TOMI Environmental Solutions, Inc. — FY 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed April 1, 2024. This is an annual report. The supplied filing text does not provide a clear standalone fourth-quarter income statement.
Business context
TOMI sells and services SteraMist, a disinfection and decontamination platform using its Binary Ionization Technology (BIT) and hydrogen peroxide solution. Its markets include life sciences, healthcare, food safety, commercial facilities, and the TOMI Service Network. The company relies on third-party manufacturers and suppliers and has no long-term customer contracts or required minimum purchases.
Financial results and position
| Metric | 2023 | 2022 | Change or context |
|---|---|---|---|
| Revenue | $7.355 million | $8.338 million | Down $983,000 (12%) |
| Gross profit / margin | $4.290 million / 58.3% | $5.060 million / 60.7% | Margin decline attributed to sales mix |
| Operating expenses | $7.639 million | $7.942 million | Down $303,000 |
| Operating loss | $(3.349) million | $(2.882) million | Loss widened |
| Net loss | $(3.403) million | $(2.880) million | Loss widened; per-share loss $(0.17) vs. $(0.15) |
| Cash from operations | $(3.599) million | $(1.234) million | Cash use increased |
| Cash from investing | $(0.217) million | $(0.241) million | Primarily capital spending and patent/trademark costs |
| Cash from financing | $2.288 million | $25,000 | Primarily convertible-note proceeds |
| Cash and cash equivalents | $2.339 million | $3.867 million | At year-end |
| Working capital | $7.903 million | $8.844 million | At year-end |
| Total liabilities | $4.999 million | $4.052 million | Includes $2.298 million net convertible notes and lease liabilities |
| Shareholders’ equity | $8.359 million | $11.448 million | At year-end |
Product revenue declined to $5.695 million from $6.864 million, while service and training revenue increased 13% to $1.660 million. International revenue fell to $1.230 million from $2.077 million; U.S. revenue was $6.125 million versus $6.261 million. The company reported an accumulated deficit of $49.826 million.
Material changes and financing
- Management attributed the revenue decline principally to the timing of customer orders. Lower product sales drove the decline; service revenue grew.
- In October and November 2023, TOMI issued $2.6 million of 12% unsecured convertible notes, due in 2028, with monthly interest payments and a $1.25 conversion price, subject to a stated maximum of $1.55. Holders may convert; the company may require conversion under specified conditions. The notes are senior to other indebtedness, subject to exceptions.
- Approximately 5.5 million shares were potentially issuable at year-end from convertible notes, options, warrants, and preferred stock; these were excluded from diluted loss per share as anti-dilutive.
- Accounts receivable carried a $1.494 million allowance for credit losses, approximately 36% of gross receivables. Two customers represented 27% of gross receivables; two customers together represented 20% of 2023 revenue.
Outlook, risks, and notable items
- Management expects expanded sales channels, new distributors and representatives, customer adoption, and custom engineered system (CES) installations to support revenue growth in 2024 and beyond. It states that cash and expected operating resources should cover requirements for the next 12 months, while acknowledging possible financing needs. This outlook is forward-looking and subject to execution and demand uncertainty.
- Management reported four CES deliveries in 2023 and 16 CES orders to date. A February 2024 CES contract was valued at approximately $600,000, with installation expected by the end of Q3 2024. CES projects have long lead times, and solution consumption may depend on customers’ production schedules.
- Key risks include recurring losses and operating cash outflow, fluctuating order timing, lack of long-term customer commitments, reliance on the SteraMist product family, competition, international and regulatory exposure, third-party manufacturing and supplier dependence, customer credit and collection risk, and potential shareholder dilution.
- Nasdaq notified TOMI on February 4, 2024 that it had not met the $1.00 minimum bid-price requirement for 30 consecutive business days. The initial compliance period ran through August 15, 2024; failure to regain compliance could lead to delisting, subject to possible additional time under Nasdaq rules.
- The independent auditor issued an unqualified opinion on the financial statements and identified allowance for credit losses and inventory valuation as critical audit matters. Management concluded disclosure controls were effective; the auditor was not engaged to audit internal control over financial reporting.
- The filing reports no material pending legal proceeding. TOMI does not expect to pay cash dividends in the foreseeable future.
Investor facts to verify
- Whether subsequent filings show improvement in revenue, gross margin, operating losses, and operating cash use—and whether management’s 12-month liquidity assessment remains supported.
- Collections on receivables, the basis for the substantial credit-loss allowance, and any further customer concentration or bad-debt developments.
- Convertible-note interest payments, conversion or repayment terms in practice, and the potential dilution from notes and other outstanding securities.
- Progress and cash contribution from the CES pipeline, including the announced $600,000 installation and expected recurring solution sales.
- Nasdaq bid-price compliance and any resulting listing or financing implications.