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, 2001
                            --------------
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                                     84-1508638
    -----------------------------------                -----------------
    (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)


                                 Not Applicable
                  --------------------------------------------
                    (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 April 30, 2001,  Registrant had 432,762,922 shares of common stock, No par
value, outstanding.

<PAGE>

                                TABLE OF CONTENTS


                                                                       Page No.

    Consolidated Financial Statements:

   Consolidated Balance Sheet at March 31, 2001 and March 31, 2000
   (unaudited)                                                             2

   Consolidated Statements of Operations for the Three Months Ended
   March 31, 2001 and 2000 (unaudited)                                     3

   Consolidated Statements of Operations for the Three Months Ended
   March 31, 2001 and 2000 (unaudited)                                     4

   Consolidated Statement of Stockholders' Deficit for the Three Months
   Ended  March  30, 2001 (unaudited)                                      5

   Consolidated Statements of Cash Flows for the Three Months Ended
   March 31, 2001 and 2000                                                 6-7

   Notes to Unaudited Consolidated Financial Statements at March 30,
   2001                                                                    8-11

   Management's  Discussion and Analysis of Financial Condition
   and Results of Operations                                               12-14

Financial Condition                                                        17

Signatures                                                                 19

<PAGE>


  FINANCIALS GO HERE

<PAGE>


ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

Forward Looking Statements

This Quarterly Report on Form 10-QSB includes forward-looking  statements within
the meaning of the Private  Securities  Litigation  Reform Act of 1995. This Act
provides a "safe harbor" for  forward-looking  statements to encourage companies
to provide  prospective  information  about  themselves so long as they identify
these statements as forward looking and provide meaningful cautionary statements
identifying important factors that could cause actual results to differ from the
projected  results.  All statements  other than  statements of historical  fact,
including   statements  regarding  industry  prospects  and  future  results  of
operations of financial  position,  made in this Quarterly Report on Form 10-QSB
are forward looking. We use words such as "anticipates,"  "believes," "expects,"
"future"  and  "intends"  and similar  expressions  to identify  forward-looking
statements. Forward-looking statements reflect management's current expectations
and  are  inherently   uncertain.   The  Company's  actual  results  may  differ
significantly from management's expectations.  The following discussion includes
forward-looking statements regarding expectations of future profitability of our
business,  gross margin,  improvement in operating loss and sales,  all of which
are inherently  difficult to predict.  Actual results could differ significantly
for a variety of reasons, including the accessibility to additional capital, the
rate of growth and consumer acceptance of the Internet and online commerce,  the
amount that the Company invests in new business  opportunities and the timing of
those  investments,  customer  spending  patterns,  the mix of products  sold to
customers,  the mix of  revenues  derived  from  product  sales as  compared  to
services, and risks of fulfillment throughout and productivity.  These risks and
uncertainties,  as well as  other  risks  and  uncertainties,  could  cause  the
Company's actual results to differ significantly from management's expectations.

<PAGE>

General Summary

As  previously  reported,  we embarked on a new  direction of  operations in the
early part of 2000 of providing New Venture Management Services. The first major
step in that direction was our  development of Aggression  Sports,  Inc.,  d/b/a
Arete Outdoors during the first quarter 2000 followed late in the second quarter
2000  with  our  next  opportunity,  Applied  Behavior  Systems,  LLC.  with its
SpeechTeach  Technology,  which evolved into the  initiative  to create  Seventh
Generation  Technologies,  Inc.  as  a  vehicle  to  pursue  development  of  an
intelligent  robotics operating system.  Since launching these  initiatives,  we
have made a substantial  investment in these  businesses,  but have  encountered
difficulty in raising further needed development capital,  and/or establishing a
revenue base which would sustain operations.  In order to preserve the viability
of these  investments and meet our  commitments,  we have terminated  supporting
ongoing  operations for these ventures  financially until alternative  resources
and opportunities can be developed.

In the last half of 2000, the management  team rapidly  transformed  the Company
with investments in, and management  services  contributed to, several promising
companies and projects.  The next step in Arete  Industries'  development  is to
begin a program  that  management  has  coined as the  `Dividend  Program'.  The
Dividend  Program is intended to provide an  attractive  investment  vehicle for
professional  investors to invest in the Company's current development  projects
and in future  portfolio  companies  the  Company  is seeking  to  acquire.  The
Dividend  Program  is  also  intended  to  distribute  direct  ownership  to the
shareholders in the Company's  future  mergers,  acquisitions  and  investments.
Management believes that the Program will also attract promising new acquisition
opportunities  by offering the  entrepreneurs  and investors a near-term path to
liquidity in the public  markets  through a registered  public  spin-off  and/or
rights offering to Arete's shareholders.

