Welcome to the TOMI Environmental Solutions, Inc. First Quarter 2022 Financial Results. I will now turn it over to John Nesbett of IMS Investor Relations. John, you may begin.

Thank you for joining us today for the TOMI Environmental Solutions investor update conference call. On today's call, TOMI's Chief Executive Officer and Chairman of the Board, Dr. Halden Shane; and Nick Jennings, TOMI's Chief Financial Officer. Dr. Shane will provide an overview of recent business highlights and Nick will review the financial performance for the most recent quarter before addressing any questions you may have. A telephone replay of today's call will be available through May 19, the details of which are included in the company's press release today. A webcast replay will also be available at TOMI's website, www.tomimist.com. Please note that information contained within this call is relevant only to the day in which it was recorded, May 5, 2022, and you are therefore advised that time-sensitive information may no longer be accurate at the time of any replay. Certain written and oral statements made by management of TOMI may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements should be evaluated in light of important risk factors that could cause our actual results to differ materially from our anticipated results. The information provided in this conference call is based upon the facts and circumstances known at this time. The company undertakes no obligation to update these forward-looking statements after the date of this call. In addition, TOMI will discuss certain non-GAAP financial measures during this call. The company uses non-GAAP measures because it believes they provide useful information about the operating performance that should be considered by investors in conjunction with the GAAP measures. A reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release. I will now turn the call over to TOMI's Chairman and Chief Executive Officer, Dr. Halden Shane. Go ahead.

Thank you. Good afternoon, everyone. Thank you for joining the TOMI Environmental earning call. Today we will discuss Tommy's operating and financial results for the first quarter of 2022. I am pleased to report that 2022 is seeing a rebound in our life science business coming out of the pandemic. We have started with some notable large wins and expect this year to end even stronger with increased sales, further expansion of brand recognition via multiple avenues and new partners. As in every quarter, I'll mention some notable key customer wins and provide an updates of studies and publications the company has endured this quarter. In the first quarter of 2022, we saw growth in sales and gross profit with a decrease in operating expenses. Sales grew approximately 11% in comparison to the first quarter of 2021 and 15% sequentially over the fourth quarter of 2021. This increase in sales is primarily driven by the increase in demand for our mobile equipment and iHP Corporate Service. While our iHP Corporate Service continues to be profitable, TOMI adapts to the demands of its customers in all industries. Therefore, we are manufacturing a variety of prototypes. And this versatility is leading to improvement in the marketplace. With the demand for our custom engineered system, or as we call it CES is increasing ahead of other product lines. Because of this increase in demand for a fully automated full room disinfection decontamination solution, TOMI received approximately 3.5 million in orders this quarter. And we expect this trend to set a precedent for future quarters of this year and beyond. We project a portion of these orders to be recognized into revenue later this year. These additional orders for our CES come on the heels of our fourth quarter order and installation from Fresenius…

Thank you, Dr. Shane, and good afternoon, everyone. We will provide a brief overview of our financial results for the three months ended March 31, 2022, compared to the same prior year period. We'll also touch on some of the improvements in the financial results in our first quarter of 2022, compared to the fourth quarter of 2021, and discuss some of our key balance sheet items as of March 31, 2022. For the three months ended March 31, 2022 compared to March 31, 2021, our consolidated net revenue was $2,309,000 compared to $2,073,000, an increase of $236,000 or 11%. The increase in revenue was largely attributable to increased demand for our mobile equipment and iHP service. Consolidated gross profit was 61.5% compared to 59.6%, representing an increase of 1.9%. The increase in our gross profit was due to our product mix and sales in higher concentration of off-the-shelf mobile equipment, which carries a stronger margin when compared to our Custom Engineered Systems or CES. The consolidated operating loss improved to $660,000 compared to $1,510,000, representing a 56% decline. The improved operating loss was attributable to higher sales, gross profit, and lower operating expenses, which declined 24% when compared to the same prior year period. The client operating expenses was primarily due to lower G&A expense which were down 20% compared to the same prior year period. Our consolidated net loss improved to $660,000, or $0.03 per basic share, compared to $1,511,000, or $0.09 per basic share representing an improvement of $851,000 or $0.06 per basic share. EBITDA was a loss of $578,000 compared to $1,427,000 representing an improvement of $849,000. Cash provided from operations was $27,000 compared to cash used in operations of $1,225,000. The increased cash flow from operations was primarily due to cash deposits received from customers…

