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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM  10-Q

(Mark One)

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2012 or

o 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 333-147037

Avatar Ventures Corp.
 (Exact name of registrant as specified in it’s charter)
 
 
 Nevada           45-1689814
 (State or other jurisdiction of incorporation or organization)       (I.R.S. Employer Identification No.)
       
 
27281 Las Ramblas, Suite 200 Mission Viejo, California 92691
 (Address of principal executive offices)(Zip Code)

949-420-3100
(Registrant’s telephone number, including area code)

______________________________________________________________________________________
(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 oNo

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). oYes   oNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer o        Non-accelerated filer o(Do not check if a smaller reporting company)     Smaller reporting company x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). xYes  o No

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

APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Number of shares of each class of Avatar Ventures' capital stock outstanding as of March 14, 2012: 68,634,615 shares of common stock


 
 

 


TABLE of CONTENTS

 
 
 PART I FINANCIAL INFORMATION
       Page Number
       
 Item 1.  Financial Statements     3
       
 Item 2.  Management's Discussion and Analysis of financial Condition and Results of Operations    10
       
 Item 3.  Quantitative and Qualitative Disclosures About Market Risk    11
       
 Item 4.  Controls and Procedures    11
       
 PART II OTHER INFORMATION
       
 Item 1.  Legal Proceedings    12
       
 Item 1A.  Risk Factors    12
       
 Item 2.  Unregistered Sales of Securities and Use of Proceeds    12
       
 Item 3.  Defaults Upon Senior Securities    12
       
 Item 4.  Submission of Matters to a Vote of Security Holders    12
       
 Item 5.  Other Information    12
       
 Item 6.  Exhibits    12
       
SIGNATURES    13
 



 
- 2 -

 

 
PART I—FINANCIAL INFORMATION

 
 
 
 
 
 
 
AVATAR VENTURES Corp.
(A Development Stage Company)
 
CONDENSED FINANCIAL STATEMENTS
 
January 31, 2012
 
Unaudited
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONDENSED BALANCE SHEETS
 
CONDENSED STATEMENTS OF OPERATIONS
 
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
 
CONDENSED STATEMENTS OF CASH FLOWS
 
 NOTES TO UNAUDITED CONDENSED INTERIM FINANCIAL STATEMENTS


 
- 3 -

 


AVATAR VENTURES Corp.
 
(A Development Stage Company)
 
             
CONDENSED BALANCE SHEETS
 
Unaudited
 
             
   
January 31, 2012
   
July 31, 2011
 
             
             
ASSETS
           
             
CURRENT ASSETS
           
Cash
  $ 1,817     $ 217,802  
Loan Receivable
    132,100       70,000  
TOTAL CURRENT ASSETS
  $ 133,917     $ 287,802  
                 
Intangible Assets
  $ 108,321     $ 50,179  
                 
TOTAL ASSETS
  $ 242,238     $ 337,981  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
               
                 
CURRENT  LIABILITIES
               
Accounts payable and accrued liabilities
  $ 43,850     $ 15,390  
Loans from Related Party
    15,839       15,839  
TOTAL CURRENT LIABILITIES
  $ 59,689     $ 31,229  
                 
STOCKHOLDERS'  EQUITY ( DEFICIT )
               
Capital stock
               
Authorized
               
        75,000,000 shares of common stock, $0.001 par value,
               
Issued and outstanding
               
        68,634,615 at January 31, 2012 (and at July 31, 2010) common shares
  $ 68,635     $ 68,635  
        Additional Paid in Capital
    460,865       460,865  
Deficit accumulated during the development stage
    (346,951 )     (222,748 )
TOTAL STOCKHOLDERS' EQUITY/(DEFICIT)
  $ 182,549     $ 306,752  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
  $ 242,238     $ 337,981  
                 
                 
                 
The accompanying notes are an integral part of these financial statements
 


 
- 4 -

 


AVATAR VENTURES Corp.
 
