Abode Mortgage Corporation
TSX VENTURE : ABD

Abode Mortgage Corporation

January 28, 2008 19:07 ET

Abode Mortgage Holdings Corp. Reports 1st Quarter 2008 Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 28, 2008) - Abode Mortgage Holdings Corp. (TSX VENTURE:ABD) announces its financial results for the first quarter ending November 30th, 2007. For the quarter, the company recorded a loss of $1,316,125 as compared to a loss of $761,037 in the prior year's quarter ended November 30th, 2006.

FINANCIAL HIGHLIGHTS

- Funded loans worth $15.97 million

- Securitized $27.97 million of loans

- Net revenues including gain on sale for the quarter, were $2.92 million

- Net expenses were $4.2 million

Mike Linehan, CEO of Abode Mortgage Holdings Corp., reports the following, "During the first quarter of 2008 Abode made a conscious decision to maintain its current book of mortgages and to refrain from significantly increasing originations in the quarter. A high sales volume quarter would have placed additional stress on its warehouse facilities at a time when sale markets became uncertain. This decision meant new origination volumes were reduced and therefore expenses continued to outpace revenues. However, the slow-down strategy also gave management time to re-tool its product offerings and update its overall business strategy. Abode used this origination pause as an opportunity to also hold mortgage assets until market pricing became palatable again. From mid September until the end of October with the freezing of the non-bank asset backed commercial paper trading markets and the credit market uneasiness from the US sub-prime spill-over to Canada the sale pricing of mortgage assets became untenable. By the end of the quarter the market began behaving more reliably and we began to re-sell insured assets at more favourable levels. The decrease in earnings directly relates to the reduction in new origination volumes and the associated reduction in fees. Infrastructure costs were maintained to the same level as the 4th quarter of 2007.The first quarter of 2008 also includes the added costs to insure the previous non-insured mortgage portfolio which is a direct charge against 2008 revenues. The insurance was necessary from both a prudent risk management tactic, given the turn in the credit markets, and also enhanced the mortgage's ability to be sold. Staffing still remains the biggest overhead component of our expenses but it is vital to maintain our talent pool as we re-launch our new product growth strategy. Abode funded $15.97 million in mortgages during the quarter even with the reduction strategy, and we completed $27.97 million of sales of existing volume during the quarter."

BUSINESS HIGHLIGHTS

- Launched new mortgage programs

- Established new mortgage sale agreements with Global and Canadian Financial institutions

- Established an additional $25 million warehouse margin facility with a leading financial institution

OUTLOOK

Mike Linehan, CEO of Abode Mortgage Corporation, continues the discussion with the following comments, "The disruption in the Canadian capital markets continues to provide many challenges for the Company. The change in our market strategy during the quarter to insure Abode mortgage's through third party insurers will reduce expected fee income. However, the benefits of this changed market approach include access to new mortgage origination volumes and an increased supply of capital market purchasers. We chose not to sell assets immediately until the capital markets became more favorable to buying and selling mortgage product at reasonable prices. Abode completed a variety of securitization transactions during the quarter as the markets became more receptive to insured product at reasonable pricing during the later part of November 2007. We anticipate that our 2008 origination targets will be behind the original business projections due to the change in credit market conditions and the overall tight mortgage securitization markets. While the anticipated growth in the non-conforming market will as always be subject to Canada's normal macroeconomic and regional disparities causing origination volatility province to province and city to city, the reduction of the number of lenders in the market should provide an overall stronger core, a variety of new niche lending products, and an overall more profitable risk based pricing system."



