TOMI Environmental Solutions Inc
For the period ended Sep 30, 2024. Filed Oct 30, 2024.
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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.
Sep 30, 2024 · Filed Oct 30, 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 2024-06-30; filed 2024-08-01.
0001654954-24-009807
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-30.
0001654954-24-013506
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 208 previous paragraphs and 204 current paragraphs.
125 unchanged; 55 reworded; 24 added; 26 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 17 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 (24)
Current report
Revenue for the third quarter 2024 was $2,542,000 which represents $1,072,000 or 73% growth compared to the third quarter of the prior year. The higher revenue was attributable to increased demand for our mobile units and higher iHP service revenue.
Current report
Our gross profit margins for the three months ended September 30, 2024 were 61.4%, compared to 55% in the same prior year period. The improved gross profit margins were attributable to our product mix in sale and the increased demand for our mobile equipment.
Current report
Our General and Administrative expenses declined by $148,000 or 4% during the first nine months ended September 30, 2024 compared to the same period in 2023. This decrease was primarily due to operating expense controls, lower executive compensation and a reduction in consultant fees.
Current report
During 2024, the service decontamination sector experienced shifts among key competitors, resulting in an increased volume of leads for our company. On March 7, 2024, we announced the expansion of SteraMist iHP Corporate Service contracts through the addition of new strategic partners. This growth accelerated through the second quarter and has seen substantial momentum in the third quarter, with record-breaking revenue. We continue to support key clients, including Pfizer, Inc. and Thermo Fisher Scientific facilities, while successfully onboarding new customers such as Integra life sciences, Curia, and multiple smaller engagements within the Food Safety sector. These new relationships are expected to drive future sales across both capital equipment and routine service contracts. The addition of these customers further solidifies iHP’s position as a market leader in advanced decontamination solutions, serving corporate clients across life sciences and adjacent industries.
Current report
We recently launched a targeted campaign aimed at domestic manufacturers of cleanroom construction and general building companies that may require decontamination services as part of their project bids. This outreach extends to both existing partners and new prospects involved in modular cleanrooms, construction design firms, mobile healthcare pods, and related sectors. The campaign has already gained traction, resulting in numerous sales presentations. While many of these opportunities are geared toward long-term engagements, our expanded product offerings and scalable solutions—designed to meet varying industry needs—position us for sustained sales growth in the coming year and beyond.
Current report
To further highlight the effectiveness of SteraMist iHP technology in the food industry, TOMI announced several collaborative efforts with prominent organizations on new studies exploring expanded applications and benefits of SteraMist iHP. These partnerships have also opened doors to additional opportunities through introductions to their suppliers. One of these collaborations involves a leading producer of health, hygiene, and nutrition products, where we are developing a specialized application for spraying conveyor belts to streamline the decontamination process for packaged goods, targeting pathogens such as Salmonella and Listeria. This initiative represents a significant addition to our client portfolio, aligning with market trends driven by growing health awareness and increasing demand for sustainable, premium products. Additionally, TOMI will soon begin a project with a major conglomerate focused on the decontamination of heart monitoring devices to add to our focus on healthcare initiatives.
Current report
We would also like to emphasize that we are fully aware of the numerous challenges currently impacting the food market. In response, we have proactively engaged with key industry players to offer our solutions and support.
Current report
Key international sales highlights from the third quarter include our expansion into the Indian market, a highly competitive arena within the decontamination sector and a critical focus of TOMI’s global growth strategy. We secured approximately $150,000 in initial purchases, demonstrating our ability to successfully penetrate this challenging market. Establishing a foothold in India underscores the unrivaled effectiveness of SteraMist iHP technology and reinforces our competitive positioning.
Current report
Additionally, we achieved significant progress in Q3 with one of our platinum customers expanding their use of SteraMist iHP to a facility in South Africa. This marks their fourth location utilizing SteraMist technology and services, following successful implementations in Chile, Portugal, and Brazil.
Current report
This partnership has proven highly effective, with these facilities now purchasing mobile units and pallets of solution through the Nevada-based consultant. His expertise has been instrumental in driving broader adoption of SteraMist iHP technology across multiple sites and uses of SteraMist iHP.
Current report
SteraMist Pro Certified (“SPC”) - New Program Offering
Current report
As a result, we will no longer maintain the TOMI Service Network (TSN) in its current form. Instead, we launched a proactive program now available to all our customers—including those in Life Sciences, Healthcare, Food Safety, and Commercial sectors. This on-demand program reflects our proactive approach, leveraging the expertise of all partners and key relationships to strengthen our brand and global presence. Through these valuable relationships we have built with industry experts, we continue to advance contamination control and validation practices.