(A Development Stage Company)
 
                               
CONDENSED STATEMENTS OF OPERATIONS
 
Unaudited
 
                               
                               
                               
                               
                           
Cumulative results from
 
   
Three months
   
Three months
   
6 months
   
6 months
   
from inception
 
   
ended
   
ended
   
ended
   
ended
   
(August 14, 2006) to
 
   
January 31, 2012
   
January 31, 2011
   
January 31, 2012
   
January 31, 2011
   
January 31, 2012
 
REVENUE
                             
                               
Revenues
  $ -     $ -     $ -     $ -     $ -  
Total Revenues
  $ -     $ -     $ -     $ -     $ -  
                                         
EXPENSES
                                       
                                         
Office and general
  $ 45,772     $ -     $ 116,302     $ 200     $ 255,059  
Professional Fees
    2,900       600       7,900       3,600       91,891  
Total Expenses
  $ 48,672     $ 600     $ 124,202     $ 3,800     $ 346,951  
                                         
Provision for Income Tax
  $ -     $ -     $ -     $ -     $ -  
NET LOSS, BEFORE INCOME TAX
  $ (48,672 )   $ (600 )   $ (124,202 )   $ (3,800 )   $ (346,951 )
                                         
BASIC AND DILUTED LOSS PER COMMON SHARE
                                       
  $ -     $ -     $ -     $ -          
                                         
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
                                       
                                       
    68,634,615       89,269,022       68,634,615       90,134,511          
                                         
                                         
                                         
The accompanying notes are an integral part of these financial statements
 


 
- 5 -

 


AVATAR VENTURES Corp.
 
(A Development Stage Company)
 
                                     
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
 
From inception (August 14, 2006) to January 31, 2012
 
Unaudited
 
                           
Deficit
       
   
Common Stock
               
accumulated
       
         
Additional
   
Share
   
during the
       
   
Number of
         
Paid-in
   
Subscriptions
   
development
       
   
shares
   
Amount
   
Capital
   
Receivable
   
stage
   
Total
 
Balance at inception - August 14, 2006
    -       -       -       -       -       -  
                                                 
Common stock issued for cash at $0.001
                                               
per share on July 21, 2007
    58,500,000       58,500       (54,000 )     -       -       4,500  
                                                 
Net loss for the period from inception
                                               
to July 31, 2007
                                    (600 )     (600 )
                                                 
Balance, July 31, 2007
    58,500,000     $ 58,500     $ (54,000 )   $ -     $ (600 )   $ 3,900  
Common stock issued for cash at $0.001
                                               
per share on May 20, 2008
    32,500,000       32,500       (7,500 )     -       -       25,000  
                                                 
Net loss for the year ended
                                               
July 31, 2008
    -       -       -       -       (36,237 )     (36,237 )
                                                 
Balance, July 31,2008
    91,000,000     $ 91,000     $ (61,500 )   $ -     $ (36,837 )   $ (7,337 )
Net loss for the year ended
                                               
July 31, 2009
    -       -       -       -       (7,521 )     (7,521 )
                                                 
Balance, July 31, 2009
    91,000,000     $ 91,000     $ (61,500 )   $ -     $ (44,358 )   $ (14,858 )
Net loss for the year ended
                                               
July 31, 2010
    -       -       -       -       (6,831 )     (6,831 )
                                                 
Balance, July 31, 2010
    91,000,000     $ 91,000     $ (61,500 )   $ -     $ (51,189 )   $ (21,689 )
On January 28, 2011, the company:
                                               
Cancelled 22,750,000 shares at $0.001,
    (22,750,000 )     (22,750 )     22,750                       -  
                                                 
Common stock issued for cash at $1.30
                                               
per share on April 24, 2011
    384,615       385       499,615                       500,000  
                                                 
Net loss for the year ended
                                               
July 31, 2011
    -       -       -       -       (171,560 )     (171,560 )
                                                 
Balance, July 31, 2011
    68,634,615     $ 68,635     $ 460,865     $ -     $ (222,749 )   $ 306,752  
Net loss for the year ended
                                               
January 31, 2012
    -       -       -       -       (124,202 )     (124,202 )
                                                 
Balance,  January 31, 2012
    68,634,615     $ 68,635     $ 460,865     $ -     $ (346,951 )   $ 182,549  
                                                 
All shares have been restated to reflect the 12:1 forward split in January 2011
                 


 
- 6 -

 


AVATAR VENTURES Corp.
 
