TSO3 announces financial results for second quarter 2015

Ticker:  TSX – TOS
Shares Outstanding: 82,617,989

QUÉBEC CITY, Aug. 6, 2015 /CNW Telbec/ - TSO3 Inc. (TSX: TOS) ("TSO3" or the "Company") an innovator in sterilization technology for medical devices in healthcare settings, posted today its financial results for the second quarter (Q2) ended June 30, 2015.

In Q2-2015, sales amounted to $136,969, as compared to $132,179 during the same period in 2014. For the six-month period ended June 30, 2015, sales amounted to $226,580, as compared to $213,936 for the same period in 2014. The higher sales in 2015 reflect a higher utilization by the users of the installed base of sterilizers. Sales in 2015 and 2014 consisted of consumables as well as revenues from service contracts in connection with the STERIZONE® 125L+ Sterilizers originally installed in 2012.

"During the quarter substantial progress was made on all fronts" stated R.M. (Ric) Rumble, President and CEO. "Sales and Service teams have been trained and customer calls are occurring at an ever increasing pace. Subsequent to the close of the quarter initial orders have been received. In addition, during the quarter the Company received notice of multiple patents being issued in a number of key markets including the United States" Mr. Rumble concluded.

Q2 2015 Conference Call

TSO3 will host a telephone Conference Call today, August 6, 2015 at 10:30 a.m. (EST). Analysts and Institutional Investors are invited to participate in 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. Please dial-in with the following identification number to join the conference call: 87512917. Other interested parties may listen to the live Webcast of the Conference Call accessible via CNW's Website at: http://event.on24.com/r.htm?e=1025996&s=1&k=BB8EE157DC971933CED224308B6A1EEF

The Webcast will be archived for 90 days.

 

SUMMARY OF CONSOLIDATED RESULTS

Periods ended June 30 (Unaudited, IFRS Basis)





SECOND QUARTER

SIX MONTHS


2015

$

2014

$

2015

$

2014

$

Sales

136,969

132,179

226,580

213,936

Expenses






Supply Chain

334,696

209,994

529,476

460,963


Marketing, Sale and Service

214,231

71,807

380,814

172,439


Research and Development

644,065

524,779

1,191,798

1,122,537


Administrative

713,326

666,380

1,738,320

1,398,273


Financial Income

(43,523)

(28,779)

(60,862)

(67,907)


Financial Costs

22,578

12,515

13,216

13,152

Total Expenses

1,885,373

1,456,696

3,792,762

3,099,457

Net Loss before Income Taxes

(1,748,404)

(1,324,517)

(3,566,182)

(2,885,521)

Income Taxes

-

-

-

-

Net Loss and Comprehensive Loss attributable to Shareholders

(1,748,404)

(1,324,517)

(3,566,182)

(2,885,521)

Basic and Diluted Net Loss per Share

(0.02)

(0.02)

(0.04)

(0.04)

Weighted Average Number of Outstanding Shares

82,610,901

73,000,906

79,403,118

73,000,906

 

RESULTS ANALYSIS

In the following paragraphs, the Company discusses the variations of certain accounts within the second quarter of 2015 and 2014 and within the six-month period ended June 30, 2015 and June 30, 2014.

SALES

Sales in 2015 and 2014 consisted of consumables as well as revenues from service contracts in connection with the STERIZONE® 125L+ Sterilizers originally installed in 2012.

In Q2-2015, sales amounted to $136,969, as compared to $132,179 during the same period in 2014. For the six-month period ended June 30, 2015, sales amounted to $226,580, as compared to $213,936 for the same period in 2014. The higher sales in 2015 reflect a higher utilization by the users of the installed base of sterilizers.

NET LOSS

In the second quarter of 2015 the Company experienced a loss of $1,748,404 ($0.02 per share), as compared to $1,324,517 ($0.02 per share) in Q2-2014. For the six-month period ended June 30, 2015, the net loss amounted to $3,566,182, as compared to $2,885,521 for the same period in 2014. The year-to-year variations are reflecting operating issues and increase in marketing efforts as well as one-time items related to R&D tax credits and the write-off of patents in 2015.

When adjusting the results to exclude those adjustments, the net loss in the second quarter of 2015 is $1,842,274 ($0.02 per share), as compared to $1,465,718 ($0.02 per share) in 2014. For the six-month period ended June 30, 2015, the net loss amounted to $3,480,595, as compared to $3,282,127 for the same period in 2014. Besides the elements presented in the previous table, the increase of the net loss in 2015 is mainly the result of the ramp up of activities in the United States.

Supply Chain

Supply Chain expenses include all expenses incurred in connection with (1) outsourcing services provided by the Supply Chain Department to all departments, (2) production costs, (3)  related quality control and assurance expenses, (4) cost of services sold to end-users, and (5) shipping expenses.

