Alien Metals Regulatory News (UFO)

15 Feb 2006 07:00

Hard Assets Inc15 February 2006 AIM: HAI February 14, 2006 Hard Assets Inc. Announces 2005 Year-End Results Hard Assets Inc. (AIM-HAI) announced today its 2005 year-end results for theperiod ending December 31, 2005. For the year ended December 31, 2005, Hard Assets Inc. reported a loss of$188,452 or $0.01per share. The loss largely reflects operating expenses of$208,052, with transfer agent and Nomad fees totalling $87,859 of this figure. The Company will continue to operate in the business segment of acquiringresources properties. At present, the Company has sufficient cash resources tosettle its liabilities. On behalf of Hard Assets Inc."Gordon B. Keep"President & Director For additional information, contact: Gordon B. KeepTel: 604.609.6110Email: gkeep@endeavourfinancial.com For a copy of the financials, please send a written request to the following address: Hard Assets Inc.Suite 3123 - 595 Burrard St.PO Box 49139Vancouver, BC V7X 1J1 Deloitte. Deloitte & Touche LLP 2800 - 1055 Dunsmuir Street 4 Bentall Centre P.O. Box 49279 Vancouver BC V7X 1P4 Canada Tel: (604) 669-4466 Fax: (604) 685-0395 www.deloitte.ca Auditors' Report To the Shareholders ofHard Assets Inc. We have audited the balance sheets of Hard Assets Inc. as at December 31, 2005and 2004 and the statements of operations and deficit and cash flows for theyear ended December 31, 2005 and the period from May 4, 2004 (date ofincorporation) to December 31, 2004. These financial statements are theresponsibility of the Company's management. Our responsibility is to express anopinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditingstandards. Those standards require that we plan and perform an audit to obtainreasonable assurance whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made bymanagement, as well as evaluating the overall financial statement presentation. In our opinion, these financial statements present fairly, in all materialrespects, the financial position of the Company as at December 31, 2005 and 2004and the results of its operations and its cash flows for the year endedDecember 31, 2005 and the period from May 4, 2004 (date of incorporation) toDecember 31, 2004 in accordance with Canadian generally accepted accountingprinciples. "Deloitte & Touche LLP" Chartered AccountantsVancouver, British ColumbiaJanuary 27, 2006 HARD ASSETS INC.Balance SheetsDecember 31, 2005(Expressed in Canadian dollars) 2005 2004ASSETS CURRENT Cash and cash equivalents $ 1,007,029 $ 1,194,829 Receivables and prepaid expenses 18,008 7,613 $ 1,025,037 $ 1,202,442 LIABILITIES CURRENT Accounts payable and accrued liabilities $ 32,578 $ 21,531 SHAREHOLDERS' EQUITY Share capital (Note 3) 1,404,169 1,404,169Contributed surplus (Note 3) 12,888 12,888Deficit (424,598) (236,146) 992,459 1,180,911 $ 1,025,037 $ 1,202,442 APPROVED BY THE BOARD "Gordon Keep"Gordon Keep, Director "Jay Sujir"Jay Sujir, Director See accompanying notes to the financial statements HARD ASSETS INC.Statements of Operations and Deficit(Expressed in Canadian dollars) Period from May 4, 2004 (date of Year ended incorporation) December 31, to December 31, 2005 2004 EXPENSES Advisory fees (Note 4) $ 60,000 $ 40,000 Directors' fees 36,000 24,891 Nomad fees 44,856 - Office and general 1,115 2,273 Professional fees 8,686 101,771 Rent (Note 4) 12,000 8,000 Shareholder services and press releases 2,392 - Stock-based compensation (Note 3(d)) - 12,888 Transfer agent and filing fees 43,003 50,659 208,052 240,482 OTHER ITEMS Foreign exchange gain 310 - Interest income 19,290 4,336 19,600 4,336 NET LOSS (188,452) (236,146)DEFICIT, BEGINNING OF PERIOD (236,146) -DEFICIT, END OF PERIOD $ (424,598) $ (236,146) BASIC AND DILUTED LOSS PER SHARE $ (0.01) $ (0.01) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED 37,000,003 31,913,226 See accompanying notes to the financial statements HARD ASSETS INC.Statements of Cash Flows(Expressed in Canadian dollars) Period from May 4, 2004 (date of Year ended incorporation) December 31, to December 31, 2005 2004 ---------- ---------- OPERATING ACTIVITIES Net loss $ (188,452) $ (236,146) Item not involving cash Stock-based compensation expense - 12,888 (188,452) (223,258)Changes in non-cash working capital items Receivables and prepaid expenses (10,395) (7,613) Accounts payable and accrued liabilities 11,047 21,531 (187,800) (209,340) FINANCING ACTIVITY Net proceeds on issuance of shares - 1,404,169 CHANGE IN CASH AND CASH EQUIVALENTS DURING THE PERIOD (187,800) 