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/A
                                 (Amendment #1)


[X]  Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934.

                      For the period ended: March 31, 2003

                                       or

[]   Transition  Report  pursuant  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.)


7102 La Vista Place, Suite 100, Niwot, CO                                80503
-----------------------------------------                             ----------
(Address of principal executive offices)                              (Zip Code)


                                 (303) 652-3113
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


                                 Not Applicable
                     --------------------------------------
                     (Former name, former address and former
                   fiscal year, if changed since last report.)

<PAGE>


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.        [ ] Yes [ ] No


                      APPLICABLE ONLY TO CORPORATE ISSUERS:

As of May 15, 2003,  Registrant  had 47,599,581  shares of common stock,  No par
value, outstanding.

<PAGE>

                     ARETE INDUSTRIES, INC. AND SUBSIDIARIES

                                      INDEX
                                      -----
                                                                        Page No.
                                                                        --------
Consolidated Financial Statements:

Index to Consolidated Financial Statements                                     1

Consolidated Balance Sheet at March 31, 2003 and December 31, 2002
(unaudited)                                                                    2

Consolidated Statements of Operations for the Three Months Ended March 31
2003 and 2002 (unaudited)                                                      3

Consolidated Statement of Stockholders' Deficit for the Three Months Ended
March 31, 2003 (unaudited)                                                     4

Consolidated Statements of Cash Flows for the Three Months Ended March 31,
2003 and 2002 (unaudited)                                                    5-6

Notes to Unaudited Consolidated Financial Statements at March 31, 2003       7-9

Item 2
Management's Discussion and Analysis of Financial Condition and Results
of Operations                                                              10-14

Part II - Other Information                                                   14

Signatures                                                                    15

                                        1
<PAGE>

<TABLE>
                    ARETE INDUSTRIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                      December 31, 2002 and March 31, 2003
                                  (Unaudited)
<CAPTION>

                                     ASSETS
                                     ------
                                                                 2002             2003
                                                              ------------    ------------
<S>                                                           <C>             <C>
Current assets:
    Cash and cash equivalents                                 $        381    $         32
    Accrued interest receivable                                     24,632          27,914
    Inventory                                                       20,302          20,302
    Prepaid expenses                                                 2,285             345
                                                              ------------    ------------

      Total current assets                                          47,600          48,593

Furniture and equipment, at cost net of accumulated
    depreciation of $74,309 (2002) and $81,823 (2003)               97,056          89,542
Intellectual property                                               32,215          31,640
                                                              ------------    ------------

                                                              $    176,871    $    169,775
                                                              ============    ============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT


Current liabilities:
    Accounts payable (Note 2)                                 $    422,697         428,052
    Accrued expenses                                               576,333         573,163
    Accrued payroll taxes (Note 2)                                 289,761         289,761
    Settlement due                                                  18,650          18,650
    Notes payable - related parties                                 27,532          27,827
                                                              ------------    ------------

      Total current liabilities                                  1,334,973       1,337,453

Commitments and contingencies (Notes 1 and 2)

Stockholders' deficit (Notes 4 and 5):
    Convertible Class A preferred stock; $10 face value,
      1,000,000 shares authorized:
        Series 1, 30,000 shares authorized, 16,001
          shares issued and outstanding                            160,014         160,014
        Series 2, 25,000 shares authorized, 18,542 (2002)
          and 18,897 (2003) shares issued and outstanding          185,425         188,970
    Common stock, no par value; 499,000,000 shares
      authorized, 34,399,581 (2002) and 42,099,581 (2003)
      shares issued and outstanding                              9,592,587       9,729,082
    Accumulated deficit                                        (10,877,308)    (11,026,924)
    Notes receivable from sale of stock                           (218,820)       (218,820)
                                                              ------------    ------------

      Total stockholders' deficit                               (1,158,102)     (1,167,678)
                                                              ------------    ------------

                                                              $    176,871    $    169,775
                                                              ============    ============
</TABLE>
                             See accompanying notes

                                        2
<PAGE>

                     ARETE INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
               For the three months ended March 31, 2002 and 2003
                                   (Unaudited)


                                                      2002            2003
                                                  ------------    ------------
Revenues:
    Sales                                         $        379    $       --
                                                  ------------    ------------

