OXBOW Equities Corp.
TSX : XBO

OXBOW Equities Corp.

May 12, 2006 17:34 ET

Oxbow Equities Corp. Announces Financial Results for the Three-Month Period Ended March 31, 2006

MONTREAL, QUEBEC--(CCNMatthews - May 12, 2006) - This press release is not for distribution in the United States.

Oxbow Equities Corp. ("Corporation") (TSX:XBO) today announced the results of its unaudited interim consolidated financial statements for the three-month period ended March 31, 2006. The unaudited interim consolidated financial statements, including management's discussion and analysis ("MD&A") of the results will be filed with SEDAR (www.sedar.com).

A selection of financial information, derived from the Corporation's unaudited interim consolidated financial statements for the three-month periods ended March 31, 2006 and 2005 are presented below:

Consolidated statements of income



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Three-Month Periods Ended
March 31,
2006 2005
(in thousands except per common share amounts) $ $
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Revenues
Interest income 731 556
Gain realized on the disposition of the
investment in Mission Medical, Inc.
held for sale
realized on February 25, 2005 - 3,856
unrealized gain previously recorded
in December 2004 - (3,355)
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731 1,057
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Expenses
General and administrative 342 278
Foreign exchange losses (gains) (119) 41
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223 319
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Income from continuing operations before other
income and other items 508 738
Other income
Consulting fees 43 83
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Income from continuing operations before other
items 551 821
Equity loss in MonoGen, Inc. (2,113) (1,785)
Dilution gain on issuance of common shares
by MonoGen, Inc. - 25
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Loss from continuing operations for the period (1,562) (939)
Income from discontinued operations for the
period, net of tax - -
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Net loss for the period (1,562) (939)
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Basic and diluted loss per common share
Loss from continuing operations (0.02) (0.01)
Income (loss) from discontinued operations - -
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Net loss per common share - basic and diluted (0.02) (0.01)
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Consolidated statements of cash flows

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Three-Month Periods Ended
March 31,
2006 2005
(in thousands) $ $
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Decrease in cash flows related to operating
activities from continuing operations (320) (205)
Increase in cash flows related to financing
activities from continuing operations 101 2,333
Increase (decrease) in cash flows related to
investing activities from continuing operations (768) 16,087
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Consolidated balance sheets

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March 31, December 31,
2006 2005
(in thousands) $ $
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Cash and cash equivalents and short term
investment 14,986 15,978
Investments in MonoGen, Inc. 16,727 17,128
Total assets 33,360 34,911
Total liabilities 182 319
Shareholders' equity 33,178 34,592
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Oxbow's investments in MonoGen, Inc. ("MonoGen") are described in its
Annual Information Form. The carrying amount and fair value of the
investments in MonoGen presented below are detailed in notes 3 and 7
of the unaudited interim consolidated financial statements for the
three-month period ended March 31, 2006:

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Estimated Carrying Estimated Carrying
Fair Value Amount Fair Value Amount
March 31, December 31,
(in thousands except 2006 2005
percentage amounts) $ $ $ $
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Investments in
MonoGen, Inc.
Common shares - - 4,705 -
Subordinated secured
convertible
promissory notes 34,727 16,727 47,051 17,128
Warrants to purchase
common shares - - 208 -
Stock appreciation
rights - - - -
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34,727 16,727 51,964 17,128
Ownership
Basic 41.0% 41.0%
Fully diluted 48.6% 47.2%
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Consolidated assets subject to foreign exchange risk

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March 31, December 31,
2006 2005
(in thousands except percentage amount
and exchange rate) $ $
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Total assets 33,360 34,911
Total assets subject to foreign exchange risk 17,181 18,975
Percentage of assets subject to foreign
exchange risk 52% 54%
Exchange rate of the U.S. dollar in Canadian
dollars 1.1680 1.1630
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Overall Performance

For the three-month period ended March 31, 2006, the Corporation reported a consolidated net loss of $1,562,000 from continuing operations compared to a consolidated net loss of $939,000 for the same period in 2005.

The net loss for the three-month periods ended March 31, 2006 and 2005 is primarily the result of recording an equity loss from the investment in MonoGen of $2,113,000 and $1,785,000, respectively. This non-cash expense was applied against the carrying amount of the Corporation's investments in MonoGen.

