**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**





**FORM
          10-KSB/A**


(x)
            ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES ACT OF
                1934





For
                the
                fiscal year endedDecember
                31, 2005





(
                )
            TRANSACTION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934


For
                the transaction period fromtoCommission
                File number333-122449





**HENLEY
                VENTURES INC.**(Exact
                name of Company as specified in
                charter)





Nevada
            98-0359930State
                or jurisdiction or incorporation organization
            (I.R.S.
                Employee ID No.)





3rdFloor - 830 West Pender Street
              Vancouver,
                British Columbia, Canada
            V6C
                1J8(Zip
                Code)





Issuer’s
                telephone number:1-604-683-6991





Securities
      registered pursuant to section 12 (b) of the Act:





Title
                of each share
            Name
                of each exchange on which registeredNone
            None





Securities
      registered pursuant to Section 12 (g) of the Act:





None


(Title
      of
      Class)





Check
      whether the Issuer (1) filed all reports required to be filed by section 13
      or
      15 (d) of the Exchange Act during the past 12 months (or for a shorter period
      that Henley was required to file such reports), and (2) has been subject to
      such
      filing requirements for the past 90 days.





(1)
      Yes
      [X]  No
      [
      ]    (2)  Yes
      [X]
      No [ ]





Check
      if
      there is no disclosure of delinquent filers in response to Item 405 of
      Regulation S-B is not contained in this form, and no disclosure will be
      contained, to the best of Henley’s knowledge, in definitive proxy or information
      statements incorporated by reference in Part III of this Form 10-KSB or any
      amendment to this Form 10-KSB. [ ]





Indicate
          by check mark whether the registrant is a shell company (as defined in
          Rule
          12b-2 of the Exchange Act)  Yes
          [X]  No [ ]
 
 State
      issuer’s revenues for its most recent fiscal year:  $ -0-





State
      the
      aggregate market value of the voting stock held by nonaffiliates of Henley.
      The
      aggregate market value shall be computed by reference to the price at which
      the
      stock was sold, or the average bid and asked prices of such stock, as of a
      specific date within the past 60 days.





As
      at
      December 31, 2005, the aggregate market value of the voting stock held by
      nonaffiliates is undeterminable and is considered to be 0.






-1-





**(ISSUER
      INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE LAST FIVE
      YEARS)**





Not
      applicable





**(APPLICABLE
      ONLY TO CORPORATE COMPANYS)**





As
      of
      December 31, 2005, Henley has 1,450,000 shares of common stock issued and
      outstanding.





**DOCUMENTS
      INCORPORATED BY REFERENCE**





Exhibits
      incorporated by reference are referred under Part IV.











-2-








**TABLE
      OF CONTENTS**




PART
      1


Page





ITEM
                1.
            DESCRIPTION
                OF BUSINESS
            4ITEM
                2.
            DESCRIPTION
                OF PROPERTY
            12ITEM
                3.
            LEGAL
                PROCEEDINGS
            19ITEM
                4.
            SUBMISSION
                OF MATTERS TO VOTE OF SECURITIES HOLDERS
            19PART
                IIITEM
                5.
            MARKET
                FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
            19ITEM
                6.
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
            20ITEM
                7.
            FINANCIAL
                STATEMENTS
            22ITEM
                8.
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            22ITEM
                8A
            CONTROLS
                AND PROCEDURES
            23PART
                IIIITEM
                9.
            DIRECTORS,
                EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS, COMPLIANCE WITH
                SECTION 16 (a) OF THE EXCHANGE ACT
            23ITEM
                10.
            EXECUTIVE
                COMPENSATION
            27ITEM
                11.
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDERS MATTERS
            30ITEM
                12.
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS
            32PART
                IVITEM
                13.
            EXHIBITS
                AND REPORTS ON FORM 8-K
            33ITEM
                14
            PRINCIPAL
                ACCOUNTANTS FEES AND SERVICES
            34SIGNATURES
            35











-3-





**PART
      1**







**ITEM
      1. DESCRIPTION OF BUSINESS**




**History
      and Organization**





Henley
      was incorporated as Henley Ventures Inc. by Articles of Incorporation dated
      January 3, 2001 pursuant to laws of the State of Nevada. Our executive offices
      are located at 3 rd Floor -
      830 West Pender Street, Vancouver, British Columbia, Canada, V6C 1J8 (Tel:
      604-683-6991; Fax: 604-681-1775). Presently, we do not have any subsidiaries,
      affiliated companies or joint venture partners.




We
      have
      no current operations since we have not commenced any exploration work on the
      Red Bird. In addition, we have no revenues and very limited operations since
      our
      incorporation. We acquired the Red Bird by way of a Bill of Sale Absolute from
      Richard J. Billingsley on July 28, 2004. This Bill of Sale Absolute has not
      been
      filed with the Ministry and therefore the claims are still in the name of
      Richard Billingsley. We have not registered with the Ministry the Red Bird
      under
      Henley’s name due to not having the money available to do so. First, we would
      have to incorporate a British Columbia company at a cost of approximately $385,
      apply for a British Columbia Electronic Identification Number, the number
      assigned by the government to an individual or company wishing to acquire the
      rights to a mineral claim, at a cost of $20 and obtain a Free Miners License
      at
      a further cost of $400. The only way to ensure the Red Bird is not transferred
      to a third party without the knowledge of Henley is to have the Red Bird
      registered in the name of Henley - refer to Risk Factor #10 on page 8 and page
      12. In addition, Henley does not own the land comprising the Red Bird but has
      only the rights to the minerals thereon. The land is owned by the Province
      of
      British Columbia; known as the Crown. We have the rights to all minerals below
      the overburden, being the dirt above the hard rock, except for coal which must
      be applied for under a separate license. We will not apply for the coal rights.
      In addition, we do not have the rights to any placer minerals; being particles
      of gold, gemstones or other heavy minerals of value contained within the
      overburden. To have the rights to placer minerals would result in us having
      to
“stake” the Red Bird specifically for placer minerals. We will obtain the placer
      rights only if, during our exploration program, we verify there are placer
      minerals of value on the Red Bird. There are no proven ore reserves on the
      Red
      Bird. Therefore, any expenses incurred in exploring the Red Bird are expensed
      during the period they are incurred.





Our
      auditors have expressed substantial doubt about our ability to continue as
      a
      going concern - refer to page 36. We have cash of $1,920 as at December 31,
      2005
      with prepared expenses of $300, and have liabilities of $42,187 of which $23,071
      is owed to our directors. Since our inception we have incurred accumulated
      losses of $124,031. We anticipate minimum operating expenses for the next twelve
      months of $30,416 (page 21). It is extremely unlikely we will earn any revenue
      for a minimum of 5 years. We do not have any employees either full or part
      time.





We
      currently have two officers that devote an immaterial amount of time to our
      business. For example, one of our officers devotes approximately 10 hours per
      month to our business and our other officer devotes approximately 5 hours per
      month to our business.





We
      will
      have to raise money to meet our obligations during the next twelve months in
      the
      amount of approximately $30,416 - refer to page 21 and Risk Factor #1 on page
      5.





We
      have a
      100 percent interest in the mineral rights on certain claims in British
      Columbia, Canada called the Red Bird Property (the “Red Bird”). The claim
      consists of approximately 1,544 acres. It is 93 air miles northeast of
      Vancouver, British Columbia. We have not yet undertaken any exploration






-4-




work
      on
      the Red Bird. There is no assurance we will find a commercially viable mineral
      reserve on the Red Bird. The Red Bird is in good standing until July 23, 2006
      at
      which time assessment work or cash in lieu of assessment work will have to
      be
      filed with the Ministry of Energy and Mines for the Province of British Columbia
      (the “Ministry”) in the amount of approximately $2,200 to keep it in good
      standing for a further twelve months.





On
      the
      Red Bird claim, Henley is focusing on precious metals; being gold and silver.





Management
      anticipates Henley’s shares will be qualified on the system of the National
      Association of Securities Dealers, Inc. (“NASD”) known as the OTC Bulletin Board
      (the “OTCBB”).





Henley
      has 1,450,000 shares outstanding.





Henley
      is
      responsible for filing various forms with the United States Securities and
      Exchange Commission (the “SEC”) such as Form 10-KSB and Form
      10-QSB.





The
      shareholders may read and copy any material filed by Henley with the SEC at
      the
      SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC, 20549. The
      shareholders may obtain information on the operations of the Public Reference
      Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
      that contains reports, proxy and information statements, and other information
      which Henley has filed electronically with the SEC by assessing the website
      using the following address: http://www.sec.gov .
      Henley
      has no website at this time.





**Planned
      Business**





The
      following discussion should be read in conjunction with the information
      contained in the financial statements of Henley and the notes, which form an
      integral part of the financial statements, which are attached
      hereto.





The
      financial statements mentioned above have been prepared in conformity with
      accounting principles generally accepted in the United States of America and
      are
      stated in United States dollars.





Henley
      presently has minimal day-to-day operations; consisting mainly of maintaining
      the Red Bird claim in good standing and preparing the reports filed with the
      SEC
      as required.





**RISK
      FACTORS**





This
      prospectus also contains forward-looking statements that involve risks and
      uncertainties. If any of the events or circumstances described in the following
      risks actually occurs, our business, financial condition, or results of
      operations could be materially adversely affected and the price of our common
      stock could decline, when and if it is ever quoted on the OTCBB.





**1.**
            **Our
                auditors have expressed substantial doubt about our ability to continue
                as
                a going concern.**





Cordovano
      and Honeck, LLP, our auditors, are concerned as to whether we will be able
      to
      continue as a going concern unless adequate financing is obtained in the near
      future. Presently, we owe our auditors $3,000, our in-house accountant $11,000
      and $116 for unpaid office expenses. In addition, our President, Mr. Sam Hirji,
      is owed $17,883, Mr. Moeller, our Chief Financial Officer, is owed $187 and
      Mr.
      Terry


Heard,
      one of our Directors, is owed $5,000. During the next twelve months, we will
      require $30,416 to maintain our operations. If we were required to settle all
      the above amounts owed or to be incurred in the future at a single time, we
      would require cash of $42,187. We do not have these funds on hand. The only
      availability of funds will be from the issuance of treasury shares. If we cannot
      attract funds from this source, we might cease to operate as a going
      concern.






-5-






**2.**
            **We
                have two part time officers who have not managed an exploration company
                and are unfamiliar with the reporting requirements of a public company
                which will increase our overall costs if we are required to hire
                professional personnel to attend to our
                affairs.**





None
      of
      our two officers work full time for us due to having other business interests
      which take the majority of their time. Only Terry Heard, one of our directors
      and a professional geologist, has had any experience in managing an exploration
      company but, like Herb Moeller, Principal Accounting Officer, has never been
      involved with the filing of various forms with the SEC. For example, when Henley
      is subject to reporting requirement, we must file information with the SEC
      about:





●
our
      operations;


●
our
      officers, directors and certain shareholders, including salaries, various fringe
      benefits and transactions between Henley and management;


●
the
      financial condition of Henley, including financial statements audited by an
      independent certified public accountant; and


●
our
      competitive position and material terms of contracts and lease
      agreements.





We
      must
      continue to file these reports with the SEC as long as our securities are traded
      on the OTCBB. On an annual basis we will have to seek a shareholder vote on
      corporate matters thereby requiring us to provide a proxy statement to our
      shareholders, together with a proxy card. Our director, officers and any
      shareholder who acquired more than five percent of our outstanding shares must
      file beneficial owners’ reports. Unless our two part time officers are willing
      to spend more time addressing these matters, we will have to hire professionals
      to undertake these filing requirements for Henley and this will increase the
      overall cost of operations.





**3.**
            **Being
                a start up company, we have the inherit risks of not knowing the
                potential, if any, of the Red Bird, identifying quality people who
                are
                familiar with the exploration business, learning the various regulatory
                requirements associated with being a public company and not knowing
                a
                market maker who will obtain us a quotation on the OTC Bulletin
                Board.**





Henley
      is
      in the start up stage; being a relatively new business only incorporated in
      January 2001, thereby having relatively little experience in operating itself.
      First, we have never undertook a significant exploration program on the Red
      Bird
      claims but will to do before July 23, 2006. Undertaking a major exploration
      program will require knowledge which the majority of the directors and officers
      do not have. Regardless of the results, we have never assessed the merits of
      a
      mineral property regarding whether future exploration is warranted. Second,
      we
      will have to interview professional staff to work on the Red Bird claim which
      might be difficult for our directors to do unless Terry Heard is available
      to
      assist them since neither Mr. Hirji, the individual responsible for the day
      to
      day operations of Henley, nor Mr. Moeller have any geological experience. In
      the
      event there is a shortage of professional people in British Columbia, our
      chances in obtaining experienced people will be more difficult since the
      majority of professional would rather work for a company which is well known
      and
      has an inventory of mineral claims. Third, we have never had to prepare on
      a
      regular basis reports such as financial statements, budgets and notices to
      our
      shareholders. To date we have only filed a Form 10Q-Sb relating to the first
      quarter since Henley’s registration statement became effective. Fourth, we will
      have to identify a market marker to make an application to the NASD so that
      our
      shares can be quoted on the OTCBB. Market makers might not wish to quote a
      start
      up company and therefore we might never have our shares quoted on the
      OTCBB.






-6-







**4.**
            **Since
                January 3, 2001, our date of inception, we have not made any revenue
                and
                may never generate revenue, and have accumulated losses of $124,031
                which
                might result in Henley having to cease its operations.**




Since
                our inception on January 3, 2001, we have made no revenue and as
                at
                December 31, 2005 have accumulated losses of $124,031. Since we have
                no
                current operations, all money spent by us on the exploration of the
                Red
                Bird will increase our accumulated losses since it is extremely unlikely
                we will be able to earn any revenue for a minimum of more than 5
                years.
                First, we will have to explore the Red Bird by establishing a grid
                allowing us to take rock and soil samples for assaying to determine
                if
                there exists any mineralization on the Red Bird. Our initial exploration
                of the Red Bird will cost us approximately $2,200 as a minimum and
                if we
                wish to undertake Phase 1 of the recommended work program it will
                cost us
                $5,800. If there is mineralization, we will have to extend the grid
                and
                also take additional samples from within the original grid to determine
                the extent of mineralization. As a minimum, the sampling of rocks
                and
                soils using the grid could take two to three years and cost us
                approximately $96,000. All expenses during this time will increase
                our
                accumulated losses. If the results are still favorable, we will consider
                a
                diamond drilling program. Drilling is expensive and has been estimated,
                including some exploration work, at a cost of $270,000. The number
                of
                holes to be drilled is unknown. Again, the accumulated losses will
                continue to increase without any revenue being generated. There is
                the
                possibility we might never generate any revenue and eventually have
                to
                cease our operations.





