What changed in this filing

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Item 1. Financial Statements

2022-11-10 compared with 2022-08-15 · 142 added, 180 removed, 561 unchanged (36% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2022 (Unaudited)

September 30, 2022 (Unaudited)

December 31, 2021

17 unchanged sentences

Accrued Expenses and Other Current Liabilities (Note 13)

Customer Deposits

Current Portion of Long-Term Operating Lease

Deferred Revenue

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

Total Current Liabilities

6 unchanged sentences

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

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

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

Cumulative Convertible Series B Preferred Stock;

2 unchanged sentences

4,000 shares authorized;

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

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

19,763,955 and 16,761,513 shares issued and outstanding at September 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 unaudited condensed consolidated financial statements.

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

TOMI ENVIRONMENTAL SOLUTIONS, INC.

1 unchanged sentence

For The Three Months Ended

For The Six Months Ended

For The Nine Months Ended

September 30,

Cost of Sales

10 unchanged sentences

( 3,190,199 )

( 2,703,562 )

Other Income (Expense):

15 unchanged sentences

Diluted Weighted Average Common Shares Outstanding

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

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

TOMI ENVIRONMENTAL SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the six months ended June 30, 2022

For the nine months ended September 30, 2022

Series A Preferred

5 unchanged sentences

Common Stock Issued for Services Provided

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

Warrants and Options Exercised

Net (Loss) for the nine months ended September 30, 2022

( 2,175,015 )

Balance at June 30, 2022

Balance at September 30, 2022

$ ( 45,718,590 )

For the six months ended June 30, 2021

For the nine months ended September 30, 2021

Series A Preferred

Shareholders’

Additional Paid

Total Shareholders’

Balance at January 1, 2021

1 unchanged sentence

Common Stock Issued for Services Provided

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

Common Stock Issued in Private Placement

Net (Loss) for the nine months ended September 30, 2021

( 2,775,952 )

Balance at June 30, 2021

Balance at September 30, 2021

$ ( 41,884,030 )

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

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

TOMI ENVIRONMENTAL SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

For the three months ended June 30, 2022

For the three months ended September 30, 2022

Series A Preferred

Shareholders’

Balance at April 1, 2022

Additional Paid

Total Shareholders’

Balance at July 1, 2022

$ ( 45,065,440 )

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

Balance at June 30, 2022

Warrants and Options Exercised

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

Balance at September 30, 2022

$ ( 45,718,590 )

For the three months ended June 30, 2021

For the three months ended September 30, 2021

Series A Preferred

Shareholders’

Balance at April 1, 2021

Additional Paid

Total Shareholders’

Balance at July 1, 2021

$ ( 41,397,472 )

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

Balance at June 30, 2021

Common Stock Issued in Private Placement

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

Balance at September 30, 2021

$ ( 41,884,030 )

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

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

TOMI ENVIRONMENTAL SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash Flow From Operating Activities:

21 unchanged sentences

Accrued Expenses

Customer Deposits

Deferred Revenue

Lease Liability

5 unchanged sentences

Net Cash Used in Investing Activities

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

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

TOMI ENVIRONMENTAL SOLUTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – CONTINUED

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Cash Flow From Financing Activities:

Net Cash From Financing Activities:

Proceeds from Issuance of Stock and Warrants

Proceeds from Exercise of Options and Warrants

Net Cash Provided by Financing Activities:

Increase (Decrease) In Cash and Cash Equivalents

( 2,710,429 )

Cash and Cash Equivalents - Beginning

1 unchanged sentence

Supplemental Cash Flow Information:

Cash Paid (Refunded) for Income Taxes

Cash Paid 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.

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

TOMI ENVIRONMENTAL SOLUTIONS, INC.

49 unchanged sentences

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

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

At September 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 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 .

Bad debt expense for the three and nine months ended September 30, 2022 was approximately $ 96,000 and $ 109,000 .

Bad debt expense for the three and nine months ended September 30, 2021 was approximately $ 96,000 and $ 511,000 .

At September 30, 2022 and December 31, 2021, the allowance for doubtful accounts reserve 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 June 30, 2022 and December 31, 2021.

Our reserve for obsolete inventory was $ 0 as of September 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 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.

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

Amortization expense for the three and nine months ended September 30, 2021, was $ 10,475 and $ 31,425 , respectively.

