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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2006
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[ ] Transition Report pursuant to 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period to
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Commission File Number 333-120382
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MATRIX VENTURES, INC.
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(Exact name of small Business Issuer as specified in its charter)
Nevada Applied For
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2640 Tempe Knoll Drive
North Vancouver, B.C. V7N 4K6
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (604) 986-9633
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N/A
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(Former name, former address and former fiscal year, if changed since
last report)
Check whether the issuer (1) 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 issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days [ X ] Yes [ ] No
Indicate by check mark whether the registrant 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
stock, as of the latest practicable date: 7,309,000 shares of $0.001 par value
common stock outstanding as of May 12, 2006.
<page>
MATRIX VENTURES, INC.
(An Exploration Stage Company)
UNAUDITED INTERIM FINANCIAL STATEMENTS
March 31, 2006
<page>
Matrix Ventures, Inc.
(An Exploration Stage Company)
Balance Sheets
(Expressed in U.S. Dollars)
<table>
<caption>
March 31, June 30,
2006 2005
$ $
ASSETS (unaudited)
<s> <c> <c>
Current Assets
Cash 2,829 9,330
- ----------------------------------------------------------------------------------------------------------------------
Total Assets 2,829 9,330
======================================================================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable 2,122 1,221
Accrued liabilities 25,000 29,642
Due to a related party (Note 4(a)) 9,241 50
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Total Liabilities 36,363 30,913
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Commitments (Note 3)
STOCKHOLDERS' DEFICIT
Common Stock
75,000,000 shares authorized, with a $0.001 par value, 7,309,000
shares issued and outstanding 7,309 7,309
Additional Paid-in Capital 23,841 23,841
Donated Capital (Note 4(b)) 26,000 17,000
Deficit Accumulated During the Exploration Stage (90,684) (69,733)
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Total Stockholders' Deficit (33,534) (21,583)
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Total Liabilities and Stockholders' Deficit 2,829 9,330
======================================================================================================================
</table>
The accompanying notes are an integral part of these financial statements
<page>
Matrix Ventures, Inc.
(An Exploration Stage Company)
Statements of Operations
(Expressed in U.S. Dollars)
(unaudited)
<table>
<caption>
Accumulated From
Three Months Nine Months February 2, 2004
Ended Ended (Inception) to
March 31, March 31, March 31,
2006 2005 2006 2005 2006
$ $ $ $ $
<s> <c> <c> <c> <c> <c>
Revenue - - - - -
- ----------------------------------------------------------------------------------------------------------------------------
Expenses
Donated rent (Note 5(b)) 750 750 2,250 2,250 6,500
Donated services (Note 5(b)) 2,250 2,250 6,750 6,750 19,500
Impairment loss on mineral property costs 2,000 9,200
- - -
Mineral exploration - - - 5,000 5,000
Office 982 893 3,251 1,594 3,481
Professional fees 576 1,928 6,700 6,814 47,003
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Total Expenses 4,558 5,821 20,951 22,408 90,684
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Net Loss for the Period (4,558) (5,821) (20,951) (22,408) (90,684)
============================================================================================================================
Net Loss Per Share - Basic and Diluted - - - - -
============================================================================================================================
Weighted Average Number of Shares Outstanding 7,309,000 7,309,000 7,309,000 7,309,000
============================================================================================================================
</table>
The accompanying notes are an integral part of these financial statements
<page>
Matrix Ventures, Inc.