Thank you, Nick. As I mentioned, prior to report, seven separate ServPro locations each purchase two SteraPak's this past quarter. These locations and TOMI's relationship with ServPro expanded because we are steadily making progress with long-term service providers. As we diligently search for new partnerships and providers, the TOMI executives are actively meeting with owners to develop opportunities to integrate SteraMist disinfection beyond their regular SteraMist business. A long-term TSN member and now sales representative, Indoor Environmental Solutions and Consultants recently completed a 124 page forensic, architectural and engineering investigation and decontamination report with Kalera indoor farms. IESC is a state-of-the-art indoor air and surface decontamination company dedicated to food and health safety. In addition to being a TSN service provider, IESC are distributor partners to iHP's SteraMist technology. Kalera, a global leader in vertical community farm for greens and culinary herbs, harvested on demand all year is highly motivated to have iHP SteraMist be their cleaning decontamination solution. The recently received report outlines decontamination protocols and calculated savings and estimated service and purchasing options, ServPro added SteraPak to their locations in Colorado and Arizona to continue iHP disinfection treatment of Kalera facilities. In addition, Kalera is budgeting to purchase SteraMist mobile equipment for the protocols set forth in the report. The renewed interest can be attributed to the increase of TOMI's corporate support interest in the CES and the launch of SteraMist support portal that is available on desktop and a mobile app, which provides ease of use for sales support, branding and assistance. TOMI continues to pursue market connections, partnerships and sponsorships. Recently, TOMI attended RIA 2022 The International Restoration Convention & Industry Expo, TOMI was able to discuss with large franchisees about the future growth plans and the possibility of SteraMist disinfection partnership. Mycotoxin deactivation, a successful…

. Okay, our first question is going to come from Sameer Joshi with H.C. Wainwright. Sameer, your line is open.

Thanks, , Nick. Thanks. Congratulations on the good progress both sequentially and year-over-year. And this is truly post-COVID drive of revenues. That's fairly good to see.

Thank you.

The question I have is about the operating expenses, they were lower sequentially as well as year-over-year. At the same time, your revenues were up, that is remarkable. How come you were able to do this?

Yes, our operating expenses did go down in Q1, when compared to the quarters you referenced, and it was largely attributable to payroll costs. Were at certain points last year, our headcount was higher than it is this year, which could be said for our general and administrative costs. And as far as the selling costs are concerned. As well as our were down somewhat this year too, because there was a lot more in development in Q1 of the last year.

So sir, should we see similar levels of OpEx on both R&D and SG&A in the coming quarters, so maybe with just a little bit escalation based on inflation?

Yes, I think so. Our research and development was mostly from the backpack and a lot of that was in throughout last year. And currently, a lot of our research is being done internally and with ARM for these other devices. So I'm not sure yet until I see what numbers are in the second quarter, but I would think that we have that well under control.

Got it. I had another question, but since you mentioned. So you are working in conjunction with them for the control panels and the customization of your product for each customer? What is the role of planet innovation and what is significant of them from moving facilities to California?

So, I'm not sure there's any advantage for anyone moving to California, personally. But I think that I obviously don't work for the Chamber of Commerce here. But the fact that we were shipping from Australia to the states was expensive, and the fact that warranty repairs, they'll have a location here, they'll be able to assemble the products here, and the shipping costs will be a lot less. So that's really what our advantage and our plus. We'd be able to, because there in Southern California, we'll be able to work with them on a one by one basis for further developments in relationship to our backpack and our applicators.

Got it. Okay. And then you -- I think in the prepared remarks, you mentioned $6 million worth of proposals that you're working on. Is there anything else in the pipeline? And then further stepping back part two of that question is how much visibility in general do you have at this stage of what is to come, and then delivery timelines of the orders that you expect over the next say nine to 12 to 15 months?

So we have a fairly robust pipeline. The proposals that are in there are just for the built-ins, they're not for the entire pipeline, which covers multiple verticals. So I would have to say, until obviously, we get purchase orders in -- their pipeline, very interested companies -- very large companies, and we're fairly comfortable on the built-in pipeline. And the other verticals will be coming in, as you know, people start putting in orders.

Got it. And in general, how, like this, the orders that you received 3.5 million in the first quarter, I think maybe 200,000 or 300,000 of that has already been delivered, but then some of it is or bulk of it is over the next nine to 12 months. Is that how typical orders should be expected to be going forward?

Yes, well, this is a first for this company, because we always just ended at the quarter and then started over again. So now we're starting to get deposits for product that is going out even into 2023. So we're very excited about that development and the position the company is currently in, in relationship to these proposals that are coming out of the pipeline, deposits that we are receiving, and the projected completion dates, which with ARM manufacturing and for us, they've been delivering on time. So we're very excited about the accumulation of all those facts coming in to the company at the point we're at right now.