Accounts Payable

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

As of September 30, 2022, one vendor accounted for approximately 46 % of accounts payable.

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

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

For the three and nine months ended September 30, 2022, two vendors accounted for 68 % and 66 % of cost of sales, respectively.

For the three and nine months ended September 30, 2021, two vendors accounted for 55 % and 60 % of cost of sales, respectively.

Accrued Warranties

3 unchanged sentences

We assume responsibility for product reliability and results.

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

As of September 30, 2022, and December 31, 2021, our warranty reserve was $ 68,000 .

(See Note 14).

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 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 June 30, 2022 and December 31, 2021.

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 FASB ASC Topic 740, Income Taxes guidance for income taxes.

Net deferred tax benefits have been fully reserved at September 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 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”).

Potentially dilutive securities as of September 30, 2022 consisted of 2,793,585 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 September 30, 2021 consisted of 3,424,771 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 2.0 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,

Options, warrants, and preferred stock of approximately 3.3 million and 3.6 million exercisable or convertible into shares of common stock were outstanding at September 30, 2022 and September 30, 2021, respectively, but were excluded from the computation of diluted net loss per share at September 30, 2022 due to the anti-dilutive effect on net loss per share.

For the Three Months Ended September 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 June 30,

For the Three Months Ended September 30,

Net Income (Loss)

6 unchanged sentences

Net Income (Loss) Per Common Share:

For the Six Months Ended June 30,

Warrants, options and preferred stock for the three months ended September 30, 2022 and 2021 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive.

For the Nine Months Ended September 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 Six Months Ended June 30,

For the Nine Months Ended September 30,

Net Income (Loss)

6 unchanged sentences

Net Income (Loss) Per Common Share:

Warrants, options and preferred stock for the nine months ended September 30, 2022 and 2021 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive.

Revenue Recognition

22 unchanged sentences

Product and Service Revenue

For the three months ended

For the three months ended September 30,

SteraMist Product

1 unchanged sentence

Revenue by Geographic Region

For the three months ended

For the three months ended September 30,

United States

1 unchanged sentence

Product and Service Revenue

For the six months ended

For the nine months ended September 30,

SteraMist Product

1 unchanged sentence

Revenue by Geographic Region

For the three months ended

For the nine months ended September 30,

United States

9 unchanged sentences

Contract Balances

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.

As of September 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.

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

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

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 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.

For the nine months ended September 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 and six months ended June 30, 2022 and December 31, 2021.

We had no long-lived asset impairment charges for the three and nine months ended September 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 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.

Advertising and promotional expenses included in selling expenses for the three and nine months ended September 30, 2022 were approximately $ 102,000 and $ 454,000 , respectively.

Advertising and promotional expenses included in selling expenses for the three and nine months ended September 30, 2021 were approximately $ 145,000 and $ 552,000 , respectively.

Research and Development Expenses

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

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.

For the three and nine months ended September 30, 2022, research and development expenses were approximately $ 118,000 and $ 255,000 , respectively.

For the three and nine months ended September 30, 2021, research and development expenses were approximately $ 93,000 and $ 495,000 , respectively.

Business Segments

20 unchanged sentences

Inventories consist of the following at:

June 30, 2022

September 30, 2022

December 31, 2021

2 unchanged sentences

VENDOR DEPOSITS

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.

At September 30, 2022 and December 31, 2021, we maintained vendor deposits of $ 481,788 and $ 288,586 , respectively, for open purchase orders for inventory.

PROPERTY AND EQUIPMENT

Property and equipment consist of the following at:

June 30, 2022

September 30, 2022

December 31, 2021

6 unchanged sentences

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.

For the three and nine months ended September 30, 2022, depreciation was $ 78,991 and $ 237,164 , respectively.

For the three and nine months ended September 30, 2021, depreciation was $ 67,383 and $ 218,398 , respectively.

For the three and nine months ended September 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 $ 3,628 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.

Amortization expense was $ 3,628 and $ 10,498 for the three and nine months ended September 30, 2022, respectively.

Amortization expense was $ 2,422 and $ 7,268 for the three and nine months ended September 30, 2021, respectively.