(An Exploration Stage Company)
Statements of Cash Flows
(Expressed in U.S. Dollars)
(unaudited)
<table>
<caption>
Nine Months Nine Months
Ended Ended
March 31, March 31,
2006 2005
$ $
<s> <c> <c>
Operating Activities
Net loss for the period (20,951) (22,408)
Adjustments to reconcile net loss to cash used in operating activities
Donated services and rent 9,000 9,000
Impairment loss on mineral property costs 2,000 -
Changes in operating assets and liabilities
Accounts payable 901 428
Accrued liabilities (4,642) (107)
Due to a related party 191 -
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Net Cash Used in Operating Activities (13,501) (13,087)
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Investing Activities
Mineral property costs (2,000) -
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Net Cash Used in Investing Activities (2,000) -
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Financing Activities
Advances from a related party 9,000 -
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Net Cash Provided by Financing Activities 9,000 -
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Decrease in Cash (6,501) (13,087)
Cash - Beginning of Period 9,330 23,936
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Cash - End of Period 2,829 10,849
====================================================================================================================
Supplemental Disclosures
Interest paid - -
Income taxes paid - -
====================================================================================================================
</table>
The accompanying notes are an integral part of these financial statements
<page>
Matrix Ventures, Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2006
(Expressed in U.S. Dollars)
(unaudited)
1. Nature and Continuance of Operations
The Company was incorporated in the State of Nevada on February 2, 2004.
The Company is an Exploration Stage Company as defined by Statement of
Financial Accounting Standard ("SFAS") No. 7. The Company has acquired a
mineral property located in the Province of Ontario, Canada and has not yet
determined whether this property contains reserves that are economically
recoverable. The recoverability of amounts from the property will be
dependent upon the discovery of economically recoverable reserves,
confirmation of the Company's interest in the underlying property, the
ability of the Company to obtain necessary financing to satisfy the
expenditure requirements under the property agreement and to complete the
development of the property and upon future profitable production or
proceeds for the sale thereof.
These financial statements have been prepared on a going concern basis. The
Company has a working capital deficiency of $33,534 and has incurred losses
since inception resulting in an accumulated deficit of $90,684. The Company
expects further losses in the development of its business raising
substantial doubt about the Company's ability to continue as a going
concern. Its ability to continue as a going concern is dependent upon the
ability of the Company to generate profitable operations in the future
and/or to obtain the necessary financing to meet its obligations and repay
its liabilities arising from normal business operations when they come due.
2. Summary of Significant Accounting Policies
a) Basis of Presentation
The financial statements of the Company have been prepared in
accordance with generally accepted accounting principles in the United
States and are expressed in U.S. dollars. The Company's fiscal year end
is June 30.
b) Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management
to make estimates and assumptions that affect the reported amounts of
assets and liabilities and 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.
c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of
three months or less at the time of issuance to be cash equivalents.
d) Mineral Property Costs
The Company has been in the exploration stage since its formation on
February 2, 2004 and has not yet realized any revenues from its planned
operations. It is primarily engaged in the acquisition and exploration
of mining properties. Mineral property exploration costs are expensed
as incurred. Mineral property acquisition costs are initially
capitalized when incurred using the guidance in EITF 04-02, "Whether
Mineral Rights Are Tangible or Intangible Assets". The Company assesses
the carrying costs for impairment under SFAS 144, "Accounting for
Impairment or Disposal of Long Lived Assets" at each fiscal quarter
end. When it has been determined that a mineral property can be
economically developed as a result of establishing proven and probable
reserves, the costs then incurred to develop such property, are
capitalized. Such costs will be amortized using the units-of-production
method over the estimated life of the probable reserve. If mineral
properties are subsequently abandoned or impaired, any capitalized
costs will be charged to operations.
<page>
Matrix Ventures, Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2006
(Expressed in U.S. Dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
e) Long-lived Assets
In accordance with SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", the carrying value of long-lived assets
is reviewed on a regular basis for the existence of facts or
circumstances that may suggest impairment. The Company recognizes
impairment when the sum of the expected undiscounted future cash flows
is less than the carrying amount of the asset. Impairment losses, if
any, are measured as the excess of the carrying amount of the asset
over its estimated fair value.
f) Foreign Currency Translation
The Company's functional and reporting currency is the United States
dollar. Monetary assets and liabilities denominated in foreign
currencies are translated in accordance with SFAS No. 52 "Foreign
Currency Translation", using the exchange rate prevailing at the
balance sheet date. Gains and losses arising on settlement of foreign
currency denominated transactions or balances are included in the
determination of income. Foreign currency transactions are primarily
undertaken in Canadian dollars. The Company has not, to the date of
these financials statements, entered into derivative instruments to
offset the impact of foreign currency fluctuations.