Current report
With SteraMist iHP, we now have a game-changing technology across four key industries, capable of addressing everything from routine cleaning to complex cleanroom decontamination, patient healthcare environments, biohazard management, and border control along with an educational platform. Our domestic and international service provider partnerships are essential in driving this mission forward and expanding our impact worldwide.
Current report
Total revenue for the nine months ended September 30, 2024, was $6,670,000, a 14.5% increase or $843,000 compared to $5,827,000 for the nine months ended September 30, 2023. This growth was driven by higher sales of SteraMist products and iHP Service Revenue.
Current report
On August 22, 2024, we announced the expansion of its partnership with a global leader in laboratory testing and diagnostics services with multiple mobile equipment purchases and a Custom Engineered System (CES) to support the expansion of their Wisconsin facility.
Current report
On September 6, 2024, we announced that Elissa J. Shane, Chief Operating Officer, and Joe Rzepka, Chief Financial Officer, will be participating in the H.C. Wainwright 24 th Annual Global Investment Conference to be held September 9-11, 2024, at the Lotte New York Palace Hotel in New York City.
Current report
Cost of sales was $2,583,000 and $2,376,000 for the nine months ended September 30, 2024 and 2023, respectively, an increase of $207,000, or 9%, compared to the prior year. The increase in cost of sales was primarily due to the higher sales.
Current report
Research and development expenses for the three months ended September 30, 2024 were approximately $56,000, as compared to $76,000 for the quarter ended September 30, 2023, representing a decrease of approximately $20,000 or 26%. 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
Research and development expenses for the nine months ended September 30, 2024 were approximately $186,000, as compared to $221,000 for the quarter ended September 30, 2023, representing a decrease of approximately $35,000, or 16%. 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
General and administrative expenses were $910,000 and $1,005,000 for the three months ended September 30, 2024 and 2023, respectively, a decrease of $95,000 or 9% in the current period. The decrease is attributable to the reduction in executive salaries and reduced overhead related to the closing of a satellite office space.
Current report
Interest expense was $94,000 and $0 for the three months ended September 30, 2024 and 2023, respectively.
Current report
Interest expense was $281,000 and $0 for the nine months ended September 30, 2024 and 2023, respectively.
Current report
Our cash and cash equivalents at September 30, 2024 of $809,000 represented an increase of $100,000 when compared to the cash and cash equivalents balance of $709,000, as of June 30, 2024, as we were cash flow positive for the three months ended September 30, 2024.
Current report
Cash used in operations for the nine months ended September 30, 2024 and 2023 was $1,453,000 and $2,362,000, respectively. The decrease was attributable to a lower current year loss and management’s planned overhead cost reductions.
Removed paragraphs (26)
Previous 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.
Previous 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.
Previous 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.
Previous report
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 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.
Previous 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.
Previous report
TOMI Service Network (“TSN”) New Program Offering
Previous report
SteraMist equipment ownership: Demonstrating a commitment to utilizing SteraMist technology for effective disinfection.
Previous report
Public health commitment: Upholding a dedication to safeguarding public health through rigorous disinfection practices.
Previous report
Training excellence: Ensuring thorough and ongoing training for personnel involved in disinfection procedures.
Previous report
Employee awareness and training: Fostering a culture of awareness and competence among staff regarding disinfection protocols.
Previous report
Equipment maintenance assurance: Guaranteeing the proper maintenance and upkeep of SteraMist equipment to optimize performance.
Previous report
Internal self-audit program: Implementing regular self-assessment processes to monitor and improve disinfection practices.
Previous report
Customer feedback innovation: Embracing customer feedback to drive innovation and enhance service delivery.
Previous report
Continuous improvement documentation: Documenting efforts to continuously enhance disinfection practices and procedures.
Previous report
Environmental sustainability commitment: Incorporating environmentally sustainable practices into disinfection operations.
Previous report
Emergency response plan with risk assessment: Developing comprehensive plans and risk assessments to effectively respond to emergencies.
Previous 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.
Previous report
·Net cash used in operations of approximately $1,558,000.
Previous 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.
Previous 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%.
Previous 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%.
Previous report
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 report
Interest expense was $93,000 and $0 for the three months ended June 30, 2024 and 2023, respectively.
Previous report
Interest expense was $187,000 and $0 for the six months ended June 30, 2024 and 2023, respectively.
Previous report
Cash used in operations for the six months ended June 30, 2024 and 2023 was $1,558,000 and $2,198,000, respectively.
