What changed in this filing

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Item 9A. Controls and Procedures

2025-04-14 compared with 2024-04-01 · 232 added, 189 removed, 1078 unchanged (28% of the section changed)

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Our disclosure controls and procedures are intended to ensure that the information we are required to disclose in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including the Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that, as of the end of the period covered by this Annual Report, our disclosure controls and procedures were designed, implemented and operating effectively.

Based on that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of December 31, 2024.

Our management has concluded that the financial statements included in this Annual Report on Form 10-K present fairly, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with generally accepted accounting principles.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, as amended from time to time.

Based on the assessment, our management concluded that our internal control over financial reporting was not effective as of December 31, 2024.

Material Weakness in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management has concluded that, as of December 31, 2024, we did not maintain effective controls over the preparation, review, presentation and disclosure of our financial statements.

Specifically, we noted the following:

• There are limited resources within the finance and accounting departments with sufficient knowledge and experience in applying U.S.

GAAP, including but not limited to developing appropriate accounting estimates, reserves, and allowances in a timely manner and to maintain proper segregation of duties;

• Policies and procedures with respect to the review, supervision and monitoring of our accounting and SEC reporting functions were either not designed and in place or not operating effectively.

As a result, a number of adjustments and disclosure corrections were identified and made during our current year audit;

These control deficiencies, if not remediated, could result in a misstatement to the annual or interim consolidated financial statements which would result in a material misstatement of the annual or interim consolidated financial statements that would not be prevented or detected.

Accordingly, our management has determined that these control deficiencies constitute material weaknesses.

Remediation Plans

Our management, with oversight from our Audit Committee, is in the process of developing and implementing remediation plans in response to the identified material weaknesses described above, and such remediation plans include the following:

We plan to expand the resources within the finance and accounting departments with personnel who possess sufficient knowledge and experience in applying U.S.

GAAP, including but not limited to developing appropriate accounting estimates, reserves, and allowances in a timely manner and to maintain proper segregation of duties;

We will design and implement additional policies and procedures with respect to the review, supervision and monitoring of our accounting and SEC reporting functions to improve the effectiveness of our internal controls and to ensure the timely reporting with the SEC in accordance with GAAP.

We will continue to recruit and train personnel with appropriate internal controls, accounting knowledge and experience commensurate with our accounting and reporting requirements, in addition to engaging and utilizing third party consultants and specialists.

Our management also continued to reallocate and align roles and responsibilities within the accounting team to optimize and leverage the skills and experience of various personnel.

We believe the measures described above will remediate the control deficiencies we have identified and strengthen our internal control over financial reporting.

We are committed to continuing to improve our internal control processes and will continue to review, optimize and enhance our financial reporting controls and procedures.

Changes in Internal Control Over Financial Reporting

During our most recent fiscal quarter, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

During our most recent fiscal quarter and except as disclosed above regarding the material weaknesses and related remediation plans, there have been no changes in our internal control over financial reporting that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

OTHER INFORMATION

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Nick Jennings

Chief Financial Officer

Interim Chief Financial Officer

Shane has been our Chief Executive Officer and Chairman of the Board since October 15, 2007, when we commenced our current operations.

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in Psychology and Communications with a minor in Economics from the University of Southern California in 2001.

We believe that Ms.

Shane’s experience, expertise and knowledge of our day-to-day business operations will contribute significantly to the Board’s oversight functions of the Company.

Nick Jennings :

Jennings has been our Chief Financial Officer since October 2014.

Jennings served as our Chief Financial Officer from October 2014 through May 2024.

In December 2024, Mr.

Jennings agreed to become our interim Chief Financial Officer.

From July 2014 until his employment by the Company, Mr.

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Nick Jennings (4)

Joe Rzepka (5)

The amounts shown in this column represent the aggregate grant date fair value of stock, option and/or warrant award, as applicable, granted during the year computed in accordance with FASB ASC Topic 718.

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The grant date fair value of each share of common stock underlying the option was $0.76.

Please refer to Item 11 Employment Agreements for additional details of Dr.

Shane’s annual compensation.

During the year ended December 31, 2024, we issued an option to purchase 50,000 shares of common stock to our Chief Operating Officer at an exercise price of $0.75 per share pursuant to an employment agreement.

The option was valued at $32,068 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 option received by our Chief Operating Officer with the following assumptions:

volatility, 125%;

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The grant date fair value of each share of common stock underlying the option was $0.64.

The other compensation in the amount of $12,000 represents an auto allowance pursuant to Ms.

Shane’s employment agreement.

Please refer to Item 11 Employment Agreements for additional details of Ms.

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The option was valued at $37,817 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 option received by our Chief Operating Officer with the following assumptions:

volatility, 139%;

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The grant date fair value of each share of common stock underlying the option was $0.76.

The other compensation in the amount of $12,000 represents an auto allowance pursuant to Ms.

Shane’s employment agreement.

Please refer to Item 11 Employment Agreements for additional details of Ms.

Shane’s annual compensation.

During the year ended December 31, 2024, Mr.

Jennings served as our Chief Financial Officer until May 2024.

