MonoGen, Inc.

MonoGen, Inc.

March 30, 2007 18:56 ET

MonoGen, Inc. Announces Restatement of its Financial Statements Loss Reduced by $677,000 for the Nine-Month Period Ended September 30, 2006

MONTREAL, QUEBEC--(CCNMatthews - March 30, 2007) - This Press Release is Not for Distribution in the United States

MonoGen, Inc., formerly Oxbow Equities Corp., ("Corporation") (TSX:MOG) today announced that the results of its unaudited interim consolidated financial statements For the Nine-Month Period Ended September 30, 2006 has been restated including the management's discussion and analysis ("MD&A") of the results for the third quarter. The restated financial statements and MD&A will be filed with SEDAR (

In the third quarter, The Corporation's equity accounted for investment, MonoGen USA, concluded a debt settlement agreement with its senior secured lender (the "Lender"). The settlement included the issuance of new warrants and modifications to existing warrants previously issued to the Lender. Errors in determining the fair value of the newly issued warrants and the modifications to the previously existing warrants resulted in an overstatement of the debt settlement expense recorded by MonoGen USA, which resulted in overstating the equity loss recorded by the Corporation by $466.

For the purposes of determining the Corporation's equity share of MonoGen USA's net loss, its financial statements must be reconciled to Canadian generally accepted accounting principles ("GAAP"). Errors in the determination of the value of recorded as convertible debt financial instruments of MonoGen USA in accordance with Canadian GAAP resulted in an overstatement of accretion expense, which resulted in overstating the equity loss recorded by the Corporation by $211.

The net effect of this restatement on the unaudited interim consolidated financial statements for the three-month and nine-month periods ended September 30, 2006 was to decrease the net loss for this period by $677 and to increase, the carrying value of the investment in MonoGen USA by $677 as of September 30, 2006. These errors did not impact the Corporation's cash flow from operations.

Overall Performance

For the nine-month period ended September 30, 2006, the Corporation reported a consolidated net loss of $7,492,000 from continuing operations compared to a consolidated net loss of $5,605,000 for the same period in 2005.

The net loss for the nine-month periods ended September 30, 2006 and 2005 is primarily the result of recording an equity loss from the investment in MonoGen USA of $6,641,000 and $6,038,000, respectively and the reduction of future income tax benefits. The equity loss is a non-cash expense and was applied against the carrying amount of the Corporation's investments in MonoGen USA.

The non-cash interest income revenue in the first three quarters of 2006 increased from $1,594,000 to $2,032,000. The increase in non-cash interest income was substantially due to the fact that since May 2003 interest is compounded quarterly on the MonoGen USA convertible promissory notes and to interest earned on additional investments of $7,369,000 made to MonoGen USA in the first three quarters of 2006.

During the first three quarters of 2006, general and administrative expenses increased to $1,167,000 from $1,088,000 for the same period in 2005. The increase was due mostly to increased professional fees. The amount in 2006 included a non-cash expense of $353,000 for stock-based compensation compared to $355,000 in 2005..Page 2 of 3 During the first three quarters 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 losses amounting to $1,147,000 in the first three quarters of 2006 compared to foreign exchange losses of $1,027,000 for the same period in 2005, although the impact was lessening for the three months ended September 30, 2006 as the loss was $61,000.

As of September 30, 2006 the cash balance was $8,174,000 and approximately 96.9% of the Corporation's assets are invested in one United States based privately held health care company, MonoGen USA (49.1% - December 31, 2005).

Future Prospects

On October 31, 2006 the Corporation completed the transaction, announced on July 13, 2006, whereby the Corporation acquired the remaining ownership interest of MonoGen USA that it did not already own. The acquisition was achieved through a share exchange whereby the Corporation issued 0.6923 of a common share in exchange for each one share of common stock of MonoGen USA, issuing a total of 57,914,094 common shares. In addition, 7,482,740, 15,161,946 and 1,998,965 common shares have been reserved for MonoGen USA warrants, options, and convertible notes, respectively. Following closing of the acquisition, the name of the Corporation was changed to MonoGen, Inc., and it continued its listing on the TSX.

On November 13, 2006, the Corporation announced that it has considerably strengthened its balance sheet by entering into binding subscription agreements for a non-brokered private placement for a total amount of $18.5 million by issuing 33.7 million common shares at $0.55 per share. As at October 31, 2006, the Corporation had a consolidated cash position of approximately $13.0 million ($31.5 million proforma the completion of the $18.5 million private placement), trade payables and other short term liabilities of $6.0 million and long term liabilities of $4.2 million.

From an operational point of view, MonoGen USA is currently ramping up the manufacturing and commercialization infrastructure for the sale of its products through its strategic partnerships, which include key plastic components supplier Hoffer Plastics Corporation, manufacturing partner Diamond Machine Werks, Inc. and distribution partner Cardinal Health Inc. Product placements of MonoPrep ® Processors and MonoPrep ® Pap Test for evaluation by prospective key customers should begin in the first quarter of 2007.

With operating headquarters in the United States (Greater Chicago area), MonoGen is a private medical device company developing an integrated suite of fully automated devices (the SAVANT LABORATORY SYSTEM™) for anatomic and molecular pathology laboratories. The SAVANT LABORATORY SYSTEM™ is being designed to automate processes performed by clinical laboratories to reduce their costs, increase throughput, and improve the quality and consistency of results.

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

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 based on the Corporation's beliefs and assumptions based on information available at the time the assumption was made. Forward-looking statements relate to, among other things, anticipated financial performance, business prospects, strategies, regulatory developments, new services, market forces, commitments and technological developments, relating to the Corporation. By its nature, such forward-looking information is subject to various risks and uncertainties which could cause the Corporation's actual results and experience to differ materially from the anticipated results or other expectations expressed. Those risks and uncertainties include, but are not limited to MonoGen's ability to raise additional capital, MonoGen's ability to execute its business plan while maintaining at all times its various regulatory approvals, the performance of its strategic partners including the performance of Cardinal Health in the commercialization of the Corporation's products in the marketplace and the competitive response from existing and potential competitors. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this document, and the Corporation undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise

Contact Information

  • MonoGen, Inc.
    Mr. Andre Denis
    Executive Chairman and Interim Chief Financial Officer
    514-286-0999, ext. 224
    514-286-3777 (FAX)