TOMI Environmental Solutions Inc
For the period ended Jun 30, 2024. Filed Aug 1, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 1, 2024
TOMZ$2.15-1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001654954-24-006405
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-01.
0001654954-24-009807
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 212 previous paragraphs and 208 current paragraphs.
133 unchanged; 33 reworded; 41 added; 42 removed; 4 previous and 1 current paragraphs rearranged.
Tables are not compared: 16 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (41)
Current report
For the first time since the end of 2020, our outlier year due to the COVID-19 pandemic, we surpassed $3 million in our quarterly sales.
Current report
In the second quarter of 2024, we achieved profitability and improved financial results through revitalized revenue growth and strategic reductions in operating expenses. We expanded our customer base and secured significant agreements and new partnerships.
Current report
During the second quarter of 2024, TOMI reported a 170% increase in revenue, amounting to $3,013,000, a sequential growth of $1,900,000 compared to the first quarter of 2024. This growth was primarily driven by higher mobile equipment sales, a product mix not seen since the 2022 year, with our mobile SteraMist equipment accounting for over 60% of our revenue in the second quarter of 2024.
Current report
Our quarterly revenue increased by 9% and SteraMist product-based revenue, mobile and custom engineered equipment increased by 20% in the second quarter this year, when compared to the same period last year. In fact, as of June 30, 2024, we have nearly matched the total number of mobile equipment sales realized throughout the entire calendar year of 2023.
Current report
Our second quarter international revenue grew by 130%, driven by new customers in Canada, Mexico, the Philippines, and the United Arab Emirates, compared to the same period in 2023.
Current report
Our total recognized revenue and backlog for the first and second quarters of 2024 amounted to $5,100,000, consisting of approximately $4,100,000 in recognized revenue and a sales backlog of approximately $1,000,000 at the end of June 2024.
Current report
During the second quarter, management implemented cost reduction initiatives that lowered our operating expenses by 3% compared to the same period last year. Additionally, our operating expenses in the second quarter of 2024 decreased by 9% compared to the first quarter of 2024 as a result of our cost-cutting measures.
Current report
With increased revenue and lower operating expenses, we reported a profit of approximately $30,000. This represents a significant milestone for the company and a major improvement compared to both the first quarter of this year and the second quarter of 2023.
Current report
We continue to pursue innovative solution and new markets for our versatile and environmentally friendly SteraMist iHP technology.
Current report
To expand our reach and increase our presence in the western United States, we entered a partnership with EMAQ. EMAQ has made a substantial investment of over $1,000,000 in SteraMist iHP equipment and will serve as our partner to expand iHP services in this region. This should lead to significant increases in solution sales in the sector with the expansion of the western part of the United States, helping us to increase the sales of razor blades using the razor/razor blade model. Where our SteraMist delivery systems represent the razor and our proprietary BIT Solution represents the razor blade.
Current report
During the three months ended June 30, 2024, we received an order for our CES system with a global leader in advanced laboratory services. This customer purchased two additional Environment Systems to their original fleet of two Environment Systems and a seven (7) applicator iHP Custom Engineered System (CES), which is slated for installation by the end of the year.
Current report
Second quarter BIT Solution sales increased by approximately 36% compared to the second quarter of 2023 and by 185% sequentially over the first quarter of 2024.
Current report
During the second quarter we maintained an active focus on digital marketing initiatives and business development plans with existing customers. In an effort to optimize our budget, we reduced our participation in tradeshows and redirected resources towards more effective lead generation strategies such as referrals and references. While tradeshows offer valuable networking opportunities, we have found that for the short-term TOMI SteraMist’s strong reputation generates sufficient interest through other channels. These alternative approaches have proven to be more cost-effective and efficient in driving new business and expanding our customer base.
Current report
We are steadily increasing our presence in the food safety marketplace primarily from tradeshows we attended in the past. As stated, we must demonstrate that we are a viable solution for this industry, and we are currently conducting numerous feasibility studies with both small and large companies. We have entered the coffee industry with Mayorga Coffee and Organea Terra SRL, the desserts and ice cream industry with Lakeview Farms and Crank and Boom, egg white food manufacturing, pet food production and packaging, and a few agribusinesses have joined in adding iHP SteraMist to their sanitization standard operating procedures.
Current report
To further demonstrate the effectiveness of SteraMist iHP technology in the food industry, TOMI is also excited to announce collaborative efforts with several esteemed establishments on new studies that explore the broader applications and benefits of SteraMist iHP technology. We are working with one of the world’s leading oleoresin production companies out of Spain directly applying iHP on spices such as pepper, thyme, and paprika to reduce salmonella. A multinational corporation in food and beverage processing is operating iHP at two of their international sites. Preliminary results show no contamination after treatment with iHP, and continued testing is expected to lead to company wide acceptance. These studies have also created further opportunities through introductions to their suppliers. A third new initiative is one with a leader in consumer goods production of health, hygiene, and nutrition products. TOMI is developing a specialized application of spraying their conveyor belts simplifying the decontamination of packaged items against salmonella and listeria.
Current report
Building upon our successful partnership with Indigo, we continued to cultivate strong relationships within our existing network. In July, the same consultant who introduced Indigo brought BeSpoke Pharmaceuticals, a compounding pharmacy, to our attention. We successfully delivered a Hybrid system to BeSpoke, with installation imminent. Like Indigo, BeSpoke has committed to a marketing initiative to promote our Hybrid product line. These strategic partnerships underscore the effectiveness of our focused approach to business development. By prioritizing existing relationships and leveraging referrals, we are generating tangible results and accelerating revenue growth compared to traditional lead generation methods such as tradeshows.
Current report
TOMI Service Network (“TSN”) New Program Offering
Current report
Total revenue for the three months ended June 30, 2024, was $3,013,000, a 170% increase of $1,900,000 compared to $1,114,000 for the three months ended March 31, 2024. Additionally, revenue for the three months ended June 30, 2024, was up 9% from $2,775,000 in the same period in 2023, reflecting an increase of $238,000. This growth was driven by higher sales of SteraMist products and Custom Engineered Systems.