During the year ended December 31, 2023, we issued an option to purchase 25,000 shares of common stock to our Chief Financial Officer at an exercise price of $0.85 per share pursuant to an employment agreement.

The option was valued at $18,909 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 option received by our Chief Financial Officer with the following assumptions:

volatility, 139%;

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Jennings’ annual compensation.

During the year ended December 31, 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.

Rzpeka served as our Chief Financial Officer from May 2024 through December 2024.

During the year ended December 31, 2024, we issued an option to purchase 75,000 shares of common stock to Mr.

Rzpeka at an exercise price of $0.75 per share pursuant to an employment agreement.

The option was valued at $48,102 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 option received by our former Chief Financial Officer with the following assumptions:

volatility, 125%;

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The grant date fair value of each share of common stock underlying the option was $0.64.

Please refer to Item 11 Employment Agreements for additional details of Mr.

Rzepka’s annual compensation.

Outstanding Equity Awards at 2024 Fiscal Year-End

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Options vested on January 26, 2023 and have a term of ten years.

Options pursuant to the 2016 Plan vested on January 3, 2019 and have a term of five years.

Options vested on May 15, 2024 and have a term of ten years.

Options pursuant to the 2016 Plan vested on January 3, 2020 and have a term of five years.

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Options vested on January 26, 2023 and have a term of ten years.

Options pursuant to the 2016 Plan vested on January 26, 2018 and have a term of five years.

Options vested on May 15, 2024 and have a term of ten years.

Warrants vested on April 24, 2020 and have a term of ten years.

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The initial term of his 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 June 2024, for the purpose of implementing cost-saving measures to reduce cash requirements and achieve profitability objectives, Dr.

Shane’s annual salary was reduced to $423,500 from June 1, 2024 through December 31, 2024.

In the event Dr.

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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 June 2024, for the purpose of implementing cost-saving measures to reduce cash requirements and achieve profitability objectives, Ms.

Shane’s annual salary was reduced to $228,690 from June 1, 2024 through December 31, 2024.

In the event Ms.

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Jennings will receive an amount equal to his annual salary as of such termination date after the second employment anniversary.

Effective as of May 14, 2024, Mr.

Nick Jennings due to family matters retired as the Chief Financial Officer of the Company

On December 16, 2024, the Board of Directors of the Company appointed Nick Jennings, former Chief Financial Officer of the Company, as Interim Chief Financial Officer.

The Company has entered into an offer letter with Mr.

Jennings, pursuant to which Mr.

Jennings will serve as the Interim Chief Financial Officer for a five-month period and will receive a fee of $15,000 per month.

On May 16, 2024, we entered into a new employment agreement with Mr.

Rzepka to which he served as our Chief Financial Officer.

Rzepka’ annual salary was $185,000, which was reviewed annually.

Rzepka was also entitled to additional equity compensation based upon superior performance of his responsibilities, as determined by the Board in its sole discretion.

The agreement also provided that we will reimburse Mr.

Rzepka for certain business and entertainment expenses.

In June 2024, for the purpose of implementing cost-saving measures to reduce cash requirements and achieve profitability objectives, Mr.

Rzepka’s annual salary was reduced to $166,500 from June 1, 2024 through December 31, 2024.

On December 11, 2024, Mr.

Rzepka resigned from the Company.

Director Compensation

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Johnsen provides for an annual fee in the amount of $48,000 paid on a quarterly basis and an annual grant of shares of common stock.

In January 2023, we issued Mr.

In June 2024, we issued Mr.

Johnsen 20,000 shares of common stock that were valued at $15,000.

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Anderson provides for an annual fee in the amount of $54,600 paid on a quarterly basis and an annual grant of shares of common stock.

In January 2023, we issued Ms.

In June 2024, we issued Ms.

Anderson 20,000 shares of common stock that were valued at $15,000.

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Lim provides for an annual fee in the amount of $48,000 paid on a quarterly basis and an annual grant of shares of common stock.

In January 2022, we issued Mr.

In June 2024, we issued Mr.

Lim 20,000 shares of common stock that were valued at $15,000.

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Equity compensation plans approved by security holders

1,037,708 (4)

Equity compensation plans not approved by security holders

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Series A Preferred Stock

% of Total Voting

Name of Beneficial Owner

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Based on Form 3 filed with the SEC by Lau Sok Huy on January 24, 2018.

Based on a Schedule 13G/A filed with the SEC by John F.

Nelson on October 11, 2024.

The address of the shareholder is 3610 Deerpath Road, Middleton, WI 53562.

(i) 2,430,164 shares of Common Stock held of record by Dr.

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firms [PCAOB No.

Report of Independent Registered Public Accounting Firm [PCAOB No.

Consolidated Balance Sheets as of December 31, 2024 and 2023

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We have audited the accompanying consolidated balance sheets of TOMI Environmental Solutions, Inc.

(the Company) as of years ended December 31, 2023 and 2022, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2023 and 2022, and the related notes (collectively referred to as the financial statements).

(the Company) as of years ended December 31, 2024 and 2023, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

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The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

To the Board of Directors and

Stockholders of TOMI Environmental Solutions, Inc.

