UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C.  20549





FORM
10-K


ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURUTIES EXCHANGE ACT OF
1934





For
the fiscal year ended September 30, 2010





Commission
file number 333-154455





CommerceTel
Corporation


(Exact
Name of Registrant as Specified in Its Charter)





Nevada
              26-3439095(State
      or Other Jurisdiction of
              (I.R.S.
      EmployerIncorporation
      or Organization)
              Identification
      No.)





8929 Aero
Drive, Suite E


San Diego,
CA  92123


(Address
of Principal Executive Offices & Zip Code)





(866)
622-4261


(Telephone
Number)





Dennis
Becker


CommerceTel
Corporation.


8929 Aero
Drive, Suite E


San Diego, CA  92123


Telephone  &
Facsimile (866) 622-4261


(Name,
Address and Telephone Number of Agent for Service)





Securities
registered pursuant to Section 12(b) of the Act:


None





Securities
registered pursuant to section 12(g) of the Act:


Common
Stock, $.001 par value




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes o     No þ




Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act  Yes þ    No o




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 þ     No o




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 o   No o




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  o




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. (Check
one):




Large
      accelerated filer o
            
            Accelerated
      filer
            
            Non-accelerated
      filer o)
            
            Smaller
      reporting company þ




Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).  Yes o     No þ




As of
December 15, 2010, the registrant had 17,700,000 shares of common stock issued
and outstanding.  No market value has been computed based upon the
fact that no active trading market had been established as of December 15,
2010.








COMMERCETEL
CORP.


TABLE OF
CONTENTS





Page  No.Part
      IItem
      1.
                        Business
                        
                        3Item
      1A.
                        Risk
      Factors
                        
                        14Item
      2.
                        Properties
                        
                        23Item
      3.
                        Legal
      Proceedings
                        
                        23Item
      4.
                        Submission
      of Matters to a Vote of Securities Holders
                        
                        23Part
      IIItem
      5.
                        Market
      for Registrant’s Common Equity, Related Stockholder Matters and Issuer
      Purchases of Equity Securities
                        
                        23Item
      7.
                        Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                        
                        25Item
      8.
                        Financial
      Statements and Supplementary Data
                        
                        28Item
      9.
                        Controls
      and Procedures
                        
                        39Part
      IIIItem
      10.
                        Directors
      and Executive Officers
                        
                        41Item
      11.
                        Executive
      Compensation
                        
                        43Item
      12.
                        Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                        
                        44Item
      13.
                        Certain
      Relationships and Related Transactions
                        
                        45Item
      14.
                        Principal
      Accounting Fees and Services
                        
                        45Part
      IVItem
      15.
                        Exhibits
                        
                        46Signatures
                        
                        47


2


Part I





Item
1.  Business





CommerceTel
Corporation, a Nevada corporation (the “Company”), formerly Ares Ventures
Corporation, was during the most recent fiscal year end an exploration stage
company with no revenues and a limited operating history.On November 2,2010
the Company completed an acquisition of CommerceTel, Inc, a Nevada corporation,
as described below.





Recent
Developments





On
November 2, 2010 the Company entered into a Share Exchange Agreement (the
“Exchange Agreement”) with CommerceTel Canada Corporation, an Ontario company
and the principal shareholder (the “Shareholder”) of CommerceTel, Inc., a Nevada
corporation (“CommerceTel”), as well as the other shareholders of CommerceTel
(together with the Shareholder, the “Sellers”), pursuant to which the Company
purchased from the Sellers all issued and outstanding shares of CommerceTel, in
consideration for the issuance to the Sellers of 10,000,000 shares of common
stock of the Company (the “Share Exchange”).  Please refer to Note 10
accompanying the financial statements.





In
anticipation of the transaction, effective October 5, 2010, the Company changed
its name from Ares Ventures Corp. to CommerceTel Corporation.





Bridge
Financing





On
November 2, 2010, the Company issued to a number of accredited investors a
series of its 10% Senior Secured Convertible Bridge Note (the “Notes”) in the
aggregate principal amount of $1,000,000 (the “Financing”). The Notes accrue
interest at the rate of 10% per annum. The entire principal amount evidenced by
the Notes (the “Principal Amount”) plus all accrued and unpaid interest is due
on the earlier of (i) the date the Company completes a financing transaction for
the offer and sale of shares of common stock (including securities convertible
into or exercisable for its common stock), in an aggregate amount of no less
than 125% of the principal amounts evidenced by the Notes (a “Qualifying
Financing”), and (ii) November 3, 2011. On the maturity date of the Notes, in
addition to the repayment of the Principal Amount and all accrued and unpaid
interest, the Company will issue to each holder of the Notes, at each such
holder’s option, (i) three year warrants to purchase that number of shares of
its common stock equal to the Principal Amount plus all accrued and unpaid
interest divided by the per share purchase price of the common stock offered and
sold in the Qualifying Financing (the “Offering Price”) which warrants shall be
exercisable at the Offering Price, or (ii) that number of shares of Common Stock
equal to the product arrived at by multiplying (x) the Principal Amount plus all
accrued and unpaid interest divided by the Offering Price and (y)
0.33.  The Company’s obligations under the Notes are secured by all of
the assets of the Company, including all shares of CommerceTel, its wholly owned
subsidiary.


3





General
Information





CommerceTel
is a provider of technology that enables major brands and enterprises to engage
consumers via their mobile phone. Interactive electronic communications with
consumers is a complex process involving communication networks and software.
CommerceTel removes this complexity through its suite of services and
technologies thereby enabling brands, marketers, and content owners to
communicate with their customers and consumers in general. From Presidential
elections to major broadcast events, we are pioneers in the deployment of the
mobile channel as the ultimate direct connection to the consumer.





Mobile
phone users represent a large and captive audience. While televisions, radios,
and even PCs are often shared by multiple consumers, mobile phones are personal
devices representing a unique and individual address to the end user. We believe
that the future of digital media will be driven by mobile phones where a direct,
personal conversation can be had with the world’s largest audience. The future
of mobile includes banking, commerce, advertising, video, games and just about
every other aspect of both on and offline life. Over four million consumers have
been engaged via their mobile device thanks to CommerceTel’s
technology.





We
believe that our mobile marketing and advertising campaign platform is among the
most advanced in the industry as it allows real time interactive communications
with consumers. We generate revenue from licensing our software to clients in
our software as a service (Saas) model, per-message and per minute transactional
fees, and customized professional services.





Our “C4”
Mobile Marketing and Customer Relationship Management (CRM) platform is a hosted
solution enabling our clients to develop, execute, and manage a variety of
engagements to a consumer’s mobile phone. Short Messaging Service (SMS),
Multi-Media Messaging (MMS), and Interactive Voice Response (IVR) interactions
can all be facilitated via a set of Graphical User Interfaces (GUIs). Reporting
and analytics capabilities are also available to our users through the C4
solution.





Mobile
devices are emerging as the principal interactive channel for brands to reach
consumers since it is the only media platform that has access to the consumer
virtually anytime and anywhere. Brands and advertising agencies are recognizing
the unique benefits of the mobile channel and they are increasingly integrating
mobile media within their overall advertising and marketing campaigns. Our
objective is to become the industry leader in connecting brands and enterprises
to consumers’ mobile phones.




Industry
Background




The area
of our business consists of advertising and marketing. While advertising raises
awareness and fosters positive perceptions of a product, service or company
through brand-building or individually-targeted campaigns, marketing activities
occur once the consumer decides to interact with the brand, and are focused on
convincing the consumer to take action, for example request information, opt-in
to a campaign, or make a purchase.


4





The
Mobile Marketing Association, the premier global non-profit trade association in
the area of mobile marketing, has defined mobile marketing as a set of practices
that enables organizations to communicate and engage with their audience in an
interactive and relevant manner through any mobile device or network. Mobile
marketing is commonly known as wireless marketing.





Mobile
advertising is a rapidly growing business providing brands, agencies and
marketers the opportunity to connect with consumers beyond traditional and
digital media directly on their mobile phones. Today’s mobile phones are
utilized for more than just making and receiving calls. Besides voice services,
mobile users have access to data services such Short Message Service (SMS), also
known as text messaging, picture messaging, content downloads and the Mobile
Web. These media channels carry both content and advertising. The mobile phone
is an extremely personal device as each mobile phone typically has one unique
user. While televisions, radios, and even PCs are often shared by multiple
consumers, mobile phones are personal devices representing a truly unique and
individual address to the end user. This makes the mobile phone a precisely
targeted communication channel, where users are highly engaged with
content.  As a result, the mobile channel is a highly effective
campaign tool and its response levels are high compared to other media. Mobile
is valuable as a stand-alone medium for advertising, but it’s also well suited
for a vital role in fully integrated cross-media campaign plans, including TV,
print, radio, outdoor, cinema, online and direct mail. We believe that the
future of digital media will be driven by mobile phones where a direct, personal
conversation can be had with the world’s largest network. The future of mobile
includes banking, commerce, advertising, video, games and just about every other
aspect of both on and offline life.





Mobile
advertising campaigns may use multiple channels to reach the consumer, including
Mobile Web sites, mobile applications, mobile messaging and mobile video, all of
which can be integrated into interactive campaigns. Each channel can link to
additional mobile content or channels, as well as to complementing traditional
media. Mobile advertising provides a powerful, instant and interactive response
path in that consumers may send a keyword to a short code via SMS, or register
on a Mobile Web site.




Mobile
Web





The
Mobile Web is fast emerging as a mainstream information, entertainment and
transaction source for people on the move and away from a
PC.  Browsing the Mobile Web is similar to traditional PC-based Web
browsing and provides users with access to news, sports, weather, entertainment
and shopping sites.  However, there are some significant differences
between PC based access and phone-based access:





•
              The mobile phone is a targeted device with
      typically only one user.  This enable the delivery of relevant
      communications causing users to become engaged immediately with campaigns
      and content resulting in increased campaign
      effectiveness.




•
              Mobile phones do not permit detailed search and
      delivery.  Rather, mobile users will usually seek quick access
      to succinct information and services. Space on mobile phone screens is at
      a premium, and users have limited input mechanisms, so Mobile Web sites
      need to be easy to navigate using just the mobile phone
      keypad.




•
              Mobile phones have a broad range of different form
      factors, screen sizes and resolutions, all of which presents a challenge
      for the display and optimal viewing of content and
      advertising.


5





Mobile
Messaging





Mobile
messaging technology enables users to communicate in a so-called asynchronous
manner, where messages are stored in the network and delivered to the recipient
as soon as the recipient’s mobile phone can receive it.  Once
delivered, the message is stored on the users’ mobile phone.  SMS
(Short Messaging Service) allows a mobile user to send and receive a text
message of up to 160 characters and across virtually any operator
network.  This service is also referred to as “text messaging” or
“texting”.  All recent mobile phone models support SMS.  As
a result, the large installed base of SMS phones creates a large addressable
market for SMS-based mobile marketing campaigns.  MMS (Multimedia
Messaging Service) is the rich media equivalent to SMS text
messages.  An MMS message can include graphics photos, audio and
video, in addition to text. MMS is not yet universally supported by all
networks, however this market segment is growing.  SMS and MMS
services are together referred to as “mobile messaging” or “messaging”. The
stickiness of Mobile Messaging, the enormous reach of SMS and the rich media
capabilities of MMS make this channel a highly rewarding advertising
opportunity.





Mobile
messaging represents an opportunity for advertising placement. Media publishers
are using messaging to distribute mobile content. Businesses are providing
consumer services through mobile messaging. These messages provide inventory
into which advertisements can be inserted. In addition, it is now possible to
purchase advertising in personal – person-to person (P2P) – SMS and MMS
messages.




Mobile
devices have become one of the most widely used means of communication globally.
Significant technological advancements have and are continuing to provide mobile
users with increased access to features previously available only on PCs, such
as Internet browsing, email and social networking. As mobile devices have
evolved, they have begun to enable brands and advertising agencies to interact
with consumers virtually anytime and anywhere, optimizing engagement with other
traditional media while lowering the cost of customer acquisition and
retention.




As a
result, mobile devices have emerged as an important media method for brands and
advertising agencies to interact with consumers. According to ABI Research,
mobile marketing and advertising spending is expected to increase from
$1.64 billion in 2007 to nearly $29 billion in 2014.




The
CommerceTel Solution




CommerceTel
resolves three technical barriers needing to be overcome for the marketplace to
achieve the ultimate goal of engaging the consumer via their mobile
devices.




·
            Multimodal
      Communication: Cell phones are used for voice conversations, to
      take pictures, sending and receiving SMS text messages, and several other
      tasks. Marketers and enterprises need to include multiple communication
      modalities when interacting with the mobile consumer. Engaging only one
      channel to the mobile consumer, for example SMS text messaging, will only
      result in a partial engagement with the consumer. CommerceTel solves this
      problem via its carrier-grade integrated infrastructure delivering access
      to all modes of mobile communication from SMS to MMS to IVR and
      beyond.




6




·
            Campaign Design and
      Management.The ability to conceptualize, create, and execute mobile marketing
      campaigns or enterprise applications in an efficient manner is affected by
      software and tools available at any given time. Fragmented tool sets,
      costly service models, and prolonged time-to-market will impede and impair
      the growth of the industry. CommerceTel’s Web-based solution, “C4”, is a
      unified services creation environment that enables brands and enterprises
      to create, manage, and report on campaigns through a set of
      hosted Web tools.




