Q1 2024 TOMI Environmental Solutions Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the TOMI Environmental Solutions first quarter 2024 financial results conference call. Our host for today's call is John Nesbett of IMS Investor Relations. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. I would now like to turn the call over to your host. Mr. Nesbett, you may begin.

Good day, ladies and gentlemen, and welcome to the told me Environmental solutions first quarter 'twenty 'twenty four financial results Conference call. Our hosts for today's call is John Nesbit of IMS Investor Relations. At this time all participants are in a listen only mode. Later, we will.

John Nesbett: conference call. On today's call is TOMI's Chief Executive Officer and Chairman of the Board, Dr. Halden Shane, TOMI's Chief Operating Officer, E.J. Shane, and TOMI's Chief Financial Officer, Nick Jennings.

John Nesbett: Dr. Shane will provide an overview of recent business highlights, EJ will report on future plans, Nick will provide the financials, and all will be available for Q&A. A telephonic replay of today's call will be available through May 29, 2024, the details of which are included in the company's press release dated May 15, 2024. A webcast replay will also be available at TOMI's website, www.staramist.com

John Nesbett: Please note that information contained within this presentation is relevant only to the day of which it was recorded, May 15, 2024, and you are therefore advised that time-sensitive information may no longer be accurate at the time of any replay. Furthermore, 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 actual results to differ materially from our anticipated results.

John Nesbett: The information provided in this conference call is based upon 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 operating performance that should be considered by investors in conjunction with GAAP measures. Reconciliation of these non-GAAP measures to comparable GAAP measures is included in the earnings release date, May 15, 2024. I will now turn the call over to TOMI's Chairman and Chief Executive Officer, Dr. Halden Shane. Please go ahead. Thank you, John.

John Nesbett: Conduct a question and answer session I would now like to turn the call over to your host Mr. Nesbit you may begin.

Speaker Change: Conference call on today's call is telling me as Chief Executive Officer, and Chairman of the Board Doctor Holden Shane Tony.

Speaker Change: Tell me as Chief operating Officer, EJ, Shane and Tommy's Chief Financial Officer, Nick Jennings.

Doctor Shane will provide an overview of recent business highlights E. J will report on future plans, Nick will provide the financials and all will be available for Q&A.

Speaker Change: Telephonic replay of today's call will be available through May 29, 2024 at the details of which are included in the company's press release dated may 15th 2020 for a webcast replay will also be available attorneys website www dot steroid missed dot com. Please note that information contained.

Speaker Change: In this presentation is relevant only today of which was recorded may 15th 2024 and are therefore advised the time sensitive information may no longer be accurate at the time of any replay certain written and oral statements made by management as Tommy May constitute forward looking statements as defined in the private Securities Litigation Reform Act of 1995.

Speaker Change: These forward looking statements should be evaluated in light of important risk factors that could cause actual results to differ materially.

Speaker Change: Somewhere anticipate 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, Tony will discuss certain non-GAAP financial measures. During this call. The company uses non-GAAP measures because it believes they provide useful information.

Speaker Change: The operating performance 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 date May 15th 2024, I will now turn the call over to Tommy's Chairman and Chief Executive.

Speaker Change: Officer Doctor Halden Shane Please go ahead.

Halden Stuart Shane: Thank you, John. Good afternoon, and thank you for joining the TOMI Environmental Earning Call. Today we will provide an update on operations and financials for the first quarter of 2024. This call will be relatively short for those that have joined in the past compared to our previous calls due to the fact that we just had a call 30 days ago, while also providing insight into key current endeavors of the company for the past month and immediate future. During the quarter, due to revenue recognition, we reported only $1.1 million in revenue. This was disappointing and below where we expect it to be.

Speaker Change: Thank you John Good afternoon, and thank you for joining that telling me environmental earning call today.

Halden Stuart Shane: That said, our revenue remains susceptible to timing of large orders as we scale. So it's important to note that our backlog, which reflects firm orders, was $900,000, much of which was closed during the quarter. So our total sales activity for the quarter, combining sales and backlog, was approximately 2 million, which is about a 27% increase in sales over the first quarter of 2023. Also, we are encouraged by our sales pipeline across multiple end markets, given our expanded base of distribution parts. So the sales in the quarter do not fully capture the growing interest in our technology and the flow of sales inquiries and engagements over the past 30 days.

Speaker Change: I will provide an update on operations and financials for the first quarter of 2020 for this call will be relatively short.

Speaker Change: Or those that have joined in the past compared to our previous calls due to the fact that we just had a call 30 days ago.

Speaker Change: While also providing insight into key current endeavors of the company for the past month in immediate future.

Speaker Change: During the quarter due to revenue recognition, we reported only $1.1 million in revenue this was disappointing.

Speaker Change: And below where we expect it to be that said our revenue remains susceptible to timing of large orders as we scale. So it's important to note that our backlog, which reflects firm orders was $900000 much of which was closed during the quarter.

So our total sales activity for the quarter, combining sales and backlog was approximately $2 million, which is up.

Speaker Change: About 27% increase in sales over the first quarter of 2023.

Speaker Change: Also we are encouraged by our sales pipeline across multiple end markets given our expanded base of distribution partners.

Speaker Change: So the sales in the quarter does not fully capture the growing interest in our technology and the flow and sale inquiries and engagements over the past 30 days. It is our expectation that we will see sequential growth and reduce loss in quarter. Two and are currently laser focused on driving the business to <unk>.

