Augen Capital Corp.
TSX VENTURE : AUG

Augen Capital Corp.

November 28, 2008 14:37 ET

Augen Capital Reports Third Quarter Results

TORONTO, ONTARIO--(Marketwire - Nov. 28, 2008) - Augen Capital Corp. ("Augen" or "the Company") (TSX VENTURE:AUG) today announced its unaudited interim consolidated financial results for the third quarter and nine-month period ended September 30, 2008.

Third Quarter Results

In the quarter ended September 30, 2008, Augen's income was $301,193, compared with $796,856 in the third quarter of 2007. The Company's income is driven by its Managed Products (MP) and Merchant Banking (MB) segments. Income in the MP segment was $180,522 in the latest quarter, compared with $462,161 in the third quarter of 2007. This was mainly the result of consulting and due diligence fees declining by $78,720, advisory and performance fees declining by $191,702 and interest and dividend income declining by $11,217 from the same period in 2007. Income in the MB segment was $120,671 in the latest quarter, compared with $334,695 in the third quarter of 2007. This was primarily the result of a net realized gain on the sale of investments in the same period of 2007 of $119,893. A decrease in consulting fees of $45,667, a decrease of $38,034 in interest and dividend income and a decrease in income from investee company services of $10,430 also accounted for the change.

In the MP segment, the third quarter loss before income taxes was $59,371 compared with earnings of $70,290 in the same period of 2007. This change was primarily due to a decline in income of $281,639.

The MB segment experienced a loss, before income taxes, of $1.4 million in the three months ended September 30, 2008, compared with a loss before income taxes of $2.4 million in 2007. The decrease in the loss was mainly due to a greater amount recovered from the adjustment to the fair value of liabilities of $132,899 recovered in 2008, compared with $41,353 recovered in 2007, and investments held for trading that were subject to an unrealized loss of $1.2 million in 2008 compared with an unrealized loss of $2.3 million in 2007.

The Company incurred a total of $11,164 in non-recurring charges in the quarter, and 50% was allocated to each of the Augen's operating segments.

Net loss before income taxes for the quarter was $1.5 million compared with $2.3 million in the third quarter of 2007.

Net loss in the quarter was $1.3 million compared with a net loss of $2.1 million in the same period of 2007.

Note: The adoption of CICA Handbook Section 3855, which requires the reporting of unrealized fluctuations in the fair value of the Merchant Banking investment portfolio, has resulted in greater volatility in the net earnings of Augen since it was adopted in the first quarter of 2007. While these accounting standards provide insight into the current fair value of the Merchant Banking (MB) investment portfolio, they do not necessarily provide an accurate indication of the ultimate realized gain or loss, which will be different.



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Consolidated Statements of Earnings
----------------------------------------------------------------------------
Managed
For the three Products Merchant Banking Total
months ended 2008 2007 2008 2007 2008 2007
September 30, $ $ $ $ $ $
----------------------------------------------------------------------------
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Income
(loss) 180,522 462,161 120,671 334,695 301,193 796,856
Expenses 228,671 390,219 413,981 462,287 642,652 852,506
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Earnings
(loss)
before
undernoted
items (48,149) 71,942 (293,310) (127,592) (341,459) (55,650)
Unrealized
loss on
investments
held for
trading - - 1,244,848 2,264,442 1,244,848 2,264,442
Non-recurring
charges 5,582 - 5,582 - 11,164 -
Adjustment to
fair value
of
liabilities - - (132,899) (41,353) (132,899) (41,353)
Amortization 5,640 1,652 5,641 1,652 11,281 3,304
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Earnings (loss)
before income
taxes (59,371) 70,290 (1,416,482) (2,352,333) (1,475,853) (2,282,043)
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Income taxes
Current (63,595) 110,654
Future (159,689) (341,284)
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(223,284) (230,630)
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Net earnings
(loss) and
comprehensive
earnings (loss) (1,252,569) (2,051,413)
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For the three months ended September 30, cash used in operations, excluding changes in non-cash working capital decreased to $94,221, from $179,853 in the same period of 2007. This was mainly the result of a reduction in the net loss of $798,844 and a decrease in income taxes of $181,595. This was partially offset by a reduction of $899,701 in net realized and unrealized losses on investments held for trading in the quarter compared with 2007.

"The fluctuations in the price of commodities earlier in the year foreshadowed a significant market correction, along with the uncertainty and investor fear that has accompanied it. Our business is not immune from broader market realities and our quarterly results reflect this," said J. David Mason, Chief Executive Officer of Augen. "Management has taken action to streamline operational costs and preserve cash in addition to suspending the disposition of securities until the market shows signs of improvement. The Company remains committed to creating shareholder value by maximizing fee income from the Managed Products consulting assets and investment returns on the Merchant Banking investment portfolio."

Year-to-Date Results

Through the first nine months of 2008, Augen's income was $1.2 million compared with $3.3 million through the first three quarters of 2007. In addition to other items, the variance was mainly the result of a decrease in advisory and performance fees of $107,654 and a decrease in consulting and due diligence fees of $601,060 in the MP segment, coupled with a net realized gain on the sale of investments of $108,922 in 2008, compared with a net realized gain on the sale of investments of $1.6 million in the MB segment in 2007.