      Total revenues                                       379            --

Operating expenses:
    Depreciation                                         8,102           7,515
    Rent                                                 9,804           2,084
    Other operating expenses                            34,247         138,309
                                                  ------------    ------------

      Total operating expenses                          52,153         147,908
                                                  ------------    ------------

        Total operating loss                           (51,774)       (147,908)

Other income (expense):
    Minority interest in Aggression Sports loss          2,522            --
    Interest expense                                    (4,296)         (4,990)
    Interest and miscellaneous income                    3,228           3,282
                                                  ------------    ------------

      Total other income (expense)                       1,454          (1,708)
                                                  ------------    ------------

Net loss (Note 3)                                 $    (50,320)   $   (149,616)
                                                  ============    ============



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


Weighted average common shares outstanding          24,416,300      38,852,900
                                                  ============    ============

*-Less than $.01 per share

                             See accompanying notes.

                                        3
<PAGE>

<TABLE>
                     ARETE INDUSTRIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                    For the three months ended March 31, 2003
                                   (Unaudited)
<CAPTION>
                                                          Series 1            Series 2
                                                       preferred stock    preferred stock        Common stock
                                                      ----------------   -----------------  ----------------------   Accumulated
                                                      Shares    Amount   Shares    Amount      Shares    Amount         deficit
                                                      ------   -------   -------  --------  ----------  ----------   ------------

<S>                                                   <C>     <C>        <C>      <C>        <C>         <C>          <C>
Balance, December 31, 2002                            16,001  $160,014     18,542   $185,425  34,399,581  $9,592,587   $(10,877,308)

   Issuance of Series 2 preferred  stock
     to reimburse advances made to the
     Company (Note 4)                                    --        --         355      3,545        --          --             --

   Issuance of common stock to employees
     and consultants for services (Note 4)               --        --        --         --     7,700,000     119,758           --

   Value of stock options granted to consultants
     (Note 4)                                            --        --        --         --          --        16,737           --

   Net loss for the year ended
     March 31, 2003                                      --        --        --         --          --          --         (149,616)
                                                      ------  ----------   ------   --------  ----------  ----------   ------------

Balance, March 31, 2003                               16,001  $160,014     18,897   $188,970  42,099,581  $9,729,082   $(11,026,924)
                                                      ======  ==========   ======   ========  ==========  ==========   ============
</TABLE>

                             See accompanying notes.

                                        4
<PAGE>

                     ARETE INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
               For the three months ended March 31, 2002 and 2003
                                   (Unaudited)


                                                           2002        2003
                                                        ---------    ---------
Cash flows from operating activities:
    Net loss                                            $ (50,320)   $(149,616)
    Adjustments to reconcile net loss to net
      cash used in operating activities:
        Depreciation and amortization                       8,102        8,089
        Stock issued and options granted for services        --        136,495
        Changes in assets and liabilities:
          Interest receivable                              (3,227)      (3,282)
          Prepaid expenses                                  1,342        1,940
          Accounts payable                                 (2,507)       5,355
          Accrued expenses                                 31,495       (3,170)
                                                        ---------    ---------

            Total adjustments                              35,205      145,427
                                                        ---------    ---------

        Net cash used in operating activities             (15,115)      (4,189)

Cash flows from investing activities:
    Investments in and advances to Aggression Sports       (1,521)        --
                                                        ---------    ---------

        Net cash used in investing activities              (1,521)        --

Cash flows from financing activities:
    Proceeds from issuance of preferred stock                --          3,545
    Proceeds from note payable - related parties           16,989          295
                                                        ---------    ---------

      Net cash provided by financing activities            16,989        3,840
                                                        ---------    ---------

Net increase (decrease) in cash and cash equivalents          353         (349)
Cash and cash equivalents at beginning of period              110          381
                                                        ---------    ---------

Cash and cash equivalents at end of period              $     463    $      32
                                                        =========    =========

                             See accompanying notes

                                        5
<PAGE>

                     ARETE INDUSTRIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
               For the three months ended March 31, 2002 and 2003
                                   (Unaudited)

                         (Continued from preceding page)


                                                           2002        2003
                                                        ---------    ---------
Supplemental disclosure of cash flow information:

    Interest paid during the period                     $    --      $    --
                                                        =========    =========
    Income taxes paid during the period                 $    --      $    --
                                                        =========    =========

Supplemental disclosure of non-cash investing and financing activities:



During the quarter ended March 31, 2003,  an account  payable to a related party
with an outstanding balance of $3,545 was converted into preferred stock.


