Thank you for joining us today for the TOMI Environmental Solutions Investor Update Conference Call. On today’s call is TOMI’s CEO and Chairman of the Board, Dr. Halden Shane, who will provide an overview of recent business highlights for the most recent quarter.

TOMI’s CFO, Nick Jennings, will follow-up and discuss critical financial benchmarks before addressing any questions you may have. A telephone replay of today’s call will be available through August 20, 2020, the details of which are included in the company’s press release of August 7, 2020.

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 of which it was recorded, August 13, 2020, and you are therefore, advised that time sensitive information may no longer be accurate at the time of any replay.

Certain written or oral statements made by management of TOMI may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are identified by such words and phrases as we expect, expected to, estimates, estimated, current outlook, we look forward to, would equate to, projects, projections, projected to be, anticipates, anticipated, we believe, could be, and other similar phrases.

All statements addressing operating performance, events, or developments that the company expects or anticipate will occur in the future, including statements relating to the revenue growth, earnings, earnings per share growth or similar projections, are forward-looking statements within the meaning of the Reform Act.

They are forward-looking and they 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. I will now proceed to get the call to TOMI’s CEO and Chairman of the Board, Dr. Halden Shane. Sir, the floor is yours..

Thank you. Hello, everyone. Welcome to TOMI Environmental Solutions second quarter 2020 earnings call. With me today is a Chief Financial Officer, Nick Jennings, who will lead us into our second quarter 2020 financial results.

But first, I’ll discuss an overview of recent developments and ongoing efforts of the SteraMist brand as sales and earnings were robust and consistent with our expectations across our current divisions, Hospital-HealthCare, Life Sciences, TOMI Service Network, also known as TSN, and Food Safety.

In fact, new channels were opened, as we saw a substantial increase in many commercial verticals, such as automobile, marine, aviation, medical first responders and medical transportation, police, fire, prisons and the education industries purchasing SteraMist directly and implementing SteraMist into their daily cleaning protocols.

Thus far in 2020, TOMI has excel at maintaining seamless operations, adapting to this ever changing and new world we all live in.

As a leading provider in disinfection decontamination, TOMI is in a strong position to play a leading role battling COVID-19 and continue to be the leading provider wherever we exit the current COVID-19 environment and move into the next normal. We are posed to finish 2020 in a stronger competitive position as we become the industry standard.

Our focus remains on maximizing our post-COVID traction to continue to drive growth and profit as a leading provider in disinfection and decontamination. We have substantially increased our customer lists in the first half of the year. Globally, we added 87 new customers and have trained approximately 150 users in the second quarter.

This is a 358% increase over the second quarter of 2019. Total revenue for our second quarter was a record quarter for TOMI, with over $10 million, an increase of over $8 million or 512% when compared to the end of the second quarter of 2019.

As reported during our last call, the first quarter of 2020 was a record breaking quarter for TOMI and our second quarter of 2020 for TOMI was another record breaker. As we saw a 42% growth over our great first quarter, we are thrilled to have reached the $10 million mark for the quarter.

We reported on the prior call, due to the strong demand we required a 50% deposit on all machine orders, which brought our revenue to around $8 million for the first seven weeks, all those orders have been shipped. Our revenue model is similar to the razor, razor blades, as our recurring revenue is BIT solution reorder.

Our second quarter BIT solution revenue increased a record 1,082% quarter-over-quarter. We expect our BIT solution revenue growth to continue to surge, as TOMI expands its customer base and SteraMist is deployed as a disinfectant and decontamination solution.

And as I stated in our press release early in the second quarter, as we continue forward during these difficult times, we are committed to keeping pace with increased demand across the Board, ensuring that those on the frontlines of the fight against SARS CoV-2 virus are well-equipped with our technology and solution remains our number one priority.

SARS CoV-2 was the launching point for TOMI products and services in the market and we’ll continue to see TOMI products recognized as the industry standard in disinfecting decontamination. We expect that the adoption of our products and services will continue to be that standard in a post-COVID-19 era.

Several other key initiatives took place to-date in 2020, expanding current and securing new intellectual property and product registration, increasing personnel thus expanding operational departments and implementing additional quality control and adding an additional overseas manufacturer.

As previously reported, our product is qualified to meet the EPA emerging viral pathogen guidance, the novel Coronavirus that causes COVID-19. The EPA emerging viral pathogen label is important, because the occurrence of emerging viral pathogens is less common and predictable than established pathogens.