The non-cash interest income revenue in the first quarter of 2006 increased from $507,000 to $605,000. The increase in non-cash interest income was substantially due to the fact that since May 2003 interest is compounded quarterly on the MonoGen convertible promissory notes and to interest earned on additional investments of $1,004,000 made to MonoGen in the first quarter of 2006.

During the first quarter of 2006, general and administrative expenses increased to $342,000 from $278,000 for the same period in 2005. The amount in 2006 included a non-cash expense of $65,000 for stock-based compensation compared to $12,000 in 2005.

During the first quarter of 2006, the Corporation continued to be impacted by the fluctuation of the Canadian dollar vis-a-vis the United States dollar. The Corporation recorded foreign exchange gains amounting to $119,000 in the first quarter of 2006 compared to foreign exchange losses of $41,000 for the same period in 2005.

As of March 31, 2006 approximately 50.1% of the Corporation's assets are invested in one United States based privately held health care company, MonoGen (49.1% - December 31, 2005).

Future Prospects

Upon receiving United States Food and Drug Administration ("FDA") approval to commercialize its MonoPrep® Pap Test during the first quarter of 2006, MonoGen reached the early commercialization phase of its development. MonoGen is currently planning the ramp up of the manufacturing and commercialization of its products through its strategic partnerships, which include, key plastic components supplier Hoffer Plastics Corporation, manufacturing partner Diamond Machine Werks, Inc. and commercialization partner Cardinal Health, Inc. Product placements of MonoPrep® Processors and MonoPrep® Pap Test for evaluation by prospective customers should begin in the third quarter of 2006 and initial orders are expected in the first quarter of 2007.

The Corporation's cash position as of May 12, 2006 is approximately $13.5 million. The Corporation maintains its intention to defer distributing its cash resources to its shareholders until MonoGen secures funding at acceptable terms. MonoGen is currently in discussions with a potential financial investor. Due to the uncertainty of the timing and extent of any such funding, the Corporation is currently providing funding to MonoGen and may decided to continue investing additional cash resources in MonoGen. To this effect, the Corporation is assisting MonoGen in establishing an operational and financial plan that will allow it to reach its objectives while maximizing shareholder value. The financial plan could result in the Corporation investing a portion or all of its cash resources in MonoGen and raising more equity capital in due course at both the Corporation level and at the MonoGen level.

Subsequent to MonoGen obtaining United States FDA approval for commercialization of the MonoPrep® Pap Test, Cardinal Health 200, Inc. ("Secured Lender") demanded repayment of its secured loan and stated that it maintains its distribution rights. MonoGen requires additional capital until it becomes cash flow positive from the commercialization of its products, including approximately US$5 million to repay the aforementioned secured loan from the Secured Lender.

The consolidated financial results of the Corporation will continue to be impacted by any variation in the exchange rate since a significant portion of its assets are denominated in United States dollars. The Corporation does not use and does not intend to use derivatives to hedge its foreign exchange rate risk.

The common shares of the Corporation are listed for trading on the Toronto Stock Exchange under the trading symbol "XBO".

Forward-Looking Statements

This press release is not for distribution in the United States.

This press release contains statements that are forward-looking in nature. Statements preceded by the words believe, expect, anticipate, plan, intend, continue, estimate, may, will, and similar expressions are forward-looking statements.

Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to known and unknown risks and uncertainties such as, but not limited to the capacity of the Corporation to obtain funding for its operations and for the needs of MonoGen. In addition, the ultimate recoverability of the Corporation's investment in MonoGen will be dependent upon a number of factors including, but not limited to, the capacity of MonoGen to obtain funding from third parties to finance its operations and the need to repay its debt obligations as further described in note 3 "MonoGen Secured Loans Default" of the unaudited interim consolidated financial statements, the ability of MonoGen to maintain government regulations such as those of the United States FDA, the eventual commercial success of MonoGen's products, the capability of the Corporation to realize the value of MonoGen on commercially reasonable terms and/or in a timely manner, changes in future foreign currency exchange rates, and other factors referenced herein and in the Corporation's continuous disclosure filings. Therefore, the Corporation's actual results may be materially different from those expressed or implied by such forward-looking statements.

Contact Information

  • Oxbow Equities Corp.
    Mr. Andre Denis
    President and Chief Executive Officer
    (514) 286-0999, ext. 224
    (514) 286-3777 (FAX)
    adenis@oxbowequities.com