                             See accompanying notes.

                                        6
<PAGE>


                     ARETE INDUSTRIES, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 2003

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,  2002 and March 31,  2003,  and the results of
     operations and cash flows for the periods ended March 31, 2002 and 2003.

     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,
     2003,  the  Company  has a working  capital  deficit  of  $1,288,860  and a
     stockholders' deficit of $1,167,678. In addition, the Company is delinquent
     on payment of payroll taxes and creditor  liabilities  pursuant to the plan
     of  reorganization.  As  a  result,  substantial  doubt  exists  about  the
     Company's  ability to continue to fund future operations using its existing
     resources.

     On December  19,  2001,  by board  resolution  pursuant  to a  subscription
     agreement,  the board of directors  designated  25,000 of Class A Preferred
     Stock as Series 2 Convertible  Preferred Stock, in a proposed  placement of
     up to $200,000 of such preferred  stock at $10 per share face value.  As of
     March 31, 2003, the Company received  proceeds of $188,970 for the purchase
     of 18,897 shares of Series 2 Convertible  Preferred Stock. As a development
     stage  company,  the Company  continues  to rely on  infusions  of debt and
     equity capital to fund operations.  The Company relies  principally on cash
     infusions from its three directors, deferred compensation and expenses from
     the executive officers, and paid a significant amount of personal services,
     salaries  and  incentives  in the form of  common  stock and  common  stock
     options.

     The  Company's  business  plan is to provide  promising  emerging  and high
     growth-stage  companies with financial and board level managerial  support.
     The Company  plans to develop its own in-house  projects as well as seek to
     make acquisitions of going businesses  through merger,  acquisition,  share
     exchange,  or through  financial  service  agreements  to earn-in an equity
     participation as well as managerial fees from client companies. The Company
     believes  that it can  provide its client  companies  access to private and
     public  debt  and/or  equity  capital  by  offering  these   companies  the
     opportunity to go public through a registered  rights  offering or dividend
     distribution to the Company's shareholders.

2.   Delinquent amounts payable

     As of March 31,  2003,  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.

                                        7
<PAGE>


3.   Income taxes

     The book to tax temporary  differences resulting in deferred tax assets and
     liabilities  are primarily net operating loss  carryforwards  of $4,328,000
     which expire in years through 2023.

     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 reasonably assured.

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

4.   Stock transactions

     On December  19,  2001,  by board  resolution  pursuant  to a  subscription
     agreement,  the board of directors  designated  25,000 of Class A Preferred
     Stock as Series 2 Convertible  Preferred Stock, in a proposed  placement of
     up to $200,000 of such preferred  stock at $10 per share face value.  As of
     March 31, 2003, the Company received  proceeds of $188,970 for the purchase
     of 18,897 shares of Series 2 Convertible  Preferred Stock.  These preferred
     shares are convertible into 18,896,976 shares of common stock.

     Effective July 15, 2002, the  shareholders of the Company approved a 20 for
     1 reverse  stock split.  All common  share  references  in these  financial
     statements have been revised to reflect the reverse split.

     On January 29, 2003,  the Company issued  5,000,000  shares of common stock
     valued at $75,000,  and granted stock options to purchase  3,000,000 shares
     at $0.0165 per share to its officers and directors for compensation for the
     first quarter. The options are exercisable  beginning 79 days from the date
     of  issuance  and  for a  period  of  two  years  thereafter.  Additionally
     1,000,000 shares of common stock were issued to one consultant for services
     performed valued at $15,000.

     By  agreement  dated March 6, 2003,  the Company  engaged a  consultant  to
     provide  corporate  communications  support for a period of six months from
     such date for  compensation of 3,000,000 common shares and stock options to
     purchase  up to 4,000,000  common  shares for $0.015 per share for a period
     expiring 6 months from such date (valued at $16,737).  As of March 31, 2003
     1,500,000 of these shares have been issued valued at $22,500.

     On March 7, 2003,  the Company issued 200,000 shares of common stock valued
     at $7,258 in final settlement of a wage claim.