Outdoors Equipment:  Arete Outdoors.
-----------------------------------

During the fourth and first quarters of 2000 and 2001 respectively,  we executed
the  first  production  and  marketing  season  for our two  products,  the Rush
Downhiller snow scooter and our SnowFangs. The Rush was marketed to mountain ski
resorts  across the country and  introduced  to the Colorado  ski resort  Copper
Mountain  and by January  2001,  was on the slopes of this  popular  ski resort.
Initial feed back from those renting the Rush was very favorable.  People of all
down  hilling  skill  levels  using the Rush found it easy to  operate,  fun and
unique.  The snowshoe was marketed  through  traditional  wholesale  channels to
high-end  mountaineering shops through several  representative  groups in the US
and Europe. Feedback from users who tried the snowshoe was very positive,  while
we missed  most of the  selling  season  due to design  and  production  delays.
Finally,  to develop a more stable and low cost  source of  revenue,  we hired a
marketing  and sales  manager  in  November  of 2000,  to  initiate a program of
distributing  and selling  third party  outdoor  products  into the  traditional
wholesale/retail market.

The  combination of lower than expected  sales  revenues and higher  development
costs  created a  situation  which  reasonably,  in our  opinion,  supports  our
determination  to  seek  alternative  ways of  generating  revenues  from  Arete
Outdoors.  With a view  toward  maximizing  the  developed  Rush  and  SnowFangs
snowshoe  and several  other  products  we have taken  steps to cease  incurring
further costs and the process of seeking other investors/partners.  Part of this
process  included  terminating  our  existing  arrangements  with  Michael  Lowe
subsequent to the end of the first quarter.  We are also seeking  outside buyers
or strategic  partners to continue  marketing and  development  of our products,
including the Rush and SnowFangs  snowshoe.  Patent applications have been filed
on the Rush and  SnowFangs.  We will  examine  the  benefits  of seeking  patent
protection of the other products.

We are  optimistic  about this phase as  preliminary  discussions  with  several
national outdoor equipment  manufacturers have yielded exploratory  interest. We
plan  to make  the web  site  Adventure  Travel  Services  available  with  this
transition as well.

The current financial  statements  contained herein treat subsidiary  Aggression
Sports,  Inc. (d/b/a Arete  Outdoors) on a  non-consolidated  basis,  i.e. as an
investment.

II.   Patented Intelligent Agent Software

Applied  Behavior  Systems,  LLC,  ("ABS") has developed a patented  intelligent
agent  software  that has  unique  applications  for  language  learning,  voice
recognition,  vision  recognition  and  intelligent  robotics.  In June  2000 we
entered a New Venture  Management  Services  with ABS which  agreed to pay Arete
$16,000 per month. The services, include accounting, management services, office
facilities  with common  computer and telephone  network  services.  In November
2000, we entered into an agreement with ABS to form a new company,  subsequently
called Seventh  Generation  Technologies,  Inc. ("7GT"),  which would expand the
relationship beyond bringing to market a new teaching software for children with
developmental  learning  disabilities  called  "Speech  Teach"  to  include  the
development  of self training  software for robots.  The new  agreement  permits
exploration and utilization of this software for  applications  beyond education
and language. The agreement is with 7GT (Seventh Generation  Technologies,  Inc,
f/k/a VerbalTech Labs, Inc.). 7GT has opened and conducted several meetings with
outside  investors and  interested  potential  industrial  users of this type of
technology.  7GT has carried its development of the adaptive capabilities of the
new  software  to  the  point  it  is  actively  seeking  outside  investor  and
partnering.  Initial  efforts to develop the software  for this new  application
point to the  realistic  ability to instruct a robotic  operation  verbally.  To
carry  development  of this  software  application  further  outside  funding is
necessary,  as well as a potential  refocusing of 7GT to only the development of
the robotic  software.  For  prudent  business  reasons  cost  cutting  steps to
maintain its market viability have been implemented, including reduced payroll.

