insurance costs.
Legal Fees. Legal fees were $15,205 and $36,301 for the nine months ended June
30, 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 year ended September 30, 2002. The Company expects legal fees to
decrease from these levels in subsequent quarters.
Depreciation and Amortization. Depreciation and amortization was $436 and $7,507
for the nine months ended June 30, 2003 and 2002, respectively.
Interest Expense. Interest expense was $766 and $43,272 for the nine months
ended June 30, 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 $17,455 and $3,777 for the nine months
ended June 30, 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 $8,370 and $3,747 for the nine months ended
June 30, 2003 and 2002, respectively.
Net Loss Before Income Taxes. Net loss before income taxes was $308,752 and
$436,556 for the nine months ended June 30, 2003 and 2002, respectively.
State Income Taxes. At June 30, 2003, the Company accrued $33,044 of state
income tax expense for the California alternative minimum tax relating to the
proceeds from the legal settlements received in September 2002, which was paid
in July 2003. The Company does not expect to be subject to this tax in
subsequent periods. The Company did not have any state income tax expense in
2002.
Net Loss. Net loss was $341,796 and $436,556 for the nine months ended June 30,
2003 and 2002, respectively.
Financial Condition - June 30, 2003:
Liquidity and Capital Resources:
Overview. The Company had cash and cash equivalents of $4,464,169 at June 30,
2003, as compared to $4,768,749 at September 30, 2002, a decrease of $304,580.
-13-
The Company had working capital of $4,424,515 at June 30, 2003, as compared to
working capital of $4,767,275 at September 30, 2002.
Operating. The Company's operations utilized cash resources of $320,664 and
$484,437 during the nine months ended June 30, 2003 and 2002, respectively.
As of June 30, 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 nine months ended June 30, 2003, net cash provided by
investing activities was $16,084, consisting of the payment from a related
entity of $65,245, reduced by an increase in the amount due from the related
entity of $47,761 and the purchase of property and equipment of $1,400. During
the nine months ended June 30, 2002, net cash provided by investing activities
was $31,528, consisting of the payment from a related entity of $77,393, reduced
by an increase in the amount due from the related entity of $45,865.
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.
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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.
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 as of the end of the fiscal
quarter. 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.
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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 June 30, 2003: None
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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: August 11, 2003 By: ________________________
Robert N. Weingarten
President and Chief
Financial Officer
(Duly Authorized Officer
and Chief Financial
Officer)
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INDEX TO EXHIBITS
Exhibit
Number Description of Document
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31 Certification pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
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