ProSep Reports 2008 First Quarter Results

MONTREAL, May 14 /PRNewswire-FirstCall/ -- ProSep Inc., formerly known as TORR Canada Inc. (TSX: TOR) ("ProSep" or the "Company"), dedicated to providing process solutions to the Oil and Gas industry, today reported its financial results for the first quarter ended March 31, 2008. The Company's financial statements and Management Discussion and Analysis are available at www.torrcanada.com or at
Q1 Highlights and Subsequent Events

- Concluded over $25.0 million in new sales, bringing the current total
sales backlog since January 2008 to approximately $48.0 million, most
of which will be recognized during fiscal 2008
- Closed a $5.1 million private placement financing
- Completed company-wide restructuring and significantly reduced annual
operating expenses by more than $7.0 million or 40%
- Completed implementation of new strategic plan and completed
structural and operational reorganisation:
- Created three profit centres
- Opened new sales and representation office in Bahrain
- Completed reallocation of key employees and activities
- Centralized all product development activities in Norway
- Established strong management committee
- Obtained successful performance confirmations for the TORR system,
ProSalt and the C-Tour
- Amended the Company's name to ProSep Inc.
- Appointed Bruno Ducharme to Board of Directors

"Our first quarter was marked by the completion of our reorganization plan and implementation of our new global strategy. As we stand today, I can say with confidence that we are starting to reap the rewards of our new positioning," said Jacques L. Drouin, President and Chief Executive Officer of ProSep. "Looking ahead, we will continue focusing our efforts on our global commercialisation strategy and cross selling initiatives to drive sales in the near term. We aim to achieve positive cash flow from operating activities as soon as possible."

Financial Results

The following review of results includes ProSep Inc. financial results as at the end of March 31, 2008 for a three-month period.

Revenue for the three month period ended March 31, 2008, totalled $9,117,043. Of the total revenue, $7,767,263 was generated from conventional products and $1,349,780 from proprietary products.

Gross profit was $2,652,556, or 29% of revenues, for the first quarter of 2008. The Company's strategy of offering a mix of conventional and proprietary technologies reduces sales volatility and provides the possibility to increase profitability.

Sales and marketing expenses totalled $561,064 for the first quarter of 2008. The majority of expenses are related to salaries, travel expenses, and professional fees paid to sales and marketing experts in Houston, Montreal and Norway.

Research and development expenses reached $303,205 for the three month period ended March 31, 2008. This amount is mostly comprised of salaries.

General and administrative ("G&A") expenses for the first quarter of 2008, totalled $2,229,348. Of the total G&A expenses for the three month period ended March 31, 2008, the most significant expenses related to salaries, professional fees and office infrastructure.

The Company reports a net improvement of EBITDA (Earnings Before Interest Taxes, Depreciation and Amortization) from ($1,863,748) for the three-month period ended March 31, 2007 to ($441,061) for the same period ended March 31, 2008, which includes $368,000 of non-recurring items.

Financing charges reached $1,958,870 for the quarter ended March 31, 2008 including a foreign exchange loss of $1,151,334 due to the change in value of the foreign currency denominated debt, as well as a loss of $239,998 in relation to a derivative financial instrument. A total of $69,804 was recognized as interest revenue on short term investments.

Net loss for the first quarter of 2008 totalled $3,337,814 or $0.05 per share.

As at March 31, 2008, the Company had $7,720,541 in cash and cash equivalents.

On April 24, 2008, ProSep Inc. announced the completion of a private placement to raise $5,090,000 of gross proceeds.

The Company previously announced that approximately $9.0 million of its liquidities was invested in R1-High non-extensible asset-backed commercial paper ("ABCP") and currently remains outstanding. ProSep Inc. has adjusted the estimated fair value of this investment and has recognized an additional impairment charge of $450,000 during the three-month period ended March 31, 2008 while $1,800,000 was recorded during the six-month period ended December 31, 2007 for a total impairment charge of $2,250,000 since the acquisition, representing 25% of original cost.

2008 First Quarter Results Conference Call & Web Cast

Management of ProSep (formerly TORR Canada) will host a conference call to discuss its 2008 first quarter financial results on May 15, 2008 at 8:30 a.m. EST. The conference call will also be audio-cast live at www.newswire.ca and archived for 90 days at
About ProSep Inc.

ProSep Inc., formerly known as TORR Canada Inc., is dedicated to providing process solutions to the Oil and Gas industry. ProSep designs, develops, manufactures and commercializes technologies to separate oil, water and gas generated by Oil and Gas production. For more information, please visit www.torrcanada.com.

Caution concerning forward-looking statements
---------------------------------------------

This press release contains forward-looking statements. Such statements inherently involve numerous risks and uncertainties. Actual future results may differ from the anticipated results expressed in the forward-looking statements contained in this press release and ProSep does not undertake to update this information. Investors are cautioned against placing undue importance on forward-looking information contained herein and should consult the final short form prospectus and the documents incorporated by reference therein, which contain a more exhaustive analysis of risks and uncertainties connected to ProSep's business.