                                        8
<PAGE>


4.   Stock transactions (continued)

     Following the end of the first quarter,  the Company  inadvertently  issued
     shares and/or  granted  stock  options which  exceeded the number of common
     shares allocated to its 2002 Incentive Stock Option Plan by 683,333 shares.
     Certain of these  include  shares  reserved  for  issuance  on  exercise of
     outstanding stock options.  The Company will not allow exercise of the most
     recently  granted stock options unless other  outstanding  options  expire,
     other  shares  pending  issuance  are  cancelled or shares that were issued
     under the plan can be  reassigned  outside of the 2002 Plan or  included in
     the  anticipated  2003 Omnibus Stock  Compensation  and  Incentive  Plan in
     sufficient number to allow their exercise.

     The Company has adopted the  disclosure-only  provisions  of  Statement  of
     Financial   Accounting   Standards  No.  123,  Accounting  for  Stock-Based
     Compensation. Accordingly, no compensation cost has been recognized for the
     stock option plans. Had  compensation  costs for the Company's stock option
     plans been determined  based on the fair value at the grant date for awards
     during the period ended March 31, 2003 in accordance with the provisions of
     SFAS No.  123,  the  Company's  net loss and loss per share would have been
     increased to the pro forma amounts indicated below:

                                               2003
                                               ----

       Net loss - as reported               $(149,616)
       Net loss - pro forma                  (175,794)
       Loss per share - as reported               *
       Loss per share - pro forma                 *

       * - Less than .01 per share

     The fair value of each option grant is estimated on the date of grant using
     the Black-Scholes  option-pricing model with the following weighted-average
     assumptions  used for  grants  in  2003,  dividend  yield  of 0%;  expected
     volatility of 100%, risk-free interest rate of 1.45% to 1.75%; and expected
     life of .5 to 2 years.

5.   Subsequent Events

     On April 1, 2003 the company issued  1,000,000  shares to its CEO and stock
     options to purchase an  aggregate  of  3,000,000  shares of common stock at
     $0.0155 per share as  compensation  to the three  directors  for the second
     quarter of 2003.  The options are  exercisable  beginning  90 days from the
     date of  issuance,  expiring  24  months  from  the  original  grant  date.
     Additionally,  2,000,000 common stock options were exercised by the CEO and
     a consultant for consideration of $25,000 in cash and in payment of $15,000
     of note payable to the CEO.

     On April 30,  2003, 2,500,000  shares of common  stock  were  issued to two
     consultants for services performed.

                                        9
<PAGE>


Item 2 - Management's Discussion and Analysis

Critical accounting policies:

The Company has identified the accounting  policies  described below as critical
to its business  operations and the  understanding  of the Company's  results of
operations. The impact and any associated risks related to these policies on the
Company's  business  operations is discussed  throughout this section where such
policies  affect the  Company's  reported and expected  financial  results.  The
preparation  of  this  Report   requires  the  Company  to  make  estimates  and
assumptions  that affect the reported  amount of assets and  liabilities  of the
Company,  revenues and expenses of the Company  during the reporting  period and
contingent  assets and  liabilities  as of the date of the  Company's  financial
statements.  There can be no assurance  that the actual  results will not differ
from those estimates.

Stock issuances:

The Company has relied upon the  issuance of shares of its common and  preferred
stock, and options to purchase its common stock and preferred stock to fund much
of the Company's operations.  The following describes the methods used to record
various stock related transactions.

Stock issued for services is valued at the market price of the  Company's  stock
at the date of grant.

Compensation related to the issuance of stock options to employees and directors
is recorded at the intrinsic value of the options,  which is the market price of
the  Company's  common  stock  less  the  exercise  price of the  option  at the
measurement  date. The Company's  common stock issued to consultants is recorded
at the market price of the Company's  common stock at the measurement  date. The
measurement date is generally the date the options are fully vested.

Revenue recognition:

The Company has  provided  management  services to  companies  in the process of
developing new products with no operations.  These management fees have not been
recorded as revenue when such services were performed since  collectibility  was
not reasonably assured.

