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Form 8-K TOMI Environmental Solut For: Mar 30

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March 30, 2021 5:05 PM EDT
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): March 30, 2021
 
TOMI Environmental Solutions, Inc.
(Exact name of registrant as specified in its charter)
 
Florida
 
000-09908
 
59-1947988
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)
 
8430 Spires Way
Frederick, Maryland 21701
(Address of principal executive offices) (Zip Code)
 
(800) 525-1698
(Registrant's telephone number, including area code)
 
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company      ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 
 

 
 
 
Item 2.02 Results of Operations and Financial Condition.
 
On March 30, 2021, TOMI Environmental Solutions, Inc. issued a press release regarding its financial results for the year ended December 31, 2020. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.1. No additional information is included in this Current Report on Form 8-K.
 
The information included in this Current Report on Form 8-K, including the exhibit hereto, shall not be deemed “filed” for purposes of, nor shall it be deemed incorporated by reference in, any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except as expressly set forth by specific reference in such a filing.
 
Item 9.01 Financial Statements and Exhibits.
 
(d) Exhibits.
 
Exhibit Number
 
Description
 
Press release issued March 30, 2021
 
 
 
 
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
TOMI ENVIRONMENTAL SOLUTIONS, INC.
 
 
 
Dated: March 30, 2021
By:
/s/ Halden Shane
 
 
Halden Shane
 
 
Chief Executive Officer
 
 
 
 
 
 
EXHIBIT INDEX
 
Exhibit Number
 
Description
 
Press release issued March 30, 2021
 
 
 
  Exhibit 99.1
 
TOMI ENVIRONMENTAL SOLUTIONS, INC. REPORTS RECORD CALENDAR YEAR 2020 REVENUE GROWTH OF 297% TO $25 MILLION; FOURTH QUARTER SALES GROW 95% TO $3.7 MILLION
 
FREDERICK, MD, March 30, 2021 (BUSINESS WIRE) — TOMI Environmental Solutions, Inc.® (“TOMI”) (NASDAQ: TOMZ), is a global company specializing in disinfection and decontamination utilizing its premier Binary Ionization Technology (BIT) platform through its SteraMist brand of products today announced its results financial results for the calendar year 2020 which includes annual revenue growth of 297% and a 95% increase in fourth quarter sales.
 
TOMI Chief Executive Officer, Dr. Halden Shane stated, “Our Company made tremendous progress in 2020, resulting in record annual revenues reaching $25 million and net income of $4.4 million. The COVID-19 pandemic elevated the way the world looks at disinfection protocols. This shift in thinking allowed us to expand our SteraMist brand, and to onboard a diverse group of customers from a wide range of verticals, significantly enhancing our customer base. TOMI’s customers are great referrals for the advancement of SteraMist technology in the marketplace and the promotion of TOMI as a company, particularly in the emergency services and long-term care facilities.
 
“Our TOMI Service Network members continue to fight at the front lines assisting in the reopening of the economy by enabling businesses to maintain a new level of clean. Our Life Science division is seeing a return to normal for our current customers and the majority of our long-term projects with top tier pharmaceutical companies have resumed after being placed on hold due to COVID-19. As we move through 2021, we expect the launch of new products including the SteraBot, SteraBox, and SteraPack to drive continued growth and meet customer demand for more agile solutions. With these initiatives, the potential for 2021 performance is even stronger than what we achieved in 2020. We’re excited about the launch of these new products, which demonstrate the versatility of our superior technology and we believe our strengthened portfolio of offerings, coupled with our recently announced new sales executives, position us well to continue increasing our market share throughout 2021.”
 
Financial Results for the year ended December 31, 2020 compared to December 31, 2019
 
