FORM 10-QSB - Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[ X ]  Quarterly  Report  pursuant  to  Section  13 or 15(d)  of the  Securities
Exchange  Act of 1934.  For the period  ended:  March 31, 2000 or [ ] Transition
Report Pursuance to Section 13 or 15(d) of the Securities  Exchange act of 1934.
For the transition period from to

Commission File Number  33-16820-D
                      --------------


                             ARETE INDUSTRIES, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


             Colorado                                     84-1063149
    -----------------------------------                -----------------
    (State or other jurisdiction of                    (I.R.S. Employer
    incorporation or organization                      Identification No.)

    2955 Valmont Road, Suite 310, Boulder, CO                80301
    ------------------------------------------            -------------
    (Address of principal executive offices)               (Zip Code)


                                 (303) 247-1313
                -------------------------------------------------
              (Registrant's telephone number, including area code)


              2305 Canyon Blvd, Suite 103, Boulder, Colorado 80302
             -------------------------------------------------------
                 (Former name, former address and former fiscal
                      year, if changed since last report.)

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.
                                         [ X  ] Yes     [  ] No


          APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                        DURING THE PRECEDING FIVE YEARS:

Indicated  by check mark  whether the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.

                                         [ X ] Yes     [   ] No


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

As of May 15, 2000,  Registrant had  325,075,040  shares of common stock, No par
value, outstanding.

<PAGE>


                      ARETE INDUSTRIES, INC. AND SUBSIDIARY


                                      INDEX


                                                                       Page No.
                                                                       --------

   Consolidated Financial Statements:

   Consolidated Balance Sheet                                              2

   Consolidated Statements of Operations                                   3

   Consolidated Statement Stockholders' (Deficit)                          4

   Consolidated Statements of Cash Flows                                   5

   Notes to Consolidated Financial Statements                              7


<PAGE>


                   ARETE INDUSTRIES, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                      March 31, 2000 and December 31, 1999
                                  (Unaudited)

                                                            2000       1999
                                                            ----       ----
Current assets:
   Cash and cash equivalents                              $ 88,202    $ 15,844
   Restricted cash                                               -      25,000
   Accounts receivable, less allowance for
    doubtful accounts of $0                                    445         519
   Prepaid expenses                                              -       1,200
                                                           -------    --------

    Total current assets                                    88,647      42,563

Furniture and equipment, at cost net of accumulated
   depreciation of $349 (2000) and $233 (1999)               1,980       2,096

Investment in and advances to Aggression Sports
   (Note 2)                                                237,665      40,560
                                                          --------    --------

                                                          $328,292    $ 85,219
                                                          ========    ========

            LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Accounts payable (Note 3)                              $180,628    $204,318
   Accrued expenses                                         32,358      34,409
   Accrued payroll taxes (Note 3)                          152,539     146,130
   Notes payable                                             5,000      24,500
   Convertible note payable - officer                       81,021      81,021
   Stock subscription payment received                       7,333       7,333
                                                        ----------  ----------

    Total current liabilities                              458,879     497,711

Commitments and contingencies (Notes 1, 3 and 6)

Stockholders' deficit (Note 4):
   Redeemable preferred stock; 100,000,000 shares
    authorized:
     Convertible Class A; $10 par value, 100,000
      shares authorized, 3,000 shares issued and
      outstanding (liquidation preference $32,475)               -      30,000
   Common stock, $.0001 par value; 500,000,000 shares
    authorized, 321,575,040 (2000) and 301,397,155
    (1999) shares issued and outstanding                 7,805,377   7,414,758
   Accumulated deficit                                  (7,935,964) (7,857,250)
                                                        ----------  ----------

    Total stockholders' deficit                           (130,587)   (412,492)
                                                        ----------  ----------

                                                        $ 328,292   $   85,219
                                                        =========   ==========

                            See accompanying notes.
                                       2

<PAGE>


                   ARETE INDUSTRIES, INC. AND SUBSIDIARY
                             STATEMENT OF OPERATIONS
               For the three months ended March 31, 2000 and 1999
                                  (Unaudited)

                                                          2000          1999
                                                          ----          ----

Sales                                                     $ 8,035     $257,484

Cost of goods sold                                          7,515      226,151
                                                          -------     --------

Gross profit                                                  520       31,333

Operating expenses:
   Depreciation                                               116            -
   Rent                                                     6,440       23,765
   Salaries                                                30,028       64,805
   Stock issued for services (Note 4)                      10,000            -
   Other operating expenses                                24,456       63,796
                                                          -------     --------

