TSO3 announces financial results for Q3 2009 and updates on negotiations with
3M
Stock symbol:TSX: TOS Outstanding shares: 47,863,402 Highlights of Q3 2009 and recent weeks: - Progressed in due diligence and negotiations with 3M toward signing a channel partner agreement within the agreed upon 90 day period; - Completed new cycle development and initiated data collection to support filings with regulatory agencies in Canada, United States and Europe; - Filed patent applications to extend protection for new cycles; - John H. Stroger Hospital of Cook County announced in press release adoption of STERIZONE(R) technology. Benefits cited include cost- effective and eco-friendliness; - Continued interaction with US regulatory agency supporting request for expanded claims of sterile efficacy for multi-channel flexible endoscopes. </pre> <p/> <p><location>QUEBEC</location> CITY, <chron>Nov. 11</chron> /CNW Telbec/ - TSO3 Inc. ("TSO3") (TSX: TOS) posted revenues of <money>$126,162</money> on the sales of consumables and service for the third quarter ended <chron>September 30, 2009</chron>. There were no new shipments of sterilizers in third quarter. This compares with <money>$725,257</money> for the same period prior year in which sterilizers, consumables and field service were sold. Year to date 2009, the Company has generated revenues of <money>$1,170,276</money> compared to prior year to date of <money>$1,853,854</money>. The Company's net loss during the third quarter of 2009 was <money>$2,287,711</money> or <money>$0.05</money> per share, whereas it was <money>$1,848,859</money> or <money>$0.04</money> per share during the same period last year. Year to date the net loss for the Company is <money>$6,538,518</money> compared to <money>$6,736,423</money> for the same period last year.</p> <p>"The third quarter was negatively impacted by frozen budgets in targeted hospitals, which resulted in delayed purchases", said R.M. (Ric) Rumble, CEO at TSO3. "With signs that budgets are slowly being released, we believe these pieces of targeted business will mature into purchase orders over the next months and quarters".</p> <p>On <chron>September 2, 2009</chron>, TSO3 entered into a 90 days exclusive negotiation period with 3M, for the distribution of the STERIZONE(R) 125L Sterilizer, including the new cycles, through 3M's Global Infection Prevention Division. As is customary in such arrangements, 3M has conducted a significant amount of due diligence covering TSO3's technology, as well as the Company's regulatory and operating systems. "Significant resources have been applied from both 3M and TSO3 over the recent weeks. The teams are working to complete the due diligence and business plans required to support a fair and lasting agreement", commented <person>Mr. Rumble</person>. "In parallel with these meetings, discussions as to the timing and sequence of product introductions continue to take place, focused on markets where we expect timely regulatory clearances. Even though we cannot guarantee a positive outcome in regards to the conclusion of an agreement, within the 90 days and potentially at all, all parties continue to work well together towards apparent common goals".</p> <p/> <p>New Cycles</p> <p/> <p>During the quarter, the Company completed development of three additional cycles and began the work documenting their effectiveness for the purpose of filing for regulatory clearance in <location>Canada</location>, the <location>United States</location> and <location>Europe</location>. Filing with the agencies is expected to occur before year end.</p> <p>The new cycles offer increased speed and material compatibility. Specifically two of the three cycles are completed in under an hour, while the third cycle takes only 100 minutes. All cycles offer large load capacity, are eco-friendly and safe for users and patients. The cycles allow the lowest cost per sterilized instrument.</p> <p>During the quarter, TSO3 reported the pursuit of additional Intellectual Property protection by filing for additional patents related to these new cycles.</p> <p/> <p>Gaining Customer Support</p> <p/> <p>TSO3's STERIZONE(R) sterilization technology was recently featured in a press release (<a href="http://www.cookcountyhealth.net/Documents/News/instrument_sterilization">http://www.cookcountyhealth.net/Documents/News/instrument_sterilization</a>(2).doc), from the John H. Stroger, Jr. Hospital of Cook County (part of the Cook County Health & Hospitals System - CCHHS). Stroger acquired two STERIZONE(R) 125L Sterilizers earlier this year and is now promoting the technology's value as a green and cost-effective sterilization alternative.</p> <p>The Stroger Hospital is a 1.2 million square feet healthcare center (the equivalent of 25 football stadiums), nationally known for its expertise and breadth of service. "We found the TSO3 STERIZONE(R) 125L Sterilizer to be a compelling alternative to EtO and the best fit to our operational needs because it is efficient, safe, environmentally friendly and will significantly reduce sterilization costs - an important consideration for a publicly funded hospital such as Stroger," said CCHHS CEO <person>Mr. Bill Foley</person>.