10-Q 1 form10q.htm Filed by sedaredgar.com - Cignus Ventures Inc. - Form 10Q

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 May 31, 2008

[ ] 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 000-51714

CIGNUS VENTURES INC.
(Exact name of registrant as specified in its charter)

NEVADA 74-3152432
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)  
   
#206 -1480 Gulf Road  
Point Roberts, WA 98281
(Address of principal executive offices) (Zip Code)

(360) 483-9517
(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. Yes [ X ] No [ ]

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 [ ]
Non-accelerated filer [ ]
(Do not check if a smaller reporting company)		 Accelerated filer [ ]
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). Yes [ X ] No [ ]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As of July 8, 2008, the Issuer had 16,000,000 Shares of Common Stock outstanding.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

2

CIGNUS VENTURES INC.
(An Exploration Stage Company)

CONSOLIDATED FINANCIAL STATEMENTS

MAY 31, 2008

(Unaudited)

(Stated in U.S. Dollars)


CIGNUS VENTURES INC.
(An Exploration Stage Company)
 
CONSOLIDATED BALANCE SHEETS
 
(Stated in U.S. Dollars)

    MAY 31,     AUGUST 31,  
    2008     2007  
    (unaudited)     (audited)  
             
ASSETS            
             
Current Assets            
     Cash $  66   $  415  
             
Total Current Assets   66     415  
             
Office Equipment, net (Note 4)   179     582  
             
Total Assets $  245   $  997  
             
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY            
             
Current Liabilities            
     Accounts payable and accrued liabilities $  58,021   $  40,303  
     Accounts payable and accrued liabilities –related party (Note 6)   6,828     5,000  
     Loans payable -stockholder (Note 6)   32,329     13,500  
             
Total Current Liabilities   97,178     58,803  
             
Stockholders’ Deficiency            
     Common stock (Note 7)            
           Authorized:            
               100,000,000 common shares with a par value of $0.001 per share            
               100,000,000 preferred shares with a par value of $0.001 per share            
           Issued and outstanding:            
               16,000,000 common shares   16,000     16,000  
     Additional paid-in capital   114,000     114,000  
     Deficit accumulated during the exploration stage   (226,933 )   (187,806 )
             
Total Stockholders’ Deficiency   (96,933 )   (57,806 )
             
Total Liabilities and Stockholders’ Deficiency $  245   $  997  

The accompanying notes are an integral part of these consolidated financial statements.

F-2


CIGNUS VENTURES INC.
(An Exploration Stage Company)
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Stated in U.S. Dollars)

                            CUMULATIVE   
                            AMOUNTS  
                            FROM  
    THREE     THREE     NINE     NINE     INCEPTION  
    MONTHS     MONTHS     MONTHS     MONTHS     (MARCH 10,  
    ENDED     ENDED     ENDED     ENDED     2005) TO  
    MAY 31,     MAY 31,     MAY 31,     MAY 31,     MAY 31,  
    2008     2007     2008     2007     2008  
                               
EXPENSES                              
                               
     Amortization $  135   $ 135   $ 402   $ 403   $  1,434  
     Incorporation costs   -     -     -     -     1,271  
     Interest -loans   761     -     1,329     -     1,329  
     Management fees   -     -     -     -     44,100  
     Mineral property                              
         exploration costs   -     -     1,752     -     18,322  
     Office and sundry   1,171     1,813     3,978     3,602     19,011  
     Professional fees   6,266     5,693     29,262     36,262     125,654  
     Transfer and filing fees   661     625     2,404     1,863     10,259  
     Travel and promotion   -     -     -     -     5,553  
                               
     LOSS BEFORE INCOME                              
     TAXES   8,994     8,266     39,127     42,130     226,933  
                               
     Provision for income taxes         -     -     -     -  
                               
NET LOSS $  8,994   $ 8,266   $ 39,127   $ 42,130   $ 226,933  
                               
                               
BASIC AND DILUTED NET                              
LOSS PER SHARE $  (0.00 ) $ (0.00 )  $ (0.00 ) $ (0.00 )      
                               
                               
WEIGHTED AVERAGE NUMBER OF                          
COMMON SHARES OUTSTANDING   16,000,000     16,000,000     16,000,000     16,000,000        

The accompanying notes are an integral part of these consolidated financial statements.

F-3


CIGNUS VENTURES INC.
(An Exploration Stage Company)
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)

                CUMULATIVE  
                AMOUNTS  
                FROM  
    NINE     NINE     INCEPTION  
    MONTHS     MONTHS     (MARCH 10,  
    ENDED     ENDED     2005) TO  
    MAY 31,     MAY 31,     MAY 31,  
    2008     2007     2008  
CASH FLOWS FROM OPERATING ACTIVITIES                  
 Net loss for the period $  (39,127 ) $  (42,130 ) $  (226,933 )
 Adjustments to reconcile net loss to cash used in operating activities:                  
     Amortization   403     403     1,434  
 Changes in non-cash working capital items:                  
     Increase in accounts payable and accrued liabilities   17,718     32,349     58,021  
     Increase in accounts payable and accrued liabilities–related party   1,828     -     6,828  
     Increase in accrued interest payable   1,329     -     1,329  
     Net cash used in operating activities   (17,849 )   (9,378 )   (159,321 )
CASH FLOWS FROM INVESTING ACTIVITIES                  
     Office equipment purchase   -     -     (1,613 )
     Net cash used in investing activities   -     -     (1,613 )
CASH FLOWS FROM FINANCING ACTIVITIES                  
     Issuance of common stock for cash   -     -     130,000  
     Proceeds from loans payable -stockholder   17,500     -     31,000  
     Net cash provided by financing activities   17,500     -     161,000  
NET INCREASE (DECREASE) IN CASH   (349 )   (9,378 )   66  
CASH, BEGINNING OF PERIOD   415     9,692     -  
CASH, END OF PERIOD $  66   $  314   $  66  
                   
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                  
 Cash paid for:                  
     Interest $  -   $  -   $  -  
     Income taxes $  -   $  -   $  -  

The accompanying notes are an integral part of these consolidated financial statements.