Allowance for credit losses

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This estimate is determined based on internally developed qualitative and quantitative factors derived from the aging of receivables, the Company’s past collection history with customers, forward looking information and economic trends and conditions.

We identified the estimates used to determine the allowance for doubtful accounts as a critical audit matter.

We have identified the evaluation of the Company’s estimation of allowance for doubtful accounts as a critical audit matter.

There is an established policy for determining overall allowance for doubtful accounts with specific judgement in place for certain account balances that require additional evaluation and assessment which are used in estimating losses related to customer receivables.

We identified the estimates used to determine the allowance for credit losses as a critical audit matter.

We have identified the evaluation of the Company’s estimation of allowance for credit losses as a critical audit matter.

There is an established policy for determining overall allowance for credit losses with specific judgement in place for certain account balances that require additional evaluation and assessment which are used in estimating losses related to customer receivables.

There is also a high degree of subjectivity in management's assessment of the completeness and accuracy of the allowance for credit losses, specifically the portion of the receivable expected to be collected, which requires a heightened level of auditor judgement in auditing the estimate.

Our audit procedures related to the allowance for doubtful accounts included:

Testing the mathematical accuracy of management’s allowance for doubtful accounts calculation as of December 31, 2023 by recalculating and independently applying the policy to each risk pool, as well as recalculating the aging of receivables based on underlying source documentation.

Evaluating the design and implementation of controls over the calculation of the allowance for credit losses.

Testing the mathematical accuracy of management’s allowance for credit losses calculation as of December 31, 2024 by recalculating and independently applying the credit loss methodology promulgated by generally accepted accounting principles to each risk pool, as well as recalculating the aging of receivables based on underlying source documentation.

Recomputing current and historical collection rates for customer receivable balances and comparing the historical loss rates against the current period estimated loss rates within the respective risk pools and performing a retrospective analysis of the subsequent collections on customer receivables with certain risk characteristics.

Taking into consideration future economic factors applicable to the Company’s industry and their effect over the allowance for current expected credit loss.

Evaluating the reasonableness of management’s qualitative adjustments against the allowance for credit losses by obtaining corroborating evidence which supports the adjustments and assumptions made by management in determining the allowance.

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As further described in Note 2 to the consolidated financial statements, inventory is stated at the lower of cost or net realizable value.

At the balance sheet date, the Company evaluated inventories for excess quantities and obsolescence and included an inventory reserve against its inventory balances.

As of December 31, 2023, the inventory reserve was approximately $0.1 million, or 3% of total inventory.

To estimate the amount of inventory that may be in excess or obsolete, the Company reviews inventory quantities on hand as well as historical and projected distribution levels.

At the balance sheet date, the Company evaluated inventories for excess quantities and obsolescence (E&O) and included an inventory reserve against its inventory balances.

As of December 31, 2024, the inventory reserve was $1.1 million, or approximately 24% of total inventory.

To estimate the amount of inventory that may be in excess or obsolete, the Company reviews inventory quantities on hand as well as historical and projected sales volumes.

The Company’s model assumes that inventory will be distributed on a first-in-first-out basis.

Due to the nature of the inventory and the levels of inventory purchased in prior years, estimating the amount of inventory that is in excess or potentially obsolete involves significant judgments and estimates.

Due to the nature of the inventory and the levels of inventory purchased in prior years, as well as recent sales trends, estimating the amount of inventory that is in excess or potentially obsolete involves significant judgments and estimates.

Given the significant judgments associated with evaluating the valuation of E&O inventory, auditing the reasonableness of management’s estimates and assumptions involved especially subjective judgment and an increased extent of effort, therefore we identified the estimates used to determine the valuation of the E&O inventory as a critical audit matter.

To the Board of Directors and

Stockholders of TOMI Environmental Solutions, Inc.

Our audit procedures related to the Company’s valuation of E&O inventory included the following:

Evaluating the design and implementation of controls over the E&O inventory valuation.

Evaluating management’s future projections by comparing the historical sales.

Obtaining the Company’s E&O calculation and testing the mathematical accuracy.

Assessing the reasonableness of the assumptions used in the E&O calculation by developing an independent expectation and comparing our independent expectation to the results of the Company’s calculation.

Inquiring of the Company’s employees outside of the accounting department and evaluating other areas of the audit to identify business, product, or industry changes that may impact the inputs in the inventory E&O calculation.

Evaluating management’s future projections by comparing to current and historical sales trends.

Going Concern

As described in Note 2 to the consolidated financial statements, the Company has recurring losses from operations, negative cash flows from operations, a retained deficit, and as of December 31, 2024, has approximately $665,000 of cash.

The ability of the Company to continue as a going concern is dependent on its ability to generate sufficient cash to fund operations and meet its obligations as they become due.

These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We identified the Company’s ability to continue as a going concern as a critical audit matter.

Assessing the Company’s assertion on its ability to continue as a going concern is complex and involves a high degree of subjectivity and judgment as it relates to the reasonableness of the assumptions used and judgements made in the determination.

