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TSO3 ANNOUNCES FINANCIAL RESULTS FOR Q3 2010

^{Published on 2010-11-03 03:21:15 - Market Wire}
 

Stock symbol: TSX: TOS
Outstanding shares: 58,014,451

Highlights of Q3 2010 and recent weeks:

• Adopted process improvement initiatives in support of 3M™ quality policies;
• Successfully recruited Senior Engineering and Supply Chain talent into the Company;
• Received commitments for additional sterilizers to be delivered in 2011;
• Met with US regulators and subsequently supplied formal background documentation, including additional safety and efficacy documentation.

QUEBEC CITY, Nov. 3 /CNW Telbec/ - TSO₃ Inc. ("TSO₃") (TSX: TOS) an innovator in sterilization technology for medical devices in healthcare settings using ozone, posted revenues of $122,759 for the third quarter of 2010, ended September 30, for the sale of accessories and service contracts. This compares to $126,162 for the same period in 2009, for the sale of accessories and service contracts as well. The Company recorded a net loss of $2,033,140 for the third quarter of 2010, or $0.04 per share, compared to a net loss of $2,287,711 or $0.05 for the same period in 2009.

For the nine-month period ending September 30, 2010, the net loss amounted to $5,973,837, or $0.11 per share, compared to $6,538,518, or $0.14 per share for the same period in 2009.

"In third quarter, TSO₃ continued the process of transitioning from a direct, regional entity, to a technology focused organization, global in scope", said R.M. (Ric) Rumble President and CEO of TSO₃. "We are now building sterilizers bearing the 3M™ brand and we are expected to build and support to 3M's specifications and processes. In order to do that, a number of process initiatives have been adopted over the recent months and continue. With 3M's support, we are maturing as an organization at high speed and all lessons we learn will be applied to our new projects", added Mr. Rumble.

"In the meantime, we continue to experience interest for the product and backlog increases for shipments in 2011. As for our filing for US regulatory clearance, we have supplied a first round of documents to the Agency during the quarter and remain in open dialogue with the regulators for an eventual filing", concluded Mr. Rumble.

Conference Call

TSO₃ will host a telephone Conference Call today, November 3, 2010 at 10:30 a.m. (EDST). Analysts and Institutional Investors are invited to participate to the call. The numbers to dial for access are 514-807-9895 (Montréal area), 647-427-7450 (Toronto area) or the Toll-Free number 1 888 231-8191. Other interested parties may listen to the live Webcast of the Conference Call accessible via TSO₃'s Website at: [ http://www.tso3.com/en/investors/financial-reports-webcasts.php ]. The Webcast will be archived for 90 days.

OPERATING RESULTS ANALYSIS

Three and nine-month periods ending September 30, 2010, compared to the three and nine-month periods ending September 30, 2009.

Sales

Sales for the three-month period ending September 30, 2010 amounted to $122,759 representing the sale of accessories and service contracts, compared to $126,162 representing the sale of the same category of items for the corresponding period in 2009. 

For the nine-month period ending September 30, 2010, sales amounted to $761,340 representing the sale of four STERIZONE^® 125L+ Sterilizers, accessories and service contracts, compared to $1,170,276 representing the sale of five first generation sterilizers (125L), accessories and service contracts, including a large installation contract, for the same period in 2009.

Operating

For the three-month period ending September 30, 2010 operating expenses amounted to $251,711 compared to $359,275 for the same period in 2009. Operating expenses are related to production, manufacturing and after-sales service departments. The variance between the two periods is explained by a decrease in the costs related to service contracts and salaries in the customer and after-sales service departments.

For the nine-month period ending September 30, 2010, operating expenses amounted to $1,181,623 compared to $1,530,267 for the same period in 2009. The variance between the two periods is the result of a decrease in the cost of goods sold from having sold fewer devices and again, by a decrease in salaries in the customer and after-sales service departments.

Sales and Marketing

Sales and Marketing expenses amounted to $263,357 for the three-month period ending September 30, 2010 compared to $524,748 for the same period in 2009. The variance between the two periods is mainly the result of a decrease in salaries, commissions and travelling expenses due to a reduction in workforce slightly offset by increase in severance expenses. 