There are currently no other EPA registered combine technology solutions with a Hospital-HealthCare disinfectant labeling claims against COVID-19 that are on the EPA list and for emerging viruses or pathogen.

Keep in mind, our foundation was built on binary ionization technology, BIT, solution that was developed by DARPA for the fight against weaponized anthrax spores and use exclusively in tandem with SteraMist equipment including the surface unit and the environment unit.

Both are currently listed on TOMI’s EPA label and further amended to include emerging viral pathogen claims, thus meeting the criteria against envelope viruses and large non-envelope viruses.

It is also listed on EPA’s list G for Norovirus, H for MRSA, K for C.difficle, L for Ebola, M for avian flu or influenza, and N for emerging viral pathogens, including SARS CoV-2, TOMI maintains this registration 50 states, Canada and approximately 33 other countries.

So those of you who are new to the disinfection industry and/or our SteraMist brand of products and BIT solution, TOMI SteraMist is a leading provider in this industry due to our superior technology as the only disinfection decontamination product that encompasses all of the following advantages, faster room turnover, ability to disinfect the hardest to reach smallest of areas, a non-corrosive product with superior material compatibility and with proven six-log or higher efficacy.

All meet the FDA requirements for an emergency utilization review application for reprocessing of N95 masks and PPA. Therefore, customers in our core industries along with other industries are searching for a quick, non-corrosive decontamination solution that can be used on the most sensitive of equipment.

The SteraMist process provides the user with a peace of mind as it reaches everywhere.

Customers prefer SteraMist over its competitors inferior method such as sales manual clean, line of sight, outdated ultraviolet, antiquated other hydrogen peroxide processes and potentially illegal electrostatic sprayers and I use the word potentially illegal, because if one puts an EPA registered disinfectant product into the sprayer that has not been GLP tested or good laboratory procedure tested is true then that provider end user could be subject to regulatory enforcement.

One must be very careful when it comes to altering the chemical composition of an EPA registered product without EPA sanctioned studies, like, SteraMist has. These sprayers were produced for indoor and outdoor pesticide control of flies, mosquitoes and pesticides of leafy plants.

Our domestic revenue for the second quarter of 2020 was over $8 million, when compared to the second quarter of 2019, which is $1.4 million, representing an increase of approximately $7 million or 488%.

Through January 30, 2020, our domestic revenue reached approximately $12 million, representing an increase of over $9 million or 367%, when compared to 2019. In healthcare or Healthcare-Hospital revenues alone grew by approximately 227% in second quarter of 2020, when compared to the same prior year period.

The growth was primarily attributable to the significant demand for product as a result of the SARS CoV-2 Coronavirus global pandemic.

We anticipate continued growth in this division as Hospital-HealthCare facilities review and adopt mechanical no touch cleaning in lieu or in combination to manual spray and wipe techniques to address this current and future outbreaks, as well as the daily cleaning standards for the facility.

An article was published by a long-term customer at Dana-Farber in Boston, and the research studies and protocol development of the decontamination of N95 masks as a shield. This protocol is under review with the FDA and allows the disinfection of 2,000 masks in two hours.

Similar protocols developed at the University of Iowa and Cedars-Sinai of Los Angeles are also currently under review with the FDA allowing for tens of thousands of PPA reprocessing daily. In a recent news article, a TOMI healthcare client, St.

Luke’s Boise State says that SteraMist deactivates organisms on contact, resulting in a shorter chemical dwell time and eliminates the need for new employees to touch contaminated surfaces in order to disinfect an area and it also prevents cross contamination.

Hospitals concentrating on COVID-19 disinfection in the emergency department and specific patient isolation rooms, but as plans to expand the use in other areas like the operatory suite and serious patient room. SteraMist total Disinfection Cart has been a proven success in hospitals, such as, St.

Luke’s and with the increase in demand resulted in TOMI upgrading the Cart with improved mobility, extra space components and an improved locking mechanism. TOMI has also seen an increase in Hospital-HealthCare customer purchasing multiple SteraMist units in order to deploy throughout multiple locations and/or areas within the facility.

In 2020, the Montgomery County Pennsylvania Public Health purchased an environment unit and the surface package, which was soon followed by their public safety training campus purchasing a surface unit using a homeland security grant.

In May 2020 Geisinger Health System purchase eight SteraMist surface units for eight separate locations, expanding from their Jersey Shore Hospital location to their Wyoming Valley Hospital facility. The Geisinger Health System placed an initial investment of approximately $200,000 in SteraMist and continued to place routine orders since May.

