TSO3 Posts Sustained Revenue Momentum and Reduced Expenses in the Third Quarter



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

    Highlights from the third quarter 2008:

    - Continued sales momentum with revenues of $725,257
    - Various initiatives result in efficiency gains and operating cost
      reductions
    - Vendor partnership agreement formed with major U.S. based group
      purchasing organization
    - Progress made in reducing sales and order/installation cycles
    - Product development efforts include expanding the use of Sterizone(R)
      125L Ozone Sterilizer
    

    QUEBEC, Oct. 31 /CNW Telbec/ - Mr. R.M. (Ric) Rumble, President and Chief
Executive Officer of TSO3 Inc. ("TSO3") (TSX: TOS), is pleased to announce
that the Company experienced continued sales momentum during the third quarter
ended September 30, 2008. In total, five Sterizone(R) 125L Ozone Sterilizers
and associated accessories were sold for revenues of $725,257. This compares
to revenues of $281,525 for the same period last year. Sales for the first
nine-months of 2008 were $1,853,584. This is up from $1,055,401 for the same
period in 2007.
    "In the third quarter, TSO3 built on the sales momentum it has been
steadily gaining since early in the second quarter. The Company recorded sales
during each month of the third quarter, resulting in six consecutive months of
revenue growth. I expect this trend to continue in the coming quarter driven
by product enhancement plans, a promising new vendor partnership agreement and
a marketing strategy emphasizing increased account segmentation," said
Mr. Rumble.

    New initiatives show results

    Various commercial, operational and technological initiatives implemented
in the second quarter continued to produce positive results in the third
quarter. These measures included better alignment of TSO3's products to suit
market needs and the optimization of financial resources, resulting in
efficiency gains and operating cost reductions. "Due to measures initiated
early in the second quarter, we have reduced the monthly burn-rate by about
$150,000 as previously announced in June. This will enable TSO3 to conserve
liquidities in a difficult financial market environment. At the same time, the
Company is benefiting from rising revenues," added Mr. W. Barry McDonald, who
held the position of Interim President and Chief Executive Officer until mid
October.
    Progress has also been made in reducing the sales and order/installation
cycles, allowing TSO3 to capture sales sooner and permit customers to begin
using the Sterizone(R) 125L Ozone Sterilizer more rapidly. These efforts will
translate into nearer term and ongoing after-sale revenues from consumables
and service contracts.

    R&D achievements

    R&D product development efforts have shown encouraging results. In
particular, the Company is confident that current programs for expanding use
of its Sterizone(R) 125L Ozone Sterilizer will produce positive results.

    Vendor partnership agreement

    In early October, TSO3 was proud to announce that the Company has been
selected as a vendor partner by the Mid-Atlantic Group Network of Shared
Services (MAGNET), one of the oldest and largest group purchasing
organizations in the United States.
    East coast-based MAGNET, serves 11,000 health care providers including
750 acute care hospitals by offering access to a contract portfolio of
high-quality capital equipment and services. As a vendor partner, TSO3 will
supply MAGNET's members with its low temperature ozone sterilization system
for hospital environments.

    New President and CEO

    In early October, TSO3 announced the appointment of Mr. R.M. (Ric) Rumble
as President and Chief Executive Officer of the Company effective October 14,
2008. Prior to this appointment, Mr. Rumble held the position of President of
BERCHTOLD Corporation. For 25 years he has held a variety of management and
executive positions at leading medical device manufacturers in Canada and the
United States. These previous positions include: Vice President, Sales &
Marketing for Strategic Diagnostics Inc., Vice President and General Manager
of STERIS Corporation, a global leader in health care sterilization business
and President and Chief Executive Officer of MediVators Inc..
    "I would like to express my appreciation to Mr. W. Barry McDonald who
held the position of Interim President and CEO until my recent appointment.
With the talented and dedicated team at TSO3, Mr. McDonald has greatly
contributed toward laying a foundation for the Company's growth and
prosperity. I am excited to take on the challenge of building this innovative
and dynamic enterprise to new heights," concluded Mr. Rumble.

    Conference call

    TSO3 will host a conference call this morning at 11:00 A.M. (ET).
Analysts and institutional investors are invited to participate. The numbers
to dial for access are (514) 807-8791 (Montréal area), (416) 644-3414 (Toronto
area) or the toll-free number 1-800 732-9303. Journalists and other interested
parties may listen to the live Webcast of the Conference Call accessible via
TSO3's Website at: www.tso3.com. The Webcast will be archived for 90 days.


    SUMMARY OF OPERATING RESULTS

    Period ended September 30 (unaudited)