Current report
SteraMist product-based revenue, which is primarily comprised of our mobile and CES equipment, was up 20% in the second quarter of the current year, when compared to the same prior year period.
Current report
Our second-quarter international revenue grew by 130%, driven by new customers in Canada, Mexico, the Philippines, and the United Arab Emirates, compared to the same period in 2023.
Current report
One June 6, 2024, we announced comprehensive cost reduction initiatives to align the Company’s cost structure with targeted profitability objectives. The Company’s operational cash savings initiatives include a modification of compensation arrangement for our executive officers, pursuant to which executives will reduce their compensation by 30% of their current cash compensation for the remainder of 2024, and an optimization of our consulting arrangement, under which we terminated select external consulting agreements, with remaining consultants agreeing to reduce their consultant fees.
Current report
On June 13, 2024, we announced two recent sales in the Life Sciences sector, underscoring the Company’s successful strategic expansion in the sector and growth potential. The first purchase agreement, signed with one of the largest private pharmaceutical companies in the world, includes the acquisition of a SteraMist Environment System and TOMI validation services for the client’s vivarium facility in Mexico. The second purchase agreement arises from the Company’s collaboration with a trusted partner with decades of experience in big pharma. This partnership facilitated the sale of the first Hybrid System to Indigo Pharmaceutical, Inc. as announced in September 2023. Continuing this momentum, the partner has now successfully sold another SteraMist Hybrid System to BeSpoke Pharmaceuticals, a Nevada-based manufacturer targeting 503B products.
Current report
On July 24, 2024, we announced that EMAQ Group, Inc. purchased twenty (20) SteraMist Environment Systems, generating $1,180,280 in revenue which was recognized in the second quarter of 2024. This strategic partnership aims to enhance the market penetration of SteraMist iHP decontamination solutions within the pharmaceutical industry and is expected to grant SteraMist iHP technology the significant traction it deserves, delivering decontamination solutions that meet the stringent demands of the pharmaceutical sector.
Current report
·Net cash used in operations of approximately $1,558,000.
Current report
Our service-based revenue for the three months ended June 30, 2024 and 2023, was $285,000 and $503,000, respectively, representing a decrease of $218,000 or 43%. For the six months ended June 30, 2024 and 2023, our service-based revenue was $656,000 and $809,000, representing a decrease of $153,000 or 19% when compared to the same prior period in 2023. The decrease in service revenue was due to timing of emergency service work that occurred in the same prior period.
Current report
Our domestic revenue for the three months ended June 30, 2024 and 2023 was $2,621,000 and $2,602,000, respectively, an increase of $19,000 or 1%, when compared to the same prior year period. For the six months ended June 30, 2024 and 2023, our domestic revenue was $3,283,000 and $3,730,000, representing a decrease of $447,000 or 12% when compared to the same prior period in 2023.
Current report
Internationally, our revenue for the three months ended June 30, 2024 and 2023, was approximately $392,000 and $173,000, respectively, representing an increase of $219,000 or 127% when compared to the same prior year period. For the six months ended June 30, 2024 and 2023, our international revenue was $844,000 and $627,000, representing an increase of $217,000 or 35% when compared to the same prior period in 2023.
Current report
Cost of sales was $1,602,000 and $1,715,000 for the six months ended June 30, 2024 and 2023, respectively, a decrease of $113,000, or 7%, compared to the prior year.
Current report
Professional fees were $84,000 and $112,000 for the three months ended June 30, 2024 and 2023, respectively, a decrease of approximately $28,000 or 25%, in the current year period. The decrease in professional fees was due to lower legal fees incurred in the current year period due to costs incurred in connection with our intellectual property and the related timing of when those services were rendered.
Current report
Depreciation and amortization were approximately $154,000 and $179,000 for the six months ended June 30, 2024 and 2023, respectively, representing a decrease of $25,000, or 14%.
Current report
Selling expenses for the six months ended June 30, 2024 were approximately $655,000, as compared to $878,000 for the quarter ended June 30, 2023, representing a decrease of approximately $223,000 or 25%. The decline in selling expenses is due to lower sales commission incurred in the current year period due to less sales generated by third party representatives.
Current report
Research and development expenses for the three months ended June 30, 2024 were approximately $62,000, as compared to $74,000 for the quarter ended June 30, 2023, representing a decrease of approximately $12,000 or 16%.
Current report
Research and development expenses for the six months ended June 30, 2024 were approximately $130,000, as compared to $144,000 for the quarter ended June 30, 2023, representing a decrease of approximately $14,000, or 10%.
Current report
The decline in research and development expenses is due to the timing projects that occurred in the prior period, which did not recur in the same current year period.
Current report
Consulting fees were $23,000 and $69,000 for the three months ended June 30, 2024 and 2023, respectively, representing a decrease of $46,000 or 67%, in the current quarter period.
Current report
Consulting fees were $137,000 and $144,000 for the six months ended June 30, 2024 and 2023, respectively, representing a decrease of $7,000, or 5%, in the current quarter period.
Current report
The decrease in consulting fees is due to termination of select external consulting agreements, with remaining consultants agreeing to reduce their consultant fees, as part of our cost-reduction measures in June 2024.
Current report
General and administrative expenses were $2,271,000 and $2,324,000 for the six months ended June 30, 2024 and 2023, respectively, a decrease of $53,000, or 2% in the current period. The decrease in general and administrative expenses was attributable to a decrease in Executive compensation.
Current report
Interest expense was $93,000 and $0 for the three months ended June 30, 2024 and 2023, respectively.
Current report
Interest expense was $187,000 and $0 for the six months ended June 30, 2024 and 2023, respectively.
Showing the first 40 of 41 passages. Open the source sections for the rest.
