2007 annual report aveiro investment corp. - First West Properties

a company with common management. In addition general and
administrative expenses in the amount of $4,651 were paid on
that company’s behalf and were subsequently reimbursed during
the period.
Stock-based compensation expenses for the year were $249,207.
The Company uses the fair value method of accounting for stockbased
compensation whereby the Company recognizes the fair
value of stock options granted to employees, directors and certain
consultants. In order to determine the fair value option and
warrant prices management selected the Black-Scholes pricing
model. This method of determining the option and warrant prices
requires management to use several estimates. In the absence of
signifi cant historical data, management utilized other companies
in the real estate industry and the TSX Venture Exchange index
to develop a reasonable expectation of what the volatility of the
Company will be. Other companies in the Company’s industry
range from 13% to 17% volatility, but as they are mostly established
with a large asset base this may not be an accurate indication of
the Company’s future volatility. Since the Company is a growth
oriented company in its initial stages management expects that
the volatility of the Company’s stock will be in excess of that of
a more established company. Management has determined
that another useful comparison is the average volatility on the
TSX Venture Exchange index which is approximately 20%. After
weighing the facts, management has determined that a volatility
measure of 20% would be reasonable.
Interest expense for the year on the mortgage payable related to
the Lethbridge Warehouse and Lethbridge Land totaled $14,813.
Amortization for the year was $5,692. $3,629 of this amount
related to the Lethbridge Warehouse and the remainder of $2,063
related to offi ce equipment and computer hardware and software.
Property operating costs related to the Lethbridge Warehouse
totaled $3,558.
As a result of the foregoing, the loss for the 12 month period was
$872,750 or $0.1535 per basic and fully diluted Common Share.
The loss for the comparative year ended June 30, 2006 was $6,863
or $0.0033 per basic and diluted Common Share.
SUMMARY OF QUARTERLY RESULTS
For the quarter ended June 30, 2007 the Company recorded
revenues of $71,900. This amount was derived from three
sources. First, the Company earned $29,178 in rental revenue on
the Lethbridge Warehouse. Second, the Company earned $24,722
in interest income from excess funds invested in guaranteed
investment certifi cates with a Canadian chartered bank. Finally,
the Company recorded $18,000 in revenue from a company
which shares common offi cers and directors, pursuant to which
the Company shares offi ce costs (including rent and certain
offi ce expenses).
Operating expenses for the quarter totaled $621,043. This
amount was higher than the prior quarter due primarily to the
recording of share-based compensation during the fourth quarter
of $249,207 and to acquisition fees of $103,949 paid pursuant to
the Management Agreement in respect of the acquisition of the
Lethbridge Warehouse and the Lethbridge Land. Other expenses
during the quarter included salaries, wages and benefi ts paid to
Aveiro staff of $32,393; offi ce rent of $61,240; sales and marketing
expenses of $34,368 and offi ce expenses of $36,801. As a result of
the foregoing, the loss for the three month period was $549,143
or $0.0499 per basic and fully diluted Common Share. The loss
for the comparative three month period ended June 30, 2006 was
$5,070 or $0.0025 per basic and diluted Common Share.
Aveiro Investment Corp. | 2007 Annual Report | 21