●
Total net revenue was $25.0 million compared to $6.3 million, an increase of $18.7 million or 297%.
-
SteraMist® equipment-based revenues were $16.9 million and $3.9 million respectively, an increase of 333%.
-
SteraMist® BIT Solution-based revenues were $4.3 million and $0.7 million respectively, an increase of 514%.
-
Service-based revenues were $2.1 million and $1.3 million, respectively, an increase of 62%.
-
Domestic revenues were $18.4 million and $5.0 million, respectively, an increase of 268%; International revenues were approximately $6.7 million and $1.3 million, respectively, an increase of 415%.
●
Gross margin was 60.1% compared to 61.7%. The decrease in gross profit is attributable to product mix.
●
Operating income was $4.5 million compared to an operating loss of ($2.1 million).
●
Net Income was $4.4 million or $0.27 per basic and $0.23 per diluted share, compared to a net loss of $2.3 million or ($0.15) per basic and diluted share.
●
EBITDA was $5.2 million compared to an EBITDA loss of ($1.4 million). A table reconciling EBITDA to the appropriate GAAP measure is included with the Company's financial information below.
●
Adjusted EBITDA was $8.4 million as compared to adjusted EBITDA loss of ($1.2 million). Adjusted EBITDA margin was 33% for full year 2020. A table reconciling Adjusted EBITDA to the appropriate GAAP measure is included with the Company's financial information below.
●
Cash provided from operations for the year ended December 31, 2020 was $4.6 million compared to cash used in operations of ($814,000) for the year ended December 31, 2019.
 
 
 
 
Financial Results for the three months ended December 31, 2020 compared to December 31, 2019
 
●
Total net revenue was $3.7 million compared to $1.9 million, an increase of 95%.
-
SteraMist® equipment-based revenues were $2.3 million and $1.3 million respectively, an 77% increase.
-
SteraMist® BIT Solution-based revenues were $0.8 million and $0.2 million, respectively, an increase of 300%.
-
Service-based revenues were $0.2 million and $0.3 million, respectively, a decrease of 33%.
-
Domestic revenues were $2.9 million and $1.2 million , respectively, an increase of 142%; International revenues were consistent at approximately $0.7 million in both 2020 and 2019.
●
Gross margin was 58.9% compared to 56.0%. The increased gross margin is attributable to product mix.
●
Operating loss was ($2.9 million) compared to an operating loss of ($0.5 million). The increased loss from operations is attributable to non-cash equity compensation expense charge incurred in the fourth quarter in the amount of $2.8 million.
●
Net loss was ($2.9 million) or ($0.17) per basic and diluted share, compared to a net loss of ($0.5 million) or ($0.03) per basic and diluted share.
●
EBITDA loss was ($2.7 million) and ($0.3 million). A table reconciling EBITDA to the appropriate GAAP measure is included with the Company's financial information below.
●
Adjusted EBITDA was $0.1 million compared to EBITDA loss of ($0.3 million). A table reconciling Adjusted EBITDA to the appropriate GAAP measure is included with the Company's financial information below.
 
Balance sheet highlights as of December 31, 2020
●
Cash and cash equivalents were approximately $5.2 million compared to $0.9 million at December 31, 2019, an increase of $4.3 million .
●
Working capital was $11.5 million compared to ($1.3 million) at December 31, 2019.
●
Shareholders’ equity was $13.2 million compared to $0.9 million at December 31, 2019, an increase of $12.3 million.
 
Current Business Highlights To Date
Revenues
●
Record total revenue exceeding $25 million in a calendar year.
●
Added approximately 250 new customers across our five divisions for the year ended December 31, 2020.
●
Sold 650 machines and 29,000 gallons of our SteraMist® BIT Solution during 2020 calendar year.
 
Business Highlights
●
Conversion of $4.5 million convertible note into shareholder equity.
●
Effected a 1-for-8 reverse stock split of the outstanding shares of our common stock and preferred A stock; Common stock was approved for listing on the Nasdaq Stock Market and our shares commenced trading on the Nasdaq Stock Market on October 1, 2020.
●
Added additional manufacturer through agreement with Planet Innovation.
●
TOMI Service Network provider memberships increased and BIT solution sales dramatically increased related to the number of service jobs conducted by TSN providers, including the treatment of schools, residential and commercial buildings, rapid transit, airplanes and other transportation methods.
●
Launched our Commercial Division to capitalize on increased demand from Federal Government facilities and agencies, the aircraft industry, manufacturing companies, the automobile, naval, education, retail, housing and recreation sectors, and emergency preparedness for counties and cities.
●
 SteraMist equipment and BIT solution officially approved and registered with the China CDC (Received two separate registrations).
●
Successfully tested for direct produce application efficacy, with testing results published in Food Control for the third time, highlighting the USDA paper “Cold plasma-activated hydrogen peroxide aerosol on populations of Salmonella Typhimurium and Listeria innocua and quality changes of apple, tomato and cantaloupe during storage – A pilot scale study” authored by Dr. Xuetong Fan. The study sought to test direct application of iHP™ directly onto the smooth surfaces of tomatoes and apples, the stem scars of of tomatoes, and the rinds of cantaloupes. Resulting efficacy on the reduction of Salmonella Typhimurium and Listeria innocua bacteria as well as any changes in quality parameters for simulated storage were observed.
 
