Le Lézard
Classé dans : Les affaires, L'environnement

TORR Canada communique des résultats records pour le troisième trimestre de l'exercice 2006



MONTREAL, le 11 mai /CNW/ -- MONTREAL, le 11 mai /CNW/ - TORR Canada Inc. ("TCI" ou la "Société") (TOR à la Bourse de croissance TSX), un chef de file mondial dans la conception, la mise au point, la fabrication et la commercialisation, pour les industries pétrolières et gazières, de solutions d'extraction des hydrocarbures contenus dans les eaux de production, a déclaré aujourd'hui ses résultats financiers pour le trimestre et la période de neuf mois ayant pris fin le 31 mars 2006. Les états financiers et l'analyse par la direction de la Société sont disponibles à l'adresse www.torrcanada.com.

Points saillants du trimestre

Au cours du troisième trimestre, la Société a atteint plusieurs objectifs sur le plan des finances, du marketing et de l'exploitation, notamment :

    -  Un contrat de 20,9 M$ US signé avec SK Engineering & Construction,
       portant sur la livraison de systèmes capables de traiter 260 000
       barils par jour (bpj) d'eau au Koweit;
    -  The Expro Group, l'un des partenaires commerciaux de TCI, a vendu à
       une des plus importantes sociétés de production de pétrole et de gaz
       une unité de 5 000 bpj pour une application de nettoyage de puits;
    -  L'unité de 160 000 bpj, fabriquée pour Wood Group et Amerada Hess, a
       été livrée à temps et dans les limites du budget prévu;
    -  L'unité de démonstration pour Weatherford a été livrée et plusieurs
       essais sur le terrain ont été programmés en Amérique du Sud dans les
       mois qui viennent;
    -  Lancement officiel de la technologie TORR sur le marché des sables
       bitumineux et DGMV (SAGD) à la conférence CONRAD sur le traitement des
       eaux à Fort McMurray; et
    -  Mise en place d'un nouveau plan stratégique amélioré pour les deux
       prochaines années.


"Nous avons franchi plusieurs étapes clés pendant ce trimestre, depuis la signature d'un important contrat avec SK, jusqu'au lancement du système TORR sur le marché DGMV (SAGD), et la livraison d'un système de 160 000 bpj à Amerada Hess", a déclaré Alain Ferland, président et chef de la direction de TORR Canada. "Pour le reste de l'exercice 2006, nous prévoyons continuer de créer de nouvelles possibilités d'affaires en faisant une plus forte percée sur nos principaux marchés géographiques actuels."

Résultats financiers détaillés

Au troisième trimestre ayant pris fin le 31 mars 2006, les produits d'exploitation ont augmenté de façon significative pour se chiffrer à 2,86 M$ alors qu'ils étaient de 16 647 $ au troisième trimestre de 2005. Pour la période de neuf mois ayant pris fin le 31 mars 2006, les produits d'exploitation s'établissaient à 3,1 M$ par rapport à 223 931$ à la même période l'an dernier. La croissance du chiffre d'affaires est attribuable principalement au produit d'exploitation constaté au troisième trimestre de l'exercice 2006 et provenant de la vente de la Plateforme Triton à Amerada Hess et de la livraison de l'unité de démonstration fabriquée pour Weatherford.

Au 31 mars 2006, le carnet de soumissions de TORR était de près de 100 millions comparativement à 130 millions à la fin du trimestre précédent. Le niveau actuel de soumissions représente l'ajustement suite à la vente effectuée à SK. Le portefeuille représente actuellement 71 projets ou devis actifs non conclus pour traiter potentiellement 1,9 million de bpj.

La marge bénéficiaire brute pour le troisième trimestre de l'exercice 2006 était de 514 993 $, soit 18 % des produits d'exploitation, comparativement à (37 976 $) pour la période comparable de l'exercice précédent.

La perte nette au troisième trimestre de l'exercice 2006 s'est établie à 932 159 $, ou à (0,03) $ l'action, alors qu'elle avait été de 928 469 $, ou de (0,07) $ l'action, à la même période l'an dernier. Pour la période de neuf mois ayant pris fin le 31 mars 2006, la perte nette s'élève à 3,5 M$, ou à (0,11) $ l'action, alors qu'elle avait été de 2,3 M$, ou (0,16) $ l'action, à la période correspondante de l'exercice 2005. Au troisième trimestre de l'exercice 2006, les frais de recherche et de développement se sont chiffrés à 137 873 $, comparativement à 92 821 $ à la période correspondante de l'an dernier. Pour la période de neuf mois ayant pris fin le 31 mars 2006, les frais de recherche et de développement ont atteint 516 662 $, comparativement à 294 442 $ pour la période correspondante de l'exercice 2005. Les activités de recherche et de développement ont surtout porté, au cours du trimestre, sur l'augmentation des applications possibles de TORR(MC) et de RPA(MD) et sur l'optimisation de la conception des cartouches RPA(MD) version 5.

