2007 annual report aveiro investment corp. - First West Properties

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LIQUIDITY Working Capital Position At June 30 2007, the Company had cash of $1,930,423 (June 30 2007 - $Nil) and a working capital defi cit of $239,871 (June 30, 2007 – ($6,349)). The working capital defi cit was short term in nature due to the required short term debt payments on the mortgages payable. As at the date of this MD&A the working capital position of the Company had improved to approximately $3,750,000. From 22 | Aveiro Investment Corp. | 2007 Annual Report Sept. 2005 Dec. 2005 March 2006 June 2006 Sept. 2006 Dec. 2006 March 2007 June 2007 Total Revenue $ Nil $ Nil $ Nil $ Nil $ Nil $ Nil $ 2,596 $ 71,900 Loss from Operations $ (157 ) $ (713 ) $ (923 ) $ (5,070 ) $ (38,278 ) $ (126,893 ) $ (158,436 ) $ (549,143 ) Net Loss $ (157 ) $ (713 ) $ (923 ) $ (5,070 ) $ (38,278 ) $ (126,893 ) $ (158,436 ) $ (549,143 ) Net loss per Share $ (0.0001 ) $ (0.0003 ) $ (0.0005 ) $ (0.0025 ) $ (0.01861 ) $ (0.0339 ) $ (0.0310 ) $ (0.0499 ) Net loss per $ (0.0001 ) $ (0.0003 ) $ (0.0005 ) $ (0.0025 ) $ (0.01861 ) $ (0.0339 ) $ (0.0310 ) $ (0.0499 ) Share (diluted) Contractual obligations Contractual obligations currently owed by the Company at June 30, 2007 are summarized in the following table: Less than Years Years $ Total $ 1 year $ 2 and 3 $ 4 and 5 First Mortgage on Lethbridge Lands 665,950 – 665,950 – First Mortgage on Lethbridge Warehouse 3,625,000 56,820 187,221 3,380,959 First Mortgage on Airdrie Lands 735,000 – 735,000 – Second Mortgage on Airdrie Land 2,052,000 2,052,000 – – Total 7,077,950 2,108,820 1,588,171 3,380,959 Operating Lease - Photocopier 9,072 3,024 6,048 – July 1, 2007 to the date of this MD & A, the Company received net proceeds of approximately $4,065,000 from the issuance of 3,000,000 Common Shares at $1.50 per share. As at the date of this MD&A, the Company has the necessary liquidity to meet its obligations for the next fi scal year. The Company continues to actively search for real estate investment opportunities that meet its acquisition criteria, however its success in acquiring additional real estate assets that meet its investment criteria will be determined by its ability to raise additional capital.
During the 2008 fi scal year, the Company has committed to make principal and interest payments of $335,000 in regards to the mortgages payable on the Lethbridge Warehouse property. The Company has entered into leases on that property which will provide an aggregate of $776,000 of net rent during the same period of time resulting in excess cash fl ows of $441,000 generated from the Lethbridge Warehouse. The Company has also entered into a lease agreement for its Saskatoon Warehouse, which was acquired subsequent to the year end, which will result in net rent of $240,000 from this property. The Saskatoon Warehouse is not currently encumbered by any fi nancing. CAPITAL RESOURCES The Company’s capital resources include both equity capital from the issuance of Common Shares and debt capital secured by mortgages on properties purchased by the Company. The Company had made no commitments for capital expenditures at June 30, 2007. On August 28, 2007 the Company issued 1,238,095 Common Shares to purchase an industrial warehouse property in Saskatoon, Saskatchewan. OFF BALANCE SHEET ARRANGEMENTS The Company did not have any off-balance sheet arrangements in place at as and during the year ending June 30, 2007. RISK MANAGEMENT AND FAIR VALUE The Company is exposed to both interest rate and credit risk. The Company is exposed to interest rate risk on its variable rate mortgages payable. It minimizes this risk by restricting mortgages payable to 75% of the purchase price of the property. As an owner of real estate the Company is exposed to credit risk in that tenants may become unable to pay amounts owing under lease agreements. Management mitigates this risk by carrying out appropriate credit checks and related due diligence on the signifi cant tenants. The fair values of the Company’s cash, accounts receivable, restricted cash, accounts payable and accrued liabilities, and mortgages payable approximate their carrying amounts. RISKS AND UNCERTAINTIES In evaluating Aveiro and its business, the following is a brief review of certain of the potential impact different risks and uncertainties may have on the Company’s operations. Dependence on Key Personnel The success of Aveiro will be largely dependent upon the quality of its management and personnel, including the offi cers and employees of the Manager which provides strategic management services to Aveiro (see “Results of Operations - Expenses”). Loss of the services of such persons, or the inability to attract personnel of equal ability, could materially affect Aveiro’s business operations and prospects. Aveiro has not purchased “key man” insurance on any of its directors, offi cers or key employees, and has no plans to do so. Real Estate Industry All real estate investments are subject to varying degrees of risk depending on the nature of the property in question. The value of Aveiro’s investments in its properties is subject to changes in general economic conditions (such as the availability and cost of mortgage funds), local conditions (such as the over supply of a real estate product or a reduction in demand for properties in any particular area), the attractiveness of such properties to current and potential tenants, the competition from others with similar developments and the ability of Aveiro to adequately maintain and improve its properties pursuant to its business plan at an economic Aveiro Investment Corp. | 2007 Annual Report | 23
Page 1 and 2: AVEIRO INVESTMENT CORP. 2007 ANNUAL
Page 3 and 4: CHAIRMAN’S LETTER DEAR FELLOW SHA
Page 5 and 6: ASSETS SASKATOON TOTAL OF APPROXIMA
Page 7 and 8: ASSETS AIRDRIE 77 ACRES OF UNDEVELO
Page 9 and 10: Harold Kunik, Chief Financial Offic
Page 11 and 12: JULY 2007 Private Placement In July
Page 13 and 14: WHY SASKATCHEWAN? Once solely an ag
Page 15 and 16: OVERVIEW About Aveiro Aveiro is an
Page 17 and 18: OVERALL PERFORMANCE Financial Posit
Page 19 and 20: The Warehouse Mortgage is a fi rst
Page 21: a company with common management. I
Page 25 and 26: properties. The ability of Aveiro t
Page 27 and 28: OUTSTANDING SHARE DATA Common Share
Page 29 and 30: The rates are determined based on m
Page 31 and 32: AUDITOR’S REPORT To the sharehold
Page 33 and 34: STATEMENTS OF LOSS AND DEFICIT Year
Page 35 and 36: NOTES TO THE FINANCIAL STATEMENTS J
Page 47 and 48: AUDITORS Grant Thornton LLP 1000, 1

2007 annual report aveiro investment corp. - First West Properties

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