Got it. Just one last one. The biotoxin study inactivation study that you refer to, it seems pretty significant. But in terms of the potential revenues from this effort, what is the timeline expected right now? And what is the size of this opportunity?

Well, the opportunity is extremely large, if we're able to get the data that we know we can get, it just by independently being achieved. Because these are government agencies potentially, who are looking for a fast reaction to the unfortunate use of a biological and/or chemical weapon. And this can expand out throughout the world, once we get the data and individual units in use or tested. And so we're very excited about the opportunity, and I'm comfortable, we'll be able to go ahead and receive favorable data. So that's encouraging to me and for the company.

Got it. So congrats once again. I'll take my other questions offline. Thanks.

Thank you so much.

Our next question is going to come from John Nelson, Individual Investor. John, your line is open.

Thank you. Compliments again on progress made in developing this extremely large markets that you're attacking. First question is related to, I believe you in the last conference call, you mentioned, working on a 1% solution for possible food treatment as part of that farm to table. Any progress you can tell us about that?

So we're still in the process, our consultants who are working with the EPA on that are continuing to get dates. We know, it's been severely delayed because of the COVID, the reason or excuse or whatever from meeting EPA people, but we're following up on it. In my opinion, food industry, I mean they'll be able to spray direct on food appliances, applications, maintaining tremendous advantages for both eliminating human and plant pathogens. So, we're excited of the opportunity, once we get that label. And in the meantime, as you know, we're moving forward with marketing on to 0.35%. And we don't really anticipate a problem getting to 1%, we may have to do some toxicity studies for them which should be fairly easy to do.

?:

No, pre-update yet. We're waiting for the EPA to give us a pre-update. And once they do that, then we'll know what the outer range of that day is.

Got it. Okay. Then, last quarter, you also mentioned for CES new orders, CES transport, a healthcare facility with 50 vehicle, roughly 50 vehicles for install. Can you tell us anything about progress on this, have any been installed or and what's the time, any timeline, you can share?

So we have assembled the prototype, and it's been installed in our corporate van. The original idea came from this customer that you're talking about to make a purchase full units in the future. Their budget committee meets early summer, the prototype that was assembled was provided to our manufacturer ARM for a Beta 2 model with full engineering drawing packages. And then this beta version will be delivered within the next couple of weeks to us, once we validate it in our laboratory in Frederick, we're heading it to the State of North Carolina, to the current customers facility for final production demonstration et cetera.

Okay, great. And then can you tell us roughly how many backpack units you've sold and what the actual I mean I'm assuming you've surveyed your customers as to what they like and don't like, and the pluses and minuses are and just kind of a general update on the backpacks?

So the backpack has been well received. I'm not sure the exact number I mean, it's well over 100 plus, we are in the process of training many people on the use of the backpack and moving into these TSN members, like I mentioned in the call is very encouraging because they're each buying a couple of them and as you know, ServPro is very large. And if they start to adapt this through some of the other competitor regional service ServiceMaster people, then I think then it's going to be a winner. So, we're making some changes to further editions of the backpack, including the applicator. And we're excited going forward with this. It's taken a while to get the backpack, we should have received a lot more at the end of the fourth quarter. We didn't and this time people are a little exhausted about decontamination. But we are excited that once this Shield Study comes out, this will be the type of device that people will want to use in the healthcare and medical world, dental world, surgical, expanding facilities, et cetera. So but it's well received.

Okay, good. Any Boeing update?

Not since the last call, John. I will let you know.

Okay, and then also any further progress on airport terminal cleans captured recently?

Not recently, but they're moving ahead in Germany and doing quite a bit of work in the aviation industry on Boeing planes and airport facilities.

Okay, and any goals now, profitability, reaching profitability?

I'm hoping with what we have and the way the first quarter ran, we should be profitable this year.

Okay, great. And last one is, I realized you just have enormous markets to attack, you're a very small company with limited resources. Can you if somebody like ServPro came in with a big order, do you -- are you confident that you could handle that?

100%, we are through, we got through 2020, which was panic. And we handled it as a very matured large company. And we learned a lot and we are applying it and we're here and ready to handle anything like that.

Very good. Thank you very much.

Thank you, John for the call.

Okay, and with that, I will now turn it back over to management for closing remarks.

Thank you for your support, and for joining us today. This was a strong quarter for the company. We have momentum in our business. We also have a strong balance sheet with cash and a book value very close to where our stock is trading. In my opinion, the stock is undervalued. We look forward to executing, growing the business and driving sustained value for our investors as we perform. Everybody have a wonderful afternoon or evening and need upon where you are. Thank you.

Okay, this concludes your call. You may now disconnect.