The Silver Recycling Company Inc. Files Audited Annual Report With SEDAR

The Silver Recycling Company Inc. [NEX: TSR.H] has filed its audited annual financial statements with SEDAR for fiscal year 2007, ended June 30th, along with the accompanying Management Discussion and Analysis. The financials [PDF file] got an unqualified opinion from the auditors.

Cash decreased from $226,599 as of the end of FY 2006, or June 30/06, to $31,881 as of the end of FY '07. Current assets decreased from $226,599 to $49,231 in the same time period, while current liabilities increased from $93,201 to $208,782. As a result, working capital shrunk from a $133,398 surplus to a $159,551 deficit from FY '06 to FY '07. Book value also went from positive to negative - specifically, from $65,901, or 1.47 cents/share, to -$199,835, or -2.12 cents/share. The cash drain would have been more severe had the company not secured $221,191 of proceeds for the issuance of 1,991,666 shares upon the exercise of warrants from a private placement completed on April 19th, 2006.

Silver Recycling lost $504,334 before other items in FY '07. Since it was an active company in fiscal '06, the results for the two time periods are not comparable: the only income earned by the company in the former period was $21 in interest and other income. There was also a $2,500 loss due to the forgiveness of debt, so the net loss for FY '07 was $511,823 or 5.43 cents/share. According to note 9 of the financials, the company has $5,716,000 worth of non-capital tax-loss carry-forwards. $126,000 of them expire in 2008, and $4,233,000 of them expire in 2009.

The accompanying M D & A [PDF file] opens with a recount of a takeover-in-progress of an unnamed U.S.-based silver scrap company. A non-binding letter of intent was entered into on June 11 of this year, which will expire on November 15th due to a negotiated extension of its life. Later, the M D & A says, "Management is in discussion with two to three other potential acquisition targets" and that an increase in professional fees paid out are the result of due diligence associated with the letter of intent. Also from it: "The success of the Company is dependant upon the continuing support of its current creditors and its ability to continue to raise financing to fund operations and ultimately upon its ability to achieve profitable operations." TSR.H last traded on Tuesday, and closed at 37 cents/share on that day.