TOMI has added psychiatric hospitals to their customer lists, with the onboarding of Merakey Behavioral Health and Greystone Park Psychiatric Health each purchasing five SteraMist surface units to implement throughout their facilities, placing an initial investment of approximately $220,000.

Some of TOMI’s established customers, Bay Health, New Orleans, VA, Swedish American, the University of Iowa, all have multiple pieces of SteraMist equipment distributed across their health systems. Healthcare industry has not seen a slowdown in placing large orders of multiple SteraMist units, thereby continuing the growth trend.

Yellow River Healthcare purchased their five surface units in July. TOMI’s first Indian community followed by a second Indian community as Fort Belknap Reservation in Montana just received their unit. The new installation has the potential for additional orders this fiscal year.

The healthcare industry certainly includes a range of sub-segments, including hospitals, emergency services, nursing home, medical centers, pharmacies, diagnostic laboratories, medical device manufacturers, psychiatric institutes and so forth.

As early in 2020, TOMI has sold to these sub-segments resulting in TOMI reevaluating their segments and sub-segments, a topic and strategy which will be discussed later in this call.

As we have a growing customer -- number of customer experience team members, we’re gathering more and more information about our current customer base, not just how they are using our equipment or drafting their protocols, but across all our divisions, TOMI is receiving substantial amount of press and referrals.

For example, the Director of Environmental Service in one of our premier hospitals stated, and I quote, we absolutely love SteraMist and we’ve been using the machine non-stop since the onset of SARS CoV-2. There’s a huge sense of security and knowing that the mist is getting everywhere versus light treatments that can, end of quote.

In Life Sciences, recent current COVID events have delayed certain opportunities for our Life Science division, as clinical development programs have been postponed. However, many of our customers continue work on testing, manufacturing and distributing medications.

One of our recent customers, Gilead Sciences continued to evaluate alternatives to their recent current processes. TOMI’s second quarter 2020, revenue increased by 178%, when compared to 2019.

We continue to expand the use of SteraMist in support of pharmaceutical drug manufacturing, cell and gene therapy, and to maintain a sterile environment for key United States manufacturers. Many of our current SteraMist customers are working to produce COVID-19 vaccines.

Companies like Pfizer, Sanofi, Merck, AstraZeneca and MedImmune continue to disinfect with a safe SteraMist BIT chemical protecting their operator, facility and the environment, while providing the confidence to the American population that we will produce sterile vaccines.

A select few of our iHP corporate service operators are temporarily on hold to comply with established state government guidelines. However, once restrictions have been lifted, iHP service corporate is ready to deploy at a moment’s notice to be the first on the scene.

TOMI continues to conduct national accounts in iHP corporate services, such as life sniff [ph], health, a leader in transplant solutions and regenerative medicine in which SteraMist is use to treat for their facilities twice a month in partner with our TOMI Service Network members.

TOMI’s SteraMist expanded and continues to develop our federal government partnership with several new agency, onboarding the technology during the recent pandemic to help make spaces safe for personnel.

The federal government continues to see the expanded benefit of using a non-hazardous, low percentage hydrogen peroxide solution, which doesn’t corrode facilities, leave behind a residue or off gas caustic odors, harmful to personnel after use.

SteraMist is being used throughout six National Institute of Health NIH facilities, and continues to expand usage of SteraMist as a superior solution to mobilize and respond as needed to a site where six-log kill is required.

The Frederick County, Maryland, Emergency Management and Public Safety team comprises the region’s critical 911 Call Center, home to TOMI’s operations offices. SteraMist was purchased to safeguard the 24x7 first responders staff from contracting COVID-19 and other viruses and bacteria, preventing crucial operations from being jeopardized.

These critical highly trained staff members are a necessary resource for the community and not easily replaced should they fall ill, SteraMist will be used to disinfect 30 operator workstations in about 75 minutes to guarantee emergency response times are maintained to the standard.

Just like the Hospital-HealthCare industry, Life Science industry, many players which TOMI has recruited across the Board, including research and clinical, pharmaceutical, pharmacy, government, manufacturing, packaging, blood banks, containment and biosafety labs, all of which are proud to be servicing with SteraMist.

Our Life Science partners are truly the heart of the world and rightfully should be. The industry every year depends more and more on SteraMist to deliver the blood for their decontamination needs.