g) Financial Instruments
The carrying values of cash, accounts payable, accrued liabilities and
due to a related party approximate their fair values because of the
short maturity of these instruments. The Company's operations are in
Canada and virtually all of its assets and liabilities are giving rise
to significant exposure to market risks from changes in foreign
currency rates. The financial risk is the risk to the Company's
operations that arise from fluctuations in foreign exchange rates and
the degree of volatility of these rates. Currently, the Company does
not use derivative instruments to reduce its exposure to foreign
currency risk.
h) Concentration of Credit Risk
Financial instruments that potentially subject the Company to credit
risk consist principally of cash. Cash was deposited with a high
quality credit institution.
i) Income Taxes
Potential benefits of income tax losses are not recognized in the
accounts until realization is more likely than not. The Company has
adopted SFAS No. 109 as of its inception. Pursuant to SFAS No. 109 the
Company is required to compute tax asset benefits for net operating
losses carried forward. The potential benefits of net operating losses
have not been recognized in these financial statements because the
Company cannot be assured it is more likely than not it will utilize
the net operating losses carried forward in future years.
j) Stock-based Compensation
The Company records stock-based compensation in accordance with SFAS
No. 123, "Accounting for Stock-Based Compensation". All transactions in
which goods or services are provided to the Company in exchange for the
issuance of equity instruments are accounted for based on the fair
value of the consideration received or the fair value of the equity
instrument issued, whichever is more reliably measurable. Equity
instruments issued to employees and the cost of the services received
as consideration are measured and recognized based on the fair value of
the equity instruments issued. The Company does not currently have a
stock option plan.
<page>
Matrix Ventures, Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2006
(Expressed in U.S. Dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
k) Basic and Diluted Net Loss Per Share
The Company computes net income (loss) per share in accordance with
SFAS No. 128, "Earnings per Share". SFAS No. 128 requires presentation
of both basic and diluted earnings per share (EPS) on the face of the
income statement. Basic EPS is computed by dividing net income (loss)
available to common shareholders (numerator) by the weighted average
number of shares outstanding (denominator) during the period. Diluted
EPS gives effect to all dilutive potential common shares outstanding
during the period using the treasury stock method and convertible
preferred stock using the if-converted method. In computing diluted
EPS, the average stock price for the period is used in determining the
number of shares assumed to be purchased from the exercise of stock
options or warrants. Diluted EPS excludes all dilutive potential shares
if their effect is anti dilutive.
l) Comprehensive Loss
SFAS No. 130, "Reporting Comprehensive Income," establishes standards
for the reporting and display of comprehensive loss and its components
in the financial statements. As at March 31, 2006 and 2005, the Company
has no items that represent a comprehensive loss and, therefore, has
not included a schedule of comprehensive loss in the financial
statements.
m) Interim Financial Statements
These interim unaudited financial statements have been prepared on the
same basis as the annual financial statements and in the opinion of
management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Company's
financial position, results of operations and cash flows for the
periods shown. The results of operations for such periods are not
necessarily indicative of the results expected for a full year or for
any future period.
n) Recent Accounting Pronouncements
In May 2005, the Financial Accounting Standards Board (FASB) issued
SFAS No. 154, "Accounting Changes and Error Corrections - A Replacement
of APB Opinion No. 20 and SFAS No. 3". SFAS 154 changes the
requirements for the accounting for and reporting of a change in
accounting principle and applies to all voluntary changes in accounting
principle. It also applies to changes required by an accounting
pronouncement in the unusual instance that the pronouncement does not
include specific transition provisions. SFAS 154 requires retrospective
application to prior periods' financial statements of changes in
accounting principle, unless it is impracticable to determine either
the period-specific effects or the cumulative effect of the change. The
provisions of SFAS No. 154 are effective for accounting changes and
correction of errors made in fiscal years beginning after December 15,
2005. The adoption of this standard is not expected to have a material
effect on the Company's results of operations or financial position.