·
            Analytics.Fragmented
      analytic solutions (i.e. the lack of a uniform tool set used to analyze
      mobile consumers’ preferences) only provide insights into disparate
      modalities of the mobile channel.  For example, a Mobile Web
      analytics solution reveals a consumer’s Internet consumption while
      neglecting that same consumer’s SMS and Voice related activities.
      CommerceTel’s patent pending “Personalization Engine” leverages an
      innovative approach to gaining deep insight into mobile consumer
      activities and their associated
profiles.




Our
Principal Competitive Strength




We
believe that we have a significant advantage over our main competitors for the
following reasons:




·
            Proprietary
      Technology:  Our proprietary, patent pending technology
      enables our customers to reach across all mobile phone
      interfaces.  We continue to develop, design and deploy
      enterprise-grade software that we believe is more advanced than
      technologies developed by our
competitors.




·
            IVR and Voice
      Capabilities: Our IVR and Voice capabilities allow marketers,
      content owners, and search operators the freedom of engaging mobile
      consumers outside of wireless carrier controlled messaging
      networks.  In many instances our competitors have outsourced
      business to CommerceTel to enable IVR features in their service
      offerings.  It is this fundamental advantage that has allowed
      CommerceTel to quickly penetrate major
brands.




·
            In-house
      Expertise:  We believe that our primary technical
      advantage is that we've built most of our systems in-house, relieving
      us from costly software licensing fees associated with IVR platforms, SMS
      messaging and other platforms.  For example, IVR software
      typically ranges from $150.00US to $1,000.00US per port, plus annual
      maintenance and support fees. CommerceTel's current infrastructure
      supports over 10,000 IVR ports without any associated IVR licensing costs.
      In addition, there are unavoidable provisioning times for interconnecting
      with VOIP and PSTN networks that can take a minimum of 90 days, plus
      another 30 days for equipment
provisioning.




7




Marketing
and Sales





We
believe that a successful marketing campaign addressed to mobile marketing and
content operators, particularly large agencies and brands, is largely dependent
on strong personal relationships with executives and a solutions-based sales
approach. We intend to employ an executive level sales team capable of fostering
direct relationships with brands while business development resources will focus
on channel partnerships through IT systems integrators and marketing
agencies.





Certain
minimum capitalization and financial levels are usually required by large
enterprises when seeking technical vendors.  Therefore, we intend to
employ a partnership strategy in selling to large enterprises. Partnerships will
allow us to sell into larger enterprises during our early growth period by
avoiding having to meet these minimum capitalization levels.




The
Company also intends to employ a small executive level sales team and continue
its market leadership position with our large brand name client base
establishing credibility and entrée to prospective, targeted accounts across all
vertical segments. As key accounts are won, and the Company begins to scale, our
strategy will employ a core "Client Services" team to serve existing clients and
drive revenue growth from existing business, while a direct sales force will be
tasked with focusing exclusively on new client relationships.




Our
Platform




The
ability to conceptualize, create, and execute mobile marketing campaigns or
enterprise applications will be directly affected by software and tools
available to design and deliver solutions efficiently and effectively.
Fragmented tool sets, costly service models, and prolonged time-to-market will
impede and impair the growth of the industry.




CommerceTel’s
Web-based solution, “C4”, is a unified services creation environment empowering
brands and enterprises with the ability to create, manage, and report
on campaigns through a set of hosted Web tools.


We
believe that our C-4 platform makes it simple for users to have instant access
to their mobile and online sites. Adding IVR or SMS messaging capabilities to a
website is easily facilitated via the C-4 API interface. This expands the reach
a brand can enjoy by offering content across a number of platforms. The
following two slides show actual screens of our C-4 web-based platform in
action.







8




Research
and Development




We have
built a strong internal software development team that has many years of
experience in the mobile advertising and marketing industries. As of September
30, 2010, we had 4 engineers and software developers in our development centers
located in San Diego, CA.   Our recent research and development
activities have been focused on enhancements to our platform.  Current
research and development initiatives continue to focus on extending our
technology intro payment processing, location based services, application
analytics, and other technical opportunities in the evolving mobile
industry.




We
believe that having a dedicated, highly-trained advanced projects team enables
us to effectively address the rapidly evolving mobile marketing and advertising
services market.




We expect
our total R&D expenditures in calendar year 2011 to be approximately
$400,000.




Competition




Although
the market for mobile marketing and advertising solutions is relatively new, it
is very competitive.  We compete with companies of all sizes in select
geographies that offer solutions that compete with single elements of our
platform, such as mobile advertising networks, mobile ad serving and ad routing
providers, mobile website and content creators, providers of mobile publishing
and application development, SMS aggregators or providers of mobile analytics.
We compete at times with interactive and traditional advertising agencies that
perform mobile marketing and advertising as part of their services to their
customers.   Some of these entities have significantly greater
resources than we do.




As a
result of industry developments, some of our competitors may in the future
create an integrated platform with features similar to ours, for example,
Google, Inc.'s proposed acquisition of Admob, Inc. which was announced
in November 2009, Apple, Inc.'s acquisition of Quattro Wireless, Inc.
in January 2010, and the entry of larger companies such as Nokia, AOL, Microsoft
and Yahoo! into the mobile media markets. However, we do not directly compete
with these companies as we believe we are the only provider of an integrated,
end-to-end mobile marketing and mobile advertising platform with a significant
global presence.




We
believe that the key competitive factors that our customers use in selecting
solutions include the availability of:




·
            an
      integrated, scalable and relatively easy to implement platform that can
      expand the reach of their future
campaigns;




·
            solutions
      providing high quality functionality that meet their immediate marketing
      and advertising needs;




·
            sophisticated
      analytics and reporting;




·
            competitive
      pricing;




·
            existing
      strategic relationships with customers
globally;




·
            high
      levels of quality service and support;
and




9


·
            a
      sophisticated and financially stable provider with a proven track
      record.




We
believe that we compete favorably on each of these factors. Our extensive
experience managing global marketing and advertising campaigns, together with
experienced professional services to implement and integrate these options
globally, provides us with an advantage that many of our competitors
lack.




The
consolidation of our competitors offering point solutions into larger
organizations with increased resources is a recent trend in the industry. The
effects of such acquisitions on the market are still unclear.




Seasonality




Our
business, as is typical of companies in our industry, is highly seasonal. This
is primarily due to traditional marketing and advertising spending being
heaviest during the holiday season while brands, advertising agencies, mobile
operators and media companies often close out annual budgets towards the end of
a given year.  Seasonal trends have historically contributed to, and
we anticipate will continue to contribute to fluctuations in our quarterly
results, including fluctuations in sequential revenue growth rates.




Intellectual
Property




We regard
the protection of our developed technologies and intellectual property rights as
an important element of our business operations and as crucial to our
success.  We rely primarily on a combination of patent laws, trademark
laws, copyright laws, trade secrets, confidentiality procedures and contractual
provisions to protect our proprietary technology. We generally require our
employees, consultants and advisors to enter into confidentiality
agreements.  These agreements provide that all confidential
information developed or made known to the individual during the course of the
individual's relationship with us is to be kept confidential and not disclosed
to third parties except under specific circumstances. In the case of our
employees, the agreements provide that all of the technology which is conceived
by the individual during the course of employment is our exclusive property. The
development of our technology and many of our processes are dependent upon the
knowledge, experience and skills of key scientific and technical
personnel.




We do not
own any patents. However, we have one pending U.S. patent application. Patent
application 20070249369was filed on April 25, 2007. This patent application is described as a
system, method and apparatus for delivering Web content to a mobile telephone or
related device by using a dialing code is provided. In an exemplary embodiment,
a user who dials a telephone number, or other dialing code, and subsequently
receives content sent to the user's mobile handset. In another embodiment,
content is Web content sent to the user's phone via a Wireless Application
Protocol (WAP) process.





Any
future patents that may issue may not survive a legal challenge to their scope,
validity or enforceability, or provide significant protection for us. The
failure of our patents, or our reliance upon copyright and trade secret laws to
adequately protect our technology might make it easier for our competitors to
offer similar products or technologies. In addition, patents may not issue from
any of our current or any future applications.


10




Employees




As of
September 30, 2010, we had 5 full-time employees and 3 contract
employees.




Sales,
marketing, and business development functions are provided by one full time
employee and one contract consultant.  Engineering and research and
development functions are provided by two full time employees and two contract
employees.  General administration, finance, and executive management
consist of two full time employees.




Government
Regulation




Depending
on the products and services that they offer, mobile data service providers may
be subject to regulations and laws applicable to providers of mobile, Internet
and voice over Internet protocol, or VOIP, services both domestically and
internationally. In addition, the application of existing domestic and
international laws and regulations relating to issues such as user privacy and
data protection, defamation, pricing, advertising, taxation, gambling,
sweepstakes, promotions, billing, real estate, consumer protection,
accessibility, content regulation, quality of services, telecommunications,
mobile, television and intellectual property ownership and infringement to
wireless industry providers and platforms in many instances is unclear or
unsettled. Further, the application of existing laws regulating or requiring
licenses for certain businesses of our advertisers can be unclear.




It is
possible that a number of laws and regulations may be adopted in the countries
where we operate, which may be inconsistent and which could restrict the
wireless communications industry, including laws and regulations regarding
network management and device interconnection, lawful interception of personal
data, taxation, content suitability, copyright, distribution and antitrust.
Furthermore, the growth and development of the market for electronic storage of
personal information may prompt calls for more stringent consumer protection
laws that may impose additional burdens on companies that store personal
information. We anticipate that regulation of our industry generally will
increase and that we will be required to devote legal and other resources to
address this regulation.




We are
directly subject to certain regulations and laws applicable to providers of
Internet and mobile services both domestically and internationally. The
application of existing domestic and international laws and regulations relating
to issues such as user privacy and data protection, marketing, advertising,
consumer protection and mobile disclosures in many instances is unclear or
unsettled.




United
States Regulatory Environment




In
addition to its regulation of wireless telecommunications providers generally,
the U.S. Federal Communications Commission, or FCC, has shown interest in at
least three areas that impact our business: research and development with
regards to innovation, competition in the wireless industry and consumer
protection with an emphasis on truth-in-billing. The FCC has examined, or is
currently examining, how and when consumers enroll in mobile services, what
types of disclosures consumers receive, what services consumers are purchasing
and how much consumers are charged. In addition, the Federal Trade Commission,
or FTC, has been asked to regulate how mobile marketers can use consumers'
personal information. Consumer advocates claim that many consumers do not know
when their information is being collected from cell phones and how such
information is retained, used and shared with other companies. Consumer groups
have asked the FTC to identify practices that may compromise privacy and
consumer welfare; examine opt-in procedures to ensure consumers are aware of
what data is at issue and how it will be used; investigate marketing tactics
that target children and create policies to halt abusive practices. The FTC has
expressed interest in particular in the mobile environment and services that
collect sensitive data, such as location-based information.




11




·
            Deceptive Trade Practice Law
      in the U.S.    The FTC and state attorneys
      general are given broad powers by legislatures to curb unfair and
      deceptive trade practices. These laws and regulations apply to mobile
      marketing campaigns and behavioral advertising. The general guideline is
      that all material terms and conditions of the offer must be "clearly and
      conspicuously" disclosed to the consumer prior to the buying decision. In
      practice, the definition of clear and conspicuous disclosure is often a
      subjective determination. The balancing of the desire to capture a
      potential customer's attention, while providing adequate disclosure, can
      be even more challenging in the mobile context due to the lack of
      space.




·
            Behavioral
      Advertising.    Behavioral advertising is a
      technique used by online publishers and advertisers to increase the
      effectiveness of their campaigns. Behavioral advertising uses information
      collected from an individual's web-browsing behavior, such as the pages
      they have visited or the searches they have made, to select which
      advertisements to display to that individual. This data can be valuable
      for online marketers looking to personalize advertising initiatives or to
      provide geo-tags through mobile devices. Currently, behavioral advertising
      is not formally regulated in the U.S., but many businesses adhere to
      industry self-governing principles, including an opt-out regime whereby
      information may be collected until an individual indicates that he or she
      no longer agrees to have this information collected. The FTC and EU member
      states are considering regulations in this area, which may include
      implementation of a more rigorous opt-in regime. An opt-in policy would
      prohibit businesses from collecting and using information from individuals
      who have not voluntarily consented. Among other things, the implementation
      of an opt-in regime could require substantial technical support and
      negatively impact the market for our mobile advertising products and
      services. A few states have also introduced bills in the past two years
      that would restrict or prohibit behavioral advertising within the state.
      These bills would likely have the practical affect of regulating
      behavioral advertising nationwide because of the difficulties behind
      implementing state-specific policies or identifying the location of a
      particular consumer.




