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Item 1. Financial Statements

2022-08-15 compared with 2022-05-05 · 180 added, 100 removed, 561 unchanged (33% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

Current Assets:

March 31, 2022 (Unaudited)

June 30, 2022 (Unaudited)

December 31, 2021

Current Assets:

Cash and Cash Equivalents

16 unchanged sentences

Customer Deposits

Current Portion of Long-Term Operating Lease (Note 7)

Current Portion of Long-Term Operating Lease

Total Current Liabilities

6 unchanged sentences

par value $ 0.01 per share, 1,000,000 shares authorized;

63,750 shares issued and outstanding at March 31, 2022 and December 31, 2021

63,750 shares issued and outstanding at June 30, 2022 and December 31, 2021

Cumulative Convertible Series B Preferred Stock;

2 unchanged sentences

4,000 shares authorized;

none issued and outstanding at March 31, 2022 and December 31, 2021

none issued and outstanding at June 30, 2022 and December 31, 2021

Common stock;

par value $ 0.01 per share, 250,000,000 shares authorized;

19,732,705 and 16,761,513 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively.

19,732,705 and 16,761,513 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively.

Additional Paid-In Capital

4 unchanged sentences

Total Liabilities and Shareholders’ Equity

The accompanying notes are an integral part of the condensed consolidated financial statements.

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

TOMI ENVIRONMENTAL SOLUTIONS, INC.

1 unchanged sentence

For The Three Months Ended

For The Six Months Ended

Cost of Sales

7 unchanged sentences

Total Operating Expenses

Loss from Operations

Income (loss) from Operations

( 1,193,230 )

( 1,522,543 )

( 2,703,562 )

Other Income (Expense):

Gain Upon Debt Extinguishment

Interest Income

1 unchanged sentence

Total Other Income (Expense)

Loss before income taxes

Income (loss) before income taxes

( 1,521,865 )

( 2,289,394 )

Provision for Income Taxes (Note 16)

Net Income (loss)

$ ( 862,382 )

$ ( 778,455 )

$ ( 1,521,865 )

$ ( 2,289,394 )

Net income (loss) Per Common Share

1 unchanged sentence

Diluted Weighted Average Common Shares Outstanding

The accompanying notes are an integral part of the condensed consolidated financial statements.

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

TOMI ENVIRONMENTAL SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the three months ended March 31, 2022

For the six months ended June 30, 2022

Series A Preferred

5 unchanged sentences

Common Stock Issued for Services Provided

Net (Loss) for the three months ended March 31, 2022

Balance at March 31, 2022

Net (Loss) for the three months ended June 30, 2022

( 1,521,865 )

For the three months ended March 31, 2021

( 1,521,865 )

Balance at June 30, 2022

$ ( 45,065,442 )

For the six months ended June 30, 2021

Series A Preferred

Additional Paid

Total Shareholders’

Shareholders’

Balance at January 1, 2021

1 unchanged sentence

Common Stock Issued for Services Provided

Net (Loss) for the three months ended March 31, 2021

Net (Loss) for the three months ended June 30, 2021

( 2,289,394 )

Balance at March 31, 2021

Balance at June 30, 2021

$ ( 41,397,472 )

The accompanying notes are an integral part of the condensed consolidated financial statements.

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

TOMI ENVIRONMENTAL SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the three months ended June 30, 2022

Series A Preferred

Shareholders’

Balance at April 1, 2022

$ ( 44,203,060 )

Net (Loss) for the three months ended June 30, 2022

Balance at June 30, 2022

$ ( 45,065,442 )

For the three months ended June 30, 2021

Series A Preferred

Shareholders’

Balance at April 1, 2021

$ ( 40,619,018 )

Net (Loss) for the three months ended June 30, 2022

Balance at June 30, 2021

$ ( 41,397,472 )

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

TOMI ENVIRONMENTAL SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash Flow From Operating Activities:

Net Income (Loss)

$ ( 1,521,865 )

