Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 10, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | TOMI ENVIRONMENTAL SOLUTIONS, INC. | |
Entity Central Index Key | 0000314227 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Small Business | true | |
Entity Shell Company | true | |
Entity Emerging Growth Company | false | |
Entity Current Reporting Status | Yes | |
Document Period End Date | Sep. 30, 2021 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2021 | |
Entity Common Stock Shares Outstanding | 19,680,955 | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity Interactive Data Current | Yes | |
Entity File Number | 000-09908 | |
Entity Incorporation State Country Code | FL | |
Entity Tax Identification Number | 59-1947988 | |
Entity Address Address Line 1 | 8430 Spires Way | |
Entity Address City Or Town | Frederick | |
Entity Address State Or Province | MD | |
Entity Address Postal Zip Code | 21701 | |
City Area Code | 800 | |
Local Phone Number | 525-1698 | |
Security 12b Title | Common stock, par value $0.01 per share | |
Trading Symbol | TOMZ | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEET - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Current Assets: | ||
Cash and Cash Equivalents | $ 5,662,745 | $ 5,198,842 |
Accounts Receivable - net | 3,528,034 | 3,716,701 |
Other Receivables | 114,848 | 198,951 |
Inventories (Note 3) | 4,788,204 | 3,781,515 |
Vendor Deposits (Note 4) | 426,818 | 388,712 |
Prepaid Expenses | 319,704 | 421,305 |
Total Current Assets | 14,840,352 | 13,706,027 |
Property and Equipment - net (Note 5) | 1,299,060 | 1,298,103 |
Other Assets: | ||
Intangible Assets - net (Note 6) | 829,345 | 722,916 |
Operating Lease - Right of Use Asset (Note - 7) | 595,874 | 631,527 |
Capitalized Software Development Costs - net (Note 8) | 20,951 | 52,377 |
Other Assets | 486,623 | 358,935 |
Total Other Assets | 1,932,793 | 1,765,755 |
Total Assets | 18,072,205 | 16,769,885 |
Current Liabilities: | ||
Accounts Payable | 1,126,221 | 1,501,469 |
Accrued Expenses and Other Current Liabilities (Note 13) | 655,341 | 501,849 |
Customer Deposits | 80,059 | 118,880 |
Current Portion of Long-Term Operating Lease | 89,059 | 81,223 |
Total Current Liabilities | 1,950,680 | 2,203,421 |
Long-Term Liabilities: | ||
Loan Payable (Note 15) | 0 | 410,700 |
Long-Term Operating Lease, Net of Current Portion (Note 7) | 885,252 | 953,190 |
Total Long-Term Liabilities | 885,252 | 1,363,890 |
Total Liabilities | 2,835,932 | 3,567,311 |
Shareholders' Equity: | ||
Common stock; par value $0.01 per share, 250,000,000 shares authorized; 19,680,955 and 16,761,513 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively. | 196,810 | 167,615 |
Additional Paid-In Capital | 56,922,855 | 52,142,399 |
Accumulated Deficit | (41,884,030) | (39,108,078) |
Total Shareholders' Equity | 15,236,273 | 13,202,574 |
Total Liabilities and Shareholders' Equity | 18,072,205 | 16,769,885 |
Cumulative Convertible Series A Preferred Stock | ||
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 September 30, 2021 and December 31, 2020 | 638 | 638 |
Cumulative Convertible Series B Preferred Stock | ||
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 September 30, 2021 and December 31, 2020 | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Stockholders' Equity: | ||
Common Stock; Par Value | $ 0.01 | $ 0.01 |
Common Stock; Shares Authorized | 250,000,000 | 250,000,000 |
Common Stock; Shares Issued | 2,869,442 | 16,761,513 |
Common Stock; Shares Outstanding | 19,680,955 | 16,761,513 |
Cumulative Convertible Series A Preferred Stock | ||
Stockholders' Equity: | ||
Cumulative Convertible Preferred Stock; Par Value | $ 0.01 | $ 0.01 |
Cumulative Convertible Preferred Stock; Shares Authorized | 1,000,000 | 1,000,000 |
Cumulative Convertible Preferred Stock; Shares Issued | 63,750 | 63,750 |