Some items to note, the University of Virginia Center for Comparative Medicine began its germ-free mouse program in 2018 and came aware of SteraMist through its maintenance of biosafety Level 3 facility. Initially they went through extensive validation testing of SteraMist efficacy.

They found that SteraMist method of achieving sterility equivalent to other methods of high efficacy reported in literature that significantly saves time without compromise of sterility. The director stated and I quote, sterility is sterility, but personal time is safe. So we purchased a second unit, end of quote.

Our research and development partnership with a global safety cabinet manufacturer resulted in a custom-built decontamination solution. We were successful in meeting their needs in less than 10 minutes without dominate -- damaging any materials or research in a highly sterile environment involving germ-free research.

Recently a paper titled determining the effectiveness of decontamination with ionized hydrogen peroxide was published in the Applied Biosafety journal funded by the University of Texas Medical Branch, UTMB and the National Institute of Allergy and Infectious Disease, NIH NIAID and KAPES, lead author was Miguel Grimaldo, Director of Institutional Biocontainment, Galveston National Lab, Galveston, Texas.

Moving on to our TSN Service Network. Our service network, the TSN division added 35 new service providers in our second quarter of 2020, an increase of 1,067% compared to the second quarter of 2019. We expanded TSN membership and grew TSN revenue in the second quarter of 2020 by 1392% when compared to 2019.

TSN is proven to be a key division to address the demand for disinfecting decontaminating services during the outbreak.

As businesses update their cleaning procedures and requirements, we anticipate that TSN providers will continue to service their current and new customers, bringing SteraMist to the fight against the Coronavirus pandemic and post-COVID.

Members of this network are now generously spread around North America in 44 states and multiple Canadian provinces. TOMI expects to have a TSN member in all 50 states by the end of 2020. TOMI is also able to expand its class of service providers beyond North America’s TSN reaching service providers worldwide, including U.S.

territories and across the globe. Our service providers treat everyday establishment, some items to note. A McDonald’s in New York had an individual test positive for COVID, so our provider, Zach Construction treated the establishment so employees would feel safe and secure to return to work.

In a proactive effort to keep patrons, the shooting edge, healthy and protected in Alberta, Canada, the Gun Club reached out to our member, Calgary Contents and treated the facility with SteraMist as material compatibility with the utmost importance for their inventory.

ACE Hardware was also treated by local provider Flood Department after employee tested positive, Flood technicians immediately deployed using SteraMist in the retail storage and stockroom and ACE was thankful to their immediate response and great customer service.

The often crowded environment challenge poses a danger for the transmission of the virus. Thus a Middletown City jail addressed the issue by contacting our member, Dry Patrol, who completed the job with success. PGA Champions Tour in continuing to offer the safest atmosphere for players and staff.

The PGA Tour has invited Enviro-Mist, one of TOMI’s original TSN members to disinfect tournament facilities nicely with SteraMist. The Buffalo Ridge Clubhouse part of the Bass Pro Big Cedar Golf properties will host two PGA Champion Tour events over nine days beginning August 19th.

Our technology will thoroughly disinfect all players and staff areas, locker rooms, training, dining and scoring areas.

Such high level disinfection is the ideal complement to the enhanced cleaning protocols introduced by the PGA Tour and Big Cedar Lodge, in addition to disinfecting facility, Enviro-Mist has been protecting the PGA Tour’s shackling trailers and trucks, since the restart of golf in June. Our U.S.-Canadian service provider network is growing.

The larger the network the more awareness nationwide of superior product and its potential, more the members, more the network developed from one another and the faster each individual company benefits in their SteraMist investment.

In fact, some members are reporting SteraMist save their businesses during this pandemic and have expressed gratitude to the TOMI support team in educating them on disinfection.

We are grateful for our extensive service network and we applaud all our members for their legions to SteraMist and for being at the forefront in the fight against Coronavirus and other pathogens. Food Safety, further developments on the manufacturing front include a heavy sort out SteraMist backpack.

This product line will provide our TSN partners the solution for compact spaces for their business model continuously finds themselves while maintaining superior advantages.

This new product is set to launch next year has made some substantial advancements in development in the second quarter and we think we’ll be able to be used in the Food Safety industry. Our Food Safety division has shown only a slight increase due to closures and partnerships stalled from the covert pandemic.

However, TOMI showed 100% increase in revenue in the second quarter when compared to 2018. TOMI remains confident that Food Safety presents significant potential as an opportunity for substantial growth with continued product research and compliance testing.