6 unchanged sentences

Equity Compensation Expense

Value of Equity Issued for Services

Reserve for Bad Debt

Gain Upon Debt Extinguishment

Changes in Operating Assets and Liabilities:

1 unchanged sentence

Accounts Receivable

( 1,394,464 )

Prepaid Expenses

6 unchanged sentences

Lease Liability

Net Cash Provided (Used) in Operating Activities

Net Cash (Used in) Operating Activities

( 2,512,020 )

Cash Flow From Investing Activities:

Capitalized Patent and Trademark Costs

Purchase of Property and Equipment

Net Cash (Used in) Investing Activities

The accompanying notes are an integral part of the condensed consolidated financial statements.

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

TOMI ENVIRONMENTAL SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – CONTINUED

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Cash Flow From Financing Activities:

5 unchanged sentences

Supplemental Cash Flow Information:

Cash Received From Income Tax Refund

The accompanying notes are an integral part of the condensed consolidated financial statements.

Cash Paid (Refunded) for Income Taxes

Non-Cash Investing and Financing Activities:

Patent and trademark costs reclassified from Other Assets

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

TOMI ENVIRONMENTAL SOLUTIONS, INC.

2 unchanged sentences

TOMI Environmental Solutions, Inc., a Florida corporation (“TOMI”, the “Company”, “we”, “our” and “us”) is a global provider of disinfection and decontamination essentials through our premier Binary Ionization Technology® (BIT™) platform, under which we manufacture, license, service and sell our SteraMist® brand of products, including SteraMist® BIT™, a hydrogen peroxide-based mist and fog.

Our solution and process are environmentally friendly as the only biproduct from our decontamination process is oxygen and humidity.

Our solution and process are environmentally friendly as the only biproduct from our decontamination process is oxygen and water in the form of humidity.

Our solution is organically listed in the United States and Canada it is sustainably a green product with no or very little carbon footprint.

44 unchanged sentences

At times, these deposits may be in excess of insured limits.

At March 31, 2022 and December 31, 2021, there were no cash equivalents.

At June 30, 2022 and December 31, 2021, there were no cash equivalents.

Accounts Receivable

4 unchanged sentences

Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Bad debt expense for the three months ended March 31, 2022 and 2021 was $ 0 and $ 115,000 , respectively.

At March 31, 2022 and December 31, 2021, the allowance for doubtful accounts was $ 1,678,000 .

Bad debt expense for the three and six months ended June 30, 2022 was approximately $ 13,000 .

Bad debt expense for the three and six months ended June 30, 2021 was approximately $ 303,000 and $ 418,000 , respectively.

At June 30, 2022 and December 31, 2021, the reserve allowance for accounts was $ 1,678,000 .

Inventories are valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method.

3 unchanged sentences

We record an allowance for estimated losses when the facts and circumstances indicate that particular inventories may not be usable.

Our reserve for obsolete inventory was $ 0 as of March 31, 2022 and December 31, 2021.

Our reserve for obsolete inventory was $0 as of June 30, 2022 and December 31, 2021.

Property and Equipment

18 unchanged sentences

The periodic expense for the amortization of capitalized software development costs will be included in cost of sales.

Amortization expense for both the periods ended March 31, 2022 and 2021, was $ 10,475 .

Amortization expense for the three and six months ended June 30, 2022 was $ 10,475 .

Amortization expense for the three and six months ended June 30, 2021 was $ 10,475 and $ 20,950 , respectively.

Accounts Payable

As of March 31, 2022, one vendor accounted for approximately 52 % of accounts payable.

As of June 30, 2022, one vendor accounted for approximately 45 % of accounts payable.

As of December 31, 2021, two vendors accounted for approximately 53 % of accounts payable.

For the three months ended March 31, 2022, two vendors accounted for 69 %of cost of sales.

For the three months ended March 31, 2021, two vendors accounted for 64 %of cost of sales.

For the three and six months ended June 30, 2022, two vendors accounted for 60 % and 66 % of cost of sales, respectively.