ProSep Inc.
(Formerly TORR Canada Inc.)
Consolidated statements of loss and comprehensive loss
For three-month periods ended March 31, 2008 and 2007
(Unaudited)
Three months ended
March 31
------------------------------------------------------------------------- 2008 2007
------------------------------------------------------------------------- $ $

Revenue 9,117,043 16,414,696
Cost of goods sold 6,464,487 16,997,934
------------------------------------------------------------------------- Gross margin 2,652,556 (583,238)
-------------------------------------------------------------------------
Expenses

Sales and marketing 561,064 396,448
Research and development 303,205 120,440
General and administrative 2,229,348 763,622
------------------------------------------------------------------------- 3,093,617 1,280,510
------------------------------------------------------------------------- (441,061) (1,863,748)

Decrease in fair value of investment in ABCP 450,000 - Financial charges (income), net 1,958,870 (118,015)
Amortization 363,857 117,353
------------------------------------------------------------------------- Loss before income taxes (3,213,788) (1,863,086)
-------------------------------------------------------------------------
Current tax provision 205,168 - Future tax recovery (81,142) - ------------------------------------------------------------------------- Income taxes 124,026 - ------------------------------------------------------------------------- Net loss and comprehensive loss (3,337,814) (1,863,086)
-------------------------------------------------------------------------

Weighted average number of shares 62,556,566 46,698,710
Basic and diluted loss per share (0.05) (0.04)
------------------------- -------------------------

ProSep Inc.
(Formerly TORR Canada Inc.)
Consolidated balance sheets
As at March 31, 2008 and December 31, 2007
(Unaudited)
Audited
March 31 December 31
------------------------------------------------------------------------- 2008 2007
------------------------------------------------------------------------- $ $
Assets

Current assets
Cash and cash equivalents 7,720,541 8,662,634
Restricted cash 1,054,575 1,055,846
Receivables 13,822,823 11,299,053
Deferred contract costs 66,323 66,048
Inventories 544,326 615,430
Prepaid expenses 694,089 418,222
Derivative financial instruments - 12,450
------------------------------------------------------------------------- 23,902,677 22,129,683

Long term investment 6,750,000 7,200,000
Property and equipment 1,951,958 2,093,671
Goodwill 20,407,126 20,407,126
Intangible assets 8,361,079 8,530,759
Future tax assets 39,196 72,596
------------------------------------------------------------------------- 61,412,036 60,433,835
------------------------------------------------------------------------- -------------------------------------------------------------------------
Liabilities

Current liabilities
Bank credit facility 5,316,129 10,602,541
Accounts payable and accrued liabilities 16,853,051 15,765,232
Deferred revenue 430,535 349,515
Derivative financial instruments 227,548 - Current portion of long term debt 1,844,226 1,660,518
------------------------------------------------------------------------- 24,671,489 28,377,806

Interest payable 651,493 651,493
Long-term debt related to long-term investment 7,200,000 - Long-term debt 11,969,747 11,178,087
Future tax liabilities 1,048,250 1,162,791
Pension obligation 400,866 391,650
------------------------------------------------------------------------- 45,941,845 41,761,827
-------------------------------------------------------------------------

Shareholders' equity

Share capital 55,144,398 55,144,398
Contributed surplus 10,268,723 10,132,726
Deficit (49,942,930) (46,605,116)
------------------------------------------------------------------------- 15,470,191 18,672,008
------------------------------------------------------------------------- 61,412,036 60,433,835
------------------------------------------------------------------------- -------------------------------------------------------------------------

ProSep Inc.
(Formerly TORR Canada Inc.)
Consolidated statements of cash flows
For three-month periods ended March 31, 2008 and 2007
(Unaudited)
Three months ended
March 31
------------------------- 2008 2007
------------------------- $ $
Operating activities

Net loss and comprehensive loss (3,337,814) (1,863,086)
Items not affecting cash
Stock-based compensation 135,997 175,043
Amortization of property & equipment 194,181 90,167
Amortization of intangible assets 169,676 27,187
Accreted interest 61,731 184,367
Accrued interest on long term investment - 22,429
Decrease in fair value of investment in ABCP 450,000 - Periodic pension cost 9,216 - Future income taxes (81,142) - Change in fair value of derivative financial
instruments 239,998 (25,850)
Unrealized exchange loss 1,484,719 - ------------------------------------------------------------------------- (673,438) (1,389,743)
-------------------------------------------------------------------------
Changes in non-cash operating working capital
items (211,863) (2,975,876)
------------------------------------------------------------------------- (885,301) (4,365,619)
-------------------------------------------------------------------------
Investing activities

Acquisition of property & equipment (52,465) (269,031)
------------------------------------------------------------------------- (52,465) (269,031)
-------------------------------------------------------------------------
Financing activities

Change in bank indebtedness - 1,111,113
Reimbursement of long-term debt (4,327) (572)
Issuance of share capital - 1,667
------------------------------------------------------------------------- (4,327) 1,112,208
-------------------------------------------------------------------------
Effect of exchange rate on cash and cash
equivalents 108,819 - Decrease in cash and cash equivalents (1,050,912) (3,522,442)
Cash and cash equivalents, beginning of period 8,662,634 25,922,238
------------------------------------------------------------------------- Cash and cash equivalents, end of period 7,720,541 22,399,796
------------------------------------------------------------------------- -------------------------------------------------------------------------

Source: ProSep Inc.

CONTACT: ProSep Inc., Jacques L. Drouin, President & CEO, (514) 522-5550,
ext. 226, jdrouin@prosepinc.com; The Equicom Group Inc., Danielle Ste-Marie,
(514) 844-6064, dste-marie@equicomgroup.com

2008-05-14 19:33:24 0362094 PRNEWSWIRE