Les frais reliés aux ventes et au marketing, qui étaient de 208 971 $ à la période correspondante l'an dernier, se chiffrent à 591 849 $ au troisième trimestre de l'exercice 2006. Pour la période de neuf mois ayant pris fin le 31 mars 2006, les frais reliés aux ventes et au marketing se sont élevés à 1 182 861 $, comparativement à 467 438 $ à la période correspondante de l'exercice 2005. Cette hausse est attribuable (i) au versement d'une commission à USFilter pour la vente à Amerada Hess, (ii) aux efforts de développement des affaires et (iii) à une participation accrue de TCI dans des conférences et des salons professionnels.

Au 31 mars 2006, les espèces, les quasi espèces et les titres négociables de la Société totalisaient 5,9 M$. Le taux mensuel moyen d'épuisement des fonds pour le troisième trimestre était de 300 255 $.

Le 10 mai, le conseil d'administration a approuvé l'octroi d'options d'achat d'actions à un nombre restreint d'employés de TORR. L'octroi porte sur 13 000 actions à un prix d'exercise de 1,84 $ l'action, lequel représente le prix des actions à la fermeture de la Bourse de croissance TSX le 9 mai 2006. Toutes les options octroyées à cette date sont émises en quatre tranches égales au cours des trois prochaines années. Une option permet d'acheter une action ordinaire.

Conférence téléphonique sur les résultats du troisième trimestre 2006 et

diffusion sur le Web

La direction de TORR Canada tiendra une conférence téléphonique pour discuter de ses résultats financiers du troisième trimestre de l'exercice 2006 aujourd'hui à 8 h 30, H.A.E. La conférence sera également diffusée en direct sur le Web en version audio sur le site www.newswire.ca, et elle sera archivée pendant 90 jours sur le site www.torrcanada.com. Pour entendre une rediffusion, veuillez composer le 1 877 289-8525 ou le 1 416 640-1917 et le numéro de référence 21186396 suivi du carré.

TORR

TORR Canada est spécialisée dans les solutions de traitement des eaux pour l'industrie pétrolière et gazière. TORR conçoit, met au point, fabrique et commercialise son système exclusif TORR ("Total Oil Remediation and Recovery") et sa technologie de cartouches RPA ("Reusable Petroleum Absorbent") pour extraire les hydrocarbures des eaux de production générées par l'industrie pétrolière et gazière. Pour obtenir de plus amples renseignements, veuillez consulter le site Web de la société à l'adresse www.torrcanada.com.

Mise en garde sur les énoncés prospectifs

-----------------------------------------

Certains énoncés contenus dans le présent communiqué peuvent être de nature prospective, y compris les énoncés relatifs aux activités et au rendement financier prévu de TORR CANADA INC. Ces énoncés sont soumis à de nombreux risques et incertitudes pouvant entraîner un écart considérable entre les résultats réels et ceux prévus dans les énoncés prospectifs. Parmi les facteurs pouvant entraîner un tel écart, notons l'évolution des lois et des règlements, la concurrence, les changements technologiques, les modifications aux politiques gouvernementales et économiques, l'inflation et la conjoncture économique générale dans les régions où TORR CANADA INC. exerce ses activités. Ces facteurs, ainsi que d'autres, doivent être analysés avec soin; et le lecteur ne doit pas se fier indûment aux énoncés prospectifs. TORR CANADA INC. décline toute obligation de mettre à jour de tels énoncés prospectifs.

    La Bourse de croissance TSX n'a pas vérifié le présent communiqué et ne
    saurait être tenue responsable du bien-fondé ou de l'adéquation de son
    contenu.


    <<

        TORR CANADA Inc.
        (Formerly Environmental Applied Research Technology
         House - EARTH (Canada) Corporation)
        Consolidated Interim Financial Statements
        As at and for the three and the nine-month periods ended
        March 31, 2005 and 2006.