For the three and six months ended June 30, 2021, two vendors accounted for 73 % and 68 % of cost of sales, respectively

Accrued Warranties

3 unchanged sentences

We assume responsibility for product reliability and results.

As of March 31, 2022, and December 31, 2021, our warranty reserve was $ 68,000 .

As of June 31, 2022, and December 31, 2021, our warranty reserve was $ 68,000 .

(See Note 14).

1 unchanged sentence

The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits that are, on a more likely than not basis, not expected to be realized in accordance with Accounting Standards Codification (ASC) guidance for income taxes.

Net deferred tax benefits have been fully reserved at March 31, 2022 and December 31, 2021.

Net deferred tax benefits have been fully reserved at June 30, 2022 and December 31, 2021.

The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted.

2 unchanged sentences

Diluted income or (loss) per share is based on the treasury stock method and includes the effect from potential issuance of shares of common stock, such as shares issuable pursuant to the exercise of options and warrants and conversions of preferred stock or debentures.

Potentially dilutive securities as of March 31, 2022 consisted of 2,826,710 shares of common stock issuable upon exercise of outstanding warrants, 413,000 shares of common stock issuable upon outstanding options and 63,750 shares of common stock issuable upon conversion of outstanding shares of Preferred A stock (“Convertible Series A Preferred Stock”).

Potentially dilutive securities as of March 31, 2021 consisted of 1,880,383 shares of common stock issuable upon exercise of outstanding warrants, 132,500 shares of common stock issuable upon outstanding options and 63,750 shares of common stock issuable upon conversion of outstanding shares of Preferred A stock (“Convertible Series A Preferred Stock”).

Potentially dilutive securities as of June 30, 2022 consisted of 2,824,835 shares of common stock issuable upon exercise of outstanding warrants, 413,000 shares of common stock issuable upon outstanding options and 63,750 shares of common stock issuable upon conversion of outstanding shares of Preferred A stock (“Convertible Series A Preferred Stock”).

Potentially dilutive securities as of June 30, 2021 consisted of 1,849,133 shares of common stock issuable upon exercise of outstanding warrants, 132,500 shares of common stock issuable upon outstanding options and 63,750 shares of common stock issuable upon conversion of outstanding shares of Preferred A stock (“Convertible Series A Preferred Stock”).

Diluted net income or (loss) per share is computed similarly to basic net income or (loss) per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if such additional shares were dilutive.

Options, warrants, and preferred stock of approximately 3.3 million and 2.1 million exercisable or convertible into shares of common stock were outstanding at March 31, 2022 and March 31, 2021, respectively, but were excluded from the computation of diluted net loss per share at March 31, 2022 due to the anti-dilutive effect on net loss per share.

For the Three Months Ended March 31,

Options, warrants, and preferred stock of approximately 3.3 million and 2.0 million exercisable or convertible into shares of common stock were outstanding at June 30, 2022 and June 30, 2021, respectively, but were excluded from the computation of diluted net loss per share at June 30, 2022 due to the anti-dilutive effect on net loss per share.

For the Three Months Ended June 30,

Net Income (Loss)

7 unchanged sentences

The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented:

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Net Income (Loss)

6 unchanged sentences

Net Income (Loss) Per Common Share:

Warrants, options and preferred stock for the three months ended March 31, 2022 and 2021 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive.

For the Six Months Ended June 30,

Net Income (Loss)

$ ( 1,521,865 )

$ ( 2,289,394 )

Net income (loss) attributable to common shareholders

$ ( 1,521,865 )

$ ( 2,289,394 )

Weighted average number of shares of common stock outstanding:

Net income (loss) attributable to common shareholders per share:

The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented:

For the Six Months Ended June 30,

Net Income (Loss)

$ ( 1,521,865 )

$ ( 2,289,394 )

Basic weighted-average shares

Effect of dilutive securities

Preferred Stock

Diluted Weighted Average Shares

Net Income (Loss) Per Common Share:

Revenue Recognition

22 unchanged sentences

Product and Service Revenue

For the three months ended March 31,

For the three months ended

SteraMist Product

1 unchanged sentence

Revenue by Geographic Region

For the three months ended March 31,

For the three months ended

United States

International

Product and Service Revenue

For the six months ended

SteraMist Product

Service and Training

Revenue by Geographic Region

For the three months ended

United States

International

Product revenue includes sales from our standard and customized equipment, solution and accessories sold with our equipment.