F-4


CIGNUS VENTURES INC.
(An Exploration Stage Company)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
MAY 31, 2008
(Unaudited)
(Stated in U.S. Dollars)

1.

HISTORY AND ORGANIZATION OF THE COMPANY
   

Cignus Ventures Inc. (“the Company”) was incorporated in the State of Nevada, U.S.A., on March 10, 2005. The Company’s principal executive offices are in Point Roberts, Washington. On March 21, 2005, the Company formed a wholly-owned subsidiary, known as CVI Exploration Ltd. (“CVI”), a company incorporated in British Columbia, Canada. The Company and CVI were formed for the purpose of acquiring exploration and development stage natural resource properties. The Company is considered to be in the exploration stage as it has not yet generated any revenue from its operations.
   

These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, CVI. All significant inter-company balances and transactions have been eliminated on consolidation.
   

The Company is considered to be in the exploration stage. The accompanying financial statements represent those of a development stage enterprise and therefore, are subject to the usual business risks of development stage companies. The Company has not yet generated any revenue from operations.
   

These financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America for interim financial information. The accompanying financial statements do not include all information and footnote disclosures required for an annual set of financial statements prepared under United States of America generally accepted accounting principles. In the opinion of management, all adjustments (consisting solely of normal recurring accruals) considered necessary for a fair presentation of financial position, results of operations and cash flows as at May 31, 2008 and for all periods presented, have been included. Interim results for the period ended May 31, 2008 are not necessarily indicative of the results that may be expected for the fiscal year as a whole.
   
2.

GOING CONCERN
   

These consolidated financial statements have been prepared with the on-going assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. However, certain conditions noted below raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.
   

As shown in the accompanying consolidated financial statements, the Company has incurred a net loss of $226,933 for the period from inception (March 10, 2005) to May 31, 2008, and has no revenue. The operations of the Company have primarily been funded by the sale of common stock and loans payable. Continued operations of the Company are dependent on the Company’s ability to complete equity financings, obtain additional loans or generate profitable operations in the future. Management’s plan in this regard is to secure additional funds through future equity financings and loans payable. Such financings or loans payable may not be available or may not be available on reasonable terms to the Company.

F-5



CIGNUS VENTURES INC.
(An Exploration Stage Company)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
MAY 31, 2008
(Unaudited)
(Stated in U.S. Dollars)

3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     

The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are stated in U.S. dollars. The significant accounting policies adopted by the Company are as follows:
     
(a)

Use of estimates
     

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.
     
(b)

Foreign currency translation
     

The functional currency of the Company is the U.S. dollar. Accordingly, monetary assets and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the balance sheet date while non-monetary assets and liabilities are translated at historical rates. Revenue and expense items denominated in a foreign currency are translated at exchange rates prevailing when such items are recognized in the statement of operations. Exchange gains and losses arising on translation of foreign currency items are included in the statement of operations.
     
(c)

Cash and cash equivalents
     

The Company considers cash held at banks and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. At May 31, 2008 and August 31, 2007, the Company had no cash equivalents.
     
(d)

Office equipment
     

Office equipment consisting of computer hardware is recorded at cost and is being amortized using the straight-line method over its estimated useful life of 3 years. Maintenance and repairs are expensed as incurred while betterment or renewals are capitalized.
     
(e)

Mineral rights
     

The Company capitalizes acquisition and option costs of mineral property rights. The amount capitalized represents fair value at the time the mineral rights were acquired. The accumulated costs of acquisition for properties that are developed to the stage of commercial production will be amortized using the unit-of-production method.

F-6


CIGNUS VENTURES INC.
(An Exploration Stage Company)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
MAY 31, 2008
(Unaudited)
(Stated in U.S. Dollars)

3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
     
(f)

Accounting for the impairment of long-lived assets and long-lived assets to be disposed of
     

The Company reviews all long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.
     
(g)

Exploration costs
     

Mineral exploration costs are expensed as incurred.
     
(h)

Income taxes
     

A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expenses (benefit) result from the net change during the period of deferred tax assets and liabilities.
     

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

Fair value of financial instruments
     

The Company's financial instruments consist of cash, accounts payable and accrued liabilities, accounts payable and accrued liabilities –related party and loans payable -stockholder. 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. The fair value of these financial instruments approximates their carrying values, unless otherwise noted.
     
(j)

Net loss per share
     

Basic net loss per share is computed by dividing the net loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share takes into consideration shares of common stock outstanding (computed under basic earnings per share) and potentially dilutive shares of common stock. As at May 31, 2008 and 2007 there were no potentially dilutive instruments outstanding.

F-7


CIGNUS VENTURES INC.
(An Exploration Stage Company)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
MAY 31, 2008
(Unaudited)
(Stated in U.S. Dollars)

3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
     
(k)

Exploration stage
     

The Company is a development stage company as defined in Statement of Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting by Development Stage Enterprises,” as it is devoting substantially all of its efforts to establish a new business and planned principal operations have not commenced.
     
(l)

Concentration of credit risk
     

Cash is the only financial instrument that potentially subjects the Company to concentration of credit risk. The Company maintains cash in bank accounts that, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.
     
(m)

Recent accounting pronouncements
     

Effective June 1, 2007, the Company adopted the provisions of FASB Interpretation 48, Accounting for Uncertainty in Income Taxes ("FIN No. 48"). FIN No. 48 prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements. Additionally, FIN No. 48 provides guidance on de-recognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. Under FIN No. 48, an entity may only recognize or continue to recognize tax positions that meet a "more likely than not" threshold. The adoption of Fin No. 48 did not have a cumulative effect on the Company’s financial statements.
     