**5.**
            **Without
                sufficient funds to meet our financial obligations over the next
                twelve
                months of $30,416, might result in our shareholders losing their
                entire
                investment if Henley is force to discontinue operations
                permanently.**





With
                only $1,920 in our bank account as at December 31, 2005 and our estimated
                money required for operations over the next twelve months being $30,416,
                we do not have sufficient funds to meet our future obligations which
                might
                result in our stockholders losing their total investment in
                Henley.





**6.**
            **Penny
                stock rules may result in fewer brokers willing to make a market
                in our
                shares thereby reducing liquidity to our shareholders.**





The
      penny
      stock rules adopted by the Securities and Exchange Commission may result in
      fewer brokers making a market in our shares when, and if, we obtain a quotation
      on the OTCBB. Penny stocks are generally equity securities with a price less
      than $5.00. It is extremely doubtful our share price will trade above the $5.00
      level in the near or foreseeable future. Therefore, the penny stock rule might
      result in fewer brokers willing to make a market in our shares, due to the
      imposition of additional sales practices as more fully described on page 20,
      resulting in liquidity to our stockholders being restricted.





**7.**
            **Without
                a public market there is no liquidity for our shares and our shareholders
                may never be able to sell their shares which would result in a total
                loss
                of their investment.**




We
      are
      not listed on any exchange or quotation system and do not have a market maker
      which results in no market for our shares. Therefore, our shareholders will
      not
      be able to sell their shares in an organized market place unless they sell
      their
      shares privately. If this happens, our shareholders might not
      receive a price per share which they might have received had there been a public
      market for our shares. It is our intention to apply for a quotation on the
      OTCBB
      whereby:






-7-





●
            We
                will have to be sponsored by a participating market maker who will
                file a
                Form 211 on our behalf since we will not have direct access to the
                NASD
                personnel; and





●
            We
                will not be quoted on the OTCBB unless we are current in our reports;
                being as a minimum Forms 10K-SB and 10Q-SB, filed with the SEC or
                other
                regulatory authorities;


,


Presently,
      we estimate the time it will take us to become effective with this prospectus
      will be six months and twelve to eighteen weeks to be approved for a quotation
      on the OTCBB. We cannot be sure we will be able to obtain a participating market
      maker or be approved for a quotation on the OTCBB. If this is the case, there
      will be no liquidity for the shares of our shareholders.





**8.**
            **If
                a market develops for our shares the risk will be that our shares
                might be
                thinly traded with wide share price fluctuations resulting in analysts
                not
                being interest in our trading shares which will eventually result
                in
                permanent lower share
                prices.**





If
      a
      market for our shares develops, the share price may be volatile with wide
      fluctuations in response to several factors, including:





●
            Potential
                investors’ anticipated feeling regarding our results of
                operations;


●  Increased
      competition and/or variations in mineral prices;


●  Our
      ability or inability to generate future revenues; and


●  Market
      conception of the future of the mineral exploration industry.





In
      addition, if our shares are traded on the OTCBB, our share price may be impacted
      by factors that are unrelated or disproportionate to our operating performance.
      Our share price might be affected by general economic, political and market
      conditions, such as recessions, interest rates or international currency
      fluctuations. In addition, even if our stock is approved for quotation by a
      market maker through the OTCBB, stocks traded over this quotation system are
      usually thinly traded, highly volatile and not followed by analysts. These
      factors, which are not under our control, may have a material effect on our
      share price.





**9.
      If we have to sell treasury shares, there will be a dilution effect to our
      shareholders resulting in their percentage ownership in Henley being reduced
      accordingly.**





We
      feel
      the only way we will be able to acquire additional funds is through the sale
      of
      our common stock. This will result in a dilution effect to our shareholders
      whereby their percentage ownership interest in Henley is reduced. The magnitude
      of this dilution effect will be determined by the number of shares we will
      have
      to issue in the future to obtain the funds required.





**10.**
            **The
                mineral rights to the Red Bird are not held in the name of Henley
                which
                could result in the mineral rights being transferred to a third party
                without the knowledge of
                Henley.**





The
      rights to the minerals on the Red Bird are recorded in the name of Richard
      J.
      Billingsley, an unrelated party to Henley, and even though we have a signed
      Bill
      of Sale Absolute we are exposed and might lose our interest in the minerals
      on
      the Red Bird. Mr. Billingsley is on record






-8-






with
      the
      Ministry as the registered owner of the Red Bird and without our consent and
      knowledge, he could transfer the rights to a third party which would result
      in a
      lengthy legal case where, at the end, the case could be decided against our
      interest. Unless we register with the Ministry our rights to the minerals on
      the
      Red Bird there is no assurance we will retain our interest to it.





**11.**
            **No
                matter how much money is spent on the Red Bird, the risk is that
                we might
                never identify a commercially viable ore reserve.**





No
      matter
      how much money is spent over the years on the Red Bird, we might never be able
      to find a commercially viable ore reserve. Prior to losing the mineral rights
      to
      the HV, we spent $7,665 on exploration work and on the Red Bird we acquired
      it,
      including the preparation of a geological report, for $5,030. Over the next
      twelve months we will complete Phase I of the exploration program at a cost
      of
      $5,800. Over the next ten or more years, we could spend a great deal of money
      on
      the Red Bird and never advance mineralization-wise from the point where it
      is
      today. In other words, there is the distinct probability the Red Bird does
      not
      contain any reserves and any funds spent on exploration will probably be
      lost.





**12.**
            **Even
                with positive results during exploration, the Red Bird might never
                be put
                into commercial production due to inadequate tonnage, low metal prices
                or
                high extraction costs.**





We
      might
      be successful, during our future exploration programs, to identify a source
      of
      minerals of good grade but not in the tonnage required to enter into commercial
      production. If the cost of extracting the minerals on the Red Bird is in excess
      of the selling price of the minerals, we will not be able to develop Red Bird.
      In other words, having satisfactory ounces per ton with low tonnage would not
      allow us to economically extract the minerals from the Red Bird. This being
      the
      case, we would either have to abandon the Red Bird and seek another mineral
      claim or cease operations all together.





**13.**
            **During
                our exploration programs, we will be subject to workers’ accidents,
                climatic changes or difficult terrain which might delay our exploration
                program, cost more money than originally budgeted or eventually cause
                Henley to cease
                operations.**





Being
      a
      small pre-exploration company, we will be subject to many risk and hazards
      associated with undertaking our exploration program. First, individual workers
      on the Red Bird might be injured from twisting their ankles or breaking their
      legs from falls or slipping on fallen trees and shrubs. Second, during the
      summer months, we will be subject to forest fires which would result in us
      abandoning the Red Bird quickly thereby interrupting our exploration program.
      On
      the other hand, during the spring and winter months, the Red Bird will be
      subject to snow and flood conditions which will cause hardship on our
      exploration activities. Third, the terrain of the Red Bird comprises hills,
      broken ground rocks, trenches, fallen trees and maybe unknown adits. These
      hazards will delay our exploration when we are confronted with
      them.





**14.**
            **Without
                performing a survey on the Red Bird, we are uncertain as to its exact
                boundaries which might eventually lead to litigation trying to defend
                our
                rights to its minerals.**





We
      have
      not performed a survey to determine the exact boundaries of the Red Bird and,
      therefore, there is uncertainty as to its exact location. We have, nevertheless,
      filed our information with the Ministry which gives us the rights to the
      minerals thereon, excluding coal and placer. When, and if, we discover a
      commercially viable ore reserve on the Red Bird, it would be extremely important
      to have undertaken a survey on






-9-




the
      Red
      Bird since we do not know what legal claims will be filed against us. For
      example, there may be unregistered agreements, transfers or native land claims
      which will only surface once we have identified an ore reserve. Even though
      we
      realize, without a survey, there could be litigation against us, we are
      presently not prepared to undertake a survey on the Red Bird.





**15.**
            **Within
                the exploration industry there are many small and large exploration
                companies seeking money, exploration properties and professional
                staff
                which we, as a small under-financed company, will not be able to
                compete
                with thereby limiting our future
                growth.**





Within
      North America there are many large and small exploration companies all seeking
      money, properties of merit and professional staff to work them. The competition
      is overwhelming with the larger exploration companies commanding the biggest
      piece of the pie with regards to money, properties and professional staff.
      We
      are not able to compete with these larger exploration companies and we will
      not
      try. The smaller exploration companies are often more well known, better
      financed and have full time professional staff which will allow them to identify
      properties of merit. At the present time, due to our lack of money, it is
      doubtful if we can compete against these smaller companies in obtaining money,
      properties and professional staff.





**16.**
            **The
                majority of our directors have no history managing an exploration
                company
                and its property which will increase our costs if we have to hire
                professional staff to undertake various management functions.**





Neither
      Sam Hirji, Principal Executive Officer, President and director responsible
      for
      day to day operations, nor Herbert Moeller, Principal Financial Officer,
      Principal Accounting Officer and Secretary Treasurer, have had any experience
      in
      managing an exploration company and its properties. Only Terry Heard, a
      Professional Geologist, has had any experience in running an exploration company
      and management exploration properties. In the event Terry Heard is not available
      to oversee the work programs on the Red Bird, we will have to consider hiring
      a
      geologist to oversee any exploration program undertaken on the Red Bird
      including hiring of workers, purchase to the required equipment and supplies,
      overseeing the daily exploration work and compiling the results. This will
      become an expense to Henley which we might have avoided if Terry Heard was
      available or one of our other directors had exploration experience.





**17.**
            **If
                the Red Bird does not prove to have a commercially viable ore reserve
                on
                it, our lack of money puts serious doubt on whether we could acquire
                another mineral property thereby allowing us to stay in
                operations.**




Presently,
      we hold the mineral rights to the Red Bird claims and no other claim. If, in
      the
      future, we are unable to raise additional money we will not be able to acquire
      another mineral property in addition to the Red Bird. Raising of money might
      become extremely difficult in the event no commercially viable ore reserve
      is
      identified on the Red Bird therefore not allowing us to have surplus funds
      to
      seek out and identify another mineral claim. Therefore, presently, the
      acquisition of another mineral claim is seriously in doubt.





**18.**
            **We
                will be confronted with various governmental regulations and environmental
                risks that could prevent us from exploring the Red
                Bird.**





The
                exploration of the Red Bird is subject to extensive federal and provincial
                laws and regulations governing exploration, production, labor standards,
                occupational health, waste disposal, use of toxic substances,
                environmental regulations, mine safety and other matters. During
                our
                initial exploration stage, all work must be carried out in accordance
                with
                the “Mineral Exploration Code - Part II, Health, Safety and Reclamation
                Code for Mines” in British Columbia as set forth in the Mining Act. This
                code is to protect workers and the general public while on the Red
                Bird.
                We will have to adhere to the “Fire Prevention and Suppression Regulation
                of the Forest Practice Code of British Columbia Act” which will give us
                guidelines relating to camp fires, use of explosives and how to conduct
                ourselves during the times of forest closures. In addition, we will
                have
                to adhere at all times to “Bill 57 - Environmental Management Act” where,
                if we contaminate the soil or underground water on the Red Bird,
                we will
                be liable for clean-up. We will use only workers and professionals
                who are
                familiar with all aspects of these regulations and Codes during the
                initial exploration program. At any time, new legislation and regulation
                could be introduced by either the federal or provincial governments
                which
                we are completely unaware with at this time but might have a large
                impact
                on our exploration activities. These new regulations might result
                in
                increased exploration costs or the delay in undertaking the exploration
                of
                the Red Bird.








-10-







**19.**
            **Not
                having key man insurance will result in no money being available
                to find a
                suitable replacement for a departing director or
                officer.**





At
                the present time, we do not have an insurance policy for key man
                insurance
                in the event that one of our officers and directors decided to leave
                us.
                This is important regarding Terry Heard since he is the only geologist
                on
                our Board of Directors. If any of our present officers and directors
                departed we would have to replace them with another individual; preferable
                with geological background. This will cost money and we presently
                do not
                have sufficient money available to attract such a person or to purchase
                a
                key man insurance policy.





**20.**
            **Not
                having our directors devote sufficient time to our affairs could
                result in
                business decisions not being made on a timely basis which could be
                detrimental to our future
                growth.**




Sam
                Hirji spends approximately 10 hours, Herbert Moeller spends approximately
                5 hours and Terry Heard several hours each month on the affairs of
                Henley.
                Having no full time management results in business decisions not
                being
                made on a timely basis and could in the future have a detrimental
                effect
                on our growth since outside consultants and advisors might have to
                be
                hired on a part time basis.





**21.**
            **Our
                directors and officers have other business interests which takes
                time away
                from managing our affairs which might result in the future Henley
                having
                to hire professional staff, at substantial cost, to it to attend
                to its
                affairs.**





Our
      president, Sam Hirji, is the President of Samco Printers Ltd. in Vancouver,
      British Columbia, which takes a significant amount of his time. Herbert Moeller
      is an independent consultant whose time is limited to working on the affairs
      of
      Henley. Terry Heard has his own exploration consulting company; being Mount
      Royale Ventures, LLC. Therefore, we might have to hire independent consultants
      to undertake the exploration work on the Red Bird claim since Terry Heard is
      involved in rehabilitating a mine in Boulder, Colorado and therefore might
      not
      be available to us when needed. We will require, upon commencement of the start
      of each Phase of our exploration program, one consulting geologist at a cost
      of
      $300 a day to replace Terry Heard. Based on the number of days to complete
      each
      Phase, being a total of 66 days, a geologist will cost us approximately $19,800
      In addition, since none of our directors and officers are familiar with
      statutory filings we will have to hire, upon this registration statement
      becoming effective, a part time in-house accountant at an estimated annual
      cost
      of $4,500 to prepare and file the various Form 10Q-SBs and 10K-SB.