Reworded paragraphs (55)
Previous wording
Unless otherwise stated, all information presented herein is based on the Company’s fiscal calendar, and references to particular years, quarters, months or periods refer to the Company’s fiscal years ended in December and the associated quarters, months and periods of those fiscal years. Each of the terms the “Company” and “TOMI” as used herein refers collectively to TOMI Environmental Solutions, Inc. unless otherwise stated.
Current wording
Unless otherwise stated, all information presented herein is based on the Company’s fiscal calendar, and references to years, quarters, months or periods refer to the Company’s fiscal years ended in December and the associated quarters, months and periods of those fiscal years. Each of the terms the “Company” and “TOMI” as used herein refers collectively to TOMI Environmental Solutions, Inc. unless otherwise stated.
Previous wording
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 wording
We continue to see improved financial results as the third quarter marks our second consecutive profitable quarter in our 2024 calendar year. The improved financial results are largely due to higher revenue, improved gross profit margins, and strategic reductions in operating expenses. We also were cash flow positive in the third quarter due to the improved turnover in our accounts receivable and lower monthly outgoing cash expenditures with management’s spending cuts. We continue to expand our customer base and secured significant agreements and new partnerships.
Previous wording
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 wording
For the nine months ended September 30, 2024, TOMI reported a 14.5% increase in revenue, amounting to $6,670,000, compared to the same period in 2023. This growth was primarily driven by higher mobile equipment sales, with our mobile SteraMist equipment increasing 90% in 2024 compared to 2023.
Previous wording
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 wording
For the nine months ended September 30, 2024, our international revenue grew by 82%, driven by new customers in Canada, South Africa, and India, compared to the same period in 2023.
Previous wording
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 wording
Our total recognized revenue and backlog for the nine months ended September 30, 2024 amounted to $7,200,000, consisting of approximately $6,700,000 in recognized revenue and a sales backlog of approximately $500,000 at the end of September 2024.
Previous wording
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 wording
During the third quarter, management continued cost reduction initiatives that lowered our operating expenses by 10% compared to the same period last year. Additionally, our operating expenses in the third quarter of 2024 decreased by 19% compared to the second quarter of 2024 as a result of our cost-cutting measures.
Previous wording
We continue to pursue innovative solution and new markets for our versatile and environmentally friendly SteraMist iHP technology.
Current wording
We continue to pursue innovative solutions and new markets for our versatile and environmentally friendly SteraMist iHP technology.
Previous wording
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 wording
To enhance our market presence in the western United States, we formed a strategic partnership with EMAQ in the second half of the year. EMAQ has made a significant investment exceeding $1,000,000 in SteraMist iHP equipment and will act as our regional partner to expand iHP services in this area. This collaboration is expected to drive substantial growth in solution sales, leveraging our razor-and-blade business model—where SteraMist delivery systems represent the razor, and our proprietary BIT Solution serves as the razor blade that is designed to generate ongoing revenue. The partnership is progressing well, with both companies effectively combining strengths and resources to build business and expand opportunities.
Previous wording
Demand for our CES systems continues to grow as well as our portfolio of systems that have been built. In February 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.
Current wording
Demand for our CES systems continues to grow as our portfolio of systems that are being built. In February 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 qualified and in use by the end of the 2024 year.
Previous wording
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 wording
This year 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).
Previous 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.
Current wording
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
We believe our growing portfolio of CES systems will give us a competitive edge in the Life Sciences market segment, improving our brand recognition. This should create new business and sales opportunities for us. In addition, after our installed CES projects are fully qualified and established for use, and our portfolio grows, we anticipate this will have a positive impact on our long-term recurring BIT solution sales thus providing the potential to enhance our operating margins, further strengthening our position in the industry, and supporting sustainable growth.
Current wording
We believe our growing portfolio of CES systems will give us a competitive edge in the Life Sciences market segment, improving our brand recognition and creating new business and sales opportunities. In addition, after our installed CES projects are fully qualified and established for use, and as our portfolio grows, we anticipate this will have a positive impact on our long-term recurring BIT solution sales thus providing the potential to enhance our operating margins, further strengthening our position in the industry, and supporting sustainable growth.
Previous wording
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 wording
We maintain 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.
Previous wording
Recently, TOMI successfully installed the first SteraMist Hybrid at Indigo Pharmaceutical, Inc.’s existing research facility, which selected the SteraMist Hybrid because it met the client’s strict delivery timeline while adhering to the facility’s budget constraints. We remain in specification discussions with Indigo for a Custom Engineered System for a future site dedicated to injectables.