·
            Behavioral Advertising-Privacy
      Regulation.    Our business is affected by U.S.
      federal and U.S. state, as well as EU member state and foreign country,
      laws and regulations governing the collection, use, retention, sharing and
      security of data that we receive from and about our users. In recent
      years, regulation has focused on the collection, use, disclosure and
      security of information that may be used to identify or that actually
      identifies an individual, such as an Internet Protocol address or a name.
      Although the mobile and Internet advertising privacy practices are
      currently largely self-regulated in the U.S., the FTC has conducted
      numerous discussions on this subject and suggested that more rigorous
      privacy regulation is appropriate, possibly including regulation of
      non-personally identifiable information which could, with other
      information, be used to identify an individual. Within the EU, member
      state data protection authorities typically regard IP addresses as
      personal information, and legislation adopted recently in the EU requires
      consent for the placement of a cookie on a user device. In addition, EU
      data protection authorities are following with interest the FTC's
      discussions regarding behavioral advertising and may follow suit by
      imposing additional privacy requirements for mobile advertising
      practices.




12




·
            Marketing-Privacy
      Regulation.    In addition, there are U.S.
      federal and state laws and EU member state and other country laws that
      govern SMS and telecommunications-based marketing, generally requiring
      senders to transmit messages (including those sent to mobile devices) only
      to recipients who have specifically consented to receiving such messages.
      U.S. federal, EU member state and other country laws also govern e-mail
      marketing, generally imposing an opt-out requirement for emails sent
      within an existing business
relationship.




·
            SMS and Location-Based
      Marketing Best Practices and Guidelines.    We
      are a member of the Mobile Marketing Association, or MMA, a global
      association of 700 agencies, advertisers, mobile device manufacturers,
      wireless operators and service providers and others interested in the
      potential of marketing via the mobile channel. The MMA has published a
      code of conduct and best practices guidelines for use by those involved in
      mobile messaging activities. The guidelines were developed by a
      collaboration of the major carriers and they require adherence to them as
      a condition of service. We voluntarily comply with the MMA code of
      conduct. In addition, the Cellular Telephone Industry Association, or
      CTIA, has developed Best Practices and Guidelines to promote and protect
      user privacy regarding location-based services. We also voluntarily comply
      with those guidelines, which generally require notice and user consent for
      delivery of location-based
services.




·
            TCPA.    The
      United States Telephone Consumer Protection Act, or TCPA, prohibits
      unsolicited voice and text calls to cell phones or the use of an
      auto-dialing system unless the recipient has given prior consent. The
      statute also prohibits companies from initiating telephone solicitations
      to individuals on the national Do-Not-Call list, unless the individual has
      given prior express consent or has an established business relationship
      with the company, and restricts the hours when such messages may be sent.
      In the case of text messages, a company must obtain opt-in consent to send
      messages to a mobile device. Violations of the TCPA can result in
      statutory damages of $500 per violation (i.e., for each individual
      text message). U.S. state laws impose additional regulations on voice and
      text calls.




·
            CAN-SPAM.    The
      U.S. Controlling the Assault of Non-Solicited Pornography and Marketing
      Act, or CAN SPAM, prohibits all commercial e-mail messages, as defined in
      the law, to mobile phones unless the device owner has given "express prior
      authorization." Recipients of such messages must also be allowed to
      opt-out of receiving future messages the same way they opted-in. Senders
      have ten days to honor opt-out requests. The FCC has compiled a list of
      domain names used by wireless service providers to which marketers may not
      send commercial e-mail messages. Senders have 30 days from the date
      the domain name is posted on the FCC site to stop sending unauthorized
      commercial e-mail to addresses containing the domain name. Violators are
      subject to fines of up to $6.0 million and up to one year in jail for
      some spamming activities. Carriers, the FTC, the FCC, and State Attorneys
      General may bring lawsuits to enforce alleged violations of the
      Act.




·
            Communications Privacy
      Acts.    Foreign, U.S. federal and U.S. state
      laws impose consent requirements for disclosures of contents of
      communications or customer record information. To the extent that we
      knowingly receive this information without the consent of customers, we
      could be subject to class action lawsuits for statutory damages or
      criminal penalties under these laws, which could impose significant
      additional costs and reputational harm. EU member state laws also require
      consent for our receiving this information, and if our carrier customers
      fail to obtain such consent we could be subjected to civil or even
      criminal penalties.




13




·
            Security Breach Notification
      Requirements.    EU member state laws require
      notice to the member state data protection authority of a data security
      breach involving personal data if the breach poses a risk to individuals.
      In addition, Germany recently enacted a broad requirement to notify
      individuals in the event of a data security breach that is likely to be
      followed by notification requirements to data subjects in other EU member
      states. In the U.S., various states have enacted data breach notification
      laws, which require notification of individuals and sometimes state
      regulatory bodies in the event of breaches involving certain defined
      categories of personal information.  Japan and Uruguay have also
      recently enacted security breach notice requirements. This new trend
      suggests that breach notice statutes may be enacted in other
      jurisdictions, including by the U.S. at the federal level, as
      well.




·
            Children.    U.S.
      federal privacy regulations implementing the Children's Online Privacy
      Protection Act prohibit the knowing collection of personal information
      from children under the age of 13 without verifiable parental consent, and
      strictly regulate the transmission of requests for personal information to
      such children. Other countries do not recognize the ability of children to
      consent to the collection of personal information. In addition, it is
      likely that behavioral advertising regulations will impose special
      restrictions on use of information collected from minors for this
      purpose.




Item 1A.  Risk
Factors





Risks
Related to our Business





Proceeds
from our recent bridge financing may not be sufficient to sustain our operations
and we may need to raise additional capital to grow our business.





We
anticipate, based on currently proposed plans and assumptions relating to our
ability to market and sell our products, that our cash on hand including the
proceeds from our recent bridge as well as revenues from operations will satisfy
our operational and capital requirements for the next 12
months.  However, the operation of our business and our efforts to
grow our business further will require significant cash outlays and commitments.
The timing and amount of our cash needs may vary significantly depending on
numerous factors, including but not limited to:


·
            market
      acceptance of our mobile marketing and advertising
    services;




·
            the
      need to adapt to changing technologies and technical
      requirements;




·
            the
      need to adapt to changing regulations requiring changes to our processes
      or platform; and




·
            the
      existence of opportunities for
expansion.




14




If our
existing working capital and the proceeds from our recent bridge financing are
not sufficient to meet our cash requirements, we will need to seek additional
capital, potentially through debt, or other equity financings, to fund our
growth. We may not be able to raise cash on terms acceptable to us or at all.
Financings, if available, may be on terms that are dilutive to our shareholders,
and the prices at which new investors would be willing to purchase our
securities may be lower than the current price of our ordinary shares. The
holders of new securities may also receive rights, preferences or privileges
that are senior to those of existing holders of our ordinary shares. If new
sources of financing are required but are insufficient or unavailable, we would
be required to modify our growth and operating plans to the extent of available
funding, which could harm our ability to grow our business.




Our
sales efforts require significant time and effort and could hinder our ability
to expand our customer base and increase revenue.




Attracting
new customers requires substantial time and expense, especially in an industry
that is so heavily dependent on personal relationships with executives.  We
cannot assure that we will be successful in establishing new relationships, or
maintaining or advancing our current relationships. For example, it may be
difficult to identify, engage and market to customers who do not currently
perform mobile marketing or advertising or are unfamiliar with our current
services or platform.  Further, many of our customers typically require
input from one or more internal levels of approval. As a result, during our
sales effort, we must identify multiple people involved in the purchasing
decision and devote a sufficient amount of time to presenting our products and
services to those individuals.  The complexity of our services, including
our software-as-a-service model, often requires us to spend substantial time and
effort assisting potential customers in evaluating our products and services
including providing demonstrations and benchmarking against other available
technologies.  We expect that our sales process will become less burdensome
as our products and services become more widely known and used.  However,
if this change does not occur, we will not be able to expand our sales effort as
quickly as anticipated and our sales will be adversely affected.




We
may not be able to enhance our mobile marketing and advertising platform to keep
pace with technological and market developments, or to remain competitive
against potential new entrants in our markets.




The
market for mobile marketing and advertising services is emerging and is
characterized by rapid technological change, evolving industry standards,
frequent new product introductions and short product life cycles. Our current
platform or platforms we may offer in the future, may not be acceptable to
marketers and advertisers. To keep pace with technological developments, satisfy
increasing customer requirements and achieve acceptance of our marketing and
advertising campaigns, we will need to enhance our current mobile marketing
solutions and continue to develop and introduce on a timely basis new,
innovative mobile marketing services offering compatibility, enhanced features
and functionality on a timely basis at competitive prices. Our inability, for
technological or other reasons, to enhance, develop, introduce and deliver
compelling mobile marketing services in a timely manner, or at all, in response
to changing market conditions, technologies or customer expectations could have
a material adverse effect on our operating results or could result in our mobile
marketing services platform becoming obsolete. Our ability to compete
successfully will depend in large measure on our ability to maintain a
technically skilled development and engineering staff and to adapt to
technological changes and advances in the industry, including providing for the
continued compatibility of our mobile marketing services platform with evolving
industry standards and protocols. In addition, as we believe the mobile
marketing market is likely to grow substantially, other companies which are
larger and have significantly more capital to invest than us may emerge as
competitors. For example, in May 2010, Google, Inc. acquired Admob, Inc.
Similarly, in January 2010, Apple, Inc. acquired Quattro
Wireless, Inc. New entrants could seek to gain market share by introducing
new technology or reducing pricing. This may make it more difficult for us to
sell our products and services, and could result in increased pricing pressure,
reduced profit margins, increased sales and marketing expenses or the loss of
market share or expected market share, any of which may significantly harm our
business, operating results and financial condition.




15




Our
customer contracts lack uniformity and often are complex, which subjects us to
business and other risks.




Our
customers include some of the largest enterprises which have substantial
purchasing power and negotiating leverage. As a result, we typically negotiate
contracts on a customer-by-customer basis and our contracts lack uniformity and
are often complex. If we are unable to effectively negotiate, enforce and
account and bill in an accurate and timely manner for contracts with our key
customers, our business and operating results may be adversely affected. 
In addition, we could be unable to timely recognize revenue from contracts that
are not managed effectively and this would further adversely impact our
financial results.




Our
services are provided on mobile communications networks that are owned and
operated by third parties who we do not control and the failure of any of these
networks would adversely affect our ability to deliver our services to our
customers.




Our
mobile marketing and advertising platform is dependent on the reliability of
mobile operators who maintain sophisticated and complex mobile networks. Such
mobile networks have historically, and particularly in recent years, been
subject to both rapid growth and technological change. If the network of a
mobile operator with which we are integrated should fail, including because of
new technology incompatibility, the degradation of network performance under the
strain of too many mobile consumers using it, or a general failure from natural
disaster or political or regulatory shut-down, we will not be able provide our
services to our customers through such mobile network. This in turn, would
impair our reputation and business, potentially resulting in a material, adverse
effect on our financial results.




If
our mobile marketing and advertising services platform does not scale as
anticipated, our business will be harmed.




We must
be able to continue to scale to support potential ongoing substantial increases
in the number of users in our actual commercial environment, and maintain a
stable service infrastructure and reliable service delivery for our mobile
marketing and advertising campaigns. In addition, we must continue to expand our
service infrastructure to handle growth in customers and usage. If our mobile
marketing services platform does not efficiently and effectively scale to
support and manage a substantial increase in the number of users while
maintaining a high level of performance, the quality of our services could
decline and our business will be seriously harmed. In addition, if we are unable
to secure data center space with appropriate power, cooling and bandwidth
capacity, we may not be able to efficiently and effectively scale our business
to manage the addition of new customers and overall mobile marketing
campaigns.




16




The
success of our business depends, in part, on wireless carriers continuing to
accept our customers' messages for delivery to their subscriber
base.




We depend
on wireless carriers to deliver our customers' messages to their subscriber
base. Wireless carriers often impose standards of conduct or practice that
significantly exceed current legal requirements and potentially classify our
messages as "spam," even where we do not agree with that conclusion. In
addition, the wireless carriers use technical and other measures to attempt to
block non-compliant senders from transmitting messages to their customers; for
example, wireless carriers block short codes or Internet Protocol addresses
associated with those senders. There can be no guarantee that we, or short codes
registered to us, will not be blocked or blacklisted or that we will be able to
successfully remove ourselves from those lists. Although our services typically
require customers to opt-in to a campaign, minimizing the risk that our
customers' messages will be characterized as spam, blocking of this type could
interfere with our ability to market products and services of our customers and
communicate with end users and could undermine the effectiveness of our
customers' marketing campaigns. To date we have not experienced any material
blocking of our messages by wireless carriers, but any such blocking could have
an adverse effect on our business and results of operations.




We
depend on third party providers for a reliable Internet infrastructure and the
failure of these third parties, or the Internet in general, for any reason would
significantly impair our ability to conduct our business.




We
outsource all of our data center facility management to third parties who host
the actual servers and provide power and security in multiple data centers in
each geographic location. These third party facilities require uninterrupted
access to the Internet.  If the operation of our servers is interrupted for
any reason, including natural disaster, financial insolvency of a third party
provider, or malicious electronic intrusion into the data center, our business
would be significantly damaged.  As has occurred with many Internet-based
businesses, on occasion in the past, we have been subject to "denial-of-service"
attacks in which unknown individuals bombarded our computer servers with
requests for data, thereby degrading the servers' performance. While we have
historically been successful in relatively quickly identifying and neutralizing
these attacks, we cannot be certain that we will be able to do so in the future.
If either a third party facility failed, or our ability to access the Internet
was interfered with because of the failure of Internet equipment in general or
we become subject to malicious attacks of computer intruders, our business and
operating results will be materially adversely affected.