-11-






**Forward
      Looking Statements**





In
      addition to the other information contained in this Form 10K-SB, it contains
      forward-looking statements which involve risk and uncertainties. When used
      in
      this prospectus, the words “may”, “will”, “expect”, “anticipate”, “continue”,
“estimate”, “project”, “intend”, “believe” and similar expressions are intended
      to identify forward-looking statements regarding events, conditions and
      financial trends that may affect our future plan of operations, business
      strategy, operating results and financial position. Readers are cautioned that
      any forward-looking statements are not guarantees of future performance and
      are
      subject to risks and uncertainties and that actual results could differ
      materially from the results expressed in or implied by these forward-looking
      statements as a result of various factors, many of which are beyond our control.
      Any reader should review in detail this entire Form 10K-SB including financial
      statements, attachments and risk factors before considering an
      investment.







**ITEM
      2. DESCRIPTION OF PROPERTY**


Our
      Mineral Property





We
      had
      one mineral property: the Red Bird claims located in southeastern British
      Columbia.





(1)  The
      Location and Means of Access to the Red Bird





The
      Red
      Bird is located 1.9 miles northwest of Tulameen, British Columbia and is
      approximately 94 miles from Vancouver, British Columbia. The towns of Coalmont
      and Princeton on the Southern Trans-Provincial Highway are 17 to 34 miles
      respectively by paved highway southeast of Tulameen. Elevations vary from 1,850
      feet in Lockie Creek to slightly over 5,900 feet on Rabbitt and Boulder
      Mountains. The Red Bird is at an elevation of 5,783 feet. Access to the Red
      Bird
      is provided by a steep four-wheel drive road at the south end of the
      property.





(2)  Conditions
      to Retaining Title to the Red Bird





On
      July
      28, 2004, we purchased the Red Bird from Richard Billingsley by way of Bill
      of
      Sale Absolute.





The
      Bill
      of Sale Absolute has not been registered with the Ministry thereby keeping
      the
      Red Bird in the name of Richard Billingsley. Refer to Risk Factor 10 on page
      8.





The
      Red
      Bird is held by one modified grid claim and five 2-post claims as shown
      below:





**Claim****Name**
            **Tenure****Number**
            **Number****of
                Units**
            **Expiry****Date**Red
                Bird
            412526
            20
            July
                23, 2006Red
                Bird 1
            412527
            1
            July
                23, 2006Red
                Bird 2
            412528
            1
            July
                23, 2006Red
                Bird 3
            412529
            1
            July
                23, 2006Red
                Bird 4
            412530
            1
            July
                23, 2006Red
                Bird 5
            412531
            1
            July
                23, 2006





As
      mentioned above, these claims are registered in the name of Richard J.
      Billingsley under his personal Free Miners’ License # 139085. We are in
      procession of a signed Bill of Sale Absolute giving ownership of the mineral
      rights to the Red Bird to us. A mineral claim in the Province of British






-12-




Columbia
      has to be held in the name of a resident of the Province or by a company either
      incorporated in British Columbia or extra-provincially incorporated. At the
      present time, we do not wish to extra-provincially incorporate in British
      Columbia due to the cost. In addition, to obtain a Free Miner’s License, if we
      were extra-provincially incorporated, would cost $385 whereas there is no cost
      to us using Richard Billingsley’s Free Miner’s License to hold the Red
      Bird.





Mineral
      Title in British Columbia is held via the “Mineral Act”. The Red Bird is kept in
      good standing by applying appropriate assessment work in the amount of $88
      per
      unit per year for the first three years and then $174 per unit per year
      thereafter. In the case of the Red Bird, the cost to us for the first three
      years would be $2,200 and subsequent years would be $4,350.





We
      have
      the rights to the minerals on the Red Bird except for placer and coal. Placer
      is
      obtained by applying for the rights to placer whereas coal rights are granted
      under Coal Act of British Columbia. Even though we have the rights to other
      minerals on the Red Bird, we would have to make a separate application for
      a
      lease for placer minerals under the Titles Division of the Ministry. In British
      Columbia, a lease is a higher form of tenure than a claim. By having a lease
      there is no production limit whereas a placer claim’s production is limited to
      2,000 cubic metres of pay dirt (usually gravel or sand rich enough to be
      excavated and treated to recover its valuable contents) per year. At the present
      time, we do not anticipate applying for placer until sufficient exploration
      work
      has been performed to warrant the expenditure.





(3)  Current
      State of Exploration on the Red Bird





The
      Red
      Bird is a large claim block which covers a number of old gold and copper
      showings, which were first discovered in the early part of the last century.
      A
      considerable amount of somewhat disjointed exploration, including geochemistry,
      geophysics, geology, trenching and diamond drilling has been completed since
      1965; prior to us obtaining the Red Bird. However, due to the number of
      different operators the database is somewhat fragmented. As a consequence,
      the
      strategy behind some of the diamond drill programs is not immediately clear
      from
      the available reports.





The
      Red
      Bird has a long history of extensive work as indicated below.





●
            In
                1905, Boulder Mining Company developed several shafts and tunnels.
                A
                period between 1908 and 1918 was relatively inactive due to the First
                World War. In 1918, extensive surface and underground exploration
                was
                resumed and several veins were discovered which could be traced along
                strike for hundreds of feet. These veins were relatively lower-graded
                and
                therefore were not developed at the time. Little work was carried
                out on
                the claim until the middle of the
                1960s.





●
            In
                1965, Copper Mountain Consolidated Ltd. carried out bulldozer trenching
                near the old workings and diamond drilled 5 holes totaling 1,250
                feet.
                Between 1966 and 1967, Copper Mountain Consolidated Ltd. continued
                to
                explore the Red Bird by bulldozer trenching, geophysical and geochemical
                surveys.





●
            In
                1967, Nelway Mines Ltd. acquired and explored the Red Bird with
                geochemical surveys and diamond drilling.





●
            Between
                1971 and 1974 Gold River Mines Ltd. explored the claims by extensive
                line
                cutting, soil sampling, magnetometer and VLF-EM surveys and drilling
                a
                total of 33 holes totaling 5,800
                feet





●
            In
                1978, Northern Lights Resources Ltd. conducted a ground magnetometer
                survey and drilled two diamond drill holes, totaling 366
                feet.








-13-





.●
            In
                1979, Kenman Resources Ltd., in conjunction with Ventures West Minerals
                Ltd., began a program of detailed geological mapping of various previous
                showings with a program of soil
                sampling.





●
            In
                1980, Brican Resources Ltd. acquired the rights held by Kenman Resources
                Ltd. and began a program of systemic surface exploration. In 1984,
                a
                lithogeochemcial survey was conducted over parts of the property
                and a
                detailed magnetometer survey was
                completed.





●
            In
                1985, Aberford Resources Ltd. conducted geological, geochemical and
                geophysical surveys on the northern part of the property. In addition,
                in
                1986 Aberford Resources Ltd. conducted extensive
                trenching.





●
            In
                1997, two diamond drill holes were completed for a total of 540 feet
                by
                Harold Adams of Tulameen but there was no significant mineralization
                in
                the core.





●
            Between
                1994 and 2002 two individuals, T. Lisle and E. Ostensoe held parts
                of the
                area of the Red Bird and filed numerous assessments reports documenting
                their mainly geological mapping
                efforts.





(4)  Present
      Condition of Red Bird, Work Completed and Proposed Program for
      Exploration





Present
      Condition and Climate





The
      Red
      Bird is located in a highly mineralized region of southwestern British Columbia
      in which bulk of mineral occurrences are closely related in their distribution
      and origin to the volcanic history of the Nicola rocks and co-magnetic
      intrusives (a mass of igneous rock that, while molten, was forced into or in
      between other rocks).





A
      probable stratabound horizon of massive sulfide mineralization has been
      recognized on the Red Bird. The sulfide horizons appear stratabound, lensoid
      and
      showing remarkable potential strike length. Sulfide mineralization is hosted
      in
      andesitic to rhyolitic fragmental rocks, which may also replace massive sulfide
      mineralization along strike as barren pyrite schists. The massive sulfide
      mineralization is tabular to lensoid in shape and apparently concordant with
      layering in country rocks, trending northerly and dipping shallowly to the
      west.
      Thickness of the horizons ranges from approximately three to twelve feet and
      sulfide mineralization may contain lenses of acid and intermediate volcanic
      rocks. Numerous small scale faults transect and offset sulfide mineralization.





The
      climate is transitional between that of the dry southern interior and the much
      wetter Coast Mountains to the west. Summers are hot and dry, and winters are
      cold with heavy snowfall at high elevations.





We
      will
      be only able to explore the Red Bird during the late spring or summer due to
      the
      snow falls, which could be upwards towards 40 inches, which starts towards
      the
      end of October and are basically gone by the end of April. With the snow during
      the winter, it will make it difficult for us to obtain any soil or rock samples
      for analysis. To access the Red Bird during the winter, we will have to use
      snowmobiles.





During
      the summer months we can assess the Red Bird by four-wheel drive pick-up or
      by
      four-wheeler/quad/all terrain vehicle. One problem which we might have to face
      during the summer, which will reduce our exploration time, will be forest
      closures due to hot and dry conditions. With the number of recent fires in
      British Columbia during the last several summers this is a distinct possibility.




Work
      Completed on the Red Bird





Since
      the
      acquisition of the Red Bird we have not undertaken any exploration work on
      the
      any part of the claim. In acquiring the Red Bird and in having a geological
      report prepared on it cost us $2,680.








-14-





Proposed
      Exploration Program





Further
      geochemical sampling by way of the establishment of a grid to obtain soil and
      rock samples for assaying is recommend as an initial stage. Subsequently, deeper
      penetrating geophysical survey is recommended in the Lockie Creek hornfels
      zone
      and tightly controlled ground magnetometer survey over the entire property
      is
      also recommended.





Contingent
      on attractive targets being identified by the above work, together with a
      synthesis of older data, Phase III diamond drilling is recommended to further
      test these targets contingent on success of Phases I.





Further
      geochemical sampling and deeper penetrating geophysical surveys is recommended
      in the Lockie Creek hornfels zone and tightly controlled ground magnetometer
      survey over the entire property is recommended.





Contingent
      on attractive targets being identified by the above work, together with a
      synthesis of older data, Phase III diamond drilling is recommended to further
      test these targets contingent on success of Phases I and II. A cost estimate
      is
      included below outlining Phase I - $5,800 and Phase II - $96,000.





Contingent
      on attractive targets being identified by the above work, together with a
      synthesis of older data, Phase lll diamond drilling is recommended to further
      test these targets contingent on success of Phases l and ll. A cost estimate
      is
      included below outlining contingent Phase III of $270,000. A breakdown of the
      work to be undertaken during each Phase is shown below:





Phase
      I





It
      would
      be to our advance to locate and re-log the old drill core to determine if there
      were any significant values. The practice in British Columbia is to leave on
      the
      property the residual drill core not sent for assaying. In addition, we should
      under take geochemical testing in the Lockie Creek to determine if I any
      significant assay values located there. Areas of interest should have a
      magnetometer survey performed on it.





Geological
                mapping, assaying and magnetometer survey
            $
                2,300Transportation
            385Accommodation
                and meals
            385Data
                compilation
            2,730Total
                Phase 1
            $5,800





It
      is
      estimated Phase I will take approximately 10 days using the services of two
      workers.








-15-







Phase
      II





Depending
      upon the results of Phase I, areas of interest should be followed up by
      establishing further geochemical grids for sampling, re-sampling within the
      original grid the areas of interest, undertaking geological mapping and
      performing geophysics where needed.





Geological
                supervision, mapping
            $
                23,100Analytical
            7,700Contract
                geophysical
            19,200Follow-up
                geochemical
            15,400Transportation,
                accommodation and meals
            5,400Field
                supplies
            7,700Drafting
                (AutoCAD)
            3,000Line
                cutting
            6,100Date
                compilation
            4,600Report
                preparation
            3,000Word
                processing and reproduction
            800Total
                Phase II
            $96,000





It
      is
      estimated Phase II will take approximately 3 weeks using the services of 3
      workers and one geologist.





Phase
      III





Depending
      on our results under Phase II, we plan to undertake trenching in various
      locations where the assays indicated a high concentration of mineralization,
      followed up by a mapping and sampling program including geophysics before we
      undertake a 9,900 foot drilling program.





Continued
                geological mapping and drill supervision
            $
                29,200Contract
                diamond drilling (9,900 metres @ approximately $19.15 perfoot)
            190,500Core
                splitting and handling
            6,100Analytical
            7,700Contract
                geophysical
            8,500Transportation
            3,850Accommodation
                and meals
            11,100Field
                supplies
            750Drafting
                (AutoCAD)
            3,000Line
                cutting
            4,600Report
                preparation
            3,000Word
                processing and reproduction
            1,700Total
                Phase III
            $270,000





Phase
      III
      is estimated to take 5 weeks but will require us to supply only a site geologist
      and one worker to assist the geologist during the drilling program since the
      drilling company will supply all other personnel.





4
      (ii)  Description
      of Equipment and Infrastructure Facilities





We
      do not
      have any equipment or facilities.











-16-








5.  Rock
      Formation and Mineralization





Within
      the eastern-central portion of the Red Bird, possible Cretaceous rocks include
      andesitic tuffs (a rock composed of the finer kinds of volcanic detritus which
      is usually stratified), breccias (a rock type with angular fragments of one
      composition surrounded by rock of another composition or texture) and
      porphyritic dikes. These are characterized by their relatively fresh, blocky
      nature and maroon to salmon-pink feldspar.





Towards
      the northern end of the Red Bird, there are exposures of fresh andesitic
      pyroclastics (rocks that have been produced by explosive or aerial ejection
      from
      a volcanic vent), tuffs and conglomeratic fragmentals (with Nicola clasts),
      which may either represent local Cretaceous units or subacqueous-subaerial
      Nicola volcanosedimentary units.





The
      north-central part of the Red Bird is composed essentially of two units, as
      follows:





1.  andesitic
      volcanoclastic sediments (intermediate volcanic rocks); and





2.
            andesitic
                tuffaceous pyroclastics (intermediate volcanic rocks with relatively
                fine
                fragements).