    
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
                                   THIRD QUARTER              NINE MONTHS
                                   -------------              -----------
                                 2008         2007         2008         2007
    -------------------------------------------------------------------------
    SALES                  $  725,257   $  281,525  $ 1,853,584  $ 1,055,401
    -------------------------------------------------------------------------
    EXPENSES
      Operating               715,927      431,548    1,874,377    1,246,332
      Sales & marketing       732,574    1,055,463    2,943,083    3,039,599
      Research and
       development            549,962      438,415    1,634,592    1,267,439
      Administrative          773,096      725,911    2,828,598    2,303,356
      Financial                 6,092        4,342       18,309       11,048
    -------------------------------------------------------------------------
                            2,777,651    2,655,679    9,298,959    7,867,774
    -------------------------------------------------------------------------
    OPERATING LOSS          2,052,394    2,374,154    7,445,375    6,812,373
    OTHER REVENUES            203,535      331,424      708,952    1,066,486
    -------------------------------------------------------------------------
    NET LOSS              $ 1,848,859  $ 2,042,730  $ 6,736,423  $ 5,745,887
    -------------------------------------------------------------------------
    BASIC AND DILUTED
     NET LOSS PER SHARE   $      0.04  $      0.04  $      0.14  $      0.13
    -------------------------------------------------------------------------
    WEIGHTED AVERAGE
     NUMBER OF SHARES
     OUTSTANTDING          47,863,402   47,790,928   47,863,402   44,473,596
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    OPERATING RESULTS

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Three and nine-month periods ended September 30, 2008, compared with the
three and nine-month periods ended September 30, 2007.

    Sales

    Sales for the three-month period ended September 30, 2008 amounted to
$725,257 representing the sale of five sterilizers and related accessories,
compared to $281,525, representing the sale of two sterilizers and related
accessories for the same period in 2007. For the nine-month period ended
September 30, 2008, 11 sterilizers and accessories were sold for total sales
of $1,853,584, compared to five sterilizers and accessories in 2007 for total
sales of $1,055,401.

    Operation

    For the three-month period ended September 30, 2008, Operating expenses
were $715,927 compared to $431,548 for the same period in 2007. Operating
expenses are related to manufacturing and after-sales service department. The
variance between the two periods is because of an increase in the cost of
goods sold due to a superior number of devices sold. For the nine-month period
ended September 30, 2008, Operating expenses amounted to $1,874,377 compared
to $1,246,332 for the same period in 2007. The variance is also explained by
an increase in the cost of goods sold, due to a superior number of devices
sold.

    Sales and Marketing

    Sales and Marketing expenses amounted to $732,574 for the three-month
period ended September 30, 2008 compared to $1,055,463 for the same period in
2007. The variance between the two periods is mainly because of a decrease in
salaries, fees related to hiring personnel and expenses due to a reduction in
the number of regional sale managers following a reorganization implemented
last June. Conversely, professional fees increased between the two periods.
For the nine-month period ended September 30, 2008, Sales and Marketing
expenses amounted to $2,943,083 compared to $3,039,599 for the corresponding
period in 2007. This variance is also explained by a decrease in salaries,
fees related to hiring personnel and expenses. Conversely, professional fees
increased between the two periods.

    Research and Development

    For the three-month period ended September 30, 2008, R&D expenses before
tax credits amounted to $549,962 compared to $438,415 for the same period in
2007. The variance between the two periods is from the results of the addition
of six new employees to the R&D department following a reorganization
implemented last June and an increase in material purchases and professional
fees. For the nine-month period ended September 30, 2008, R&D expenses
amounted to $1,634,592 compared to $1,267,439 for the corresponding period in
2007. The variance between the two periods is also due to an increase in
salaries, material purchases and professional fees.

    Administrative

    Administrative expenses amounted to $773,096 for the three-month period
ended September 30, 2008 compared to $725,911 for the same period in 2007. The
variance between the two periods is due to an increase in professional fees.
Conversely, salaries and expenses related to stock-based compensation
decreased between the two periods. For the nine-month period ended September
30, 2008, Administrative expenses amounted to $2,828,598 compared to
$2,303,356 for the corresponding period in 2007. The increase between the two
periods is due to a severance payment in 2008 and from an increase in
professional fees. Conversely, expenses related to stock-based compensation
decreased also between the two periods.

    Other Revenues

    For the three-month period ended September 30, 2008, the Company realized
other revenues of $203,535 compared to $331,424 for the same period in 2007.
The variance between the two periods is due to a decrease in investment
revenues. For the nine-month period ended September 30, 2008, the Company
realized other revenues of $708,952 compared to $1,066,486 for the
corresponding period in 2007. The variance between the two periods is also due
to a decrease in investment revenues, as well as a decrease in grants
received.

    Net Loss

    The Company recorded a net loss of $1,848,859 or $0.04 per share for the
third quarter of 2008, compared to a net loss of $2,042,730, also $0.04 per
share for the same period in 2007. For the nine-month period ended September
30, 2008, net loss amounted to $6,736,423 or $0.14 per share, compared to
$5,745,887, or $0.13 per share for the same period in 2007.

    Liquid Assets and Financial Situation

    As of September 30, 2008, cash, cash equivalents and temporary
investments amounted to $18,697,032 and accounts receivable to $1,880,193 for
a total of $20,577,225 compared to $28,777,336 as of September 30, 2007.

    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
Sterizone(R) 125L Ozone Sterilizer, is designed for sterile processing centers
in the hospital environment.
    In contrast to other methods used, 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 Company believes that its technology represents an advantageous
replacement solution to other low temperature sterilization processes
currently used in hospitals.
    The Sterizone(R) 125L Ozone Sterilizer is cleared for commercialization
by the US Food and Drug Administration and by Health Canada. TSO3 is in
commercialization phase for this first product since 2006.
    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, CFO, (418) 651-0003, ext. 228,
mboisjoli@tso3.com; Frédéric Tremblay, HKDP, Tel.: 514 395-0375, ext. 234,
ir@tso3.com; Source: TSO3 Inc.


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890