(A Development Stage Company)
 
   
CONDENSED STATEMENTS OF CASH FLOWS
 
Unaudited
 
                   
   
6 months
   
6 months
   
August 14, 2006
 
   
ended
   
ended
   
(date of inception) to
 
   
January 31, 2012
   
January 31, 2011
   
January 31, 2012
 
 OPERATING ACTIVITIES
                 
Net loss
  $ (124,202 )   $ (3,800 )   $ (346,951 )
Adjustment to reconcile net loss to net cash
                       
used in operating activities
                       
Expenses paid on company's behalf by related party
    -       -       -  
(Increase) decrease in prepaid expenses
    -       -       -  
Increase (decrease) in accrued expenses
    28,460       3,600       43,850  
                         
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
                       
  $ (95,742 )   $ (200 )   $ (303,101 )
                         
INVESTING ACTIVITIES
                       
Loan to Related Party
    (62,100 )     -       (132,100 )
Intangible Assets
    (58,142 )     -       (108,321 )
NET CASH PROVIDED BY INVESTING ACTIVITIES
                       
  $ (120,242 )   $ -     $ (240,421 )
                         
FINANCING ACTIVITIES
                       
Proceeds from sale of common stock
    -       -       68,635  
Additional Paid in Capital
    -       -       460,865  
Subscription Receivable
    -               -  
Loan from related party
    -       -       15,839  
NET CASH PROVIDED BY FINANCING ACTIVITIES
                       
  $ -     $ -     $ 545,339  
                         
NET INCREASE (DECREASE) IN CASH
  $ (215,985 )   $ (200 )   $ 1,817  
                         
CASH, BEGINNING OF PERIOD
  $ 217,802     $ 216     $ -  
                         
CASH, END OF PERIOD
  $ 1,817     $ 16     $ 1,817  
                         
                         
Supplemental cash flow information and noncash financing activities:
                 
Cash paid for:
                       
Interest
  $ -     $ -     $ -  
                         
Income taxes
  $ -     $ -     $ -  
                         
The accompanying notes are an integral part of these financial statements
 


 
- 7 -

 

OTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Avatar Ventures Corp. was incorporated on August 14, 2006, under the laws of the State of Nevada, U.S.A.  Operations started on that date.

Avatar Ventures Corp. is a company that is commencing operations as a developer of aftermarket electronic accessories for motor vehicles. The Company's first product in development is a cellular phone car adapter which enables to cellular text messages and wireless emails to be displayed on a small LCD screen attached to the car's dashboard area. Text message and emails received by the user's cellular phone will be wirelessly transmitted to the car adapter via Bluetooth technology.

These financial statements have been prepared on a going concern basis. The Company has accumulated a deficit of $346,951 since inception and has yet to achieve profitable operations and further losses are anticipated in the development of its business, raising achieve profitable operations and further substantial doubt about the Company's ability to continue as a going concern. Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its the future obligations and repay its liabilities arising from normal business operations when they come due. Management plans to continue to provide for its working capital needs by seeking loans from its shareholders. These financial statements do not include any adjustments to the recoverability and classification of assets, or the amount and classification of liabilities that may be necessary should the Company be unable to continue as a going concern.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the Company have been prepared in accordance with accounting- principles generally accepted in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates, which have been made using careful judgment. Actual results may vary from these estimates.
The financial statements have, in management's opinion, been properly prepared within the framework of the significant accounting policies summarized below:

Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are translated into US dollars at the period end exchange rate, non-monetary assets are translated at historical exchange rates and all income and expenses are translated at average exchange rates prevailing during the period. Foreign currency translation adjustments are included in income.