Failure
to adequately manage our growth may seriously harm our business.




We
operate in an emerging technology market and have experienced, and may continue
to experience, significant growth in our business. If we do not effectively
manage our growth, the quality of our products and services may suffer, which
could negatively affect our brand and operating results. Our growth has placed,
and is expected to continue to place, a significant strain on our managerial,
administrative, operational and financial resources and our infrastructure. Our
future success will depend, in part, upon the ability of our senior management
to manage growth effectively. This will require us to, among other
things:




17




·
            implement
      additional management information
systems;




·
            further
      develop our operating, administrative, legal, financial and accounting
      systems and controls;




·
            hire
      additional personnel;




·
            develop
      additional levels of management within our
  company;




·
            locate
      additional office space in various countries;
  and




·
            maintain
      close coordination among our engineering, operations, legal, finance,
      sales and marketing and customer service and support
      organizations.




Moreover,
as our sales increase, we may be required to concurrently deploy our services
infrastructure at multiple additional locations or provide increased levels of
customization. As a result, we may lack the resources to deploy our mobile
marketing services on a timely and cost-effective basis. Failure to accomplish
any of these requirements would seriously harm our ability to deliver our mobile
marketing services platform in a timely fashion, fulfill existing customer
commitments or attract and retain new customers.




We
depend on the services of key personnel to implement our strategy. If we lose
the services of our key personnel or are unable to attract and retain other
qualified personnel, we may be unable to implement our strategy.




We
believe that the future success of our business depends on the services of a
number of key management and operating personnel, including Dennis Becker, our
chief executive officer, Shane Kading, our senior vice president of client
services, and Brad Morrow, our vice president of product management. We
currently have an Employment Agreement in place with CEO Dennis Becker.  We
do not maintain any key-person life insurance policies. Some of these key
employees have strong relationships with our customers and our business may be
harmed if these employees leave us. The loss of members of our key management
and certain other members of our operating personnel could materially adversely
affect our business, operating results and financial condition.




In
addition, our ability to manage our growth depends, in part, on our ability to
identify, hire and retain additional qualified employees, including a
technically skilled development and engineering staff. We face intense
competition for qualified individuals from numerous technology, marketing and
mobile software and service companies.  We require a mix of highly talented
engineers as well as individuals in sales and support who are familiar with the
marketing and advertising industry. In addition, new hires in sales positions
require significant training and may, in some cases, take more than a year
before they achieve full productivity. Our recent sales force hires and planned
hires may not become as productive as we would like, and we may be unable to
hire sufficient numbers of qualified individuals in the future in the markets
where we do business.  Further, given the rapid pace of our expansion to
date, we may be unable to attract and retain suitably qualified individuals who
are capable of meeting our growing, creative, operational and managerial
requirements, or may be required to pay increased compensation in order to do
so. If we are unsuccessful in attracting and retaining these key personnel, our
ability to operate our business effectively would be negatively impacted and our
business, operating results and financial condition would be adversely
affected.




18




The
gathering, transmission, storage and sharing or use of personal information
could give rise to liabilities or additional costs of operation as a result of
governmental regulation, legal requirements, civil actions or differing views of
personal privacy rights.




We
transmit and store a large volume of personal information in the course of
providing our services. Federal, state and international laws and regulations
govern the collection, use, retention, sharing and security of data that we
receive from our customers and their users. Any failure, or perceived failure,
by us to comply with U.S. federal, state, or international privacy or consumer
protection-related laws, regulations or industry self-regulatory principles
could result in proceedings or actions against us by governmental entities or
others, which could potentially have an adverse effect on our business,
operating results and financial condition. Additionally, we may also be
contractually liable to indemnify and hold harmless our customers from the costs
or consequences of inadvertent or unauthorized disclosure of their customers'
personal data which we store or handle as part of providing our
services.




The
interpretation and application of privacy, data protection and data retention
laws and regulations are currently unsettled in the U.S. and internationally,
particularly with regard to location-based services, use of customer data to
target advertisements and communication with consumers via mobile devices. Such
laws may be interpreted and applied inconsistently from country to country and
inconsistently with our current data protection policies and practices.
Complying with these varying international requirements could cause us to incur
substantial costs or require us to change our business practices in a manner
adverse to our business, operating results or financial condition.




As
privacy and data protection have become more sensitive issues, we may also
become exposed to potential liabilities as a result of differing views on the
privacy of personal information. These and other privacy concerns, including
security breaches, could adversely impact our business, operating results and
financial condition.




In the
U.S., we have voluntarily agreed to comply with wireless carrier technological
and other requirements for access to their customers' mobile devices, and also
trade association guidelines and codes of conduct addressing the provision of
location-based services, delivery of promotional content to mobile devices and
tracking of users or devices for the purpose of delivering targeted advertising.
We could be adversely affected by changes to these requirements, guidelines and
codes, including in ways that are inconsistent with our practices or in conflict
with the rules or guidelines in other jurisdictions.




We
may not be able to effectively manage our growth, which may harm our
profitability.





Our
strategy envisions expanding our business. If we fail to effectively manage our
growth, our financial results could be adversely affected. Growth may place a
strain on our management systems and resources. We must continue to refine and
expand our business development capabilities, our systems and processes and our
access to financing sources. As we grow, we must continue to hire, train,
supervise and manage new employees. We cannot assure you that we will be able
to:


19




·
            meet
      our capital needs;





·
            expand
      our systems effectively or efficiently or in a timely
    manner;





·
            allocate
      our human resources optimally;





·
            identify
      and hire qualified employees or retain valued employees;
  or





·
            incorporate
      effectively the components of any business that we may acquire in our
      effort to achieve growth.





If we are
unable to manage our growth, our operations and our financial results could be
adversely affected by inefficiency, which could diminish our
profitability.





Loss
of Dennis Becker, our Chief Executive Officer, could impair our ability to
operate.





If we
lose Dennis Becker, our Chief Executive Officer, our business could suffer. Our
success is highly dependent on our ability to attract and retain qualified
management personnel.  We have entered into an employment agreement with
Mr. Becker.  The loss of Mr. Becker could have some effect on our
operations.  If we were to lose our Chief Executive Officer, we may
experience temporary difficulties in competing effectively, developing our
technology and implementing our business strategies. We do not have key man life
insurance in place for any of our key personnel.




Our
management team has limited experience in public company matters, which could
impair our ability to comply with legal and regulatory
requirements.





Our
management team has only limited public company management experience or
responsibilities, which could impair our ability to comply with legal and
regulatory requirements such as the Sarbanes-Oxley Act of 2002 and applicable
federal securities laws including filing required reports and other information
required on a timely basis. There can be no assurance that our management will
be able to implement and affect programs and policies in an effective and timely
manner that adequately respond to increased legal, regulatory compliance and
reporting requirements imposed by such laws and regulations. Our failure to
comply with such laws and regulations could lead to the imposition of fines and
penalties and further result in the deterioration of our business.





RISKS
RELATED TO OUR COMMON STOCK





There
has been a limited trading market for our Common Stock.





It is
anticipated that there will be a limited trading market for the Common Stock on
the Over-the-Counter Bulletin Board.  The lack of an active market may
impair your ability to sell your shares at the time you wish to sell them or at
a price that you consider reasonable. The lack of an active market may also
reduce the fair market value of your shares. An inactive market may also impair
our ability to raise capital by selling shares of capital stock and may impair
our ability to acquire other companies or technologies by using Common Stock as
consideration.




20




You
may have difficulty trading and obtaining quotations for our Common
Stock.





The
Common Stock may not be actively traded, and the bid and asked prices for our
Common Stock on the Over-the-Counter Bulleting Board may fluctuate widely. As a
result, investors may find it difficult to dispose of, or to obtain accurate
quotations of the price of, our securities. This severely limits the liquidity
of the Common Stock, and would likely reduce the market price of our Common
Stock and hamper our ability to raise additional capital.





The
market price of our Common Stock may be, and is likely to continue to be, highly
volatile and subject to wide fluctuations.





The
market price of our Common Stock is likely to be highly volatile and could be
subject to wide fluctuations in response to a number of factors that are beyond
our control, including:





·
            dilution
      caused by our issuance of additional shares of Common Stock and other
      forms of equity securities, which we expect to make in connection with
      future acquisitions or capital financings to fund our operations and
      growth, to attract and retain valuable personnel and in connection with
      future strategic partnerships with other
  companies;





·
            announcements
      of new acquisitions or other business initiatives by our
      competitors;





·
            our
      ability to take advantage of new acquisitions or other business
      initiatives;





·
            quarterly
      variations in our revenues and operating
  expenses;





·
            changes
      in the valuation of similarly situated companies, both in our industry and
      in other industries;





·
            changes
      in analysts’ estimates affecting our company, our competitors and/or our
      industry;





·
            changes
      in the accounting methods used in or otherwise affecting our
      industry;





·
            additions
      and departures of key personnel;





·
            announcements
      by relevant governments pertaining to additional quota restrictions;
      and





·
            fluctuations
      in interest rates and the availability of capital in the capital
      markets.





These and
other factors are largely beyond our control, and the impact of these risks,
singly or in the aggregate, may result in material adverse changes to the market
price of our Common Stock and/or our results of operations and financial
condition.


21




Our
operating results may fluctuate significantly, and these fluctuations may cause
our stock price to decline.




Our
operating results will likely vary in the future primarily as the result of
fluctuations in our revenues and operating expenses, expenses that we incur,
prices of feed used in our business, the price that customer are willing and
able to pay for our products and other factors. If our results of operations do
not meet the expectations of current or potential investors, the price of our
Common Stock may decline.




We
do not expect to pay dividends in the foreseeable future.





We do not
intend to declare dividends for the foreseeable future, as we anticipate that we
will reinvest any future earnings in the development and growth of our business.
Therefore, investors will not receive any funds unless they sell their Common
Stock, and stockholders may be unable to sell their shares on favorable
terms or at all. Investors cannot be assured of a positive return on investment
or that they will not lose the entire amount of their investment in the Common
Stock.





Directors
and officers of the Company will have a high concentration of Common Stock
ownership.





Based on
the 17,700,000 shares of Common Stock that are estimated to be outstanding as of
the date hereof, our officers and directors will beneficially own approximately
41.7% of our outstanding Common Stock.  Such a high level of ownership by
such persons may have a significant effect in delaying, deferring or preventing
any potential change in control of the Company.  Additionally, as a result
of their high level of ownership, our officers and directors might be able to
strongly influence the actions of the Company’s board of directors (the “Board”)
and the outcome of actions brought to our shareholders for approval. Such a high
level of ownership may adversely affect the voting and other rights of our
shareholders.





Applicable
SEC rules governing the trading of “penny stocks” limit the trading and
liquidity of our Common Stock, which may affect the trading price of our Common
Stock.





Shares of
Common Stock may be considered a “penny stock” and be subject to SEC rules and
regulations which impose limitations upon the manner in which such shares may be
publicly traded and regulate broker-dealer practices in connection with
transactions in “penny stocks.” Penny stocks generally are equity securities
with a price of less than $5.00 (other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or system). The penny stock rules require
a broker-dealer, prior to a transaction in a penny stock not otherwise exempt
from the rules, to deliver a standardized risk disclosure document that provides
information about penny stocks and the risks in the penny stock market. The
broker-dealer must also provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer’s account. In addition,
the penny stock rules generally require that prior to a transaction in a penny
stock, the broker-dealer make a special written determination that the penny
stock is a suitable investment for the purchaser and receive the purchaser’s
written agreement to the transaction. These disclosure requirements may have the
effect of reducing the level of trading activity in the secondary market for a
stock that becomes subject to the penny stock rules which may increase the
difficulty investors may experience in attempting to liquidate such
securities.




22




Item 2. 
Properties




We own no
real estate.  We currently lease 3,751 square feet of office space located
at 8929 Aero Drive, Suite E, San Diego, CA 92123 at a
monthly expense of $5,441.  The original 60 month lease term expires
June 30, 2012.The
management believes the property is sufficient for our needs at this
time.




Item 3.  Legal
Proceedings





We are
not currently involved in any legal proceedings and we are not aware of any
pending or potential legal actions.





Item 4.  Submission of
Matters to a Vote of Security Holders





There
were no matters submitted to a vote of the security holders during the year
ended September 30, 2010.





Part
II





Item 5.  Market for
Common Equity and Related Stockholder Matters





Since
December 9, 2010, our shares have been includedfor
quotationon the OTC Electronic Bulletin Board (OTCBB) under the symbol
“MFON”.  Prior thereto it had been traded under the symbol AREVsince
January 2010. There has been no active trading of our securities, and,
therefore, no high and low bid pricing are available.  As of the date of
this report, the Company has 24 shareholders of record.  We have paid
no cash dividends and have no outstanding options.





Penny Stock
Rules





The
Securities and Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny stocks. Penny
stocks are generally equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the Nasdaq system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system).