Both
      units are schistose (readily split into thin flakes or slabs), chloritized
      (applies to the roasting of silver ores with salt) and local epidotized (a
      basic
      silicate of aluminum, calcium and iron) throughout. Calcareous alternation
      (rocks that contain calcium carbonate) is common, as a thin calcite lenses
      (line
      strips of calcium carbonate), flattened pods and sub-parallel to schistosity
      (a
      type of cleavage) and as distinct, rounded blebs (a small, usually rounded
      inclusion of one mineral in another). These occurrences may reflect secondary
      alternation and replacement associated with low grade metamorphic events
      (involving physical transformation).





The
      central portion of the Red Bird claims are predominately andesite, local dacitic
      (a fine-grained extrusive rock with intermediate composition), feldspar
      porphyritic and pyroclastic flows and dykes. Throughout the area the fragments
      are mainly felsic but there are consistently >3 to 20% mafic fragments (dark
      mineral fragments). This may reflect the bimodal distribution (contains two
      main
      size fractions) of the volcanic source material, which is masked by regional
      metamorphism. The south-centre of the Red Bird exposures comprise epidotized
      porphyriti c andesitic flows (this is a calcium-iron calc-silicate mineral) as well as
      andestic tuffaceous pyroclastics. These units appear somewhat fresher in
      appearance and may represent a later stage Nicola volcanism.





The
      Red
      Bird area is structurally complex with a large northerly trending open synclinal
      to homoclinal  sequence
      (the rocks are folded with the younger rocks surrounded by older rocks), cut
      by
      later Cretaceous and Tertiary structures.





Prior
      mapping work indicates a bedding trend of 010-050° with shallow westerly dips,
      although directions of 150-170° are locally preserved. The Nicola rocks appear
      to be drawn-out along 010-050° in response to dilational forces possibly a
      result of Cretaceous and Tertiary compression and uplift. Clockwise rotation
      may
      also have had an effect as well, with sub-horizonal strike-slip faulting
      producing the dominant 020-040° shear. Late Nicola/Cretaceous units are not as
      sheared in appearance though they are strongly joined along 150-170°. Later
      Tertiary events may have produced major faulting. Fracturing at 110-130° is
      observed to cut both Nicola and Cretaceous units.











-17-








Sulfide
      concentrations within the Red Bird claim area are tabulated as
      follows:





a.
            Intensely
                silicified, pyritiferous lenses (containing pyrite - “fool’s gold”) occur
                concordant to volcanic layering. At the Red Bird portal, massive
                chalcopyrite-quartz lenses (soft mineral similar to pyrite and the
                most
                important source of copper) up to 0.5 metre thick are exposed and
                traceable for short (15-25 metre) distances along strike before pinching
                out. The wall rock (foot-hanging walls) around the chalcopyrite-pyrite
                lenses is highly bleached displaying saussurite and sericite alteration.
                Other workings about 100 metres to the north of the Red Bird also
                expose
                similar types of mineralization and occur along the same volcanic
                horizon.
                Some of the lenses are predominately massive pyrite with little to
                no
                chalcopyrite.





b.
            The
                host rock is an andesitic-dacitic sequence, which is pervasively
                calcareous and altered to greenschist facies. At the Red Bird portal,
                the
                mineralized lenses are also associated with a silicified mylonite
                zone.
                The mineralization follows the layered sequence striking 340° to 35° to
                the west.





Pyrite
      mineralization is observed along Lockie Creek, within a
      volcanosedimentary-Cretaceous intrustion and hornfels zone. Sulfides occur
      as
      distinct belbs within the Cretaceous porphyritic dyke material as well as fine
      disseminations located along the planar bedding of the argillaceous
      volcanosediments. The altered, baked appearance of these units may suggest
      a
      metasomatic type mineralization.





Volcanic
      rocks of the Red Bird claim appear to occur as a relatively simple homoclinal
      sequence that is complicated by normal and strike slip faulting. North-south
      strikes and shallow to moderate westerly dips typify the sequence. A weak to
      moderately well developed foliation is ubiquitous and varies from 130° to 180°
in strike (dominantly 160° to 170°) with shallow westerly dips. Intensity of
      foliation is variable and largely a function of lithology, as finer grained
      fragmental rocks tend to be more schistose than their coarser counterparts.
      Layering is difficult to discern due the massive nature of many of the rocks,
      but where observed is subparallel to the foliation.





Faulting,
      of probable Tertiary age disturbs the volcanoclastic rocks. It is difficult
      to
      determine offset and movement on these faults due to scarcity of outcrop, the
      relative homogeneity of rocks, lack of distinctive layering and market horizons,
      and the lensoid nature of units within the sequence and faults are largely
      recognized by distinctive linear structures. North, northeast trends for faults
      are dominant but some east-west trends are also evident.





Structural
      features on the Red Bird claims are very similar to those of the entire belt
      of
      Nicola rocks, which are typified by large open folds cut by later
      faults.





The
      Red
      Bird has no proven or probable reserves on it and the above proposed programs
      are exploratory in nature.





Source
      of
      Power on the Red Bird





There
      is
      no source of power on the Red Bird. The only power which will be available
      is
      the use of a gas operated generator if required during Phase III. This power
      source will be supplied by the drilling company.











-18-








Conclusions
      and Recommendations





Geological
      mapping of the volcanic succession is essential in predicting the location
      of
      mineralized alkalic plutons. The common occurrence of magnetite with alkalic
      intrusions suggest the re-plotting and re-interpretation of previous magnetic
      data will aid in defining target areas. Drilling to test geological targets
      is
      envisaged.





Since
      the
      bulk of mineral occurrences in Southern Quesnellia are closely related in their
      distribution and origin to the volcanic history of the Nicola volcanics and
      co-magnetic intrusives, a detailed geological mapping program is recommended
      at
      a scale of 1:2500 on an accurate orthophoto-topographic basemap. All previous
      work should be incorporated onto this basemap as accuracy permits. In
      conjunction with this mapping program, all available diamond drill core should
      be relogged.





Further
      geochemical sampling and deeper penetrating geophysical surveys is recommended
      in the Lockie Creek hornfels zone and tightly controlled ground magnetometer
      survey over the entire property is recommended.





Henley’s
      Main Product





Henley’s
      primary product will be the sale of minerals, both precious and commercial.
      No
      minerals have been found to exist on the Red Bird claim and therefore the
      possibilities of obtaining a cash flow from the sale of minerals in the future
      might be remote.





Henley’s
      Exploration Facilities





Henley
      will be exploring and developing, if warranted, the Red Bird claim and does
      not
      plan to build any mill or smelter. During the exploration period, Henley can
      use
      tent facilities, during the summer months, to house its geological workers
      or it
      can obtain hotel accommodation in either the towns of Coalmont or Princeton,
      British Columbia.





Investment
      Policies





Henley
      does not have an investment policy at this time. Any excess funds it has on
      hand
      will be deposited in interest bearing notes such as term deposits or short
      term
      money instruments. There are no restrictions on what the director is able to
      invest or additional funds held by Henley. Presently Henley does not have any
      excess funds to invest.







**ITEM
      3. LEGAL PROCEEDINGS**







There
      are
      no legal proceedings to which Henley is a party or to which the Red Bird is
      subject, nor to the best of management’s knowledge are any material legal
      proceedings contemplated.







-19-





**ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS**







There
      has
      been no Annual General Meeting of Stockholders within the last fiscal year
      and
      there has been none held since the date of inception. Management plans to hold
      an Annual General Meeting of Stockholders during 2006.




**ITEM
      5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS**




During
      the past year, there has been no established trading market for Henley’s common
      stock. Since its inception, Henley has not paid any dividends on its common
      stock, and Henley does not anticipate that it will pay dividends in the
      foreseeable future. As at December 31, 2005 Henley had 39 shareholders; two
      of
      these shareholders are an officers and director of Henley.





Option
      Grants in Last Fiscal Year ended December 31, 2005.





In
      the
      fiscal year ended December 31, 2004, w granted Terry Heard 100,000 options
      at a
      price of $0.10 per share as shown below.





The
      stock
      options outstanding as at December 31, 2005 are as follows:





**Option/SAR
      Grants in
      Last Fiscal Year**


Individual
      Grants





(a)
            (b)
            (c)
            (d)
            (e)Name
            Number
                of Securities
              Underlying
                Options/SAR’s
                Grants (#)
            %
                of Total Option/SARs
              Granted
                to Employees inFiscal
                Year
            Exercise
                of
              Base
                Price($/Sh)
            Expiration
              DateSam
                Hirji
            Nil
            Nil
            -
            -HerbertMoeller
            Nil
            Nil
            -
            -Terry
                Heard
            100,000
            100
                %
            $
                0.10
            September15,
                2009





There
      are
      no outstanding warrants or conversion privileges for Henley.







**ITEM
      6. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF
      OPERATION**







The
      following discussion and analysis explains the major factors affecting our
      results of operations for the years ended December 31, 2001 to 2005 and the
      variance of results between periods. The following discussion of our financial
      condition and results of operations should be read along with the financial
      statements and notes to the financial statements included elsewhere in this
      Form
      10K-SB.





**(a)
      Plan of Operations**





While
      we
      believe the Red Bird has value and should be explored further, we do not have
      any current operations since we have not commenced exploration on the Red Bird.
      Our continued existence and future plans depend on us having money to pay our
      bills.






-20-





Our
      plan
      of operations to overcome our present financial difficulties for the next twelve
      months will be as follows:





●
            to
                identify a market maker to submit, on our behalf, an application
                to the
                NASD for a quotation on the OTCBB;





●
            to
                raise money sufficient, once we are public, to meet our cash requirements
                for the next twelve months as shown below. Raising money might be
                through
                the issuance of shares from treasury;
                or





•
            Through
                the goodwill of our directors advance us funds as they are
                need.





If
      the
      above method of raising money occurs, it would help to eliminate the uncertainty
      of our ability to continue as a going concern.





With
      limited operations to date, it might be difficult for us to obtain money through
      the issuance of shares especially at a price favorable to our existing
      shareholders. If the price is too low, too many shares will have to be issued
      for the same money and a greater dilution affect will happen to our existing
      shareholders. Presently, the directors and officers are not wishing to guarantee
      a loan and would rather not continue to put money into Henley other than
      maintaining the Red Bird in good standing until July 23, 2007. The only
      alternative to meeting the cash requirements of the next twelve months, being
      $30,416, is through the issuance of treasury shares. At this time, management
      does not know if Henley’s shares will be acceptable to the investing public or
      what the issuance price will be. Therefore, if financing was not available
      we
      might have no choice but to allow Henley to cease as a going concern. All
      shareholders, which include the directors and officers, would lose their
      investment..





We
      will
      not buy or sell any plant or significant equipment.





The
      number of employees is not expected to change.





We
      are
      now concentrating our interest on the Red Bird. We have not tried to identify
      any other mineral claims and will not do so until we have explored the Red
      Bird
      to determine if there exist minerals thereon of a commercial nature. Eventually,
      subject to the availability of financing, we will seek to increase our inventory
      of exploration properties and, if acceptable to us, enter into joint venture
      agreements with other exploration companies to explore various mineral claims
      we
      have identified.





We
      will
      require money to operate over the next twelve months. We have determined we
      will
      require the following funds:





Distribution
                of Funds
            Ref.
            AmountAccounting
                and audit
            (i)
            $
                9,250Exploration
                on the Red Bird
            (ii)
            5,800Office
            (iii)
            500Transfer
                agent’s fees
            (iv)
            50016,050Accounts
                payable to third parties
            (v)
            14,366Estimated
                Funds Required overthe
                Next Twelve Months
            
            $30,416








-21-





(i)  Accounting
      and auditing





This
      represents the cost for the annual financial statements and various quarterly
      financial statements required for filling with the SEC now that Henley’s
      registration statement is effective.


.


Financial
              StatementRequirement
            Independent
              Accountant
            In-house
              Accountant
            EstimatedAccountingand
              Auditing10K-SB
                - Dec 31
            $
                3,000
            $
                1,000
            $
                4,00010Q-SB
                - March 31
            1,000
            750
            1,75010Q-SB
                - June 30
            1,000
            750
            1,75010-Q-SB
                - Sept. 30
            1,000
            750
            1,750Total
            $6,000
            $3,250
            $9,250





Our
      in-house accountant prepares the accounting records and draft financial
      statements for submission to Cordovano and Honeck, LLP, our
      auditors.





(ii)  Exploration
      of the Red Bird





During
      the next twelve months there is no requirement for us to undertake any work
      on
      the Red Bird. Nevertheless, we would like to undertake Phase I of the
      recommended geological program at a cost of $5,800 as recommend on page 15.
      Management is prepared to advance this money in order to ensure this exploration
      program is completed. We are not anticipating undertaking any exploration work
      on the Red Bird until the spring of 2006.





(iii)  Office





Relates
      to photocopying, printing and courier charges in the preparation of working
      papers and other documents to be sent to our independent auditors,
      correspondence with our shareholders, general material for the office and
      miscellaneous expenses which will be incurred in the future but cannot yet
      be
      identified.





(iv)  Transfer
      agent’s fees





The
      annual fee charged by Empire Stock Transfer is $500.





With
      cash
      of $1,920 as at December 31, 2005, we will require additional funds during
      the
      next twelve months. To meet our future obligations we will have to issue
      treasury shares. The directors have not given any consideration to personally
      supporting Henley financially other than maintaining the Red Bird in good
      standing for a further year. No decision has been made by our directors
      regarding any future issuance of our shares or the price per share.







**ITEM
      7. FINANCIAL STATEMENTS**




The
      financial statements of Henley are included following the signature page to
      this
      Form 10-KSB.







-22-







**ITEM
      8. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE**




During
      the fiscal year ended December 31, 2005, to the best of our knowledge, there
      have been no disagreements with Cordovano and Honeck LLP on any matters of
      accounting principles or practices, financial statement disclosure, or audit
      scope procedures, which disagreement if not resolved to the satisfaction of
      Cordovano and Honeck LLP would have caused them to make a reference in
      connection with its report on the financial statements for the
      year.