</p> <p/> <p>Conference Call</p> <p/> <p>TSO3 will host a telephone Conference Call today, <chron>November 11, 2009</chron> at <chron>10:30 a.m. (EST</chron>). Analysts and Institutional Investors are invited to participate. The numbers to dial for access are 514-807-8791 (Montréal area), 416-915-5762 (<location>Toronto</location> area) or the Toll-Free number 1-800-590-1508. Journalists and other interested parties may listen to the live Webcast of the Conference Call accessible via TSO3's Website at: <a href="http://www.tso3.com/en/investors/financial-reports-webcasts.php">http://www.tso3.com/en/investors/financial-reports-webcasts.php</a>. The Webcast will be archived for 90 days.</p> <p/> <pre> SUMMARY OF OPERATING RESULTS Periods ended September 30, 2009 (Unaudited) ------------------------------------------------------------------------- ------------------------------------------------------------------------- ------------------------------------------------------------------------- THIRD QUARTER NINE MONTHS ------------- ----------- ------------------------------------------------------------------------- 2009 2008 2009 2008 ------------------------------------------------------------------------- SALES $ 126,162 $ 725,257 $1,170,276 $1,853,584 ------------------------------------------------------------------------- EXPENSES ------------------------------------------------------------------------- Operating 359,275 704,574 1,530,267 1,864,636 ------------------------------------------------------------------------- Sales & Marketing 524,748 724,311 1,780,369 2,919,073 ------------------------------------------------------------------------- Research & Development 876,118 634,390 2,390,273 1,870,407 ------------------------------------------------------------------------- Administrative 718,322 708,284 2,240,998 2,626,534 ------------------------------------------------------------------------- Financial 6,488 6,092 16,387 18,309 ------------------------------------------------------------------------- 2,484,951 2,777,651 7,958,294 9,298,959 ------------------------------------------------------------------------- ------------------------------------------------------------------------- OPERATING LOSS 2,358,789 2,052,394 6,788,018 7,445,375 ------------------------------------------------------------------------- Other Revenues 71,078 203,535 249,500 708,952 ------------------------------------------------------------------------- NET LOSS AND COMPREHENSIVE LOSS $2,287,711 $1,848,859 $6,538,518 $6,736,423 ------------------------------------------------------------------------- BASIC AND DILUTED NET LOSS PER SHARE $ 0.05 $ 0.04 $ 0.14 $ 0.14 ------------------------------------------------------------------------- WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 47,863,402 47,863,402 47,863,402 47,863,402 ------------------------------------------------------------------------- ------------------------------------------------------------------------- OPERATING RESULTS ANALYSIS ------------------------------------------------------------------------- ------------------------------------------------------------------------- </pre> <p/> <p>Three and nine-month periods ended <chron>September 30, 2009</chron>, compared to the three and nine-month periods ended <chron>September 30, 2008</chron>.</p> <p/> <p>Sales</p> <p/> <p>Sales for the three-month period ended <chron>September 30, 2009</chron> amounted to <money>$126,162</money> representing the sale of accessories and services, compared to <money>$725,257</money> for the same period in 2008 from the sale of five sterilizers, related accessories and services. No sterilizers were sold in the third quarter of 2009. For the nine-month period ended <chron>September 30, 2009</chron>, sales amounted to <money>$1,170,276</money>, representing the sale of five sterilizers, related accessories and services, compared to <money>$1,853,854</money> for the sale of 11 sterilizers, related accessories and services from the same period in 2008.</p> <p/> <p>Operating</p> <p/> <p>For the three-month period ended <chron>September 30, 2009</chron> operating expenses amounted to <money>$359,275</money> compared to <money>$704,574</money> 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, transportation expenses and salaries. Conversely, expenses related to warranties have increased. For the nine-month period ended <chron>September 30, 2009</chron>, operating expenses amounted to <money>$1,530,267</money> compared to <money>$1,864,636</money> for the same period in 2008. The variance between the two periods is also explained by a reduction in the cost of goods sold and transportation expenses. Conversely, installation and Warranty fees experienced an increase between the two periods.</p> <p/> <p>Sales and Marketing</p> <p/> <p>Sales and Marketing expenses amounted to <money>$524,748</money> for the three-month period ended <chron>September 30, 2009</chron>, compared to <money>$724,311</money> for the same period in 2008. The variance between the two periods is due to a decrease in professional services and representation expenses, as well as commissions paid. Conversely, marketing salaries experienced an increase between the two periods, due to the hiring of a new VP Marketing in early 2009. For the nine-month period ended <chron>September 30, 2009</chron>, Sales and Marketing expenses amounted to <money>$1,780,369</money> compared to <money>$2,919,073</money> for the same period in 2008. The variance between the two periods is also the result of a decrease in salaries due to a reduction in the sales workforce, representation expenses and commissions paid. Conversely, marketing salaries also experienced an increase between the two periods.