    TORR CANADA Inc.
    Consolidated Statements of loss and deficit
    For the three and the nine-month periods ended March 31, 2005 and 2006
    (Unaudited)


                                3 Months    3 Months    9 Months    9 Months
    -------------------------------------------------------------------------
                                  Mar 31,     Mar 31,     Mar 31,     Mar 31,
                                    2006        2005        2006        2005
    -------------------------------------------------------------------------
                                       $           $           $           $

    Revenue (Note 6)           2,855,757      16,647   3,132,691     223,931
    Cost of goods sold
     (Note 7)                  2,340,764      54,623   2,622,684     184,488
    -------------------------------------------------------------------------
                                 514,993     (37,976)    510,007      39,443
    -------------------------------------------------------------------------

    Expenses

      Sales and marketing        591,849     208,971   1,182,861     467,438
      Research and
       development, net          137,873      92,821     516,662     294,442
      General and
       administrative            443,364     322,948   1,434,220     926,458
    -------------------------------------------------------------------------
    Total expenses             1,173,086     624,740   3,133,743   1,688,338
    -------------------------------------------------------------------------

                                (658,093)   (662,716) (2,623,736) (1,648,895)

    Financial charges (Note 5)   189,041     206,323     584,200     421,446
    Loss on disposal of
     capital assets                1,076           -      29,773           -
    Amortization                  83,949      59,430     243,978     186,150
    -------------------------------------------------------------------------

    Net loss                    (932,159)   (928,469) (3,481,687) (2,256,491)

    Deficit, beginning of
     period                   26,376,040  19,607,517  23,826,512  18,179,013
    Share capital cost
     - financing                       -           -           -     100,482
    -------------------------------------------------------------------------
    Deficit, end of period    27,308,199  20,535,986  27,308,199  20,535,986
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted loss
     per share (Note 3)             0.03        0.07        0.11        0.16
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    The accompanying notes are an integral part of the interim consolidated
    financial statements



    TORR CANADA Inc.
    Consolidated Balance sheets
    As at March 31, 2006
                                                     March 31,      June 30,
                                                         2006          2005
                                                   (unaudited)     (audited)
    -------------------------------------------------------------------------
                                                            $             $
    -------------------------------------------------------------------------

    Assets
    Current assets
      Cash and cash equivalents (Note 4)             5,866,378     9,229,628
      Receivables                                    4,361,643       381,337
      Deferred contract costs                          116,126             -
      Inventory                                        173,749       116,530
      Prepaid expenses                                 162,298       161,530
    -------------------------------------------------------------------------
                                                    10,680,194     9,889,025

    Capital assets                                     465,427       290,532
    Patents and technology                             729,776       811,919
    Deferred costs                                     105,437       127,506
    -------------------------------------------------------------------------
                                                    11,980,834    11,118,982
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Current liabilities
      Accounts payable and accrued
       liabilities (Note 8)                         1,694,531        769,505
      Deferred revenues                             2,566,519         96,737
      Current obligation under a capital lease          3,309             -
      Current portion of deferred licensing
       agreement                                        6,246         24,990
    -------------------------------------------------------------------------
                                                    4,270,605        891,232


    Interest payable (Note 9)                         523,357        237,845
    Long-term debt (Note 9)                         2,105,319      1,904,060
    -------------------------------------------------------------------------
                                                    6,899,281      3,033,137
    -------------------------------------------------------------------------

    Shareholders' equity
      Share capital (Note 10)                      24,006,527     24,003,277
      Contributed surplus (Note 11)                 8,383,225      7,909,080
      Deficit                                     (27,308,199)   (23,826,512)
    -------------------------------------------------------------------------
                                                    5,081,553      8,085,845
    -------------------------------------------------------------------------
                                                   11,980,834     11,118,982
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Approved by the Board
    "Alain Ferland" ................................. Alain Ferland, Director

    "Gérard Caron"................................... Gérard Caron, Director

    The accompanying notes are an integral part of the interim consolidated
    financial statements



    TORR CANADA Inc.
    Consolidated Statements of cash flows
    For the three and the nine-month periods ended March 31, 2005 and 2006
    (Unaudited)


                                3 Months    3 Months    9 Months    9 Months
    -------------------------------------------------------------------------
                                  Mar 31,     Mar 31,     Mar 31,     Mar 31,
                                    2006        2005        2006        2005
    -------------------------------------------------------------------------
                                       $           $           $           $
    Operating activities