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements ("SFAS No. 157"), which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies to other existing accounting pronouncements that require or permit fair value measurements. SFAS No. 157 does not require any new fair value measurements. However, the application of this statement may change the current practice for fair value measurements. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. However, in February 2008, the FASB issued a final Staff Position to allow filers to defer the effective date of SFAS No. 157 for one year for nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis. The FASB Staff Position ("FSP") does not defer recognition and disclosure requirements for financial assets and financial liabilities or for nonfinancial assets and nonfinancial liabilities that are remeasured at least annually. The Company is currently evaluating the impact this statement will have on its financial position and results of operations and does not expect this statement to have a material impact on its financial position and results of operations.

F-8


CIGNUS VENTURES INC.
(An Exploration Stage Company)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
MAY 31, 2008
(Unaudited)
(Stated in U.S. Dollars)

3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
   

(m)

Recent accounting pronouncements (continued)
   

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 155 ('SFAS No. 159"). SFAS No. 159 provides companies with an option to report selected financial assets and liabilities at fair value. SFAS 159 is effective as of the beginning of an entity's first fiscal year that begins after November 15, 2007. The Company is currently evaluating the impact this statement will have on its financial position and results of operations and does not expect this statement to have a material impact on its financial position and results of operations.
   

In December 2007, the FASB issued SFAS No. 141(R), Business Combinations (revised—2007) ("SFAS No. 141(R)"). SFAS No. 141(R) is a revision to previously existing guidance on accounting for business combinations. The statement retains the fundamental concept of the purchase method of accounting, and introduces new requirements for the recognition and measurement of assets acquired, liabilities assumed and noncontrolling interests. SFAS No. 141(R) also requires acquisition-related transaction and restructuring costs to be expensed rather than treated as part of the cost of the acquisition. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company is currently evaluating the impact this statement will have on its financial position and results of operations and does not expect this statement to have a material impact on its financial position and results of operations.
   

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements ("SFAS No. 160"). The Statement requires that noncontrolling interests be reported as stockholders equity, a change that will affect the Company's financial statement presentation of minority interests in its consolidated subsidiaries. The Statement also establishes a single method of accounting for changes in a parent's ownership interest in a subsidiary as long as that ownership change does not result in deconsolidation. The statement is effective for fiscal years beginning after December 15, 2008. The Company is currently evaluating the impact of SFAS No. 160 and does not expect this statement to have a material impact on its financial position and results of operations.
   

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities ("SFAS No. 161"). SFAS No. 161 amends and expands the disclosure requirements of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and requires entities to provide enhanced qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair values and amounts of gains and losses on derivative contracts, and disclosures about credit-risk-related contingent features in derivative agreements. This statement applies to all entities and all derivative instruments. SFAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company is currently evaluating the impact of SFAS No. 161 and does not expect this statement to have a material impact on its financial position and results of operations.

F-9


CIGNUS VENTURES INC.
(An Exploration Stage Company)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
MAY 31, 2008
(Unaudited)
(Stated in U.S. Dollars)

3.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
   

(n)

Reclassifications
   

Certain amounts reported in the prior periods have been reclassified to conform to the current period’s presentation.
   
4.

OFFICE EQUIPMENT

               
      May 31,     August 31,  
      2008     2007  
               
  Computer equipment $  1,613   $  1,613  
  Accumulated depreciation   (1,434 )   (1,031 )
               
  Net book value $  179   $  582  

In the event that facts and circumstances indicate that the carrying amount of an asset may not be recoverable and an estimate of future undiscounted cash flows is less than the carrying amount of the asset, an impairment loss will be recognized. Management's estimates of revenues, operating expenses, and operating capital are subject to certain risks and uncertainties which may affect the recoverability of the Company's investments in its assets. Although management has made its best estimate of these factors based on current conditions, it is possible that changes could occur which could adversely affect management's estimate of the net cash flow expected to be generated from its operations.

5.

MINERAL PROPERTY
     

On March 23, 2005, the Company, through its wholly owned subsidiary, CVI, entered into a purchase agreement to acquire an undivided 100% interest in three mineral claims (the “Moscena Claims”) located in the Alberni Mining Division on the west coast of Vancouver Island, British Columbia, Canada. The consideration was $5,000 cash (paid) on execution of the agreement.
     

The three mineral claims are effective until August 13, 2008, November 22, 2008 and November 24, 2008 respectively.
     

Under mineral titles legislation, the Company is required to file assessment work to keep its claims in good standing, as follows:
     
i.

Minimum amount of exploration work on a claim or payment in the equivalent sum in lieu of work. The fee is $4.00 ($4 Cdn) per hectare each year for three years, then $8.00 ($8 Cdn) per hectare each year afterwards;
     
ii.

Annual minimum cost of compliance is $1,542 ($1,552 Cdn) per year.

F-10



CIGNUS VENTURES INC.
(An Exploration Stage Company)
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
MAY 31, 2008
(Unaudited)
(Stated in U.S. Dollars)

6.

RELATED PARTY TRANSACTIONS
   

Accounts payable and accrued liabilities
   

At May 31, 2008 included in accounts payable and accrued liabilities –related party is $6,828 owed to an officer and director of the Company. Amounts due to and from officers and directors are unsecured, non-interest bearing and due on demand.
   

Loans payable
   

During the year ended August 31, 2007, two non-interest bearing loans were granted from a stockholder totaling $13,500. The loans are unsecured and due on demand. On December 31, 2007, the Company agreed to begin paying interest on these loans at 10% per annum. During the nine months ended May 31, 2008, several additional loans were granted from the same stockholder totaling $17,500. The loans are unsecured, bear interest at 10% per annum and are due on demand. Interest expense included in the statement of operations for the three and nine months ended May 31, 2008 totaled $761 and $1,329, respectively.
   
7.

COMMON STOCK
   

The Company’s articles of incorporation allow it to issue up to 100,000,000 shares of common stock, par value $0.001 and 100,000,000 shares of preferred stock, par value $0.001.
   