    Total costs and expenses                               71,040      152,366
                                                          -------     --------

Net loss from discontinued operations (Note 1)            (70,520)    (121,033)

Other income (expense):
   Equity in loss of Aggression Sports (Note 2)            (2,000)           -
   Gain on sale of equipment                                    -       40,061
   Interest expense                                        (6,757)      (1,647)
   Interest and miscellaneous income                          563          312
                                                         --------     --------

    Total other income (expenses)                          (8,194)      38,726
                                                         --------     --------

Net loss (Note 5)                                        $(78,714)    $(82,307)
                                                         ========     ========

Basic and diluted loss per share                              $ *          $ *
                                                         ========     ========

Weighted average common shares outstanding            265,404,922  249,864,804
                                                      ===========  ===========



* - Less than $.01 per share

                            See accompanying notes.
                                       3

<PAGE>
<TABLE>


                   ARETE INDUSTRIES, INC. AND SUBSIDIARY
                   STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
                    For the three months ended March 31, 2000
                                  (Unaudited)
<CAPTION>



                                     Class A preferred stock     Common stock       Accumulated
                                      Shares      Amount      Shares      Amount      deficit
                                      ------     -------      ------      ------    -----------
<S>                                  <C>         <C>      <C>           <C>        <C>

Balance, December 31, 1999             3,000     $30,000  301,397,155   $7,414,758  $(7,857,250)

   Conversion of Series A preferred
    stock to common (Note 4)          (3,000)    (30,000)   2,600,000       30,000            -

   Issuance of common stock for
    services (Note 4)                      -           -    2,377,885       46,410            -

   Issuance of common stock for
    transfer of certificate of deposit
    and accrued interest (Note 4)          -           -    8,750,000       33,152            -

   Sale of common stock                    -           -      450,000       31,500            -

   Common stock issued upon exercise
    of options (Note 4)                    -           -    6,000,000       66,000            -

   Interest in sale of Arete common stock
    be equity-method investee (Note 2)     -           -            -      183,557            -

   Net loss for the three months ended
    March 31, 2000                         -           -            -            -      (78,714)
                                      ------     -------  -----------   ----------  -----------

Balance, March 31, 2000                    -     $     -  321,575,040   $7,805,377  $(7,935,964)
                                     =======     =======  ===========   ==========  ===========
</TABLE>

                            See accompanying notes.
                                       4

<PAGE>


                   ARETE INDUSTRIES, INC. AND SUBSIDIARY
                             STATEMENT OF CASH FLOWS
               For the three months ended March 31, 2000 and 1999
                                  (Unaudited)


                                                            2000        1999
                                                            ----        ----
Cash flows from operating activities:
   Net loss                                              $ (78,714)  $ (82,307)
   Adjustments to reconcile net loss to net
    cash provided by (used in) operating activities:
      Depreciation and amortization                            116           -
      Equity in loss of Aggression Sports                    2,000           -
      Stock issued for services                             46,410      54,127
      Changes in assets and liabilities:
       Accounts receivable                                      74      (5,413)
       Prepaid expenses                                      1,200      (8,437)
       Accounts payable                                    (23,690)   (135,933)
       Accrued expenses                                      4,358     210,006
       Customer deposits                                        -       (3,517)
                                                          --------    --------

        Total adjustments                                   30,468     110,833
                                                          --------    --------

      Net cash provided by (used in) operating activities  (48,246)     28,526

Cash flows from investing activities:
   Investments in and advances to Aggression Sports        (15,548)          -
   Proceeds from certificate of deposit                     25,000           -

      Net cash provided by investing activities              9,452           -

Cash flows from financing activities:
   Proceeds from issuance of common stock                   64,652      42,050
   Proceeds from exercise of stock options                  66,000           -
   Payments on long term debt                              (19,500)    (48,800)
                                                          --------    --------

    Net cash provided by (used in) financing activities    111,152      (6,750)
                                                          --------    --------

Net increase in cash and cash equivalents                   72,358      21,776
Cash and cash equivalents at beginning of period            15,844      20,047
                                                          --------    --------

Cash and cash equivalents at end of period                $ 88,202    $ 41,823
                                                          ========    ========
                            See accompanying notes.
                                       5

<PAGE>


                  ARETE INDUSTRIES, INC. AND SUBSIDIARY
                             STATEMENT OF CASH FLOWS
               For the three months ended March 31, 2000 and 1999
                                  (Unaudited)

                         (Continued from previous page)



Supplemental disclosure of cash flow information:

   Interest paid during the period                            $507     $3,839
                                                              ====     ======
   Income taxes paid during the period                        $  -     $    -
                                                              ====     ======

Supplemental disclosure of non-cash investing and financing activities:

   During the quarter  ended March 31,  2000,  the Company  issued  common stock
   valued at $15,548 to employees of Aggression Sports and treated such issuance
   as an advance.

