United States
Securities and Exchange Commission
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2011
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
EXCHANGE ACT
Commission file Number 000-53338
SMART VENTURES , INC.
Exact name of small business issuer as specified in its charter
Nevada 98-0427221
(State or other jurisdiction of Incorporation) I.R.S. Employer No.
incorporation or organization)
55 Harvest Wood Way NE Calgary, AB T3K 3X5
(Address of principal executive office)
403-922-4583
Issuer's telephone number
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
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 (§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
_X_
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,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated Filer
[ ]
Accelerated Filer
[ ]
Non-accelerated Filer
[ ]
Small 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[ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
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 Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes _________ No___________
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of Common Stock as of the latest practicable date: 33,000,0000 shares of Common Stock as of December 5, 2011.
Item 1.
Smart Ventures , Inc.
(
An Exploration Stage Company)
INTERIM FINANCIAL STATEMENTS
SMART VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
BALANCE SHEETS
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ASSETS
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September 30,
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December 31,
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2011
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2010
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(Unaudited)
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Current Assets:
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Cash
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$ -
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$ -
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Total Current Assets
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$ -
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$ -
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Total Assets
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$ -
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$ -
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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Current Liabilities:
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Accounts payable
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103,190
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90,400
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Advances from shareholders
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28,330
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13,765
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Total Current Liabilities
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131,520
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104,165
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Stockholders' Equity (Deficit):
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Preferred stock, $.001 par value; authorized 5,000,000, none issued
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-
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-
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Common stock, $.001 par value; 200,000,000 shares authorized
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33,000,000 shares issued and outstanding at September 30, 2011
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and December 31, 2010, respectively
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33,000
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33,000
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Additional paid in capital
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22,000
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22,000
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Sock subscription receivable
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-
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-
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Accumulated deficit during exploration stage
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(186,520)
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(159,165)
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Total Stockholders' Equity (Deficit)
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(131,520)
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(104,165)
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Total Liabilities and Stockholders' Equity (Deficit)
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$ -
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$ -
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SMART VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
SMART VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Unaudited)
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From
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November 22
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For the
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For the
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2006
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nine months
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nine months
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(Date of
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ended
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ended
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inception)
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Sep 30,
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Sep 30,
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Sep 30,
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2011
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2010
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2011
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Cash Flows Used in Operating Activities:
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Net Loss
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$ (27,355)
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$ (2,000)
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$ (186,520)
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Adjustments to reconcile net (loss) to net cash
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provided by operating activities:
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Issuance of stock for services rendered
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-
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-
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10,000
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Increase to accounts payable
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12,790
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2,000
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103,190
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Net Cash Used in Operating Activities
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(14,565)
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-
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(73,330)
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Cash Flows from Investing Activities:
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-
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-
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-
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Cash Flows from Financing Activities:
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Advances from shareholders
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14,565
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-
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28,330
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Issuance of common stock for cash
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-
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-
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27,000
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Receipt of Stock subscription receivable
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-
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-
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18,000
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Net Cash Provided by Financing Activities
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14,565
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-
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73,330
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Net Increase (Decrease) in Cash
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-
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-
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-
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Cash at Beginning of Period
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-
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-
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-
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Cash at End of Period
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$ -
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$ -
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$ -
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Non-Cash Investing & Financing Activities
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Issuance of stock for management services rendered
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$ -
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$ -
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$ 10,000
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Issuance of stock for Stock subscription receivable
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$ -
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$ -
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$ 18,000
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SMART VENTURES, INC.
(AN EXPLORATION STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Unaudited
NOTE 1 – BASIS OF PRESENTATION
The interim financial statements of Smart Ventures, Inc. (the Company) for the nine months ended September 30, 2011 and 2010 and for the period from the date of inception on November 22, 2006 to
September 30, 2011 are not audited. The financial statements are prepared in accordance with generally accepted accounting principles in the United States of America.
In the opinion of management, the accompanying financial statements contain all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the Company’s financial position as of September 30, 2011 and the results of its operations and cash flows for the nine months ended
September 30, 2011 and 2010 and for the period from the date of inception on November 22, 2006 to September 30, 2011
NOTE 2 – NATURE OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with maturity of three months or less to be cash equivalents.