Our audit procedures related to the substantial doubt about the Company’s ability to continue as a going concern included:

Inquiring of executive officers, key members of management, and the Audit Committee of the Board of Directors, regarding factors that would have an impact on the Company’s ability to continue as a going concern.

Evaluating management’s plan for addressing the adverse effects of the conditions identified, including assessing the reasonableness of forecasted information and underlying assumptions by comparing to actual results of prior periods and actual results achieved to date, and utilizing our knowledge of the entity, its business and management in considering liquidity needs and the Company’s ability to generate sufficient cash flows.

Assessing the availability of additional capital raises.

Evaluating the completeness and accuracy of disclosures in the consolidated financial statements.

/s/ Rosenberg Rich Baker Berman P.A.

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CONSOLIDATED BALANCE SHEETS

December 31, 2023

December 31, 2022

Current Assets:

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Other Receivables

Inventories (Note 3)

Inventories, net (Note 3)

Vendor Deposits (Note 4)

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Deferred Revenue

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

Current Portion of Long-Term Operating Lease

Total Current Liabilities

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

Convertible Notes Payable, net of discount of $ 301,985 and $ 0 at December 31, 2023 and 2022, respectively (Note 10)

Convertible Notes Payable, net of unamortized debt discount of $ 239,506 and $ 301,985 at December 31, 2024 and December 31, 2023, respectively (Note 9)

Total Long-Term Liabilities

Total Liabilities

Commitments and Contingencies (Note 12)

Commitments and Contingencies (Notes 7 and 11)

Shareholders’ Equity:

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

63,750 shares issued and outstanding at December 31, 2023 and 2022, respectively

63,750 shares issued

and outstanding at December 31, 2024 and December 31, 2023, respectively

Cumulative Convertible Series B Preferred Stock;

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4,000 shares authorized;

none issued and outstanding at December 31, 2023 and 2022, respectively

and outstanding at December 31, 2024 and December 31, 2023, respectively

Common stock;

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

19,923,955 and 19,763,955 shares issued and outstanding at December 31, 2023 and 2022, respectively

20,015,205 and 19,923,955 shares issued and outstanding

at December 31, 2024 and December 31, 2023, respectively

Additional Paid-In Capital

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Common Stock Issued for Services Provided

Warrants and Options Exercised

Net (Loss) for the year ended December 31, 2023

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$ ( 49,826,229 )

Equity Compensation

Options Exercised

Common Stock Issued for Services Provided

Equity Compensation

Net (Loss) for the year ended December 31, 2024

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For the Years Ended December 31,

Cash Flow Used in Operating Activities:

Cash Flow From Operating Activities:

$ ( 4,476,762 )

$ ( 3,402,592 )

Adjustments to Reconcile Net Loss to

Net Used In Operating Activities:

Adjustments to Reconcile Net (Loss) to Net Cash (Used) In Operating Activities:

Depreciation and Amortization

Amortization of Right of Use Asset

Amortization of Software Costs

Amortization of Deferred Financing Costs

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Value of Equity Issued for Services

Reserve for Bad Debt

Credit Loss Expense

Inventory Reserve

Sales Returns Allowance

Changes in Operating Assets and Liabilities:

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Vendor Deposits

Other Receivables

Long Term Accounts Receivable

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Accrued Expenses

Customer Deposits

Deferred Revenue

Lease Liability

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Net Cash (Used) in Investing Activities

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

TOMI ENVIRONMENTAL SOLUTIONS, INC.

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Proceeds from Issuance of Convertible Notes

Proceeds from Issuance of Stock and Warrants

Net Cash From Financing Activities:

Proceeds from Exercise of Options

Net Cash Provided By Financing Activities:

(Decrease) In Cash and Cash Equivalents

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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 consolidated financial statements.

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

Our business is organized into five divisions:

Life Sciences, Healthcare, TOMI Service Network, Food Safety and Commercial.

Our business is organized into four divisions:

Life Sciences, Healthcare, Food Safety and Commercial.

Invented under a defense grant in association with the Defense Advanced Research Projects Agency (“DARPA”) of the U.S.

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Actual results could differ materially from these estimates.

On an ongoing basis, we evaluate our estimates, including those related to accounts receivable, inventory, fair values of financial instruments, intangible assets, useful lives of intangible assets and property and equipment, fair values of stock-based awards, income taxes, and contingent liabilities, among others.

On an ongoing basis, we evaluate our estimates, including those related to, allowance for credit losses, inventory, intangible assets, useful lives of intangible assets and property and equipment, fair values of stock-based awards, income taxes, and contingent liabilities, among others.

We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of our assets and liabilities.

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Accounts Receivable

Our accounts receivable are typically from credit-worthy customers or, for certain international customers, are supported by pre-payments.

For those customers to whom we extend credit, we perform periodic evaluations of their status and maintain allowances for potential credit losses as deemed necessary.

Accounts receivable are stated at the amount management expects to collect from outstanding balances.

The Company generally does not require collateral to support customer receivables.

Management assesses the collectability of outstanding customer invoices, and maintains an allowance resulting from the expected non-collection of customer receivables.

In estimating this reserve, management considers factors such as historical collection experience, customer creditworthiness, specific customer risk, and current and expected general economic conditions.