A
purchaser is purchasing penny stock which limits the ability to sell the stock.
Our shares constitute penny stock under the Securities and Exchange Act. 
The shares will remain penny stocks for the foreseeable future.  The
classification of penny stock makes it more difficult for a broker-dealer to
sell the stock into a secondary market, which makes it more difficult for a
purchaser to liquidate his/her investment.  Any broker-dealer engaged by
the purchaser for the purpose of selling his or her shares in us will be subject
to Rules 15g-1 through 15g-10 of the Securities and Exchange Act.  Rather
than creating a need to comply with those rules, some broker-dealers will refuse
to attempt to sell penny stock.





The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from those rules, to deliver a standardized risk disclosure
document, which:


23




-
            contains
      a description of the nature and level of risk in the market for penny
      stock in both public offerings and secondary
  trading;





-
            contains
      a description of the broker's or dealer's duties to the customer and of
      the rights and remedies available to the customer with respect to a
      violation of such duties or other requirements of the Securities Act of
      1934, as amended;





-
            contains
      a brief, clear, narrative description of a dealer market, including "bid"
      and "ask"  price for the penny stock and the significance of the
      spread between the bid and ask
price;





-
            contains
      a toll-free telephone number for inquiries on disciplinary
      actions;





-
            defines
      significant terms in the disclosure document or in the conduct of trading
      penny stocks; and





-
            contains
      such other information and is in such form (including language, type, size
      and format) as the Securities and Exchange Commission shall require by
      rule or regulation;





The
broker-dealer also must provide, prior to effecting any transaction in a penny
stock, to the customer:





-
            the
      bid and offer quotations for the penny
stock;





-
            the
      compensation of the broker-dealer and its salesperson in the
      transaction;





-
            the
      number of shares to which such bid and ask prices apply, or other
      comparable information relating to the depth and liquidity of the market
      for such stock; and





-
            monthly
      account statements showing the market value of each penny  stock
      held in the
customer's  account.





In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability
statement.  These disclosure requirements will have the effect of reducing
the trading activity in the secondary market for our stock because it will be
subject to these penny stock rules. Therefore, stockholders may have difficulty
selling their securities.





Reports





We are
subject to certain filing requirements and will furnish annual financial reports
to our stockholders, certified by our independent accountant, and will furnish
un-audited quarterly financial reports in our quarterly reports filed
electronically with the Securities and Exchange Commission.  All reports
and information filed by us can be found at their website, www.sec.gov.


24




Transfer
Agent





The
company has retained Holladay Stock Transfer, Inc. of 2939 North 67th Place,
Suite C, Scottsdale, Arizona as transfer agent.





Item 7.  Management’s
Discussion and Analysis of Financial Condition and Results of
Operations





General
Overview




CommerceTel
is a provider of technology that enables major brands and enterprises to engage
consumers via their mobile phone. Interactive electronic communications with
consumers is a complex process involving communication networks and
software.  CommerceTel removes this complexity through its suite
of services and technologies thereby enabling brands, marketers, and content
owners to communicate with their customers and consumers in general.  From
Presidential elections to major broadcast events, we are pioneers in the
deployment of the mobile channel as the ultimate direct connection to the
consumer.





Mobile
phone users represent a large and captive audience. While televisions, radios,
and even PCs are often shared by multiple consumers, mobile phones are personal
devices representing a truly unique and individual address to the end user. The
future of digital media will be driven by mobile phones where a direct, personal
conversation can be had with the world’s largest audience. The future of mobile
includes banking, commerce, advertising, video, games and just about every other
aspect of both on and offline life. Over 4 million consumers have been engaged
via their mobile device thanks to CommerceTel’s technology.





We
believe that our mobile marketing and advertising campaign platform is among the
most advanced in the industry as it allows real time interactive communications
with consumers.  We generate revenue from licensing our software to clients
in our software as a service (Saas) model, per-message and per-minute
transactional fees, and customized professional services.





Our “C4”
Mobile Marketing and Customer Relationship Management (CRM) platform is a hosted
solution enabling our clients to develop, execute, and manage a variety of
engagements to a consumer’s mobile phone. Short Messaging Service (SMS),
Multi-Media Messaging (MMS), and Interactive Voice Response (IVR) interactions
can all be facilitated via a set of Graphical User Interfaces (GUIs). Reporting
and analytics capabilities are also available to our users through the C4
solution.





Mobile
devices are emerging as the principal interactive channel for brands to reach
consumers since it is the only media platform that has access to the consumer
virtually anytime and anywhere. Brands and advertising agencies are recognizing
the unique benefits of the mobile channel and they are increasingly integrating
mobile media within their overall advertising and marketing campaigns. Our
objective is to become the industry leader in connecting brands and enterprises
to consumers’ mobile phones.


25




Results of
Operations





During
the two most recent fiscal years ended September 30, 2010 and 2009, we were in
the exploration stage and had not generated any revenue.  As a result of
the acquisition of CommerceTel Inc. in November 2010, the financial results for
the two most recent fiscal years bear no relationship to our current financial
condition.





We
incurred operating expenses of $26,569 and $30,727 for the years ended September
30, 2010 and 2009, respectively.  These expenses consisted of general
operating expenses incurred in connection with the day to day operation of our
business and the preparation and filing of our periodic reports.  Our net
loss from inception (September 25, 2008) through September 30, 2010 was
$57,810.





In
September, 2008, a total of 3,000,000 shares of common stock were issued in
exchange for $15,000 US, or $.005 per share.  These securities were issued
to Shane Ellis, the officer and director of the company.  On May 12, 2009
the Company completed its S-1 offering, selling 3,000,000 common shares at $.02
per share for total proceeds of $60,000.





On
October  5, 2010,  the Company effected a one (1) old for
two (2) new  forward  stock split of our authorized and
issued and outstanding  shares of common stock. As a
result,  our authorized capital increased from 75,000,000 shares of
common stock to 150,000,000  shares of common stock and the issued and
outstanding  increased from 6,000,000 shares of common stock to
12,000,000  shares of common stock, all with a par value of
$0.001.  The stock split has been retroactively applied.





The
following table provides selected financial data about our company for the
period ended September 30, 2010.





Balance Sheet Data:
                  
                  9/30/10Cash
                  
                  $
                  7,786Deposit/Prepaid
      Expenses
                  
                  $
                  10,054Total
      assets
                  
                  $
                  17,840Total
      liabilities
                  
                  $
                  650Shareholders'
      equity
                  
                  $
                  17,190





Our
auditors expressed their doubt about our ability to continue as a going concern
unless we are able to raise additional capital and ultimately to generate
profitable operations.





Liquidity and Capital
Resources





Our cash
balance at September 30, 2010 was $7,786.   On October 25, 2010, the
Company issued to a number of accredited investors a series of its 10% Senior
Secured Convertible Bridge Note (the “Notes”) in the aggregate principal amount
of $1,000,000 (the “Financing”).




26




Plan of
Operation




Our
objective is to become the industry leader in connecting brands and enterprises
to consumers’ mobile phones.  We intend to simplify utilizing the unique
benefits of mobile marketing and advertising campaigns.  Future
opportunities might evolve to mobile payments, enterprise, or health
applications. Following are the principal elements of our strategy are
to:




·
            Capitalize upon current
      customer relationships and acquire new customers.We intend to
      capitalize on our customer relationships to widen the appeal of our
      solutions.




·
            Enable our platform by
      addressing technology shifts in mobile devices and computing.The
      mobile device marketplace by its nature undergoes constant change as new
      technologies and products emerge. In particular, we believe that
      smartphone devices as well as tablet computers with mobile capabilities
      are growing and becoming increasingly important components of mobile
      communications. We devote significant resources to address this evolving
      technology landscape with innovative application interfaces for our
      platform that ensures we will be well positioned to address the
      mobilemarketplace as consumer device preferences
  evolve.




·
            Extend our leadership position
      by continuing to invest in our platform.  We
      believe that the technical capabilities of our platform significantly
      surpass the ability of our competitors to provide brands, advertising
      agencies, mobile operators and media companies a comprehensive view of a
      consumer's interaction and engagement across a variety of media.  We
      intend to continue to invest in, and enhance the functionality of our
      platform and develop new technology solutions to further strengthen and
      broaden our end-to-end platform.




·
            Encourage the adoption of our
      platform by third parties.  Our platform provides
      a scalable, open architecture platform that allows third parties,
      including content delivery platform providers, application providers,
      campaign optimization specialists, mobile ad networks, and analytic and
      billing providers, to use our platform to execute marketing and
      advertising campaigns as well as to create new business opportunities and
      technology innovations. We have designed our platform to become central to
      the creation of a connected, global mobile marketing and advertising
      marketplace, and we believe that this platform will form the basis for a
      global mobile marketing and advertising
  ecosystem.




·
            Continue expansion and pursue
      partnerships and acquisitions.We intend to continue our expansion
      into new markets. In addition, we will continue to evaluate and pursue
      strategic partnerships and acquisitions, to continue strengthening our
      platform, increase our presence, expand relationships and enter into new
      markets.




Off-Balance Sheet
Arrangements





We have
no off-balance sheet arrangements.





27




SEALE
AND BEERS, CPAs
 PCAOB & CPAB REGISTERED
AUDITORS
 www.sealebeers.com
  REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
  To
the Board of DirectorsCommerceTel, Inc. fka Ares Ventures, Inc.
  We have
audited the accompanying balance sheets of Ares Ventures, Inc. (An Exploration
Stage Company) as of September 30, 2010 and 2009, and the related statements of
operations, stockholders’ equity (deficit) and cash flows for the years ended
September 30 2010 and 2009 and since inception on September 25, 2008 through
September 30, 2010. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits.
  We
conduct our audits in accordance with standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
  In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Ares Ventures, Inc. (An Exploration
Stage Company) as of September 30, 2010 and 2009, and the related statements of
operations, stockholders’ equity (deficit) and cash flows for the years ended
September 30 2010 and 2009 and since inception on September 25, 2008 through
September 30, 2010 in conformity with accounting principles generally accepted
in the United States of America.
  The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has had an accumulated deficit of $57,810 and has earned
no revenues since inception, which raises substantial doubt about its ability to
continue as a going concern. Management’s plans concerning these matters are
also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
  
 Seale and
Beers, CPAs
 Las
Vegas, Nevada
 December
13, 2010
  50 S. Jones Blvd. Suite 202
Las Vegas. NV 89107 Phone: (888)727-8251 Fax:
(888)782-2351
  28


Item 8.  Financial
Statements







ARES
VENTURES CORP.


(An
Exploration Stage Company)


Balance
Sheets





As of
                                                    
                                                    
                                                    As ofSeptember 30, 2010
                                                    
                                                    
                                                    September 30, 2009ASSETSCurrent
      AssetsCash
                                                    
                                                    $
                                                    7,786
                                                    
                                                    
                                                    $
                                                    47,758Deposits
                                                    
                                                    
                                                    54
                                                    
                                                    
                                                    
                                                    -Prepaid
      Expenses (See Note 9)
                                                    
                                                    
                                                    10,000
                                                    
                                                    
                                                    
                                                    -Total
      Current Assets
                                                    
                                                    
                                                    17,840
                                                    
                                                    
                                                    
                                                    47,758TOTAL
      ASSETS
                                                    
                                                    $
                                                    17,840
                                                    
                                                    
                                                    $
                                                    47,758LIABILITIES
      & STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      Payable
                                                    
                                                    $
                                                    650
                                                    
                                                    
                                                    $
                                                    4,000Total
      Current Liabilities
                                                    
                                                    
                                                    650
                                                    
                                                    
                                                    
                                                    4,000Total
      Liabilities
                                                    
                                                    
                                                    650
                                                    
                                                    
                                                    
                                                    4,000Stockholders'
      EquityCommon stock, ($0.001 par value,
      75,000,000shares authorized; 12,000,000 and
      12,000,000 shares issued and outstanding as of September 30, 2010 and
      September 30, 2009)
                                                    
                                                    
                                                    12,000
                                                    
                                                    
                                                    
                                                    12,000Additional
      paid-in capital
                                                    
                                                    
                                                    63,000
                                                    
                                                    
                                                    
                                                    63,000Deficit
      accumulated during exploration stage
                                                    
                                                    
                                                    (57,810
                                                    )
                                                    
                                                    
                                                    (31,242
                                                    )Total
      Stockholders' Equity
                                                    
                                                    
                                                    17,190
                                                    
                                                    
                                                    
                                                    43,758TOTAL
      LIABILITIES &STOCKHOLDERS'
      EQUITY
                                                    
                                                    $
                                                    17,840
                                                    
                                                    
                                                    $
                                                    47,758





The
accompanying notes are an integral part of these Financial
Statements





29





ARES
VENTURES CORP.


