TSO3 reports third quarter 2009 financial results

Stock symbol: TSX: TOS Outstanding shares: 47,863,402 Highlights of Q3 2009 and recent weeks: - Progressed in due diligence and negotiations with 3M toward signing a channel partner agreement within the agreed upon 90 day period; - Completed new cycle development and initiated data collection to support filings with regulatory agencies in Canada, United States and Europe; - Filed patent applications to extend protection for new cycles; - John H. Stroger Hospital of Cook County announced in press release adoption of STERIZONE(R) technology. Benefits cited include cost- effective and eco-friendliness; - Continued interaction with US regulatory agency supporting request for expanded claims of sterile efficacy for multi-channel flexible endoscopes.

TSO3 Inc. ("TSO3") (TSX: TOS) posted revenues of $126,162 on the sales of consumables and service for the third quarter ended September 30, 2009. There were no new shipments of sterilizers in third quarter. This compares with $725,257 for the same period prior year in which sterilizers, consumables and field service were sold. Year to date 2009, the Company has generated revenues of $1,170,276 compared to prior year to date of $1,853,854. The Company's net loss during the third quarter of 2009 was $2,287,711 or $0.05 per share, whereas it was $1,848,859 or $0.04 per share during the same period last year. Year to date the net loss for the Company is $6,538,518 compared to $6,736,423 for the same period last year.

"The third quarter was negatively impacted by frozen budgets in targeted hospitals, which resulted in delayed purchases", said R.M. (Ric) Rumble, CEO at TSO3. "With signs that budgets are slowly being released, we believe these pieces of targeted business will mature into purchase orders over the next months and quarters".

On September 2, 2009, TSO3 entered into a 90 days exclusive negotiation period with 3M, for the distribution of the STERIZONE(R) 125L Sterilizer, including the new cycles, through 3M's Global Infection Prevention Division. As is customary in such arrangements, 3M has conducted a significant amount of due diligence covering TSO3's technology, as well as the Company's regulatory and operating systems. "Significant resources have been applied from both 3M and TSO3 over the recent weeks. The teams are working to complete the due diligence and business plans required to support a fair and lasting agreement", commented Mr. Rumble. "In parallel with these meetings, discussions as to the timing and sequence of product introductions continue to take place, focused on markets where we expect timely regulatory clearances. Even though we cannot guarantee a positive outcome in regards to the conclusion of an agreement, within the 90 days and potentially at all, all parties continue to work well together towards apparent common goals".

New Cycles

During the quarter, the Company completed development of three additional cycles and began the work documenting their effectiveness for the purpose of filing for regulatory clearance in Canada, the United States and Europe. Filing with the agencies is expected to occur before year end.

The new cycles offer increased speed and material compatibility. Specifically two of the three cycles are completed in under an hour, while the third cycle takes only 100 minutes. All cycles offer large load capacity, are eco-friendly and safe for users and patients. The cycles allow the lowest cost per sterilized instrument.

During the quarter, TSO3 reported the pursuit of additional Intellectual Property protection by filing for additional patents related to these new cycles.

Gaining Customer Support

TSO3's STERIZONE(R) sterilization technology was recently featured in a press release (http://www.cookcountyhealth.net/Documents/News/instrument_sterilization(2).doc), from the John H. Stroger, Jr. Hospital of Cook County (part of the Cook County Health & Hospitals System - CCHHS). Stroger acquired two STERIZONE(R) 125L Sterilizers earlier this year and is now promoting the technology's value as a green and cost-effective sterilization alternative.

The Stroger Hospital is a 1.2 million square feet healthcare center (the equivalent of 25 football stadiums), nationally known for its expertise and breadth of service. "We found the TSO3 STERIZONE(R) 125L Sterilizer to be a compelling alternative to EtO and the best fit to our operational needs because it is efficient, safe, environmentally friendly and will significantly reduce sterilization costs - an important consideration for a publicly funded hospital such as Stroger," said CCHHS CEO Mr. Bill Foley.

Conference Call

TSO3 will host a telephone Conference Call today, November 11, 2009 at 10:30 a.m. (EST). Analysts and Institutional Investors are invited to participate. The numbers to dial for access are 514-807-8791 (Montréal area), 416-915-5762 (Toronto area) or the Toll-Free number 1-800-590-1508. Journalists and other interested parties may listen to the live Webcast of the Conference Call accessible via TSO3's Website at: http://www.tso3.com/en/investors/financial-reports-webcasts.php. The Webcast will be archived for 90 days.