<page>
Matrix Ventures, Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
March 31, 2006
(Expressed in U.S. Dollars)
(unaudited)
2. Summary of Significant Accounting Policies (continued)
n) Recent Accounting Pronouncements (continued)
In December 2004, the FASB issued SFAS No. 153, "Exchanges of
Nonmonetary Assets - An Amendment of APB Opinion No. 29". SFAS No. 153
is the result of a broader effort by the FASB to improve financial
reporting by eliminating differences between GAAP in the United States
and GAAP developed by the International Accounting Standards Board
(IASB). As part of this effort, the FASB and the IASB identified
opportunities to improve financial reporting by eliminating certain
narrow differences between their existing accounting standards. SFAS
No. 153 amends APB Opinion No. 29, "Accounting for Nonmonetary
Transactions", that was issued in 1973. The amendments made by SFAS No.
153 are based on the principle that exchanges of nonmonetary assets
should be measured based on the fair value of the assets exchanged.
Further, the amendments eliminate the narrow exception for nonmonetary
exchanges of similar productive assets and replace it with a broader
exception for exchanges of nonmonetary assets that do not have
"commercial substance." Previously, APB Opinion No. 29 required that
the accounting for an exchange of a productive asset for a similar
productive asset or an equivalent interest in the same or similar
productive asset should be based on the recorded amount of the asset
relinquished. The provisions in SFAS No.153 are effective for
nonmonetary asset exchanges occurring in fiscal periods beginning after
June 15, 2005. Early application is permitted and companies must apply
the standard prospectively. The effect of adoption of this standard did
not have a material impact on the Company's results of operations or
financial position.
o) Reclassifications
Certain reclassifications have been made to the prior period's
financial statements to conform to the current period's presentation.
3. Mineral Properties
Pursuant to a Mineral Property Option Agreement ("Agreement") dated April
21, 2004, as amended on December 31, 2005, the Company was granted the
right to acquire a 100% undivided right, title and interest in 16 mineral
claims, located in the Scadding Township, District of Sudbury, Ontario,
Canada. The Company paid $7,200 to the Optionor upon the execution of the
Agreement. The Company is obligated to pay $2,000 (paid) to the Optionor
upon execution of the amended Agreement dated December 31, 2005. In order
to keep the Agreement in good standing the Company must incur exploration
expenditures on the mineral claims of $115,000 as follows:
(a) $5,000 by December 31, 2004 (incurred);
(b) $10,000 by December 31, 2006; and
(c) $100,000 by December 31, 2007.
4. Related Party Transactions
(a) The amount of $9,241 (June 30, 2005 - $50) owing to the President
of the Company is unsecured, bears interest at 10% per annum and is due
on demand.
(b) The President of the Company provides management services and office
premises to the Company. The services are valued at $750 per month and
the office premises are valued at $250 per month. During the nine-month
period ended March 31, 2006, donated services of $6,750 (2005 - $6,750)
and donated rent expense of $2,250 (2005 - $2,250) were charged to
operations.
<page>
Item 2. Management's Discussion and Analysis or Plan of Operation
FORWARD LOOKING STATEMENTS
This quarterly report contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results are likely to differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us
described in this Risk Factors section and elsewhere in this annual report.
Plan of Operation
Our plan of operation for the twelve months following the date of this report is
to complete the phase two and three exploration programs on the Wanapitei River
property, located in Scadding Township, District of Sudbury, Ontario, as
recommended by John Siriunas. We anticipate that the phase two program will cost
approximately $10,000, while the phase three program will cost about $80,000. To
date, we have completed the first phase of exploration on the Wanapitei River
property and part of phase two.