      Net loss                  (932,159)   (928,469) (3,481,687) (2,256,491)
      Items not affecting cash
        Stock-based
         compensation            101,244      21,084     284,463      59,404
        Deferred licensing
         agreement                (6,248)     (6,246)    (18,742)    (18,742)
        Amortization of
         capital assets           56,568      35,704     161,834     114,972
        Amortization of patents
         and technology           27,381      23,726      82,143      71,178
        Loss on disposal of
         capital assets            1,076           -      29,773           -
        Amortization of
         financing costs          70,581     128,064     211,745     214,585
        Accrued interest         168,740           -     475,196           -

      -----------------------------------------------------------------------
                                (512,817)   (726,137) (2,255,275) (1,815,094)

      Changes in non-cash
       operating working
       capital items            (399,947)     13,649    (759,149)    (94,422)
    -------------------------------------------------------------------------
                                (912,764)   (712,488) (3,014,424) (1,909,516)
    -------------------------------------------------------------------------

    Investing activities

      Acquisition of capital
       assets                   (34,083)     (50,128)   (352,076)    (67,812)
      Technology                      -      (20,000)          -     (20,000)
      Deferred cost                   -            -           -           -
    -------------------------------------------------------------------------
                                (34,083)     (70,128)   (352,076)    (87,812)
    -------------------------------------------------------------------------

    Financing activities

      Convertible loans (Note 9)      -            -           -   3,000,000
      Financing costs                 -            -           -    (213,391)
      Interest expense                -       90,000           -     147,845
      Issuance of share capital
       (Note 10)                      -            -        3,250          -
    -------------------------------------------------------------------------
                                      -       90,000        3,250  2,934,454
    -------------------------------------------------------------------------


    Increase (decrease)
     in cash                   (946,847)    (692,616)  (3,363,250)   937,126
    Cash, beginning
     of period                6,813,225    2,447,796    9,229,628    818,054
    -------------------------------------------------------------------------
    Cash, end of period       5,866,378    1,755,180    5,866,378  1,755,180
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Additional information - see Note 4

    The accompanying notes are an integral part of the interim consolidated
    financial statements



    TORR CANADA Inc.
    Notes to interim consolidated financial statements
    For the three and the nine-month periods ended March 31, 2005 and 2006
    (Unaudited)
    -------------------------------------------------------------------------

    1. Disclosure

    The unaudited financial statements do not include all the information and
    notes required according to Canadian generally accepted accounting
    principles and should therefore be read with the annual audited financial
    statements and the notes included in the Company's annual report for the
    year ended June 30, 2005.

    EARTH (Canada) Corporation was renamed TORR Canada Inc. on November 4th,
    2005. The new ticker symbol is "TOR".


    2. Significant accounting policies

    The unaudited financial statements have been prepared in accordance with
    Canadian generally accepted accounting principles applied in the same
    manner as the most recently audited financial statements.

    The consolidated financial statements include the accounts of TORR CANADA
    Inc. and its subsidiary created on January 6th, 2006 (TORR Limited UK).
    Intercompany transactions and balances are eliminated on consolidation.

    Revenue Recognition

    TORR CANADA Inc.' revenues are derived from various sources: (i) Field
    Trials related services, (ii) TORR(TM) system sales, (iii) RPA(R)
    cartridges sales, and (iv) licensing agreements.

    TORR Canada Inc. offers complete and integrated solutions to meet its
    customer's needs. These solutions may involve the delivery of multiple
    services and products occurring at different points in time and/or over
    different periods in time. As appropriate, these multiple element
    arrangements are separated into their units of accounting based upon
    their relative fair values when the delivered item has value to the
    customer on a stand alone basis and there is objective and reliable
    evidence of the fair value of each deliverable. Each element is accounted
    for in accordance with the company's revenue recognition policies.

    The company recognizes revenue when realized or realizable and earned,
    which is when the following criteria are met: persuasive evidence of an
    arrangement exists; delivery has occurred; sales price is fixed or
    determinable; and collectibility is reasonably assured. For product
    sales, the recognition criteria are generally met when title and risk of
    loss have been transferred from the company to the buyer, which may be
    upon shipment or delivery to the customer site, based on contract terms
    or legal requirements in foreign countries. Instances in which the
    agreement with the customer contains a customer acceptance clause,
    revenue is deferred until customer acceptance is obtained. Service
    revenues are recognized as such when services are rendered.

    1)  Field Trials related services:

    Field trials are services rendered by technicians and or engineers
    operating a demonstration of the TORR(TM) system, at the client's site,
    with the ultimate objective of selling a system. The duration of these
    demonstrations can be from days to months. Revenues derived from this
    service are recognized on the basis of services rendered. Revenues
    derived from the rental of demonstration related equipments are
    recognized on the basis of services rendered.