Overview:

Effective  July  15,  2002,  the  Company  enacted  a  recapitalization  of  its
outstanding  common  shares by  effecting a 20 to 1 reverse  stock  split,  done
without  changing the total amount of authorized  common shares.  All references
herein to common stock have been  restated to reflect the effect of this reverse
split.  The  conversion  privilege  of the  designated  Series  1 and  Series  2
Convertible  Preferred  Stock has been  adjusted  to  reflect  the effect of the
referenced reverse stock split.

                                       10
<PAGE>

By the beginning of fiscal 2001, the Company had initiated downsizing operations
of its incubation  services and facilities.  By the end of the second quarter of
fiscal 2001, the Company had reduced  corporate  overhead by eliminating all but
two  executive  officers  who were  accruing  salaries  and had  terminated  all
operations of its incubator client companies,  its Arete Outdoors subsidiary and
the ABS and 7GT projects.  By the end of fiscal 2001, the Company had moved into
the smaller of its two office suites and  terminated  its lease on the remaining
space.  During the first half of fiscal 2002,  the Company  continued  resolving
outstanding  debts  including   salaries  and  accounts  and  notes  payable  to
non-affiliates and affiliates;  and focused on completing a recapitalization and
restructuring of its capital structure,  which required incurring the expense of
holding a shareholders  meeting that was held on July 2, 2002.  During the third
quarter of fiscal  2002,  we  dismantled  operations,  preserved  our assets and
resources,  and maintained our current  reporting  status as a public company in
order to preserve  our  continuity  and our ability to launch our new  corporate
vision.  In December  2002,  the Company  moved its  corporate  offices  into an
executive  suite,  reducing its overhead to an absolute  minimum.  Concurrently,
having  obtained  shareholder  approval to  restructure  the  Company's  capital
structure,  the CEO with the two other board members engaged aggressively in the
development of new sources of capital and new acquisition  prospects  conforming
to our business development  objectives.  Presently,  we continue our efforts to
compromise  or  resolve  outstanding   obligations  including  accrued  employee
compensation,  withholding and other taxes,  operating and trade payables of the
Company and its former  subsidiary  operations.  To date these efforts have been
funded by cash advances,  infusions from related parties, and by the issuance of
common  stock for  services.  The Company  will be required to rely upon ongoing
financial support from these parties for the foreseeable future.

Financial Condition

As of March 31, 2003, the Company had $169,775 in total assets and $1,337,453 in
total  liabilities,  as compared to $176,871 and $1,334,973 at the end of fiscal
year ended  December  31,  2002,  respectively.  Accounts  payable  and  accrued
expenses at March 31, 2003 were $1,290,976 as compared to $1,288,791 at December
31, 2002.  During the period  ended March 31, 2003,  the Company paid $75,000 in
wages,  resolved a wage claim for  $7,258 and paid $ 54,237 in  consulting  fees
with issuance of common stock and stock options. During April of 2003, the Chief
Executive Officer  exercised  1,000,000 in stock options with $5,000 in cash and
payment of $15,000 of note  payable;  and a  consultant  exercised  1,000,000 in
stock options with $20,000 in cash.

The Company's subsidiary,  Global Direct Marketing Services,  Inc., which is now
inactive,  has left an obligation  of trade  payables of $87,625 and unpaid 1999
payroll taxes of $58,230 remaining from its printing and direct mail advertising
business. The Company owes approximately $97,352 in unpaid Federal payroll taxes
for calendar  years 1995 through 1997  including  penalties  and  interest.  The
Company owes approximately  $110,842 in 2000 and $22,138 in 2001,  respectively,
in accrued  payroll taxes,  including  penalties and interest.  (See:  Note 2 to
Financial Statements.)

                                       11
<PAGE>

During the period  ended  March 31,  2003,  the Company  continued  to rely upon
infusions  of cash from  loans and cash  advances  by  officers,  directors  and
affiliates of the Company.  As stated above, $3,545 was also received in partial
payment of a  subscription  agreement for purchase of Series 2 Preferred  Stock.
The proceeds were used for  overhead,  payment of corporate  obligations,  legal
fees and  accounting  expenses for  corporate  reporting.  As of March 31, 2003,
executive  salaries  and bonuses of $518,873  were  accrued and unpaid,  and the
Company had $218,820 in notes receivable for stock sales from former  management
members.

