U.S. Markets open in 6 hrs 23 mins

TSO3 Reports Record Third Quarter 2017 Results

QUEBEC CITY and MYRTLE BEACH, SC, Nov. 6, 2017 /PRNewswire/ - TSO3 Inc. (TOS.TO), an innovator in sterilization technology for medical devices in healthcare settings, reported financial results for its third fiscal quarter 2017 ended September 30, 2017.

Third Quarter 2017 Financial Summary

  • Revenue increased to $5.1 million, an 11% sequential increase over the $4.6 million recorded in the second quarter of 2017 and a 46% increase over the $3.5 million recorded in the third quarter of 2016.  The Company shipped 44 STERIZONE® VP4 Sterilizers to Getinge, its exclusive global distributor, in the third quarter of 2017. 
  • Gross profit was $2.0 million, or 39% of revenue, which compares gross profit of $1.7 million, or 38% of revenue, in the second quarter of 2017 and a gross profit of $1.1 million, or 32% of revenue, in the third quarter of 2016.  Gross margin in the third quarter of 2017 would have been 43% after excluding the effect of foreign currency exchange rate fluctuation as compared to the second quarter of 2017. 
  • Research and Development (R&D) expenses grew to $1.6 million, as compared to $1.5 million in the second quarter of 2017 and $0.8 million in the year-ago quarter.
  • Sales, General and Administrative (SG&A) expenses were $2.1 million, as compared to $2.4 million in the second quarter of 2017 and $1.8 million in the third quarter of 2016. 
  • The Company's net loss was $1.8 million or $(0.02) per share in the third quarter of 2017 and compares to net losses of $2.3 million or $(0.02) per share in the second quarter of 2017 and $1.5 million, or $(0.02) per share, in the third quarter of 2016.
  • The Company had $16.1 million in cash, cash equivalents and investments and no debt as at September 30, 2017, as compared to $16.7 million and no debt at the end of the second quarter of 2017.

Management Commentary

"We are pleased with our financial results in the third quarter, and our training and support efforts continue to positively impact the rate at which our distributor is winning new business," stated R. M. (Ric) Rumble, TSO3's President and CEO. "We are looking forward to a productive fourth quarter 2017 and fiscal year 2018.  We are moving forward with plans for our new, higher capacity, US assembly facility, and we continue to have a positive dialogue with US regulators regarding our application to further enhance our sterilizers' claims to include duodenoscopes.

Q3-2017 Conference Call

TSO3's President and CEO R.M. (Ric) Rumble and CFO Glen Kayll, will host the conference call, followed by a question and answer period. 

Date: Tuesday, November 7, 2017
Time: 8:30 a.m. Eastern Standard Time
Toll-free dial-in number: 1-888-231-8191
International dial-in number: 1-514-807-9895 (Montreal); 1-647-427-7450 (Toronto)
Conference ID: 1482596

Analysts and institutional investors are invited to participate on the call. Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gilmartin Group at 1-610-368-6505.  

Other interested parties may listen to the live webcast of the conference call at http://event.on24.com/r.htm?e=1528844&s=1&k=1F38C510E7E63BE8C2A79B736CDC2790 which will be available for replay in the Investors section of the Company's website at www.tso3.com.

 

Quarterly Sequential Summary




 

$000's

2016

2017

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Revenues

3,071

2,977

3,507

3,746

4,211

4,630

5,105

Cost of sales

1,961

2,143

2,368

2,716

2,641

2,871

3,102

Gross Profit

1,110

834

1,139

1,030

1,570

1,759

2,003

Gross Margin

36%

28%

32%

28%

37%

38%

39%









Expenses








Research and Development

606

803

806

1,297

1,353

1,539

1,562

Selling, general and administration

1,385

1,529

1,841

1,774

2,209

2,396

2,131

Financial expenses (income)

(1,588)

-

(50)

(21)

(39)

49

48

Net Income (loss) before tax

707

(1,499)

(1,458)

(2,020)

(1,953)

(2,225)

(1,738)

Income taxes

58

(12)

15

48

27

29

33

Net Income (loss)

649

(1,487)

(1,473)

(2,068)

(1,980)

(2,254)

(1,771)

Basic and diluted net income (loss) per share

0.01

(0.02)


(0.02)

(0.02)

(0.02)

(0.02)

(0.02)

Non-cash share based compensation

216

267

333

286

609

592

632

Cash, cash equivalents and investments

24,385

21,338

20,744

19,260

19,590

16,740

16,109

 

Summary of Results

Periods ended September 30, 2017 and 2016 (Unaudited, IFRS Basis, in thousands of US dollars, except per share amounts)





Third Quarter

Nine months


2017

$

2016

$

2017

$

2016

$

Revenues

5,105

3,507

13,946

9,555

Cost of sales

3,102

2,368

8,613

6,472

Gross profit

2,003

1,139

5,333

3,083






Expenses






Research and development

1,562

806

4,456

2,215


Selling, general and administrative

2,131

1,841

6,735

4,755


Financial expenses (income)

48

(50)

58

(1,637)

Net loss before income taxes

(1,738)

(1,458)

(5,916)

(2,250)

Income taxes

33

15

89

62

Net loss and total comprehensive loss

(1,771)