Halden Stuart Shane: It is our expectation that we will see sequential growth and a reduced loss in quarter two and are currently laser focused on driving the business to profitability as soon as the third quarter of this year. We received news from a US-based multinational pharmaceutical customer confirming that two of their CES systems that were installed in September of 2022 are qualified and scheduled to begin use in the fourth quarter of 2024. Once these systems are up and running, we expect annual revenue of approximately $250,000.

Speaker Change: <unk> ability as soon as.

Speaker Change: Third quarter of this year.

Speaker Change: We received news by a U S based multinational pharmaceutical customer confirming that two of their C. S systems that were installed in September of 2022 are qualified and scheduled to begin use in the fourth quarter of 2024 once the system.

Speaker Change: Are up and running we expect annual solution revenue of approximately $250000.

Halden Stuart Shane: As you know, solution sales are the blade in our razor, razor blade model, and this is a perfect example of the long-term evolution of our economic model. I guess patience is a virtue in the life science verticals, in fact, probably in all verticals. In addition to our commercial successes, we disclosed two groundbreaking studies showcasing the efficacy of our solution against the Buddha Mouth Disease Virus, FMDV, and the African Swine Flu Virus, ASFV, reinforcing our pursuit of an additional EPA label.

Speaker Change: As you know solution sales are the blade in our razor razor blade model and this is a perfect example of the long term evolution of our economic model.

Speaker Change: I guess patience is a virtue and the life science verticals in fact, probably in all verticals.

Speaker Change: In addition to our commercial successes, we disclosed two groundbreaking studies showcasing the efficacy of our solution against foot and mouth disease virus F. M. D V and African swine flu virus a S. S&P reinforcing our pursuit of an additional E. P a label.

Halden Stuart Shane: We received notification from the Department of Homeland Security that our STEREMIS technology has been included in their Science and Technology Dictoriate Budget Overview for the purchase of 16 STEREMIS environment systems in the amount of approximately $2 million, where our STEREMIS technology will be used to support the decontamination of Plum Island. Animal Disease Center.

Speaker Change: We received notification from the department of Homeland Security that are staring. This technology has been included in their science and technology dictatorial budget overview for the purchase of 16, Steri Miss environment systems in the amount of approximately $2 million.

Speaker Change: Staring this technology will be used to support the decontamination of Plum Island.

Speaker Change: Animal disease Center.

Halden Stuart Shane: Moreover, our participation at Interfex 2024 in New York City provided the perfect platform to unveil our latest product development. EJ will go into the specifics of our participation and the innovation showcased during the event. Finally, during the quarter, we were invited to apply for a $3 million grant from the Department of Defense to be used by the Army, Air Force, and Marines focusing on mitigating ethylene oxide sterilization.

Moreover, our participation at Interfax 2024 in New York City provided the perfect platform to unveil our latest product developments you Jay will go into the specifics of our participation in the innovation showcase during the event.

Jay: Finally during the quarter, we were invited to apply for a $3 million grant from the department of defense to be used by the Army Air Force and marine focusing on mitigating ethylene oxide sterilization in may of 2024, we submitted our proposal.

Halden Stuart Shane: In May of 2024, we submitted our proposal and application under the DOD program, and we will keep shareholders appraised. Now I'd like to turn the call over to Nick Jennings for his final call to provide our quarterly financials. Nick has resigned due to personal health and family issues. He will be replaced by Joe Recepca. Joe has been our Senior Vice President of Finance and our Senior Controller for our company for five years.

Jay: And application under the D O D program, and we will keep shareholders appraised.

Nick Jennings: Now I'd like to turn the call over to Nick Jennings for his final call to provide our quarter one financials.

Speaker Change: Nick has resigned due to personal health and family issues.

Joe Receptor: He will be replaced by Joe receptor.

Joe Receptor: Joe has been our senior Vice President of Finance and senior controller for our company for five years, you'll be able to welcome Joe during our next earnings call Nick plans to stay on as a part time basis as a consultant to assist with some of the finer aspects of filing Q's and k's.

Joe comes from a strong background in financial reporting and both public and private companies, including a long stint in an aviation company, we all wish Joe and Nick the best of luck in their new positions at telling me.

Halden Stuart Shane: You'll be able to welcome Joe during our next earnings call. Nick plans to stay on a part-time basis as a consultant to assist with some of the finer aspects of filing Qs and Ks. Joe comes from a strong background in financial reporting in both public and private companies, including a long stint in aviation. We all wish Joe and Nick the best of luck in their new positions at TOMI. Now I'll turn the call over to you.

Speaker Change: Now I'll turn the call over to Nick.

Nick Jennings: Thank you, Dr. Shane, and good afternoon everyone. I'll provide a brief overview of our financial results for the first quarter of 2024 compared to the same prior year period. For the three months ended March 31st, 2024 compared to March 31st, 2023, our consolidated net revenue was $1,114,000 compared to $1,582,000, and consolidated gross profit was 60.2% compared to 59.5%. The increase in gross profit was due to our product mix and sales. Consolidated operating loss was 1,226,000 compared to 1,188,000. Our consolidated net loss was $1,310,000, or $0.07 per basic and diluted share, compared to $1,187,000, or $0.06 per basic share.

Thank you Doctor Shannon and good afternoon, everyone I'll provide a brief overview of our financial results for the first quarter of 2024 compared to the same prior year period.

Nick: For the three months ended March 31, 2024 compared to March 31, 2023, our consolidated net revenue was $1 million 114000 compared to 1.582 million.

Elissa Jessica Shane: Consolidated gross profit was 62% compared to 59, 5%.

Elissa Jessica Shane: The increase in gross profit was due to our product mix and sales.

