WALNUT CREEK, Calif., Nov. 13 /PRNewswire-FirstCall/ -- BSML, Inc., formerly known as BriteSmile, Inc., (OTC:BSML) (BULLETIN BOARD: BSML) today announced its financial results for its fiscal third quarter and first nine months ended September 29, 2007. For the Company's third quarter ended September 29, 2007, revenues decreased approximately 15%, to $5.7 million, compared to $6.7 million in the third quarter of 2006. Center revenues, primarily related to performance of our whitening procedures, decreased by $1.1 million, while sales of our teeth whitening products through other channels, primarily the QVC network, remained essentially flat. The Company's net loss from continuing operations in the third quarter of 2007 was $0.7 million, or $0.07 per share, compared to $3.8 million, or $0.36 per share, in the third quarter of 2006. The Company recorded a net loss from discontinued operations of $0.9 million for the third quarter ended September 29, 2007. This charge reflects the settlement of a claim involving Discus Dental, Inc., the purchaser of the Company's Associated Centers business in March 2006 and Longlife Health, Ltd., the Company's former distributor in the United Kingdom. The settlement amount will be paid from funds previously escrowed under the terms of the 2006 sale of the Company's Associated Centers business to Discus. For the Company's first nine months ended September 29, 2007, revenues decreased approximately 4%, to $19.6 million, compared to $20.5 million in the first nine months of 2006. The Company's net loss from continuing operations in the first nine months of 2007 was $1.8 million, or $0.17 per share, compared to a net loss from continuing operations of $13.9 million, or $1.31 per share, in the first nine months of 2006. Included in the net loss from continuing operations for the first nine months of 2006 are non-recurring items totaling $5.2 million. The Company does not expect similar non-recurring expenses of this magnitude in 2007 or future periods. For the nine months ended September 29, 2007, the Company has recorded a loss from discontinued operations of $0.9 million in regards to the settlement with Discus and Longlife described above. For the corresponding nine months of 2006, the Company's sale of its Associated Centers business resulted in income from discontinued operations of $19.3 million, or $1.83 per share. The Company's net loss in the first nine months of 2007 was $2.7 million, or $0.25 per share, compared with net income of $5.4 million, or $0.52 per share, in the first nine months of 2006. The Company's EBITDA (defined as earnings before interest, tax, depreciation, amortization and large non-recurring gains and losses including income from discontinued operations) for the third quarter ended September 29, 2007, was a loss of $0.6 million, compared to a loss of $3.8 million in the third quarter of 2006. For the first nine months ended September 29, 2007, the Company's EBITDA was a loss of $1.3 million, compared to a loss of $7.9 million in the first nine months of 2006. EBITDA is a non-GAAP financial measure. More information regarding this non-GAAP financial measure, and a reconciliation of EBITDA to net loss, the most directly comparable GAAP measure, is provided below. Dr. Julian Feneley, BSML's President and Chief Executive Officer, commented on the Company's results as follows: "The year over year comparison of center whitening revenues reflects the current difficult trading conditions for professional teeth whitening products and services. We are focusing our efforts on procedure revenue optimization and cost control. In addition, during Q3 we expanded our product offering through the launch of our private label version of Remedent, Inc.'s GlamSmile(TM) veneer system under the name BriteVeneers One-Step(TM). We are very excited about this new opportunity, which will allow us to leverage our BriteSmile Professional Whitening Centers to deliver uniquely affordable 'perfect smiles' to our customers." The Company finished its 2007 fiscal first nine months with $1.9 million in unrestricted cash, compared with $4.7 million at December 30, 2006. The decrease is almost entirely due to operating uses, including payments to vendors and for income taxes and the redemption of outstanding gift certificates. Non-GAAP Financial Information BSML provides non-GAAP EBITDA, defined by the Company as earnings before interest, taxes, depreciation, amortization and large non-recurring gains and losses as additional information for its operating results. These measures are not in accordance with or an alternative for financial measures calculated in accordance with generally accepted accounting principles, including net income or loss, the most directly comparable GAAP measure, and may be different from non-GAAP measures used by other companies. BSML's management believes this non-GAAP measure is useful to investors because it adjusts for large non-cash or non-recurring items, including: (i) the significant amount of non-cash depreciation and amortization historically incurred by the Company in its operating results, (ii) the non-cash amortization of the discount on debt of $0.5 million in the first quarter of 2006, (iii) the loss on the early extinguishment of debt of $5.0 million reported in the first quarter of 2006, (iv) the non-recurring $1.3 million gain on settlement of a legal claim we recognized in the second quarter of 2006 and (v) the non-recurring $0.9 million loss on settlement of a legal claim we recognized in the third quarter of 2007. Our calculation of EBITDA further excludes results from discontinued operations. Investors are cautioned that the items excluded from EBITDA are significant components in understanding and assessing BSML's financial performance. BSML, Inc., formerly known as BriteSmile, Inc., markets