TSO3 ANNOUNCES FINANCIAL RESULTS FOR THIRD QUARTER 2012
AND UPDATES ON ACTIVITIES
- Completed further experiments to reinforce the United States (US) regulatory filing for clearance of the STERIZONE® 125L+ Sterilizer;
- Progressed in compiling data and completing answers to questions from the Agency with the support of regulatory consultants.
- Continued negotiations with Getinge Infection Control (GETINGE), a division of worldwide Getinge AB for a new commercial agreement for the worldwide distribution and service of TSO3 products.
- Advanced development of the STERIZONE® 80L Sterilizer to address the need for a smaller-sized device (OR Sub-Sterile Area).
Quebec City, November 7, 2012 – TSO3 Inc. (“TSO3”) (TSX: TOS) an innovator in low temperature sterilization technology for medical devices in healthcare settings, posted today its revenues for the third quarter of 2012 ended September 30, 2012.
In the third quarter of 2012, sales amounted to $66,236, as compared to $1,100,892 for the same quarter of 2011. In Q3-2011, 90% of the sales, or $995,802, were to the 3M Company who had started marketing the STERIZONE® 125L+ Sterilizer under the brand 3M Optreoz™ 125-Z Sterilizer in June 2011. For the nine-month period ended September 2012, sales amounted to $1,103,782, as compared to $1,888,308 for the same period in 2011. The lower sales in the third quarter of 2012 and for the first nine months of fiscal 2012 are primarily the result of a virtual elimination of sales to the 3M Company since the middle of the second quarter of 2012.
“On August 7, we released that we had signed a letter of intent with Getinge Infection Control for the global distribution and service for our products, and we are still actively negotiating at this time. Our aim is to sign an agreement that will be the right one for our shareholders and reflects not only the opportunity in currently cleared markets but also the global opportunity post US regulatory clearance. We will make sure to update you on the status of negotiations in the upcoming weeks”, commented R.M. (Ric) Rumble President and CEO of TSO3.
“In the meantime, and as we have said repeatedly, obtaining US regulatory clearance for the sale of the products in that market remains our top priority and we are currently very active in providing the Agency with additional information to support our submission and gain clearance”, added Mr. Rumble.
Q3 2012 Conference Call
TSO3 will host a telephone Conference Call today, November 7, 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 514-807-9895 (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: 59331726.
Other interested parties may listen to the live Webcast of the Conference Call accessible via CNW’s Website at: http://www.newswire.ca/en/webcast/detail/1059897/1152235
The Webcast will be archived for 90 days.
SUMMARY OF RESULTS
Periods ended September 30
(Unaudited, IFRS Basis)
|THIRD QUARTER 2012 2011 $ $||NINE MONTHS 2012 2011 $ $|
|Customer Support and Communications||150,944||185,668||471,596||665,496|
|Research and Development||1,020,923||1,090,846||3,062,125||3,034,189|
|Net Loss before Income Taxes||2,160,348||2,261,434||4,695,624||6,257,228|
|Net Loss and Comprehensive Loss||2,160,348||2,261,434||4,695,624||6,257,228|
|Basic and Diluted Net Loss per Share||0.03||0.04||0.07||0.11|
|Weighted Average Number of Shares Outstanding||65,888,182||58,325,099||62,932,071||58,125,854|
In the following paragraphs, the Company analyzes the variations between periods ended September 30, 2012 and 2011.
In the third quarter of 2012, sales amounted to $66,236, as compared to $1,100,892 for the same quarter of 2011. In Q3-2011, 90% of the sales, or $995,802, were to the 3M Company who had started marketing the STERIZONE® 125L+ Sterilizer under the brand 3M™ Optreoz™ 125-Z Sterilizer in June 2011. The lower sales in the third quarter of 2012 are the result of a virtual elimination of sales to the 3M Company since the middle of the second quarter of 2012.
In September 2011, the Company launched an upgrade program whereby users of the 125L Ozone Sterilizers could trade-in their sterilizers to acquire, at a discounted price, 3M™ Optreoz™ 125-Z Sterilizers. As a result of that well adopted program, Q4-2011 and Q1-2012 sales were positively impacted. In Q2-2012, after the program had ended, the smaller installed base of 125L Ozone Sterilizers generated fewer consumables and service revenues to TSO3 with the consequence that sales to clients other than 3M decreased to minimal levels.
For the nine-month period ended September 2012, sales amounted to $1,103,782, as compared to $1,888,308 for the same period in 2011. The lower sales in 2012 are again the result of marketing activities virtually halted since the middle of the second quarter of 2012.
Until June 2012, TSO3 was recognizing revenue over the expected initial term of its agreement with the 3M Company by amortizing the payments it had received from 3M under that agreement. In June 2012, as a result of the termination of the 3M agreement, all unamortized license payments were recognized as revenue. Therefore, in Q3-2012, there was no license revenue, as compared to $52,568 in Q3-2011.
For the nine-month period ended September 30, 2012, license revenue amounted to $1,690,971, as compared to $157,706 for the same period in 2011. The increase from 2011 to 2012 is also due to the recognition of $1,583,833 as income the unamortized deferred license revenue from 3M.
Operating expenses include all of the expenses incurred in connection with the supply chain department. In Q3-2012, operating expenses amounted to $320,714, as compared to $1,095,488 in Q3-2011. The decrease in operating expenses between Q3-2012 and Q3-2011 was the result of lower sales.
In the first nine months period of 2012, operating expenses amounted to $1,531,193 as compared to $1,974,141 in the corresponding period in 2011. Again the variation in operating expenses was primarily due to lower sales.
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 for these activities amounted to $150,944 for the third quarter of 2012. In Q3-2011, the corresponding amount was $185,668 and was made up of (1) $79,577 in technical service expenses originally reported as part of operating expenses, (2) investor relations expenses formerly reported under administrative expenses and (3) expenses primarily incurred in connection with marketing activities conducted by TSO3 prior to the commercial launch by 3M.
The cost for customer support activities and corporate communications was lower in Q3-2012 than in Q3-2011 due to smaller technical support expenses.
For the nine-month period ended September 30, 2012, these expenses amounted to $471,596, as compared to $665,496 for the corresponding period in 2011.
Research and Development
For the quarter ended September 30, 2012, research and development expenses amounted to $1,020,923, as compared to $1,090,846 for the same period in 2011.
For the nine-month period ended September 30, 2012, these expenses amounted to $3,062,125, as compared to $3,034,189 in 2011.
Although on a year-to-year basis these expenses have been relatively stable, there has been a reallocation of resources starting in Q2-2012 away from new product development and towards work related to the filings with the US regulatory agency.
In the third quarter of 2012, the administrative expenses amounted to $779,313, as compared to $1,080,613 in the same quarter of 2011.
For the nine-month period ended September 30, 2012, these expenses amounted to $2,528,691, as compared to $2,760,141 for the corresponding period in 2011.
Variations are mainly due to reduction in staff and other costs more than offsetting the increases in professional fees and in stock exchange listing fees resulting from the April 24, 2012 equity issue.
As at September 30, 2012, cash, cash equivalents and temporary investments amounted to $14,785,723, as compared to $11,384,373 as at December 31, 2011. This increase primarily reflects the net cash proceeds of $8,152,193 from the equity issue completed on April 24, 2012 and the absorption of cash used by the operations.
Third Quarter Disclosure
The 2012 Third Quarter Report is available on TSO3’s website at the following address https://www.tso3.com/en/investors/financial_reporting/quarterly_reports/ and full Q3 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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