                             See accompanying notes.
                                        6

<PAGE>


                      ARETE INDUSTRIES, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2000



1. Summary of significant accounting policies

   Basis of presentation:

   The  accompanying  financial  statements  have been  prepared by the Company,
   without  audit.  In the opinion of  management,  the  accompanying  unaudited
   financial  statements  contain  all  adjustments  (consisting  of only normal
   recurring  accruals)  necessary  for a fair  presentation  of  the  financial
   position  as of  December  31,  1999 and March 31,  2000,  and the results of
   operations and cash flows for the periods ended March 31, 1999 and 2000.

   Discontinued operations:

   During March 2000, the Company  abandoned the direct mail and coupon business
   and shifted its focus toward Aggression Sports, Inc. (Aggression Sports) (see
   Note 2). The direct mail coupon  business  continued  until March 2000 and is
   not expected to generate a loss during 2000. The Company  provided  executive
   support to help  Aggression  Sports get prepared to start its own operations.
   Aggression  Sports is in the process of  developing  a web site to market its
   proprietary outdoor products.

   Basis of presentation:

   The  financial  statements  have been prepared on a going concern basis which
   contemplates  the realization of assets and liquidation of liabilities in the
   ordinary  course  of  business.  As  shown  in  the  accompanying   financial
   statements,  the Company  has  incurred  significant  losses and at March 31,
   2000,  the  Company  has  a  working   capital  deficit  of  $370,232  and  a
   stockholders' deficit of $130,587. In addition,  the Company is delinquent on
   payment of payroll  taxes and  creditor  liabilities  pursuant to the plan of
   reorganization,  and is being  investigated  by the  Securities  and Exchange
   Commission for alleged  securities law violations  (see Note 6). As a result,
   substantial  doubt  exists  about the  Company's  ability to continue to fund
   future operations using its existing resources.

   The Company plans to assist  Aggressions Sports set up its web site to market
   a line of specialty sporting goods. Subsequent to year end, Aggression Sports
   entered  into an agreement  to issue 30% of its  outstanding  common stock in
   exchange for the right,  title and interest in  approximately  30 products in
   various  stages of development  and various stages of the patenting  process,
   and generated cash of $417,000 through the sale of Arete's common stock.

2. Investment in and advances to Aggression Sports

   During 1998,  the Company  acquired a 44%  ownership  interest in  Aggression
   Sports in exchange for 30,000,000 shares of the Company's common stock valued
   at $150,000.  Due to the uncertainty  related to the ultimate  realization of
   this  carrying  value,  the  $150,000  was written off during the nine months
   ended  December  31,  1998.  During the three  months  ended March 31,  2000,
   Aggression  Sports  sold  26,490,000  shares of Arete for gross  proceeds  of
   $417,175.  Arete's 44% interest in the proceeds of $183,557 has been recorded
   as additional paid-in capital.


                                        7


<PAGE>


                      ARETE INDUSTRIES, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2000



2. Investment in and advances to Aggression Sports (continued)

   In January 2000,  Aggression Sports entered into an agreement to issue 30% of
   its outstanding common stock in exchange for the right, title and interest in
   approximately 30 products in various stages of development and various stages
   of the  patenting  process.  As a result  of this  agreement,  the  Company's
   interest in Aggression Sports was reduced to 31%.

   During the three months ended March 31,  2000,  the Company paid  salaries of
   $15,548 for services  performed by certain  individuals  on Agression  Sports
   behalf. The investment in Aggression Sports has been reduced by the Company's
   44% share of  Aggression  Sports'  loss for the three  months ended March 31,
   2000 exclusive of the gain on the sale of Arete common stock.

3. Delinquent amounts payable

   As of March 31,  2000,  the  Company is  delinquent  on  payments  of various
   amounts  to  creditors  including  payroll  taxes and  $62,316  to  creditors
   required to be paid under the terms of its plan of reorganization. Failure to
   pay these  liabilities  could  result in liens being  filed on the  Company's
   assets and may result in assets being attached by creditors  resulting in the
   Company's inability to continue operations.