Definite life intangible assets consist of the following:

June 30, 2022

September 30, 2022

December 31, 2021

4 unchanged sentences

Approximate future amortization is as follows:

July 1 – December 31, 2022

October 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:

June 30, 2022

December 31, 2021

Operating leases:

September 30, 2022

December 31, 2021

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 June 30, 2022

For the Three Months Ended June 30, 2021

For the Three Months Ended September 30, 2022

For the Three Months Ended September 30, 2021

Operating lease expense

For the Six Months Ended June 30, 2022

For the Six Months Ended June 30, 2021

For the Nine Months Ended September 30, 2022

For the Nine Months Ended September 30, 2021

Operating lease expense

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

June 30, 2022

September 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 June 30, 2022

For the Three Months Ended June 30, 2021

For the Three Months Ended September 30, 2022

For the Three Months Ended September 30, 2021

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

For the Six Months Ended June 30, 2022

For the Six Months Ended June 30, 2021

For the Nine Months Ended September 30, 2022

For the Nine Months Ended September 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:

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

Operating Lease

July 1 – December 31, 2022

October 1 – December 31, 2022

December 31, 2023

9 unchanged sentences

Capitalized software development costs consist of the following at:

June 30, 2022

December 31, 2021

September 30,

Capitalized Software Development Costs

1 unchanged sentence

Capitalized Software Development Costs - net

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.

Amortization expense for the three and nine months ended September 30, 2022 was $ 10,475 , respectively.

Amortization expense for the three and nine months ended September 30, 2021 was $ 10,475 and $ 31,425 , 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 June 30, 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 September 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 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.

Amortization expense for the three and nine months ended September 30, 2022 was $ 3,766 and $ 11,297 , respectively.

Amortization expense for the three and nine months ended September 30, 2021 was $ 3,482 and $ 10,446 , respectively.

SHAREHOLDERS’ EQUITY

4 unchanged sentences

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

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

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

At September 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 option received by our Chief Executive Officer with the following assumptions:

We utilized the Black-Scholes model to fair value the warrant 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 option was $ 1.03 .

The grant date fair value of each share of common stock underlying the warrant 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 option received by our Chief Executive Officer with the following assumptions:

We utilized the Black-Scholes model to fair value the warrant 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 option was $1.03.

The grant date fair value of each share of common stock underlying the warrant 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 option received by our Chief Executive Officer with the following assumptions:

We utilized the Black-Scholes model to fair value the warrant 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 option was $1.03.

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

June 30, 2022

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 September 30, 2022 and December 31, 2021:

September 30, 2022

December 31, 2021

Number of Options

Weighted Average Exercise Price

Number of Options

Weighted Average Exercise Price

1 unchanged sentence

Outstanding, end of period

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

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

Outstanding Options

3 unchanged sentences

Stock Warrants

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.

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.

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 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

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

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

September 30, 2022

December 31, 2021

4 unchanged sentences

Outstanding, end of period

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

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

Outstanding Warrants

6 unchanged sentences

Exercise Price

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

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

COMMITMENTS AND CONTINGENCIES

4 unchanged sentences

Product Liability

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

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

COVID-19 Pandemic

3 unchanged sentences

Throughout 2021, the Company experienced a reduction of demand due to various factors, including the closure of our major customers’ business operations due to the pandemic, which resulted in the suspension of many of its ongoing long-term projects.

As the impact of the COVID-19 pandemic began to subside and economic activities gradually return to normal, customers reallocated their resources elsewhere and reduced their spending on disinfection products, which resulted in lower demand for our products.

It is difficult to predict how COVID-19 pandemic will affect the Company’s financial performance in the remainder of 2022, as the global economy gradually reopens, customers adjust and change their operations, and the Company implements new marketing and sales strategies in response.

As the impact of the COVID-19 pandemic began to subside and economic activities gradually return to normal in 2022, customers reallocated their resources elsewhere and reduced their spending on disinfection products, which resulted in lower demand for our products.

It is difficult to predict how COVID-19 pandemic will affect the Company’s financial performance in the remainder of 2022 and early 2023, as the global economy gradually reopens, customers adjust and change their operations, and the Company implements new marketing and sales strategies in response.

CONTRACTS AND AGREEMENTS

Executive Agreements

On September 22, 2020, we entered into a three-year employment agreement with Dr.

Shane, effective October 1, 2020.