the most advanced teeth whitening technology available and manages state-of-the-art BriteSmile Professional Teeth Whitening Centers. BSML Spa Centers are currently operating in Beverly Hills, Irvine, Palo Alto, Walnut Creek, San Francisco and La Jolla, CA; Houston, TX; Denver, CO; Boston, MA; McLean, VA; Atlanta, GA; New York, NY; Chicago and Schaumburg, IL. For more information about BSML's procedures, call 1-800-BRITESMILE or visit the Company's Website at http://www.britesmile.com/. This release, other than historical information, consists of forward-looking statements that involve risks and uncertainties. Readers are referred to the documents filed by BSML with the Securities and Exchange Commission, specifically the Company's most recent reports on Forms 10-K, 10-K/A and 10-Q, that identify important risk factors which could cause actual results to differ from those contained in the forward-looking statements. BSML and its affiliates disclaim any intent or obligation to update these forward-looking statements. Summary Unaudited Financial Results Follow 13 Weeks 39 Weeks 13 Weeks Ended 39 Weeks Ended Ended Sept. 30, Ended Sept. 30, Sept. 29, 2006 Sept. 29, 2006 2007 (Restated) 2007 (Restated) Revenues $5,681 $6,711 $19,620 $20,506 Operating costs and expenses: Operating and occupancy costs 3,457 3,714 10,686 10,715 Selling, general and administrative expenses 2,843 6,816 10,202 17,674 Depreciation and amortization 356 415 1,079 1,235 Total operating costs and expenses 6,656 10,945 21,967 29,624 Loss from operations (975) (4,234) (2,347) (9,118) Amortization of discount on debt - - - (530) Loss on early extinguishment of debt - - - (5,039) Gain on settlement of legal claim - - - 1,257 Other income / (expense), net 279 185 596 (660) Loss from continuing operations before income tax provision (696) (4,049) (1,751) (14,090) Income tax provision 20 (271) 57 (225) Net loss from continuing operations (716) (3,778) (1,808) (13,865) Discontinued operations (Note 5): Loss on settlement of claim (857) - (857) - Income from operation of discontinued operations - - - 1,130 Gain / (loss) on settlement of litigation - (1,955) - 3,380 Gain on sale of business - - - 15,105 Income / (loss) from discontinued operations before income tax provision (857) (1,955) (857) 19,615 Income tax benefit / expense - 267 - (307) Income / (loss) from discontinued operations (857) (1,688) (857) 19,308 Net income (loss) attributable to common shareholders $(1,573) $ (5,466) $(2,665) $5,443 Basic and diluted net loss per common share from continuing operations $(0.07) $(0.36) $(0.17) $(1.31) Basic net income (loss) per common share from discontinued operations $(0.08) $(0.16) $(0.08) $1.83 Diluted net income (loss) per common share from discontinued operations $(0.08) $(0.16) $(0.08) $1.83 Basic net income (loss) per common share $(0.15) $(0.52) $(0.25) $0.52 Diluted net income (loss) per common share $(0.15) $(0.52) $(0.25) $0.52 Shares used in computing net loss per common share from continuing operations, basic and diluted 10,840 10,549 10,768 10,549 Shares used in computing net income (loss) per common share from discontinued operations, basic 10,840 10,549 10,768 10,549 Shares used in computing net income (loss) per common share from discontinued operations, diluted 10,840 10,549 10,768 10,566 Shares used in computing net income (loss) per common share, basic 10,840 10,549 10,768 10,549 Shares used in computing net income (loss) per common share, diluted 10,840 10,549 10,768 10,566 Condensed Consolidated Balance Sheet Unaudited (In thousands) September 29, 2007 December 30, (Unaudited) 2006 ASSETS Current assets: Cash and cash equivalents $1,907 $4,734 Trade accounts receivable, net 260 213 Inventories 1,020 1,273 Investments, restricted as to use - 3,625 Prepaid expenses and other current assets 621 243 Total current assets 3,808 10,088 Property and equipment, net 3,407 4,258 Investments, restricted as to use 4,753 2,761 Other assets 937 958 Total assets $ 12,905 $18,065 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts and notes payable $1,109 $1,770 Accrued liabilities 5,803 6,776 Accrual for Center closures 131 170 Gift certificate liability 1,118 1,775 Deferred revenue 2,952 2,590 Total current liabilities 11,113 13,081 Long term liablilities: Accrual for Center closures 220 258 Deferred revenue 713 1,352 Other long term liabilities 716 892 Total long term liabilities 1,649 2,502 Total liabilities 12,762 15,583 Shareholders' equity: Common stock, $0.001 par value, 50,000,000 shares authorized, 11,203,713 and 10,664,281 shares issued and outstanding at September 29, 2007 and December 30, 2006, respectively 39 39 Additional paid-in capital 174,229 173,903 Accumulated deficit (174,125) (171,460) Total shareholders' equity 143 2,482 Total liabilities and shareholders' equity $ 12,905 $18,065 Reconciation of Net Income / (Loss) to EBITDA Unaudited (In thousands) Thirteen Thirteen Thirty-nine Thirty-nine Weeks Weeks Weeks Weeks Ended Ended Ended Ended September 29, September 30, September 29, September 30, 2007 2006 2007 2006 Net Income $(1,573) $(5,466) $(2,665) $5,442 Deduct:Income from discontinued operations - 1,688 - (19,308) Deduct:Gain on settlement of 2006 legal claim - - - (1,257) Add: Loss on settlement of 2007 legal claim 857 - 857 - Add:Income tax provision 20 (271) 57 (225) Add / (deduct): Other (income) / expense, net (279) (185) (596) 660 Add: Loss on early extinguishment of debt - - - 5,039 Add:Amortization of discount on debt - - - 530 Add:Depreciation and amortization 356 415 1,079 1,236 EBITDA $(619) $(3,819) $(1,268) $(7,883) DATASOURCE: BSML, Inc. CONTACT: Investors, Rich De Young, CFO, +1-925-279-2883, or Media, Dr. Julian Feneley, CEO, +1-925-279-2863, both of BSML, Inc. Web site: http://www.britesmile.com/

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