    2)  TORR(TM) system sales:

    A TORR(TM) system is generally a produced water treatment system composed
    of TORR(TM) vessels and sometimes coupled with complementary technologies
    or traditional equipments.

    The design, fabrication and delivery of TORR(TM) systems generate
    revenues under short term contracts (normally less than one year).
    Revenues under fixed amount contracts are recognized once the TORR(TM) is
    delivered. A provision for general guarantee and a performance guarantee
    including parts and labor is accounted for as cost of goods sold. The
    provision calculated at a contractual rate of a maximum of 10% of the
    contract price or based on the data collected during field trials is
    reversed when the guarantee period ends. Amounts invoiced under contracts
    entered with clients for goods not delivered are accounted for as
    deferred revenues. All direct and incremental costs related to signed
    contracts for goods not yet delivered are recorded as deferred contract
    costs.

    Technical services related to the installation, consultation, mechanical
    inspection, operator training and supervision of equipment start-up are
    recognized on the basis of services rendered.

    3)  RPA(R) Cartridges:

    RPA(R) is a reusable petroleum absorbant.

    -  Unit sales

    RPA(R) cartridges revenue derived from unit sales is recognized upon
    delivery.

    -  Contractual agreements

    RPA(R) cartridges revenue derived from fixed price annual contract is
    recognized based on the number of cartridges delivered over the total
    expected delivery during the contract period.

    4)  Licensing agreements:

    -  Up-Front Royalty Fee:

    Up front royalty fee derived from an agreement between the licensee and
    TORR Canada Inc providing exclusivity rights are recognized on a straight
    line basis over the term of the contract.

    -  Minimum Milestone Royalty Fee and Volume Related Fee:

    When a licensee has acquired the right to sell the capacity of a TORR
    system, royalty revenue is recognized over the term of the contractual
    period and royalty based on volume is recognized when earned.

    -  Royalty fee on Technology:

    "Revenues derived by an agreement between a licensee and TORR Canada
    Inc., providing the licensee with the right to use the TORR(TM)
    technology is recognized upon the delivery of the technology."

    Foreign currency translation

    Monetary assets and liabilities are translated at the rate in effect at
    balance sheet date. Items appearing in the statement of earnings are
    translated at average month rates. All exchange gains and losses are
    included in the statement of earnings.

    The subsidiary is considered an integrated foreign subsidiary and
    accordingly monetary assets and liabilities are translated at the rates
    prevailing at the balance sheet date, whereas other assets and
    liabilities are translated at exchange rates in effect at the transaction
    dates. Gains or losses resulting from translation are recognized in
    earnings.

    Cash and cash equivalents

    Cash and cash equivalents include liquid investments purchased three
    months or less from maturity and are stated at cost, which approximates
    market value.

    Research and development expenses

    Research costs are expensed as incurred. Development costs are expensed
    if they do not meet the criteria for deferral.

    Deferred contract costs

    Direct and incremental costs relating to signed contracts are deferred
    and recognized upon delivery.

    Capital assets

    Capital assets are recorded at cost net of related government grants and
    amortized over the estimated useful lives using the straight-line method
    as follows:

        Computer equipment                           3 years
        Furniture and fixtures                       10 years
        Research and development equipment           3 years
        Demo oil recovery equipment                  3 years
        Vehicles and trailers                        4 years
        Leasehold improvements                       Term of lease
        Equipment                                    5 years
        Plant equipment under capital lease          5 years


    3. Basic Earnings and diluted loss per share

    Basic earnings per share have been calculated using the weighted-average
    number of common shares outstanding during each interim period:
    30,913,051 shares for the three-month period and 30,910,935 for the
    nine-month period ended March 31, 2006 and 13,823,265 shares for the
    three-month and 13,714,902 shares for the nine-month period ended
    March 31, 2005.

    The diluted loss per share for the periods ended March 31, 2006 and 2005,
    calculated using the "treasury stock method", is equal to the basic loss
    per share because of the anti-dilutive effect of the outstanding stock
    options and warrants.