Subject to availability, we intend to retain Mr. John Siriunas, to oversee the
proposed exploration of the Wanapitei River property given his familiarity with
the property area and his involvement with the completion of the phase one
program. We do not have any verbal or written agreement regarding the retention
of Mr. Siriunas, though he has indicated that he will be available to provide
his services. We will not have to rent or purchase any equipment for
exploration. All required equipment is provided by the consulting geologist who
oversees the programs.
In addition to exploration costs, we anticipate spending an additional $50,000
on administrative fees, including fees payable in connection with the filing of
this registration statement, our compliance with reporting obligations and
covering general administrative costs.
Total expenditures over the next 12 months are therefore expected to be
$140,000. We will require additional funding in order to complete additional
exploration programs on the Wanapitei River property and for administrative
costs. We anticipate that additional funding will be required in the form of
equity financing from the sale of our common stock. However, we cannot provide
investors with any assurance that we will be able to raise sufficient funding
from the sale of our common stock to fund the second phase of the exploration
program.
As well, our president, Lori Bolton, has agreed to loan up to $150,000 to us
from time to time upon our request in order to fund operations. Amounts loaned
will be unsecured, will bear annual simple interest of 10% and will be payable
upon demand.
We believe that debt financing will not be an alternative for funding the
complete exploration program. We do not have any arrangements in place for any
future equity financing.
Results Of Operations For Period Ending March 31, 2006
We did not earn any revenues during the nine-month period ending March 31, 2006.
We incurred operating expenses in the amount of $20,951 for the nine-month
period ended March 31, 2006, as compared to a loss of $22,408 for the
comparative period in fiscal 2005. The slight decrease in net loss in the
current fiscal year is a result of a decrease in mineral property costs ($5,000
in fiscal 2005 as compared to $2,000 in fiscal 2006).
<page>
As at March 31, 2006, we had total assets of $2,829 consisting entirely of cash
and $36,363 in liabilities consisting of accounts payable of $2,122, accrued
liabilities of $25,000 and $9,241 due to one of our directors. As at March 31,
2006, we had a working capital deficiency of $33,534.
ITEM 3: CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls
Our management evaluated the effectiveness of our disclosure controls and
procedures as of the end of our fiscal quarter on March 31, 2006. This
evaluation was conducted by our chief executive officer, Lori Bolton, and our
principal accounting officer, Erika Kumar.
Disclosure controls are controls and other procedures that are designed to
ensure that information that we are required to disclose in the reports we file
pursuant to the Securities Exchange Act of 1934 is recorded, processed,
summarized and reported.
Limitations on the Effective of Controls
Our management does not expect that our disclosure controls or our internal
controls over financial reporting will prevent all error and fraud. A control
system, no matter how well conceived and operated, can provide only reasonable,
but no absolute, assurance that the objectives of a control system are met.
Further, any control system reflects limitations on resources, and the benefits
of a control system must be considered relative to its costs. These limitations
also include the realities that judgments in decision-making can be faulty and
that breakdowns can occur because of simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by
collusion of two or more people or by management override of a control. A design
of a control system is also based upon certain assumptions about potential
future conditions; over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and may not be detected.
Conclusions
Based upon his evaluation of our controls, our chief executive officer and
principal accounting officer have concluded that, subject to the limitations
noted above, the disclosure controls are effective providing reasonable
assurance that material information relating to us is made known to management
on a timely basis during the period when our reports are being prepared. There
were no changes in our internal controls that occurred during the quarter
covered by this report that have materially affected, or are reasonably likely
to materially affect our internal controls.
<page>
PART II- OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any pending legal proceeding. Management is not aware of
any threatened litigation, claims or assessments.
Item 2. Changes in Securities
The Company did not issue any securities during the quarter ended March 31,
2006.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Report on Form 8-K
31.1 Certification pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934
31.2 Certification pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2 Certification pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
We did not file any current reports on Form 8-K during the period.
SIGNATURES
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In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DATED: May 12, 2006
Matrix Ventures, Inc.
/s/ Lori Bolton
- ------------------------------
Lori Bolton, President