7 unchanged sentences

Contract Balances

As of March 31, 2022, and December 31, 2021 we did not have any unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

As of June 30, 2022, and December 31, 2021 we did not have any unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.

Arrangements with Multiple Performance Obligations

9 unchanged sentences

The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common Stock and does not intend to pay dividends on its Common Stock in the foreseeable future.

The expected forfeiture rate is estimated based on management’s best assessment.

Forfeitures are accounted for in the period in which they occur.

On July 7, 2017, our shareholders approved the 2016 Equity Incentive Plan, or the 2016 Plan.

5 unchanged sentences

All recipients of awards under the 2016 Plan are required to enter into award agreements with us at the time of the award, and awards under the 2016 Plan are expressly conditioned upon such agreements.

For the three months ended March 31, 2022 and 2021, we issued 51,750 and 50,000 shares of common stock, respectively, out of the 2016 Plan.

For the six months ended June 30, 2022 and 2021, we issued 51,750 and 50,000 shares of common stock, respectively, out of the 2016 Plan.

Concentrations of Credit Risk

11 unchanged sentences

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, 2022 and December 31, 2021.

We had no long-lived asset impairment charges for the three and six months ended June 30, 2022 and December 31, 2021.

Advertising and Promotional Expenses

We expense advertising costs in the period in which they are incurred.

Advertising and promotional expenses for the three months ended March 31, 2022 and 2021 were approximately $ 194,000 and $ 266,000 , respectively.

Advertising and promotional expenses included in selling expenses for the three and six months ended June 30, 2022 were approximately $ 158,000 and $352,000, respectively.

Advertising and promotional expenses included in selling expenses for the three and six months ended June 30, 2021 were approximately $ 140,000 and $ 406,000 , respectively.

Research and Development Expenses

We expense research and development expenses in the period in which they are incurred.

For the three months ended March 31, 2022 and 2021, research and development expenses were approximately $ 37,000 and $ 196,000 , respectively.

For the three and six months ended June 30, 2022, research and development expenses were approximately $ 99,000 and $136,000, respectively.

For the three and six months ended June 30, 2021, research and development expenses were approximately $ 206,000 and $ 401,000 , respectively.

Business Segments

20 unchanged sentences

Inventories consist of the following at:

March 31, 2022

June 30, 2022

December 31, 2021

2 unchanged sentences

VENDOR DEPOSITS

At March 31, 2022 and December 31, 2021, we maintained vendor deposits of $ 314,836 and $ 288,586 , respectively, for open purchase orders for inventory.

At June 30, 2022 and December 31, 2021, we maintained vendor deposits of $ 320,211 and $ 288,586 , respectively, for open purchase orders for inventory.

PROPERTY AND EQUIPMENT

Property and equipment consist of the following at:

March 31, 2022

June 30, 2022

December 31, 2021

5 unchanged sentences

Accumulated depreciation

For the three months ended March 31, 2022 and 2021, depreciation was $ 79,050 and $ 81,026 , respectively.

For the three months ended March 31, 2022 and 2021, amortization of tenant improvement allowance was $ 9,798 and was recorded as lease expense and included within general and administrative expense on the condensed consolidated statement of operations.

Property and Equipment, net

For the three and six months ended June 30, 2022, depreciation was $ 79,123 and $ 158,173 , respectively.

For the three and six months ended June 30, 2021, depreciation was $ 69,990 and $ 151,016 respectively.

For the three and six months ended June 30, 2022 and 2021, amortization of tenant improvement allowance was $ 9,798 and $ 19,597 , respectively and was recorded as lease expense and included within general and administrative expense on the consolidated statement of operations.