 
 
 
●
Released preliminary scientific results on one of two studies conducted with the University of Virginia demonstrating kill on SARS CoV-2 Virus in five seconds. The Company looks forward to results on the second study achieving kill on Adenovirus, which will benefit the TOMI’s efforts in the Hospital-HealthCare, TOMI Service Network, and Commercial markets.
●
Continued development and testing of the “SteraBot” and launch of pilot program at Lithuanian University Hospital.
●
Ongoing development of new products such as SteraBox and SteraPack, with the latter to have a tentative launch set for second quarter 2021.
●
Received first Australian patent protecting use of its iHP technology, and pursuing patent rights in diverse regions of the world, encompassing the European Union, Brazil, Mexico, Korea, China, India, and many other countries.
●
Added three Vice Presidents of Sales to oversee the Company’s sales efforts, to capitalize on the growing pipeline of opportunites across the Commercial, Healthcare and Food Divisions respectively.
●
Increased demand for TOMI’s product and services has led to the hiring and onboarding of additional employees to assist in a wide variety of company operations, including accounting, procurement, customer satisfaction, and quality control.
 
TOMI™ Environmental Solutions, Inc.: Innovating for a safer world®
TOMI™ Environmental Solutions, Inc. (NASDAQ:TOMZ) is a global decontamination and infection prevention company, providing environmental solutions for indoor surface disinfection through the manufacturing, sales and licensing of its premier Binary Ionization Technology® (BIT™) platform. Invented under a defense grant in association with the Defense Advanced Research Projects Agency (DARPA) of the U.S. Department of Defense, BIT™ solution utilizes a low percentage Hydrogen Peroxide as its only active ingredient to produce a fog of  ionized Hydrogen Peroxide (iHP™). Represented by the SteraMist® brand of products, iHP™ produces a germ-killing aerosol that works like a visual non-caustic gas.
TOMI products are designed to service a broad spectrum of commercial structures, including, but not limited to, hospitals and medical facilities, cruise ships, office buildings, hotel and motel rooms, schools, restaurants, meat and produce processing facilities, military barracks, police and fire departments, and athletic facilities. TOMI products and services have also been used in single-family homes and multi-unit residences.
 
TOMI develops training programs and application protocols for its clients and is a member in good standing with The American Biological Safety Association, The American Association of Tissue Banks, Association for Professionals in Infection Control and Epidemiology, Society for Healthcare Epidemiology of America, America Seed Trade Association, and The Restoration Industry Association.
 
For additional information, please visit http://www.tomimist.com/ or contact us at [email protected].
 
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Certain written and oral statements made by us may constitute “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). Forward-looking statements are identified by such words and phrases as “we expect,” “expected to,” “estimates,” “estimated,” “current outlook,” “we look forward to,” “would equate to,” “projects,” “projections,” “projected to be,” “anticipates,” “anticipated,” “we believe,” “could be,” and other similar phrases. All statements addressing operating performance, events, or developments that we expect or anticipate will occur in the future, including statements relating to revenue growth, earnings, earnings-per-share growth, or similar projections, are forward-looking statements within the meaning of the Reform Act. They are forward-looking, and they should be evaluated in light of important risk factors that could cause our actual results to differ materially from our anticipated results. The information provided in this document is based upon the facts and circumstances known at this time. We undertake no obligation to update these forward-looking statements after the date of this release.
 
Use of Non-GAAP Financial Measures
This press release includes information relating to EBITDA, Adjusted EBITDA and Adjusted EBITDA margin, each of which the Securities and Exchange Commission has defined as a "non-GAAP financial measure."
 
We define EBITDA as net income (loss), adjusted to exclude: interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP financial measure and is intended to serve as a supplement to our results provided in accordance with GAAP. We believe that such information may provide our investors a better understanding of our underlying operational performance, business and performance trends.
 
We define Adjusted EBITDA as net income (loss), adjusted to exclude: interest, taxes, depreciation and amortization; stock-based compensation expense. We define Adjusted EBITDA margin as Adjusted EBITDA divided by net revenue. We believe that such information may provide our investors a better understanding of our underlying operational performance, business and performance trends.
 