Removed paragraphs (42)
Previous report
During the first quarter of 2024, we continued to expand our sales pipeline and saw increased demand for our CES systems as well as our iHP corporate service. We ended the quarter on a strong note with our sales backlog of approximately $900,000 which will primarily be recognized into revenue in the second and third quarters of 2024. We also saw positive signals in the market during the first quarter with respect to growth in our domestic and international sales pipeline. Our quarter-over-quarter recognized revenue did decline because of the timing of customer orders and the related revenue recognition guidelines.
Previous report
Our overall sale volume and sales order activity for the first quarter of 2024 amounted to $2,000,000 which consisted of approximately $1,100,000 in recognized revenue and an approximate sales backlog of $900,000 at the end of the quarter.
Previous report
Although first quarter sales figures have decreased compared to the first quarter of 2023, we are off to strong business development in 2024. Our multi-million domestic and international sales pipeline continues to grow, and we anticipate this will lead to growth in our top line revenues for the remainder of 2024 and into 2025.
Previous report
During the first quarter 2024, we were notified by the Department of Homeland Security, that our SteraMist technology has been included in their Science and Technology Directorate Budget overview for the purchase of 16 SteraMist Environment Systems in the amount of approximately $2,000,000. Our SteraMist technology will be used to support the decontamination of the Plum Island Animal Disease Center.
Previous report
We continue to think out of the box and find new markets for our SteraMist iHP technology. The biofuel industry is one that has high incentives to attain better alternative biofuel. iHP is very fast and the second strongest oxidizer known to man which may be able to be applied in the conversion of cellulose for biofuels. We are also in the early stages of marketing our SteraMist technology to be used in the decontamination process in the server farm industry and data centers. One of the largest areas of new infrastructure spend over the next 1 to 5 years is data centers. Major tech companies will pour $1 trillion into data centers over the next five years. Third-party data centers operators are one of the many beneficiaries of the AI boom. These data centers will need high-level disinfection to maintain levels of cleanliness that is needed to sustain their centers equipment.
Previous report
In the first quarter of 2024, we were invited to submit a proposal and apply to the Department of Defense to participate in a $3,000,000 grant in connection with mitigation of ethylene oxide sterilization. In May 2024, we submitted our proposal and application to participate in the grant. As DoD SBIR 2024.4 goes through the process we will keep all shareholders updated. H2D-0222-SteraMist, iHP an innovative solution for mitigation of ethylene oxide and a new sustainable and environmentally friendly sterilization process for a safer world.
Previous report
In the first quarter 2024, we saw a continued increase in demand for our SteraMist iHP service where we saw quarter over quarter growth of 21%. For the three months ended March 31, 2024 and 2023, our iHP service revenue was $371,000 and $306,000, respectively.
Previous report
Recent developments in the service decontamination sector, particularly changes within one of our primary competitors, have resulted in an influx of additional leads for our company. We anticipate continued growth in our service decontamination business, with the potential for a significant revenue uptick as we capitalize on the opportunities presented by our competitor’s shifts.
Previous report
We recently received notification from a U.S. based multinational pharmaceutical company, that two of our CES systems which were delivered in 2022 have been qualified and will go live by the fourth quarter of 2024. In September 2022, we announced the expansion of our technology into these facilities and the related estimated amount of annual solution revenue of $250,000 which will now be set to begin with the CES systems receiving qualification from our customer.
Previous report
During the first quarter we remained active in our marketing initiatives and attended and presented our SteraMist brand of products at various tradeshows, most notably Maryland Tech Council Event: Technology Transformation Conference, National Air Duct Cleaners of America Conference, AORN Surgical Expo, NFMT + Clean Building Expo, Indoor Ag-Con + Grocery and PDA Annual Meeting.
Previous report
TOMI Service Network (“TSN”)
Previous report
Total revenue for the three months ended March 31, 2024, and 2023, was $1,114,000 and $1,582,000, respectively, representing an decrease of $468,000, or 30% compared to the same prior year period. The decrease in revenue was attributable to the timing of customer orders and the related revenue recognition.
Previous report
On March 11, 2024, we announced a new groundbreaking study demonstrating the effectiveness of its solutions against foot-and-mouth disease virus (FMDV). This significant advancement supports the Company’s submission for an additional EPA label.
Previous report
Research Studies:
Previous report
TOMI continues to be active in the global market, using registrations to expand sales opportunities. Currently, TOMI is in the registration process for India, and renewal to meet new requirements in the Philippines. Both markets offer excellent potential due to interest in the TOMI suite of decontamination/disinfection solutions.
Previous report
TOMI is in the annual process of self-audit, where all SOPs are reviewed and updated as needed, and all compliments and complaints and requests for changes/new equipment are evaluated.
Previous report
TOMI has successfully completed a second 24-month storage stability, this one to meet EPA requirements (first one was for EU BPR submission and had different methods/requirements). With the patented 7.8% product, Binary Ionization Technology Solution is safe to ship by air and store under normal ambient conditions. The study will be submitted for EPA review, and expiration date extended going forward upon EPA approval.
Previous report
The EPA has registered our 0.35% hydrogen peroxide product for the use in greenhouses, pre harvests and post harvests. TOMI is conducting internal studies with the 0.35% on common pathogens in the food safety market to enhance protocols. We continue to pursue acceptance of the additional 1% hydrogen peroxide label with the EPA for direct food application.
Previous report
Recent SteraMist food safety customers and partners are conducting further studies to prove SteraMist in the industry. Soli Organic Inc., one of the nation’s largest commercial indoor organic growing companies, obtained multiple SteraMist systems to protect their controlled indoor growing food process from costly fungus, Botrytis. The combination of all SteraMist systems purchased will be used daily, on a continuous cycle, to disinfect everything from seed trays that the soil and plants sit in, and the plants themselves.
