TSO3 DISCLOSES FOURTH QUARTER AND FULL YEAR 2009 FISCAL RESULTS

Highlights of 2009 annual results and subsequent events:

CHANNEL STRATEGY
• Reached Global Channel Partner Agreement with 3M Infection Prevention Division for the distribution of new generation product

PRODUCT STRATEGY
• Received FDA 510(k) clearance for expanded sterilization claims, supporting superior sterile efficacy of the STERIZONE® Dynamic Sterilant Delivery Process®
• Completed data file for new product, submitted to Health Canada and received approval
• Submitted documentation to support export of new product to Europe and the United States

SUBSEQUENT EVENTS TO YEAR END
• Received Notice of Conformity to European Medical Device Directive allowing the Use of CE Mark and the sale of new product in the European Union
• Closed Bought Deal Financing for $16,000,000 CDN
• Received initial purchase commitment from 3M
• 3M Introduces the 3M™ Optreoz 125-Z™ branded Sterilizer


Quebec City, March 17, 2010 – TSO3 Inc. (“TSO3”) an innovator in sterilization technology for medical devices in healthcare settings using ozone, posted sales totalling $1.3 million for the fiscal year ended December 31, 2009, compared to $2.2 million one year earlier. During the year, the Company sold five of its first generation STERIZONE® sterilizers and accessories, whereas it sold 13 in the preceding fiscal year.

For the year ended December 31, 2009, TSO3 recorded a net loss of $9.2 million compared to $9.6 million one year earlier. While revenues decreased in 2009, versus 2008, expense control contributed to a decrease in the Company’s net loss.

Mr. R.M. (Ric) Rumble, President and Chief Executive Officer of TSO3 commented that “In 2009, the downturn in the economy clearly impacted our ability to close business. While we saw an increase in our quoting activities early on, these quotes remained mostly inactive at year end despite efforts to shake loose business with various incentives. Our response was to reallocate our resources to R&D in order to improve our product and be ready with an enhanced product offering that would result in increased business opportunities when the economy showed signs of recovery. I am proud to say that 2009, despite the lack of sales, was a year of great accomplishments for TSO3. It was a year where we set aggressive goals and timelines for ourselves, delivered on our commitments and created significant value for our Shareholders. We approach 2010 stronger than we have ever been, with fast and compatible sterilization cycles and a strong sales channel able to support sequential market role-outs on a global basis”.


The plan

At TSO3‘s 2009 Annual General Meeting, the Company outlined its plans to; increase the utility of its sterilizer though the creation of new cycles; develop relationships leading to a channel partner and increase market opportunities via expansion outside of North America.

Total solution in low temperature sterilization

The Company had successfully developed its original sterilization cycle based on novel technology for low temperature sterilization addressing the need for an efficacious, cost-effective and safe sterilization method. However, customer needs for speed and material compatibility believed to contribute to the lack of traction in the marketplace. As a result, the Company invested resources to make significant improvements to its sterilization platform. In 2009, these efforts led to a new generation sterilizer offering three cycles in a single unit. The new generation STERIZONE® Low Temperature Sterilization System offers speed, high throughput, increased instrument compatibility, and cost effective sterilization, while engineered to remain customer safe and eco-friendly. Offering the same superior sterile efficacy, the new generation sterilizer accommodates a much wider range of instruments from general surgical instruments, to short as well as long rigid and flexible endoscopes, including complex multi-channel devices.

Global channel partner

On September 2, 2009, TSO3 entered into an exclusive negotiation period with 3M, for the purpose of signing an agreement for the distribution of the new generation STERIZONE® Sterilizer, through 3M’s Global Infection Prevention Division. After roughly three months of negotiations and due diligence, TSO3 announced on December 16, 2009, that an agreement had been reached for global distribution of the product to Central Sterilization and OR Departments within acute care facilities, under the 3M™ brand Optreoz 125-Z™. Geographical roll-out will occur as regulatory clearances are received.

Market clearances on new generation sterilizer

In December 2009, TSO3 filed for regulatory clearances on the new generation product in Canada, Europe and the United States. To date, TSO3 has received authorization from Health Canada and notification from the European Notified Body (CE Mark), allowing the sale of the product in Canada, as well as export to the European Union. United States regulatory clearance is currently under review.

2010 and beyond

In 2010, TSO3 will work methodically with its channel partner to firmly establish themselves in markets, as clearances are received. The Company’s goal is to achieve substantial and sustainable market penetration globally in the years to come. TSO3 has received initial purchase commitment from 3M, on units intended for 3M internal use, and expects to start shipping these units in early second quarter.

Early in 2010, TSO3 concluded a bought deal financing round for $16M, which secures TSO3’s financial situation. In addition to supporting the transition to 3M for marketing, sales and client support activities, this additional sum of money will support TSO3’s product development plans. The Company intends to increase its product portfolio via additional applications of its STERIZONE® technology directed at new market segments within acute care facilities, as well as other markets.

Initiatives are also being undertaken in order to reduce costs in the Company’s system, while improving overall quality within the organization.

To view the entire release, as well as the management discussion and analysis, click here.

Conference call details

TSO3 will host a conference call this morning at 11:00 A.M. (EDST). Analysts and institutional investors are invited to participate. 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. Other interested parties may listen to the live Webcast of the Conference Call accessible via TSO3's website at: www.tso3.com. The Webcast will be archived for 90 days.

Fourth Quarter and Fiscal 2009 Results Disclosure

The 2009 Annual Report is available on TSO3’s website at the following address http://www.tso3.com/en/investors/financial-reports-webcasts.php and full Y09 disclosure will shortly be available on SEDAR (www.sedar.com).