(An
Exploration Stage Company)


Statements
of Operations





September 25, 2008(inception)Year ended
                                                                  
                                                                  
                                                                  Year ended
                                                                  
                                                                  
                                                                  throughSeptember 30, 2010
                                                                  
                                                                  
                                                                  September 30, 2009
                                                                  
                                                                  
                                                                  September 30, 2010RevenuesRevenues
                                                                  
                                                                  $
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  0
                                                                  
                                                                  
                                                                  $
                                                                  0Total
      Revenues
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  0
                                                                  
                                                                  
                                                                  
                                                                  0Operationg
      ExpensesOffice
      and Administration
                                                                  
                                                                  
                                                                  3,877
                                                                  
                                                                  
                                                                  
                                                                  5,616
                                                                  
                                                                  
                                                                  
                                                                  10,008Mineral
      Exploration Expenses
                                                                  
                                                                  
                                                                  8,000
                                                                  
                                                                  
                                                                  
                                                                  15,611
                                                                  
                                                                  
                                                                  
                                                                  23,611Professional
      Fees
                                                                  
                                                                  
                                                                  14,691
                                                                  
                                                                  
                                                                  
                                                                  9,500
                                                                  
                                                                  
                                                                  
                                                                  24,191Total
      Operating Expenses
                                                                  
                                                                  
                                                                  (26,569
                                                                  )
                                                                  
                                                                  
                                                                  (30,727
                                                                  )
                                                                  
                                                                  
                                                                  (57,810
                                                                  )Provision
      for Income Taxes
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -
                                                                  
                                                                  
                                                                  
                                                                  -Net
      Income (Loss)
                                                                  
                                                                  $
                                                                  (26,569
                                                                  )
                                                                  
                                                                  
                                                                  (30,727
                                                                  )
                                                                  
                                                                  $
                                                                  (57,810
                                                                  )Basic
      earnings (loss) per share
                                                                  
                                                                  $
                                                                  (0.00
                                                                  )
                                                                  
                                                                  
                                                                  (0.00
                                                                  )
                                                                  
                                                                  $Weighted
      average number ofcommon
      shares outstanding
                                                                  
                                                                  
                                                                  12,000,000
                                                                  
                                                                  
                                                                  
                                                                  8,317,808





The
accompanying notes are an integral part of these Financial
Statements





30





ARES
VENTURES CORP.


(An
Exploration Stage Company)


Statement
of Stockholders' Equity


From
September 25, 2008 (Inception) through September 30, 2010





DeficitCommon
                                    
                                    
                                    Common
                                    
                                    
                                    Additional
                                    
                                    
                                    Stock
                                    
                                    
                                    AccumulatedStock
                                    
                                    
                                    Stock
                                    
                                    
                                    Paid-in
                                    
                                    
                                    Subscription
                                    
                                    
                                    During
                                    
                                    
                                    TotalAmount
                                    
                                    
                                    Capital
                                    
                                    
                                    Receivable
                                    
                                    
                                    DevelopmentStageBalance,
      September 25, 2008
                                    
                                    
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    -Stock
      issued for cash on September 25,2008
      @ $0.0025 per share
                                    
                                    
                                    6,000,000
                                    
                                    
                                    
                                    6,000
                                    
                                    
                                    
                                    9,000
                                    
                                    
                                    
                                    (13,000
                                    )
                                    
                                    
                                    
                                    
                                    
                                    
                                    2,000Net
      loss, September 30, 2008 (restated)
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    (515
                                    )
                                    
                                    
                                    (515
                                    )Balance,
      September 30, 2008 (restated)
                                    
                                    
                                    6,000,000
                                    
                                    
                                    $
                                    6,000
                                    
                                    
                                    $
                                    9,000
                                    
                                    
                                    $
                                    (13,000
                                    )
                                    
                                    $
                                    (515
                                    )
                                    
                                    $
                                    1,485Receipt
      of cash from stock subscriptionreceivable
      on October 6, 2008
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    13,000
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    13,000Stock
      issued for cash on May 12, 2009@
      $0.01 per share
                                    
                                    
                                    6,000,000
                                    
                                    
                                    
                                    6,000
                                    
                                    
                                    
                                    54,000
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    60,000Net
      loss, September 30, 2009
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    (30,727
                                    )
                                    
                                    
                                    (30,727
                                    )Balance,
      September 30, 2009
                                    
                                    
                                    12,000,000
                                    
                                    
                                    $
                                    12,000
                                    
                                    
                                    $
                                    63,000
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    $
                                    (31,242
                                    )
                                    
                                    $
                                    43,758Net
      loss, September 30, 2010
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    
                                    (26,569
                                    )
                                    
                                    
                                    (26,569
                                    )Balance,
      September 30, 2010
                                    
                                    
                                    12,000,000
                                    
                                    
                                    
                                    12,000
                                    
                                    
                                    
                                    63,000
                                    
                                    
                                    $
                                    -
                                    
                                    
                                    
                                    (57,810
                                    )
                                    
                                    
                                    17,190





The
accompanying notes are an integral part of these Financial
Statements





31





ARES VENTURES CORP.


(An
Exploration Stage Company)


Statements
of Cash Flows





September 25, 2008(inception)Year ended
                                                                    
                                                                    
                                                                    Year ended
                                                                    
                                                                    
                                                                    throughSeptember 30, 2010
                                                                    
                                                                    
                                                                    September 30, 2009
                                                                    
                                                                    
                                                                    September 30, 2010OPERATING ACTIVITIESNet
      income (loss)
                                                                    
                                                                    $
                                                                    (26,569
                                                                    )
                                                                    
                                                                    $
                                                                    (30,727
                                                                    )
                                                                    
                                                                    $
                                                                    (57,810
                                                                    )Adjustments
      to reconcile net loss to net cashprovided
      by (used in) operating activities:Changes
      in operating assets and liabilities:(Increase)
      decrease in Deposits
                                                                    
                                                                    
                                                                    (54
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (54
                                                                    )(Increase)
      decrease in Prepaid Expenses
                                                                    
                                                                    
                                                                    (10,000
                                                                    )
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    (10,000
                                                                    )Increase
      (decrease) in Accounts Payable
                                                                    
                                                                    
                                                                    (3,350
                                                                    )
                                                                    
                                                                    
                                                                    3,485
                                                                    
                                                                    
                                                                    
                                                                    650Net
      cash provided by (used in) operating activities
                                                                    
                                                                    
                                                                    (39,972
                                                                    )
                                                                    
                                                                    
                                                                    (27,242
                                                                    )
                                                                    
                                                                    
                                                                    (67,214
                                                                    )INVESTING ACTIVITIESNet
      cash provided by (used in) investing activities
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    -FINANCING ACTIVITIESIssuance
      of Common Stock
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    60,000
                                                                    
                                                                    
                                                                    
                                                                    75,000Stock
      Subscription Receivable
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    13,000
                                                                    
                                                                    
                                                                    
                                                                    -Net
      cash provided by (used in) financing activities
                                                                    
                                                                    
                                                                    -
                                                                    
                                                                    
                                                                    
                                                                    73,000
                                                                    
                                                                    
                                                                    
                                                                    75,000Net
      increase (decrease) in cash
                                                                    
                                                                    
                                                                    (39,972
                                                                    )
                                                                    
                                                                    
                                                                    45,758
                                                                    
                                                                    
                                                                    
                                                                    7,786Cash
      at beginning of period
                                                                    
                                                                    
                                                                    47,758
                                                                    
                                                                    
                                                                    
                                                                    2,000
                                                                    
                                                                    
                                                                    
                                                                    -Cash
      at end of period
                                                                    
                                                                    $
                                                                    7,786
                                                                    
                                                                    
                                                                    $
                                                                    47,758
                                                                    
                                                                    
                                                                    $
                                                                    7,786SUPPLEMENTAL DISCLOSURES OF CASH FLOW
      INFORMATIONCash
      paid during period for :Interest
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -Income
      Taxes
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -
                                                                    
                                                                    
                                                                    $
                                                                    -





The
accompanying notes are an integral part of these Financial
Statements





32




ARES
VENTURES CORP.


(An
Exploration Stage Company)


Notes
to Financial Statements


September
30, 2010





NOTE
1.   ORGANIZATION AND DESCRIPTION OF BUSINESS





Ares
Ventures Corp. (the Company) was incorporated under the laws of the State of
Nevada on September 25, 2008.  The Company was formed to engage in the
acquisition, exploration and development of natural resource
properties.





The
Company is in the exploration stage. Its activities to date have been limited to
capital formation, organization, development of its business plan and the first
phase of its exploration plan.





On
November 2, 2010, the Company effected an acquisition of CommerceTel Inc., a
Nevada Corporation.  For more information refer to Note
10.





NOTE
2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





a.   Basis of
Accounting





The
Company’s financial statements are prepared using the accrual method of
accounting.  The Company has elected a September 30,
year-end.





b.   Basic Earnings per
Share





ASC No.
260, “Earnings Per Share”, specifies the computation, presentation and
disclosure requirements for earnings (loss) per share for entities with publicly
held common stock.  The Company has adopted the provisions of ASC No.
260.





Basic net
loss per share amounts is computed by dividing the net loss by the weighted
average number of common shares outstanding.  Diluted earnings per
share are the same as basic earnings per share due to the lack of dilutive items
in the Company.





c.   Cash
Equivalents





The
Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.





d.  Use of Estimates and
Assumptions





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 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. In accordance with ASC No. 250
all adjustments are normal and recurring.





33





ARES
VENTURES CORP.


(An
Exploration Stage Company)


Notes
to Financial Statements


September
30, 2010





NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)





e.   Income
Taxes





Income
taxes are provided in accordance with ASC No. 740, Accounting for Income
Taxes.  A deferred tax asset or liability is recorded for all
temporary differences between financial and tax reporting and net operating loss
carryforwards.  Deferred tax expense (benefit) results from the net
change during the year of deferred tax assets and liabilities.





Deferred
tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion of all of the deferred
tax assets will be realized.  Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.





f.   Revenue





The
Company records revenue on the accrual basis when all goods and services have
been performed and delivered, the amounts are readily determinable, and
collection is reasonably assured.  The Company has not generated any
revenue since its inception.





g.   Advertising





The
Company will expense its advertising when incurred. There has been no
advertising since inception.





h.   Mineral Exploration
Expenses





Ares has
been in the exploration stage since its inception and has not yet realized any
revenues from its planned operations. It was primarily engaged in the
acquisition and exploration of mining properties. Mineral property acquisition
and exploration costs were expensed as incurred.  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.  No such properties currently
exist.





i.   Recent Accounting
Pronouncements





The
Company has evaluated all the recent accounting pronouncements through the date
the financial statements were issued and filed with the Securities and Exchange
Commission and believe that none of them will have a material effect on the
company’s financial statements.





34





ARES
VENTURES CORP.


(An
Exploration Stage Company)


Notes
to Financial Statements


September
30, 2010





NOTE
3.   GOING CONCERN





The
accompanying financial statements are presented on a going concern
basis.  The Company had limited operations during the period from
September 25, 2008 (inception) to September 30, 2010 and generated a net loss of
$57,810.  This condition raises substantial doubt about the Company’s
ability to continue as a going concern.  The Company’s current cash of
$7,786 is not sufficient to cover the expenses they will incur during the next
twelve months.





NOTE
4.   WARRANTS AND OPTIONS





There are
no warrants or options outstanding to acquire any additional shares of
common.





NOTE
5.   RELATED PARTY TRANSACTIONS





The
Company neither owns nor leases any real or personal property.  The
sole officer and director of the Company is involved in other business
activities and may, in the future, become involved in other business
opportunities as they become available.





Thus he
may face a conflict in selecting between the Company and his other business
interests.  The Company has not formulated a policy for the resolution
of such conflicts.





NOTE
6.  INCOME TAXES





As of September 30, 2010
                  
                  
                  As of September 30, 2009Deferred
      tax assets:Net
      operating tax carryforwards
                  
                  $
                  57,810
                  
                  
                  $
                  22,742Other
                  
                  
                  -0-
                  
                  
                  
                  -0-Gross
      deferred tax assets
                  
                  
                  19,655
                  
                  
                  
                  7,732Valuation
      allowance
                  
                  
                  (19,655
                  )
                  
                  
                  (7,732
                  )Net
      deferred tax assets
                  
                  $
                  -0-
                  
                  
                  $
                  -0-





Realization
of deferred tax assets is dependent upon sufficient future taxable income during
the period that deductible temporary differences and carryforwards are expected
to be available to reduce taxable income.  As the achievement of
required future taxable income is uncertain, the Company recorded a valuation
allowance.





35





ARES
VENTURES CORP.


(An
Exploration Stage Company)


Notes
to Financial Statements


September
30, 2010





NOTE
7.  NET OPERATING LOSSES





As of
September 30, 2010, the Company has a net operating loss carryforward of
approximately $57,810.  Net operating loss carryforward expires twenty
years from the date the loss was incurred.





NOTE
8.  STOCK TRANSACTIONS





Transactions,
other than employees’ stock issuance, are in accordance with ASC No. 505. Thus
issuances shall be accounted for based on the fair value of the consideration
received.  Transactions with employees’ stock issuance are in
accordance with ASC No. 718. These issuances shall be accounted for based on the
fair value of the consideration received or the fair value of the equity
instruments issued, or whichever is more readily determinable.





On
September 25, 2008 the Company issued a total of 6,000,000 shares of common
stock to one director for cash at $0.0025 per share for a total of
$15,000.





On May
12, 2009 the Company completed its S-1 offering, selling 6,000,000 common shares
at $.01 per share for total proceeds of $60,000.





As of
September 30, 2010 the Company had 12,000,000 shares of common stock issued and
outstanding.





On
October 5, 2010, the Company effected a one (1) old for two (2) new forward
stock split of our authorized and issued and outstanding shares of common stock.
As a result, our authorized capital increased from 75,000,000 shares of common
stock to 150,000,000 shares of common stock and the issued and outstanding
increased from 6,000,000 shares of common stock to 12,000,000 shares of common
stock, all with a par value of $0.001. The stock split has been retroactively
applied.