Results of operations

The Company's  operations during the first quarter of 2003 have been confined to
business development activities of its officers,  directors and consultants, and
administrative  bookkeeping tasks related to creditor and investor relations and
securities act compliance.  The Company is not providing new venture  management
or advisory  activities and therefore not generating  revenue from executive and
management services.

The Company's revenues from operations for the quarter ended March 31, 2003 were
$0.  Operating  expenses  for the quarter  ended  March 31,  2003 were  $147,908
resulting in an operating loss of $147,908.  This included  officer and director
salaries  of  $75,000,  and  other  operating  expenses  of  $72,908,  including
accounting fees, consulting, bookkeeping, transfer agent fees, and storage fees.
The Company moved to an executive  suite on a month to month basis  reducing its
rent to $1,000 per month.  The Company  continues to rent storage space for file
storage,  furniture and excess equipment as well as its Arete Outdoors inventory
for approximately $550 per month.

We envision  operating the Company as a holding  company in the future for other
going concerns and revenue  generating  businesses,  which will require  minimal
staff for accounting and administrative  matters. Our future expectation is that
monthly   operating   expenses  will  remain  as  low  as  possible   until  new
opportunities are initiated, of which there can be no assurance, in which event,
the  operating  costs  of the  Company  may  increase  relative  to the need for
administrative and executive staff and overhead to provide support for these new
business entities.

Liquidity and Capital Resources

The Company had a working  capital  deficit as of March 31, 2003 of  $1,288,860.
This  compares to a working  capital  deficit of  $1,287,373  as of December 31,
2002.  During the quarter ended March 31, 2003 an aggregate of 7,700,000  shares
of common stock were issued for aggregate consideration of $119,758 (avg. $0.016
per share) and the Company  issued 355 shares of Series 2 Convertible  Preferred
Stock valued at face value of $3,545.  Subsequent  to March 31, 2003,  2,000,000
stock options were  exercised at $0.02 per share for $25,000 in cash and payment
of debt to an affiliate of the CEO in the amount of $15,000.

The Company had a stockholder's deficit at March 31, 2003 of $1,167,678. This is
compared to  stockholder's  deficit at  December  31,  2002 of  $1,158,102.  The
stockholder's  deficit  increased due to the Company operating at a loss, offset
by the issuance of preferred  stock for cash and the conversion of certain notes
payable.

                                       12
<PAGE>

At  March  31,  2003,  the  Company  had no  material  commitments  for  capital
expenditures.

Due to its recent liquidity  issues,  the Company has defaulted on several short
term obligations including for its operating overhead, trade payables, and state
and  federal  employment  taxes,  resulting  in tax liens  being  imposed on the
Company's  assets,  which  will  have to be  resolved  with an  infusion  of new
capital, of which no assurances can be made.

Management  believes  that the Company will  experience  significant  difficulty
raising  significant  additional equity capital or attracting viable acquisition
candidates until these matters have been resolved and the Company has eliminated
a substantial amount of its outstanding debt.

The Company has  recently  reduced the number of  outstanding  common  shares to
allow it to raise  equity  capital  and to effect  conversion  and  exercise  of
outstanding  common stock options and conversion rights of preferred stock which
has been  reserved for  issuance to insiders in exchange for their  accrued cash
advances,  and for issuance in a private placement of up to $200,000 in Series 2
Convertible  Preferred  stock,  which the Company is currently  conducting to an
affiliated  entity.  As of March 31,  2003,  the Company had raised  $188,970 in
gross proceeds of this private  placement and had 18,897  outstanding  shares of
Series 2 Convertible Preferred.

The  Company  may  continue  to be  required  to  issue  further  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-term.

Subsidiaries/Employees:

Arete Industries,  Inc. has one full time employee,  and two part-time corporate
officers,  and two part-time  consultants  presently  engaged in developing  and
executing a marketing  plan for its  business  development  and capital  funding
businesses, as well as the automation and upgrading of the Company's shareholder
and investor communication systems. The Company's subsidiary, Aggression Sports,
Inc.  presently has no employees other than its acting president,  the Company's
current  CEO.  The CEO  operates  and  manages  both  entities  and remains on a
deferred  salary  basis for the first two  quarters of 2003.  He has  accepted a
1,000,000  share stock grant valued at $15,000 and an Incentive  stock option to
purchase  1,000,000  shares of common stock at $0.0165 per share as compensation
for  services  rendered  during the first  quarter of 2003,  and the two outside
directors  each  received a 2,000,000  stock grant valued at $30,000 each and an
Incentive  Stock  Option to purchase  1,000,000  shares of common  stock each at
$0.0165 per share for compensation for the same period. Following the end of the
first quarter of 2003,  the company issued  1,000,000  shares of common stock to
its CEO valued at $14,000 as compensation for services during the second quarter
of 2003, and issued  1,000,000  common stock  Incentive  Options  exercisable at
$0.015 per share to each of its directors, as compensation for the same period.

