TSO3 Announces Financial Results for Q2 2009



    
    And Updates on Initiatives

    Stock symbol: TSX: TOS
    Outstanding shares: 47,863,402
    

    QUEBEC, Aug. 6 /CNW Telbec/ - TSO3 Inc. ("TSO3") (TSX: TOS) posted
revenues of $510,626 during the second quarter of 2009, compared to $1,037,180
for the same period last year. Year to date revenue for 2009 totalled
$1,044,114 compared to $1,128,327 for the same period in 2008.
    The Company's net loss during the second quarter of 2009 amounted $2.3
million or $0.05 per share, compared to a net loss of $2.7 million or $0.05
per share, during the same period last year.
    "Q2 sales performance was lower than for the same period prior year. This
is due, in our opinion, to the length of the sales cycle and short term delays
owing to the current North American economy, as we witnessed budget freezes
within certain accounts," said Mr. R.M. (Ric) Rumble, President and Chief
Executive Officer of TSO3. "In the meantime, we continue to experience
increased quoting activity and to develop traction required to break into the
double digit unit shipments by quarter performance level. We still anticipate
that it will take a few additional quarters to achieve this target".

    
    Highlights of Q2 2009 and recent weeks:

    - Continued interaction with US regulatory agency supporting request for
      expanded claims of sterile efficacy for multi-channel flexible
      endoscopes;
    - Defined parameters for additional cycles with projects timed to enable
      commercial event by year-end; initiated product registration for
      territories outside the US;
    - Opened discussions with numerous channel partner candidates;
    - Appointment of Dr. James R. Husman to the Board of Directors;
    - Successfully completed ISO 13485 Conformity Assessment Verification.
    

    Working our Plan

    On April 30, 2009, during the Company's Annual General Meeting, TSO3
outlined its core strategies and tactics through 2011. In summary, these
include:

    Increased utilization: The Company is increasing the number and type of
instruments that can be sterilized with the TSO3 STERIZONE(R) 125L Sterilizer
through additional cycles that will be added to the existing sterilizer. The
Company reports rewarding results in this area during second quarter and
believes this should lead to a commercial event in Canada later this year.

    Increased Market Opportunity: Progress made in Research and Development
has opened up additional opportunities for TSO3. To assure the Company will be
able to quickly take advantage of these successes, it has initiated pursuit of
registration of the current product for territories outside the US.

    Commercial Strategy: TSO3 believes that opportunities exist to establish
channel partners as a means to accelerate the technologies adoption on a
regional and global level. During second quarter 2009, discussions started
with numerous organizations concerning possible strategic partner
opportunities. TSO3 expects that these discussions will continue through year
end, with the intent of securing channel partners in targeted markets for a
2010 introduction.

    Valuable Expertise on Board

    The Company announced during the second quarter of 2009, the appointment
of Dr. James R. Husman to its Board of Directors. Recently retired from 3M, he
has over 30 years experience in basic research and product development on a
global level. "Dr. Husman provides additional depth to our Board of Directors,
bringing to the table a global scale expertise in medical instrumentation and
sterilization", said Mr. R.M. (Ric) Rumble, President and Chief Executive
Officer of TSO3.

    Conference call

    TSO3 will host a telephone Conference Call today, August 6, 2009 at 10:30
a.m. (ET). Analysts and Institutional Investors are invited to participate.
The numbers to dial for access are 514-807-8791 (Montréal area), 416-644-3432
(Toronto area) or the Toll-Free number 1-800-814-4857. Journalists and 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.


    
    SUMMARY OF OPERATING RESULTS
    Periods ended June 30, 2009 (Unaudited)

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
                                   SECOND QUARTER             SIX MONTHS
                                   --------------             ----------
    -------------------------------------------------------------------------
                                 2009         2008         2009         2008
    -------------------------------------------------------------------------
    SALES                 $   510,626  $ 1,037,180  $ 1,044,114  $ 1,128,327
    -------------------------------------------------------------------------
    EXPENSES
      Operating               576,719      789,078    1,170,992    1,160,062
      Sales & Marketing       644,068    1,268,987    1,255,621    2,194,762
      Research &
       Development            775,099      763,573    1,514,155    1,236,017
      Administrative          826,848    1,139,972    1,522,676    1,918,250
      Financial                 5,591        6,719        9,899       12,217
    -------------------------------------------------------------------------
                            2,828,325    3,968,329    5,473,343    6,521,308
    -------------------------------------------------------------------------
    OPERATING LOSS          2,317,699    2,931,149    4,429,229    5,392,981
      Other Revenues           54,236      203,917      178,422      505,417
    -------------------------------------------------------------------------
    NET LOSS AND
     COMPREHENSIVE LOSS   $ 2,263,463  $ 2,727,232  $ 4,250,807  $ 4,887,564
    -------------------------------------------------------------------------
    BASIC AND DILUTED
     NET LOSS PER SHARE   $      0.05  $      0.05  $      0.09  $      0.10
    -------------------------------------------------------------------------
    WEIGHTED AVERAGE
     NUMBER OF SHARES
     OUTSTANDING           47,863,402   47,863,402   47,863,402   47,863,402
    -------------------------------------------------------------------------


    OPERATING RESULTS ANALYSIS
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Three and six-month periods ended June 30, 2009, compared to the three
    and six month-periods ended June 30, 2008.
    