The
stockholders’ equity section of the Company contains the following classes of
capital stock as of September 30, 2010:





·
            Common
      stock, $ 0.001 par value: 150,000,000 shares authorized; 12,000,000 shares
      issued and outstanding.





NOTE
9.   PREPAID EXPENSE





On
September 2, 2010, the Company issued $10,000 to CommerceTel Inc as an advance
to fund transaction costs anticipated to be associated with the business
combination disclosed in Form 8K dated November  8, 2010.





36





ARES
VENTURES CORP.


(An
Exploration Stage Company)


Notes
to Financial Statements


September
30, 2010





NOTE
10.   SUBSEQUENT EVENTS





Effective
October 5, 2010, the Company changed its name from "Ares Ventures Corp." to
"CommerceTel Corporation", by way of a merger with our wholly owned subsidiary
CommerceTel Corporation, which was formed solely for the change of name.





The
forward stock split and name change became effective with the Over-the-Counter
Bulletin Board at the opening of trading on October 5, 2010.





On
November 2, 2010, the Company executed a Share exchange Agreement, ( “ Share
Exchange”).  Please refer the Company’s Form 8K filed on 11/8/2010 for
details.





Pursuant
to the Exchange Agreement, the Shareholder transferred to the Company all of the
issued and outstanding shares of common stock of CommerceTel.  In
consideration for the transfer of the shares of CommerceTel, the Company issued
an aggregate of 10,000,000 shares of common stock of the Company to the
Shareholders.  As a result of the Exchange Agreement, (i) CommerceTel
became a wholly-owned subsidiary of the Company and (ii) the Company succeeded
to the business of CommerceTel as its sole business.





For
accounting purposes, the Share Exchange was treated as a recapitalization of
CommerceTel.  CommerceTel is the accounting acquirer and the results
of its operations will be the results of the Company’s operations going
forward.





On
November 2,  2010, the Company issued to a number of accredited
investors a series of its 10% Senior Secured Convertible Bridge Note (the
“Notes”) in the aggregate principal amount of $1,000,000 (the
“Financing”).  The Notes accrue interest at the rate of 10% per
annum.  The entire principal amount evidenced by the Notes (the
“Principal Amount”) plus all accrued and unpaid interest is due on the earlier
of (i) the date the Company completes a financing transaction for the offer and
sale of shares of common stock (including securities convertible into or
exercisable for its common stock), in an aggregate amount of no less than 125%
of the principal amounts evidenced by the Notes (a “Qualifying Financing”), and
(ii) November 3, 2011.





On the
maturity date of the Notes, in addition to the repayment of the Principal Amount
and all accrued and unpaid interest, the Company will issue to each holder of
the Notes, at each such holder’s option, (i) three year warrants to purchase
that number of shares of its common stock equal to the Principal Amount plus all
accrued and unpaid interest divided by the per share purchase price of the
common stock offered and sold in the Qualifying Financing (the “Offering
Price”) which
warrants shall be exercisable at the Offering Price, or (ii) that number of
shares of Common Stock equal to the product arrived at by multiplying (x) the
Principal Amount plus all accrued and unpaid interest divided by the Offering
Price and (y) 0.33.





37





ARES
VENTURES CORP.


(An
Exploration Stage Company)


Notes
to Financial Statements


September
30, 2010





The
Company’s obligations under the Notes are secured by all of the assets of the
Company, including all shares of CommerceTel, its wholly owned
subsidiary.





WFG
Investments, Inc., a registered broker dealer, was paid a placement agent fee in
the amount of $40,000 for its services rendered in connection with the
Financing.





On
December 7, 2010, the Board of Directors of CommerceTel Corporation (the
“Company”) resolved to change the Company’s fiscal year end from September 30 to
December 31, effective immediately, to coincide with the fiscal year end of its
wholly owned subsidiary CommerceTel Inc. that was recently acquired in a reverse
acquisition (as disclosed previously on a Current Report on Form 8-K that was
filed on November 8, 2010).





We have
evaluated events through the issuance of these Financial
Statements.  Other than what has already been disclosed, no events
have occurred subsequent to the Balance Sheet date of September 30, 2010 that
would require adjustment to, or disclosure in, the financial
statements.





38




Item 9.  Controls and
Procedures





Evaluation of Disclosure
Controls and Procedures


Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission's rules and forms. Disclosure controls
and procedures include controls and procedures designed to ensure that
information required to be disclosed in our reports filed or submitted under the
Exchange Act is accumulated and communicated to management to allow timely
decisions regarding required disclosure.




As
required by paragraph (b) of Rules 13a-15 or 15d-15 under the Exchange Act, our
management, with the participation of our president (our principal executive
officer) and our chief financial officer (our principal financial officer and
principal accounting officer) evaluated the effectiveness of our disclosure
controls and procedures as of the end of the period covered by this annual
report, being September 30, 2010.  Our president and our chief financial
officer evaluated our company’s disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of September 30,
2010.




Based on
this evaluation, these officers concluded that, as of September 30, 2010, these
disclosure controls and procedures were not effective to ensure that the
information required to be disclosed by our company in reports it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities
Exchange Commission.  The conclusion that our disclosure controls and
procedures were not effective was due to the presence of material weaknesses in
internal control over financial reporting as identified below under the heading
“Management’s Report on Internal Control over Financial Reporting.” Management
anticipates that such disclosure controls and procedures will not be effective
until the material weaknesses are remediated.




Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues, if any, within our
company have been detected. These inherent limitations include the realities
that judgments in decision-making can be faulty and that breakdowns can occur
because of simple error or mistake.


39




Management’s
Report on Internal Control over Financial Reporting




Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. The term “internal control over financial
reporting” is defined as a process designed by, or under the supervision of, an
issuer’s principal executive and principal financial officers, or persons
performing similar functions, and effected by the issuer’s board of directors,
management and other personnel, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting
principles and includes those policies and procedures that:





(1)
            pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of the assets of the
      issuer; and





(2)
            provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that receipts and expenditures of the issuer
      are being made only in accordance with authorizations of management and
      directors of the issuer.




Under the
supervision of our president, being our principal executive officer, and our
chief financial officer, being our principal financial officer and principal
accounting officer, we conducted an evaluation of the effectiveness of our
internal control over financial reporting as of September 30, 2010 using the
criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). This
evaluation included review of the documentation of controls, evaluation of the
design effectiveness of controls, testing of the operating effectiveness of
controls and a conclusion on this evaluation. Based on this evaluation, our
management concluded our internal control over financial reporting was not
effective as at September 30, 2010.




A
material weakness is a deficiency, or combination of deficiencies, in internal
control over financial reporting, such that there is a reasonable possibility
that a material misstatement of our company’s annual or interim financial
statements will not be prevented or detected on a timely basis. In its
assessment of the effectiveness of our internal control over financial reporting
as of June 30, 2010, we determined that there were control deficiencies that
constituted material weaknesses which are indicative of many small companies
with small staff, such as:




(1)
            inadequate
      segregation of duties and effective risk assessment;
  and





(2)
            insufficient
      written policies and procedures for accounting and financial reporting
      with respect to the requirements and application of both generally
      accepted accounting principles in the United States and guidelines of the
      Securities and Exchange Commission.





These
control deficiencies resulted in a reasonable possibility that a material
misstatement of the annual or interim financial statements could not have been
prevented or detected on a timely basis.  As a result of the material
weaknesses described above, we concluded that we did not maintain effective
internal control over financial reporting as of September 30, 2010 based on
criteria established in Internal Control—Integrated
Frameworkissued by COSO. Our management is currently evaluating
remediation plans for the above deficiencies.   During the period
covered by this annual report on Form 10-K, we have not been able to remediate
the weaknesses described above.   However, we plan to take steps to
enhance and improve the design of our internal control over financial
reporting.


40





Changes
in Internal Control




There was
no change in our internal control over financial reporting identified in
connection with the evaluation of our internal control over financial reporting
described above that occurred during our most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.





PART
III





Item 10.  Directors and
Executive Officers





Below are
the names and certain information regarding the Company’s executive officers and
directors. Officers are appointed annually by the Company’s board of directors
(the “Board”). Dennis
Becker, David Souaid, and H. Fraser Clarke were appointed on October 29,
2010.  Paul Meyer and Doug Schneider were appointed on December 17,
2010.




Name
            
            Age
            
            PositionDennis
      Becker
            
            37
            
            Chief
      Executive OfficerPaul
      Meyer
            
            63
            
            Chief
      Financial OfficerDavid
      Souaid
            
            37
            
            DirectorH.
      Fraser Clarke
            
            35
            
            DirectorDoug
      Schneider
            
            50
            
            Director





Dennis
Becker - President & Chief Executive Officer





Dennis
Becker was appointed the Company’s Chief Executive Officer and a Director
effective as of the closing date of the Share Exchange.  He will also act
as the Company’s Interim Chief Financial Officer until a more permanent
replacement will have been identified. Mr. Becker has been President and Chief
Executive Officer of CommerceTel, Inc. since September, 2007.  He was a
founder of Frontieric Corporation, a pioneer in providing complex call routing
and merchant processing applications, where he was Chief Executive Officer from
2002 to 2005.  Mr. Becker was also Chief Executive Officer of Bexel
Technologies, which served solutions to large enterprise, from 1999 to
2001.  Mr. Becker studied Computer Science at the University of Oregon and
served in the United States Air Force.




Paul
Meyer – Chief Financial Officer
 
 Paul
Meyer has been a Partner at Scigliano Group, LLC which provides
consulting for emerging technologies and venture backed initiatives since 2008.
The group’s current clients include social media networks; wireless and internet
gaming technologies and content providers and publishers. It provides management
consulting, restructuring, interim management, capital raising and intellectual
property monetization services.
 
 From 2003
to 2008, Mr. Meyer was President and Chief Operating Officer for Shuffle Master,
Inc., a NASDAQ Global Select gaming supply company. During Mr. Meyer’s five year
tenure, Shuffle Master’s revenues grew by over 225% to $190 million, both
organically and through acquisition, and international revenues increased from
less than 9% to over 50% of total.
 
 From 2000
to 2003, Mr. Meyer was President of the Integrated Solutions Division of
Concurrent Computer Corporation, a leading NASDAQ simulation technology support
provider. Mr. Meyer moved his division to develop a Linux-based real time
operating system as demand for the company’s proprietary Unix-based operating
system was waning. Mr. Meyer also negotiated a change in his division’s supply
role in the Navy’s Aegis program from technology licensor to hardware and
software sub-contract supplier, generating over $8 million in incremental gross
margin over the succeeding three years.
 
 Mr. Meyer
has also managed his own consulting ventures on two separate occasions, focusing
on turnarounds, interim management, crisis management, restructuring and Chapter
XI consulting. His clients in these ventures included a toy company; a
location-based entertainment provider; a retail costume jewelry chain; a food
packaging equipment supplier; a locomotive re-manufacturer and a video game
accessory distributor.
 
 Mr. Meyer
has also held C-level positions with Virgin Interactive, Inc. and Viacom New
Media, entertainment software developers and publishers, and has served as a
public company Chief Financial Officer on two separate occasions.
 
 Mr. Meyer
has also served on a number of public and private company boards, and has
chaired Compensation, Audit and Governance committees in this
regard.
 
 Mr. Meyer
is a Vietnam veteran, and graduated Summa Cum Laude from C.W. Post College with
a Bachelor of Science degree in Accounting.
 41




David
Souaid, Director
  David
Souaid was elected a director of the Company on the date of closing of the Share
Exchange. He is currently the President of SterlingCard Payment Solutions and
was previously the Senior Vice President, Sales and Marketing of Optimal
Payments Inc., a credit card processing company, since 1999. He has also been a
director of Sterling Payment Solutions and Mercantile Advance Corp. since 2008
respectively. He holds a B.A. in Political Science from Mount Allison
University.
  H.
Fraser Clarke, Director





Herbert
Fraser Clarke was elected a director of the Company on the date of closing of
the Share Exchange. He has been the President and Chief Operating Officer of
Herbal Magic, a Toronto based weight loss company, since 2009.  From 2008
to 2009 he was Chief Financial Officer of NLRC, a Newfoundland based oil and gas
refinery.  From 2005 to 2008, he was the Chief Executive Officer of the
Hair Club, a hair restoration company. Mr. Clarke holds a business degree from
Memorial University.  He is a chartered accountant and a chartered
financial analyst.  He currently serves on a number of boards including
Europe’s largest provider of hair loss solutions, a United States based mobile
marketing company and a Canadian mid marketing leasing firm.