**ITEM
      8A - CONTROLS AND PROCEDURES**




(a)  Evaluation
      of Disclosure Controls and Procedures





Our
          Chief
          Executive Officer and our Chief Financial Officer, after evaluating the
          effectiveness of Henley’s controls and procedures (as defined in the Securities
          Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e) as of the end of the
          period
          covered by this annual report on Form 10-KSB/A (the “Evaluation Date”), have
          concluded that as of the Evaluation Date, Henley’s disclosure controls and
          procedures were adequate and effective to ensure that material information
          relating to it would be made known to it by others, particularly during
          the
          period in which this annual report on Form 10-KSB/A was being
          prepared.


(b)  Changes
      in Internal Controls





There
      were no changes in Henley’s internal controls or in other factors that could
      affect its disclosure controls and procedures subsequent to the Evaluation
      Date,
      nor any deficiencies or material weaknesses in such disclosure controls and
      procedures requiring corrective actions.





**PART
      111**






**ITEM
      9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS; COMPLIANCE
      WITH SECTION 16 (a) OF THE EXCHANGE ACT**




The
      name,
      municipality of residence, position held within Henley, age and the year the
      individual was first elected or appointed are set forth in the following table.
      Each director is to serve until the Annual Meeting of Shareholders or until
      his
      or her successor is elected or appointed. The work experience of each of the
      directors and officers is indicated in their individual biographies noted
      below.








-23-







**Name
                and****Municipality
                of**
              **Residence**
            **Position
                or Office within the**
              **Registrant**
            **Age**
            **Year**
              **Became****A
                Director**Sam
                Hirji
              Vancouver,
                B.C.,Canada
            Principal
                Executive Officer
              President
                andDirector
                (1)
            58
            2001Herbert
                Moeller
              Richmond,
                B.C.,Canada
            Principal
                Financial Officer, Principal Accounting Officer, Secretary Treasurer
                andDirector
                (2)
            56
            2001Terry
                Heard
              Vancouver,
                B.C.,Canada
            Director
                (3)
            68
            2004





(1)
            Sam
                Hirji became a director on November 6, 2001 and was appointed on
                the same
                day as Principal Executive Officer and
                President.





(2)
            Herbert
                Moeller became a director on November 6, 2001 and was appointed on
                the
                same day as Principal Financial Officer and Secretary Treasurer.
                On June
                30, 2004, he was appointed Principal Accounting
                Officer.





(3)  Terry
      Heard became a director on August 15, 2004.





The
      Audit
      Committee currently consists of Sam Hirji and Herbert Moeller. The general
      function of the audit committee is to review the overall audit plan and Henley’s
      system of internal control, to review the results of the external audit, and
      to
      resolve any potential dispute with our auditors. The percentage of common shares
      beneficially owned, directly, indirectly or collectively, by our directors
      and
      officers is 24.14 percent of the outstanding shares. This percentage includes
      100,000 options granted to Terry Heard on September 15, 2004.





The
      following are detailed biographies of the directors and officers of
      Henley.





SAM
      HIRJI
      graduated from Aga Khan high school, Uganda in 1972. Mr. Hirji was founder
      of
      Samco Printers Ltd in 1976, where he now resides as President and Director.
      Mr.
      Hirji has been self-employed in the printing industry since the age of 19.
      Samco
      is a mid-sized full service printing company, managed full-time by Mr. Hirji
      and
      employing 30 permanent staff. The Company has a wide range of national, local
      and international customers and also undertakes printing projects for the
      Federal and Provincial Governments. Since the inception of Samco Printers Ltd.
      Mr. Hirji has been fully employed with this company for the past 28 years.




Mr.
      Hirji
      was a director, from February 1998 to May 2001, of Minera Cortez Resources
      Ltd.
      which was a development stage company involved in exploration for gold and
      copper property in Mexico. Subsequently, Minera changed its name to Western
      Wind
      Energy Corporation (TSX listing under the symbol of MND) and is now involved
      with wind tunnels in the generation of energy and is still considered to be
      in
      the development stage. In September 1999, Mr. Hirji became a director of Falcon
      Oil and Gas Ltd., a development stage company listed on the TSX under the symbol
      of FO, which has certain oil and gas properties in Hungary. Mr. Hirji resigned
      from Falcon Oil and Gas Ltd, on March 31, 2005.





HERBERT
      MOELLER graduated in electro-mechanics from the Provincial Technical Institute
      in Hamburg, Germany in 1966. Mr. Moeller became a sales manager for Graco Inc.,
      from 1971 to 1980, and acted as an effective liaison between the marketplace
      and
      Graco by implementing corporate






-24-






programs
      through the district managers and distributors. During this period he increased
      sales by 100 percent and made the President’s Advisory Board award five years
      running. In 1980, Mr. Moeller founded Howard Marten Company Ltd, which was
      located in British Columbia, Canada. Mr. Moeller became President and was
      responsible for the company’s operations in Western Canada until the company was
      sold in 1989. Up to 1993, Mr. Moeller worked with H. Jager Developments Inc.
      as
      their Vice President and Project Coordinator helping them raise capital,
      negotiating the wood supply contract with the Province of Ontario, material
      and
      equipment supply contracts, and contracted the engineers and brought in
      MacMillan Bloedel as a partner into the project. Since 1996, he worked as a
      Vice-President and Director of H.J. Forest Products Inc., and has been working
      on a variety of projects in the forestry industry as an independent
      consultant.





TERRY
      HEARD graduated from Peterborough Collegiate High School in Southern Ontario,
      Canada in 1956 before studying at Halleybury School of Mines in Halleybury,
      Ontario where he obtained, in 1958, a diploma in mining technology. After
      graduation, he worked for Milliken Lake Uranium Mines in Elloit Lake, Ontario
      until January 1959. In 1960, Mr. Heard was employed by Phillips Dodge
      Corporation of Arizona doing grass root exploration work in British Columbia
      and
      the Yukon Territories. The next year, Mr. Heard was hired by Southwest Potash
      Corporation in Vancouver where he staked 125 claims around the Hudson Bay
      Mountain range. During the same year, he worked with Kam Kotia Mines Ltd. as
      an
      assistant engineer responsible for preparation of geological reports,
      calculation of strip ore reserves, bench tonnage for their open pit operation.
      In 1962, he was employed by Cassiar Asbestos Corporation in Cassiar, B. C.
      where
      he was in charge of the quality control laboratory conducting circuit tests
      to
      produce a better product. In 1964, Mr. Heard joined United Keno Hill Mines
      Ltd.
      in Elsa, Yukon where he was responsible for a fourteen man geochemical
      laboratory, supervision of overburden drill crews, budgeting and cost control.
      In 1966, he became project manager for Macdonald Consultants Ltd. responsible
      for mineral exploration British Columbia and the Yukon Territories, setting
      up
      cost accounting systems and field coding procedures. In 1969, he applied for
      three year program ot obtain a Bachelor of Science and Geological Engineering
      degree from Montana Tech. In 1971, he was employed by Great Plains Development
      Company of Canada Ltd. as exploration manager and later that year was employed
      by Kewannee Australia Pty. Ltd. of Darwin in the Northern Territory of Australia
      where he was responsible for the management of geological, geochemical,
      geophysical and physical (drilling and trenching) surveys and administration
      of
      fifteen personnel conducting this work on 37 property leases comprising 6,000
      square miles in addition to setting up the office, account codes, filing
      procedures, liaison with the government with respect to status of leases,
      grants, etc. and doing ore reserve calculations over potentially favorable
      prospects. In 1973, Mr. Heard United was employed by Keno Mines as their
      assistant exploration manager and in 1977, Mr. Heard became the exploration
      manager for Consolidated Coal in Red Deer responsible for coal reserve
      calculations, preliminary mine layouts and feasibility studies. In 1979, he
      became exploration manager for Canadian Island Creek Coal Company where he
      was
      responsible for the exploration and mining of all their coal holding throughout
      the world.





In
      1980,
      Mr. Heard incorporated his own private consulting company called R.T. Heard
      & Associates Ltd. Some of his initial clients were Canadian Island Creek
      Coal Company, Placer Dome, and approximately 89 other companies. In 1992, Mr.
      Heard staked 10 million acres of land in the Yukon and Northwest Territories
      of
      Canada during the diamond rush. This constituted nearly 41% of all land staked
      during the original diamond play. Mr. Heard’s consulting company performed
      property examination, evaluations and project management for clients with
      interests in base metals, precious metals, oil gas and coal in such areas as
      Montana, Idaho, Wyoming, Utah, Colorado, Nevada, California, Oregon, Washington,
      British Columbia, Alberta, Northwest Territories and the Yukon. In 1996 he
      sold
      R. T. Heard & Associates with many of the claims and ongoing royalties still
      in the company. In 1997, Mr. Heard incorporated Mount Royale Ventures, LLC
      to
      undertake various consulting work for exploration companies such as Mayonh
      Minerals Ltd. Through his new company he staked nearly 8.5 million acres of
      land
      in Mexico for resale. Since 1998, Mr. Heard has been working on rehabilitating
      the old mine workings in Boulder, Colorado in preparation of extracting gold
      and
      silver there from.






-25-







Mr.
      Heard
      is a director of only one public company being AMI Resources Inc. which trades
      on the Toronto Venture Exchange in Ontario, Canada.





Although
      Sam Hirji, Herbert Moeller and Terry Heard iH do not
      work full time for Henley, they plan to devote whatever time is required as
      we
      advance in our exploration programs. Presently, Sam Hirji spends approximately
      10 hours, Herbert Moeller spends approximately 5 hours and Terry Heard spends
      several hours each month on our affairs. Once the Red Bird is ready for
      exploring, we might hire a professional geologist to oversee the program and
      to
      prepare a geological report for presentation to the Board of Directors in the
      event that Terry Heard is not available to undertaken the supervision himself.
      Regardless whether Terry Heard is available or not, we will have to use the
      services of an independent geologist to prepare a report on the exploration
      activities of the Red Bird claims.





Once
      we
      commence our exploration program, the time spent on our affairs by our directors
      will increase but at this time we cannot assess the number of hours each will
      have to work on our affairs. In the case of both Sam Hirji and Herbert Moeller,
      their time will be spent mainly on attempting to raise money for the exploration
      programs where Terry Heard will concentrate on the establishment of the
      exploration programs on the Red Bird and with the analysis of all results
      obtained therefrom. We are hopeful Terry Heard will have the time to undertake
      the above.





Significant
      Employees





We
      have
      no employees. We might have to engage the services of certain consultants to
      assist in the exploration of the Red Bird. These individuals will be responsible
      for the completion of the geological work on our claim under the supervision
      of
      Terry Heard and therefore will be an integral part of our operations although
      they will not be considered employees either on a full time or part time basis.
      This is because our exploration programs will not last more than a few weeks
      and
      once completed these individuals will no longer be required. We have not
      identified any individual who would work as a consultant for us.





Family
      Relationships





There
      are
      no family relationships among directors, executive officers, or persons
      nominated or chosen by us to become directors or executive
      officers.





Involvement
      in Certain Legal Proceedings





To
      the
      knowledge of management, during the period from inception to December 31, 2005,
      no present or former director, executive officer or person nominated to become
      a
      director or an executive officer of Henley:





(1)
            filed
                a petition under the federal bankruptcy laws or any state insolvency
                law,
                nor had a receiver, fiscal agent or similar officer appointed by
                the court
                for the business or property of such person, or any partnership in
                which
                he was a general partner at or within two years before the time of
                such
                filings;





(2)
            was
                convicted in a criminal proceeding or named subject of a pending
                criminal
                proceeding (excluding traffic violations and other minor
                offenses);





(3)
            was
                the subject of any order, judgment or decree, not subsequently reversed,
                suspended or vacated, of any court of competent jurisdiction, permanently
                or temporarily enjoining him from or otherwise limiting, the following
                activities:








-26-







(i)
            acting
                as a futures commission merchant, introducing broker, commodity trading
                advisor, commodity pool operator, floor broker, leverage transaction
                merchant, associated person of any of the foregoing, or as an investment
                advisor, underwriter, broker or dealer in securities, or as an affiliate
                person, director or employee of any investment company, or engaging
                in or
                continuing any conduct or practice in connection with such
                activity;





(ii)  engaging
      in any type of business practice; or





(iii)
            engaging
                in any activities in connection with the purchase or sale of any
                security
                or commodity or in connection with any violation of federal or state
                securities laws or federal commodities
                laws;





(4)
            was
                the subject of any order, judgment, or decree, not subsequently reversed,
                suspended, or vacated, of any federal or state authority barring,
                suspending or otherwise limiting for more than 60 days the right
                of such
                person to engage in any activity described above under this Item,
                or to be
                associated with persons engaged in any such
                activities;





(5)
            was
                found by a court of competent jurisdiction in a civil action or by
                the
                Securities and Exchange Commission to have violated any federal or
                state
                securities law, and the judgment in such civil action or finding
                by the
                Securities and Exchange Commission has not been subsequently reversed,
                suspended, or vacated.





(6)
            was
                found by a court of competent jurisdiction in a civil action or by
                the
                Commodity Futures Trading Commission to have violated any federal
                commodities law, and the judgment in such civil action or finding
                by the
                Commodity Futures Trading Commission has not been subsequently reversed,
                suspended or vacated.





Audit
      committee financial expert





We
      have
      an audit committee comprising of Sam Hirji and Herbert Moeller but do not have
      an audit committee financial expert. It is our intention to identify a person
      who meets the attributes of a financial expert; being





1.
            an
                understanding of generally accepted accounting principles and financial
                statements;





2.
            the
                ability to assess the general application of such principles in connection
                with the accounting for estimates, accruals and
                reserves;





3.
            experience
                preparing, auditing, analyzing or evaluating financial statements
                that
                present a breadth and level of complexity of accounting issues that
                are
                generally comparable to the breadth and complexity of issues that
                can
                reasonably be expected to be raised by the small business issuer’s
                financial statements, or experience actively supervising one or more
                persons engaged in such activities;





4.  an
      understanding of internal controls and procedures for financial reporting;
      and





5.  an
      understanding of audit committee functions.





**Compliance
      with Section 16 (a) of the Exchange Act**





Henley
      knows of no director, officer, beneficial owner of more than ten percent of
      any
      class of equity securities of Henley’s registered pursuant to Section 12
      (“Reporting Person”) that failed to file any reports required to be furnished
      pursuant to Section 16(a). Other than Sam Hirji none of the other directors
      or
      officers filed reports during the most recent fiscal year.