INTANGIBLE ASSETS

2 unchanged sentences

The trademarks have an indefinite life.

Amortization expense was $ 3,242 and $ 2,422 for the three months ended March 31, 2022 and 2021, respectively.

Amortization expense was $ 3,628 and $ 6,870 for the three and six months ended June 30, 2022, respectively.

Amortization expense was $ 2,422 and $ 4,845 for the three and six months ended June 30, 2021, respectively.

Definite life intangible assets consist of the following:

March 31, 2022

June 30, 2022

December 31, 2021

4 unchanged sentences

Approximate future amortization is as follows:

April 1 – December 31, 2022

July 1 – December 31, 2022

December 31, 2023

9 unchanged sentences

The balances for our operating lease where we are the lessee are presented as follows within our condensed consolidated balance sheet:

Operating leases:

March 31, 2022

June 30, 2022

December 31, 2021

Operating leases:

Operating lease right-of-use asset

2 unchanged sentences

The components of lease expense are as follows and are included within general and administrative expense on our condensed consolidated statement of operations:

For the Three Months Ended March 31, 2022

For the Three Months Ended March 31, 2021

For the Three Months Ended June 30, 2022

For the Three Months Ended June 30, 2021

Operating lease expense

For the Six Months Ended June 30, 2022

For the Six Months Ended June 30, 2021

Operating lease expense

Other information related to leases where we are the lessee is as follows:

March 31, 2022

June 30, 2022

December 31, 2021

4 unchanged sentences

Supplemental cash flow information related to leases where we are the lessee is as follows:

For the Three Months Ended March 31, 2022

For the Three Months Ended March 31, 2021

For the Three Months Ended June 30, 2022

For the Three Months Ended June 30, 2021

Cash paid for amounts included in the measurement of lease liabilities:

As of March 31, 2022, the maturities of our operating lease liability are as follows:

For the Six Months Ended June 30, 2022

For the Six Months Ended June 30, 2021

Cash paid for amounts included in the measurement of lease liabilities:

As of June 30, 2022, the maturities of our operating lease liability are as follows:

Operating Lease

April 1 – December 31, 2022

July 1 – December 31, 2022

December 31, 2023

9 unchanged sentences

Capitalized software development costs consist of the following at:

March 31, 2022

June 30, 2022

December 31, 2021

2 unchanged sentences

Capitalized Software Development Costs - net

Amortization expense for the three months ended March 31, 2022 and 2021 was $ 10,475 , respectively.

Amortization expense for the three and six months ended June 30, 2022 was $ 0 and $ 10,475 , respectively.

Amortization expense for the three and six months ended June 30, 2021 was $ 10,475 and $ 20,950 , respectively.

CLOUD COMPUTING SERVICE CONTRACT

2 unchanged sentences

The annual contract payments are capitalized as a prepaid expense and amortized over a twelve-month period.

We have incurred implementation costs of $ 66,857 in connection with the cloud computing service contract which have been capitalized in prepaid expenses and other assets as of March 31, 2022.

We have incurred implementation costs of $ 66,857 in connection with the cloud computing service contract which have been capitalized in prepaid expenses and other assets as of June 30, 2022.

In accordance with ASU No.

2018-15, such implementation costs are being amortized over the remaining contract terms beginning January 1, 2021, which was when the cloud-based service contract was placed in service.

Amortization expense for the three months ended March 31, 2022 and 2021 were $ 4,526 and $ 3,482 , respectively.

Amortization expense for the three and six months ended June 30, 2022 was $ 3,766 and $ 7,531 , respectively.

Amortization expense for the three and six months ended June 30, 2021 was $ 3,482 and $ 6,964 , respectively.

SHAREHOLDERS’ EQUITY

4 unchanged sentences

Our authorized Convertible Series A Preferred Stock, $ 0.01 par value, consists of 1,000,000 shares.

At March 31, 2022 and December 31, 2021, there were 63,750 shares issued and outstanding.

At June 30, 2022 and December 31, 2021, there were 63,750 shares issued and outstanding.