Doug
Schneider, Director
 
 Mr. Schneider is a technology business
executive and entrepreneur with over twenty years of experience in
mobile/wireless, internet/data center, web services, and energy-related
companies.  From 2007 to 2010 Mr. Schneider was the CEO of Genea
Energy, a clean tech company that provides an innovative and comprehensive SaaS
based energy services platform for commercial office building
portfolios. Prior
thereto, he served in various consulting capacities for venture capital and
internet firms.He served as President, Small and Medium Enterprise (SME)
Hosting Business Unit for Verio, an NTT Communications Company from 1999 to
2004.  In this role, he architected a highly profitable, $125 million
revenue premier global hosting company that met the needs of over one million
SMEs in 140 countries. In an earlier role as President, Web Services, he built
and managed Verio's distribution channels and service operations for its shared
server, virtual server, and enterprise hosting product lines, which collectively
represented $160,000 million in revenues and was the world’s largest
domain-based hosting company at the time. In 1999, Mr. Schneider was selected by
VAR Business as one of thirty leading visionary executives in the nation shaping
the future of e-business for the channel and the industry.  In 2002, Verio
was recognized by Frost & Sullivan for market leadership in the SME web
hosting market.  Mr. Schneider was a key member of the Verio (NASDAQ:
VRIO) executive team responsible for executing a combined roll-up and organic
growth strategy of over 50 companies to create $5.5 billion in realized
shareholder value within 5 years through the successful $126 million IPO and
eventual sale of the company to NTT Communications.
 
 In 1994 Mr. Schneider co-founded and
served as President of a regional distribution company based in Colorado that
performed customized equipment fulfillment services for wireless carriers
OneComm and Nextel with their first generation of integrated cellular phone and
two-way radio digital products.  From 1991 to 1994, he served in marketing
and sales roles with CellularOne in the San Francisco Bay Area and drove
significant subscriber growth by leveraging indirect sales channels. 
Earlier in his career, Mr. Schneider worked for Pacific Gas & Electric
Company as an engineer.  Mr. Schneider received a Bachelor's degree in
Mechanical Engineering fromUniversityofCalifornia,Davisand an M.B.A. from the Kellogg School
of Management atNorthwesternUniversity.    He also serves
as an industry advisor to Pelion Venture Partners, a venture capital firm
focused on the IT and medical device sectors.


Employment
Agreements





Dennis Becker serves as our Chief
Executive Officer under anEmployment Agreement that was entered
into with CommerceTel, Inc on September 21, 2007 and amended March 16, 2009. The
agreement may be terminated without cause provided five (5) days prior written
notice, and a payment of six (6) months compensation at the employee's
then-currentrate of
compensation. He is paid $170,000 annually. The Board of Directors for
CommerceTelCorporation is
currently negotiating a new Employment Agreement with Dennis
Becker.


Paul
Meyer serves as our Chief Financial Officer under a Consulting Agreement that
was entered into an December 10, 2010. The agreement has a term of one year and
may be terminated upon 30 days’
written notice. Under the terms agreement, Mr. Meyer has committed to spend
up to 50 hours per month working for the Company. He is paid $30,000 and was
granted options to purchase 93,750 shares at $0.32 per share. The options vest
in 12 equal monthly increments.




Compensation
of Directors





Compensation
for the Directors has not been determined at this time.





Code of
Ethics




We do not
currently have a code of ethics, because we have only limited business
operations and only one officer and director, we believe a code of ethics would
have limited utility. We intend to adopt such a code of ethics as our business
operations expand and we have more directors, officers and
employees.


42


Item 11.  Executive
Compensation





SUMMARY COMPENSATION TABLEName and
                        Principal
                        Position
                      
                      Year
                      
                      Salary
                      
                      
                      Bonus
                      
                      
                      Stock
                        Awards
                      
                      
                      Option
                        Awards
                      
                      
                      Non-
                        Equity
                        Incentive
                        Plan
                        Compen-sation
                      
                      
                      Change in
                        Pension
                        Value
                        and Non-qualified
                        Deferred
                        Compen-sation
                        Earnings
                      
                      
                      All
                        Other
                        Compen-sation
                      
                      
                      TotalShane Ellis,
                      
                      2010
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0President,
      CFO & CEO
                      
                      2009
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0
                      
                      
                      
                      0





OUTSTANDING EQUITY AWARDS AT FISCAL YEAR
      ENDOption Awards
                  
                  
                  Stock AwardsName
                  
                  Number of
                    Securities
                    Underlying
                    Unexercised
                    Options (#)
                    Exercisable
                  
                  
                  Number of
                    Securities
                    Underlying
                    Unexercised
                    Options (#)
                    Unexercisable
                  
                  
                  Equity
                    Incentive
                    Plan Awards;
                    Number of
                    Securities
                    Underlying
                    Unexercised
                    Unearned
                    Options (#)
                  
                  
                  Option
                    Exercise
                    Price
                  
                  
                  Option
                    Expiration
                    Date
                  
                  
                  Number
                    of
                    Shares
                    or Units
                    of Stock
                    That
                    Have
                    Not
                    Vested
                    (#)
                  
                  
                  Market
                    Value
                    of
                    Shares
                    or
                    Units
                    of
                    Stock
                    That
                    Have
                    Not
                    Vested
                  
                  
                  Equity
                    Incentive
                    Plan
                    Awards:
                    Number
                    of
                    Unearned
                    Shares,
                    Units or
                    Other
                    Rights
                    That
                    Have Not
                    Vested
                  
                  
                  Equity
                    Incentive
                    Plan
                    Awards:
                    Market
                    or Payout
                    Value of
                    Unearned
                    Shares,
                    Units or
                    Other
                    Rights
                    That
                    Have Not
                    VestedShane Ellis
      CEO & CFO
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0
                  
                  
                  
                  0





DIRECTOR COMPENSATIONName
                    
                    Fees Earned
                      or Paid in
                      Cash
                    
                    
                    Stock
                      Awards
                    
                    
                    Option
                      Awards
                    
                    
                    Non-Equity
                      Incentive Plan
                      Compensation
                    
                    
                    Change in
                      Pension
                      Value and
                      Nonqualified
                      Deferred
                      Compensation
                      Earnings
                    
                    
                    All Other
                      Compensation
                    
                    
                    TotalShane Ellis
                      Director
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0
                    
                    
                    
                    0


43





In
September 2008 Shane Ellis purchased 6,000,000 shares of our common stock at
$0.0025 per share.  The terms of the stock issuance was as fair to the
company, in the opinion of the board of directors, as could have been made with
an unaffiliated third party.





There are
no annuity, pension or retirement benefits proposed to be paid to officers,
directors or employees in the event of retirement at normal retirement date
pursuant to any presently existing plan provided or contributed to by the
company or any of its subsidiaries, if any.





Item 12.  Security
Ownership of Certain Beneficial Owners and Management





The
following table sets forth as of December 20, 2010, certain information
regarding the beneficial ownership of the Company’s Common Stock giving effect
to the Share Exchange.  The table sets forth the beneficial ownership of
(i) each person who, to our knowledge, beneficially owns more than 5% of the
outstanding shares of Common Stock; (ii) each of the nominees for director and
executive officer of the Company; and (iii) all of our executive officers and
nominees for director as a group.  The number of shares owned includes all
shares beneficially owned by such persons, as calculated in accordance with Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”).  Under such rules, beneficial ownership includes any
shares of Common Stock as to which a person has sole or shared voting power or
investment power and any shares of Common Stock which the person has the right
to acquire within 60 days of December 20, 2010 through the exercise of any
option, warrant or right, through conversion of any security or pursuant to the
automatic termination of a power of attorney or revocation of a trust,
discretionary account or similar arrangement.  Unless otherwise indicated,
the address of each shareholder is c/o the Company, 8929 Aero Drive, Suite
E, San Diego, CA 92123.




Name
      of Beneficial Owner
                            
                            Number of
                              Shares
                            
                            
                            Percentage(1)CommerceTel
      Canada Corporation
                              1
      First Canadian Place
                              100
      King Street West
                              Toronto,
      ON  M5X 1B2
                            
                            
                            7,267,972
                            
                            
                            
                            41.1
                            %Dennis
      Becker (2)
                            
                            
                            7,360,335
                            
                            
                            
                            41.6
                            %David
      Souaid
                            
                            
                            -0-
                            
                            
                            
                            N/AFraser
      Clarke (3)
                            
                            
                            7,267,972
                            
                            
                            
                            4.1.
                            %Paul
      Meyer
                            
                            
                            15,625
                            
                            
                            
                            *Doug
      Schneider
                            
                            
                            -0-
                            
                            
                            
                            N/AJohn
      Liviakis
                            
                            
                            1,700,000
                            
                            
                            
                            9.6
                            %655
      Redwood Highway, Suite 655
                              Mall
      valley, CAExecutive
      Officers and Directors as a Group
                              (three
      persons)
                            
                            
                            7,375,960
                            
                            
                            
                            41.7
                            %








* Denotes
less than 1%




(1)
            Beneficial
      ownership percentages gives effect to the completion of the Share
      Exchange, and are calculated based on  shares of Common Stock
      issued and outstanding.  Beneficial ownership is determined in
      accordance with Rule 13d-3 of the Exchange Act. The number of shares
      beneficially owned by a person includes shares of Common Stock underlying
      options or warrants held by that person that are currently exercisable or
      exercisable within 60 days of December 20, 2010.  The shares issuable
      pursuant to the exercise of those options or warrants are deemed
      outstanding for computing the percentage ownership of the person holding
      those options and warrants but are not deemed outstanding for the purposes
      of computing the percentage ownership of any other
  person.


44





(2)
            Includes 7,267,972
      shares owned by CommerceTel Canada Corporation (“CTel Canada”) of which
      Mr. Becker may be deemed to be the beneficial owner in his capacity as
      President and Chief Executive Officer of that entity.  Mr. Becker
      disclaims beneficial ownership in the shares owned by CTel Canada in
      excess of his proportional ownership of CTEl
  Canada.





(3)
            Consists
      of shares held by CTel Canada of which Mr. Clarke may be deemed the
      beneficial owner in his capacity as Chairman of that entity.  Mr.
      Clarke disclaims beneficial ownership in the shares owned by CTel Canada
      in excess of his proportional ownership of CTEl
  Canada.




(4)
              Consists
      of shares issuable upon exercise of options that vest within the next 60
      days does not include 78,125 that will vest
    thereafter.




Item
13.Certain
Relationships and Related Transactions





In
September 2008 Shane Ellis purchased 6,000,000 shares of our common stock at
$0.0025 per share.  All of such shares are “restricted” securities, as that
term is defined by the Securities Act of 1933, as amended, and are held by the
officer and director of the Company. (See "Principal
Stockholders".)





Item 14.  Principal
Accounting Fees and Services





The total
fees charged to the company for audit services were $8,000 for audit-related
services were $Nil, for tax services were $Nil and for other services were $Nil
during the year ended September 30, 2010.





For the
year ended September 30, 2009, the total fees charged to the company for audit
services were $Nil, for audit-related services were $Nil, for tax services were
$Nil and for other services were $Nil.


45


PART
IV





Item 15. 
Exhibits





Exhibit
      No.
                            
                            Exhibit
                            
                            Incorporated
      by Reference or FiledHerewith3.1
                            
                            Articles
      of Incorporation
                            
                            Incorporated
      by reference to the Registration Statement on Form S-1 filed with the SEC
      on October 20, 2008, File No. 333-1544554.1
                            
                            Form
      of 10% Senior Secured Convertible Bridge Note
                            
                            Incorporated
      by reference to the Company’s Current Report on Form 8-K filed November 7,
      20103.2
                            
                            Bylaws
                            
                            Incorporated
      by reference to the Registration Statement on Form S-1 filed with the SEC
      on October 20, 2008, File No. 333-15445510.1
                            
                            Form
      of Security Agreement
                            
                            Incorporated
      by reference to the Company’s Current Report on Form 8-K filed November 7,
      201010.2
                            
                            Form
      of Subsidiary Guaranty
                            
                            Incorporated
      by reference to the Company’s Current Report on Form 8-K filed November 7,
      201010.3
                            
                            Consulting
      Agreement dated December 10, 2010 with Paul Meyer
                            
                            Filed herewith10.4
                            
                            Employment
      Agreement between Dennis Becker and CommerceTel, Inc. dated September 21,
      2007.
                            
                            Filed herewith31.1
                            
                            Section
      302 Certification of Chief Executive Officer
                            
                            Filed
      herewith31.2
                            
                            Section
      302 Certification of Chief Financial Officer
                            
                            Filed
      herewith32
                            
                            Section
      906 Certification of Chief Executive Officer and Chief Financial
      Officer
                            
                            Filed
      herewith


46





SIGNATURES




Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.





DATE:       
      December 20, 2010
              COMMERCETEL
      CORPORATION/s/
      Dennis BeckerDennis
      BeckerChief
      Executive Officer





POWER
OF ATTORNEY





KNOW ALL
PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Dennis Becker, his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any amendments
to this Annual Report on Form 10-K, and to file the same, with exhibits thereto
and other documents in connections therewith, with the Securities and Exchange
Commission, hereby ratifying and conforming all that each of said
attorneys-in-fact, or his or her substitutes, may do or cause to be done by
virtue of hereof.





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.





Signature
                        
                        Title
                        
                        Date/s/
                        Dennis
      Becker
                        
                        Chief
      Executive Officer and Director
                        
                        December
      20, 2010(Principal
      Executive Officer)/s/
                        Paul
      Meyer
                        
                        Chief
      Financial Officer
                          (Principal
      Financial and
                            Accounting Officer)
                        
                        December
      20, 2010/s/
                        Fraser
      Clarke
                        
                        Director
                        
                        December
      20, 2010/s/
                        David
      Souaid
                        
                        Director
                        
                        December
      20, 2010/s/
                        Doug
      Schneider
                        
                        Director


47