On March 21, 2005, the Company issued 10,000,000 shares of its common stock at $0.001 per share in a private placement transaction.
   

On May 31, 2005, the Company issued 6,000,000 shares of its common stock at $0.02 per share in a private placement transaction.
   
8.

SEGMENT INFORMATION
   

The Company’s operations are conducted in one reportable segment being the acquisition of exploration and development stage natural resource properties in Canada. All of the Company’s office equipment is located in Canada.

F-11



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements contained in this Quarterly Report constitute "forward-looking statements". These statements, identified by words such as “plan,” "anticipate," "believe," "estimate," "should," "expect" and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Such risks and uncertainties include those set forth under “Part II – Item 1A Risk Factors " and elsewhere in this Quarterly Report. We advise you to carefully review the reports and documents we file from time to time with the United States Securities and Exchange Commission (the “SEC”), particularly our Annual Reports on Form 10-KSB, Quarterly Reports on Form 10-QSB and Form 10-Q and our Current Reports on Form 8-K.

As used in this Quarterly Report, the terms “we,” “us,” “our,” the “Company,” and “Cignus” mean Cignus Ventures Inc. and its subsidiaries unless otherwise indicated. All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise stated.

OVERVIEW

We were incorporated on March 10, 2005, under the laws of the State of Nevada. We are an exploration stage company engaged in the acquisition and exploration of mineral properties. We acquired a 100% undivided interest in three mineral claims known as Moscena 1, Moscena 2 and Maple Leaf Claims (the “Moscena Claims”) comprised of a claim block totaling 379.6 hectares located in the Alberni Mining Division on the west coast of Vancouver Island, British Columbia, Canada. Title to our mineral claims is held by our wholly owned subsidiary, CVI Exploration Ltd., a British Columbia company. Our plan of operation is to conduct mineral exploration activities on the Moscena Claims in order to assess whether they possess mineral deposits of copper, silver, and gold capable of commercial extraction.

We have not earned any revenues to date. We do not anticipate earning revenues until such time as we enter into commercial production of our mineral properties. We are presently in the exploration stage of our business and we can provide no assurance that a commercially viable mineral deposit exists on our mineral claims or that we will discover commercially exploitable levels of mineral resources on our properties, or if such deposits are discovered, that we will enter into further substantial exploration programs. Further exploration is required before a final evaluation as to the economic and legal feasibility is required to determine whether our mineral claims possess commercially exploitable mineral deposits of copper, silver, and gold.

MOSCENA CLAIMS

Current State Of Exploration

Our mineral claims presently do not have any proven mineral reserves. Results of our exploration program are intended only to define potential exploration targets, and significant and costly exploration work will be needed if initial results warrant further effort. We have only recently commenced exploration of the Moscena Claims and this exploration is currently in the preliminary

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stages. Our planned exploration program is exploratory in nature and no mineral reserves may ever be found.

Phase I Exploration Results

The results of the June 1, 2005 geological report on the Moscena Claims prepared by our geological consultant, Mr. Sookochoff, concluded that the property covers a number of quartz veins containing localized gold values that may be potentially developed to economic mineral zones. The report concluded that the reported banding of the veins is an indication that the veins may be epithermal requiring further exploration. The report suggested that we proceed with the four phase exploration program outlined as follows:

Phase Exploration Program Cost Status
Phase I
Trenching, Sampling and Prospecting of
Moscena Property. 		$6,000
Completed in June, 2005.
Phase II


Coverage of the Maple Leaf veined area
with a VLF-EM survey for a structural
analysis; local geochem surveys over
“anomalous” zones. 		$5,000


Commenced in October, 2006
and expected to be completed
in the fall exploration season of
2008.
Phase III
Sampling and geological mapping of the
veins within anomalous zones. 		$7,500
To be completed in 2008 based
on the results of Phase II.
Phase IV
Test diamond drilling of the prime targets.
$30,000
To be completed in 2008 based
on the results of Phase III.
  Total Estimated Cost $48,500  

Phase I of our exploration program was completed in early June, 2005. The Phase I exploratory program was conducted over a period of three days and consisted of confirmation of past results by blast trenching, sampling and relocation of mineralized zones and structural features. Pursuant to the Phase I report, a total of four rock trenches were blasted, five grab samples were selected for assay, and the immediate adit/vein was prospected. The grab samples revealed the following results:

Trench No.      Location Sample No. Description Oz/t Ag Oz/t Au
1 H Vein Moscena 1 Quartz grab Trace 0.002
2 F Vein Moscena 2 Quartz grab Trace Trace
3 E Vein Moscena 3 Quartz grab Trace Trace
4 Shaft Vein Moscena 4 Quartz grab 12.12 0.716
4 Shaft Vein Moscena 5 Quartz grab 9.59 7.34

The Phase I report confirmed the existence of the veins which appear to contain localized significant amounts of sulfides which may indicate gold values. The report recommended that systematic sampling of the veins and host rock with analysis of the vein material would be required to determine the nature of the veins and potential mineral controls pursuant to Phase II of the exploration program.

Phase II Exploration

The second phase of our exploration program commenced in October, 2006. Subject to ability to obtain sufficient financing, Phase II is expected to be completed during the fall exploration season

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of 2008. Phase II of our exploration program consists of compilation and correlation of all data and reconnaissance soil geochemical sampling and geochemical surveying.

PLAN OF OPERATION

Our plan of operation is to conduct mineral exploration activities on the Moscena Claims in order to assess whether the claims possess mineral reserves capable of commercial extraction. We have not, nor has any predecessor, identified any commercially exploitable reserves of these minerals on our mineral claims.

Phase I of our exploration program was completed in early June, 2005. The total cost for the first phase was approximately $6,000. The Phase I exploratory program consisted of confirmation of past results by blast trenching and sampling, and relocation of mineralized zones and structural features. The second phase consisting of compilation and correlation of all data and reconnaissance soil geochemical sampling and geochemical surveying commenced in October, 2006. We have expended $5,000 on Phase II of our exploration program to date. Subject to our ability to obtain sufficient financing, Phase II is expected to be completed during the fall exploration season of 2008.

