Augen Capital Corp.
TSX VENTURE : AUG

Augen Capital Corp.

August 26, 2011 12:31 ET

Augen Capital Reports 2011 Second Quarter Results

TORONTO, ONTARIO--(Marketwire - Aug. 26, 2011) - Augen Capital Corp. ("Augen" or the "Company") (TSX VENTURE:AUG) today announced its interim unaudited consolidated financial results for the second quarter ended June 30, 2011.

In the quarter ended June 30, 2011, the Company reported income of $733,046 compared to income of $70,315 for the second quarter of 2010. The net loss for the second quarter of 2011 was $856,286 ($0.01 loss per share) compared to net income of $12,682 ($0.00 earnings per share) in the same quarter of 2010. In 2011, the Company reported an unrealized loss on fair value through profit and loss ("FVTPL") investments of $1,385,819 compared to an unrealized gain of $545,257 during the same quarter of 2010.

The Company generates income primarily through the activities of its Merchant Banking ("MB") segment, the strength of which is closely related to global market conditions and the general economic environment. Management believes the current market conditions have become more difficult, especially for junior exploration companies, and has therefore refocused on companies with near term production and cash flow. While the market has improved markedly since the lows of early 2009, the current uncertainty is likely to have a continued impact on the Company's investment portfolio as a result of increased volatility.

The Managed Products ("MP") consulting asset base declined to $NIL at December 31, 2010, and as such, Augen will no longer earn consulting fees on the historic MP consulting assets. Augen has not offered or consulted on any new flow- through limited partnerships since mid-2008.

Consolidated expenses were $182,675 in 2011 compared to $590,677 in 2010. The decrease of $408,002 is primarily due to: Management fee expense was $NIL in 2011 compared to $287,880 in 2010. Effective October 31, 2010, the Company terminated the Management Agreement with OreReserve, the Company's former Manager, and as such, no longer incurs management fee expense. Professional fees decreased by $109,201, primarily due to the recovery of previously reported legal fees of $53,289 in connection with the Company's 2010 contested annual and special meeting. Without considering the recovery of these legal fees, the Company reduced overall professional fee expense by $55,912 in 2011 from the $85,366 of professional fees incurred in 2010. Corporate development expense was $14,625 in 2011 compared to $65,650 in 2010. General and administrative expenses were $93,477 in 2011 compared to $132,951 in 2010. Share- based compensation expense was $NIL in 2011 compared to $14,060 in 2010. The decrease in these expenses was partially offset by the following increase in expenses: Wages and benefits expense was $78,658 in 2011 compared to $3,790 in 2010; and sales and marketing expense was $19,750 in 2011 compared to $980 in 2010. The increase in certain expenses in 2011 was primarily due to the Company incurring these expenses directly, as opposed to being incurred by the former Manager through the Management Agreement in 2010.

Consolidated Statements of Operations and Comprehensive Earnings (loss)
Merchant Banking Managed Products Total
For the three months ended June 30, 2011 2010 2011 2010 2011 2010
$ $ $ $ $ $
Income (loss) 732,719 65,629 327 4,686 733,046 70,315
Expenses 182,675 560,483 - 30,194 182,675 590,677
Earnings (loss) before undernoted items 550,044 (494,854 ) 327 (25,508 ) 550,371 (520,362 )
Unrealized (gain) loss on investments held-for-trading 1,385,819 (545,257 ) - - 1,385,819 (545,257 )
Amortization 5,994 3,993 666 443 6,660 4,436
Earnings (loss) before income taxes (841,769 ) 46,410 (339 ) (25,951 ) (842,108 ) 20,459
Income taxes
Current 14,178 7,435
Future - 342
14,178 7,777
Net earnings (loss) and comprehensive earnings (loss) (856,286 ) 12,682
Earnings (loss) per share
Basic and diluted (0.01 ) 0.00
Weighted average shares outstanding 77,837,039 36,615,614

For the six month period ended June 30, 2011, the Company reported income of $738,213 compared to $140,727 for the same period of 2010. The net loss was $3,228,520 ($0.05 loss per share) in the first half of 2011 compared to a net loss of $636,956 ($0.02 loss per share) in the first half of 2010. In 2011, the Company reported an unrealized loss on FVTPL investments of $3,437,783 compared to an unrealized gain of $549,890 in 2010.

Consolidated Statements of Operations and Comprehensive Earnings (loss)
Merchant Banking Managed Products Total
For the six months ended June 30, 2011 2010 2011 2010 2011 2010
$ $ $ $ $ $
Income (loss) 737,701 132,570 512 8,157 738,213 140,727
Expenses 495,323 1,047,843 6,856 60,584 502,179 1,108,427
Earnings (loss) before undernoted items 242,378 (915,273 ) (6,344 ) (52,427 ) 236,034 (967,700 )
Share of (earnings) loss and capital transactions from
equity-accounted investment - 192,160 - - - 192,160
Unrealized (gain) loss on FVTPL investments 3,437,783 (549,890 ) - - 3,437,783 (549,890 )
Amortization 11,177 7,985 1,242 887 12,419 8,872
Earnings (loss) before income taxes (3,206,582 ) (565,528 ) (7,586 ) (53,314 ) (3,214,168 ) (618,842 )
Income taxes
Current 14,352 7,107
Deferred - 11,007
14,352 18,114
Net earnings (loss) and comprehensive earnings (loss) (3,228,520 ) (636,956 )
Earnings (loss) per share
Basic and diluted (0.05 ) (0.02 )
Weighted average shares outstanding 69,999,169 36,615,614

Merchant Banking Portfolio

The Company's most significant investment, which represented 71% of the MB portfolio as at June 30, 2011, declined on a per share basis by 49% during the six month period ended June 30, 2011, which had a significant negative impact on the earnings of the Company.

The Company's investment portfolio had a fair value of $2,656,235 as at June 30, 2011, having decreased by $3,345,908 since December 31, 2010, a 56% decline. The decrease was due to a combination of: The lower market value of shares held in the MB portfolio at June 30, 2011 relative to their December 31, 2010 market values; and due to the selling of certain investments held at December 31, 2010. The net decline in fair value of the investments held at December 31, 2010 was partially offset by the acquisition of certain other investments during the period. The Company reported an unrealized loss on FVTPL investments of $3,437,783 during the period.

Change in Financial Reporting Standards

The first quarter of 2011 marked the first period after the Company's changeover to International Financial Reporting Standards ("IFRS"). Details on the changeover are contained in the Company's notes to the interim unaudited consolidated financial statements and the Management's Discussion and Analysis for the period ended March 31, 2011.

The full interim unaudited consolidated financial statements for the quarter ended June 30, 2011 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 provision of management, consulting and due diligence services to listed issuers in the mineral exploration, development and extraction sectors. Augen also assists in the financing of, and investment in, resource companies or projects.

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 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: 77,837,039

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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