Current wording
TOMI successfully installed the first official SteraMist Hybrid at Xenith Pharmaceutical F/KA Indigo Pharmaceutical, Inc.’s existing research facility, which selected the SteraMist Hybrid because it met the client’s strict delivery timeline while adhering to the facility’s budget constraints. We remain in specification discussions with Xenith for a Custom Engineered System for a future site dedicated to injectables.
Previous wording
The SteraMist Transport has seen positive reception of its SteraMist Transport unit, an all-in-one dual voltage fogging product designed to treat a wide variety of vehicle sizes with an application time of only 20 minutes per 1,000 cubic feet. The initial batch of this innovative product is currently in a soft launch phase and was sold for live practical assessment with an existing international customer and domestic distributor.
Current wording
We have seen positive reception of its SteraMist Transport unit, an all-in-one dual voltage fogging product designed to treat a wide variety of vehicle sizes with an application time of only 20 minutes per 1,000 cubic feet. The initial batch of this innovative product is currently in a soft launch phase and was sold for live practical assessment with an existing international customer and domestic distributor.
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,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.
Current wording
SteraMist products are designed to address a wide spectrum of industries using iHP. Our operations consist of four main divisions based on our current target industries: Life Sciences, Hospital-HealthCare, 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
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.
Current wording
The TOMI Service Network or TSN, an expansive network consisting of professionals who are exclusively licensed and trained to use the SteraMist products. TOMI trained and serviced a wide array of professional remediation companies in the use of SteraMist. TheTSN addressed many cleaning protocols that changed permanently due to the COVID-19 pandemic, a network that played 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
In optimizing our communication, offerings, and requirements, we are prioritizing the categorization of Certification participants: Individuals, Sole Proprietors/Small Businesses, Franchises, and Internal/Departments. This classification will enable us to tailor our approach and support to meet the specific needs and challenges faced by each group. Our TOMI Service Network members and many current customers may fall within these categorizations and all that are eligible will be offered to join the SPC program.
Current wording
In optimizing our communication, offerings, and requirements, we are prioritizing the categorization of Certification participants: Individuals, Sole Proprietors/Small Businesses, Franchises, and Internal/Departments. This classification will enable us to tailor our approach and support to meet the specific needs and challenges faced by each group.
Previous wording
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 wording
SteraMist product-based revenue, which is primarily comprised of our mobile and CES equipment, was up 85% in the third quarter of the current year, when compared to the same prior year period.
Previous wording
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 wording
Our third-quarter international revenue grew by 230%, driven by new customers in Canada, South Africa and the India, compared to the same period in 2023.
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 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.
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 recently obtained new patents in Mexico and Japan. We have obtained four related United States utility patents, giving us protection of our technology until the year 2038; we are currently pursuing allowance for a fifth US patent for our backpack decontamination units and mobile carts. We have obtained utility patents for our technologies in diverse countries such as Brazil, Japan, Korea, Israel, Australia, Taiwan, Canada, Mexico, Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, The Netherlands, Portugal, Romania, Slovenia, and Sweden, Singapore, New Zealand, and 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. Initial findings for our filed improvement applicator designs in cell biology may be followed by designation applications in many countries.
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. Recently, we have filed new patent applications, both in the United States and internationally, which are directed to improved applicator designs, and designs for applications in cell biology; these new designs have been found novel during review in the World Intellectual Property Organization international application process. Initial findings for our filed improved applicator designs in cell biology may be followed by accelerated applications in many countries.
Previous wording
During the six months ended June 30, 2024, our debt and liquidity positions were affected by the following:
Current wording
During the nine months ended September 30, 2024, our debt and liquidity positions were affected by the following:
Previous 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:
Current wording
Results of Operations for the Three and Nine Months Ended September 30, 2024 Compared to the Three and Nine Months Ended September 30, 2023:
Previous 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.
Current wording
Total revenue for the three months ended September 30, 2024 and 2023, was $2,542,000 and $1,470,000, respectively, representing an increase of $1,072,000 or 73% compared to the same prior year period. Product based revenues for the nine months ended September 30, 2024 and 2023, were $5,247,000 and $4,501,000, representing an increase of $746,000 or 17% when compared to the same prior year period. The higher revenue was attributable to increased demand for our mobile units and higher iHP service revenue.
Previous wording
As customers mature through the product and adoption cycle and our sales pipeline converts to revenue, we expect to generate more predictable sales quarter over quarter. Further, as the COVID-19 pandemic has subsided, we expect that the demand for our products and services will continue as we are building a team to address the post COVID-19 pandemic market opportunities.