(1,473)

(6,005)

(2,312)

Basic and diluted net loss per share

(0.02)

(0.02)

(0.07)

(0.03)

 

Consolidated Statements of Financial Position

(Unaudited in thousands of US dollars)





September 30,

2017

$

December 31,

2016

$

Current Assets




Cash and Cash Equivalents

7,642

2,698


Short-term Investments

8,467

15,064


Accounts Receivable

613

2,318


Inventories

2,595

1,703


Prepaid Expenses

165

102


19,482

21,885

Non-current Assets




Long-term Investments

-

1,498


Property, Plant and Equipment

2,944

2,357


Intangible Assets

1,885

1,836


4,829

5,691


24,311

27,576

Current Liabilities




Accounts Payable and Accrued Liabilities

2,664

2,272


Warranty Provision

1,103

575


Deferred Revenues

1,103

1,004


4,870

3,851

Non-current Liabilities




Deferred Income Tax Liabilities

198

109


Deferred Revenues

5,204

5,945


10,272

9,905

Equity




Share Capital

111,215

110,406


Reserve – Share-based Compensation

6,273

4,709


Deficit

(101,737)

(95,732)


Accumulated Other Comprehensive Loss

(1,712)

(1,712)


14,039

17,671


24,311

27,576

 

Consolidated Statements of Cash Flows

As of September 30, 2017 and 2016 (Unaudited, IFRS Basis, in thousands of US dollars)




Nine months


2017

$

2016

$

Cash flows from operating activities



Net loss

(6,005)

(2,312)

Adjustments for:




Depreciation and amortization

715

328


Loss on write-down of PP&E

39

-


Deferred income tax liabilities

89

-


Share-based compensation

1,833

817


Investment income

(138)

(131)


(3,467)

(1,298)


Changes in non-cash operating working capital items

883

(3,134)


Interest received

127

95

Cash flows used in operating activities

(2,457)

(4,337)

Cash flows from investing activities




Acquisition of investments

(2,909)

(22,917)


Disposal of investments

11,015

8,845


Acquisition of property, plant and equipment

(1,057)

(635)


Acquisition of intangible assets

(190)

(248)


Proceed from disposal of property, plant and equipment

2

-

Cash flows generated by investing activities

6,861

(14,955)

Cash flows from financing activities




Options exercised

540

672


Warrants exercised

-

10,145

Cash flows generated by financing activities

540

10,817

Increase (decrease) in cash and cash equivalents

4,944

(8,475)

Cash and cash equivalents at the beginning

2,698

12,654

Cash and cash equivalents at the end

7,642

4,179

 

About the STERIZONE® VP4 Sterilizer

The STERIZONE® VP4 Sterilizer is a low-temperature sterilization system that utilizes the dual-sterilants of vaporized hydrogen peroxide (H2O2) and ozone (O3) to achieve terminal sterilization of heat and moisture sensitive medical devices. Its single pre-programmed cycle can sterilize a large number and wide range of compatible devices, creating a cost-effective sterilization process with error free cycle selection. The device's unique Dynamic Sterilant Delivery System™ automatically adjusts the quantity of injected sterilant based on the load composition, weight and temperature. This capability removes the guesswork and potential for human error, as there is no need to sort instruments and choose the appropriate cycles as with other machines.

The STERIZONE® VP4 Sterilizer is the only terminal sterilization method that is FDA cleared to sterilize multi-channeled flexible endoscopes (with a maximum of four channels) of up to 3.5 meters in length, such as video colonoscopes and gastroscopes - an industry first for any medical device sterilization process.

The STERIZONE® VP4 Sterilizer is also the only cleared low temperature sterilizer that can process a mixed load consisting of general instruments, single channel flexible endoscopes, and single or double channel rigid endoscopes in the same cycle with load weights of up to 75lbs.  The ability to run mixed loads significantly reduces labor costs by minimizing the amount of instrument sorting required, while maximizing the device turns (more productivity from increased throughput capacity).  

More information about the STERIZONE® VP4 Sterilizer is available through TSO3's website, under the Products section at http://www.tso3.com/en/products/sterizone-vp4/.

About TSO3

Founded in 1998, TSO3's activities encompass the sale, production, maintenance, research, development and licensing of sterilization processes, related consumable supplies and accessories for heat-sensitive medical devices. The Company designs products for sterile processing areas in the hospital environment that offer an advantageous replacement solution to other low temperature sterilization processes currently used in hospitals. TSO3 also offers services related to the maintenance of sterilization equipment and compatibility testing of medical devices with such processes.

For more information about TSO3, visit the Company's website 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 TSO3's regulatory filings, revenue, business or operations) are forward-looking statements that involve certain risks, uncertainties and hypotheses, including, but not limited to, the ability of the Company to obtain the required regulatory clearances to market its products, 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.  Although TSO3 believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The complete versions of the cautionary note regarding forward-looking statements as well as a description of the relevant assumptions and risk factors likely to affect TSO3's actual or projected results are included in the Management's Discussion and Analysis for the year ended December 31, 2016, which is available on the Company's website. The forward-looking statements contained in this press release are made as of the date hereof, and TSO3 does not assume any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise unless expressly required by applicable securities laws.