4. Stockholders' equity

   During the three  months  ended March 31,  2000,  (1) an officer and a former
   officer of the Company converted their Class A preferred stock into 2,600,000
   shares of the Company's common stock, (2) the Company issued 2,377,885 shares
   of common  stock for  services  valued at $46,410  ($.02 per share),  (3) the
   Company  issued  8,750,000  shares of common  stock in exchange for a $25,000
   certificate of deposit, accrued interest and for guaranting a note payable of
   the Company and (4) the Company issued  6,000,000 shares of common stock upon
   the exercise of stock options at $.011 per share.

   In January  2000,  the board of  directors  adopted,  subject to  shareholder
   approval,  the 2000 Omnibus Stock Option and Incentive Plan which  designates
   and reserves 50,000,000 shares of common stock to be issued under the Plan.

   In January 2000, the board of directors authorized the issuance of options to
   purchase  65,000 shares of Class A preferred  stock for $10 per share to five
   individuals.  The options are first exercisable between May and July 2000 and
   are  exercisable  for a period  of one year  from  those  dates.  The Class A
   preferred stock is convertible  into the Company's  common stock at $.025 per
   share. The board also approved  compensatory common stock grants of 7,750,000
   shares in the  aggregate  to six  individuals  for  services to be  performed
   valued at $77,500.


                                        8


<PAGE>


                      ARETE INDUSTRIES, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2000



5. Income taxes

   The book to tax  temporary  differences  resulting in deferred tax assets and
   liabilities  are  primarily net operating  loss  carryforwards  of $1,838,000
   which expire in years through 2020.

   As of March 31,  2000 and  December  31,  1999,  total  deferred  tax assets,
   liabilities and valuation allowances are as follows:

                                                     2000         1999
                                                     ----         ----
Deferred tax asset resulting from loss
carryforwad                                       $ 367,600    $ 352,000
Valuation allowance                                (367,600)    (352,000)
                                                  ---------    ---------

   Net deferred tax asset                         $       -    $       -
                                                  =========    =========


   A 100%  valuation  allowance  has been  established  against the deferred tax
   assets,  as utilization of the loss  carryforwards  and  realization of other
   deferred tax assets cannot be reasonable assured.

   The Company's net operating  losses are restricted as to the amount which may
   be utilized in any one year. The Company's net operating  loss  carryforwards
   expire as follows:

                December 31, 2015                             $  458,000
                      2016                                       224,000
                      2017                                       304,000
                      2018                                       614,000
                      2019                                       161,000
                      2020                                        77,000
                                                              ----------

                                                              $1,838,000
                                                              ==========

6. Commitments and contingencies

   Securities and Exchange Commission investigation:

   The Company  received a letter from the  Securities  and Exchange  Commission
   dated March 30, 1998  indicating  that the staff of  Securities  and Exchange
   Commission pursuant to a formal order of private investigation was conducting
   an investigation of certain matters.  On October 23, 1998, the Securities and
   Exchange  Commission  sent another letter to the Company  indicating that the
   staff  of  the  Central  Regional  Office  of  the  Securities  and  Exchange
   Commission  intends to recommend to the Commission that an enforcement action
   be instituted against the Company and two former officers of the Company. The
   staff proposed to allege that based on facts developed in their investigation
   that  misleading  press  releases  regarding  the  acquisition  of a  private
   company,  that company's business  relationships,  and sales projections were
   released. The proposed action would allege that these press releases included
   material   misstatements   and/or  omitted  to  disclose  material  facts  in
   connection  with the offer,  purchase and sale of Company  common  stock,  in
   violation of Section 17(a) of the Securities Act of 1933 and Section 10(b) of
   the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder.

                                        9


<PAGE>


                      ARETE INDUSTRIES, INC. AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2000


6. Commitments and contingencies (continued)

   Additionally,  the staff's  proposed action would be based on facts developed
   in their investigation that, between January 1988 to the present, the Company
   failed to file, or filed on an untimely basis, required periodic reports with
   the  Commission,  in violation of Section 15(d) of the Exchange Act and Rules
   15d-1 and 15d-13 thereunder. The proposed action would further allege the two
   former officer's of the Company aided and abetted the Company's  violation of
   Section 15(d) of the Exchange Act and Rules 15d-1 and 15d-13 thereunder.  The
   Company's   legal   counsel  has   indicated   that  at  this  state  of  the
   investigation,  it is  impracticable  to render an opinion  about whether the
   likelihood of an  unfavorable  outcome is either  "probable"  or "remote".  A
   contingency  exists with respect to this matter,  the ultimate  resolution of
   which cannot presently be determined.