Fair Value of Financial Instruments
The respective carrying value of certain on-balance sheet financial instruments approximate their fair values. These financial statements include cash, receivables, advances receivable, cheques issued in excess of cash, accounts payable and property obligations payable. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. Unless otherwise noted, fair values were assumed to approximate carrying values for these financial instruments since they are short term in nature and their carrying amounts approximate fair values or they are receivable or payable on demand.

Use of Estimates
The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at (ASC) Topic 915 Development Stage Entities for its characterization of the Company as development stage.

Development Stage Company
The Company complies with the FASB Accounting Standards Codification (ASC) Topic 915 Development Stage Entities for its characterization of the Company as development stage.

Impairment of Long Lived Assets
Long-lived assets are reviewed for impairment in accordance with ASC Topic 360, "Accounting for the Impairment or Disposal of Long- lived that their carrying amounts may not be recoverable. An impairment charge is recognized or the amount, if any, which the carrying value of the asset of the asset exceeds the fair value.

Financial Instruments
The carrying value of the Company's financial instruments consisting of cash equivalents and accounts payable and accrued liabilities approximates their fair value because of the short maturity of these instruments. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

Income Taxes
The Company uses the assets and liability method of accounting for income taxes in accordance with FASB Topic 740 "Accounting for Income Taxes". Under this method, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.


 
- 8 -

 

Basic and Diluted Net Loss Per Share
In accordance with FASB Topic 260, "Earnings Per Share', the basic net loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted net loss per common share is computed similar to basic net loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. As at January 31, 2012, diluted net loss per share is equivalent to basic net loss per share.

New Accounting Standards
Management does not believe that any recently issued, but not yet effective accounting standards if currently adopted could have a material effect on the accompanying financial statements.

3. SHARE CAPITAL

On July 21, 2007, the Company issued 4,500,000 common shares at $0.001 per share to the sole director of the Company for total proceeds of $4,500.

On May 20, 2008, the Company issued 2,500,000 common shares at $0.01 per share for total proceeds of $ 25,000.

On January 28, 2011 the Company cancelled 1,750,000 shares at $0.001 per share.

On January 28, 2011 the Company declared a dividend of 12 shares for every share held.  The equity statement has been restated to reflect this change.

On April 24, 2011 the Company issued 384,615 shares at $1.30 per share, for $500,000 cash.

4. RELATED PARTY TRANSACTIONS

The Company's sole officer has loaned the company $15,839 without interest and fixed term of repayment. The Company paid the President $9,500 in management fees during the six months to January 31, 2012
The Company has loaned the amount of $132,100 to a related party called App Marketing Solutions.  The loan is unsecured, bears no interest and repayment is due as follows:
$70,000 on April 29, 2013
$15,000 on September 19, 2013
$17,100 on October 13, 2013
$30,000 on July 30, 2013

 
- 9 -

 

 
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Caution about Forward-Looking Statements

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "US$" refer to United States dollars and all references to "common shares" refer to the common shares in our capital stock. As used in this quarterly report, the terms "we", "us", "our", "our company" and "Avatar" mean Avatar Ventures Corp., unless otherwise indicated.

Overview

Avatar Ventures Corp. was incorporated in the state of Nevada on August 23, 2006. On May 4, 2011, Avatar Ventures Corp. (“AVC”) entered into a binding letter of intent with Apps Marketing Solutions, Inc. (“AMS”) with respect to the acquisition of all issued and outstanding shares of AMS by AVC.

AMS is a developer of mobile marketing solutions, ranging from simple text messaging campaigns to robust mobile applications.  The AMS Mobile marketing solutions focus on use of smart phones, tablets and other mobile devices to market a brand or message intended to support clients’ integrated marketing strategies.  Mobile marketing is commonly used in order to increase brand awareness, generate customer opt-in databases, and drive attendance to specific events and locations.