For those customers to whom we extend credit, in accordance with the Current Expected Credit Loss (CECL) model, we make a risk-based evaluation at the point of sale which is further reviewed on both an individual and collective (pool) basis during each reporting period based on ASC 326.

These accounting standards represent a significant departure from previous GAAP.

We are now required to estimate and report expected credit losses over the entire life of a financial asset, considering historical data, current conditions, and future forecasts, even if the risk of loss is remote.

We have a policy of reserving for credit losses based on our best estimate of the amount of potential credit losses in existing accounts receivable.

We periodically review our accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt.

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 years ended December 31, 2023 and 2022, was approximately $ 272,517 and $ 142,188 , respectively.

At December 31, 2023 and December 31, 2022, the allowance for doubtful accounts reserve was $ 1,494,347 and $ 1,678,000 .

Our allowance for credit losses was as follows for the years ended December 31, 2024 and 2023:

Allowance for credit losses

Credit Loss Expense

Adjustment to allowance

Allowance for credit losses

Long-term trade accounts receivable, are principally amounts arising from the sale of goods and services with a contractual maturity date or realization period of greater than one year and are recognized as "Long-Term Accounts Receivable" in our Consolidated Balance Sheet.

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We expense costs to maintain certification to cost of goods sold as incurred.

We review inventory on an ongoing basis, considering factors such as deterioration and obsolescence.

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 $ 95,000 as of December 31, 2023 and December 31, 2022.

We review inventory on an ongoing basis, considering factors such as deterioration and obsolescence, and future customer demand.

We record an allowance for estimated losses when the facts and circumstances indicate that particular inventories may not be usable or realized when comparing current inventory levels to anticipated demand for our product.

Our reserve for obsolete inventory was $ 1,100,000 and $ 95,000 as of December 31, 2024 and December 31, 2023, respectively.

Property and Equipment

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These payments will be included as variable lease expense in the period in which they are incurred.

Capitalized Software Development Costs

In accordance with ASC 985-20 regarding the development of software to be sold, leased, or marketed, we expense such costs as they are incurred until technological feasibility has been established, at and after which time those costs are capitalized until the product is available for general release to customers.

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

Amortization expense for the years ended December 31, 2023 and 2022, was $ 0 and $ 10,475 , respectively.

Accounts Payable

As of December 31, 2023, two vendors accounted for approximately 59 % of accounts payable.

As of December 31, 2024, one vendor accounted for approximately 60 % of accounts payable.

As of December 31, 2023, two vendors accounted for approximately 59 % of accounts payable.

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Potentially dilutive securities as of December 31, 2024 consisted of 2,080,000 shares of common stock from convertible debentures, 2,765,846 shares of common stock issuable upon exercise of outstanding warrants, 805,042 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 December 31, 2022 consisted of 2,792,335 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 December 31, 2023 consisted of 2,080,000 shares of common stock from convertible debentures, 2,772,096 shares of common stock issuable upon exercise of outstanding warrants, 617,542 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”).

Options, warrants, preferred stock and shares associated with the conversion of debt to purchase approximately 5.7 million and 5.5 million shares of common stock were outstanding at December 31, 2024 and 2023, respectively, but were excluded from the computation of diluted net loss per share at December 31, 2024 and 2023 due to the anti-dilutive effect on net loss per share.

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Revenue Recognition

We recognize revenue in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, Revenue from Contracts with Customers (Topic 606).

We recognize revenue in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC”) Revenue from Contracts with Customers (Topic 606).

We recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services.

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a) the number of performance obligations based on the determination under step (ii) above and whether those performance obligations are distinct from other performance obligations in the contract;

b) the transaction price under step (iii) above;

b) the transaction price under step (iii) above for each distinct performance obligation identified in step (ii) above;

and c) the stand-alone selling price for each performance obligation identified in the contract for the allocation of transaction price in step (iv) above.

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SteraMist Product

$ ( 1,169,000 )

Service and Training

$ ( 983,000 )

Revenue by Geographic Region

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United States

$ ( 136,000 )

International

$ ( 983,000 )

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

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Service revenue is recognized as the agreed upon services are rendered to our customers in an amount that reflects the consideration we expect to receive in exchange for those services.

Estimated allowances for sales returns are recorded as sales are recognized.

We use a specific identification method based on subsequent product return activity and historical average calculations to estimate the allowance for sales returns.

For the years ended December 31, 2024 and 2023, we recorded an allowance of $ 227,000 and $ 128,390 , respectively.

Costs to Obtain a Contract with a Customer

3 unchanged sentences

Contract Balances

As of December 31, 2023, and December 31, 2022 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 December 31, 2024, and December 31, 2023 we had contract balances and 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 in the amounts of $ 211,724 and $0, respectively.

Arrangements with Multiple Performance Obligations

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Our contracts with customers for products and services often dictate the terms and conditions of when the control of the promised products or services is transferred to the customer and the amount of consideration to be received in exchange for the products and services.

We also record an estimated allowance for anticipated product returns.

Equity Compensation Expense

35 unchanged sentences

Business Segments

We currently have one reportable business segment due to the fact that we derive our revenue primarily from one product.