    4. Supplemental cash flow information

                                3 Months    3 Months    9 Months    9 Months
                               ----------------------------------------------
                                  Mar 31,     Mar 31,     Mar 31,     Mar 31,
                                    2006        2005        2006        2005
                               ----------------------------------------------
                                       $           $           $           $

    Cash & cash equivalents
      Cash                     2,881,468   1,755,180   2,881,468   1,755,180
      Short-term
       investments             2,984,910           -   2,984,910           -
    -------------------------------------------------------------------------
                               5,866,378   1,755,180   5,866,378   1,755,180
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Interest paid                      -           -           -           -
    Income taxes paid                  -           -           -           -
    Non-cash transactions
      Capital lease                    -           -      14,426           -
      Technology acquired
       with issuance of
       share capital                   -     160,000           -     160,000



    5. Financial charges
                                3 Months    3 Months    9 Months    9 Months
                               ----------------------------------------------
                                  Mar 31,     Mar 31,     Mar 31,     Mar 31,
                                    2006        2005        2006        2005
                               ----------------------------------------------
                                       $           $           $           $
      Interest on long-term
       debt                      105,512      90,118     285,512     147,963
      Foreign exchange                83        (832)     27,713       7,324
      Professional fees                -      (2,226)     21,065      68,584
      Interest revenue           (50,364)     (8,801)   (151,520)    (17,010)
      Amortization of deferred
       financing costs             7,356       6,896      22,062      11,493
      Accreted interest on
       convertible loans          63,227      60,584     189,684     101,546
      Amortization related to
       warrants attached
       to the convertible loans   63,227      60,584     189,684     101,546
    -------------------------------------------------------------------------
                                 189,041     206,323     584,200     421,446
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    6.  Segmented information

    Geographical information
                                3 Months    3 Months    9 Months    9 Months
                               ----------------------------------------------
                                  Mar 31,     Mar 31,     Mar 31,     Mar 31,
                                    2006        2005        2006        2005
                               ----------------------------------------------
                                       $           $           $           $
    Sales to customers situated
     in:
      Canada                       4,500           -      24,127      56,072
      France                       6,248       6,248      56,549      53,774
      Italy                            -           -       2,794           -
      United Kingdom           2,585,218           -   2,771,324           -
      United States              259,791           -     259,791     102,161
      Asia                             -           -      18,106       1,525
      Norway                           -      10,399           -      10,399
    -------------------------------------------------------------------------
                               2,855,757      16,647   3,132,691     223,931
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                3 Months    3 Months    9 Months    9 Months
                               ----------------------------------------------
                                  Mar 31,     Mar 31,     Mar 31,     Mar 31,
                                    2006        2005        2006        2005
                               ----------------------------------------------
                                       $           $           $           $
    Direct sales:
      Canada                       4,500           -      24,127      56,072
      International            2,756,944      10,399   2,979,716     128,273

    Licensing agreement
     related revenues             94,313       6,248     128,848      39,586
    -------------------------------------------------------------------------
                               2,855,757      16,647   3,132,691     223,931
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Significant customers:

    One client represented 86% of the Company's revenue for the three-month
    period ended March 31, 2006 and 78% of revenue for the nine-month period
    ended March 31, 2006.

    One client represented 62% of the Company's revenue for the three-month
    period ended March 31, 2005 and three clients represented respectively
    40%, 24% and 18% of revenue for the nine-month period ended March 31,
    2005.

    One client represented 32% of the Company's receivables as at March 31,
    2006 and three clients represented respectively 42%, 27% and 12% of the
    Company's receivables as at June 30, 2005.


    7.  Cost of goods sold
                                3 Months    3 Months    9 Months    9 Months
                               ----------------------------------------------
                                  Mar 31,     Mar 31,     Mar 31,     Mar 31,
                                    2006        2005        2006        2005
                               ----------------------------------------------
                                       $           $           $           $

    Outsourcing TORR(TM)
     System                    1,606,408           -   1,607,527      25,280
    RPA(R) Cartridges            141,273      15,695     166,530      36,713
    Salaries and general
     expenses                    578,338      35,358     829,394     114,287
    Freight                       14,745       3,570      19,233       8,208
    -------------------------------------------------------------------------
                               2,340,764      54,623   2,622,684     184,488
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    8.  Accounts payable and accrued liabilities

                                          March 31, 2006       June 30, 2005
                                         ------------------------------------
                                                       $                   $

    Accounts payable                             978,038             213,547
    Sales tax payable                            100,363                   -
    Warranty provision                           259,667                   -
    Accrued liabilities                          356,463             555,958
    -------------------------------------------------------------------------
                                               1,694,531             769,505
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    9.  Long-term debt and interest payable

    In October 2004, the Company completed a private placement of secured
    convertible term loans in the aggregate principal amount of $3 million
    and warrants to purchase 4,615,385 shares of the Company at an exercise
    price of $0.65 per share for an aggregate amount of $3 million at any
    time on or before October 29, 2009.