Current wording
As customers mature through the product and adoption cycle and our sales pipeline converts to revenue, we expect to generate more predictable sales quarter over quarter.
Previous 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.
Current wording
SteraMist Product-based revenues for the three months ended September 30, 2024 and 2023, were $1,776,000 and $953,000, representing an increase of $813,000 or 85% when compared to the same prior year period. The higher revenue was attributable to increased demand for our mobile units and higher iHP service revenue. For the nine months ended September 30, 2024 and 2023, our total revenue was $6,670,000 and $5,827,000, respectively, representing an increase of $843,000, or 14% compared to the same prior year period.
Previous wording
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 wording
Our service-based revenue for the three months ended September 30, 2024 and 2023, was $776,000 and $517,000, respectively, representing an increase of $259,000 or 50%. For the nine months ended September 30, 2024 and 2023, our service-based revenue was $1,423,000 and $1,326,000, representing an increase of $97,000 or 7% when compared to the same prior period in 2023. The increase in service revenue was due to timing of emergency service work that occurred in the same prior period.
Previous wording
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 wording
Our domestic revenue for the three months ended September 30, 2024 and 2023 was $1,886,000 and $1,271,000, respectively, an increase of $615,000 or 48%, when compared to the same prior year period. For the nine months ended September 30, 2024 and 2023, our domestic revenue was $5,169,000 and $5,001,000, representing an increase of $168,000 or 3% when compared to the same prior period in 2023. Our domestic product-based revenue increased due to higher domestic demand for our equipment and iHP services.
Previous wording
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 wording
Internationally, our revenue for the three months ended September 30, 2024 and 2023, was approximately $656,000 and $199,000, respectively, representing an increase of $457,000 or 230% when compared to the same prior year period. For the nine months ended September 30, 2024 and 2023, our international revenue was $1,501,000 and $826,000, representing an increase of $675,000 or 82% when compared to the same prior period in 2023. The higher revenue was attributable to increased demand for our mobile units.
Previous 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.
Current wording
Cost of sales was $981,000 and $661,000 for the three months ended September 30, 2024 and 2023, respectively, an increase of $320,000 or 48%, compared to the prior year. The increase in cost of sales was primarily due to higher sales. Our gross profit as a percentage of sales for the three months ended September 30, 2024 was 61% compared to 55% in the same prior period, respectively. The higher gross profit is attributable to the product mix in sales.
Previous wording
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 wording
Professional fees were $105,000 and $208,000 for the three months ended September 30, 2024 and 2023, respectively, a decrease of approximately $103,000 or 50%, 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.
Previous 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.
Current wording
Professional fees were $387,000 and $457,000 for the nine months ended September 30, 2024 and 2023, respectively, a decrease of approximately $70,000, or 15%, in the current year period. The decrease in professional fees was primarily due to lower legal fees we incurred in connection with distributor and OEM agreements.
Previous 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%.
Current wording
Depreciation and amortization were approximately $70,000 and $94,000 for the three months ended September 30, 2024 and 2023, respectively, representing a decrease of $24,000 or 26%.
Previous wording
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 wording
Depreciation and amortization were approximately $224,000 and $273,000 for the nine months ended September 30, 2024 and 2023, respectively, representing a decrease of $49,000, or 18%.
Previous wording
The decrease in depreciation expense is due to a lower amount of fixed assets being depreciated in the current year periods when compared to the same prior year periods.
Current wording
The decrease in depreciation expense is due to a lower amount of fixed assets being depreciated in the current year period when compared to the same prior year periods.
Previous 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.
Current wording
Selling expenses for the three months ended September 30, 2024 were approximately $227,000, as compared to $283,000 for the quarter ended September 30, 2023, representing a decrease of approximately $56,000 or 20%. 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 and lower advertising and tradeshow costs incurred in the current year period.
Previous wording
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 wording
Selling expenses for the nine months ended September 30, 2024 were approximately $882,000, as compared to $1,161,000 for the quarter ended September 30, 2023, representing a decrease of approximately $279,000 or 24%. 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 and lower advertising and tradeshow costs incurred in the current year period.
Previous wording
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 wording
Consulting fees were $44,000 and $44,000 for the three months ended September 30, 2024 and 2023, respectively, representing no change in the current quarter period.
Previous wording
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 wording
Consulting fees were $181,000 and $189,000 for the nine months ended September 30, 2024 and 2023, respectively, representing a decrease of $8,000, or 4%, in the current quarter period.
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Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Previous report — wording carried elsewhere
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.