TSO3 ANNOUNCES FINANCIAL RESULTS FOR Q1 2012
Highlights of Q1 2012 and activities of recent weeks:
• Completed additional data collection requested by the US regulatory agency and filed complete package on April 20;
• Continued shipments of 3M™ Optreoz™ 125-Z Sterilizers to additional international markets through 3M and directly to TSO3 initial Canadian customers as part of the upgrade program;
• Supported 3M marketing efforts through education and hands-on training;
• Closed Private Placement financing round for gross proceeds of $8.97 million;
• Unveiled new Operating Room Sub-Sterile area sterilizer under development (OR) at the Annual General Meeting of Shareholders; cycle optimization underway.
Quebec City, May 9, 2012 – TSO3 Inc. (“TSO3”) (TSX: TOS) an innovator in sterilization technology for medical devices in healthcare settings, posted total revenues of $780,291 for the first quarter of 2012 ending March 31, for the sale of 3M™ Optreoz™ 125-Z Sterilizers, consumable supplies, accessories, service and license revenues. This compares to $189,197 in the first quarter of 2011. The Company recorded a net loss of $2,008,848 for the first quarter of 2012, or $0.03 per share, compared to a net loss of $1,880,010 or also $0.03 for the same period in 2011.
“During the first quarter we shipped products for installation in both Canadian and international markets and also made good progress on the development of the product that we have designed for the OR Sub-Sterile area. Testing is now underway and its cycle is undergoing optimization prior to completing the intense studies required to meet and file global regulatory submission requirements”, said R.M. (Ric) Rumble President and CEO of TSO3. “Our recent private placement generated additional gross proceeds of $8.97 million intended to support our current efforts in securing the US regulatory clearance for the 3M™ Optreoz™ 125-Z Sterilizer, as well as in finalizing the development of our new OR sterilizer, for which initial commercial activities are targeted at the end of this year”, added Mr. Rumble.
“Although we did encounter a set-back at the end of the quarter with the US regulatory authorities requesting additional information, I am pleased to say that as of April 20th, we have all documentation once again registered with the Agency and under review”, noted Mr. Rumble. “We remain confident in our ability to obtain the required clearance for the US market”.
Q1 2012 Conference Call
TSO3 will host a telephone Conference Call today, May 9, 2012 at 10:30 a.m. (ET). Analysts and Institutional Investors are invited to participate in the call. The numbers to dial for access are 514 427 7450 (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 the CNW website at: http://www.newswire.ca/en/webcast/detail/964529/1034577. The Webcast will be archived for 90 days.
SUMMARY OF RESULTS
Periods ended March 31
(Unaudited, IFRS Basis)
In the following paragraphs, the Company analyzes the variations between the first quarter of 2012 and the first quarter of 2011.
Sales and License Revenues
In Q1, revenue from sale of sterilizers, consumable supplies, accessories, service contracts, training, after-sales service and license amounted to $780,291, as compared to $189,197 in 2011. The revenue in Q1-2012 was driven by sales of sterilizers while in Q1-2011, the majority of revenue was from service contracts.
In Q1-2012, operating expenses amounted to $839,597, as compared to $244,764 in Q1-2011. Operating expenses include all of the expenses incurred in connection with the Supply Chain Department. Given that production was almost non-existent in Q1-2011, most of the increase is due to additional staffing and expenses directly related to a higher level of actual and prospective sales of sterilizers in 2012. As explained below, some expenses formerly reported as part of operating expenses are now reclassified as part of Customer Support and Communications.
Customer Support and Communications
Beginning in 2012, TSO3 has regrouped all activities related to corporate communications, customer service and technical assistance, including support to 3M’s sales and marketing activities. Expenses incurred on these activities amounted to $191,365 for the first quarter of 2012. In Q1-2011, the corresponding amount was $239,043 and was made up of (1) $80,304 formerly reported as part of operating expenses and (2) expenses primarily incurred in connection with marketing activities conducted by TSO3 prior to the commercial launch of the Optreoz™ 125-Z Sterilizer by 3M. On a year-to-year comparable basis, the customer support and corporate communications expenses were therefore lower in Q1-2012 than in Q1-2011 primarily due to the fact that marketing and sale activities for the Optreoz ™ 125-Z Sterilizer are under the responsibility of 3M.
Research and Development
For the quarter ended March 31, 2012, research and development expenditures amounted to $1,021,465, as compared to $849,706 in 2011. The higher research and development expenses are due to activities related to the 510(k) applications with the US regulatory agency, development cost’s associated with the OR product as well as efficacy and compatibility tests for various surgical instruments.
In Q1 2012, the administrative expenses amounted to $762,726, as compared to $795,802 in 2011. The difference primarily stems from timing difference in certain expenses without any significance for the overall level of expenses.
In Q1 2012, financial revenue stood at $33,020, as compared with $65,886 for the corresponding period in 2011. The difference is primarily due to a lower level of interest-bearing cash and cash equivalents and temporary investments in 2012.
As of March 31, 2012, cash, cash equivalents and temporary investments amounted to $9,855,902, as compared to $11,384,373 as at December 31, 2011. This decrease reflects the absorption of cash by the operations partly offset by a $549,640 decrease in non-cash working capital. As detailed below, such decrease is primarily due to a decrease in accounts receivable and inventories from December 31, 2011 to March 31, 2012.
First Quarter Disclosure
The First Quarter Report is available on TSO3’s website at the following address https://www.tso3.com/en/investors/financial_reporting/quarterly_reports/
and full Q1 disclosure will shortly be available on SEDAR (www.sedar.com).
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, to 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.
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