An anonymous director reports

ATMOFIZER TECHNOLOGIES INC. ANNOUNCES YEAR END 2022 FINANCIAL RESULTS

Atmofizer Technologies Inc. has released its financial results for the year ended Dec. 31, 2022. All amounts are expressed in U.S. dollars unless otherwise noted.

Corporate developments

On Feb. 23, 2022, the company filed a prospectus supplement to the base shelf prospectus, establishing an at-the-market equity program that allows the company to issue and sell up to $5-million (Canadian) of common shares from treasury to the public, from time to time, at the company's discretion. All common shares sold under the ATM program will be made through sales that are deemed to be at-the-market distributions as defined in National Instrument 44-102 through the Canadian Securities Exchange or any other marketplace in Canada as defined under applicable securities laws.

Distributions of the common shares have been made under the prospectus supplement pursuant to the terms of an equity distribution agreement between the company and Clarus Securities Inc. dated Feb. 23, 2022. The volume and timing of distributions under the ATM program, if any, will be determined in the company's sole discretion. Common shares are distributed pursuant to the ATM program at the market prices prevailing at the time of each sale, and, as a result, prices may vary as between purchasers and during the period of the ATM program. The ATM program will be effective until the earlier of the issuance and sale of all of the common shares issuable pursuant to the ATM program and Feb. 14, 2024, unless terminated prior to such date by the company or Clarus in accordance with the terms of the equity distribution agreement.

On April 5, 2022, the U.S. Patent and Trademark Office issued a U.S. patent relating to the company's air and water purification technology. The U.S. patent provides protection for the application of the company's air and water purification technology in the United States.

On Aug. 23, 2022, the company announced that the USPTO has issued a notice of allowance for new claims related to the company's air and water purification technology. The allowed patent application, titled, "Ultra-Fine Particle Aggregation, Neutralization and Filtration" (U.S. patent application No. 11,291,939), provides broad protection for important aspects of Atmofizer's air purification technology. The notice of allowance from the USPTO is directed to a new design that delivers ultrafine particle agglomeration and nanoparticle reduction performance in larger air ducts with faster-moving air, using fewer parts. The company plans to market this patent to be licensed by air purification device manufacturers, HVAC (heating, ventilation and air conditioning) suppliers and service companies.

On Nov. 29, 2022, the company announced its recent business development in the forced area market (HVAC).

The company continues to transition the business to its most valuable addressable market to integrate the agglomeration technology into existing forced air systems. The company is ready to focus on the third objective of our strategic plan: (1) Prove it; (2) protect it; and (3) promote it.

Prove it

The company has been working with Four Seasons Heating and Conditioning in Chicago, Ill., one of the largest privately owned HVAC service providers in the United States. Four Seasons has validated the product market fit and helped to develop the final production design, which can be installed in fewer than 15 minutes by any HVAC service technician and sell for less than other similar accessories in the market. The company has completed testing on the HVAC solution with almost immediate agglomeration at air speeds consistent or superior to most HVAC applications, meaningful improvement of filter performance to remove ultrafine and fine particles from the air with existing filter technologies, reducing energy costs, and improving the flow of hot and cold air to improve HVAC performance. The last phase of comprehensive third party laboratory tests to independently certify the results of this new product range is scheduled for January, 2023. The design can be easily adapted to expand beyond the residential HVAC market to service commercial, industrial and agricultural applications.

Protect it

The company received its second U.S. patent, its agglomeration technology for integrated and HVAC applications. On Aug. 23, 2022, the company announced that the USPTO issued a notice of allowance for new claims related to the company's air and water purification technology. This was followed by a formal patent issuance on Oct. 25, 2022 (U.S. patent No. 11,478,742). The allowed patent application, titled, "Ultra-Fine Particle Aggregation, Neutralization and Filtration" (U.S. patent application No. 11,291,939), provides broad protection for important aspects of Atmofizer's air purification technology. The notice of allowance from the USPTO is directed to a new design that delivers ultrafine particle agglomeration and nanoparticle reduction performance in larger air ducts with faster-moving air, using fewer parts.