-27-





The
      following table sets forth as at August 31, 2005, the name and position of
      each
      Reporting Person that filed any reports required pursuant to Section 16 (a)
      during the most recent fiscal year.







**ITEM
      10. EXECUTIVE COMPENSATION**




Cash
      Considerations





Our
      directors and officers have not been compensated for their services and there
      are no plans to compensate them in the near future until such time as we
      generate sufficient revenue to do so.





Compensation
      of Directors





During
      the fiscal years ended December 31, 2001, 2002, 2003, 2004 and 2005, we did
      not
      pay our directors for any meetings.





Executive
      Compensation





The
      following table set forth the total compensation paid or accrued by us for
      the
      four years ended December 31, 2005 on behalf of our named executive officers.
      In
      addition, this table sets forth information with respect to stock option to
      purchase common stock granted to our named executive officers during the same
      periods mentioned above.





SUMMARY
      COMPENSATION TABLE


ANNUAL


COMPENSATION





Long
      Term Compensation


****


Awards   Payouts


(a)
            (b)
            (c)
            (e)
            (f)
            (g)
            (h)
            (i)Name
                and Principal
              Position
            Year
            Salary
            Other
              annual
              Comp.
              ($)
            Restricted
              stock
              awards
              ($)
            Options/
              SAR
              (#)
            LTIP
              payouts
              ($)
            All
                other
              compen-
              sation
              ($)Sam
                Hirji (1)
              Principal
                Executive
              Officer,
                President
            2002
              2003
              2004
              2005
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-Herbert
                Moeller (2)
              Principal
                Financial
              Officer,
                PrincipalAccounting
                Officer,Secretary
                Treasurer
            2002
              2003
              2004
              2005
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-
            -0-
              -0-
              -0-
              -0-





(1)  Appointed
      as a Director, Principal Executive Officer and President on November 6,
      2001.


(2)
            Appointed
                as a Director, Principal Financial Officer and Secretary Treasurer
                on
                November 6, 2001. On June 30, 2004, he was appointed Principal Accounting
                Officer.






-28-







Option
      Grants in Last Fiscal Year ended December 31, 2005.





The
      stock
      options outstanding as at December 31, 2005, 2005 are as follows:





**Option/SAR
      Grants in Last Fiscal Year**


Individual
      Grants





(a)
            (b)
            (c)
            (d)
            (e)Name
            Number
                of Securities
              Underlying
                Options/SAR’s
                Grants (#)
            %
                of Total Option/SARs
              Granted
                to Employees inFiscal
                Year
            Exercise
                of
              Base
                Price($/Sh)
            ExpirationDateSam
                Hirji
            Nil
            Nil
            -
            -HerbertMoeller
            Nil
            Nil
            -
            -Terry
                Heard
            100,000
            100
                %
            $
                0.10
            September15,
                2009





Employment
      Agreements with Executive Officers and Directors





There
      are
      no employment agreements with any officers or directors. None of our directors
      have been paid any compensation in either cash or shares since the inception
      of
      Henley.





Employment
      Contracts and Termination of Employment Agreements





We
      do not
      have any employment contracts with any of our directors or officers or any
      other
      individual proposed to be an officer or director. There are no compensation
      agreements in the event one or more of our officers or directors terminates
      his
      involvement with Henley.





Stock
      Option Plan





We
      have
      never established any form of stock option plan for the benefit of our
      directors, officers or future employees. We do not have a long-term incentive
      plan nor do we have a defined benefit, pension plan, profit sharing or other
      retirement plan.





Bonuses
      and Deferred Compensation





None





Compensation
      Pursuant to Plans





None





Pension
      Table





None








-29-








Other
      Compensation





The
      director has not received any compensation for the time he has devoted to
      Henley. Nevertheless, Henley does give recognition to the time spent by accruing
      as an expense each month a charge of $500 per month as management fees with
      an
      offsetting credit to Additional Paid-Up Capital. The amount so accrued with
      not
      be pay in either cash or shares to the director in the future.





Termination
      of Employment





There
      are
      no compensatory plans or arrangements, including payments to be received from
      Henley, with respect to any person named in Cash Consideration set out above
      which would in any way result in payments to any such person because of his
      resignation, retirement, or other termination of such person’s employment with
      Henley or its subsidiaries, or any change in control of Henley, or a change
      in
      the person’s responsibilities following a change in control of
      Henley.







**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT**







The
      following table sets forth information regarding the beneficial ownership of
      shares of our common stock as of December 31, 2005 (1,450,000 shares issued
      and
      outstanding) by all stockholders known to us to be beneficial owners of more
      than 5 percent of our outstanding common stock.





**Title
                or**
              **Class**
            **Name
                and Address of**
              **Beneficial
                Owner****(1)**
            **Amount
                and Nature**
              **of
                Beneficial****Ownership
                (2)**
            **Percent
                of**
              **Class**Common
              Stock
            Sam
                Hirji
              2203-1275
                Pacific Boulevard
              Vancouver,
                B.C.,Canada,
                V6Z 2R6
            150,000
                (3)
            10.34%Common
              Stock
            Herbert
                Moeller
              7200
                Langton Road
              Richmond,
                B.C.,Canada,
                V7C 4B2
            100,000
                (3)
            6.90%Common
              Stock
            Terry
                Heard
              2203
                - 837 West Hastings St.
              Vancouver,
                B.C.,Canada,
                V6C 3N7
            100,000
                (4)
            6.90%Common
              Stock
            Claus
                Andrup
              3-22268
                - 116 Street
              Maple
                Ridge, B.C.,Canada,
                V2X 1P5
            100,000
                (5)
            6.90%Common
              Stock
            Ownership
                of all directors
              and
                officers as a group
            350,000
            24.14%






-30-







(1)
            Unless
                otherwise noted, the security ownership disclosed in this table is
                of
                record and beneficial.





(2)
            Under
                Rule 13-d under the Exchange Act, shares not outstanding but subject
                to
                options, warrants, rights, conversion privileges pursuant to which
                such
                shares may be acquired in the next 60 days are deemed to be outstanding
                for the purpose of computing the percentage of outstanding shares
                owned by
                the persons having such rights, but are not deemed outstanding for
                the
                purpose of computing the percentage for such other
                persons.





(3)
            These
                shares are restricted. After these shares have been held for one
                year, Sam
                Hirji, Herbert Moeller and Terry Heard (when his options are exercised)
                could sell 1% of the outstanding stock in Henley every three months.
                Therefore, this stock can be sold after the expiration of one year
                in
                compliance with the provisions of Rule 144. There are “stock transfer”
                instructions placed against these certificates and a legend has been
                imprinted on the stock certificates
                themselves.





(4)
            Terry
                Heard has been granted a stock option for the purchase of 100,000
                common
                shares in our capital stock at a price of $0.10 per share exercisable
                in
                whole or in part on or before September 15, 2009. To date no options
                have
                been exercised.





(5)
            Claus
                Andrup was a director of Henley who resigned December 1, 2003 due
                to
                having other business interests.





We
      do not
      know of any other shareholder who has more than 5 percent of the issued
      shares.





The
      number of shares under Rule 144 is 350,000 less an amount of 20,000 shares
      qualified for trading under our effective registration statement.





Our
      two
      largest shareholders, Sam Hirji and Herbert Moeller, own, collectively, 250,000
      issued and outstanding shares of our common stock of which 10,000 shares each
      held by Sam Hirji and Herbert Moeller were registered for trading under our
      effective registration statement. These shares are “restricted shares” as that
      term is defined in Rule 144 of the Rules and Regulations of the SEC promulgated
      under the Securities Act. Under Rule 144, shares can be publicly sold, subject
      to volume restrictions and restrictions on the manner of sale, commencing one
      year after their acquisition.





There
      are
      no voting trusts or similar arrangements known to us whereby voting power is
      held by another party not named herein. We know of no trusts, proxies, power
      of
      attorney, pooling arrangements, direct or indirect, or any other contract
      arrangement or device with the purpose or effect of divesting such person or
      persons of beneficial ownership of our common shares or preventing the vesting
      of such beneficial ownership.





Description
      of Our Securities





We
      have
      only common shares authorized and there are no preferred shares or other forms
      of shares. Our authorized common stock consists of 200,000,000 shares of common
      stock, par value $0.001 per share. The holders of our common stock:





-
            have
                equal ratable rights to dividends from funds legally available therefore,
                when, as, and if declared by our Board of
                Directors;





-
            are
                entitled to share ratably in all of the assets of Henley available
                for
                distribution upon winding up of the affairs of Henley;
                and






-31-







-
            do
                not have preemptive, subscription or conversion rights and there
                are no
                redemption or sinking fund provisions or rights;
                and





-
            are
                entitled to one non-cumulative vote per share on all matters on which
                shareholders may vote at all meetings of
                shareholders.





The
      shares of common stock do not have any of the following rights:





-  preference
      as to dividends or interest;





-  preemptive
      rights to purchase in new issues of shares;





-  preference
      upon liquidation; or





-  any
      other
      special rights or preferences.




All
      our
      shares of commons stock now issued and outstanding are fully paid and
      non-assessable.





Convertible
      Securities





The
      shares are not convertible into any other securities.





Non-Cumulative
      Voting.





The
      holders of shares of our common stock do not have cumulative voting rights,
      which means that the holders of more than 50% of such outstanding shares, voting
      for the election of directors, can elect all of the directors to be elected,
      if
      they so choose. In such event, the holders of the remaining shares will not
      be
      able to elect any of our directors. Our directors and officers have 17.24
      percent (24.14 percent if Terry Heard exercises his stock options) of the shares
      outstanding making it difficult for any shareholder or group of shareholders
      to
      accumulate sufficient votes of shares from other shareholders to change our
      directors.







**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**







**Transactions
      with Management and Others**





Except
      as
      indicated below, there were no material transactions, or series of similar
      transactions, since inception of Henley and during its current fiscal period,
      or
      any currently proposed transactions, or series of similar transactions, to
      which
      Henley was or is to be a party, in which the amount involved exceeds $60,000,
      and in which any director or executive officer, or any security holder who
      is
      known by Henley to own of record or beneficially more than 5% of any class
      of
      Henley’s common stock, or any member of the immediate family of any of the
      foregoing persons, has an interest.





**Indebtedness
      of Management**





There
      were no material transactions, or series of similar transactions, since the
      beginning of Henley’s last fiscal year, or any currently proposed transactions,
      or series of similar transactions, to which Henley was or is to be a part,
      in
      which the amount involved exceeded $60,000 and in which any director or
      executive officer, or any security holder who is known to Henley to own of
      record or beneficially more than 5% of the common shares of Henley’s capital
      stock, or any member of the immediate family of any of the foregoing persons,
      has an interest.






-32-






**Transactions
      with Promoters**





Henley
      does not have promoters and has no transactions with any promoters.








**PART
      IV**




**ITEM
      13. EXHIBITS AND REPORTS ON FORM 8-K**







(a)
      (1)   **Financial
      Statements.**





The
      following financial statements are included in this report:





Title
                of Document
            PageReport
                of Cordovano and Honeck LLP
            36Balance
                Sheet as at December 31, 2005
            37Statement
                of Operations for the year ended December 31, 2005 and 2004and
                for the period from January 3, 2001 (Inception) to December 31,
                2005
            38Statement
                of Changes in Shareholders’ Deficit for the period from January 3,2001
                (Inception) to December 31, 2005
            39Statement
                of Cash Flows for the year ended December 31, 2005 and 2004and
                for the period from January 3, 2001(Inception) to December 31,
                2005
            40Notes
                to the Financial Statements
            41





(a)
      (2) **Financial
      Statement Schedules**





The
      following financial statement schedules are included as part of this
      report:





None.





(a)
      (3) **Exhibits**





The
      following exhibits are included as part of this report by
      reference:





1.
            
            Certificate
                of Incorporation, Articles of Incorporation and By-laws1.1
            
            Certificate
                of Incorporation (incorporated by reference from Henley’s RegistrationStatement
                on Form SB-2 filed on February 1, 2005)1.2
            
            Articles
                of Incorporation (incorporated by reference from Henley’s RegistrationStatement
                on Form SB-2 filed on February 1, 2005)1.3
            
            By-laws
                (incorporated by reference from Henley’s Registration Statement onForm
                SB-2 filed on February 1, 2005)99.1
            
            Certificate
                Pursuant to Section 301 (a) of the Sarbanes-Oxley Act of 2002 (ChiefExecutive
                Officer)99.2
            
            Certification
                of the Chief Executive Officer Pursuant to Section 906 of the
                Sarbanes-Oxley
                Act of 200299.3
            
            Certificate
                Pursuant to Section 301 (a) of the Sarbanes-Oxley Act of 2002 (ChiefFinancial
                Officer)99.4
            
            Certification
                of the Chief Financial Officer Pursuant to Section 906 of the
                Sarbanes-Oxley
                Act of 2002







-33-





**ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**




(1)  Audit
      Fees





The
      aggregate fees billed by the independent accountants for the last two fiscal
      years for professional services for the audit of Henley’s annual financial
      statements and the review included in Henley’s Form 10-QSB and services that are
      normally provided by the accountants in connection with statutory and regulatory
      filings or engagements for those fiscal years were as follows: December 31,
      2005
      -$6,898 and December 31, 2004 - $6,750.





(2)  Audit-Related
      Fees





The
      aggregate fees billed in each of the last two fiscal years for assurance and
      related services by the principal accountants that are reasonably related to
      the
      performance of the audit or review of Henley’s financial statements and are not
      reported under Item 9 (e)(1) of Schedule 14A was NIL.





(3)  Tax
      Fees





The
      aggregate fees billed in each of the last two fiscal years for professional
      services rendered by the principal accountants for tax compliance, tax advice,
      and tax planning was NIL.





(4)  All
      Other Fees





During
      the last two fiscal years there were no other fees charged by the principal
      accountants other than those disclosed in (1) and (3) above.





(5)  Audit
      Committee’s Pre-approval Policies





At
      the
      present time, there are not sufficient directors, officers and employees
      involved with Henley to make any pre-approval policies meaningful. Once Henley
      has elected more directors and appointed directors and non-directors to the
      Audit Committee it will have meetings and function in a meaningful
      manner.