A decision on proceeding beyond the planned Phase II exploration will be made by assessing whether the results of Phase II are sufficiently positive. The decision whether or not to proceed will be based on the recommendations of our geological consultant. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. If the results of exploration do not reveal viable commercial mineralization, we may decide to abandon our claims and acquire new claims for exploration. The acquisition of additional claims will be dependent upon our possessing sufficient capital resources at the time in order to purchase such claims. If no funding is available, we may be forced to abandon our operations.

Cash Requirements

We anticipate that we will incur over the next twelve months the following expenses:

Category Planned Expenditures Over the Next Twelve Months
Professional Fees(1) $20,000
Mineral Exploration costs $37,500
Miscellaneous $5,000
TOTAL $62,500

  Notes:  
(1) Includes legal and accounting expenses associated with our reporting requirements under the Securities Exchange Act of 1934.

Our cash on hand as of May 31, 2008 is $66. As such, we do not have sufficient cash to meet the anticipated costs of completing Phase II of our proposed exploration program and meeting our anticipated working capital requirements for the next twelve months. Therefore, we will require additional financing. There is no assurance that we will be able to acquire such additional financing on terms that are acceptable to us, or at all.

During this exploration stage, our president will be devoting approximately 60% of his time to our business. We do not foresee this limited involvement as negatively impacting our company over

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the next twelve months as all exploratory work has been and will continue to be performed by outside consultants. Additionally, we will not have a need to hire any employees over the next twelve months, nor do we plan to make any purchases of equipment over the next twelve months due to reliance upon outside consultants to provide all the tools needed for the exploratory work being conducted.

RESULTS OF OPERATIONS

Summary of Third Quarter Results

    Three Months Ended May 31,     Nine Months Ended May 31,  
                Percentage                 Percentage  
                Increase /                 Increase /  
    2008     2007     (Decrease)     2008     2007     (Decrease)  
Revenue $ --   $ --     n/a   $ --   $ --     n/a  
Expenses   (8,994 )   (8,266 )   8.8%     (39,127 )   (42,130 )   (7.1)%
Net Loss $ (8,994 ) $ (8,266 )   8.8%   $ (39,127 ) $ (42,130 )   (7.1)%  

Revenue

We have not earned any revenues since our inception and we do not anticipate earning revenues until such time as we have entered into commercial production of our mineral properties. We are currently in the exploration stage of our business and we can provide no assurances that we will discover commercially exploitable mineral deposits on our properties, or if such resources are discovered, that we will be able to enter into commercial production of our mineral claims.

Operating Expenses

The major components of our operating expenses are outlined in the table below:

    Three Months Ended May 31,     Nine Months Ended May 31,  
                Percentage                 Percentage  
    2008     2007     Increase /     2008     2007     Increase /  
                (Decrease)                 (Decrease)  
Amortization $ 135   $ 135     n/a   $ 402   $ 403     (0.2)%
Interest – Loans   761     --     n/a     1,329     --     n/a  
Mineral Property   --     --     n/a     1,752     --     n/a  
Exploration Costs                                    
Office and Sundry   1,171     1,813     (35.4)%   3,978     3,602     10.4%  
Professional Fees   6,266     5,693     10.1%     29,262     36,262     (19.3)%  
Transfer and Filing Fees   661     625     5.8%     2,404     1,863     29.0%  
Total Expenses $ 8,994   $ 8,266     8.8%   $ 39,127   $ 42,130     (7.1)%  

The slight increase in our expenses was primarily a result of a slight increase in professional fees during the three months ended May 31, 2008. Professional fees consist of legal and accounting fees in connection with meeting our ongoing reporting requirements under the Exchange Act.

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We anticipate that our operating expenses will increase significantly as we undertake our plan of operation and pursue our exploration program for the Moscena Claims. Our expenses will continue to increase if our board of directors decides to proceed beyond Phase II of our exploration program to Phase IV. However, there are no assurances that such a determination will be made

LIQUIDITY AND CAPITAL RESOURCES

Working Capital                  
                Percentage  
    At May 31,2008     At August 31, 2007     Increase / (Decrease)  
Current Assets $ 66   $ 415     (84.1)%  
Current Liabilities   (97,178 )   (58,803 )   65.3%  
Working Capital (Deficit) $ (97,112 ) $ (58,388 )   66.3%  

Cash Flows            
    Nine Months Ended     Nine Months Ended  
    May 31, 2008     May 31, 2007  
Cash Flows Used In Operating Activities $ (17,849 ) $ (9,378 )
Cash Flows Provided By Financing Activities   17,500     -  
Cash Flows Used In Investing Activities   -     -  
Net Increase (Decrease) In Cash During Period $ (349 ) $ (9,378 )

We anticipate that we will incur approximately $62,500 for operating expenses, including professional legal and accounting expenses associated with our reporting requirements under the Exchange Act during the next twelve months. As such, we currently do not have sufficient cash to meet the anticipated costs of completing Phase II of our exploration program and meeting our anticipated working capital requirements for the next twelve months. As a result, we will need to obtain additional financing. There is no assurance that we will be able to acquire such additional financing on terms that are acceptable to us, or at all.

During the nine months ended May 31, 2008, we received loans totaling $17,500 from a shareholder. The loans are unsecured, bear interest at a rate of 10% and are due on demand.

Financing Requirements

As at May 31, 2008, we had cash in the amount of $66. Our current operating funds are not sufficient to complete the proposed exploration program and will be insufficient to complete the full exploration of the mineral claims and begin mining efforts should the mineral claims prove commercially viable. Therefore, we will need to obtain additional financing in order to complete our full business plan. We also require additional financing to sustain our business operations if we are not successful in earning revenues. We currently do not have any arrangements for financing and we may not be able to obtain financing when required. Obtaining additional financing would be subject to a number of factors, including the market prices for the mineral property and gold. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.