Promote it

The HVAC solution has been designed to scale to other HVAC applications with an asset-light strategy that will target existing HVAC suppliers and manufacturers with existing distribution and scale. The company will look to partner to execute its asset-light, technology-first approach to license its patented technology for high-margin licensing opportunities. The company is in the final stages of distribution discussions with Four Seasons to be announced in due course.

On Jan.l 12, 2023, the company implemented the share consolidation of one postconsolidation common share for 20 preconsolidation common shares. The number of shares and relevant information, including, but not limited to, the share price, number of warrants, stock options and restricted stock units, and exercise price per warrant and option presented in these financial statements for both the years ended Dec. 31, 2022, and 2021, had been retroactively adjusted accordingly.

Financial highlights for year ended Dec. 31, 2022

For the 12 months ended Dec. 31, 2022, the company generated revenue of $210,000 with a gross profit of $60,293 (29.0 per cent) compared with $497,280 with a gross profit of $83,199 (16.7 per cent) during the 12 months ended Dec. 31, 2021.

The company incurred $26,326,805 in expenses during the 12 months ended Dec. 31, 2022, compared with $13,180,714 during the 12 months ended Dec. 31, 2021. The increase of $13.2-million increase in expenses was driven primarily by an increase in impairment of intellectual property ($8.2-million), share-based payments ($5.6-million), marketing expenses ($1.2-million), and salaries and wages ($800,000). There were significant decreases over the previous year in consulting fees ($2.3-million), management and directors fees ($1.1-million), research and development costs ($600,000), and professional fees ($200,000). The company has focused on reducing operating expenses, and excluding non-cash expenses such as amortization, impairment loss and share-based payments, operating expenses were reduced by $2.2-million during year ended Dec. 31, 2022.

During the year ended Dec. 31, 2022, the company recorded a net loss of $28-million compared with a net loss of $21-million for the year ended Dec. 31, 2021. The increase of $6.8-million was mainly due to the increase in operating expenses of $13.2-million, which was partially offset by the decrease of $6.4-million in other income (expenses). The $13.2-million increases in operating expenses were driven primarily by an increase in impairment of intellectual property ($8.2-million), share-based payments ($5.6-million), marketing expenses ($1.2-million), and salaries and wages ($800,000). There were significant decreases over the previous year in consulting fees ($2.3-million), management and directors fees ($1.1-million), research and development costs ($600,000), and professional fees ($200,000). Other income (expenses) was reduced from the prior year by $6.4-million. In 2021, the company incurred a listing expense of $7.1-million, which is the major reason for the lower other income (expenses) in the year ended Dec. 31, 2022, compared with the prior year.

About Atmofizer Technologies Inc.

Atmofizer's consumer and industrial solutions are based on its patent-protected and patent-pending technology for ultrafine particle agglomeration and neutralization. This capability creates a revolutionary and more efficient method for addressing the wide range of dangerous nanoscale particles, viruses and bacteria that are too small to be effectively managed by conventional HEPA (high-efficiency particulate air) filters and ultraviolet lights. Atmofizer plans to disrupt the air treatment industry by improving air safety and purification efficiency while lowering customers' operational costs.

Atmofizing air refers to the process of using ultrasonic acoustic waves to agglomerate (cluster together) small particles into a larger target that is then radiated by ultraviolet light to neutralize their harmful properties. Using units that atmofize air in tandem with HEPA filters can make the HEPA filters work more efficiently, enable the use of a less powerful filter, and result in a cleaner and longer-lasting filter that reduces operating costs and is less of a health hazard to clean or replace.

Atmofizer is a patent-pending and patent-protected sole source of technology to atmofize air, and is applying its proprietary technology in consumer and industrial air purification products currently manufactured under the Atmofizer brand, as well as in retail and commercial devices produced by other companies that integrate Atmofizer technology into their own products under licence. Atmofizer's owned and licensed product lines include wearable, portable and mobile use for personal air treatment, as well as larger systems to handle higher air volumes for commercial, industrial, institutional and residential applications.

We seek Safe Harbor.