    Sales

    Sales for the three-month period ended June 30, 2009 amounted to $510,626
representing the sale of two sterilizers and related accessories compared to
$1,037,180 for the same period in 2008 representing the sale of six
sterilizers and related accessories. For the six-month period ended June 30,
2008, sales amounted to $1,044,114 representing the sales of five sterilizers
and related accessories compared to $1,128,327, representing the sales of six
sterilizers and related accessories for the corresponding period in 2008.

    Operating

    For the three-month period ended June 30, 2009 operating expenses were
$576,719 compared to $789,078 for the same period in 2008. Operating expenses
are related to production, manufacturing and after-sales service departments.
The variance between the two periods is the result of a decrease in the cost
of goods sold. Conversely, expenses related to salaries, installation fees and
expenses related to service contracts increased between the two periods. For
the six-month periods ended June 30, 2009, operating expenses amounted to
$1,170,992 compared to $1,160,062 for the same period in 2008. The variance
between the two periods is explained by an increase in salaries, installation
fees and expenses related to service contracts. Warranty fees decreased
between the two periods.

    Sales and Marketing

    Sales and Marketing expenses amounted to $644,068 for the three-month
period ended June 30, 2009 compared to $1,268,987 for the same period in 2008.
The variance between the two periods is due to a decrease in salaries and
representation fees related to a reduction in the number of regional sale
managers and commissions paid. For the six-month period ended June 30, 2009,
Sales and Marketing expenses amounted to $1,255,621 compared to $2,194,762 for
the same period in 2008. The variance between the two periods is also due to a
decrease in salaries, representation fees and commissions paid.

    Research and Development

    For the second quarter of 2009, Research and Development expenses were
similar as 2008. For the three-month period ended June 30, 2009, Research &
Development expenses before tax credits amounted to $775,099 compared to
$763,573 for the same period in 2008. For the six-month period ended June 30,
2009, R&D expenses amounted to $1,514,155 compared to $1,236,017 for the same
period in 2008. The variance between the two periods is due to an increase in
the purchases of materials and instruments as well as subcontracting expenses
related to compatibility tests. The variance is also explained by an increase
in salary costs resulting from the addition of employees to the R&D
Department. Expenses related to the scientific advisors decreased.

    Administrative

    Administrative expenses amounted to $826,848 for the three-month period
ended June 30, 2009 compared to $1,139,972 for the same period in 2008. The
variance between the two periods is explained by a decrease in exceptional
charges. In the second quarter of 2008, the Company proceeded to severance
payments. The variance is also explained by a decrease of professional
expenses, expenses related to the item Stock-based Compensation, insurance
fees as well as taxes on capital. Conversely, payroll charges increased
between the two periods. For the six-month period ended June 30, 2009,
administrative expenses amounted to $1,522,676 compared to $1,918,250 for the
corresponding period in 2008. The variance between the two periods is also
explained by a decrease of professional fees, expenses related to the item
Stock-based Compensation, insurance fees as well as taxes on capital.
Conversely, payroll charges also increased between the two periods.

    Other Revenues

    For the three month period ended June 30, 2009, the Company realized
other revenues of $54,236 compared to $203,917 for the same period in 2008.
The variance between the two periods is due to a decrease in investment
revenues as well as an increase in exchange loss. Conversely, R&D tax credits
increased between the two periods. For the six month period ended June 30,
2009, the Company realized other revenues of $178,422 compared to $505,417 for
the corresponding period in 2008. The variance is also explained by a decrease
in investment revenues as well as an increase in exchange loss. Conversely,
R&D tax credits increased between the two periods.

    Net Loss

    The Company recorded a net loss of $2,263,463 for the second quarter of
2009, or $0.05 per share compared to a net loss of $2,727,232 $ for the same
period in 2008, or also $0.05 per share. For the six-month period ended June
30, 2009, net loss amounted to $4,250,807, or $0.09 per share, compared to
$4,887,564, or $0.10 per share for the corresponding period in 2008.

    Liquid Assets and Financial Situation

    As of June 30, 2009, cash, cash equivalents and temporary investments
amounted to $13,740,386 and accounts receivable to $1,184,546 for a total of
$14,924,932 compared to a total amount of $22,427,706 as of June 30, 2008.

    Second Quarter Disclosure

    Second Quarter Report is available on TSO3 website at the following
address http://www.tso3.com/en/investors/financial-reports-webcasts.php and
full Q2 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. The Company's first product, the
TSO3 STERIZONE(R) 125L Sterilizer, is designed for sterile processing centers
in the hospital environment. The Company believes that its technology
represents an advantageous replacement solution to other low temperature
sterilization processes currently used in hospitals.
    In contrast to other methods, the ozone sterilization process developed
and patented by TSO3 meets all standards required by the evolution in
sterilization needs, which are: significant costs savings, increased safety
for patients and hospital staff, and a "green" environmentally safe process.
    The TSO3 STERIZONE(R) 125L Sterilizer is cleared for commercialization by
the US and Canadian regulatory agencies for sterilization of metal and heat
sensitive instruments, as well as for devices with diffusion-restricted
spaces, such as the hinged portion of haemostats, forceps and scissors and
rigid endoscopes having a single stainless steel lumen as small as 0.9 mm
internal diameter and 485 mm long. In 2009, the Company received clearance
from Health Canada for sterilization of additional complex medical
instruments, including multi-channelled flexible endoscopes.
    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.
    




For further information:

For further information: Marc Boisjoli, Chief Financial Officer, (418)
651-0003, Ext. 228, mboisjoli@tso3.com; Caroline Côté, Director, Corporate
Communications and IR, (418) 651-0003, Ext. 237, ccote@tso3.com; Source: TSO3
Inc.


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