Previous report
Analysis concluded dramatic reduction in fungal growth, mold spores, and yield loss from environmental bio-loads, with notable efficacy against Alternaria, a species causing 20% yield loss in all annual vegetable production. Levels went from high/medium to non-existent/nondetectable with the following spores: Alternaria (Ulocladium), Aspergillus/Penicillium, Acremonium++, and Botrytis.
Previous report
SteraMist is also working with a few partners in the cannabis industry. Enviro-Mist has been testing cannabis flower incubated with Aspergillus flavus, Aspergillus fumigatus, Aspergillus niger, Aspergillus terreus, Escherichia Coli, Shigella Spp, Salmonella, Staphylococcus aureus, yeasts and molds and subsequently treated using ionized Hydrogen Peroxide (iHP) to the dried material. Potency results of the cannabis plant were not affected, and no additional residual solvents were found. The process was successful in complete remediation of all microbial contaminants. Another partner TOMI is working with has proven SteraMist that has reduced microbial count on cannabis flower from 400cfu/g to non-detectable without affecting the level of THC. SteraMist continues to penetrate the market with additional studies and bringing on premier clients.
Previous report
In August 2023, we announced the completion of a study funded by the USDA and the National Institute of Food and Agriculture (“NIFA”) which demonstrated SteraMist iHP as an effective treatment of deformed wing virus (“DWV”) contaminated hive substrates.
Previous report
In 2024, we will continue to use research and testing to inform the marketplace of the effectiveness of our products. One goal of TOMI is to make SteraMist a recommended best practice to minimize emergency responder exposures to synthetic opioids, including fentanyl and fentanyl analogs.
Previous report
We are also investigating whether SteraMist can play a role in controlling the environmental impact from perfluorooctane sulfonate (PFOS) and perfluorooctanoic acid (PFOA). These substances and group of chemicals have been released to the environment through industrial manufacturing and through the use and disposal of PFAS containing products. As a result, they are found across all trophic levels in the soil, air, and groundwater at sites across the United States and the rest of the world.
Previous report
On April 26, 2023, we announced that approximately 20 billion medical devices are sterilized per year with Ethelene oxide and a proposal restriction restricting its usage could create a significant market void that may be filled with alternative sterilization processes such as TOMI’s patented Binary Ionization Technology ® (BIT™) Technology.
Previous report
On March 14, 2024, the New York Times published an article “E.P.A. Sets Limits on Carcinogenic Gas Used to Sterilize Medical Devices” which stated,
Previous report
The Environmental Protection Agency is imposing new restrictions on the emissions of ethylene oxide, a colorless gas that is widely used to sterilize medical devices and is also a carcinogen.
Previous report
The regulation, which is expected to be finalized shortly, would force sterilizing plants and other facilities that use ethylene oxide to install pollution controls to reduce emissions of the gas by about 90 percent.
Previous report
It would mark the first time in 20 years that the government has tightened limits on the amount of the gas permitted to escape from a manufacturing facility.
Previous report
Ethylene oxide is used in a number of products but is applied to about half the medical equipment made in the United States to reduce the risk of infection.
Previous report
When inhaled, the gas can irritate the eyes, nose, throat and lungs, and has been linked to lymphoid and breast cancer as well as damage to the brain and nervous and reproductive systems.
Previous report
It is still very early in the process, but this could lead to opportunities in large manufacturing faculties that would have a need for our custom unit built-ins in the manufacturing of medical equipment to replace ethylene oxide, as SteraMist’s only by-product environmentally is humidity and oxygen.
Previous report
In the first quarter of 2024, we were invited to submit a proposal and apply to the Department of Defense to participate in a $3,000,000 grant in connection with mitigation of ethylene oxide a known carcinogenic. In May 2024, we submitted our proposal and application to participate in the grant.
Previous report
Product and Service Revenue
Previous report
Our service-based revenue for the three months ended March 31, 2024 and 2023, was $371,000 and $306,000, respectively, representing an increase of $65,000. The increase in service revenue was due to higher demand in the current year period.
Previous report
Revenue by Geographic Region
Previous report
Our domestic revenue for the three months ended March 31, 2024 and 2023 was $662,000 and $1,128,000, respectively, a decrease of $466,000, when compared to the same prior year period.
Previous report
Internationally, our revenue for the three months ended March 31, 2024 and 2023, was approximately $452,000 and $454,000, respectively, representing a decrease of $2,000 when compared to the same prior year period.
Previous report
Research and development expenses for the three months ended March 31, 2024 were approximately $68,000, as compared to $71,000 for the quarter ended March 31, 2023, representing a decrease of approximately $3,000.
Previous report
Consulting fees were $114,000 and $75,000 for the three months ended March 31, 2024 and 2023, respectively, representing an increase of $39,000, in the current quarter period. The increase in consulting fees is due to the additional business development-related consulting projects which occurred in the current year period that did not occur in the prior year period.
Showing the first 40 of 42 passages. Open the source sections for the rest.
Reworded paragraphs (33)
Previous wording
On March 7, 2024, we announced an expansion in its SteraMist iHP Corporate Service contracts with the addition of new partners including the University of Texas and Rising Pharmaceuticals reaffirming its position as a leading provider of decontamination services to corporate clients in the life sciences industry.
Current wording
This year the service decontamination sector experienced a change within one of our primary competitors, which has resulted in an influx of additional leads for our company. On March 7, 2024, we announced an expansion in its SteraMist iHP Corporate Service contracts through the addition of new partners including the University of Texas and Rising Pharmaceutical. This strategic growth continued into the second quarter with the onboarding of Cornell, GlaxoSmithKline, and additional ThermoFisher facilities. These new customers reaffirm iHP’s position as a leading decontamination technology provider to corporate clients within the life sciences industry.
Previous wording
To date, we have received 16 orders for CES systems. With the successful completion of each project, our iHP technology is rapidly gaining popularity as the preferred decontamination solution for pharmaceutical and biotech companies. Further, as we continue to install our technology in new CES projects, the product line evolves into a comprehensive turnkey solution.