Financial Information

Abode Mortgage Holdings Corp.
Consolidated Balance Sheets
As at November 30, 2007 and August 31, 2007

November 30, 2007 August 31, 2007
(un-audited) (audited)
$ $
Assets

Cash and cash equivalents 1,514,045 1,646,080
Advances for mortgage loans 179,250 1,066,475
Mortgage loans 67,447,917 79,393,174
Accrued interest receivable 219,325 241,305
Accounts receivable Prepaid expenses
and deposits 1,045,922 1,274,228
Equipment 112,694 120,378
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70,519,153 83,741,640
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Liabilities

Credit facilities 65,599,913 78,561,414
Accounts payable and accrued liabilities 2,299,537 1,341,571
Debt 694,068 685,169
Interest rate swap 175,000 167,691
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68,768,518 80,755,845
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Shareholders' equity

Capital stock 13,636,439 13,636,439
Equity portion of convertible debenture 65,757 65,757
Contributed surplus 716,391 635,426
Deficit (12,667,952) (11,351,827)
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1,750,635 2,985,795
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70,519,153 83,741,640
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Approved on behalf of the Board of Directors

David G. Nelson, Director Malcolm Clay, Director


Abode Mortgage Holdings Corp.
Consolidated Statements of Operations and Deficit
For the First Quarter Ended November 30, 2007 and November 30, 2006

Three Months
Ended November 30
(unaudited)
2007 2006
$ $

Revenue

Fee income 1,350,448 -
Interest on mortgages held 1,419,961 -
Gain on sale of mortgages 138,019 -
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2,908,428 -
Origination and financing expense (2,750,356) -
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158,072 -
Other income 7,933 205,176
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166,005 205,176

Expenses

General and administrative 1,086,604 914,324
Non-recurring development expense 365,685 -
Interest on debt 29,841 31,442
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Loss from continuing operations (1,316,125) (740,590)
Other Items
Foreign exchange loss - (20,447)
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Loss for the year (1,316,125) (761,037)

Deficit - Beginning of period (11,351,827) (6,640,652)
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Deficit - End of period (12,667,952) (7,401,689)
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Basic and diluted loss per share (0.0116) (0.0077)
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Weighted average number of shares
Outstanding 113,706,539 99,206,539

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Abode Mortgage Holdings Corp.
Consolidated Statements of Cash Flows
For the First Quarter Ended November 30, 2007 and November 30, 2006

Three Months
Ended November 30
(un-audited)
2007 2006
$ $
Operating activities:

Loss from continuing operations (1,316,125) (761,037)

Items not affecting cash:

Amortization 7,685 7,437
Accretion on convertible debenture 8,898 10,500
Provision for credit losses (7,391) -
Stock-based expense 187,892 -
Fair value of interest rate swap 7,309 -
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(1,111,732) (743,100)
Changes in non-cash working capital items 1,079,345 (359,090)
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Net cash used in operating activities (32,387) (1,102,190)

Financing activities:
Credit facility, net of repayments (12,961,501) -
Advances for mortgage loans 887,225 -
Proceeds from share issuance, net of costs - 50,000
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Net cash provided by financing activities (12,074,276) 50,000

Investing activities:
Net increase in mortgages receivable 11,974,628 -
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Net cash used in investing activities 11,974,628 -
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Decrease in cash and cash equivalents (132,035) (1,052,190)

Cash and cash equivalents - beginning
of year 1,646,080 4,950,854
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Cash and cash equivalents - end of year 1,514,045 3,898,664
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Supplementary cash flow information:

Income taxes paid - 142,913
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Interest paid 1,285,376 20,943
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About Abode Mortgage Holdings Corp.

Abode Mortgage Holdings Corp. is a public company trading on the TSX Venture Exchange under the symbol ABD, and through its wholly owned subsidiary, Abode Mortgage Corporation, provides mortgage services to the increasing number of Canadians who are unable to find mortgage financing through traditional sources. Headquartered in Vancouver, Abode Mortgage Corporation is delivering a new standard of service excellence to the Canadian non-conforming residential mortgage industry by providing simplified products, consistent underwriting decisions, uniformed pricing and competitive compensation programs. The Company launched its lending operations in February, 2007.

Information about Abode Mortgage Corporation is available on the Internet at: www.abodecorp.com.

Forward-Looking Statements

Forward-looking statements in this document are based on current expectations and are subject to significant risks and uncertainties. Actual results may differ due to factors such as the competitive nature of the industry, the ability of Abode Mortgage to execute its growth strategy, and the reliance of Abode Mortgage on key personnel. Additional information identifying risks and uncertainties is contained the regulatory filings available on its website and at www.sedar.com.

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

Contact Information