As a provider of mobile marketing and online marketing solutions the Company announced it’s new mobile offering October 20, 2011. Small business operators are beginning to realize that mobile marketing is now critical to their business success, but these busy entrepreneurs often lack the time and expertise to create and maintain any type of mobile presence. The Company now offers an affordable, professional option to promote a small business with a custom Direct Connect package which includes text messaging, mobile web site and custom iPhone, Android and Blackberry apps for under $400.00.

Results of Operations

Avatar has not generated any revenues for the three months ended January 31, 2012.

The Company experienced office and general expenses of $45,772 for the three months ended January 31, 2012, compared to office and general expenses of nil for the three months ended January 31, 2011. The increase in office and general expense experienced by the Company is largely attributed to an increase in fees paid to consultants for services related to developing the Company’ products.

For the three months ended January 31, 2012, the Company experienced Professional Fees of $2,900 as compared to Professional Fees of $600 for the three month period ended January 31, 2011

For the three months ended January 31, 2012, the company experienced a net loss of $48,672 as compared to a loss of $600 for the three months ended January 31, 2011.

Liquidity and Capital Resources

The Company has satisfied its working capital needs by using capital raised from issuing common shares to investors and loans from the director. As of January 31, 2012, the Company has cash on hand in the amount of $1,817. Management does not expect that the current level of cash on hand will be sufficient to fund our operation for the next twelve month period. In the event that additional funds are required to maintain operations, our officers and directors have agreed to advance us sufficient capital to allow us to continue operations. We may also be able to obtain more future loans from our shareholders, but there are no agreements or understandings in place currently.

 
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We believe that we will require additional funding to expand our business and ensure its future profitability. We anticipate that any additional funding will be in the form of equity financing from the sale of our common stock. However, we do not have any agreements in place for any future equity financing. In the event we are not successful in selling our common stock, we may also seek to obtain short-term loans from our director.
 
Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

As a "smaller reporting company", we are not required to provide the information required by this Item.
 
Item 4.  Controls and Procedures.

Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time period specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is accumulated and communicated to management including our principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.

In connection with this quarterly report, as required by Rule 15d-15 under the Securities Exchange Act of 1934, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our company's management, including our company's principal executive officer and principal financial officer. Based upon that evaluation, our company's principal executive officer and principal financial officer concluded that subject to the inherent limitations noted in our Form 10-K Part II, Item 9A(T) as of July 31, 2011, our disclosure controls and procedures were not effective due to the existence of material weaknesses in our internal controls over financial reporting, as discussed below.

Management's Report on Internal Control Over Financial Reporting
 
As of July 31, 2011 management assessed the effectiveness of the Company's internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, our President and principal executive officer, who also acts as our principal financial officer, concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
 
The matters involving internal controls and procedures that the Company's management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to the lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; and (3) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by our President and principle accounting officer in connection with the review of our financial statements as of January 31, 2012.
 
Management believes that the material weaknesses set forth in items (2) and (3) above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and lack of a majority of outside directors on our board of directors, results in ineffective oversight in the establishment and monitoring of required internal controls and procedures which could result in a material misstatement in our financial statements in future periods.
 
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated or plan to initiate the following series of measures.
 
We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. And we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management when funds are available to us.

 
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Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.

We will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

This quarterly report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management's report in this quarterly report.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)) during the quarter ended January 31, 2012 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 
PART II—OTHER INFORMATION
 
Item 1. Legal Proceedings.
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
 
Item 1A. Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Act of 1934 and are not required to provide the information under this item.
 
Item 2. Unregistered Sales of Securities and Use of Proceeds.

None
 
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.
31.1 Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Executive Officer
31.2 Rule 13(a)-14(a)/15(d)-14(a) Certification of Chief Financial Officer *
32.1 Section 1350 Certification of Chief Executive Officer
32.2 Section 1350 Certification of Chief Financial Officer **
*     Included in Exhibit 31.1
**    Included in Exhibit 32.1
 


 
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SIGNATURES

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

Avatar Ventures Corp.


BY /s/ Date: March 19, 2012

/s/ Zhen Chen
Zhen Chen
CEO and Director
Principal Executive Officer
Principal Financial Officer
Principal Accounting Officer