Current wording
To date, we have received 19 orders for CES systems. With the successful completion of each project, our iHP technology is rapidly gaining popularity as the preferred decontamination solution for pharmaceutical and biotech companies. Further, as we continue to install our technology in new CES projects, the product line evolves into a comprehensive turnkey solution.
Previous wording
Indeed, the timing is favorable as the industry is experiencing a shift towards modular cleanroom requirements. The adaptability and efficiency offered by our iHP technology align perfectly with the changing needs of cleanroom setups. This trend allows us to capitalize on the increasing demand for flexible and scalable cleanroom solutions, further enhancing the relevance and value of our products within the industry.
Current wording
We believe our industry is experiencing a shift towards modular cleanroom requirements which may benefit our business operations. The adaptability and efficiency offered by our iHP technology align perfectly with the changing needs of cleanroom setups. This trend allows us to capitalize on the increasing demand for flexible and scalable cleanroom solutions, further enhancing the relevance and value of our products within the industry.
Previous wording
Subsequent to the close of the first quarter, we announced the company has received the Gold Safety Award from Highwire. The award is presented to TOMI in recognition of the Company achieving a score of between 85-94 on the Highwire Safety Assessment. Highwire’s Safety Assessment reviews a company’s historic and current safety performance. The program provides a thorough, objective, and consistent evaluation of company performance so clients and contractors can identify, monitor, and mitigate risks more effectively. The results provide a strong indicator of how a contractor values safety and serve as a reliable predictor of future performance.
Current wording
On April 3, 2024, we announced the company has received the Gold Safety Award from Highwire. The award is presented to TOMI in recognition of the Company achieving a score of between 85-94 on the Highwire Safety Assessment. Highwire’s Safety Assessment reviews a company’s historic and current safety performance. The program provides a thorough, objective, and consistent evaluation of company performance so clients and contractors can identify, monitor, and mitigate risks more effectively. The results provide a strong indicator of how a contractor values safety and serve as a reliable predictor of future performance.
Previous wording
Our SteraMist® BIT™ solution product line is currently made up of a 32-ounce bottle for the SteraPak, a ten (10) liter, five (5) gallon, 55-gallon drum for our custom built-ins and our traditional one (1) gallon bottle. This brings the BIT Solution product line to a total of five (5) options provided to our customers, which will benefit our razor/razor-blade business model.
Current wording
Our SteraMist® BIT™ solution product line is currently made up of a 32-ounce bottle for the SteraPak, a ten (10) liter, five (5) gallon, 55-gallon drum for our custom built-ins and our traditional one (1) gallon bottle. This brings the BIT Solution product line to a total of five (5) options provided to our customers, which will benefit our razor/razor-blade business model. Where our SteraMist delivery systems represent the razor and our proprietary BIT Solution represents the razor blade.
Previous wording
Introducing a revolutionary approach to disinfection and decontamination, our technology offers a streamlined and effective solution. By harnessing the power of atmospheric chemistry, our process converts 7.8% hydrogen peroxide into a plasma-generated hydroxyl radical, achieving a 6-log and greater kill of pathogens leaving only oxygen and humidity as by-products. It’s a simple yet effective solution that sets a new standard for global cleaning disinfection decontamination practices.
Current wording
Introducing a revolutionary approach to disinfection and decontamination, our technology offers a streamlined and effective solution. By harnessing the power of atmospheric chemistry, our process converts 7.8% hydrogen peroxide into a plasma-generated hydroxyl radical, achieving a 6-log and greater kill of pathogens leaving only oxygen and humidity as by-products. It is a simple yet effective solution that sets a new standard for global cleaning disinfection decontamination practices.
Previous wording
SteraMist products are designed to address a wide spectrum of industries using iHP. Our operations consist of five main divisions based on our current target industries: Life Sciences, Hospital-HealthCare, TSN, Food Safety, and Commercial. Launched in sequential order as listed to either strategically address the needs and/or ensure compliance with the specific regulations governing each industry segment.
Current wording
SteraMist products are designed to address a wide spectrum of industries using iHP. Our operations consist of five main divisions based on our current target industries: Life Sciences, Hospital-HealthCare,TOMI Service Network, Food Safety, and Commercial. Launched in sequential order as listed to either strategically address the needs and/or ensure compliance with the specific regulations governing each industry segment.
Previous wording
In 2024, it’s estimated that approximately 7-10% of patients admitted to healthcare facilities worldwide will acquire at least one HAI during their stay. This translates to millions of cases annually, with significant economic burdens and human costs. Furthermore, the emergence of antimicrobial-resistant pathogens poses a growing threat, exacerbating the challenge of infection control in healthcare settings.
Current wording
In 2024, it is estimated that approximately 7-10% of patients admitted to healthcare facilities worldwide will acquire at least one HAI during their stay. This translates to millions of cases annually, with significant economic burdens and human costs. Furthermore, the emergence of antimicrobial-resistant pathogens poses a growing threat, exacerbating the challenge of infection control in healthcare settings.
Previous wording
The TSN addressed many cleaning protocols that changed permanently due to the COVID-19 pandemic, and our network plays a significant role in facilitating and maintaining these protocols. COVID-19 highlighted the limitations of reactive approaches to cleanliness and hygiene. Recognizing this, TOMI is now championing a proactive approach to disinfection. While the pandemic may have initially spurred reactive measures, we are advocating for a shift towards proactive, ongoing disinfection protocols.
Current wording
TSN is an expansive network consisting of professionals who are exclusively licensed and trained to use the SteraMist products. TOMI trains and services a wide array of professional remediation companies in the use of SteraMist. The TSN addressed many cleaning protocols that changed permanently due to the COVID-19 pandemic, and our network plays a significant role in facilitating and maintaining these protocols. COVID-19 highlighted the limitations of reactive approaches to cleanliness and hygiene. Recognizing this, TOMI is now championing a proactive approach to disinfection. While the pandemic may have initially spurred reactive measures, we are advocating for a shift towards proactive, ongoing disinfection protocols.