                                        10

<PAGE>


                                     ITEM 2

               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS


Overview
--------

Management reports that effective March 31, 2000, the entire financial structure
of the Company,  relative to the coop coupon advertising business,  has changed.
The Company has completely  discontinued the coop advertising business which has
historically  averaged  total  revenues  in the $1 to  $1.5  Million  range  and
traditionally incurred annual cash losses of approximately $300,000 or more. The
Company is now in the business of cultivating new start-up or development  stage
businesses by providing  managed fixed cost services,  marketing and fulfillment
services  and  executive  management  services,  and  by  offering  entrepeneurs
liquidity as a publicly traded entity.

Since the change in control to current  management  which  occurred on April 30,
1998,  the Company has been in a turnaround  and  restructuring  mode.  With the
discontinuance  of its print and direct mail  operations  and of the  franchised
cooperative coupon direct mail advertising business, the Company resolved to put
its resources behind launching the outdoor adventure equipment  business,  Arete
Outdoors,  which management  believes has a much greater  potential for revenues
and  profits.  As such,  the Company  became  essentially  a  development  stage
company.

Current  management  signed on to develop  and  implement  a  strategic  plan to
restore the  Company to  financial  viability.  The first phase of that plan has
come to  fruition  with the  elimination  of  unprofitable,  cash  and  resource
draining business  operations.  This task was accomplished  without jeapordizing
the economic viability of parent entity, Arete Industries, Inc. The second phase
of adding  executive  financial,  corporate,  legal and  operational  management
expertise was accomplished in the first quarter of 2000. The third phase,  which
management is focused on now is to develop operational capabilities to cultivate
new business ideas, and generate immediate revenue with Arete Outdoors.

During the first  quarter of fiscal  2000,  the  Company  aggressively  launched
start-up operations for Arete Outdoors,  by initiating the patenting and product
development process for a number of its product concepts. Patents were filed for
the snowshoe and the alpine  scooter.  The product  development  cycle is nearly
complete for the snowshoe  which is scheduled to go into  production  during the
second  quarter and will be released  in the third  quarter of 2000.  The alpine
scooter is  scheduled  to be  released  for sale in late third  quarter or early
fourth quarter of 2000. Patenting and initial design work has been initiated for
two other winter season  products,  the suspension ski and the power pole. Arete
Outdoors also initiated  development of its e-commerce  website  through Digital
Spinner, Inc. which will be an outdoor adventure and lifestyle community website
built on a complex database engine which will be fully scalable.

During the first quarter of 2000, with a view of acquiring e-commerce marketing,
fulfillment and data-base  driven direct marketing  infrastructure,  the Company
moved to expanded  office space and  initiated  discussions  with several  early
stage  companies at various levels of maturity which offer  significant  synergy
with the goals and  direction of the Company.  The Company  believes  that these
discussions  will develop into  relationships  which will be  profitable  to the
Company.

Management is currently focused on establishing sales and developing  profitable
operations and then  recapitalizing the business when it has a demonstrable cash
flow model to show to potential  investors.  Management  believes that it cannot
currently attract capital from professionally  managed funds on terms which will
be favorable to its current shareholders.  Management therefore intends to raise
capital  internally,   through  small  private  offerings  and  through  project
financing. Management believes that they can take advantage of the publicly held
nature  of the  Company's  stock to  pursue  capital  raising  transactions  and
strategic  acquisitions as outlined above. Other than outstanding stock options,
there are currently no acquisition or capital funding  transactions  pending and
no assurances that such  opportunities will become available in the near future,
nor that Management will be able to keep present operations viable.

The current  financial  statements  provide  consolidated  financial  statements
reflecting  its wholly owned  subsidiary  corporation,  Global Direct  Marketing
Services,  Inc.  The  financials  treat its partly  owned  subsidiary  Agression
Sports,  Inc.  (d/b/a  Arete  Outdoors)  on  a  non-consolidated  basis,  as  an
investment.