We currently have one reportable business segment due to the fact that we derive our revenue primarily from one product in which 1) The business activities are homogenous in nature, 2) The entire operation faces similar market conditions and risks, 3) There is a high degree of integration in its operations, 4) Internal evaluations of financial results are conducted on a consolidated basis.

A breakdown of revenue is presented in “Revenue Recognition” in Note 2 above.

See Note 17, Segment Reporting for more details.

We are required to apply the guidance in ASC 280 and identify significant segment expenses and other segment items for our single reportable segment.

Going Concern

For the years ended December 31, 2024 and 2023, our net loss was approximately $ 4,477,000 and $ 3,403,000 , respectively, and the cash used in operations was approximately $ 1,440,000 and $ 3,599,000 , respectively.

As of December 31, 2024, we had approximately $ 665,000 of cash and cash equivalents and an accumulated deficit of $ 54.3 million.

These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.

The Company’s consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and satisfaction of liabilities in the ordinary course of business;

no adjustments have been made relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company not continue as a going concern.

The Company intends to fund ongoing activities by utilizing its current cash on hand, the cash generated from operations, and by raising additional capital through equity or debt financings.

There can be no assurance that the Company will be successful in raising that additional capital or that such capital, if available, will be on terms that are acceptable to us, as our ability to raise capital may be affected by various factors, including general market conditions, volatility of our stock price, investor interests and expectations, and our financial performance.

On March 28, 2025, we received a deficiency letter from the Listing Qualifications Department (the "Staff") of the Nasdaq Stock Market ("Nasdaq") notifying us that, for the preceding 30 consecutive business days, the closing bid price for the Company's common stock, par value $0.01 per share (the "Common Stock") was below the minimum $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the "Bid Price Requirement").

The notification received has no immediate effect on the Company's Nasdaq listing.

In accordance with Nasdaq rules, the Company has been provided an initial period of 180 calendar days, or until September 24, 2025 (the "Compliance Date"), to regain compliance with the Bid Price Requirement.

There is no guarantee that we will be able to regain compliance with the Bid Price Requirement by the Compliance Date, and failure to do so may subject us to delisting proceedings of NASDAQ.

Recent Accounting Pronouncements

Recently issued accounting pronouncements not yet adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2023-07, Improvements to Reportable Segment Disclosures (Topic 280).

This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment’s profit or loss.

This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources.

The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements.

Early adoption is also permitted.

This ASU will likely result in us including the additional required disclosures when adopted.

We are currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2024.

In December 2023, the FASB issued ASU No.

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This ASU will result in the required additional disclosures being included in our consolidated financial statements, once adopted.

In November 2024, the FASB issued ASU No.

2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40).

In January 2025, ASU No.

2025-01 was issued to clarify the effective date for all public business entities.

The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions.

This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses.

The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.

Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements.

Early adoption is also permitted.

This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted.

We are currently evaluating the provisions of this ASU.

Recently adopted accounting pronouncements

In March 2022, the FASB issued ASU 2022-02, Troubled Debt Restructurings and Vintage Disclosures.

This ASU eliminates the accounting guidance for troubled debt restructurings by creditors that have adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which we adopted on January 1, 2020.

This ASU also enhances the disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower is experiencing financial difficulty.

In addition, the ASU amends the guidance on vintage disclosures to require entities to disclose current period gross write-offs by year of origination for financing receivables and net investments in leases within the scope of ASC 326-20.

The ASU is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years.

We adopted the ASU prospectively on January 1, 2023.

This ASU did not have a material impact on our consolidated financial statements.

In October 2021, the FASB issued ASU No.

2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805).

This ASU requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606.

At the acquisition date, the acquirer applies the revenue model as if it had originated the acquired contracts.

The ASU is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years.

We adopted this ASU prospectively on January 1, 2023.

This ASU did not have a material impact on our consolidated financial statements.

In August 2020, the FASB issued ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.

ASU 2020-06 was issued to reduce the complexity associated with accounting for certain financial instruments with characteristics of liabilities and equity.

ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock and improves the disclosures for convertible instruments and related earnings per share guidance.

ASU 2020-06 also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity and improves and amends the related earnings per share guidance.

For public entities that qualify as a filer with the SEC, excluding entities eligible to be smaller reporting companies, ASU 2020-06 is effective for fiscal annual periods beginning after December 15, 2021, including interim periods within those fiscal years.

For nonpublic entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

Early adoption was permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

ASU 2020-06 must be adopted as of the beginning of a company’s annual fiscal year.

ASU 2020-06 may be adopted through either a modified retrospective method of transition or a fully retrospective method of transition.

The Company adopted ASU 2020-06 on January 1, 2021.

The adoption did not have an impact on our consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (“ASU 2016-13”), which provides new authoritative guidance with respect to the measurement of credit losses on financial instruments.

This update changes the impairment model for most financial assets and certain other instruments by introducing a current expected credit loss (“CECL”) model.

The CECL model is a more forward-looking approach based on expected losses rather than incurred losses, requiring entities to estimate and record losses expected over the remaining contractual life of an asset.

ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies.

The Company adopted ASU 2016-13 on January 1, 2023.

The adoption did not have an impact on our consolidated financial statements.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2023-07, Improvements to Reportable Segment Disclosures (Topic 280).

The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements.

Early adoption is also permitted.

This ASU was adopted retrospectively on December 31, 2024 and resulted in us including the additional required disclosures.

.Refer to Note 17, Segment Reporting about the areas for the inclusion of the new required disclosures.

Inventories consist of the following at (rounded to the nearest thousandth):

December 31, 2023

December 31, 2022

Finished goods

1 unchanged sentence

Inventory Reserve

( 1,100,000 )

Inventory, net

Our inventory reserve was adjusted upwards by $ 1,005,000 during the fiscal year ended December 31, 2024, to account for additional slow-moving items in our year-end inventory records compared to anticipated demand for certain units.

VENDOR DEPOSITS

2 unchanged sentences

Property and equipment consist of the following at:

December 31, 2023

December 31, 2022

Furniture and fixtures

13 unchanged sentences

Definite life intangible assets consist of the following:

December 31, 2023

December 31, 2022

Intellectual Property and Patents

16 unchanged sentences

Operating leases:

December 31, 2023

December 31, 2022

Operating lease right-of-use asset

6 unchanged sentences

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

December 31, 2023

December 31, 2022

Weighted-average remaining lease term:

17 unchanged sentences

Long-term portion of lease obligations

CAPITALIZED SOFTWARE DEVELOPMENT COSTS

In accordance with ASC 985-20 we capitalized certain software development costs associated with updating our continuing line of product offerings.

Capitalized software development costs consist of the following at:

December 31, 2023

December 31, 2022

Capitalized Software Development Costs

Accumulated Amortization

Capitalized Software Development Costs - net

Amortization expense for the years ended December 31, 2023 and 2022 was $ 0 and $ 10,475 , respectively.

CLOUD COMPUTING SERVICE CONTRACT

35 unchanged sentences

In January 2023, we issued 60,000 shares of Common Stock valued at approximately $ 51,000 to members of our Board pursuant to our equity plan (see Note 12).

In May 2024, we issued 60,000 shares of Common Stock valued at approximately $ 45,000 to members of our Board pursuant to our equity plan (see Note 12).

Stock Options

In January 2022 we issued an option to purchase 172,500 shares of common stock to our Chief Executive Officer at an exercise price of $ 1.12 per share pursuant to an employment agreement.

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:

volatility, 156 %;

expected dividend yield, 0 %;

risk free interest rate, 1.65 %;

and an expected life of 5 years.

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 warrant received by our Chief Executive Officer with the following assumptions:

volatility, 156 %;

expected dividend yield, 0 %;

risk free interest rate, 1.65 %;

and an expected life of 5 years.

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 warrant received by our Chief Executive Officer with the following assumptions:

volatility, 156 %;

expected dividend yield, 0 %;

risk free interest rate, 1.65 %;

and an expected life of 5 years.

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

In January 2023, we issued options to purchase 175,000 shares of Common Stock to Officers at an exercise price of $ 0.85 per share pursuant to an employment agreement.

14 unchanged sentences

The grant date fair value of each share of Common Stock underlying the options was $ 0.76 .

In May 2024, we issued options to purchase 225,000 shares of Common Stock to officers at an exercise price of $ 0.75 per share pursuant to an employment agreement.

The options were valued at $ 144,307 and have a contractual term of 10 years.

We utilized the Black-Scholes model to fair value the options received by Officers with the following assumptions:

volatility, 125 %;

expected dividend yield, 0 %;

risk free interest rate, 4.35 %;

and a contractual term of 10 years.

The grant date fair value of each share of Common Stock underlying the options was $ 0.64 .

The total stock based compensation for the years ended December 31, 2024 and 2023, was $ 144,307 and $ 163,286 , respectively which has been in included within General and Administration expense in our statement of operations.

9 unchanged sentences

Options outstanding and exercisable by price range as of December 31, 2024 were as follows:

Exercisable Options

Outstanding Options

Exercisable Options

Life in Years

4 unchanged sentences

December 31, 2023

Number of Warrants

Weighted Average Exercise Price

21 unchanged sentences

CONTRACTS AND AGREEMENTS

Consulting Agreement

On December 16, 2024, the Board of Directors of the Company appointed Nick Jennings, former Chief Financial Officer of the Company, as Interim Chief Financial Officer.

The Company has entered into an offer letter with Mr.

Jennings, pursuant to which Mr.

Jennings will serve as the Interim Chief Financial Officer for a five-month period and will receive a fee of $ 15,000 per month.

Director Compensation

3 unchanged sentences

For the year ended December 31, 2024, we issued an aggregate of 60,000 shares of Common Stock that were valued at approximately $ 45,000 to members of our Board.

Manufacturing Agreement

In June 2020 we entered into a manufacturing agreement with Planet Innovation Products, Pty Ltd (“PI”).

The agreement does not provide for any minimum purchase commitments and is for a term of three years.

The agreement also provides for a warranty against product defects.