The agreement provides for a base annual salary of $ 500,000 .

The agreement also provides for a signing bonus of 375,000 warrants.

Shane is also entitled to a cash performance bonus and an annual issuance of an option to purchase 31,250 shares of common stock from the 2016 Plan at the discretion of the Board.

The agreement also provides that we will reimburse Dr.

Shane for the expenses associated with the use of an automobile up to $ 750 a month.

The term of the agreement is three years.

In the event Dr.

Shane is terminated as CEO as a result of a change in control, Dr.

Shane will be entitled to a lump sum payment of two years’ salary at the time of such termination.

The Board may terminate Dr.

Shane for cause by written notification to Dr.

provided, however, that no termination for cause will be effective unless Dr.

Shane has been provided with prior written notice and opportunity for remedial action and fails to remedy within 30 days thereof, in the event of a termination by the Company (i) by reason of willful dishonesty towards, fraud upon, or deliberate injury or attempted injury to, the Company, (ii) by reason of material breach of his employment agreement and (iii) by reason of gross negligence or intentional misconduct with respect to the performance of duties under the agreement.

Upon termination for cause, Dr.

Shane will be immediately paid an amount equal to his gross salary.

The Board may terminate Dr.

Shane other than for cause at any time upon giving notice to Dr.

Upon such termination, Dr.

Shane will be immediately paid an amount equal to his gross salary.

On October 1, 2020, we entered into an employment agreement with Elissa J.

Shane, effective October 1, 2020.

Pursuant to her employment agreement, Ms.

Shane will receive an annual base salary of at least $ 270,000 , subject to annual review and discretionary increase by the Compensation Committee of the Board.

Shane is eligible to receive an annual cash bonus and other annual incentive compensation.

The agreement originally provided for a grant of 93,750 warrants.

Additionally, in connection with the execution of her employment agreement, on October 1, 2020, we issued Ms.

Shane a warrant to purchase 93,750 shares of Common Stock at an exercise price of $ 6.17 per share.

These provisions were subsequently amended to provide for the issuance to Ms.

Shane of 31,250 options from the 2016 Equity Plan at the closing price of $ 7.06 on the date of grant in lieu of the warrant grant and the 93,750 warrants were cancelled.

Shane acknowledged that the 31,250 options were in full consideration of the amount she was entitled to under the agreement.

Her employment agreement also provides that we will reimburse Ms.

Shane for reasonable and necessary business and entertainment expenses that she incurs in performing her duties.

During the term of her employment, Ms.

Shane will also be entitled to up to four weeks of paid vacation time annually, which will accrue up to six weeks, and to participate in our benefit plans and programs, including but not limited to all group health, life, disability and retirement plans.

Shane is also entitled to the sum of $ 1,000 per month as a vehicle allowance.

The initial term of her employment agreement is three years, which may be automatically extended for successive one-year terms, unless either party provides the other with 120 days’ prior written notice of its intent to terminate the agreement.

In the event Ms.

Shane is terminated as COO as a result of a change in control, Ms.

Shane will be entitled to a lump sum payment of one and a half years’ salary at the time of such termination.

Director Compensation

1 unchanged sentence

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

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.

For the nine months ended September 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 nine months ended September 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:

July 1 - December 31, 2022

October 1 - December 31, 2022

December 31, 2023

3 unchanged sentences

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

June 30, 2022

September 30, 2022

December 31, 2021

10 unchanged sentences

The following table presents warranty reserve activities at:

June 30, 2022

September 30, 2022

December 31, 2021

3 unchanged sentences

Ending accrued warranty costs

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

For the nine months ended September 30, 2022 and 2021, our provision for income tax was $ 0 .

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 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.

As of September 30, 2022 and December 31, 2021, we recorded a valuation allowance of $ 5,550,000 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.

deferred tax assets will not be realized, such that a valuation allowance is required against U.S.

deferred tax assets will not be realized, such that a full of 100% valuation allowance is required against U.S.

deferred tax assets.

1 unchanged sentence

CUSTOMER CONCENTRATION

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.

One customer accounted for 20 % of net revenue for the three months ended September 30, 2022.

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

For the nine months ended September 20, 2021, one customer accounted for 11 % of net revenue.

We had three customers that accounted for 35 % of accounts receivable as of September 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