(6)  Audit
      hours incurred





The
      principal accountants did not spend greater than 50 percent of the hours spent
      on the accounting by Henley’s internal accountant.








-34-










**SIGNATURES**
  
 In
          accordance with the requirements of the Exchange Act, the registrant caused
          this
          report to be signed on its behalf by the undersigned, thereunto duly
          authorized.
 
 **HENLEY
          VENTURES INC.**
 (Registrant)
 
 October
          30, 2006
 
 
 By:
          SAM HIRJI
 Sam
          Hirji
 Chief
          Executive Officer,
 President
          and Director
 
 
 By:
          HERBERT MOELLER
 Herbert
          Moeller
 Chief
          Accounting Officer,
 Chief
          Financial Officer and Director





-35-







**Report
      of Independent Registered Public Accounting Firm**





To
      The
      Board of Directors


of
      Henley
      Ventures, Inc.





We
      have
      audited the accompanying balance sheet of Henley Ventures, Inc. as of December
      31, 2005, and the related statements of operations, stockholders’ deficit, and
      cash flows for the years ended December 31, 2005 and 2004 and for the period
      from January 3, 2001 (inception) through December 31, 2005. These financial
      statements are the responsibility of the Company’s management. Our
      responsibility is to express an opinion on these financial statements based
      on
      our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the financial
      statements are free of material misstatement. An audit includes examining,
      on a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements. An audit also includes assessing the accounting principles used
      and
      significant estimates made by management, as well as evaluating the overall
      financial statements presentation. We believe that our audits provide a
      reasonable basis for our opinion.





In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Henley Ventures, Inc. as of
      December 31, 2005, and the results of its operations and its cash flows for
      the
      years ended December 31, 2005 and 2004 and for the period from January 3, 2001
      (inception) through December 31, 2005 in conformity with generally accepted
      accounting principles.





The
      accompanying financial statements have been prepared assuming the Company will
      continue as a going concern. As discussed in Note 1 to the financial statements,
      the Company’s significant operating losses raise substantial doubt about its
      ability to continue as a going concern. The financial statements do not include
      any adjustments that might result from the outcome of this
      uncertainty.





CORDOVAN
      AND HONECK, LLP





Cordovano
      and Honeck, LLP


Englewood,
      Colorado


March
      10,
      2006








-36-







**HENLEY
      VENTURES, INC.**


(An
      Exploration Stage Company)


**Balance
      Sheets**


**December
      31, 2005**





**Assets**Cash
            **$
                1,920**Prepaid
                expenses
            **300**Total
                assets
            **$****2,220****Liabilities
                and Shareholders’ Deficit**Liabilities:Accounts
                payable
            **$
                14,366**Accrued
                expenses
            **4,750**Indebtedness
                to related parties (Note 2)
            **23,071**Total
                liabilities
            **42,187**********Shareholders’
                deficit (Note 2 and 4)Common
                stock, $.001 par value. Authorized 200,000,000 sharesand
                1,450,000 issued and outstanding shares
            **1,450**Additional
                paid-up capital
            **82,614**Accumulative
                deficit
            ******(124,031****)**Total
                shareholders’ deficit
            ******(39,967)**Total
                liabilities and shareholders’ deficit
            **$****2,220**







See
      accompanying notes to financial statements








-37-







**HENLEY
      VENTURES, INC.**


(An
      Exploration Stage Company)


**Statements
      of Operations**





**Year
                Ended**
              **December
                31**
            **January
                3, 2001**
              **(Inception)
                through**
              **December
                31,****2005**
            **2004**
            **2005**Expenses:Contribution
                rent (Note 2)
            **$
                6,600**
            $
                6,600
            **$
                33,000**Contribution
                services (Note 2)
            **6,967**
            6,457
            **32,564**Exploration
                costs
            **1,750**
            5,030
            **12,695**Organization
                costs
            **-**
            -
            **1,845**Professional
                fees
            **19,481**
            9,555
            **39,186**Office
            **2,802**
            1,024
            **4,717**Other
                general expenses
            **-**
            -
            **24**Total
                expenses
            **(37,600)**
            (28,666)
            **(124,031)**Loss
                before income taxes
            **(37,600)**
            (28,666)
            **(124,031)**Income
                tax provision (Note 5)
            **-**
            -
            **-**Net
                loss
            **$****(37,600****)**
            $(28,666)
            **$****(124,031****)**Basic
                and diluted loss
              per
                share
            **$****(0.03****)**
            $(0.04)Weighted
                average common
              shares
                outstanding
            ******1,450,000**
            638,462







See
      accompanying notes to financial statements







-38-







**HENLEY
      VENTURES, INC.**


(An
      Exploration Stage Company)


**Statement
      of Changes in Shareholders’ Deficit**




**Common****Shares******
            **Stock****Amount**
            **Additional**
              **paid-in****capital**
            **Accumulated****Deficit**
            ******Total**Balance
                January 3, 2001-Inception
                date
            -
            $
                -
            $
                -
            $
                -
            $
                -Common
                stock issued to founders as December 15,2001
            350,000
            350
            3,150
            -
            3,500Contributed
                rent and services(Note
                2)
            -
            -
            12,862
            -
            12,862Net
                loss
            -
            -
            -
            (21,666)
            (21,666)Balance
                at December 31, 2001
            350,000
            350
            16,012
            (21,666)
            (5,304)Contributed
                rent and services(Note
                2)
            -
            -
            13,028
            -
            13,028Net
                loss
            -
            -
            -
            (20,138)
            (20,138)Balance
                at December 31, 2002
            350,000
            350
            29,040
            (41,804)
            (12,414)Contributed
                rent and services(Note
                2)
            -
            -
            13,050
            -
            13,050Net
                loss
            -
            -
            -
            (15,961)
            (15,961)Balance
                at December 31, 2003
            350,000
            350
            42,090
            (57,765)
            (15,325)June
                2004, sale of commonstock,
                pursuant to privateoffering,
                net of offeringcosts
                of $2,500(Note
                4)
            1,000,000
            1,000
            6,500
            -
            7,500August
                2004, sale of commonstock,
                pursuant to privateoffering,
                net of offeringcosts
                of $2,500 (Note 4)
            100,000
            100
            7,400
            -
            7,500Contributed
                rent and services
            -
            -
            13,057
            -
            13,057Net
                loss
            -
            -
            -
            (28,666)
            (28,666)Balance
                at December 31, 2004
            1,450,000
            1,450
            69,047
            (86,431)
            (15,934)Contributed
                rent and services(Note
                2)
            -
            -
            13,567
            -
            13,567Net
                loss
            -
            -
            -
            (37,600)
            (37,600)Balance
                at December 31, 2005
            1,450,000
            1,450
            $82,614
            $124,031
            $(39,967)








See
      accompanying notes to financial statements








-39-








**HENLEY
      VENTURES, INC.**


(An
      Exploration Stage Company)


**Statements
      of Cash Flows**





For
                Year
              December
                31,
            January
                3, 2001(Inception)
              throughDecember
                31,2005
            2004
            2005Cash
                flows from operating activities:Net
                loss
            $
                (37,600)
            $
                (28,666)
            $
                (124,031)Adjustments
                to reconcile net loss to netcash
                used by operating activities:Contributed
                rent and services (Note 2)
            13,567
            13,057
            65,564Changes
                in operating assets and liabilities,Prepaid
                expenses
            (300)
            -
            (300)Accounts
                payable
            2,624
            9,312
            19,116Net
                cash used in operating activities
            (21,709)
            (6,297)
            (39,651)Cash
                flows from financing activitiesProceeds
                from related party debt(Note
                2)
            14,611
            155
            23,071Proceeds
                from issuance of common stock,net
                of offering costs (Note 4)
            -
            15,000
            18,500Net
                cash provided byfinancing
                activities
            14,611
            15,155
            41,571Net
                change in cash
            7,098
            (8,858)
            1,920Cash:Beginning
                of period
            9,018
            160
            -End
                of period
            $1,920
            $9,018
            $1,920Supplemental
                disclosure of cash flowinformation:Cash
                paid during the year for:Income
                taxes
            $-
            $-
            $-Interest
            $-
            $-
            $-





See
      accompanying notes to financial
      statements





-40-







**HENLEY
      VENTURES, INC.**


**(An
      Exploration Stage Company)**


**Notes
      to Financial Statements**





**1.**
            **Summary
                of Significant Accounting
                Policies**





***Organization
      and Basic of Presentation***





Henley
      Ventures, Inc. (the “Company”) was incorporated under the laws of the State of
      Nevada on January 3, 2001 for the purpose of acquiring and developing mineral
      properties. The Company is in the exploration stage in accordance with Industry
      Guide 7. The accompanying financial statements have been prepared assuming
      that
      the Company will continue as a going concern.





On
      January 24, 2001, the Company acquired the mineral rights to the HV mineral
      claim group (the “HV”) from Paul Saulnier, an unrelated individual who is not a
      director, officer or shareholder of the Company. The HV was “staked” on January
      24, 2001 by Paul Saulnier on the Company’s behalf. “Staking” of a claim is the
      method used to verify title to the minerals on the Province of British Columbia
      (known as the “Crown’) property. The Company has undertaken exploration work on
      the HV to maintain it in good standing until January 24, 2005. On January 24,
      2005, the Company lost all of its rights to the minerals on the HV mineral
      claim
      when the Province of British Columbia changed its method of recording ownership.
      The Company has no further interest in the HV claims and no liability attached
      thereto.





On
      July
      28, 2004, the Company acquired the mineral rights to the Red Bird claim (the
      “Red Bird”), located in British Columbia, by Bill of Sale Absolute from Richard
      J. Billingsley for the purchase price of $1,667; the cost incurred by him to
      stake the Red Bird on behalf of the Company. The Red Bird claims are registered
      in the name of Richard J. Billingsley under his Free Miners’ License #139085.
      The Company is in procession of a signed Bill of Sale Absolute giving ownership
      to the mineral rights of the Red Bird to them (See Note 3). A mineral claim
      in
      the Province of British Columbia has to be held in the name of a resident of
      the
      Province or by a company either incorporated in British Columbia or
      extra-provincially incorporated. At the present time, the Company does not
      wish
      to extra-provincially incorporate in British Columbia due to the cost. In
      addition, to obtain a Free Miners’ License, if the Company were
      extra-provincially incorporated, would cost $385 whereas there is no cost to
      the
      Company using Richard Billingsley’s Free Miners’ License to hold the Red Bird.
      By having a Bill of Sale Absolute signed to the Company’s benefit, the Company
      has control over the mineral rights on the Red Bird. Eventually, the Company
      will extra-provincially incorporate but not until sufficient exploration work
      has been undertaken on the Red Bird to warrant the cost of doing so. The Company
      holds the rights to the minerals on the Red Bird, except for placer and coal,
      but do not have an interest in the land since it is owned by the Crown (Note
      3).
      Legal status is that the Company has the rights to the minerals on the Red
      Bird.





The
      Company’s significant operating losses raise substantial doubt about the ability
      to continue as a going concern. Inherent in the Company’s business are various
      risks and uncertainties, including its limited operating history, historical
      operating losses, dependence upon strategic alliances, and the historical
      success rate of mineral exploration.






-41-





**HENLEY
      VENTURES, INC.**


**(An
      Exploration Stage Company)**


**Notes
      to Financial Statements**





The
      Company’s future success is primarily dependent upon the existence of minerals
      on the property for which the Company owns claim to. No minerals have yet been
      discovered on the property. The Company’s success will also be dependent upon
      its ability to raise sufficient capital to fund its exploration program and,
      if
      minerals are discovered, to mine the discovery on a timely and cost-effective
      basis.





***Use
      of Estimates***





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





***Functional
      Currency***





Although
      the Company operates in Canada, the financial statements are measured using
      U.S.
      dollars as the functional currency. During the period January 3, 2001
      (inception) through December 31, 2004, the Company had a Canadian bank account
      and a U.S. bank account, with significant transactions being conducted from
      the
      U.S. bank account. The Canadian bank account was closed as of December 31,
      2004.





***Cash
      and Cash Equivalents***





The
      Company considers all highly liquid securities with original maturities of
      three
      month or less when acquired to be cash equivalents. There were no cash
      equivalents at December 31, 2005 and 2004.





***Financial
      Instruments***





At
      December 31, 2005, the fair value of the Company’s financial instruments
      approximate their carrying value based on their terms and interest
      rates.





***Mineral
      Interests***





Exploration
      and development expenses are expensed in the period incurred until such time
      as
      the Company establishes the existence of commercial feasibility, at which time
      these costs will be deferred. Administrative expenditures are expensed in the
      period incurred.





Mineral
      interest acquisition costs and related interest and financing costs may be
      deferred until the property is placed into production, sold or abandoned.
      Mineral interest acquisition costs will be deferred only when and if proven
      and
      probable reserves have been found to exist. No proven or probable reserves
      are
      currently known to exist.







-42-





**HENLEY
      VENTURES, INC.**


**(An
      Exploration Stage Company)**


**Notes
      to Financial Statements**





Any
      deferred costs will be amortized on a unit-of-production basis over the
      estimated proven and probable reserves of the property following commencement
      of
      commercial production or written off if the property is sold, allowed to lapse
      or abandoned.





***Earnings
      (loss) per Common Share***





The
      Company reports earnings (loss) per share in accordance with Statement of
      Financial Accounting Standard No. 128 “Earning Per Share”. Under the Provision
      of SFAS No. 128, basic net income (loss) per share is computed by dividing
      the
      net income (loss) available to common shareholders for the period by the
      weighted average number of shares outstanding during the period. Diluted net
      income (loss) per share is computed by dividing the net income (loss) available
      to common shareholders for the period by the weighted average number of common
      and common equivalent shares outstanding during the year. Common equivalent
      shares, consisting of common shares issuable upon the exercise of stock options
      are included in diluted net income (loss) per share to the extent such shares
      are dilutive.





***Income
      Taxes***





The
      Company accounts for income taxes under the provisions of Statement of Financial
      Accounting Standards No. 109, *Accounting
      for Income Taxes* (SFAS
      109). SFAS 109 requires recognition of deferred tax liabilities and assets
      for
      the expected future tax consequences of events that have been included in the
      financial statements or tax returns. Under this method, deferred tax liabilities
      and assets are determined based on the difference between the financial
      statement and tax bases of assets and liabilities using enacted tax rates in
      effect for the year in which the differences are expected to
      reverse.