Previous wording
Through consistent and persistent efforts, we are slowly but steadily changing minds across all industries that individuals interact with in their daily lives. By emphasizing the importance of maintaining clean and safe environments as a preemptive measure providing long-term benefits of proactive disinfection in ensuring the health and well-being of their employees, customers, and communities, rather than merely reacting to immediate threats, we are promoting a culture of preventive healthcare via our TSN.
Current wording
Through consistent and persistent efforts, we are slowly but steadily changing minds across all industries that individuals interact with in their daily lives. By emphasizing the importance of maintaining clean and safe environments as a preemptive measure providing long-term benefits of proactive disinfection in ensuring the health and well-being of their employees, customers, and communities, rather than merely reacting to immediate threats, we are promoting a culture of preventive healthcare. To do this more widely, we needed to offer something more than theSPC to the world.
Previous wording
TOMI’s latest venture, the SteraMist Pro Certified (SPC) program, signifies a significant step towards industry excellence. Our aim is to establish a standard that reflects a commitment to continuous improvement, adherence to evolving disinfection and biohazard response norms, and dedication to setting benchmarks in the field.
Current wording
The SteraMist Pro Certified (SPC) program, signifies a significant step towards industry excellence. Our aim is to establish a standard that reflects a commitment to continuous improvement, adherence to evolving disinfection and biohazard response norms, and dedication to setting benchmarks in the field.
Previous wording
In 2023, we made significant strides in boosting brand awareness within the food safety industry through targeted promotion and marketing initiatives. Leveraging a similar strategy to what proved successful in the Life Sciences sector; we focused on building a customer base through referrals and feasibility studies, gradually expanding our reach. By fostering relationships with key supporters of our technology and remaining patient in our approach, we have finally laid a foundation. In 2024, we expect to continue to expand and grow our presence in this critical market segment.
Current wording
We have made significant strides in boosting brand awareness within the food safety industry through targeted promotion and marketing initiatives. Leveraging a similar strategy to what proved successful in the Life Sciences sector, we focused on building a customer base through referrals and feasibility studies, gradually expanding our reach. By fostering relationships with key supporters of our technology and remaining patient in our approach, we have finally laid a foundation and expect to continue to expand and grow our presence in this critical market segment.
Previous wording
Our portfolio includes more than 25 Utility or Design Patents worldwide which expire at various dates through the year 2038 for both method and system claims on SteraMist® BIT™, as well as design of devices. We continue to pursue further claims to additional capabilities in on-going United States and worldwide patent applications. We have obtained three related United States utility patents, giving us protection of our technology until the year 2038. We have obtained utility patents for our technologies in diverse countries such as Brazil, Japan, Korea, Israel, Australia, Taiwan, Canada, Mexico, Europe, Singapore, New Zealand, and, currently pending, in the UK, and continue to pursue protections all over the world.
Current wording
Our portfolio includes more than 25 Utility or Design Patents worldwide which expire at various dates through the year 2038 for both method and system claims on SteraMist® BIT™, as well as design of devices. We continue to pursue further claims to additional capabilities in on-going United States and worldwide patent applications. We have obtained four related United States utility patents, giving us protection of our technology until the year 2038. We are further pursing patent protection for our backpack decontamination units and mobile carts in the United States. We have obtained utility patents for our technologies in diverse countries such as Brazil, Japan, Korea, Israel, Australia, Taiwan, Canada, Mexico, Europe, Singapore, New Zealand, and, currently pending, in the UK, and continue to pursue protections all over the world.
Previous wording
We have submitted utility patent applications in multiple jurisdictions and countries, including Europe, China, Brazil, Korea and Australia for further additional applications of SteraMist BIT, and a related application has already been determined novel and inventive in Taiwan, Japan, Israel, New Zealand, Australia and Singapore. We have recently filed new patent pending applications on novel uses and enhancements of our technology in the United States. We have been awarded a design patent on our surface-mounted applicator device in the United States, China, Japan, Taiwan, and Korea. We have filed and have been granted or have pending acceptance on 32 separate design patents for our: Decontamination Chamber(s), Decontamination Applicator, Decontamination Cart, Applicator, and Surface Mounted Applicator 90-Degree Device. These patents are published around the world, including but not limited to the United States, China, Hong Kong, Europe, United Kingdom, Singapore, Taiwan, Vietnam, Canada, South Korea, and Japan. We are also pursuing IP protection for further applications of our SteraMist BIT in diverse fields in multiple jurisdictions, such as food decontamination and, in installed systems for the application of iHP for the protection of buildings post outbreak or after a biological attack. With worldwide attention on the etiology of SARs CoV2 coming from a lab leak, attention on the prevention and control of a leak or mishap should be on the mind of all the biological labs managers around the world. The fact that iHP and our BIT platform can be incorporated in new or existing buildings to create an “immune building” should assist in further lab applications of SteraMist in the biosecurity industry in the future. Our current patents with claims to systems already serve to provide protection for our technology in this area and our on-going pending applications will further enhance the scope of our intellectual property.
Current wording
We have submitted utility patent applications in multiple jurisdictions and countries, including Europe, China, Brazil, Korea and Australia for further additional applications of SteraMist BIT, and a related application has already been determined novel and inventive in Taiwan, Japan, Israel, New Zealand, Australia and Singapore. We have recently filed new patent pending applications on novel uses and enhancements of our technology in the United States. We have been awarded a design patent on our surface-mounted applicator device in the United States, China, Japan, Taiwan, and Korea. We have filed and have been granted or have pending acceptance on 32 separate design patents for our: Decontamination Chamber(s), Decontamination Applicator, Decontamination Cart, Applicator, and Surface Mounted Applicator 90-Degree Device. These patents are published around the world, including but not limited to the United States, China, Hong Kong, Europe, United Kingdom, Singapore, Taiwan, Vietnam, Canada, South Korea, and Japan. We are also pursuing IP protection for further applications of our SteraMist BIT in diverse fields in multiple jurisdictions, such as food decontamination and, in installed systems for the application of iHP for the protection of buildings post outbreak or after a biological attack. With worldwide attention on the etiology of SARs CoV2 coming from a lab leak, attention on the prevention and control of a leak or mishap should be on the mind of all the biological labs managers around the world. The fact that iHP and our BIT platform can be incorporated in new or existing buildings to create an “immune building” should assist in further lab applications of SteraMist in the biosecurity industry in the future. Our current patents with claims to systems already serve to provide protection for our technology in this area and our on-going pending applications will further enhance the scope of our intellectual property. Initial findings for our filed improvement applicator designs in cell biology may be followed by designation applications in many countries.