Although we believe that the use of non-GAAP financial measures enhance its investors’ understanding of its business and performance, our use of non-GAAP financial measures should not be considered an alternative to GAAP basis financial measures and should be read in conjunction with the relevant GAAP financial measures. Other companies in similar industries may define or calculate non-GAAP financial measures differently than ours, limiting their usefulness as a comparative measure. Because of these limitations, the non-GAAP financial measure used in this release should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measure is available in this news release.
 
 
 
  
 
TOMI ENVIRONMENTAL SOLUTIONS, INC.
 
 
CONSOLIDATED BALANCE SHEET
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
Current Assets:
 
 
 
 
 
 
Current Assets:
 
December 31, 2020 (1)
 
 
December 31, 2019 (1)
 
 Cash and Cash Equivalents
 $5,198,842 
 $897,223 
Accounts Receivable - net
  3,716,701 
  1,494,658 
Other Receivables
  198,951 
  - 
Inventories
  3,781,515 
  2,315,214 
Vendor Deposits
  388,712 
  141,052 
Prepaid Expenses
  421,305 
  187,664 
       Total Current Assets
  13,706,027 
  5,035,811 
 
    
    
Property and Equipment – net
  1,298,103 
  1,367,864 
 
    
    
Other Assets:
    
    
Intangible Assets – net
  722,916 
  939,010 
Operating Lease - Right of Use Asset
  631,527 
  674,471 
Capitalized Software Development Costs - net
  52,377 
  94,278 
Other Assets
  358,935 
  114,033 
     Total Other Assets
  1,765,755 
  1,821,792 
Total Assets
 $16,769,885 
 $8,225,467 
Current Liabilities:
    
    
  LIABILITIES AND SHAREHOLDERS’ EQUITY
    
    
  Accounts Payable
 $1,501,469 
 $713,222 
  Accrued Expenses and Other Current Liabilities
  501,849 
  450,112 
  Accrued Interest
  - 
  66,667 
  Customer Deposits
  118,880 
  - 
  Current Portion of Long-Term Operating Lease
  81,223 
  71,510 
  Convertible Notes Payable, net of discount of $0
    
    
     at December 31, 2019
  - 
  5,000,000 
     Total Current Liabilities
  2,203,421 
  6,301,511 
 
    
    
Long-Term Liabilities:
    
    
  Loan Payable (Note 16)
  410,700 
  - 
  Long-Term Operating Lease, Net of Current Portion
  953,190 
  1,034,413 
     Total Long-Term Liabilities
  1,363,890 
  1,034,413 
     Total Liabilities
  3,567,311 
  7,335,924 
 
    
    
 Commitments and Contingencies
  - 
  - 
 
    
    
 Shareholders’ Equity:
    
    
      Cumulative Convertible Series A Preferred Stock;
    
    
 
 par value $0.01 per share, 1,000,000 shares authorized; 63,750 shares issued
 
    
        and outstanding at December 31, 2020 and December 31, 2019
  638 
  638 
 
 Cumulative Convertible Series B Preferred Stock; $1,000 stated value;
 
    
 
 7.5% Cumulative dividend; 4,000 shares authorized; none issued
 
    
        and outstanding at December 31, 2020 and December 31, 2019
  - 
  - 
 
 Common stock; par value $0.01 per share, 250,000,000 shares authorized;
 
    
 
 16,761,513 and 15,587,552 shares issued and outstanding
 
    
        at December 31, 2020 and December 31, 2019, respectively.
  167,615 
  155,875 
     Additional Paid-In Capital
  52,142,399 
  44,232,274 
     Accumulated Deficit
  (39,108,078)
  (43,499,244)
     Total Shareholders’ Equity
  13,202,574 
  889,543 
Total Liabilities and Shareholders’ Equity
 $16,769,885 
 $8,225,467 
 
(1) Share amounts with respect to the common stock and Convertible Series A Preferred Stock have been retroactively restated to reflect the reverse split thereof, which was effected as of the close of business on September 10, 2020. 
 
 
 
 
 

TOMI ENVIRONMENTAL SOLUTIONS, INC.
 