<PAGE>

III.     Other Opportunities

Subsequent  event.  In April 2001, we formed a new company  called Eagle Capital
Fund  Corporation.  This  new  business  helps  fund  governmental  construction
projects in the state of Colorado.  The Tabor  Amendment,  passed in Colorado in
the  mid-1990's,  creates  the  niche  this new  opportunity  fills.  The  Tabor
Amendment  requires any  governmental  entity in the state of Colorado to obtain
voter  approval  for  certain  types of  expenditures.  For  example,  the Tabor
Amendment prohibits cities,  counties or the state from issuing bonds or raising
taxes  absent  voter  approval.  This places a  significant  burden on governing
bodies  when  attempting  to  carryout  their  duties  particularly  as  regards
construction needs.  Colorado,  and especially  cities/counties  from Greeley to
Pueblo (a/k/a the "Front Range") are experiencing  rapid growth and development.
In  an  effort  to  satisfy  the  governing  needs  to  management  this  growth
alternative means of funding capital  expenditures has become important.  Gerald
J. Brandimarte has been brokering such financing  options for several years. Mr.
Brandimarte,  currently  undertaking  such  efforts for a firm sought to use his
skills  independently.  Our New Venture  Management  Services  offer him such an
opportunity.  We will  provide  Mr.  Brandimarte  with  office  support,  namely
accounting,  telephone  answering,  etc.,  in return for a  percentage  of gross
revenues on all deals closed and funded.  An agreement  dated April 16, 2001 was
entered into with Mr. Brandimarte.

Employees:
Arete Industries, Inc. has seven full time employees,  Outdoors has no employees
and ABS has two employees.

Financial Condition
-------------------
The Company had a working  capital  deficit as of March 31,  2001,  of ________.
This  compares to a working  capital  deficit of  $_________ at March  31, 2000.
Losses  were  partially  funded  with  accrued  salaries  and shares  issued for
services.  During the 3-month  period ended March 31, 2001,  the Company  issued
31,200,010 shares of common stock for services.

Results of Operations
---------------------
The Company's  financial  performance  has been stabilized by the termination of
its co-op  coupon  business,  and the  execution  of the New Venture  Management
Services strategy has not yet developed into significant financial results.

The Company's operating revenues of $_______ was management fees charged for its
New Venture  Management  Services for the three months  ended March 31, 2001.

For the quarter ended March 31, 2001, the Company incurred $_______ in operating
expenses.  The Company's  future  expectation is that these expenses will remain
relatively  stable,  but may increase  over time  relative to growth in revenues
from its management services.

Liquidity and Capital Resources
-------------------------------
At this time we are seeking  buyers and/or  investors for Arete Outdoors to move
the products into the mainstream markets in the US and Europe.  Capital received
from sale of this  operation  to investors  will be used to  liquidate  expenses
incurred in developing the products, Rush and SnowFangs snowshoes to production.
The Company  anticipates  the sales proceeds will be adequate to resolve primary
obligations.

The Company had a stockholder's deficit in excess of assets at March 31, 2001 of
$_______.  This is  compared  to  stockholder's  deficit  in excess of assets at
March 31, 2000 of $__________.  The  stockholder's  deficit increased due to the
Company's operating at a loss.

Management believes its New Venture Management Services strategy, despite recent
adverse  events,  is appropriate for ultimate  viable  financial  success of the
company.  Despite limited working capital for Company's new business  incubation
initiatives  Management is committed to forging ahead toward  positioning itself
to attract larger sources of financing to improve its infrastructure. Management
is resolved to  continue  to support the Company and its  incubator  partners as
long as it is able to generate  positive cash flow to finance  growth and retire
debt within the near term,  of which there is no  assurance.  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 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,  2001,  the  Company  had no  material  commitments  for  capital
expenditures.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

During the Period ended March 31, 2001, 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. - The  following  were the  unregistered  shares of
          common stock sold by the registrant  during the period covered by this
          report.

          None

Item 3. Defaults Upon Senior Securities.

          None.

Item 5. Other Information.

          None.

Item 6. Exhibits and Reports on Form 8-K

          There are no Exhibits filed herewith.

          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: March 31, 2001              By:  /s/  Thomas Y. Gorman, CFO
                                      -------------------------------
                                      Thomas Y. Gorman, CFO
                                      Principal Financial and Accounting Officer