The Convertible Series A Preferred Stock is convertible at the rate of one share of common stock for one share of Convertible Series A Preferred Stock.

1 unchanged sentence

Our authorized Convertible Series B Preferred Stock, $ 1,000 stated value, 7.5% cumulative dividend, consists of 4,000 shares.

At March 31, 2022 and December 31, 2021, there were no shares issued and outstanding, respectively.

At June 30, 2022 and December 31, 2021, there were no shares issued and outstanding, respectively.

Each share of Convertible Series B Preferred Stock may be converted (at the holder’s election) into two hundred shares of our common stock.

8 unchanged sentences

The option was valued at $ 178,281 and has a contractual term of 10 years.

We utilized the Black-Scholes model to fair value the warrant received by our Chief Executive Officer with the following assumptions:

We utilized the Black-Scholes model to fair value the option received by our Chief Executive Officer with the following assumptions:

volatility, 156 %;

2 unchanged sentences

and an expected life of 5 years.

The grant date fair value of each share of common stock underlying the warrant was $ 1.03 .

The grant date fair value of each share of common stock underlying the option was $ 1.03 .

In January 2022 we issued an option to purchase 57,500 shares of common stock to our Chief Operating Officer at an exercise price of $ 1.12 per share pursuant to an employment agreement.

The option was valued at $ 59,427 and has a contractual term of 10 years.

We utilized the Black-Scholes model to fair value the warrant received by our Chief Executive Officer with the following assumptions:

We utilized the Black-Scholes model to fair value the option received by our Chief Executive Officer with the following assumptions:

volatility, 156 %;

2 unchanged sentences

and an expected life of 5 years.

The grant date fair value of each share of common stock underlying the warrant was $ 1.03 .

The grant date fair value of each share of common stock underlying the option was $1.03.

In January 2022 we issued an option to purchase 40,000 shares of common stock to our Chief Financial Officer at an exercise price of $ 1.12 per share pursuant to an employment agreement.

The option was valued at $ 41,340 and has a contractual term of 10 years.

We utilized the Black-Scholes model to fair value the warrant received by our Chief Executive Officer with the following assumptions:

We utilized the Black-Scholes model to fair value the option received by our Chief Executive Officer with the following assumptions:

volatility, 156 %;

2 unchanged sentences

and an expected life of 5 years.

The grant date fair value of each share of common stock underlying the warrant was $ 1.03 .

The following table summarizes stock options outstanding as of March 31, 2022 and December 31, 2021:

March 31, 2022

The grant date fair value of each share of common stock underlying the option was $1.03.

The following table summarizes stock options outstanding as of June 30, 2022 and December 31, 2021:

June 30, 2022

December 31, 2021

5 unchanged sentences

Outstanding, end of period

Options outstanding and exercisable by price range as of March 31, 2022 were as follows:

Options outstanding and exercisable by price range as of June 30, 2022 were as follows:

Outstanding Options

3 unchanged sentences

Stock Warrants

On February 11, 2021, we agreed to amend (the “Warrant Amendment”) the warrant to purchase 125,000 shares of TOMI common stock, par value $0.01 (the “Common Stock”), issued by TOMI to Dr.

On February 11, 2021, we agreed to amend the warrant to purchase 125,000 shares of TOMI common stock, (the “Warrant Amendment”) par value $0.01 (the “Common Stock”), issued by TOMI to Dr.

Shane, TOMI’s Chief Executive Officer and a director on TOMI’s board of directors, on February 11, 2014 (the “Warrant”), to provide TOMI an option to repurchase the Warrant from Dr.

3 unchanged sentences

On the same date , the Warrant Amendment and the Repurchase was considered, approved and adopted by a disinterested majority of TOMI’s board of directors.

The $ 314,500 charge in connection with the warrant amendment has been included in General and Administrative expenses for the three months ended March 31, 2021.

The following table summarizes the outstanding common stock warrants as of March 31, 2022 and December 31, 2021:

March 31, 2022

The $314,500 charge in connection with the warrant amendment has been included in General and Administrative expenses for the six months ended June 30, 2021.

