TSO3 announces financial results for Q1 2010

    Highlights of Q1 2010 and recent weeks:

    - Completion of a bought deal financing round resulting in the sale and
      issuance of 10M shares for gross proceeds of $16M;

    - Received notification of conformity to the new European Medical Device
      Directive allowing new generation sterilizer to be sold in the European

    - 3M(TM) announced new brand: the 3M(TM) Optreoz(TM) 125-Z using the TSO3
      STERIZONE(R) Technology;

    - Newly branded 3M(TM) Optreoz(TM) 125-Z exhibited at major international
      tradeshow and education event AORN (Association of Perioperative
      Registered Nurses) gathering 7,000 healthcare decision makers;

    - Received initial orders from 3M(TM) for internal training and support

    Stock symbol: TSX: TOS
    Outstanding shares: 57,897,451

QUEBEC CITY, May 12 /CNW Telbec/ - TSO3 Inc. ("TSO3") (TSX: TOS) an innovator in sterilization technology for medical devices in healthcare settings using ozone, posted revenues of $144,228 for the sales of consumables and services for its first generation STERIZONE(R) Sterilizer (125L) for the first quarter ended March 31, 2010. This compares with $533,488 for the same period in the prior year in which three sterilizers (125L), consumables and services were sold. The Company's net loss during the first quarter of 2010 was $2,033,932 or $0.04 per share, compared to $1,987,344 or $0.04 per share during the same period last year.

"With our 2009 achievements, we are now opening a new chapter in TSO3's history", said R.M. (Ric) Rumble, CEO at TSO3. "We have started 2010 with a new sterilizer, a new look, an improved sales channel and clearances never before held by the Company. The documentation to transition our entire product line and systems to support a global organization such as 3M(TM) kept us very busy in the first quarter. The required work has been underway for a few months and the teams are expected to have the transition work completed by the end of second quarter. In line with this transition and the necessary 3M(TM) training, during the first quarter TSO3 received an initial order for units intended for 3M(TM) internal use".

"We are now testing our production line and making sure that we can not only meet demand, but also produce sterilizers of the highest possible quality", said Mr. Rumble. "As we move into the second half of the year, we are planning to launch our upgrade program for current STERIZONE(R) 125L Sterilizer users, who wish to upgrade to the 3M(TM) Optreoz(TM) 125-Z sterilizer. We are also looking forward to shipping our first 3M(TM) branded sterilizers and to a positive outcome on our filing for clearance in the U.S.".

Conference Call

TSO3 will host a telephone Conference Call today, May 12, 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.

    Three-month periods ended March 31 (Unaudited)

                                                              FIRST QUARTER
                                                            2010        2009
    SALES                                               $144,228    $533,488
      Operating                                          341,336     594,273
      Sales & Marketing                                  313,358     611,553
      Research & Development                             758,344     739,056
      Administrative                                     909,793     695,828
      Financial                                            2,153       4,308
                                                       2,324,984   2,645,018
    OPERATING LOSS                                     2,180,756   2,111,530
      Other Income                                       146,824     124,186
    NET LOSS AND COMPREHENSIVE LOSS                   $2,033,932  $1,987,344
    BASIC AND DILUTED NET LOSS PER SHARE                   $0.04       $0.04


Three-month period ended March 31, 2010, compared to the three-month period ended March 31, 2009.


Sales for the three-month period ended March 31, 2010 amounted to $144,228 representing the sale of accessories and service contracts, compared to $533,488 representing the sale of three of its first generation ozone sterilizers, the STERIZONE(R) 125L Sterilizer, and related accessories for the same period in 2009.


For the three-month period ended March 31, 2010 operating expenses amounted to $341,336 compared to $594,273 for the same period in 2009. Operating expenses are related to production, manufacturing and after-sales service departments. Having sold fewer devices, the variance between the two periods is the result of a decrease in the cost of goods sold. This variance is also explained by a decrease in salaries related to customer service and after-sales service.

Sales and Marketing

Sales and Marketing expenses amounted to $313,358 for the three-month period ended March 31, 2010 compared to $611,553 for the same period in 2009. The variance between the two periods is mainly the result of a decrease in salaries and expenses due to a reduction in workforce in the sales department. This variance can also be explained by a decrease in expenses related to exhibitions and professional fees. We anticipate 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 first quarter of 2010, Research and Development expenses amounted to $758,344, compared to $739,056 for the same period in 2009. The difference between the two periods is due to an increase in sub-contracting fees as well as an increase in salaries resulting from the addition of employees in the R&D department to pursue the work on patents and the filings of the new cycles with agencies. Conversely, material and instrument purchases decreased between the two periods.


Administrative expenses amounted to $909,793 for the three-month period ended March 31, 2010, compared to $695,828 for the same period in 2009. The variance between the two periods is explained by an increase in salaries due to the Company's contractual obligation to compensate employee(s) for double taxation (US and Canadian). The variance is also explained by a provision for bonuses, by an increase in director's fees and professional fees mainly related to the review as well as tests performed on internal controls. Conversely, expenses related to Stock-based Compensation decreased between the two periods.

Other Income

For the three-month period ended March 31, 2010, the Company realized other revenues of $146,824 compared to $124,186 for the same period in 2009. The variance is due to the amortization of the Deferred revenues from the 3M(TM) agreement. In the first quarter of 2010, an amount of $44,046 was amortized. The variance is also due to a foreign exchange gain. Conversely, there was a decrease in investment revenues between the two periods due to the Company's use of its liquidity to finance its operations and to lower interest rates on its investment.

Net Loss

The Company recorded a net loss of $2,033,932 for the first quarter of 2010, or $0.04 per share compared to a net loss of $1,987,344 or $0.04 for the same period in 2009.

Liquid Assets and Financial Situation

As of March 31, 2010, cash, cash equivalents and temporary investments amounted to $24,298,537 compared to an amount of $15,914,834 as of March 31, 2009.

First Quarter Disclosure

First Quarter Report is available on TSO3's website at the following address http://www.tso3.com/en/investors/financial-reports-webcasts.php 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 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.


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 Investor Relations, (418) 651-0003, Ext. 237, ccote@tso3.com; Source: TSO3 Inc.

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