1,194,829CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,194,829 - CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,007,029 $ 1,194,829 CASH AND CASH EQUIVALENTS IS COMPRISED OF: Cash $ 7,780 $ 1,194,829 Term deposits 999,249 - $ 1,007,029 $ 1,194,829 See accompanying notes to the financial statements HARD ASSETS INC.Notes to the Financial StatementsYear ended December 31, 2005 and the period from May 4, 2004 to December 31,2004(Expressed in Canadian dollars) 1. NATURE AND CONTINUANCE OF OPERATIONS On May 4, 2004, Hard Assets Inc. (the "Company") was incorporated in theprovince of British Columbia under the British Columbia Business CorporationsAct. On July 14, 2004, the Company was admitted to trading on the AlternativeInvestment Market ("AIM"), under the symbol "HAI". The Company is engaged in theacquisition of resource properties. These financial statements are prepared on a going concern basis which assumesthat the Company will be able to realize its assets and discharge itsliabilities in the normal course of business. At December 31, 2005, the Companyhad not yet acquired any resource property. The Company's ability to continue ona going concern basis depends on its ability to successfully raise additionalfinancing, acquire resource property and/or other assets and ultimately achieveprofitable operations. 2. SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared in accordance with Canadiangenerally accepted accounting principles ("Canadian GAAP") and except asdescribed in Note 8, conform in all material respects with InternationalFinancial Reporting Standards ("IFRS"). The principal accounting policiesfollowed by the Company, which have been consistently applied, are outlinedbelow: (a) Use of estimates The preparation of the financial statements in conformity with Canadian GAAPrequires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the financial statements. Actual results could differfrom those estimates. (b) Cash and cash equivalents Cash and cash equivalents consist of cash on hand, deposits in banks and highlyliquid investments with an original maturity of ninety days or less. (c) Loss per share The basic loss per share is computed by dividing the net loss by the weightedaverage number of common shares outstanding during the period. The fully dilutedloss per share reflects the potential dilution of common share equivalents, suchas outstanding stock options, in the weighted average number of common sharesoutstanding during the year, if dilutive. For this purpose, the "treasury stockmethod" is used for the assumed proceeds upon the exercise of stock options andwarrants that are used to purchase common shares at the average market priceduring the period. Options, as disclosed in Note 3 (c), are anti-dilutive and,therefore, have not been taken into account in the per share calculations. 2. SIGNIFICANT ACCOUNTING POLICIES (d) Income taxes The Company accounts for income taxes whereby future income tax assets andliabilities are computed based on differences between the carrying amount ofassets and liabilities on the balance sheet and their corresponding tax valuesusing the substantively enacted income tax rates at each balance sheet date.Future income tax assets also result from unused loss carry-forwards and otherdeductions. The valuation of future income tax assets is reviewed annually andadjusted, if necessary, by use of a valuation allowance to reflect the estimatedrealizable amount. (e) Stock-based compensation Stock-based awards made to non-employees and employees are measured andrecognized using a fair value based method. Accordingly, the fair value ofoptions at the date of grant is accrued and charged to operations, with anoffsetting credit to contributed surplus, on a straight-line basis over thevesting period. If the stock options are ultimately exercised, the applicableamounts of contributed surplus are transferred to share capital. (f) Foreign currency translation Transactions denominated in foreign currencies are translated into Canadiandollar equivalents at exchange rates approximating those in effect at thetransaction dates. Foreign currency denominated monetary assets and liabilitiesare translated at the year-end exchange rate. Gains and losses arising fromforeign currency translation are recognized in the statement of operations anddeficit. (g) Financial instruments and financial risks The fair values of cash and cash equivalents, receivables and prepaid expensesand accounts payable approximate their carrying values due to the short term tomaturity of these financial instruments. The Company has no derivative financialinstruments. It is management's opinion that the Company is not exposed to interest,commodity, credit or currency risk arising from these financial instruments. (h) Comparative figures Certain comparative figures have been reclassified to conform to the currentyear's presentation. 