 
 CONSOLIDATED STATEMENT OF OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For The Three Months Ended
 
 
For The Years Ended
 
 
 
December 31,
 
 
December 31,
 
 
 
2020
 
 
2019
 
 
2020
 
 
2019
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Sales, net
 $3,654,133 
 $1,855,441 
 $25,027,637 
 $6,347,160 
   Cost of Sales
  1,500,466 
  816,563 
  9,985,046 
  2,433,243 
   Gross Profit
  2,153,667 
  1,038,878 
  15,042,591 
  3,913,917 
 
    
    
    
    
Operating Expenses:
    
    
    
    
   Professional Fees
  262,861 
  66,440 
  681,377 
  363,789 
   Depreciation and Amortization
  198,274 
  177,095 
  719,760 
  716,165 
   Selling Expenses
  267,348 
  380,238 
  1,247,444 
  1,654,564 
   Research and Development
  209,603 
  91,209 
  455,046 
  340,582 
   Equity Compensation Expense
  2,823,300 
  27,189 
  3,130,986 
  114,222 
   Consulting Fees
  100,778 
  39,627 
  327,232 
  126,693 
   General and Administrative
  1,195,110 
  749,376 
  3,971,956 
  2,681,146 
Total Operating Expenses
  5,057,275 
  1,531,174 
  10,533,802 
  5,997,161 
Income (loss) from Operations
  (2,903,608)
  (492,296)
  4,508,789 
  (2,083,244)
 
    
    
    
    
Other Income (Expense):
    
    
    
    
   Amortization of Debt Discounts
  - 
  - 
  - 
  (17,534)
   Interest Income
  568 
  613 
  2,915 
  3,045 
   Interest Expense
  (1,272)
  (50,000)
  (43,538)
  (200,000)
Total Other Income (Expense)
  (704)
  (49,387)
  (40,623)
  (214,489)
 
    
    
    
    
Income (loss) before income taxes
  (2,904,312)
  (541,683)
  4,468,166 
  (2,297,733)
Provision for Income Taxes
  - 
  - 
  77,000 
  - 
Net Income (loss)
 $(2,904,312)
 $(541,683)
 $4,391,166 
 $(2,297,733)
 
    
    
    
    
Net income (loss) Per Common Share
    
    
    
    
    Basic
 $(0.17)
 $(0.03)
 $0.27 
 $(0.15)
   Diluted
 $(0.17)
 $(0.03)
 $0.23 
 $(0.15)
 
    
    
    
    
Basic Weighted Average Common Shares Outstanding
  16,759,058 
  15,587,552 
  16,512,126 
  15,586,258 
Diluted Weighted Average Common Shares Outstanding
  16,759,058 
  15,587,552 
  18,757,509 
  15,586,258 
 
  (1) Share amounts with respect to the common stock and Convertible Series A Preferred Stock have been retroactively restated to reflect the reverse  split thereof, which was effected as of the close of business on September 10, 2020.
 
 
 
 
The following is a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA (in thousands, except percentages; unaudited):
 
 
 
For The Three Months Ended
 
 
For The Year Ended
 
 
 
December 31,
 
 
December 31,
 
 
 
2020
 
 
2019
 
 
2020
 
 
2019
 
 
 
(Unaudited)
 
 
(Unaudited)
 
 
(Unaudited)
 
 
(Unaudited)
 
Net income (loss)
 $(2,904,312)
 $(541,683)
 $4,391,166 
 $(2,297,733)
 
    
    
    
    
   Interest Income
  (568)
  (613)
  (2,915)
  (3,045)
   Interest Expense
  1,272 
  50,000 
  43,538 
  200,000 
   Depreciation and Amortization
  198,274 
  177,095 
  719,760 
  716,165 
   Provision for Income Taxes
  - 
    
  77,000 
    
   Other
  - 
  - 
  - 
  17,534 
EBITDA
 $(2,705,334)
 $(315,201)
 $5,228,549 
 $(1,367,079)
 
    
    
    
    
Equity Compensation Expense
  2,823,300 
  10,621 
  3,130,986 
  114,222 
Adjusted EBITDA
 $117,996 
 $(304,580)
 $8,359,535 
 $(1,252,857)
 
    
    
    
    
Net revenue
 $3,654,133 
 $1,855,441 
 $25,027,637 
 $6,347,160 
Adjusted EBITDA Margin
  3%
  (16%)
  33%
  (20%)
 
INVESTOR RELATIONS CONTACT:
John Nesbett/Jennifer Belodeau
IMS Investor Relations
 
 
 

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