</p> <p/> <p>Research and Development</p> <p/> <p>For the third quarter of 2009, Research and Development expenses amounted to <money>$876,118</money>, compared to <money>$634,390</money> for the same period in 2008. The difference between the two is mainly due to material and instrument purchases in order to accelerate ongoing work on compatibility. The gap between the two periods is also explained by an increase in sub-contracting fees as well as an increase in salaries resulting from the addition of employees in R&D to pursue the development of new cycles and filings with agencies. Conversely, professional fees decreased. For the nine-month period ended <chron>September 30, 2009</chron>, R&D expenses amounted to <money>$2,390,273</money> compared to <money>$1,870,407</money> for the same period in 2008. The variance between the two periods is also due to material and instrument purchases made to accelerate ongoing work on compatibility. The variance is also explained by an increase in salaries resulting from the addition of employees in the R&D department. Conversely, professional fees and fees related to the Scientific Advisory Committee decreased.</p> <p/> <p>Administrative</p> <p/> <p>Administrative expenses amounted to <money>$718,322</money> for the three-month period ended <chron>September 30, 2009</chron>, compared to <money>$708,284</money> for the same period in 2008. The variance between the two periods is explained by a decrease in professional fees, expenses related to the item Stock-based Compensation and representation expenses. Conversely, expenses related to salaries, as well as fees related to the Board of Directors and other committees increased between the two periods. For the nine-month period ended <chron>September 30, 2009</chron>, administrative expenses amounted to <money>$2,240,998</money> compared to <money>$2,626,534</money> for the corresponding period in 2008. The variance between the two periods is mainly explained by a decrease in exceptional charges for severances paid in 2008. The difference is also due to a reduction in professional fees, expenses related to the item Stock-based Compensation and representation expenses. Conversely, expenses related to salaries, as well as fees related to the Board of Directors and other committees increased between the two periods.</p> <p/> <p>Other Revenues</p> <p/> <p>For the three month period ended <chron>September 30, 2009</chron>, the Company realized other revenues of <money>$71,078</money> compared to <money>$203,535</money> 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 nine-month period ended <chron>September 30, 2009</chron>, the Company realized other revenues of <money>$249,500</money> compared to <money>$708,952</money> for the corresponding period in 2008. The variance is also explained by a decrease in investment revenues as well as an increase in exchange rate loss. Conversely, R&D tax credits also increased between the two periods.</p> <p/> <p>Net Loss</p> <p/> <p>The Company recorded a net loss of <money>$2,287,711</money> for the third quarter of 2009, or <money>$0.05</money> per share compared to a net loss of <money>$1,848,859</money> for the same period in 2008, or <money>$0.04</money> per share. For the nine-month period ended <chron>September 30, 2009</chron>, net loss amounted to <money>$6,538,518</money>, or <money>$0.14</money> per share, compared to <money>$6,736,423</money>, or <money>$0.14</money> per share for the corresponding period in 2008.</p> <p/> <p>Liquid Assets and Financial Situation</p> <p/> <p>As of <chron>September 30, 2009</chron>, cash, cash equivalents and temporary investments amounted to <money>$11,581,759</money> and accounts receivable amounted to <money>$631,452</money> for a total of <money>$12,213,211</money> compared to a total amount of <money>$20,577,225</money> as of <chron>September 30, 2008</chron>.</p> <p/> <p>Third Quarter Disclosure</p> <p/> <p>Third Quarter Report is available on TSO3's website at the following address <a href="http://www.tso3.com/en/investors/financial-reports-webcasts.php">http://www.tso3.com/en/investors/financial-reports-webcasts.php</a> and full Q3 disclosure will shortly be available on SEDAR (<a href="http://www.sedar.com">www.sedar.com</a>).</p> <p/> <p>About TSO3</p> <p/> <p>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.</p> <p>In contrast to other methods, the ozone sterilization process developed and patented by TSO3 combines attributes that answer market needs for: efficacy, costs savings, increased safety for patients and hospital staff, and a "green" environmentally safe process.</p> <p>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 rigid endoscopes having a single stainless steel channel. In 2009, the Company received clearance from Health <location>Canada</location> for sterilization of additional complex medical instruments, including multi-channel flexible endoscopes.</p> <p>For more information about TSO3, visit the Company's Web site at <a href="http://www.tso3.com">www.tso3.com</a></p> <p/> <p>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.</p> <p/> <pre> The TSX has neither approved nor disapproved the information contained herein and accepts no responsibility for it.
For further information: Marc Boisjoli, Chief Financial Officer, (418) 651-0003, Ext. 228, [email protected]; Caroline Côté, Director, Corporate Communications and IR, (418) 651-0003, Ext. 237, [email protected]; Source: TSO3 Inc.
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