From inception on March 10, 2005 to May 31, 2008, we have used our common stock to raise money for our property acquisition, for corporate expenses and to repay outstanding indebtedness. Since our inception, we have suffered aggregate losses in the amount of $226,933 and net cash outflows from operations and are dependent upon obtaining financing to pursue any extensive

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exploration activities. We expect to continue to incur substantial losses until we complete the development of our business. For these reasons, our auditors stated in their report to our audited financial statements for the year ended August 31, 2007 that they have substantial doubt that we will be able to continue as a going concern. We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing shareholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing for to fund our planned exploration activities.

OFF-BALANCE SHEET ARRANGEMENTS

None.

CRITICAL ACCOUNTING POLICIES

We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations.

Principles of Consolidation

Our consolidated financial statements include our accounts and our wholly-owned subsidiary, CVI Exploration Ltd., a British Columbia corporation. All significant inter-company balances and transactions have been eliminated on consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from these estimates.

Mineral Rights

We capitalize acquisition and option costs of mineral property rights. The amount capitalized represents fair value at the time the mineral rights were acquired. The accumulated costs of acquisition for properties that are developed to the stage of commercial production will be amortized using the unit-of-production method.

Exploration Costs

Mineral exploration costs are expensed as incurred.

Exploration Stage Enterprise

We are a development stage company as defined in Statement of Financial Accounting Standards No. 7 (“SFAS 7”), “Accounting and Reporting for Development Stage Enterprises,” as we are devoting substantially all of our efforts to establish a new business and planned principal operations have not commenced.

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Foreign Currency Translation

Our functional currency is the U.S. dollar. Accordingly, monetary assets and liabilities denominated in a foreign currency are translated at the exchange rate in effect at the balance sheet date while non-monetary assets and liabilities are translated at historical rates. Revenue and expense items denominated in a foreign currency are translated at exchange rates prevailing when such items are recognized in the statement of operations. Exchange gains and losses arising on translation of foreign currency items are included in the statement of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable.

ITEM 4T. CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer has concluded that these disclosure controls and procedures are effective.

There were no changes in our internal control over financial reporting during the quarter ended May 31, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 1A. RISK FACTORS.

The following are some of the important factors that could affect our financial performance or could cause actual results to differ materially from estimates contained in our forward-looking statements. We may encounter risks in addition to those described below. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial, may also impair or adversely affect our business, financial condition or results of operation.

If we do not obtain additional financing, our business will fail.

Our current operating funds are insufficient to complete the proposed exploration program. Therefore, we will need to obtain additional financing in order to complete our full business plan. As of May 31 2008, we had cash in the amount of $66. We currently do not have any income. Our plan of operation calls for significant expenses in connection with the exploration of our mineral claims. We have commenced Phase II of our recommended geological work program; however, we do not have sufficient cash on hand to complete Phase II of our proposed exploration program. As such, we will need additional financing to complete and proceed beyond Phase II of our exploration program. We may also require additional financing if the costs of the exploration of our mineral claims are greater than anticipated. We currently do not have any arrangements for financing and we may not be able to obtain financing when required. Obtaining additional financing would be subject to a number of factors, including positive results from our Phase II and Phase III exploration program, and any unanticipated problems relating to our mineral exploration including environmental assessments and additional costs and expenses that may exceed our current estimates. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us in which case our business will fail.

We have yet to attain profitable operations and because we will need additional financing to fund our exploration activities, our accountants believe that there is substantial doubt about our ability to continue as a going concern.

We have incurred a net loss of $226,933 for the period from March 10, 2005 (inception) to May 31, 2008, and have no revenues to date. Our future is dependent upon our ability to obtain financing and upon future profitable operations from the development of our mineral claims. These factors raise substantial doubt that we will be able to continue as a going concern. Davidson & Company LLP, our independent auditors, have expressed substantial doubt about our ability to continue as a going concern given our recurring losses from operations, which are described in the first risk factor above. This opinion could materially limit our ability to raise additional funds by issuing new debt or equity securities or otherwise. If we fail to raise sufficient capital, we will not be able to implement our exploration program which requires significant funding past Phase II of our exploration program; as a result, we may have to liquidate our business.

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Since this is an exploration project, we face a high risk of business failure due to our inability to predict the success of our business.

We have just begun the initial stages of exploration of our mineral claims, and thus have no way to evaluate the likelihood that we will be able to operate the business successfully. We were incorporated on March 10, 2005, and to date have been involved primarily in organizational activities, the acquisition of the mineral claims, obtaining a summary geological report and performing certain limited work on our mineral claims. We have not earned any revenues to date.

Because of the unique difficulties and uncertainties inherent in mineral exploration ventures, we face a high risk of business failure.

You should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates. Our Moscena Claims do not contain a known body of commercial ore and, therefore, any program conducted on the Moscena Claims would be an exploratory search of ore. There is no certainty that any expenditures made in the exploration of the Moscena Claims will result in discoveries of commercial quantities of ore. Most exploration projects do not result in the discovery of commercially mineable deposits of ore. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. If the results of Phase II of our exploration program do not reveal viable commercial mineralization, we may decide to abandon our claims and acquire new claims for new exploration. The acquisition of additional claims will be dependent upon our possessing capital resources at the time in order to purchase such claims. If no funding is available, we may be forced to abandon our operations.

Mineral exploration is highly speculative, involves substantial expenditures, and is frequently non-productive.

Mineral exploration involves a high degree of risk and exploration projects are frequently unsuccessful. Few prospects that are explored end up being ultimately developed into producing mines. To the extent that we continue to be involved in mineral exploration, the long-term success of our operations will be related to the cost and success of our exploration programs. We cannot assure you that our mineral exploration efforts will be successful. The risks associated with mineral exploration include:

  (i)

the identification of potential economic mineralization based on superficial analysis;

  (ii)

the quality of our management and our geological and technical expertise; and

  (iii)

the capital available for exploration and development.