REVENUE RECOGNITION
The Company considers revenue to be recognized at the time the service is performed.
USE OF ESTIMATES
The preparation of the Company’s financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company’s short-term financial instruments consist of cash and cash equivalents and accounts payable. The carrying amounts of these financial instruments approximate fair value because of their short-term maturities. Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash. During the year the Company did not maintain cash deposits at financial institution in excess of the $250,000 limit covered by the Federal Deposit Insurance Corporation. The Company does not hold or issue financial instruments for trading purposes nor does it hold or issue interest rate or leveraged derivative financial instruments.
EARNINGS PER SHARE
Basic Earnings per Share (“EPS”) is computed by dividing net income available to common stockholders by the weighted average number of common stock shares outstanding during the year. Diluted EPS is computed by dividing net income available to common stockholders by the weighted-average number of common stock shares outstanding during the year plus potential
dilutive instruments such as stock options and warrant. The effect of stock options on diluted EPS is determined through the application of the treasury stock method, whereby proceeds received by the Company based on assumed exercises are hypothetically used to repurchase the Company’s common stock at the average market price during the period. Loss per share is unchanged on a diluted basis since the assumed exercise of common stock equivalents would have an anti-dilutive effect.
INCOME TAXES
The Company uses the asset and liability method of accounting for income taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of certain assets and liabilities. Deferred income tax assets and liabilities are computed annually for the difference between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period, plus or minus the change during the period in deferred tax assets and liabilities.
Deferred income taxes may arise from temporary differences resulting from income and expanse items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of the assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. The Company had no significant deferred tax items arise during any of the periods presented.
CONCENTRATION OF CREDIT RISK
The Company does not have any concentration of related financial credit risk.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company does not expect the adoption of any recent accounting pronouncements to have a material impact on its financial statements.
NOTE 3 – MINERAL CLAIMS
The Company entered into a mineral claims purchase agreement on September 1, 2007, whereby the Company purchased certain mineral claims located in the Laurentides Region near Mont Laurier, Quebec. These mineral claims were acquired from an individual for cash in the amount of $6,500. In addition the Company is required to expend additional monies in subsequent years to maintain these claims. After the acquisition of these mineral claims, management performed an impairment test to determine the carrying value of these claims. Management determined that there was no reasonable method to value the claims and have impaired the cost of these claims and recorded the expense as exploration costs during the year ended December 31, 2007.
NOTE 4- PROPOSED ACQUISITION
On June 15, 2011 we entered into a share exchange agreement with the shareholders of Metal Assets S.A. which provides in part for us to acquire all of the issued and outstanding common stock or other equity interests of Metal Assets S.A. The Purchase Price for the shares of common stock is $9,800,000. We will also issue the shareholders a total of 22 million shares of our common stock. The agreement was subsequently amended to provide for the issuance of 72 million shares of common stock. The transaction has not closed and will likely be terminated.
NOTE 5 – COMMON STOCK
The Company issued 6,000,000 shares of its common stock in December 2006 in exchange for services rendered valued at $ 10,000.
During the year ended December 31, 2007 the Company issued 27,000,000 shares of its common stock for cash and for stock subscriptions receivable valued at $.00167 per share for an aggregate total of $ 45,000. At December 31, 2007 there was an outstanding stock subscription receivable in the amount of $10,000. The Company received payment of this receivable in January of 2008.
NOTE 6– GOING CONCERN
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has no sales and has incurred a net loss of $ 186,520 since inception. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its mineral properties. Management has plans to seek additional capital through a private placement and public offering of its common stock. The financial statements do not include any adjustments relating to the recoverability and classifications of recorded assets, or the amounts of and the classification of liabilities that might be necessary in the event the Company cannot continue in existence.
Item 1A.