The Food Safety industry in North America is coming under closest scrutiny with the implementation and enforcement of new and established guidelines. Our consultants have submitted a request to expand our current label to include a 1% acceptable concentration of hydrogen peroxide, which will go into our backpack.

This year TOMI received two additional published Food Safety papers testing the efficiency and impact of the iHP process of our cold plasma arc when compared to an old method of soaking in hydrogen peroxide only. The studies detailed positive effects of SteraMist and various aspects of fresh produce quality and storage methods.

Further, a fluff paper is set to be published shortly on the SteraMist claim of no residue left behind after treatment.

These published studies correlate nicely as TOMI’s primarily objective to this industry is to prevent and minimize food decay without the use of harsh chemical that leaves toxic residues, which could create a lucrative opportunity to supplement or replace current pesticides and fungicides currently being used by industry leaders.

The SteraMist Select Surface Unit has been proven effective for not only the Life Sciences, but the Food Safety industry as well. In the second quarter of 2020, the USDA, United States Department of Agriculture and FSIS, the Food Safety Inspection Service and OPHS, I know lot of -- Office of Public Health and Safety purchased three of these units.

FSIS, a public health regulatory agency of the USDA protects consumers by ensuring that meat, poultry and egg products are safe, wholesome and accurately labeled. FSIS has three laboratories located in Athens, Georgia, St. Louis, Missouri, and Albany, California.

These regulatory laboratories analyze meat, poultry and egg products to ensure that they are free of adulteration. The labs are part of the critical infrastructure of the country and continue to operate during the Coronavirus pandemic to provide a safe supply of food products.

As the select surface unit is portable and flexible, the disinfection unit can be used in multiple areas and on different types of surfaces, which is ideal for these labs. For their statement of work, the units were purchased initially to provide lab workers the safe environment to work in.

However, since SteraMist technology inactivate viruses and kills bacteria, the unit will also be useful after the treatment of the current pandemic, one, as the lab has all three sites routinely handle a variety of pathogenetic bacteria.

TOMI is working in the Virginia State University Agricultural Research Station and its partner, Arkoma on a food safety pilot study based on novel non-thermo and environmentally friendly technology to control foodborne pathogens on industrial hemp seeds and strawberries as representative model tool.

The study will investigate the efficacy of ionized hydrogen peroxide in inactivating foodborne pathogen determining the optimum treatment conditions on microbial and physical quality two model products.

Recently, the USDA’s Research, Education, and Economics Mission area in the Northeast purchased a SteraMist Select Surface Unit and TOMI is seeing a slight increase in their interest of universities assembling funding to purchase during SteraMist disinfection for their dining halls in order to bring students back to school and open their dining halls and cafes, very important for students to go back to school.

As mentioned in my introduction, new channels were opened as disinfecting and decontamination protocols have been firmly implemented and enhanced across the world. Today, TOMI has shifted equipment to and onboarded a total of 27 customers in a variety of new commercial channels, domestically and internationally.

As mentioned earlier, these customers include but are not limited use sites such as aviation, prisons, manufacturing companies, police and fire departments.

We love our police and fire, prisons, automobile, marine, education, regulatory, consulting, agencies, retail, housing and recreation, and of course, state emergency preparedness for countries and cities to use SteraMist throughout their community.

As we move forward, TOMI will continue to access the markets they serve, due to the increased demand in our new channel. Beginning in the third quarter of 2020, we will add a fifth division Commercial. Our Commercial division will most likely encompass the most versatile of and expand over a wide range of sub-classifications.

Internationally, our International business continues to grow, some of our 2020 items to note, the Laundry Solutions based out of Guam, a leader in hospitality, industry exhibiting versatility and expertise in the broad range of products and services it offers to the hotels, hospitals and federal establishments on Guam.

Many of their premier SteraMist services can be found online all throughout the territory, which provided a revenue of approximately $200,000 in 2020 for TOMI. TOMI previously welcome Shield Aviation in our customer lineup as a German-based airline cleaning and disinfection service.

Shield Aviation continues to expand into multiple territories within aircrafts both large and small. They’re active throughout the EU and assisting TOMI in third-party testing on aviation controls, which assist TOMI worldwide in the aviation category.