Elissa Jessica Shane: The consolidated operating loss was 1.226 million compared to $1 million 188000.

Elissa Jessica Shane: Our consolidated net loss was 1.310 million or seven cents per basic and diluted share compared to $1 million 187000, or six cents per basic share.

Nick Jennings: Moving on to the ballot sheet, as of March 31st, 2024, our cash and cash equivalents were approximately $1.1 million, working capital was $6.6 million, and our shareholder equity was $7.1 million.

Elissa Jessica Shane: Moving onto the balance sheet.

Elissa Jessica Shane: As of March 31, 2024, our cash and cash equivalents were approximately $1 1 million.

Elissa Jessica Shane: Working capital was $6 6 million and our shareholder equity was $7 1 million.

Elissa Jessica Shane: As.

Nick Jennings: As Dr. Shane mentioned, this is my last call with the company, and I just wanted to take a quick minute to thank Dr. Shane for giving me the opportunity to work here. It's been an honor and a pleasure. I also wanted to thank the board, employees, and everyone involved with this company. I wish you all the absolute best moving forward, and I know we'll continue on our mission to make the world a safer place. Now, I'm going to turn the call over to EJ Shane to provide insight on the current company activities.

Elissa Jessica Shane: As Doctor Shane mentioned this is my last call with the company and I just wanted to take a quick minute to thank doctor Shane for giving me the opportunity to work here.

Elissa Jessica Shane: It's been an honor and a pleasure.

Elissa Jessica Shane: And.

I also wanted to thank the board.

Speaker Change: Employees and everyone involved with this company.

Elissa Jessica Shane: I wish you all the absolute best moving forward and I know, we will continue on our mission to make the world a safer place now I'm going to turn the call over to EJ Shang to provide insight on our current company activities.

EJ Shang: Yeah.

Elissa Jessica Shane: Thank you, Nick, and good afternoon, everyone. I would like to provide everyone with some context around our strategic progress. While Q1 revenue was lower than we expected, our pipeline is strong and healthy, and it includes companies across multiple end markets. We are very focused on executing against the key objectives that we laid out in the April call. These objectives include closing more CES sales and ensuring that current custom installations generate the anticipated BITS solution revenue, driving traction for our SIS, or Stereo Misintegrated Systems, fostering repeat business with OEMs of decontamination enclosures, growing IHP corporate service revenues, and expanding sales of our mobile equipment to both existing and new customers and to our worldwide distribution network. Let's take each of these points separately.

Elissa Jessica Shane: Thank you Nick and good afternoon, everyone.

Elissa Jessica Shane: I would like to provide everyone with some context around our strategic progress.

Elissa Jessica Shane: While our quarter, one revenue was lower than we expected our pipeline is strong and healthy and it includes companies across multiple end markets.

Elissa Jessica Shane: We are very focused on executing against the key objectives that we laid out in the April call.

Speaker Change: These objectives include closing more C E S L and ensuring that current customer installations generate the anticipated bit solution revenue.

Speaker Change: Driving traction for our SaaS service integrated system, fostering repeat business with Oems, a decontamination and closures.

Speaker Change: IHT corporate service revenues and expanding sales of our mobile equipment to both existing and new customers and to our worldwide distribution network.

Speaker Change: Let's please take each of these separately.

Elissa Jessica Shane: In February, we secured a new contract with a California-based life sciences company for the installation of a Thermos IHP-CES valued at approximately $600,000. This system, equipped with six applicators, is slated for integration into a clinical suite by the end of the third quarter of 2024, and the project remains as scheduled. Upon full functionality, we anticipate all current CES installations to collectively yield approximately $600,000 in BITSolution revenue.

Speaker Change: In February we secured a new contract with the California based life Sciences company for the installation of a stern Ms. IH B C. S valued at approximately 600000.

Speaker Change: This system is equipped with six applicators is slated for integration into a clinical suite by the end of the third quarter and 2024 and the project remains as scheduled.

Upon full functionality, we anticipate all currency S installation to collectively yield approximately $600000 in bed solution revenue.

Elissa Jessica Shane: This is based on current customer schedules and assuming these production and manufacturing schedules do not change. In addition, we expect two additional CES contracts to close in the very near future for similar builds as the California company I just referenced, with delivery schedules for Quarter 4 of 2024 and Quarter 2 of 2025. We have implemented enhanced internal operational methods to monitor and support our customers with these installations, as they require a different level of support than our mobile devices. Obviously, the faster they can get these larger systems installed, the sooner we can support these systems with suitable solutions. The SIS products are, in essence, a CES on a smaller scale, the decontamination of enclosures.

Speaker Change: This is based on current customer schedules and assuming these production and manufacturing schedules do not change.

Speaker Change: In addition, we expect two additional C S contracts to close in the very near future for similar billed as the California Company I, just referenced with deliveries scheduled for quarter for F. 'twenty 'twenty four and quarter two 2025.

Speaker Change: We have implemented enhanced internal operational methods to monitor and support our customers with these installations as they require a different level of support than our mobile devices.

Speaker Change: Honestly the faster they can get these larger systems installed the sooner we can support these systems with that solution.

Speaker Change: The SaaS products are in essence, a CES on a smaller scale the decontamination of enclosures.

Elissa Jessica Shane: Its significance lies in enhancing TOMI's reputation as a versatile and user-friendly decontamination solution technology. The ability to offer quick and effective solutions for Biological Safety Cabinets, or BSCs, decontamination chambers, and various other enclosures will lead to long-term financial rewards. These scalable models are in high demand, as we are currently engaged in many communications on this matter. And I do acknowledge the repetition from our previous update in April on our SIS product line. We must work with many parties, first in the design and assembly, then in the testing and cycle developments, and finally in the registration procedures to ensure data and compliance of each solution.