The following table summarizes the outstanding common stock warrants as of June 30, 2022 and December 31, 2021:

June 30, 2022

December 31, 2021

4 unchanged sentences

Outstanding, end of period

Warrants outstanding and exercisable by price range as of March 31, 2022 were as follows:

Warrants outstanding and exercisable by price range as of June 30, 2022 were as follows:

Outstanding Warrants

6 unchanged sentences

Exercise Price

There were no unvested warrants outstanding as of March 31, 2022.

There were no unvested warrants outstanding as of June 30, 2022.

COMMITMENTS AND CONTINGENCIES

4 unchanged sentences

Product Liability

As of March 31, 2022 and December 31, 2021, there were no claims against us for product liability.

As of June 30, 2022 and December 31, 2021, there were no claims against us for product liability.

COVID-19 Pandemic

51 unchanged sentences

Director compensation also includes the annual issuance of our common stock.

For the three months ended March 31, 2021, we issued an aggregate of 50,000 shares of common stock that were valued at approximately $ 228,000 to members of our Board.

For the three months ended March 31, 2022, we issued an aggregate of 51,750 shares of common stock that were valued at approximately $ 54,000 to members of our Board.

For the six months ended June 30, 2021, we issued an aggregate of 50,000 shares of common stock that were valued at approximately $ 228,000 to members of our Board.

For the six months ended June 30, 2022, we issued an aggregate of 51,750 shares of common stock that were valued at approximately $ 54,000 to members of our Board.

Manufacturing Agreement

6 unchanged sentences

Approximate minimum future payments under the contract are as follows:

April 1 - December 31, 2022

July 1 - December 31, 2022

December 31, 2023

3 unchanged sentences

Accrued expenses and other current liabilities consisted of the following at:

March 31, 2022

June 30, 2022

December 31, 2021

10 unchanged sentences

The following table presents warranty reserve activities at:

March 31, 2022

June 30, 2022

December 31, 2021

3 unchanged sentences

Ending accrued warranty costs

For the three months ended March 31, 2022 and 2021, our provision for income tax was $ 0 .

For the three and six months ended June 30, 2022 and 2021, our provision for income tax was $ 0 .

Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse.

The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits, which are, on a more likely than not basis, not expected to be realized in accordance with ASC guidance for income taxes.

As of March 31, 2022 and December 31, 2021, we recorded a valuation allowance of $ 5,042,000 and $ 4,941,000 , respectively for the portion of the deferred tax assets that we do not expect to be realized.

As of June 30, 2022 and December 31, 2021, we recorded a valuation allowance of $ 5,283,000 and $ 4,941,000 , respectively for the portion of the deferred tax assets that we do not expect to be realized.

Management believes that based on the available information, it is more likely than not that the remaining U.S.

3 unchanged sentences

CUSTOMER CONCENTRATION

Three customers accounted for 41 % of net revenue for the three months ended March 31, 2022.

We had no customers/distributor whose revenue individually represented 10 % or more of our total revenue for the three months ended March 31, 2021.

We had one customers/distributors that accounted for 14 % of accounts receivable as of March 31, 2022.

Three customers/distributors accounted for 42 % of accounts receivable as of December 31, 2021.

One customer accounted for 29 % of net revenue for the three months ended June 30, 2022.

Two customers accounted for 29 % of our revenue for the three months ended June 30, 2021.

Three customers accounted for 32 % of our revenue for the six months ended June 30, 2022.

One customer accounted for 13 % of net revenue for the six months ended June 30, 2021.

We had three customers that accounted for 41 % of accounts receivable as of June 30, 2022.

Three customers accounted for 42 % of accounts receivable as of December 31, 2021.

SUBSEQUENT EVENTS

In July 2022, 31,250 shares of common stock were issued to Dr.

Halden Shane, our Chief Executive Officer, in connection with the exercise of warrants for which we received proceeds of $ 25,000

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements