TSO₃ receives first order and announces delay in marketing program

March 10, 2004

Québec City, March 10, 2004 – TSO3 Inc. (“TSO3”) announced today that it has received the first order for its 125L Ozone Sterilizer from a Canadian hospital.

As is customary in the medical field when a new technology is introduced, this hospital will benefit from the performance guarantees valid for a specific period as one of the first users of the technology. As these guarantees allow the purchasers to return the unit if they are not completely satisfied, the Company will recognize this sale at the expiration of the performance guarantees.

“We are very happy to announce the initial sale for our first product. The intention of this hospital to allocate a major portion of their budget to the acquisition of the 125L Ozone Sterilizer and to become the first user of the technology, even before all the data from the referral sites has been compiled, confirms their confidence in the rigorousness of our current work, as well as the need that exists in the market for a product such as ours,” said Jocelyn Vézina, CEO of TSO3.

Marketing program

The marketing program at TSO3 includes the deployment of several demonstration units in hospitals throughout North America that act as referral sites. These units will be in the hospitals on a trial basis for about three months, after which the participating hospitals must generate satisfaction reports and manifest their intention to purchase the device.

The purpose of this program is to obtain recognition for the value of the sterilization process, leading to the endorsement of TSO3’s innovative technology by credible third parties – hospitals recognized for being on the leading edge of medical techniques and for their critical analysis of new health technologies. The deployment of these demonstration units is required for the successful commercial launch in the United States.

Progress

Currently, six agreements have been signed with Canadian hospitals to act as referral sites. Under these agreements, four units have been installed already and the other two units will be deployed in the coming months.

Regarding the American referral sites, the goal of TSO3 is to sign five to 10 agreements. Two were signed with prestigious hospitals in the fall of 2003, after TSO3 obtained approval from the U.S. Food and Drug Administration (FDA). TSO3 is currently inventorying instruments in both of these hospitals, and in discussions with other American hospitals to sign a further three to eight agreements over the coming months.

“This is a new process and any new process faces challenges. Thousands of surgical instruments are used in hospital settings every day and these instruments are constantly evolving. Thanks to the diversity of expertise at our referral sites and the collaboration of several major manufacturers, we are testing the widest range of instruments to determine their compatibility with the process, as well as the optimal preparation and packaging of instruments to maximize the benefits of ozone sterilizing. This research will require more time than we had originally planned but we have made the strategic decision to put greater emphasis on this work in order to optimize the adoption of the product in the marketplace and to ensure total commercial success,” explained Mr. Vézina.

Accordingly, TSO3 foresees a delay of six to nine months in its business plan, which means the Company believes it will be in a position to sign the next agreements with American hospitals during the current and the second quarters and proceed with deploying the units during the third quarter of this year.

This should allow TSO3 to make sales through the referral sites towards the end of 2004, which will not stop the Company from selling units to hospitals that are not part of the referral sites in the meantime, as today’s announcement demonstrates.

About TSO3

TSO3 Inc., founded in Québec City in 1998, employs 43 people, 16 of whom work exclusively in research and development. The company’s mission is to develop and commercialize global, innovative sterilization solutions.

TSO3 has perfected a unique new sterilization process using ozone as the sterilizing agent. The first product based on this technological platform is the 125L Ozone Sterilizer intended for hospital sterilization units. The 125L – named for its 125-litre/4.3-cubic-foot capacity – was designed to allow the sterilization of the new generation of surgical and diagnostic instruments made of non-heat-resistant materials such as polymers. The ozone sterilization process is a safe, efficient, fast and cost-effective response to evolving sterilization needs.

The 125L Ozone Sterilizer was licensed by Health Canada in May 2002 and TSO3 was recently granted U.S. Food and Drug Administration (FDA) approval, on September 3, 2003.

The Company’s R&D team has also undertaken the development of a smaller, point-of-use ozone sterilization device for operating rooms and private clinics, and is planning the development of an industrial-sized device for manufacturers of medical instruments, among others.

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 any financing undertaken by TSO3) are forward-looking statements that involve certain risks, uncertainties and hypotheses, including, but not limited to, 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.

The TSX has neither approved nor disapproved the information contained herein and accepts no responsibility for it.

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