Previous wording
During the three months ended March 31, 2024, our debt and liquidity positions were affected by the following:
Current wording
During the six months ended June 30, 2024, our debt and liquidity positions were affected by the following:
Previous wording
Results of Operations for the Three Months Ended March 31, 2024 Compared to the Three Months Ended March 31, 2023:
Current wording
Results of Operations for the Three and Six Months Ended June 30, 2024 Compared to the Three and Six Months Ended June 30, 2023:
Previous wording
Total revenue for the three months ended March 31, 2024 and 2023, was $1,114,000 and $1,582,000, respectively, representing a decrease of $486,000 compared to the same prior year period. The decrease in revenue was attributable to the timing of customer orders and the related revenue recognition.
Current wording
Total revenue for the three months ended June 30, 2024 and 2023, was $3,013,000 and $2,775,000, respectively, representing an increase of $238,000 or 9% compared to the same prior year period. Product based revenues for the six months ended June 30, 2024 and 2023, were $4,127,000 and $4,357,000, representing a decrease of $230,000 or 5% when compared to the same prior year period. The decrease in product based revenue was attributable to the timing of customer orders and the related revenue recognition.
Previous wording
SteraMist Product-based revenues for the three months ended March 31, 2024 and 2023, were $743,000 and $1,276,000, representing a decrease of $533,000 when compared to the same prior year period. The decline in revenue was attributable to the lower equipment revenue in the current year period as a result of the timing of customer orders and the related revenue recognition.
Current wording
SteraMist Product-based revenues for the three months ended June 30, 2024 and 2023, were $2,728,000 and $2,272,000, representing an increase of $456,000 or 20% when compared to the same prior year period. The increase in revenue was attributable to the higher equipment revenue in the current year period as a result of the timing of customer orders and the related revenue recognition. For the six months ended June 30, 2024 and 2023, our total revenue was $3,471,000 and $3,548,000, respectively, representing a decrease of $77,000, or 2% compared to the same prior year period.
Previous wording
Cost of sales was $443,000 and $641,000 for the three months ended March 31, 2024 and 2023, respectively, a decrease of $198,000, compared to the prior year. The decrease in cost of sales was primarily due to the lower sales. Our gross profit as a percentage of sales for the three months ended March 31, 2024 was 60% compared to 59% in the same prior period, respectively.
Current wording
Cost of sales was $1,159,000 and $1,074,000 for the three months ended June 30, 2024 and 2023, respectively, an increase of $85,000 or 8%, compared to the prior year. The increase in cost of sales was primarily due to the higher sales. Our gross profit as a percentage of sales for the three months ended June 30, 2024 was 62% compared to 61% in the same prior period, respectively.
Previous wording
Professional fees were $198,000 and $137,000 for the three months ended March 31, 2024 and 2023, respectively, an increase of approximately $61,000, in the current year period. The increase in professional fees was primarily due to higher legal fees we incurred in connection with distributor and OEM agreements.
Current wording
Professional fees were $282,000 and $249,000 for the six months ended June 30, 2024 and 2023, respectively, an increase of approximately $33,000, or 13%, in the current year period. The increase in professional fees was primarily due to higher legal fees we incurred in connection with distributor and OEM agreements.
Previous wording
Depreciation and amortization were approximately $78,000 and $89,000 for the three months ended March 31, 2024 and 2023, respectively, representing a decrease of $11,000.
Current wording
Depreciation and amortization were approximately $77,000 and $91,000 for the three months ended June 30, 2024 and 2023, respectively, representing a decrease of $14,000 or 15%.
Previous wording
Selling expenses for the three months ended March 31, 2024 were approximately $289,000, as compared to $377,000 for the quarter ended March 31, 2023, representing a decrease of approximately $88,000. The decline in selling expenses is due to lower payroll costs due to a reduced employee headcount current year period.
Current wording
Selling expenses for the three months ended June 30, 2024 were approximately $366,000, as compared to $501,000 for the quarter ended June 30, 2023, representing a decrease of approximately $135,000 or 27%. The decline in selling expenses is due to lower sales commission incurred in the current year period due to less sales generated by third party representatives.
Previous wording
General and administrative expenses were $1,151,000 and $1,381,000 for the three months ended March 31, 2024 and 2023, respectively, a decrease of $230,000 in the current period. The decline is attributable to lower equity based on compensation in the current year period as well a charge associated with shares issued to our board of directors in the prior period which did not reoccur in the current year period.
Current wording
General and administrative expenses were $1,121,000 and $943,000 for the three months ended June 30, 2024 and 2023, respectively, an increase of $178,000 or 19% in the current period. The increase is attributable to higher equity based on compensation in the current year period as well as a charge associated with shares issued to our board of directors in the current period which did not occur in the prior period.
Previous wording
Interest income was approximately $10,000 and $1,000 for the three months ended March 31, 2024 and 2023, respectively.
Current wording
Interest income was approximately $12,000 and $1,000 for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
Interest expense was $94,000 and $0 for the three months ended March 31, 2024 and 2023, respectively. The interest expense is attributable to the convertible notes.
Current wording
The interest expense is attributable to the convertible notes.