It's significant flies and enhancing <unk> reputation as a versatile and user friendly decontamination installation technology the ability to offer quick and effective solution for biological safety cabinets or BSC decontamination chambers and various other enclosures will lead to long term financial rewards.

Speaker Change: These scalable model are in high demand as we are currently engaged in many communications on this matter and I do in college the repetition for my previous update in April on our SaaS product lines, we must work with many parties for some of the design and Assembly then a testing cycle developments and finally, the registration procedures to ensure the data and complaints as easily.

Speaker Change: Sure.

Elissa Jessica Shane: However, I am pleased to announce significant advancements with four distinct manufacturing companies. Our in-house service team is performing extremely well. IHB service revenue serves frequently as our primary introduction to organizations and leads to repeat orders. As mentioned, service revenue increased by 21% in Q1 of this year.

Speaker Change: However, I am pleased to announce significant advance advancement with four distinct manufacturing company.

Speaker Change: Our in House service team is performing extremely well IH be service revenue service frequently other primary introductions organizations and leads to repeat orders.

Speaker Change: I've mentioned service revenue increased by 21% in quarter one of this year.

Elissa Jessica Shane: I am also pleased to report IHP service opportunities have increased significantly this quarter, some resulting in six-figure sales. These opportunities typically offer clearer revenue forecasts and expedited sales cycles, often tied to prompt decontamination needs. More importantly, to report is that we are witnessing a significant shift in the decontamination service market, presenting us with a substantial number of opportunities. As stated throughout last year, we brought a distribution network to the United States to join our worldwide distribution network.

Speaker Change: I'm also pleased to report IHT service opportunities have increased significantly this quarter, some resulting in six figure sales.

Speaker Change: These opportunities typically offer clear revenue forecast and expedited sales cycles, often tied to prompt decontamination neat.

Speaker Change: More importantly to report is that we are witnessing a significant shift in the decontamination service market presenting us with a substantial amount of opportunity.

Speaker Change: As stated throughout last year, we brought a distribution networks in the United States to join our worldwide distribution network.

Elissa Jessica Shane: Allow me to share an update on some of our partners around the world. ARIES Distribution is handling the 2025 CES build opportunity mentioned earlier, along with one of our high-value IHP service decontamination projects scheduled for this summer. Moreover, they are exploring numerous opportunities for their existing inventory, including potential additional sales to end-users in the United States. One of these opportunities will be by an independent agency of the U.S. government, which when approved to publicly share, will be particularly exciting to announce.

Allow me to share an update on some of our partners around the world.

Speaker Change: There is distribution is handling the 2025 C. S build opportunity mentioned earlier, along with one of our high value I H P service decontamination projects scheduled for this summer.

Speaker Change: Moreover, they are exploring numerous opportunities for their existing inventory, including potential additional sales to end users in the United States.

Speaker Change: One of these opportunities will be by an independent agency of the U S government, which went up proved to publicly share will be particularly exciting to announce.

Elissa Jessica Shane: Technium Out in Canada has a robust pipeline within the EMS industry, featuring seven opportunities, each involving purchases of double-digit STERIPAKs or transport units. The status of these opportunities varies, ranging from budgeting processes to presentation sub-room management, or the need for contracts to be finalized with current suppliers before proceeding with sterilization. Emitech in Malaysia remains optimistic about four bids tailored specifically for Ceramis with the anticipation of securing the first contract soon. Another international bid tailored for Sterimids for shipment to Africa via the U.S. Embassy is set to close by the end of this month for 10 Steripak devices and associated accessories.

Technium out in Canada has a robust pipeline within EMS industry, featuring seven opportunities each involving purchases of double digits, there packs or transport units.

Speaker Change: Status of these opportunities vary ranging from budgeting processes, so presentation stubborn management or the need for contracts to be finalized with current suppliers before proceeding with sterling.

Speaker Change: AMETEK in Malaysia remains optimistic about four beds tailored specifically for service with the anticipation of securing the first contracts soon.

Speaker Change: Another international bid tailored for steroids for shipments to Africa via the U S. Embassy is set to close by the end of this month for 10 sterile pack devices and associated accessories.

Elissa Jessica Shane: IBD in Italy, having placed their initial order last quarter, engages with us frequently to explore partnerships aligned with our SIS strategy and beyond. Universal Disinfection in Germany continues to cultivate its pipeline. They've also expanded their focus from life sciences and aviation to include the food safety market. We eagerly anticipate formal EU registration, which will unlock significant sales opportunities for our key European distributors. Tekin and Turkey maintain a biannual purchase pipeline with their second order slated for the end of 2024.

Speaker Change: IBD in Italy, having placed their initial order last quarter engages with us frequently to explore partnerships aligns with our strategy and beyond.

Speaker Change: Universal Disinfection in Germany continues to cultivate their pipeline.

Speaker Change: Standard their focus from life Sciences and aviation to include the food safety market.

Speaker Change: We eagerly anticipate formal EU registration, which will unlock significant sales opportunities for our key European distributors.

Speaker Change: Second in Turkey, and maintains a biannual purchase pipeline with their second order slated for the end of 'twenty 'twenty four.

Elissa Jessica Shane: Additionally, we recently onboarded a new distributor in India, STS Technocraft, comprising three directors with 35 years of collective experience in technical consumable sales. Their clientele includes notable names such as Sanofi, Mylan, and Sun Pharma. This overview covers 7 of the 30 plus active partners we collaborate with.