For the three-month period ended June 30, 2015, the Supply Chain expenses amounted to $334,696, as compared to $209,994 for the same period in 2014. For the six-month period ended June 30, 2015, these expenses amounted to $529,476, as compared to $460,963 for the same period in 2014. The variation is largerly the result of the higher costs in 2015 due to the hiring of employees in production plant in order to be ready for the ramp up of operations related to the STERIZONE® VP4 Sterilizer in the United States.

Marketing, Sales and Service

For the quarter ended June 30, 2015, the Marketing, Sales and Service expenses amounted to $214,231, as compared to $71,807 for the same period in 2014. For the six-month period ended June 30, 2015, these expenses amounted to $380,814, as compared to $172,439 for the same period in 2014. The larger amount in 2015 is due to (1) an increase in marketing-related activities, including trade shows and professional association meetings, (2) an increase in customer related travel expenses, and (3) the hiring of a senior executive in January 2015.

Research and Development

For the quarter ended June 30, 2015, Research and Development (R&D) expenses were $644,065, as compared to $524,779 in Q2-2014. For the six-month period ended June 30, 2015, these expenses amounted to $1,191,798, as compared to $1,122,537 for the same period in 2014. The year-to-year comparisons are impacted by the recognition of R&D tax credits.

Before accounting for the tax credits, R&D expenses were $737,935 in Q2-2015, as compared to $665,980 in Q2-2014. The variation is the result of an increase in new detailed studies intended to assist in the pursuit of extended claims for its STERIZONE® Sterilizer for the Canadian, U.S. and European markets.

For the six-month period ended June 30, 2015, before R&D tax credits, R&D expenses amounted to $1,320,420 as compared to $1,519,143 in 2014. The variation is the result of lower contracted work  related to the FDA clearance.

Administrative

For the Q2-2015, administrative expenses amounted to $713,326, as compared to $666,380 for the second quarter of 2014. The increase in Q2-2015 is mainly due to an increase in computer related expenses and traveling expenses related to the ramp up in activities currently underway.

For the six-month period ended June 30, 2015, administrative expenses were $1,738,320 as compared to $1,398,273 for the same period in 2014. The 2015 figure reflects a write-off of $214,209 in connection with abandoned patents. When adjusting for that amount, administrative expenses for the first six months of 2015 were $1,524,111, or a year-to-year increase of $124,838. The larger amount in 2015 is due to  an increase (1) in computer related expenses, (2) in legal fees due to the incorporation of the subsidiary TSO3 Corporation and (3) a general increase in expense items, including traveling expenses, in connection with the ramp up in activities previously initiated.

Financial Income

For the quarter ended June 30, 2015, financial income amounted to $43,523, as compared to $28,779 for the same period in 2014. The increase is due to higher amounts of Cash, Cash Equivalents and Investments in 2015.

For the six-month period ended June 30, 2015, financial income was $60,862 as compared to $67,907 for the same period in 2014. The decrease is due to smaller amounts of Cash, Cash Equivalents and Investments Q1-2015 and a lower level of interest rates for entire six months of 2015.

Liquid Assets

As at June 30, 2015, cash, cash equivalents and short-term investments amounted to $12,909,885, as compared to $5,973,446 as at December 31, 2014. The variation is largerly due to the net proceeds of $10,350,265 from the public equity offering closed on March 5, 2015 and by the cash absorbed by operations during the first two quarters of 2015.

Second Quarter Disclosure

The 2015 Second Quarter Report is available on TSO3's website at the following address http://www.tso3.com/en/investors/financial_reporting/quarterly_reports/ and full Q2 disclosure will shortly be available on SEDAR (www.sedar.com).

About the STERIZONE® VP4 low temperature sterilizer

The STERIZONE® VP4 Sterilizer developed by TSO3 is a dual sterilant, low temperature sterilization system that utilizes vaporized hydrogen peroxide (H2O2) and ozone. Its single cycle can sterilize a large number and wide range of compatible devices, thereby allowing for a cost effective and error-free sterilization process. TSO3's unique Dynamic Sterilant Delivery SystemTM automatically adjusts the quantity of injected sterilant based on the load composition, weight and temperature. With its large 75 lb load capacity and a short cycle time, the STERIZONE® VP4 Sterilizer can enhance throughput and lower sterilization cost. The STERIZONE® VP4 Sterilizer was cleared for commercialization in the United States in December 2014.

More information about the STERIZONE® VP4 Sterilizer is available through TSO3's website, under the Products section: http://www.tso3.com/en/products/sterizone-vp4/

About TSO3

Founded in 1998, TSO3's activities encompass the sale, production, maintenance, research, development and licensing of sterilization processes, related consumable supplies and accessories for heat-sensitive medical devices. The Company designs products for sterile processing areas in the hospital environment that offer an advantageous replacement solution to other low temperature sterilization processes currently used in hospitals. It also offers services related to the maintenance of sterilization equipment and compatibility testing of medical devices with such processes.

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, Email: info@tso3.com

RELATED LINKS
http://www.tso3.com

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