Previous wording
As of March 31, 2024, we had cash and cash equivalents of approximately $1,093,000 and working capital of $6,571,000. Our principal capital requirements are to fund operations, invest in research and development and capital equipment, and the continued costs of compliance with public company reporting requirements. We have historically funded our operations through funds generated through operations and debt and equity financings. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and may include operating and financial covenants that would restrict our operations. We cannot be certain that any financing will be available in the amounts we need or on terms acceptable to us, if at all.
Current wording
As of June 30, 2024, we had cash and cash equivalents of approximately $709,000 and working capital of $6,828,000. Our principal capital requirements are to fund operations, invest in research and development and capital equipment, and the continued costs of compliance with public company reporting requirements. We have historically funded our operations through funds generated through operations and debt and equity financings. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations and may include operating and financial covenants that would restrict our operations. We cannot be certain that any financing will be available in the amounts we need or on terms acceptable to us, if at all.
Previous wording
For the three months ended March 31, 2024 and 2023, we incurred losses from operations of ($1,226,000) and ($1,188,000), respectively. Cash used in operations for the three months ended March 31, 2024 and 2023 was ($1,178,000) and ($1,363,000), respectively
Current wording
For the six months ended June 30, 2024 and 2023, we incurred losses from operations of ($1,105,000) and ($1,277,000), respectively. Cash used in operations for the six months ended June 30, 2024 and 2023 was ($1,558,000) and ($2,198,000), respectively.
Previous wording
A breakdown of our statement of cash flows for the three months ended March 31, 2024 and 2023 is provided below:
Current wording
A breakdown of our statement of cash flows for the six months ended June 30, 2024 and 2023 is provided below:
Previous wording
Cash used in investing activities for the three months ended March 31, 2024 and 2023 was $95,000 and 34,000, respectively. The increase was attributable to higher property and equipment purchased in the current year period.
Current wording
Cash used in investing activities for the six months ended June 30, 2024 and 2023 was $99,000 and $94,000, respectively. The increase was attributable to higher property and equipment purchased in the current year period.
Previous wording
Cash provided by financing activities for three months ended March 31, 2024 and 2023 was $27,500 and $0, respectively. The increase is attributable to the proceeds from the exercise of stock options.
Current wording
Cash provided by financing activities for six months ended June 30, 2024 and 2023 was $28,000 and $0, respectively. The increase is attributable to the proceeds from the exercise of stock options.
Previous wording
We believe that our existing balance of cash and cash equivalents and amounts expected to be provided by operations will provide us with sufficient financial resources to meet our cash requirements for operations, working capital and capital expenditures over the next twelve months. See Footnote 2 to the Financial Statements. We may consider financing transactions to fund our operations if opportunities arise. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures. Debt financing would also result in fixed payment obligations.
Current wording
We believe that our existing balance of cash and cash equivalents and amounts expected to be provided by operations will provide us with sufficient financial resources to meet our cash requirements for operations, working capital and capital expenditures over the next twelve months. We may consider financing transactions to fund our operations if opportunities arise. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures. Debt financing would also result in fixed payment obligations.
Previous wording
The gross proceeds from the transaction are approximately $2,600,000, before deducting the placement agent’s fees and other estimated offering expenses. We intend to use the net proceeds from this offering for working capital and other general corporate purposes. The initial closing of the Private Placement occurred on November 7, 2023.
Current wording
The gross proceeds from the transaction are approximately $2,600,000, before deducting the placement agent’s fees and other estimated offering expenses. The initial closing of the Private Placement occurred on November 7, 2023.
Previous wording
We assess long-lived assets for potential impairments at the end of each year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the asset. In evaluating long-lived assets for impairment, we measure recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If our long-lived assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value. We base the calculations of the estimated fair value of our long-lived assets on the income approach. For the income approach, we use an internally developed discounted cash flow model that includes, among others, the following assumptions: projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. We base these assumptions on our historical data and experience, industry projections, micro and macro general economic condition projections, and our expectations. We had no long-lived asset impairment charges for the three months ended March 31, 2024 and 2023.
Current wording
We assess long-lived assets for potential impairments at the end of each year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the asset. In evaluating long-lived assets for impairment, we measure recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If our long-lived assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value. We base the calculations of the estimated fair value of our long-lived assets on the income approach. For the income approach, we use an internally developed discounted cash flow model that includes, among others, the following assumptions: projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. We base these assumptions on our historical data and experience, industry projections, micro and macro general economic condition projections, and our expectations. We had no long-lived asset impairment charges for the three and six months ended June 30, 2024 and 2023.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Interest income was approximately $2,000 and $0 for the three months ended June 30, 2024 and 2023.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
TSN is an expansive network consisting of professionals who are exclusively licensed and trained to use the SteraMist products. With the purchase of SteraMist and joining TSN, TOMI trains and services a wide array of professional remediation companies in the use of SteraMist throughout the TSN division. TSN allows for increased accessibility and brand awareness of iHP services to facilities in need of local routine and emergency disinfection and decontamination.
Previous report — wording carried elsewhere
On February 29, 2024, we announced the signing of a new contract for a SteraMist iHP Custom Engineered System (CES) installation with a California-based life sciences company. The contracted iHP Custom Engineered System (CES) is valued at approximately $600,000. This system, featuring six applicators, will be integrated into a clinical suite, and is expected to be fully installed by the end of the third quarter in 2024.
Previous report — wording carried elsewhere
On March 7, 2024, announced an expansion in its SteraMist iHP Corporate Service contracts with the addition of new partners including the University of Texas and Rising Pharmaceuticals reaffirming its position as a leading provider of decontamination services to corporate clients in the life sciences industry.
Previous report — wording carried elsewhere
On April 3, 2024, we announced the company has received the Gold Safety Award from Highwire. The award is presented to TOMI in recognition of the Company achieving a score of between 85-94 on the Highwire Safety Assessment.