Speaker Change: Additionally, we recently on boarded a new distributor in India S. T. S technocrat comprising of three directors with 35 years of collective experience and technical consumable sales. Their clientele includes notable names such as Sanofi Mylan and Sun pharma.

Speaker Change: This overview covers a seven of the 30 plus active partners, we collaborate with.

Speaker Change: Yeah.

Elissa Jessica Shane: Lastly, I'd like to touch upon our confidence in the pipeline, particularly in capital equipment mobile purchases. As Dr. Shane mentioned earlier, our presence at Interfects in April was impactful, facilitating interactions with current and prospective customers leading to hundreds of quality leads, as well as valuable face time with our partners, several of whom I provided updates on today. Many of the new leads will lead into future projects and sales, while also serving as a platform to introduce our latest products, namely the SIS SA, or Standalone, and the NV+, both of which were well received.

Speaker Change: Lastly, I'd like to touch upon our confidence in the pipeline, particularly in capital equipment mobile purchases.

Elissa Jessica Shane: While feedback is always wide-ranging, both items have already been quoted for opportunities identified at the show, and they were all in agreement with the necessity of these applications. Remarkably, this was the first time our participation at a trade show resulted in immediate requests for quotes, even before dismantling our booth.

Speaker Change: As Dr. <unk> mentioned earlier, our presence at intersect in April was impactful facilitating interactions with current and prospective customers leading to hundreds of quality leads as well as valuable face time with our partners several of whom I provided updates on today.

Speaker Change: Many of the new lease will lead in the future projects in sales, while also serving as a platform to introduce our latest products, mainly that's I S. S, a or standalone and the N b, plus well, which were well received.

Speaker Change: Feedback is always wide ranging both items have already been quoted opportunities identified at the show and they were all were in agreement with the necessity of these applications.

Speaker Change: Remarkably this is the first time our participation at a trade show resulted in immediate request for quote even before dismantling our but some.

Elissa Jessica Shane: Some of these budget approvals align with upcoming summer initiatives. Furthermore, in the second half of 2023 and this year, we intensified our proactive approach to disinfection in the commercial and healthcare sectors, emphasizing the importance of routine disinfection beyond the lessons of any pandemic. To expedite this process, we're developing an educational platform tailored for all our TOMI Service Network members, as well as service providers and internal departments at healthcare facilities meeting a

Speaker Change: Some of these budget approvals align with upcoming summer initiatives.

Speaker Change: Furthermore, the second half of 'twenty 23, and this year, we're intensified our proactive approach to disinfection in commercial and health care sectors.

Speaker Change: Besides the importance of routine disinfection beyond the lessons of any pandemic.

Speaker Change: To expedite this process, we're developing an educational platform tailored for all our tell me service network members.

Speaker Change: As well as service providers and internal departments to health care facilities meeting a specified criteria.

Elissa Jessica Shane: The StairMist Pro Certified Program remains a significant step towards industry excellence. As a recap, our aim is to establish a standard that reflects a commitment to continuous improvement, adherence to evolving disinfection and biohazard response standards, and dedication to setting benchmarks in the field. Central to our mission is ensuring that the SPC program resonates with consumers by placing their needs at the forefront, portraying the certification as user-centric rather than STEREMA-centric. The program seeks to ensure certified entities worldwide are equipped to deliver disinfection and decontamination while prioritizing public health, safety, and environmental sustainability. I will now turn the call back to Dr. Shane for closure.

Speaker Change: The Stern Ms Pro certified program remains a significant step towards industry excellence as.

Speaker Change: As a recap our aim is to establish a standard that reflects our commitment to continuous improvement adherents to evolving disinfection of Biohazard response, norm and dedication to setting benchmarks in the field.

Speaker Change: So our mission is ensuring that the SPC program resonates with consumers by placing their needs at the forefront powertrain certification as user centric rather than staring with centric.

Speaker Change: The program seeks to ensure certified entities worldwide.

Speaker Change: We're equipped to deliver disinfection decontamination, while prioritizing public health safety and environmental sustainability.

Speaker Change: I will now turn the call back to Dr. Shane for closure.

Halden Stuart Shane: Thank you, EJ and Nick. We continue to think outside of the box and find new markets for our Sturry Mist IHP technology. And I encourage the company itself to think further out of the box because there are a lot of these opportunities available. So the biofuel industry is just one that has a high incentive to obtain better alternative biofuels. IHP is known to be the fastest and the second strongest oxidizer known to man, which may be able to be applied in the conversion of cellulose and bile.

Elissa Jessica Shane: Thank you.

Speaker Change: And Nick.

Elissa Jessica Shane: Good.

Elissa Jessica Shane: We continue to think out of the box and find new markets for our story, Mr. IH Pee technology.

Speaker Change: And I encourage the company itself to think further out of the box because theres a lot of these opportunities available.

Speaker Change: So the biofuel industry is just one that has a high incentive to obtain better alternative biofuel IH P is known to be the fastest and the second strongest oxidizer known to man.

Speaker Change: Which may be able to be applied in the conversion of cellulose and biofuels.

Halden Stuart Shane: We're also in the early stages of marketing our Sterimis technology to be used in the decontamination process in the server farm industry and data centers. One of the largest areas of the new infrastructure spend over the next 1 to 5 years will be data centers. Major tech companies are pouring $1 trillion into data centers over the next five years, and third-party data center operators are one of the many beneficiaries of this AI boom. These data centers will need high-level disinfection to maintain the levels of cleanliness that are needed to sustain their centers.