Substantial expenditures are required to determine if a project has economically viable mineralization. It may take several years to establish proven and probable reserves and to develop and construct mining and processing facilities. Because of these uncertainties, our current and future exploration programs may not result in the discovery of reserves, the expansion of our existing reserves or the further development of our mines.

We have no known mineral reserves and if we cannot find any, we will have to cease operations.

We have no mineral reserves. If we do not find a mineral reserve containing gold, copper, or silver

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or if we cannot explore the mineral reserve, either because we do not have the money to do it or because it will not be economically feasible to do it, we will have to cease operations and you will lose your investment. Mineral exploration, particularly for gold, is highly speculative. It involves many risks and is often non-productive. Even if we are able to find mineral reserves on our property, our production capability is subject to further risks including:

  • Costs of bringing the property into production including exploration work, preparation of production feasibility studies, and construction of production facilities, all of which we have not budgeted for;
  • Availability and costs of financing;
  • Ongoing costs of production; and
  • Environmental compliance regulations and restraints.

The marketability of any minerals acquired or discovered may be affected by numerous factors which are beyond our control and which cannot be accurately predicted, such as market fluctuations, the lack of milling facilities and processing equipment near the Moscena Claims, and such other factors as government regulations, including regulations relating to allowable production, importing and exporting of minerals, and environmental protection.

Given the above noted risks, the chances of finding reserves on our mineral properties are remote and funds expended on exploration will likely be lost.

Because we anticipate our operating expenses will increase prior to our earning revenues, we may never achieve profitability.

Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from the exploration of our mineral claims, we will not be able to earn profits or continue operations. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide no assurance that we will generate any revenues or ever achieve profitability. If we are unsuccessful in addressing these risks, our business will most likely fail.

Even if we discover proven reserves of precious metals on our mineral claims, we may not be able to successfully commence commercial production.

Our mineral claims do not contain any known bodies of ore. If our exploration programs are successful in discovering proven reserves on our mineral claims, we will require additional funds in order to place the mineral claims into commercial production. The expenditures to be made by us in the exploration of mineral claims in all probability will be lost as it is an extremely remote possibility that the mineral claims will contain proven reserves. If our exploration programs are successful in discovering proven reserves, we will require additional funds in order to place the Moscena Claims into commercial production. The funds required for commercial mineral production can range from several millions to hundreds of millions. We currently do not have sufficient funds to place our mineral claims into commercial production. Obtaining additional financing would be subject to a number of factors, including the market price for gold and the costs of exploring for or mining these materials. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us. Because we will need additional financing to fund our exploration activities there is substantial doubt about our ability to continue as a going concern. At this time, there is a risk that we will not be able to obtain such financing as and when needed.

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Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business.

The search for valuable minerals involves numerous hazards. As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure. At the present time, we have no coverage to insure against these hazards. The payment of such liabilities may result in our inability to complete our planned exploration program and/or obtain additional financing to fund our exploration program.

The price of gold is highly volatile and a decrease in the price of gold can have a material adverse effect on our business.

The profitability of mining operations is directly related to the market prices of metals. The market prices of metals fluctuate significantly and are affected by a number of factors beyond our control, including, but not limited to, the rate of inflation, the exchange rate of the dollar to other currencies, interest rates, and global economic and political conditions. Price fluctuations of metals from the time development of a mine is undertaken to the time production can commence can significantly affect the profitability of a mine. Accordingly, we may begin to develop one or more of our mines at a time when the price of metals makes such exploration economically feasible and, subsequently, incur losses because the price of metals decreases. Adverse fluctuations of the market prices of metals may force us to curtail or cease our business operations.

Because access to our mineral claims may be restricted by inclement weather, we may be delayed in our exploration.

The Moscena Claims property consists of three mineral claims with a total area of 379.6 hectares, located on the west coast of Vancouver Island, British Columbia, Canada, northeast of Tofino. The claims are accessible by floatplane from Tofino, British Columbia, and by land via highway 4 and the Tofino highway. The area of the Moscena Claims is an essentially undeveloped area in British Columbia. The area consists of many mountains and lakes with heavy forestation. Winters are often severe with rain, freezing rain, wind, and snow common from November through March. Access to the Moscena Claims may be restricted through some of the year due to weather in the area. As a result, any attempt to test or explore the property is largely limited to the times when weather permits such activities. These limitations can result in significant delays in exploration efforts. Such delays can have a significant negative effect on our exploration efforts.

As we undertake exploration of our mineral claims, we will be subject to compliance with government regulation that may increase the anticipated cost of our exploration program.

There are several governmental regulations that materially restrict mineral exploration. We will be subject to the laws of the Province of British Columbia as we carry out our exploration program. We may be required to obtain work permits, post bonds and perform remediation work for any physical disturbance to the land in order to comply with these laws. If we enter the production phase, the cost of complying with permit and regulatory environment laws will be greater because the impact on the project area is greater. Permits and regulations will control all aspects of the production program if the project continues to that stage. Examples of regulatory requirements include:

(i)

Water discharge will have to meet drinking water standards;

   
(ii)

Dust generation will have to be minimal or otherwise re-mediated;

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(iii)

Dumping of material on the surface will have to be re-contoured and re-vegetated with natural vegetation;

   
(iv)

An assessment of all material to be left on the surface will need to be environmentally benign;

   
(v)

Ground water will have to be monitored for any potential contaminants;

   
(vi)

The socio-economic impact of the project will have to be evaluated and if deemed negative, will have to be re-mediated; and

   
(vii)

There will have to be an impact report of the work on the local fauna and flora including a study of potentially endangered species.