    The convertible loans have been accounted for in accordance with their
    substance and are presented in their components parts of debt and equity.
    The debt component is determined as the difference between the face value
    of the loans and the sum of the fair value of the conversion option and
    warrants.

    The fair value of the convertible portion of the loans has been
    calculated using the Black-Scholes option pricing model and is reflected
    in the contributed surplus of the shareholders' equity for an amount of
    $1,264,546. The fair value of the warrants has been calculated at
    $1,128,170 also using the Black-Scholes option pricing model with the
    following assumptions:

            Risk-free interest rate                 3.17%
            Expected life of options            52 months
            Volatility                                90%
            Dividend rate                              0%

    The convertible loans bear interest at 12% per annum and mature on
    October 29, 2009. The interest payable for years 1, 2 and 3 will be
    payable on the Term Date and year 4 and 5 will be payable yearly.

    The accretion of the convertible loans equal to the value of the
    conversion option and of the warrants is charged to earnings rateably to
    maturity and will be accounted for as financing charges in the statement
    of earnings.

    The cost of issuing convertible loans was allocated between shareholders'
    equity and the long-term debt in proportion of their relative value. The
    portion allocated to the long-term debt is amortized over the term of the
    loan.

    The obligation under capital lease is repayable through November 2010 in
    monthly instalments of $276 (including interest calculated at a rate of
    7.5% with a purchase option of $3,190 at maturity.

    10. Share capital

    Authorized
      Authorized
        Unlimited common shares without par value

      Stated
                                              Number of shares        Amount
                                             --------------------------------
                                                                           $

      Balance, June 30, 2004                        13,661,898    19,771,777
      Issued as consideration of
       the purchase of technology                      246,154       160,000
      Private placement                             17,000,000     4,071,500
      -----------------------------------------------------------------------
      Balance, June 30, 2005                        30,908,052    24,003,277


      Warrants exercised                                 5,000         3,250
      -----------------------------------------------------------------------
      Balance, March 31, 2006                       30,913,052    24,006,527
      -----------------------------------------------------------------------
      -----------------------------------------------------------------------

    During 2005, the Company entered into an agreement to acquire technology
    for an amount of $180,000 payable with a cash consideration of $20,000
    and the balance with the issuance of 246,154 common shares.

    On June 23, 2005, the Company completed a private placement of
    17,000,000 units of the corporation for gross proceeds of $8,500,000.
    Each unit consists of one common share and one share purchase warrant of
    the corporation, with each such share purchase warrant being exercisable
    for one common share until November 2, 2009. The proceeds of the
    issuance of units were allocated between contributed surplus and share
    capital based on the relative fair value of the warrants and the common
    shares. The broker has received broker warrants exercisable for units
    equal to 10% of the units issued under the private placement exercisable
    until December 23, 2006. The estimated fair value of the broker warrants
    were recorded as share issue expenses during the year.

    On November 4, 2005, the Company's shareholders voted in favour of, along
    with the approval of the Board of directors, that the outstanding common
    shares be consolidated on the basis of one (1) new common share for every
    five (5) common shares currently issued and outstanding. All share
    information has been presented as of the share consolidation occurred on
    July 1, 2004.

    The total of share issue expenses includes the following:           $

    Broker warrants                                                1,657,082
    Broker commission - in cash                                      425,000
    Other costs of issuing units - in cash                           195,000
    Costs related to the equity portion of the convertible loan      107,201
    -------------------------------------------------------------------------
                                                                   2,384,283
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Stock option plan

    The Company grants incentive stock options to its directors, officers,
    employees and others providing services to it in accordance with the
    regulations set by the TSX and is subject to its approval. The total
    number of common shares which may be issued pursuant to this plan is
    limited to 10% of the issued shares. Options may be exercised at a price
    equal to the quoted market value as at the date of grant. Options expire
    five years from the date of grant.

    Options are normally granted based on the ability of the participant to
    influence directly and positively not only the short-term elements of the
    success of the Corporation such as sales increases, cost reductions, or
    balance sheet elements, but also strategic issues and business
    opportunities. Options can be granted to directors, officers,
    consultants, and employees. Options vest over a three-year period; 25%
    are vested when granted, 25% after 12 months, 25% after 24 months, and
    25% after 36 months. The fair value of the options is amortized over the
    vesting period.