In fact, the owner states, and I quote, when looking for a suitable disinfection system for airplanes and helicopters, we discovered iHP, which is also compatible with the rules of the European Union Aviation Safety Agency, EASA with no negative effects on aircraft structures and electronics, as well as a very short exposure time, it is the perfect solution for aviation.

Shield now has multiple SteraMist units and deploys throughout Germany’s European aviation market.

Israel based CleanCore and existing customer onboarded in 2019, followed by large investments in SteraMist in early 2020, providing a total revenue of approximately $2.3 million to the company, the company specializing initially in water and fire damage.

Mediation Industrial Cleaning has diversified and created a subsidiary Clean-Bit, environmental solutions bringing SteraMist to a vast array of industries throughout the region. Further, their organizations support business team has assisted in providing valuable and effective marketing to assist in the awareness of the SteraMist brand.

Clean-Bit started a subsidiary in Thailand with one of TOMI’s international partners and is moving into life sciences and veterinary and industry. Internationally our revenue was over $1.6 million, representing an increase of $1.4 million or 675% when compared to the second quarter of 2019.

And for the year International revenue increased over $4.7 million. We anticipate substantial growth in our International revenue in the second half of 2020. The increase in our International revenue was attributable to the continued use and expansion of our SteraMist line of products in Canada, Europe, Asia and the Middle East.

We expect our International revenue to grow as more countries adopt our products and services, as well as the ever changing requirements for disinfection and decontamination.

In addition, our International revenue is also attributed to our long-term partners in Italy, Spain, Chile and South Korea, GD Science, the latter who is finalizing arrangement in the pharmaceutical class, providing the necessary user requirements specification for purchases this year.

Also GD Sciences has over 10 South Korean hospitals using SteraMist. In the second quarter, TOMI entered into a distribution sales agreement with two privately owned Portugal’s based company. One specializes in worldwide distribution of hemostasis, autoimmunity, acute care and in-vitro diagnostics.

The agreement requires the purchase of $500,000 by the end of 2020, with a 20% increase each year thereafter. Second company sponsor the manufacturing of a walkthrough disinfection chamber, they will be using our technology as a platform along with selling our existing products to their clients in Portugal and Spain.

The walkthrough chamber promotes good practices of prevention, sanitation and disinfection in the access of spaces with large flow of persons. I can see these in front of large apartments and hotels, and transportation.

TOMI has also entered into agreement with an Indonesian company for distribution in many verticals including Indonesian Arm Forces, Ministry of Health and Ministry of Defense.

Earlier this year TOMI into agreement with L3M International Pte Limited, the L3M is a distributor for the Singaporean healthcare industry in the Singapore Minister of Education and the education sector. L3M is scheduled to purchase an addition to surface units.

They’ve entered into a partnership with a neighboring disinfection service provider in Malaysia. Malaysia has plans to open its borders at the end of August in which L3M is prepared to combat the second wave with their new partner by their side.

As TOMI expands worldwide via air and service centers across the globe to the ease of servicing our equipment. L3M based in Singapore has noted above, is being trained in our Frederick operations facility and will co-manage a large Singapore based service facility.

Similar training and protocols have been taught to our partners in South Korea and White Knight in the United Kingdom.

Along with our long established Singaporean partners, SteraMist, who is currently working with the Civil Defense, TOMI has added an additional partner Victory Knights Management and Consultancy Services for distributions of homeland security and the defenses in Singapore.

TOMI is under agreement with a number of separate manufacturers internationally in the development of the SteraBot. One is RV Technologies in Hong Kong who has already shipped its first SteraBot robot to a healthcare customer in an Eastern European or Baltic country for validation and trial.

Our robots going forward will be used indoor and outdoor area disinfection. Robot will be able to perform both manual and automatic remote control for indoor and outdoor disinfection tests.

This robotic system will be commissioned with appropriate types of disinfection operation and battery driven chassis with processing units including obstacle avoidance, navigation and indoor positioning. TOMI continues to expand an intellectual property, protecting both trademark and patents.

Today, TOMI has over 400 published granted or pending design and utility patents or patent applications worldwide. These include filings related for countries including but not limited to the EU, Israel, Singapore and Canada. Further, TOMI has over 160 trademarks worldwide, between world and logo marks either active or pending acceptance.

These include our most recent applications for the SteraMist Robot, the SteraBot. Further, TOMI continues to test and validate each component of its DC voltage prototype with their original manufacturer in the United States.

This unit will allow for improved compliance with regional standards for electrical system and equipment, as well as streamline product manufacturing.