Our annual cost of compliance with the Mineral Tenure Act is presently approximately $3,052 per year. In the Province of British Columbia, the recorded holder of a mineral claim is required to perform a minimum amount of exploration work on a claim or make payment in the equivalent sum in lieu of work. The fee is CDN$3.98 per hectare (approximately US$4.00) in the first three years and CDN$7.95 (approximately US$8.00) in subsequent years. There is a risk that new regulations could increase our costs of doing business and prevent us from carrying out our exploration program. We will also have to sustain the cost of reclamation and environmental remediation for all exploration work undertaken. Both reclamation and environmental remediation refer to putting disturbed ground back as close to its original state as possible. Other potential pollution or damage must be cleaned-up and renewed along standard guidelines outlined in the usual permits. Reclamation is the process of bringing the land back to its natural state after completion of exploration activities. Environmental remediation refers to the physical activity of taking steps to remediate, or remedy, any environmental damage caused. The amount of these costs is not known at this time as we do not know the extent of the exploration program that will be undertaken beyond completion of the recommended work program. If remediation costs exceed our cash reserves, we may be unable to complete our exploration program and have to abandon our operations.

Because our executive officer does not have formal training specific to the technicalities of mineral exploration, there is a higher risk that our business will fail.

David K. Ryan, our sole executive officer and sole director, does not have any formal training as a geologist or in the technical aspects of management of a mineral exploration company. With no direct training or experience in these areas, our management may not be fully aware of the specific requirements related to working within this industry. Our management’s decisions and choices may not take into account standard engineering or managerial approaches mineral exploration companies commonly use. Consequently, our operations, earnings, and ultimate financial success could suffer irreparable harm due to management’s lack of experience in this industry.

Because our executive officer has only agreed to provide his services on a part-time basis, he may not be able or willing to devote a sufficient amount of time to our business operations, causing our business to fail.

David K. Ryan, our sole director and sole officer, is employed on a full time basis by other companies. Because we are in the early stages of our business, Mr. Ryan will not be spending a significant amount of time on our business. Mr. Ryan provides his services on a part-time basis as required for our business. Mr. Ryan presently commits approximately 60% of his business time to our business. Competing demands on Mr. Ryan’s time may lead to a divergence between his interests and the interests of other shareholders.

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Because our president, David K. Ryan, owns 62.5% of our outstanding common stock, investors may find that corporate decisions controlled by Mr. Ryan are inconsistent with the best interests of other stockholders.

David K. Ryan, our sole executive officer and sole director, controls 62.5% of our issued and outstanding shares of common stock. Accordingly, in accordance with our Articles of Incorporation and Bylaws, Mr. Ryan is able to control who is elected to our board of directors and thus could act, or could have the power to act, as our management. Since Mr. Ryan is not simply a passive investor but is also one of our active executives, his interests as an executive may, at times, be adverse to those of passive investors. Where those conflicts exist, our shareholders will be dependent upon Mr. Ryan exercising, in a manner fair to all of our shareholders, his fiduciary duties as an officer or as a member of our board of directors. Also, Mr. Ryan, due to his stock ownership position in Cignus, will have: (i) the ability to control the outcome of most corporate actions requiring stockholder approval, including amendments to our Articles of Incorporation; (ii) the ability to control corporate combinations or similar transactions that might benefit minority stockholders which may be rejected by Mr. Ryan to their detriment, and (iii) control over transactions between him and Cignus.

We may conduct further offerings in the future in which case your shareholdings will be diluted.

Since our inception, we have relied on such equity sales of our common stock to fund our operations. We may conduct further equity offerings in the future to finance our current projects or to finance subsequent projects that we decide to undertake. If common stock is issued in return for additional funds, the price per share could be lower than that paid by our current stockholders. We anticipate continuing to rely on equity sales of our common stock in order to fund our business operations. If we issue additional stock, the interests of existing shareholders will be diluted.

As our business assets and our directors and officers are located outside of the United States, investors may be limited in their ability to enforce civil actions against our assets or our director and officer.

Our business assets are located in Canada and our director and officer is a resident of Canada. Consequently, it may be difficult for United States investors to effect service of process within the United States upon our assets or our director or officer, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under U.S. Federal Securities Laws. A judgment of a U.S. court predicated solely upon such civil liabilities may not be enforceable in Canada by a Canadian court if the U.S. court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter. There is substantial doubt whether an original action could be brought successfully in Canada against any of our assets or our directors and officers predicated solely upon such civil liabilities.

Because our stock is a penny stock, shareholders will be more limited in their ability to sell their stock.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system. Because our securities constitute “penny stocks” within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability of owners of shares to sell our securities in any market that might

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develop for them. As long as the quotation price of our common stock is less than $5.00 per share, the common stock will be subject to rule 15g-9 under the Exchange Act. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that:

1.

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

   
2.

contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws;

   
3.

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

   
4.

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

   
5.

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

   
6.

contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation.

The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our stock.

ITEM 2. UNREGISTERED SALES OF EQUITY 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.

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ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.

Exhibit  
Number Description of Exhibit
3.1

Articles of Incorporation.(1)

3.2

Bylaws, as amended.(1)

4.1

Form of Share Certificate.(1)

10.1

Purchase Agreement dated March 23, 2005 between Larry Sostad and CVI Exploration Ltd.(1)

14.1

Code of Ethics.(2)

21.1

List of Subsidiaries.(3)

31.1

Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


Notes:  
(1) Filed with the SEC as an exhibit to our Registration Statement on Form SB-2 originally filed on November 25, 2005, as amended.
(2) Filed with the SEC as an exhibit to our Quarterly Statement on Form 10-QSB filed on July 11, 2006.
(3) Filed with the SEC as an exhibit to our Annual Report on Form 10-KSB filed on December 14, 2007.

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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.

      CIGNUS VENTURES INC.
       
       
       
Date: July 15, 2008 By: /s/ David K. Ryan
      DAVID K. RYAN
      Chief Executive Officer, Chief Financial Officer
      President, Secretary and Treasurer
      (Principal Executive Officer
      and Principal Accounting Officer)