Speaker Change: We're also in the early stages of marketing or starting this technology to be used in the decontamination process in server farm industry and data centers one of the largest areas of the new infrastructure spend over the next 1251 to five years as data centers major tech companies are pouring.

Speaker Change: One trillion dollars into data centers over the next five years.

Speaker Change: Third party data center operators are one of the many beneficiaries of this AI boom.

Speaker Change: These data centers will need high level disinfection to maintain levels of cleanliness that is needed to sustain their centers equipment.

Halden Stuart Shane: We will keep our shareholders up to date in our endeavors to spread the application in as many verticals as possible. Thank you for your time today. Stay tuned. I'll open the call to questions and answers.

Speaker Change: We will keep our shareholders up to date in our endeavors.

Speaker Change: Spread the application and there's many verticals as possible. Thank you for your time today stay tuned I'll open the call to questions and answers at this time.

Operator: At this time, we will conduct the question and answer session. If you would like to ask a question, please press star, then number one on your telephone keypad now, and you will be placed in the queue in the order received. Once again, to ask a question, press star, then the number one on your telephone keypad now. One moment while we compile the Q&A roster. Your first question comes from Adam Halshier with Halshier Capital. Your line is open.

Speaker Change: At this time, we will conduct a question and answer session. If you would like to ask a question. Please press Star then the number one on your telephone keypad now and you will be placed in the queue in the order received.

Once again to ask a question press Star then the number one on your telephone keypad now.

Speaker Change: One moment, while we compile the Q&A roster.

Speaker Change: Your first question comes from Adam Hall, China with half Shire capital. Your line is open.

Adam Halshier: Hey, thanks for taking the question. Regarding the $2 million allocation from the Department of Homeland Security for the purchase of the 16 systems, can you clarify the expected timeline for revenue recognition from the contract?

Adam Hall: Hey, Thanks for taking the question.

Adam Hall: Regarding the 2 million allocation from the department of Homeland Security.

Adam Hall: For the purchase of 16 systems can you clarify the expected timeline for revenue recognition from the contract.

Halden Stuart Shane: So they're going to decontaminate Plum Island, and I believe it has to be formed at the end of the first or second quarter of 2025. So I would have to think that the budget itself and the purchase order would come in somewhere in the fourth quarter of this year.

Speaker Change: Sure so they're going to decontaminate Plum Island, and I believe it has to be performed in the first.

Speaker Change: <unk> ended the first or second quarter of 25, So I would have to think that the budget itself and the purchase order would come in somewhere in the fourth quarter of this year.

Adam Halshier: Got it, got it. Thank you. And then just one more.

Adam Halshier: Can you provide a bit more color on the growth of the CES business and how that impacts the razor razor blade model? Is it true that CES customers are more dependable on the users of the high margin, dependable on the users of the high margin bid solution?

Speaker Change: Got it got it. Thank you and then just one more keep Fred a bit more color on the growth in the CES business and how that impacts the razor razorblade model the truth I kind of see as customers are more dependable on these is the high margin.

Speaker Change: It depends more on the uses of the high margin fit solution.

Halden Stuart Shane: Question? Yeah, so, once we're in this marketplace where we are building these devices for lots of money for major players in both the life sciences and pharmaceuticals space, and even though the usage of solutions in this space isn't as great as, for example, if you're out spraying them every day in a hospital, it's consistent, and we can start going ahead and putting together reports on what we anticipate our solution orders to be going forward. So I think that's a breakthrough for the company, and we have a tremendous pipeline of interested life science professionals, companies, Bavarians, universities in these areas with whom we're very happy.

Speaker Change: Question.

Speaker Change: Yeah. So once we were in this marketplace, where we are building these devices for lots of money for a major players in both the life Sciences Pharmaceuticals Bavarian space.

Speaker Change: And even though the usage of solution in this space isn't as great as a for example, if you're out spraying. It every day in a hospital, it's consistent and we can start going ahead and putting together a reports on too.

Speaker Change: What we anticipate our solution orders to be going forward.

Speaker Change: So I think that's a breakthrough for the company and we have a tremendous pipeline in interested a life science.

Speaker Change: <unk> companies Bavarians universities.

Speaker Change: In these areas that we're very happy about.

Adam Halshier: Got it, got it. Okay, great. Thank you. That's all for me.

Speaker Change: Got it got it okay, great. Thank you that's all for me.

Speaker Change: Yeah.

Speaker Change: Yeah.

Operator: Once again, to ask a question, please press star, then the number 1 on your telephone keypad now. Your next question comes from John Nelson, shareholder. Your line is open.

Speaker Change: Once again to ask a question. Please press Star then the number one on your telephone keypad now.

Your next question comes from John Nelson shareholder Your line is open.

John Nelson: Hi to all of you and thanks for the Incredible that such a small company has so many opportunities in front of it, in my opinion. But, you know, the cash position looks, looks low. Is the current cash position of the company enough to get it to profitability, in your opinion?

Speaker Change: Hi.

John Nelson: To Oh, all of you and thanks.

John Nelson: For for the summary.

The yes.

Speaker Change: Incredible that Suntrust com.

Speaker Change: The company has.

Speaker Change: So many opportunities in front of it.

Speaker Change: In my opinion.

Speaker Change: You know the.

Speaker Change: Our cash position looks.

Speaker Change: Looks loan is the cash the current cash position of the company.

Speaker Change:

Speaker Change: Enough to get you to profitability in European Union.