                                       13
<PAGE>


PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

During the Period ended March 31, 2003, there were no material legal proceedings
initiated  by or  against  the  Company  or any of its  officers,  directors  or
subsidiaries.

During the third  quarter of 2001,  the Company  concluded its defense of an SEC
enforcement  action  brought in the Federal  District  Court for the District of
Colorado,  for  violations  under  Section  15d of the '33 Act and  Section  10b
including  Rule 10b-5 of the '34 Act  against  the  Company,  one of its current
officers and two former officers and directors through  settlement of the action
by consenting to the entry of an  administrative  Cease and Desist Order without
admitting or denying the findings and conclusions  made by the SEC. No financial
sanctions  or  professional  bars were  imposed on the  Company  or the  current
officer in the  settlement.  The SEC  previously  settled  this  matter with the
former officers and directors through the imposition of financial  sanctions and
an injunction from future violations of the anti-fraud provisions of the federal
securities laws.

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


        Exhibit 99.1    Certification of CEO and CFO Pursuant to
                        18 U.S.C. Section 1350, as adopted pursuant to
                        Section 906 of the Sarbanes-Oxley Act of 2002.

        There were no Reports on Form 8-K filed  during the period  covered by
        this report.

                                       14
<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 20, 2003

By: /s/ Thomas P. Raabe, CEO/ Interim CFO
---------------------------------------------------
Thomas P. Raabe, CEO/ Interim CFO
Interim Principal Financial and Accounting Officer

                                       15
<PAGE>



                            CERTIFICATION PURSUANT TO
    SECURITIES EXCHANGE ACT OF 1934: RULES 13a-14, 13a-15, 15d-14, and 15d-15
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


     I , Thomas P. Raabe, certify that:

1.   I have reviewed this quarterly report on Form 10-QSB/A of Arete Industries,
     Inc.

2.   Based on my knowledge,  this  quarterly  report does not contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information  included  in this  quarterly  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the  registrant  as of, and for,  the  periods  presented  in this
     quarterly report;

4.   I am responsible for establishing and maintaining  disclosure  controls and
     procedures  (as  defined in Exchange  Act Rules  13a-14 and 15d-14) for the
     registrant and have:


     a)   designed  such  disclosure  controls  and  procedures  to ensure  that
          material  information  relating  to  the  registrant,   including  its
          consolidated subsidiaries,  is made known to us by others within those
          entities,  particularly  during  the  period in which  this  quarterly
          report is being prepared;

     b)   evaluated the  effectiveness of the registrant's  disclosure  controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     c)   presented  in  this  quarterly   report  my   conclusions   about  the
          effectiveness  of the disclosure  controls and procedures  based on my
          evaluation as of the Evaluation Date;

5.   I have disclosed,  based on my most recent evaluation,  to the registrant's
     auditors and the audit  committee of  registrant's  board of directors  (or
     persons performing the equivalent functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which could  adversely  affect the  registrant's  ability to
          record,  process,   summarize  and  report  financial  data  and  have
          identified for the  registrant's  auditors any material  weaknesses in
          internal controls; and

     b)   any fraud, whether or not material,  that involves management or other
          employees who have a  significant  role in the  registrant's  internal
          controls; and

6.   I have  indicated in this quarterly  report whether there were  significant
     changes in internal  controls or in other factors that could  significantly
     affect  internal  controls  subsequent  to  the  date  of  my  most  recent
     evaluation,  including any  corrective  actions with regard to  significant
     deficiencies and material weaknesses.

Dated: May 20, 2003       By: /s/ Thomas P. Raabe
                              --------------------------------------------------
                              Thomas P. Raabe, CEO/ Interim CFO
                              Interim Principal Financial and Accounting Officer

                                       16