Cloud Computing Service Contract

In May 2020 we entered into an agreement with a vendor for a cloud computing service contract.

The contract provides for annual payments in the amount of $ 30,409 and has a term of 5 years.

Approximate minimum future payments under the contract are as follows:

December 31, 2024

December 31, 2025

December 31, 2026

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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

December 31, 2023

December 31, 2022

Payroll and related costs

2 unchanged sentences

Accrued warranty (Note 14)

Allowance for Sales Returns

Other accrued expenses

Other accrued expenses and current liabilities

ACCRUED WARRANTY

4 unchanged sentences

The following table presents warranty reserve activities at:

December 31, 2023

December 31, 2022

Beginning accrued warranty costs

26 unchanged sentences

Income tax expense computed at US statutory corporate income tax rate

( 1,253,493 )

Reconciling items:

2 unchanged sentences

( 1,188,884 )

Incentive stock options and warrants

Gain Upon Debt Extinguishment

Meals and Entertainment

2 unchanged sentences

Deferred tax assets:

Reserve for Bad Debt

Reserve for Credit Loss

Inventory Reserve

2 unchanged sentences

Intangible Assets

Allowance for Sales Returns

Capitalized R&D

25 unchanged sentences

CUSTOMER CONCENTRATION

The Company had certain customers whose accounts receivable balances individually represented 10 % or more of the Company’s accounts receivable.

The Company had certain customers whose accounts receivable balances individually represented 10 % or more of the Company’s accounts receivable, or whose sales for the fiscal year represented 10% or more of the Company’s revenue.

As of December 31, 2024, two customers accounted for 25 % of our gross accounts receivable.

As of December 31, 2022, one customer accounted for 14 % of our gross accounts receivable.

For the year ended December 31, 2023, we had 2 customers who represented 20 % of revenue.

For the year ended December 31, 2022, we had no customer who represented 10 % or more of revenue.

As of December 31, 2023, two customers accounted for 27 % of our gross accounts receivable.

For the year ended December 31, 2024, we had one customer who represented 15 % of revenue.

For the year ended December 31, 2023, we had two customers who represented 20 % of revenue.

SEGMENT REPORTING

Our Chief Executive Officer, as the CODM, organizes our company, manages resource allocations and measures performance among one operating and reportable segment due to the fact that we derive our revenue primarily from one product (equipment and service revenue based on our patented BIT technology).

A breakdown of revenue is presented in “Revenue Recognition” in Note 2 above.

We evaluated the aggregation criteria in ASC 280-10-50-11 which states that aggregation can be considered if segments are similar in certain areas, including the nature of products and services, production processes, type of class of customer, and future economic performance.

Our CODM is regularly provided with more detailed expense information than what is included on our consolidated income statement.

The CODM considers monthly budgets and cash flow projections, gross margins for each project, and our consolidated net income as reported on the income statement when allocating resources and assessing our performance.

We are required to apply the guidance in ASC 280 and identify significant segment expenses and other segment items for our single reportable segment.

SUBSEQUENT EVENTS

In March 2025, we entered into a Securities Purchase Agreement (the “SPA”) with certain accredited investors (collectively, the “Investors”) pursuant to which we agreed to sell and issue to the Investors in a private placement transaction (the “Private Placement”) in one or more closings up to an aggregate principal amount of $3,000,000 (the “Notes”).

In March and April 2025, we sold and issued pursuant to an SPA convertible promissory note (the “Notes”) to purchase an aggregate of 308,000 shares of common stock at an exercise price of $ 1.25 per share in exchange for aggregate gross proceeds of $ 385,000 .

The Notes mature and are due on the fifth anniversary of the issuance date in March of 2030.

The Notes bear simple interest at a rate of 12 % per annum, payable in equal monthly installments.

The Notes are convertible into shares of our Common Stock, at the option of the holder, at a conversion price of $ 1.25 per share, which shall not exceed $1.55 per share.

In addition, we can require Investors to convert the Notes at the then current conversion price at any time after 90 days from the issue date if the Common Stock has a closing bid price of $ 1.55 per share or higher on any twenty (20) days within a thirty (30) day period of consecutive trading days, or if a “fundamental change” occurs (as defined in the Securities Purchase Agreement).

The Notes are unsecured and senior to other indebtedness subject to certain exceptions.

On March 28, 2025, we received a deficiency letter from the Listing Qualifications Department (the “Staff”) of the Nasdaq Stock Market (“Nasdaq”) notifying us that, for the preceding 30 consecutive business days, the closing bid price for the Company’s common stock, par value $0.01 per share (the “Common Stock”) was below the minimum $1.00 per share requirement for continued inclusion on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Requirement”).

The notification received has no immediate effect on the Company’s Nasdaq listing.

In accordance with Nasdaq rules, the Company has been provided an initial period of 180 calendar days, or until September 24, 2025 (the “Compliance Date”), to regain compliance with the Bid Price Requirement.

There is no guarantee that we will be able to regain compliance with the Bid Price Requirement by the Compliance Date, and failure to do so may subject us to delisting proceedings of NASDAQ.

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-K

Item 9A. Controls and Procedures