Halden Stuart Shane: It might get us to profitability, but we're going to be looking for some cash. We need to make this company larger. And in order to take the opportunities that we have and turn them into revenue, we're going to have to build on the company. So I think that's the best way to answer it. So it's definitely a possibility.

Speaker Change: But it might get us to profitability, but we're going to be looking for some cash as we we need to make.

Speaker Change: This company is larger.

Speaker Change: And in order to take the opportunities that we have and turn them into revenue, we're going to have to build on the company.

Speaker Change: So you know.

Speaker Change: That's the best way to answer it so it's definitely a possibility.

John Nelson: Okay, are you investigating a bank line of credit, or do you already have one? Locked up.

Speaker Change: Okay are you investigating bank line of credit or do you already have one.

Speaker Change: Locked up.

Halden Stuart Shane: No, we don't. We're investigating a lot of sources.

Speaker Change: No. We don't we're we're investigating a lot of sources.

Halden Stuart Shane: Okay, thanks, the note holders that we initially dealt with in November, actually September of last year, who are interested in furthering the line of credit. You mentioned the two CES systems that were delivered in 2022 that are cleared now to start up and should start up in the fourth quarter of this year. Can you explain why it took so long or is going to take so long to get those systems started up?

Speaker Change: Okay. Thank you.

Speaker Change: If we do have the note holders that we initially.

Speaker Change: Mhm dealt with in November September really last year that are interested in further in the line of credit and that also.

Speaker Change: Okay.

Speaker Change: Mentioned the.

Speaker Change: Two CES systems that were delivered in 2022.

Speaker Change: Our cleared now to start up and should start up at the in the fourth quarter of this year.

Speaker Change: Ken.

Speaker Change: Can you explain why it.

Speaker Change: It took so long where it's going to take so long to get the system started up.

Halden Stuart Shane: Yeah, John, I mean, you know, this is the frustrating part of the business. So these large companies spend hundreds of thousands of dollars, and they put these systems into place. Then they have to go through qualifications and validations, and, you know, many times they buy the units, and they don't even move into their facilities for a year. And sometimes they can't even validate them for two years. So it's good news that this very, very large pharmaceutical facility is now qualifying their two units and will shortly be receiving revenue from their solution.

Ken: Yeah, John I mean, you know this is the frustrating part of the business. So these large companies spend hundreds of thousands of dollars and they've put these systems into play then they have to go through qualification and validation.

Ken: And you know many times they buy the units and they don't even move into their facilities for a year.

Ken: And sometimes they can't even validate them for two years. So it's good news that this very very large pharmaceutical.

Ken: Facility is now qualifying their two units and shortly we'll be receiving revenue from their solution use.

Ken: Okay.

Ken: Hum.

John Nelson: Okay. And let's see... The, All right. One of the things that you mentioned on the year-end call that we were investigating Fentanyl testing. [inaudible] Any comments on that?

Ken: And let's see.

Ken:

Ken: The.

Ken: Uh huh.

Ken: One of the things that from the yearend call that you had mentioned or.

Ken: Investigating.

Ken:

Ken: Panel testing.

Correct.

Ken: Any comments on that.

Halden Stuart Shane: Not yet. We have a couple sources that are investigating it. I think we'll definitely be able to neutralize it. Ones that are, one's going to take a little longer because it's involved in the military and nothing happens quickly, and the other one is within our service end, so we might have some data related to it.

Speaker Change: Not yet we have a couple of sources that are are investigating at a I think it will definitely be able to neutralize it.

Speaker Change: The.

Speaker Change: Ones that are one is going to take a little longer because it's an evolved in the military and.

Speaker Change: Nothing happens quickly and the other one is within our service and so we might have some data relatively soon.

John Nelson: Okay, also. And what kind of roles do you have any ideas on what kind of roles a ceramist could play in?

Speaker Change: Okay.

Speaker Change: Also.

Speaker Change: What kind of do you have any I am.

Speaker Change:

Speaker Change: Our ideas on what kind of room, there Jeremy could play in.

John Nelson: PFOS and PFOA treatment

Speaker Change: <unk> and people with a treatment.

Speaker Change:

Halden Stuart Shane: Again, if we were a much larger company, we could focus on that. I know it's a big, big industry, and it's a big problem in the world. I think a lot has to do with soil and plants and, of course, water and air contaminants. They're finding these traces everywhere in humans and everything. It's a big issue, and, again, we wear many hats within the size of our company and do as much as we can, but we're still looking into it.

Speaker Change: Again.

Speaker Change: If we were a much larger company, we could focus on that I know, it's a big big industry and it's a big problem in the world.

Speaker Change: You know I think a lot has to do with soil and plants and of course water and.

Speaker Change: And air contaminants, they're finding these traces everywhere in humans and everything so.

Speaker Change: Yeah, it's a it's a big issue.

And you know where you.

Speaker Change: Again, we're wearing a lot of hats within the size of our company and doing them as much as we can but you know what.

Speaker Change: We're still looking into it.

John Nelson: Okay, and also from the year-end call, you mentioned the U.S. Department of Biological Select Agents and Toxins Bio-Risk Program Office completed a study that demonstrated Sterimis is an effective technology for decontaminating biological toxoids. And my question is, might this possibly lead to... down the road to government stockpiles of ceramics, dispensers, and solutions for emergency purposes?

Speaker Change: Okay and N P and also from there.

Speaker Change: Year end call you mentioned the.

Speaker Change: U S apartment on biological select agents in tax and spinal risk program office complete.

Speaker Change: <unk> completed a study which demonstrates deramus isn't effective.