Risk Factors
Since we are no longer engaged in mining operations, those risk factors attributable to mining operations no longer impact our operations. Since we intend to terminate our acquisition of Metal Assets, we will need to identify a new acquisition candidate. The primary risks associated with our ongoing operations will be that we do not have a targeted business or industry and that we may not be able to consummate any type of business combination.
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This section of the prospectus includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this prospectus. These forward-looking states are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or out predictions.
PLAN OF OPERATION
On June 15, 2011 we entered into a share exchange agreement with the shareholders of Metal Assets S.A. which provides in part for us to acquire all of the issued and outstanding common stock or other equity interests of Metal Assets S.A. The transaction has not closed and management intends to terminate the transaction as Metal Assets did not comply with certain conditions precedent that were called for in the share exchange agreement.
Metal Assets’ business objective was to build a steel micro-mill in the Russian Federation. While there may be subsequent discussions between the Company and the various shareholders of Metals Assets, there can be no assurance that we will be successful in renegotiating the transaction or any similar agreement.
“Shell” Corporation
Since we do not have operations and, we intend to cancel our agreement with Metal Assets S.A., our focus will be to look for other acquisition candidates or structure a new agreement with Metal Assets or its associates.
We will not restrict our search to any specific business, industry or geographical location, and we may participate in a business venture of virtually any kind or nature. Our management may become involved in management of the target business and/or may hire qualified but as yet unidentified individuals to manage the target business.
Since we have virtually no business operations we are characterized as a "shell" corporation. As a shell corporation, we face special risks inherent in the investigation, acquisition, or involvement in a new business opportunity. We face all of the unforeseen costs, expenses, problems, and difficulties related to such companies. We are dependent upon our management to identify a business opportunity for the Company to pursue.
With limited capital resources and the uncertainties in the equities market, we have chosen to expand our search for possible acquisition candidates to encompass most industries and businesses. The financial information set forth below represents the results of operations during our formulative stages and is not indicative of the likely results from any new operations.
Comparison of Operating Results for the Three and Nine Months ended September 30, 2011 and 2010 and from November 22, 2006 (“Inception”) to September 30, 2011.
Revenue
and Operating Expenses
Since Inception we have not generated any revenues. Our operating expenses for the three and nine months ended September 30, 2011 totaled $3,400 and $27,355 respectively as compared to $500 and $2,000 for the comparable periods in 2010. Total expenses since Inception were $186,520.
Liquidity and Capital Resources
Assets and Liabilities
At September 30, 2011 and December 31, 2010 we had no cash and no assets. Liabilities totaled $131,520 and $104,165 respectively. Our current operations have been financed by shareholder advances. We will require additional financing in order for us to continue operations. Currently, there is no commitment for funding.
Off-Balance Sheet Arrangements
We are not currently a party to, or otherwise involved with, any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Item 3.
Quantitative and Qualitative Disclosure About Market Risk
Not applicable
.
Item 4.
Controls and Procedures
(a)
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) and determined that our disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q. The evaluation considered the procedures designed to ensure that the information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and communicated to our management as appropriate to allow timely decisions regarding required disclosure.
(b)
Changes in Internal Control over Financial Reporting
During the period covered by this Quarterly Report on Form 10-Q, there was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(d) and 13d-15(d) under the Exchange Act) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
(c)
Inherent Limitations of Disclosure Controls and Internal Controls over Financial Reporting
Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. Projections of any evaluation or effectiveness to future periods are subject to risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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
Not Applicable.
Item 4.
Removed and Reserved.
Item 5.
Other Information
Not applicable.
Item 6
.
Exhibits and Reports on Form 8K
Exhibit No.
Description
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31.1
Section 302 Certification of the Principal Executive Officer
31.2 Section 302 Certification of the Principal Financial Officer
32.1 Section 906 Certification of Principal Executive Officer
32.2
Section 906 Certification of Principal Financial and Accounting Officer
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
SMART VENTURES, INC.
Dated
DECEMBER 8, 2011
/s/
Lance R. Larsen
Lance R. Larsen, President, Director and Chief Executive Officer
/s/
Jamie Bond
Jamie Bond, Secretary/Treasurer, Director and Principal Accounting Officer