    Changes in the number of options are as follows:

                                                For the nine-month period
                                                   ended March 31, 2006
                                           ----------------------------------
                                            Number of        Weighted average
                                             options          exercise price
                                           ----------------------------------
                                                                           $
    Outstanding, July 1, 2005               1,584,000                   1.10
    Granted                                   913,000                   1.18
    Expired                                    38,000                      -
    Exercised                                       -                      -
                                           -----------
    Outstanding, March 31, 2006             2,459,000                   1.24
                                           -----------
                                           -----------


    The table below presents additional information regarding the Company's
    stock option programs at March 31, 2006 and June 30, 2005:


                                March 31, 2006            Option exercisable
    -------------------------------------------------------------------------
                                  Weighted-   Weighted               Weighted
       Range of                    average     average                average
       exercise                   remaining   exercise               exercise
        price           Number      life        price      Number      price
    -------------------------------------------------------------------------
                                                   $                      $
    Below $0.50        165,000     4 years       0.50      55,000       0.50
    $0.50 - $ 1.00   1,080,000     4 years       0.98     367,500       0.97
    $1.00 - $ 1.50     200,000     3 years       1.37     200,000       1.37
    $0.57 - $ 1.50     913,000     5 years       1.18     228,250       1.18
    Over $1.50         101,000     1 year        2.50     101,000       2.50
    -------------------------------------------------------------------------
                     2,459,000                            951,750
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    The table below shows the compensation expense for outstanding options
    and the assumptions used in the Black-Scholes option pricing model for
    awards granted during the periods:


                          3 Months      3 Months      9 Months      9 Months
                         ----------------------------------------------------
                            Mar 31,       Mar 31,       Mar 31,       Mar 31,
                              2006          2005          2006          2005
                         ----------------------------------------------------
      Compensation
       expense             101,244        21,086       284,464        59,407
      Number of stock
       options granted      72,000             -       913,000       205,000
      Weighted-average
       grant date fair
        value               27,452             -       662,553        75,276
      Weighted-average
       assumptions:
        Dividend yield           0%            0%            0%            0%
        Expected
         volatility            107%            -    89% to 107%    85% to 89%
        Risk-free
         interest rate        4.08%            -  3.43 to 4.08% 3.48 to 3.79%
        Expected life
         (years)                 3             5             3             5


    Changes in the number of warrants are as follows:


                                                      March 31, 2006
                                           ----------------------------------
                                            Number of        Weighted average
                                             warrants         exercise price
                                           ----------------------------------
                                                                           $
    Outstanding July 1, 2005                23,315,385                  0.65
    Granted                                          -
    Expired                                          -
    Exercised                                  (5,000)
    Outstanding, March 31, 2006             23,310,385                  0.65
                                           ------------
    Warrants exercisable                    23,310,385
                                           ------------
                                           ------------


    Compensation expense relating to the warrants or the three-month and
    nine-month periods ended March 31, 2006 is $63,227 and $189,681,
    respectively. For the three-month and the nine month periods ended
    March 31, 2005 compensation expense was $57,941 and $96,569 respectively.


    11. Contributed surplus

                                          March 31, 2006        June 30, 2005
    -------------------------------------------------------------------------
                                                       $                   $

    Options                                      674,810             390,346
    Warrants                                   6,443,869           6,254,188
    Convertible loans                          1,264,546           1,264,546
    -------------------------------------------------------------------------
                                               8,383,225           7,909,080
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    12. Comparative Figures

    Comparative figures for the period ended March 31, 2005 have been
    reclassified to comply with the March 31, 2006 presentation.


    13. Subsequent Event

    On April 19, 2006 TORR Canada Inc. announced that Lothian Partners
    27 (sarl) SICAR, which held a convertible term loan granted to the
    Company in the context of the $3 million private placement completed on
    November 2, 2004, has exercised its right to convert the aggregate
    principal amount of such loan, $1,000,000, and the accrued and unpaid
    interest on such loan, of an aggregate amount of $180,387.95, into common
    shares of the Company. The principal amount is to be converted at a price
    of $0.65 per common share, for a total of 1,538,462 common shares being
    issued by the Company. The aggregate amount of the accrued and unpaid
    interest is to be converted at a price of $0.879 per common share,
    representing the average of closing price of the common shares on the
    TSX Venture Exchange for the twenty trading days preceding the date of
    exercise of the conversion right by Lothian Partners 27 (sarl) SICAR, for
    a total of 205,220 common shares to be issued by the Company upon
    approval by the TSX Venture Exchange.

    >>

    %SEDAR: 00009317EF c5262

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