TM Editors Note: This article discusses one or more penny stocks and/or microcaps. Such stocks are readily manipulated; do your own careful due diligence.

The COVID-19 virus has suddenly turned the spotlight on companies that make antiviral products – drugs, swipes, diagnostic kits, equipment, and more.

Tomi Environmental Solutions (TOMZ) is one such company that is cashing in on the coronavirus fear. The company makes disinfectant sprays/mists using a proprietary formula. Its products are already EPA-registered on lists J, K, G, and L, which include H1N1 or Influenza A and Norovirus. TOMZ also is likely to secure a listing in EPA’s forthcoming publication of Emerging Pathogen Lists, which includes COVID-19.

Its stock has rocketed from $0.12 to $0.55 in Feb 2020 (as of Feb 27, 2020) and looks all set to zoom higher once it crosses its resistance level of $0.66.

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Here’s my analysis of the company’s prospects:

Business Model and Financials

TOMZ is into bacteria decontamination and infectious disease control. It manufactures Hydrogen Peroxide based disinfectants (proprietary formula) using Binary Ionization Technology. The company’s brand – SteraMist BIT – complies with Good Manufacturing Practices (cGMP) and Good Laboratory Practice (cGLP) conditions. SteraMist can be customized per the client’s needs and is used in a variety of industries including hospitals, pharmaceutical facilities, and food.

Atmospheric pressure equipment like SteraMist is covered by the Cold Plasma market which is growing at a CAGR of 16.8%.

TOMZ’s financials are nothing to speak off. In Q3 2019 (the last results published), the company clocked a revenue of $1.6 million and a net loss of $237,000.

Analyzing its revenues makes no sense because these are too insignificant. The stock took off after the COVID-19 outbreak, and its price rise has nothing to do with fundamentals.

TOMZ’s Prospects

On Feb 27, 2020, the company announced that it had received separate registrations for SteraMist equipment and BIT solution from China’s CDC. TOMZ is in the process of finalizing negotiations with the Chinese government for using its products to help control COVID-19.

Recently, a hotel in the United Kingdom tested positive for COVID-19. SteraMist was used to disinfect the hotel room and the treatment was successful.

There is little doubt that COVID-19 will leave a psychological scar across the globe. Facilities that host crowds or are required to be sanitized will consider purchasing or renting disinfectant equipment like SteraMist.

The company does have a future if it plays it right. It will face competitive pressure down the line and everything depends on its business strategy. As of now, the prospects look good but everything depends on how the company plays its cards.

The Verdict

Buying into TOMZ looks very tempting at this stage because it is propelled by the coronavirus news. As an analyst, its past holds me back from putting out a naked “buy” call.

I would wait for any one of the following to trigger before entering the stock:

(1) Successful completion of negotiations with the Chinese government

(2) SteraMist securing a listing in EPA’s forthcoming publication of Emerging Pathogen Lists, which includes COVID-19.

(3) The stock price crosses $0.66.

If anyone of these three conditions triggers, I would invest a limited sum (no more than $2,000-$3,000) and track the stock and wait for the other conditions to trigger. When all three trigger, I would consider adding more. If not, I would write off the investment and dump the stock in cold storage for the next 5-10 years.