<PAGE>


Financial Condition
-------------------

The Company had a working  capital  deficit as of March 31, 2000,  of $ 370,677.
This  compares  to a working  capital  deficit of $ 455,148 in fiscal year ended
March 31, 1999. Losses were again partially funded with issuance of common stock
and the  exercise of stock  options.  During the 3-month  period ended March 31,
2000 an aggregate of 9,200,000  shares of common stock were issued for aggregate
consideration  of $ 64,652 and 6,000,000  shares of Common Stock were issued for
the exercise of incentive options for $66,000 in cash. (See - Notes to Financial
Statements - Note 4)


Results of Operations
---------------------

The  Company's  financial   performance  has  been  adversely  affected  by  the
termination of its co-op coupon business.

The Company generated  operating  revenues of approximately  $8,035 with cost of
goods sold of $7,515 (or 93% of sales)  during the quarter ended March 31, 2000.
This is compared  to  operating  revenues of $257,484  and cost of goods sold of
approximately  $226,151  (or 88% of sales)  during the  quarter  ended March 31,
2000. Salary expenses of approximately  $30,028 (or 374% of sales) were incurred
during the quarter  ended March 31, 2000,  compared to $64,805 (or 25% of sales)
in the quarter ended March 31, 1999. The decrease in compensation was due to the
elimination of the management,  employees and  consultants  necessary to perform
the  turnaround  of the direct  mail  business.  The  Company  had a net loss of
$78,714 (or 980% of sales) during the quarter ended March 31, 2000.

Liquidity and Capital Resources
-------------------------------

Arete Outdoors will need significant  additional capital in the coming months as
additional  products  come on stream and prior to the  generation  of sufficient
revenue to cover these costs.

The Company had  liabilities  in excess of assets at March 31, 2000 of $130,587.
This is  compared  to  liabilities  in excess  of  assets  at March 31,  1999 of
$412,492.  The  reduction  in the  liabilities  in excess of assets was due to a
change in the  investment in and advances to  Aggression  Sports from $40,560 in
the period  ending  March 31, 1999 to $237,665  in the period  ending  March 31,
2000.

The Company has made progress toward  becoming an attractive  investment for new
equity  investors,  but  the  Company  has a  long  way  to go  to  qualify  for
conventional bank or venture capital  financing.R>  Additional equity capital is
necessary to finance working capital for the Company's new business  cultivation
initiatives  and  to  build  merchant  banking  and  operational  infrastructure
capabilities.  Management  is resolved to continue to  bootstrap  the Company as
long as it is able to generate  positive cash flow to finance  growth and retire
debt. Due to the current  financial  condition of the Company and the volatility
in the market for the Company's  common stock, no assurance can be made that the
Company will be successful in raising any substantial  amount of capital through
the sale of equity  securities,  or with additional bank debt on favorable terms
in the near future.  Never the less, due to such conditions,  the Company may be
required to issue further common stock to pay executives,  consultants and other
employees which may have a continuing  dilutive effect on other  shareholders of
the Company. Failure of the Company to acquire additional capital in the form of
either debt or equity capital will most likely impair the ability of the Company
to meet its obligations in the near or medium term.

At  March  31,  2000,  the  Company  had no  material  commitments  for  capital
expenditures.

<PAGE>



                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

During the period ended March 31, 2000, there were no material legal proceedings
initiated  by or  against  the  Company  or any of its  officers,  directors  or
subsidiaries.


Item 2. Changes in Securities

(a)  Changes in  Instruments  Defining  Rights of Security  Holders.  Previously
     reported.
(b)  Not Applicable

(c)  Item 701 Reg.  SB. - During  the  period  covered by the  report,  400,000
     shares of no par value common stock were sold by officers of the Company to
     an individual on February 29, 2000 for an aggregate of $31,500.  There were
     no commissions or fees paid in connection with the placement and Management
     relied on the exemption from  registration  provided by Section 4(2) of the
     Securities Act of 1933 and Rule 504 promulgated thereunder.


Item 3.   Defaults Upon Senior Securities.

None.


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

None.


Item 5.  Other Information.

None.


Item 6.     Exhibits and Reports on Form 8-K

The following exhibits are attached:


Exhibit No.           Description

27                    Financial Data Schedule

Other than one report  covering  a change in  accountants  on Item 4 of Form 8-K
with related  exhibits on March 16, 2000 there were no Reports on Form 8-K filed
during the period covered by this report


<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                                       ARETE INDUSTRIES, INC.



Date: May 15, 2000         By:  /s/  Thomas Y. Gorman, CFO
      ------------             -------------------------------
                                     Thomas Y. Gorman
                                     Principal Financial and Accounting Officer