Technology for Decontaminating biological Tactfully and my question is how might this possibly lead to.

Speaker Change: Down the road to government stockpiling of ore.

Speaker Change: Ceramist dispensers and solution for emergency purposes.

Speaker Change:

Halden Stuart Shane: We sure could if they thought like you and I are thinking now. We just, you know, when did we say that we said that at the end?

Speaker Change: Sure could if they thought like you and I are thinking now we just you know when was when was when did we say that we said that for the last at the end of last year.

Halden Stuart Shane: It was in the call last year, the Q4 call. Thank goodness they received the final signed off paper and certification. Like I said, patience is key.

Speaker Change: Yeah.

Speaker Change: Yeah. It was in the call last year from now.

Speaker Change: Now the Q4 call.

Mei: So this is Mei, we just finally and.

Mei: Thank goodness to them receive the final signed off paper and service reputation our Hopkins suites.

Mei: Okay.

Halden Stuart Shane: Like I said, patience is a virtue.

Mei: Like I said patience is a virtue.

John Nelson: Um, any updates on food, produce, food, produce, produce. Hospital cleaning, or you've mentioned the data centers, also semiconductor plants?

Speaker Change: [laughter] any update on it.

Speaker Change: Experiments.

Speaker Change: For food produce.

Speaker Change: Produce produce produce.

Speaker Change: Hospital cleaning or.

Speaker Change: You've mentioned the data centers also semiconductor plant.

Halden Stuart Shane: Not anything other than what I just mentioned. So we are still, and we renewed an agreement with USDA, to continue their research in some specific targeted areas that we're interested in. And they always come up with some really good papers, which you can pick up on the web and any listeners can go ahead and review for food safety and Pathogen Kill. We're also going to be working with them further on residuals and applications in other areas of the food supply.

Speaker Change: Not anything other than what I just mentioned so we are.

Speaker Change: Still we renewed our agreement with U S D a.

Speaker Change: To continue their research and some specific targeted areas that we're interested in.

Speaker Change: And they are and they always come up with some really good papers, which you can pick up on the web and any listeners can go ahead and review on food safety and.

Speaker Change: And pathogen kill.

Speaker Change: We're also gonna be working with them further on residuals and applications in other areas of the food supply.

Halden Stuart Shane: We're getting a lot of interest in food safety, as I think we should. You know, I read a paper today that Bill Gates is spending $26 million to control farts and burps from cows. So, I think that we could hook them all up with stirrup packs and figure that out.

Speaker Change: We're getting a lot of interest in food safety as I think we should.

Speaker Change: You know I I'm just.

Speaker Change: Yeah, I read a paper today that bill gates is spending $26 million to control parts and burps from cows.

Speaker Change: So I think that we could hook them, all up with star impacts and figure it out.

Speaker Change: That's funny.

Speaker Change: Okay.

Speaker Change: And in that way.

John Nelson: Okay, have you had any inquiries from any companies about... [inaudible] animals with the, or I should say animals or their environments to prevent bird flu?

Speaker Change: Have you had any inquiries from any companies about.

Speaker Change: Trading.

Speaker Change:

Speaker Change: Animals with the or I should say animals for their environment.

Could prevent bird flu.

Halden Stuart Shane: We are getting some interest, and we are marketing that because I believe that we can help with the control of avian flu and possibly prevent the culling of millions and millions of birds if they follow a protocol using our product. You know, and my whole stance on these avian flus, which have been going on for years, especially with H5N1, has been that. If they're going to cull all these animals, why don't they try something that may help them survive? You know, and I think that's... eventually, somebody will come up and say, yeah, let's go ahead and do a program and experiment in this area.

Speaker Change: We are getting some interest and we are marketing that because I believe that we can help with the control of avian flu and possibly prevent the choline have millions and millions of birds.

Speaker Change: They follow a protocol using our product.

Speaker Change: You know in my whole stance has been about these avian flu, which have been going on for years, especially as H five N. One has been that.

Speaker Change: You know if they're going to call. All these animals you know why don't they try something that may help them survive.

Speaker Change: You know and I think that's a.

Speaker Change: Eventually somebody will come up and say yeah. Let's go ahead and do a program an experiment in this area.

Speaker Change: Okay.

John Nelson: Good. Well, that's all of my questions.

Speaker Change: Alright, well that someone with my question. Thanks, very much. Thanks, John Thanks for your support.

John Nelson: Thanks very much. Thanks, John. Thanks for your support.

Halden Stuart Shane: Thanks, John. Thanks for your support.

Speaker Change: Yeah.

Operator: At this time, I would like to turn the call back to management for any further remarks. I just want to thank everybody.

Speaker Change: At this time I would like to turn the call back to management for any further remarks.

Operator: I just want to thank everybody for joining us today. I want to thank Nick for his support of the company. And with that, I say goodnight. This concludes today's TOMI Environmental Solutions First Quarter 2024 Financial Results.

Speaker Change: Well I just wanted to thank everybody for joining today and.

Speaker Change: Thanks, Nick for his support and everything he's done for the company.

Speaker Change: With that I say goodnight.

Speaker Change: Yeah.

Speaker Change: This concludes today's Tony Environmental solutions first quarter 'twenty 'twenty four financial results conference call. Thank you for attending have a wonderful rest of your day.

Operator: This concludes today's TOMI Environmental Solutions first quarter 2024 financial results conference call. Thank you for attending. Have a wonderful rest of your day.

Speaker Change: Hum.

Speaker Change: Hum.

Speaker Change: Okay.

Speaker Change: [music].