For the nine-month period ending September 30, 2010, Sales and Marketing expenses amounted to $875,181 compared to $1,780,369 for the same period in 2009.  The variance between the two periods is due to the same as above as well as to a decrease in expenses related to trade shows.  We expect our Sales and Marketing expenses to decrease going forward since these expenses are now the responsibility of our channel partner.

Research and Development

For the third quarter of 2010, Research and Development expenses amounted to $856,558 compared to $876,118 for the same period in 2009.  The difference between the two periods is due to a decrease in material purchases and sub-contracting fees. Conversely, regulatory and professional fees, as well as salaries resulting from the addition of employees in the R&D department, increased between the two periods to pursue the work on patents and the filings of the new generation product with agencies.

For the nine-month period ending September 30, 2010, Research and Development expenses amounted to $2,480,208 compared to $2,390,273 for the same period in 2009. The difference between the two periods is also due to an increase in regulatory and professional fees and salaries and by a decrease in material and sub-contracting.

Administrative

Administrative expenses amounted to $970,863 for the three-month period ending September 30, 2010 compared to $718,322 for the same period in 2009. The variance between the two periods is explained by severance and recruiting expenses. Conversely, the expenses related to Stock-based Compensation, Board Meetings and sub-committees decreased.

For the nine-month period ending September 30, 2010, administrative expenses amounted to $2,613,151 compared to $2,240,998 for the same period in 2009.  The variance is explained mainly by an increase in salaries, provision for bonuses, severance expenses, and recruiting fees. The variance is also explained by an increase in professional fees, patents fees, stock exchange fees, as well as expenses related to Stock-based Compensation, Board Meetings and sub-committees. Conversely, Stock-based Compensation expenses as well as public relations expenses decreased between the two periods.  

Other Income

For the three-month period ending September 30, 2010, the Company realized other revenues of $189,462 compared to $71,078 for the same period in 2009.  The variance between the two periods is explained by an increase in investment income, a lower loss on exchange rate and by the amortization of the deferred revenues from the 3M™ agreement representing an amount of $53,638. 

For the nine-month period ending September 30, 2010, other revenues amounted to $422,699 compared to $249,500 for the same period in 2009.  The variance is due to an increase in R&D tax credit, an increase in the amortization of the deferred revenues from the 3M™ agreement and a lower loss on exchange rate.

Net Loss

The Company recorded a net loss of $2,033,140 for the third quarter of 2010, or $0.04 per share compared to a net loss of $2,287,711 or $0.05 for the same period in 2009. 

For the nine-month period ending September 30, 2010, the net loss amounted to $5,973,837, or $ 0.11 per share, compared to $6,538,518, or $0.14 per share for the same period in 2009.

Liquid Assets and Financial Situation

As of September 30, 2010, cash, cash equivalents and temporary investments amounted to $20,457,057 compared to an amount of $11,581,759 as of September 30, 2009.

Third Quarter Disclosure

Third Quarter Report is available on TSO₃'s website at the following address [ http://www.tso3.com/en/investors/financial-reports-webcasts.php ] and full Q3 disclosure will shortly be available on SEDAR ([ www.sedar.com ]).

About TSO₃

TSO₃, founded in Québec City in 1998, specializes in the research and development of innovative, high-performance medical instrument sterilization technology with high commercial potential. TSO₃ designs products for sterile processing areas in the hospital environment and offers an advantageous replacement solution to other low temperature sterilization processes currently used in hospitals.

For more information about TSO₃, visit the Company's Web site at [ www.tso3.com ]

The statements in this release and oral statements made by representatives of TSO₃ relating to matters that are not historical facts (including, without limitation, those regarding the timing or outcome of any financing undertaken by TSO₃) are forward-looking statements that involve certain risks, uncertainties and hypotheses, including, but not limited to, general business and economic conditions, the condition of the financial markets, the ability of TSO₃ to obtain financing on favourable terms and other risks and uncertainties.

The TSX has neither approved nor disapproved the information contained herein and accepts no responsibility for it.