3. SHARE CAPITAL AND CONTRIBUTED SURPLUS (a) Authorized Unlimited preference shares, no par valueUnlimited common shares, no par value (b) Issued and fully paid common shares Number of common Contributed shares Amount surplus --------- --------- --------- Issued pursuant toincorporation 3 $ 1 $ -Issued pursuant to private placement 30,000,000 750,003 -Issued pursuant to brokered financing 7,000,000 654,165 -Stock-based compensation - - 12,888 Balance, December 31, 2004 and December 31, 2005 37,000,003 $ 1,404,169 $ 12,888 On May 28, 2004, the Company completed a non-brokered private placement of30,000,000 common shares of the Company at a price of $0.025 per share for netproceeds of $750,003. On July 14, 2004, the Company completed a brokered financing of 7,000,000 commonshares of the Company at a price of $0.12 (£0.05) per share for net proceeds of$654,165 (£270,464). (c) Stock options On May 7, 2004, the Company granted 300,000 stock options with an exercise priceof $0.12 per share to directors of the Company. These stock options vestedimmediately, expire on May 7, 2009 and remain unexercised as at December 31,2005. (d) Stock-based compensation The Company did not record any stock-based compensation during the year endedDecember 31, 2005. Comparatively, using the fair value method for stock-basedcompensation, the Company recorded a charge to earnings of $12,888 for theperiod from May 4, 2004 to December 31, 2004 for stock options granted todirectors. This amount was determined using the Black-Scholes option pricingmodel assuming no dividends were paid, a weighted average volatility of 34%, aweighted average annual risk free interest rate of 4.50% and a weighted averageexpected life of five years. 4. RELATED PARTY TRANSACTIONS During the year, the Company incurred the following expenses with EndeavourFinancial Ltd. ("Endeavour"), a company related by way of a director and officerin common: Period from May 4, Year ended 2004 to December 31, December 31, 2005 2004 ---------- ---------- Advisory fees $ 60,000 $ 40,000Rent 12,000 8,000 These transactions, occurring in the normal course of operations, are measuredat the exchange amount, which is the amount of consideration established andagreed to by the related parties. 5. SEGMENTED INFORMATION The Company currently operates in one business segment, being the acquisition ofresource properties. 6. COMMITMENT Effective May 2004, the Company entered into a financial advisory and officerent agreement with Endeavour. Endeavour charges $5,000 per month for theadvisory services and $1,000 per month for the use of its office. Endeavour hasa right to earn certain other fees on the closing of a transaction. Theagreement was for an initial term of 12 months after which time is has continuedin force on a month-to-month basis. 7. INCOME TAXES The recovery of income taxes differs from the amount that would be computed byapplying the statutory income tax rate to loss before income taxes due to thefollowing: 2005 2004 Statutory tax rate 34.9% 35.6% Expected income tax recovery 65,713 $ 84,068Effect of non-deducible incomeand expenses - (4,588)Tax benefit of losses not recognized in the period that the benefit arose (65,713) (79,480) $ - $ - The approximate tax effect of temporary differences that give rise to theCompany's future income tax assets are as follows: 2005 2004 Non-capital losses $ 143,307 $ 79,480Less: Valuation allowance (143,307) (79,480) $ - $ - The Company has Canadian income tax losses of approximately $420,000 availableto reduce Canadian income tax payable in future years. These losses expire in2015. 8. DIFFERENCES BETWEEN CANADIAN GAAP AND IFRS The Company prepares its financial statements in accordance with Canadian GAAP.The Company has evaluated and determined there are no quantifiable materialdifferences between Canadian GAAP and IFRS. Accordingly, no differences in theCompany's reported financial position at December 31, 2005 and 2004 or resultsof operations or cash flows for the year ended December 31, 2005 and period fromMay 4, 2004 to December 31, 2004 have been presented. This information is provided by RNS The company news service from the London Stock Exchange