TSO3 announces financial results for first quarter 2014

Company to hold Annual General Meeting of Shareholders today in Québec

Stock symbol: TSX: TOS
Outstanding shares: 73,000,906

QUEBEC CITY, May 7, 2014 /CNW/ - TSO3 Inc. ("TSO3") (TSX: TOS) an innovator in low temperature sterilization technology for medical devices in healthcare settings, posted today its financial results for the first quarter of 2014 ended March 31.

In the first quarter of 2014, sales amounted to $81,757, as compared to $76,059 for the first quarter in 2013. As of June 2012 when TSO3 terminated its distribution agreement with the 3M Company, TSO3 has concentrated its efforts on securing the required regulatory clearance to market its products in the United States. Sales consisted of consumable supplies and services and were made in connection with the installed base of sterilizers. 

"On January 30, 2014, the Company announced that it had received guidance from the US regulatory authorities requesting additional elements to be included in our file. During the first quarter, all available resources were focused on conducting the appropriate tests and collecting the requested data.  Subsequent to the end of the quarter, the team undertook the task of integrating the data into a new file in order to submit to the US Regulatory Authorities. As recently announced the file was submitted on May 2, 2014. The new file identifies the product as the STERIZONE® VP4 Sterilizer, a unique product targeting the US market. The new designation differentiates the US product as having a single cycle, expanded claims for that cycle, and while it continues to utilize both Hydrogen Peroxide and Ozone as part of the overall cycle, claims contained within the STERIZONE® VP4 Sterilizer submission rely solely on Hydrogen Peroxide as the sterilant" outlined Mr. R.M.(Ric) Rumble, president and CEO. 

"During the first Quarter of 2014, the Company conducted a collective dismissal impacting 30% of its workforce as a means of conserving cash resources. This action was taken to best insure that existing liquidities will be sufficient to conclude the US regulatory process. Now that the submission is back in the hands of the US Regulators, remaining resources will reassume work on new product development such as the STERIZONE® 80L Sterilizer project" concluded Mr Rumble.

Annual General Meeting of Shareholders

TSO3 will hold its Annual General Meeting of Shareholder, this morning at 10:30 am (EDT) at the Palais Montcalm, (boardroom d'Youville), 995, Place d'Youville, Québec (Québec). A webcast of this event will be accessible at http://www.newswire.ca/en/webcast/detail/1340423/1481833.

The Webcast will be archived for 90 days.

SUMMARY OF RESULTS
Periods ended March 31 (Unaudited, IFRS Basis)


FIRST QUARTER


2014

$

2013

$

Sales

81,757

76,059

Expenses




Supply Chain

250,969

254,691


Customer Support and Communications

100,632

124,671


Research and Development

597,758

1,010,943


Administrative

731,893

817,168


Financial Income

(39,128)

(39,426)


Financial Costs

637

7,884

Total Expenses

1,642,761

2,175,931

Net Loss before Income Taxes

(1,561,004)

(2,099,872)

IncomeTaxes

-

-

Net Loss and Total Comprehensive Loss attributable to Shareholders

(1,561,004)

(2,099,872)

Basic and Diluted Net Loss per Share

(0.02)

(0.03)

Weighted Average Number of Outstanding Shares

73,000,906

68,065,960

 

RESULTS ANALYSIS

In the following paragraphs, the Company discusses the variations of certain accounts within the first quarter of 2014 and 2013.

SALES

In Q1-2014, sales amounted to $81,757, as compared to $76,059 for the first quarter in 2013.  As of June 2012 when TSO3 terminated its distribution agreement with the 3M Company, TSO3 has concentrated its efforts on securing the required regulatory clearance to market its products in the United States. Sales consisted of consumable supplies and services and were made in connection with the installed base of sterilizers.

EXPENSES

Supply Chain

Supply Chain expenses include all expenses incurred in connection with (1) the outsourcing services provided by the Supply Chain Department to all departments, (2) the production costs, (3) the related quality control and assurance expenses, and (4) the shipping expenses.

For the three-month period ended March 31, 2014, the Supply Chain expenses amounted to $250,969, as compared to $254,691 for the same period in 2013. There were no material variation in the Supply Chain expenses between Q1-2014 and Q1-2013 because the sales level was the same in both periods.

Customer Support and Communications

For the quarter ended March 31, 2014, the customer support and communication expenses amounted to $100,632, as compared to $124,671 incurred for the same period in 2013. The decrease is primarily due to a reduction in the unallocated customer technical support costs in Q1-2014 as compared to the same quarter in 2013.

Research and Development

For the quarter ended March 31, 2014, research and development expenses were $597,758, as compared to $1,010,943 for the first quarter in 2013. Most of that decrease is due to the recognition of an amount of $237,222 as R&D tax credits for the year 2011 and 2012. This amount tax credits was previously recorded in accordance with the Company accounting policy where only 80% of the amount expected to be recovered is recognized at the time a claim is made. The remainder of the decrease is primarily due to fewer compatibility studies.

Administrative

For the quarter ended March 31, 2014, the administrative expenses amounted to $731,893, as compared to $817,168 for the first quarter of 2013.  Several items were smaller in 2014 as a result of general compressions of expenses, but the largest variation was the decrease in professional fees largely since June 2013 due to the settlement of the dispute with the 3M Company.

Liquid Assets

As at March 31, 2014, cash, cash equivalents and short-term investments amounted to $8,980,476, as compared to $9,608,531 as at December 31, 2013.  The variation is due to the cash absorbed by operations during the first quarter of 2014.

First Quarter Disclosure

The 2014 First Quarter Report is available on TSO3's website at the following address http://www.tso3.com/en/investors/financial_reporting/quarterly_reports/ and full Q1 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 solutions 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.

SOURCE TSO3 Inc.

For further information: R.M. (Ric) Rumble, President and CEO, (418) 651-0003, Ext. 254, Email: info@tso3.com