***Stock-based
      Compensation***




SFAS
      No.
      123, “Accounting for Stock-Based Compensation” was issued in October 1995. This
      accounting standard permits the use of either a fair value based method or
      the
      method defined in Accounting Principles Board Opinion 25, “Accounting for Stock
      Issued to Employees” (“APB 25”) to account for stock-based compensation
      arrangements. Directors, acting in their capacity as directors, are in the
      employee category. Companies that elect to use the method provided in APB 25
      are
      required to disclose pro forma net income and earnings per share that would
      have
      resulted from the use of the fair value based method.





In
      December 2004, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 123R (FAS-123R), *Share-Based
      Payment,* which is
      a revision of Statement of Financial Accounting Standards No. 123 (FAS-123), *Accounting
      for Stock-Based Compensation).* This
      Statement establishes standards for the accounting for transactions in which
      an
      entity exchanges its equity instruments for goods and services. It also
      addresses transactions in which an entity incurs liabilities in exchange for
      goods or services that are based on the fair value of the entity’s equity
      instruments or that may be settled by the issuance of those equity instruments.






-43-







**HENLEY
      VENTURES, INC.**


**(An
      Exploration Stage Company)**


**Notes
      to Financial Statements**





This
      Statement focuses primarily on accounting for transactions in which an entity
      obtains employee services in share-based payment transactions. This Statement
      does not change the accounting guidance for share-based payment transactions
      with parties other than employees provided in Statement 123 as originally issued
      and EITF Issue No. 96-18, “Accounting for Equity Instruments That Are Issued to
      Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
      Services.” This Statement does not address the accounting for employee share
      ownership plans, which are subject to AICPA Statement of Position 93-6, *Employers’
      Accounting for Employee Stock Option Plans.* The
      Company is required to adopt SFAS 123R effective January 1, 2006. The standard
      provides for a prospective application. Under this method, the Company will
      begin to recognize compensation cost for equity based compensation for all
      new
      or modified grants after the date of adoption. In addition, the Company will
      recognize the unvested portion of the grant date fair value of awards issued
      prior to the adoption abased on the fair values previously calculated for
      disclosure purposes.





The
      Company has elected to continue to determine the value of stock-based
      compensation arrangements under the provisions of APB 25 and, accordingly,
      has
      included pro forma disclosure under SFAS No. 123. At December 31, 2005, the
      Company had no unvested options.




**(2)**  **Related
      Party Transactions**





The
      Company’s president, who is also a director, contributed the use office space,
      including the use of telephone, to the Company for all periods presented. The
      office space was valued at $350 per month based on the market rate in the local
      area and telephone charges estimated and valued at $200 per month. The
      contributed use of office space is included in the accompanying financial
      statements as contributed rent expense with a corresponding credit to additional
      paid-in capital in the amount of $6,600 and $6,600 for years ended December
      31,
      2005 and 2004 respectively.





The
      president, who is also a director, contributed management services to the
      Company for the periods presented. The time and effort was recorded in the
      accompanying financial statements based on the prevailing rates for such
      services, which equaled $500 per month based on the level of services performed.
      The services are reported as contributed services with a corresponding credit
      to
      additional paid-in capital in the amount of $6,000 and $6,000 for year ended
      December 31, 2005 and 2004 respectively.





From
      January 3, 2001 (date on inception) through period ended December 31, 2005,
      the
      directors of the Company paid certain organization costs, exploration costs
      and
      certain office expenses on behalf of the Company totaling $23,071. This balance
      remains outstanding at December 31, 2005, and is included in the accompanying
      financial statements as Indebtedness of related parties. Interest expense
      related to the unpaid balance is contributed by the Company’s president,
      director, and shareholder and is calculated at 5% per annum with a corresponding
      credit to additional paid-in capital in amount of $967 and $457 for years ended
      December 31, 2005 and 2004, respectively.






-44-








**HENLEY
      VENTURES, INC.**


**(An
      Exploration Stage Company)**


**Notes
      to Financial Statements**





In
      December 2001, the Company sold 350,000 shares of its restricted common stock
      to
      its officers and directors for $3,500 ($.01/share). In June 2004 the Company
      sold 1,000,000


common
      shares of its common stock under a private offering at a price of $0.01 per
      share and in August 2004 the Company sold 100,000 common shares at a price
      of
      $0.10 per share.





**(3)**  **Mineral
      Claims**





***Red
      Bird Claim***





The
      property is located 3 km northwest of Tulameen, B.C. It occupies the upland
      area
      immediately west of Otter Lake. The southern part of the claims covers the
      crest
      and slopes of the southeasterly trending ridge between Mount Rabbitt and Mount
      Riddell.





The
      claims extend north from the Lawless Creek logging road, 2.5 to 5.0 km west
      of
      Tulameen, to Lockie (Boulder) Creek, an easterly flowing tributary of Otter
      Creek.





The
      upper
      slopes of Rabbit and Boulder Mountains are gently sloping with deeply incised
      creek canyons. The slopes of the valleys of the Tulameen River, Otter Valley
      and
      Lockie Creeks, are steep to precipitous. Elevations vary from 470 metres in
      Lockie Creek to slightly over 1,500 metres on Rabbit and Boulder Mountains.
      The
      Red Bird Showing is at an elevation of 1,469 metres.





Access
      to
      the various showings is provided by steep four-wheel drive roads at the south
      ends of the property. The Rabbit Mountain area is accessible by a network of
      roads, which leave the main Lawless Creek road between 3.5 and 8.0 km west
      of
      Tulameen. The town of Princeton on the Southern Trans-Provincial Highway is
      27
      km by paved highway southeast of Tulameen. The Canadian Pacific Railway follows
      the Otter Valley immediately east of the property. The Coquihalla Toll Highway
      is located 12 km to the west of the property.





The
      Red
      Bird Property is held by one modified grid claim and five 2-post claims as
      listed:





**List
      of Claims**


Claim
                Name
            Tenure
              Number
            #
                of
              Units
            Size
            Current
              Expiry
                DateRed
                Bird
            412526
            20
            4S5E
            July
                23, 2006Red
                Bird 1
            412527
            1
            2
                post
            July
                23, 2006Red
                Bird 2
            412528
            1
            2
                post
            July
                23, 2006Red
                Bird 3
            412529
            1
            2
                post
            July
                23, 2006Red
                Bird 4
            412530
            1
            2
                post
            July
                23, 2006Red
                Bird 5
            412531
            1
            2
                post
            July
                23, 2006Total
                Units
            25








-45-





**HENLEY
      VENTURES, INC.**


**(An
      Exploration Stage Company)**


**Notes
      to Financial Statements**





Henley
      Ventures Inc. reportedly has acquired the Red Bird Property by Bill of Sale
      from
      R. J. Billingsley. The claims are still registered in R B Billingsley’s name
      (FMC 139085) as of December 31, 2005. The risk inherent in the Red Bird being
      held in the name of a non-related party is that the party in question could
      sell
      it to another third party without the permission or knowledge of the Company
      and
      thereby resulting in the Company losing its interest in the Red Bird, even
      though the Company has legal ownership. Only through the legal system might
      the
      Company be able to recover its interest in the Red Bird. This would be a costly
      matter and may take many years to resolve.





The
      fractional claim (Rainbow 6, Tenure Number 371270) occurs in the center of
      the
      Red Bird claim and was in good standing until August 21, 2005. The Company
      did
      not acquire the Rainbow 6 when it expired.





Two
      2-post claims supercede parts of Red Bird 1 and 2.





Mineral
      Title of British Columbia is held via the *Mineral
      Act.* Claims
      are kept in good standing by applying appropriate assessment work in the amount
      of $100 per unit per year for the first 3 years and then $200 per unit per
      year
      thereafter.





The
      Red
      Bird Property is a large claim block which covers a number of old gold and
      copper showings, which were first discovered in the early part of the twentieth
      century. A considerable amount of somewhat disjointed exploration, including
      geochemistry, geophysics, geology, trenching and diamond drilling has been
      completed since 1965. However, due to the number of different operators the
      database is somewhat fragmented. As a consequence, the strategy behind some
      of
      the diamond drilling programs is not immediately clear from the available
      reports.





A
      probable stratabound horizon of massive sulfide mineralization has been
      recognized on the property. The sulfide horizons appear stratabound, lensoid
      and
      show remarkable potential strike length. Sulfide mineralization is hosted in
      andesitic to rhyolitic fragmental rocks, which may also replace massive sulfide
      mineralization along strike as barren pyretic schists. The massive sulfide
      mineralization is tabular to lensoid in shape and apparently concordant with
      layering in country rocks, trending northerly and dipping shallowly to the
      west.
      Thickness of the horizons ranges form approximately one to four metres and
      sulfide mineralization may contain lenses of acid and intermediate volcanic
      rocks. Numerous small scale faults transect and offset sulfide
      mineralization.





Known
      sulfide occurrences include the Motherlode-Spokane, Red Bird, Shamrock, Thynne,
      and Hilltop (Lloyd George) showings on the south side of Lockie
      Creek.





Geological
      mapping of the volcanic succession is essential in predicting the location
      of
      mineralized alkalic plutons. The common occurrence of magnetite with alkalic
      intrusions


suggest
      that replotting and reinterpretation of previous magnetic data will aid in
      defining target areas. Drilling to test geological targets is
      envisaged.







-46-





**HENLEY
      VENTURES, INC.**


**(An
      Exploration Stage Company)**


**Notes
      to Financial Statements**





**4.**  **Capital
      Stock**





On
      September 15, 2004, the directors approved the granting of stock option to
      one
      of its directors whereby 100,000 common shares could be exercised at the price
      of $0.10 per shares on or before September 15, 2009 in whole or in part with
      a
      vesting at the rate of 25,000 options at the beginning of every three month
      period commencing September 15, 2004 while the director serves of the Company.
      (See Note 6)





On
      August
      2004, the Company sold 100,000 common shares at a price of $0.10 per share
      under
      Offering Memorandum dated August 23, 2004 through its own “best efforts”. The
      price of $0.10 per share was determined by the Board of Directors based on
“good
      faith estimates”. All shares of common stock offered were originally subject to
      resale restrictions under Regulation D, Rule 504 but were qualified for trading
      under a registration statement which became effective on September 1, 2005.
      Proceeds from the sale of common shares totaled $7,500, net of offering cost
      of
      $2,500.





On
      June
      2004, the Company sold 1,000,000 common shares at a price of $0.01 per share
      under Offering Memorandum dated June 15, 2004 through its own “best efforts”.
      The price of $0.01 per share was determined by the Board of Directors based
      on
“good faith estimates”. All shares of common stock offered were subject to
      resale restrictions under Regulation D, Rule 504. Gross proceeds from the sale
      of common shares totaled $7,500, net offering cost of $2,500. Following the
      June
      and August 2004 stock sales, the Company had 1,450,000 common shares issued
      and
      outstanding.





**(5)**  **Income
      Taxes**





A
      reconciliation of the U.S. statutory federal income tax rate to the effective
      tax rate is as follows:


December
      31.


2004   2005


U.S
                statutory federal rate
            15.00
                %
            15.00%Contributed
                rent and services
            -6.83
                %
            -5.21%Net
                operating loss for which no tax
                benefit is currently available
            -8.17%
            -9.790.00%
            0.00%








-47-







**HENLEY
      VENTURES, INC.**


**(An
      Exploration Stage Company)**


**Notes
      to Financial Statements**





At
      December 31, 2005, the Company had a net operating loss carryforward for federal
      income tax purposes of approximately $124,031, which was fully allowed for
      in
      the valuation allowance of $124,031. The valuation allowance offsets the net
      deferred tax asset for which there is no assurance of recovery. The change
      in
      the valuation allowance for the year ended December 31, 2005 and 2004 was
      $37,600 and $28,666 respectively. Due to the uncertainty of the ultimate
      utilization of the net operating loss carryforward, no tax benefit for losses
      has been provided by the Company in the accompanying financial statements.
      The
      net operating loss carryforward will expire through the year 2025.





**6.**  **Stock
      Option Plan**





On
      September 15, 2004, the directors approved the granting of stock options to
      one
      of its directors whereby 100,000 common shares could be exercised at a price
      of
      $0.10 per shares on or before September 12, 2009 in whole or in part with a
      vesting at the rate of 25,000 options at the beginning of every three month
      period commencing September 15, 2004 while the director serves to the
      Company.





The
      status of the Company’s stock-option plan is summarized as follows:


Numberof
                Shares
            WeightedAverage
              ExercisePriceOutstanding
                at December 31, 2003
            -
            $
                -Granted
            100,000
            0.10Exercised
            -
            -Canceled
            -
            -Outstanding
                at December 31, 2004
            100,000
            0.10Granted
            -
            -Exercised
            -
            -Canceled
            -
            -Outstanding
                at December 31, 2005
            100,000
            $
                0.10Options
                exercisable on December 31, 2004
            50,000
            $0.10Options
                exercisable on December 31, 2005
            100,000
            $010











-48-







**HENLEY
      VENTURES, INC.**


**(An
      Exploration Stage Company)**


**Notes
      to Financial Statements**





The
      weighted average fair value of options granted during September 2004 estimated
      on the date of grant using the Black-Scholes option-pricing model was $.015.
      The
      fair value of options granted is estimated on the date of the grant using the
      following assumptions: dividend yield of 0%, expected volatility of 0%,
      risk-free interest rate of 3.39% and an expected life of five
      years.





Had
      compensation cost for the Company’s stock option grants been determined
      consistent with SFAS 123, the Company’s net income (loss) and net income (loss)
      per share would approximate the pro forma amounts below:





For
                theYear
                ended
              December
                31, 2005
            For
                theYear
                ended
              December
                31, 2004Net
                loss
            $
                (37,600)
            $
                (28,666)As
                reportedIncrease
                loss due to:Employee
                stock option plan
            (750)
            (750)Pro
                forma
            $(38,350)
            $(29,416)Loss
                per common sharesAs
                reported
            $(0.03)
            $(0.05)Pro
                forma
            $(0.03)
            $(0.05)














-49-