The loss before income taxes in the MP segment, for the nine months ended September 30, 2008, was $592,341 compared with earnings of $486 in 2007. In addition to other items, this variance was primarily the result of a decline in income of $730,158 that was partially offset by a decrease of $398,655 in expenses.

Through the first three quarters of 2008, the MB segment's reported loss before income taxes was $3.1 million compared to a loss before income taxes of $3.2 million in the same period of 2007. This was primarily the result of a decrease of $227,008 in expenses year-over-year, which was offset by other items.

Net loss, before income taxes, was $3.6 million in 2008, compared with a net loss of $3.2 million through the first three quarters of 2007.

Net loss was $3.0 million for the nine months ended September 30, 2008, compared with a net loss of $2.8 million in the same period of 2007.



----------------------------------------------------------------------------
Consolidated Statements of Earnings
----------------------------------------------------------------------------
Managed Merchant
For the nine Products Banking Total
months ended 2008 2007 2008 2007 2008 2007
September 30, $ $ $ $ $ $
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Income
(loss) 635,846 1,366,004 566,961 1,913,469 1,202,807 3,279,473
Expenses 961,906 1,360,561 1,051,897 1,278,905 2,013,803 2,639,466
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Earnings
(loss)
before
undernoted
items (326,060) 5,443 (484,936) 634,564 (810,996) 640,007
Unrealized
loss on
investments
held for
trading - - 2,521,038 4,272,282 2,521,038 4,272,282
Non-
recurring
charges
(note 15) 257,438 - 257,438 - 514,876 -
Adjustment
to fair
value of
liabilities - - (220,380) (481,334) (220,380) (481,334)
Amortization 8,843 4,957 8,843 4,956 17,686 9,913
----------------------------------------------------------------------------
Earnings
(loss)
before
income
taxes (592,341) 486 (3,051,875) (3,161,340) (3,644,216) (3,160,854)
----------------------------------------------------------------------------
Income taxes
Current (322,985) 206,098
Future (363,864) (535,854)
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(686,849) (329,756)
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Net earnings
(loss) and
comprehensive
earnings
(loss) (2,957,367) (2,831,098)
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----------------------------------------------------------------------------


Cash used in operations, excluding changes in non-cash working capital, was $772,065 compared with $273,011 through the first three quarters of 2007. This change was mainly the result of an increase in the net loss of $126,269, a decline in stock-based compensation of $239,949 and a decrease of $298,251 in net realized and unrealized losses on investments held for trading.

Consolidated assets decreased by 26% to $8.4 million on September 30, 2008, from $11.3 million on December 31, 2007. Augen's balance sheet has almost $4 million in current assets and no long-term debt.



----------------------------------------------------------------------------
Consolidated Assets
----------------------------------------------------------------------------
Managed Products Merchant Banking Total
September December September December September December
30, 2008 31, 2007 30, 2008 31, 2007 30, 2008 31, 2007
As at, $ $ $ $ $ $
----------------------------------------------------------------------------
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Total assets 672,257 733,415 7,679,304 10,550,270 8,351,561 11,283,685
----------------------------------------------------------------------------
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Shareholders'
equity per
share (i) 0.21 0.29
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(i) Defined as shareholders'equity per financial statements, divided by
common shares outstanding
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The full unaudited interim consolidated financial statements for the period ended September 30, 2008 are available at www.augencc.com or at www.sedar.com.

About Augen Capital

Augen Capital Corp. ("Augen") (TSX VENTURE:AUG) is a Toronto-based public merchant bank specializing in the financing of and investment in emerging resource companies. Augen manages a merchant banking hard dollar portfolio of emerging resource stocks including private companies and is an industry performance leader in tax-advantaged flow-through investments in Canada's resource sector having raised over $58 million in flow-through limited partnership assets since inception. Augen currently has $25 million in flow-through investment consulting assets, including $17 million raised in 2008 by Augen and its sales and distribution partner. Augen holds over one hundred gold, base metals and uranium exploration and development public and private companies with direct holdings in its merchant banking portfolio and consulting assets in flow-through limited partnerships.

For more information on Augen Capital, visit our website at www.augencc.com.

The Company's public documents may be accessed at www.sedar.com.

This news release contains forward-looking statements. These statements are based on certain factors and assumptions as set forth in this news release including expected growth, results of operations, performance and business prospects and opportunities. While the Company considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. A number of factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to results of exploration, project development, reclamation and capital costs of the companies in the merchant banking portfolios ("investee companies"), and the Company's financial condition and prospects, could differ materially from those currently anticipated in such statements for many reasons such as: changes in general economic conditions and conditions in the financial markets; changes in demand and prices for the minerals the investee companies expect to produce; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; technological and operational difficulties encountered in connection with the activities of the Company and investee companies. Additional risks and uncertainties can be found in our 2008 Management's Discussion and Analysis and in filings with the Canadian provincial securities commissions. Forward-looking statements are given only as at the date of this news release and the Company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Shares outstanding: 36,615,615

The TSX Venture has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Augen Capital Corp.
    J. David Mason
    Chief Executive Officer
    (416) 479-3300
    Email: investorrelations@augencc.com
    or
    Lute & Company
    John Lute
    (416) 929-5883 x 222