In order to meet the worldwide demand for superior disinfection decontamination technology, TOMI has successfully brought on an additional manufacturer in the Australian marketplace which will enable our product to be efficiently delivered to Asia and International customers.

Planet Innovation specializes in healthcare technology and private commercialization, and their geography for our current International clients’ base is a perfect fit. TOMI team reports that the last few months have been pleasurable and seamless in collaborating with Planet Innovation and look forward to bringing the SteraMist backpack to production.

As we move into the third quarter of 2020, TOMI now has a focus on five divisions, Hospital-Healthcare, Life Sciences, TSN or TOMI Service Network, Food Safety and Commercial, each encompassing their indemnifiable or overlapping classification.

Thus, TOMI has taken a stride in developing its accounting and operations departments with the hiring of a controller, billing specialist and additional logistics administrator, safeguarding our quality control standards.

Further, development is the migration to a new software system to manage business finances, operations and customer relations, NetSuite. I will now and happily turn the call over to TOMI’s Chief Financial Officer, Nick Jennings..

Thank you, Dr. Shane. I’ll provide a brief overview of our financial results for the second quarter of 2020 compared to the prior year period. For the three months ended June 30, 2020, compared to June 30, 2019, total net revenue was $10,028,000, compared to $1,639,000, representing an increase of $8,389,000 or 512%.

The increase in revenue was attributable to increased global demand for disinfection and infectious disease controlled products in response to the SARS CoV-2 Coronavirus global pandemic. In the second quarter, we saw a significant demand for our product with our Hospital-Healthcare, TSN and new Commercial sales channels.

To further breakdown revenue, SteraMist product based revenues was $9,235,000 and $1,504,000, representing an increase of $7,731,000 or 514%. Service based revenue was approximately $793,000 and $135,000, respectively, representing a year-over-year increase of 487%.

Domestic revenue was $8,392,000 and $1,428,000, respectively, an increase of $6,964,000 or 488%. International revenue was approximately $1,636,000 and $211,000, respectively, representing an increase of $1,425,000 or 675%. Gross margins were 55.5%, compared to 59.5%. The lower gross profit was attributable to product mix and sales.

Income from operations was $3,657,000, compared to a loss from operations of $535,000, representing an increase of $4,291,000. The increase in net income relates to higher revenue and gross profit, offset by increased operating costs.

Net income was $3,657,000 or $0.03 on a per share basis, compared to a net loss of $585,000 or zero cents on a per share basis, representing an increase of $4,242,000. EBITDA was $3,829,000, compared to an adjusted loss of $356,000.

For additional income on the calculation of EBITDA and the reconciliation to our GAAP net income, please refer to today’s press release. Cash provided from operations for the six months ended June 30, 2020 was $5,385,000, compared to cash used in operations of $120,000 for the same prior year period.

Next, I would like to go through some of the key items on our balance sheet. As of June 30, 2020 and December 31, 2019, cash and cash equivalents of approximately $6,628,000 and $897,000, representing an increase of $5,371,000. Working capital was $10,583,000 and negative $1,266,000, representing an increase of $11,848,000 for the year.

Shareholder equity was $12,159,000 and $890,000, representing an increase of $11,269,000 for the year. Our cash and liquidity position improved in the second quarter due to higher revenue and gross profit, which led to strong cash flows generated from our operations.

Our operating margins also remain strong at 36.5% and 37% for the three months and six months ended June 30, 2020, respectively. As Dr. Shane mentioned earlier, we have expanded our accounting department and are currently implementing a new ERP system, NetSuite.

We anticipate the new system will improve our reporting, allow us to further automate processes and will improve the overall operations of our company. Looking forward, we are excited to continue to grow the business and plan on adding more employees and expanding our facility to accommodate our growth. Now, I will turn the call back over to Dr.

Shane..

Thank you, Nick. So my closing remarks, we are all very encouraged and I look forward to a continued strong growth in the second half of 2020.

We’re also encouraged by the substantial progress and promising business development initiative undertaking that targets to secure our new revenue channel, while adding new customers and penetrating our current client base.

We plan to achieve such growth by continuing to excel in our marketing collateral and initiative, expanding customer referral, ongoing public relations, provide the best five star customer service and always growing our sales and customer service team. We’re also planning to expand and almost double a new Frederick facility to accommodate growth.

Also in the plan is an uplist to NASDAQ market in the coming month, trading under the symbol of TOMZ. Our research and development will continue to be a top priority as we develop new products, protect current and new intellectual property, and further and finalize many ongoing outstanding international product registration.

TOMI will continue to work on increasing shareholder value through our revenue growth, customer penetration, IP initiative and effective deployment of capital. As we have advised on previous calls, we reiterate that, TOMI is a long-term growth opportunity and we are striving for SteraMist to become the standard in the industry.

TOMI continues to leverage our capabilities to meet the needs of our healthcare providers and first responders that are at the forefront of this pandemic. I’d like to thank once again. Thank the first responders and their families who have risked much in their occupation.

And finally, I want to thank all of our TOMI team members, who delivered quality service every day to our customers domestically and across the world. I’d like to thank everyone who’s joined our fall. Listen to our call over the internet. Stay tuned for good things ahead.

I’ve answered under fair disclosure many of your email questions and we will always strive to innovate for a safer world. Operator, we have a few minutes, I’ll open the floor to take a few questions either by email.

First question?.

[Operator Instructions] Okay. Our first question comes from Zack Sklar [ph]. Zack, please state your question..

Hi.

I’m wondering if you can give us any indication of future revenues for the upcoming quarter?.

We -- Zack, we don’t give forward looking numbers yet, probably, in 2021 we will, but currently we don’t. We look forward to having a great second half. Thank you for the question..

Next on the line we have John Lee [ph]. John Lee, please state your question..

Good afternoon.

Can you talk about your capacity and how much your added capacity will add to potential revenues?.

We are able to handle our current capacity. But we’re hoping that and we know by expanding capacity wise both from our office and staff wise we’ll be able to handle anything that we have in our pipeline, which is very large pipeline at the moment. Thank you..

Great. And also what….

Operator, thanks for cutting off..

Next on the line we have Barry Mills [ph]. Barry, please state your question. Oh! I see he disconnected. Okay. Next we have Alex Tillman [ph]. Albert -- Alex, please state your question..

Hi, Dr. Shane. I appreciate you taking the question.

I was hoping maybe you this year hoping to provide some guidance on the deposit system and some of the guidance that you gave us maybe is on intentionally in Q1 of the robust performance in the first half versus the second half and what exactly happened there, because I think that’s kind of what led to today’s price situation?.

So I don’t comment on stock market prices, nothing organic..

Right, sir.

What I’m trying -- you heard my question is, how does the deposit system work for you guys and are you currently still seeing a bunch of deposits being put down?.

So we started taking deposits, as you know, we had so much equipment and inventory and we had to replenish it, to replenish it we took deposits in parts which probably showed that we had the revenue we had and then we started to fill those. You have to understand that our equipment is technical, it requires training.

Our company is so big and by selling hundreds and hundreds, which we have sold, you’ll see that it requires a lot of staff to get this in the operation and out in the public working and that’s the reason. Thank you for the question..

Right..

Okay..

Next on the line we have Marty Gocaston [ph]. Marty, please state your question..

Hi, everyone. I want to congratulate you all on a phenomenal quarter and thank you for being in the front lines of this COVID pandemic.

Just had some questions regarding the FDA and you’re working with them? Is there some kind of as far as timeline on things that you guys are looking on getting cleared or approved through the FDA, especially in the food and safety area..

So, as you would assume, working with any government agency, they don’t give you timelines. We know that there are six levels of, let’s say, that you have to go through with the FDA and I think we’ve passed through level five. So I can’t give you a timeline.

The same thing with the FDA, with the Food Safety, we go through the EPA for this label and they have a certain criteria, which is a time limit that they allowed until they give you an okay. And we think that we’ll have that label sometime maybe late 2020 or early 2021. I hope this answers your question. Thank you.

Operator, we’ve time for one more question..

Our last question comes from George Froley [ph]. George, please go ahead..

Hi, Dr. Shane.

How you doing?.

Good.

How are you?.

It was a great quarter..

Yeah..

But there’s just too many shares outstanding, I mean, the stock whatever you did, the market didn’t like it. It’s off 30%, 40% today, you love percentages. I mean, it telling you a message. I think you’ve got a reverse split like 10% or 12% for 1. So something meaningful can be shown on the earnings call..

Okay..

Thank you..

Thanks, George. Have a good day..

Thank you..

With that, we’ll go ahead and close it out. Thank you all for listening..

Okay. Ladies and gentlemen, that does conclude today’s teleconference. You may now disconnect your lines and enjoy the rest of your day..