Cumulative Convertible Preferred Stock; Shares Outstanding | 63,750 | 63,750 |
Cumulative Convertible Series B Preferred Stock | ||
Stockholders' Equity: | ||
Cumulative Convertible Preferred Stock; Par Value | $ 1,000 | $ 1,000 |
Cumulative Convertible Preferred Stock; Shares Authorized | 4,000 | 4,000 |
Cumulative Convertible Preferred Stock; Shares Issued | 0 | 0 |
Cumulative Convertible Preferred Stock; Shares Outstanding | 0 | 0 |
Cumulative Preferred stock, dividend | 7.50% |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) | ||||
Sales, net | $ 2,204,569 | $ 4,291,588 | $ 5,743,549 | $ 21,373,503 |
Cost of Sales | 890,273 | 1,455,568 | 2,252,133 | 8,484,580 |
Gross Profit | 1,314,296 | 2,836,021 | 3,491,415 | 12,888,924 |
Operating Expenses: | ||||
Professional Fees | 117,654 | 227,560 | 397,928 | 418,516 |
Depreciation and Amortization | 69,805 | 177,279 | 225,666 | 521,486 |
Selling Expenses | 465,304 | 212,624 | 1,275,137 | 980,096 |
Research and Development | 93,274 | 44,862 | 494,645 | 245,443 |
Equity Compensation Expense (Note 10) | 0 | 10,621 | 0 | 307,686 |
Consulting Fees | 63,805 | 75,204 | 265,588 | 226,454 |
General and Administrative | 991,090 | 991,543 | 4,022,650 | 2,776,846 |
Total Operating Expenses | 1,800,933 | 1,739,693 | 6,681,614 | 5,476,527 |
Income (loss) from Operations | (486,637) | 1,096,328 | (3,190,199) | 7,412,397 |
Other Income (Expense): | ||||
Gain Upon Debt Extinguishment | 0 | 0 | 414,583 | 0 |
Interest Income | 79 | 762 | 698 | 2,347 |
Interest Expense | 0 | (790) | (1,034) | (42,266) |
Total Other Income (Expense) | 79 | (28) | 414,247 | (39,919) |
Income (loss) before income taxes | (486,558) | 1,096,300 | (2,775,952) | 7,372,478 |
Provision for Income Taxes (Note 16) | 0 | 77,000 | 0 | 77,000 |
Net Income (loss) | $ (486,558) | $ 1,019,300 | $ (2,775,952) | $ 7,295,478 |
Net income (loss) Per Common Share | ||||
Basic | $ (0.03) | $ 0.06 | $ (0.17) | $ 0.44 |
Diluted | $ (0.03) | $ 0.05 | $ (0.17) | $ 0.40 |
Basic Weighted Average Common Shares Outstanding | 16,843,045 | 16,741,622 | 16,805,145 | 16,429,360 |
Diluted Weighted Average Common Shares Outstanding | 16,843,045 | 18,593,255 | 16,805,145 | 18,280,993 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) | Total | Series A Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) |
Balance, shares at Dec. 31, 2019 | 63,750 | 15,587,552 | |||
Balance, amount at Dec. 31, 2019 | $ 889,543 | $ 638 | $ 155,876 | $ 44,232,273 | $ (43,499,244) |
Equity Compensation | 334,875 | 334,875 | |||
Common Stock Issued for Services Provided, shares | 50,000 | ||||
Common Stock Issued for Services Provided, amount | 48,000 | $ 500 | 47,500 | ||
Conversion of Notes Payable into Common Stock, shares | 1,041,667 | ||||
Conversion of Notes Payable into Common Stock, amount | 4,500,000 | $ 10,417 | 4,489,583 | ||
Warrants and Options Exercised, shares | 66,796 | ||||
Warrants and Options Exercised, amount | 183,500 | $ 668 | 182,832 | ||
Reverse stock split adjustment, shares | 2,499 | ||||
Reverse stock split adjustment, amount | 0 | $ 25 | (25) | ||
Net Income for the nine months ended September 30, 2020 | 7,295,478 | 7,295,478 | |||
Balance, shares at Sep. 30, 2020 | 63,750 | 16,748,514 | |||
Balance, amount at Sep. 30, 2020 | 13,251,396 | $ 638 | $ 167,485 | 49,287,039 | (36,203,765) |
Balance, shares at Jun. 30, 2020 | 63,750 | 16,719,075 | |||
Balance, amount at Jun. 30, 2020 | 12,158,974 | $ 638 | $ 167,191 | 49,214,210 | (37,223,065) |
Equity Compensation | 10,621 | 10,621 | |||
Warrants and Options Exercised, shares | 26,940 | ||||
Warrants and Options Exercised, amount | 62,499 | $ 269 | 62,230 | ||
Reverse stock split adjustment, shares | 2,499 | ||||
Reverse stock split adjustment, amount | 0 | $ 25 | (25) | ||
Net Income for the nine months ended September 30, 2020 | 1,019,300 | 1,019,300 | |||
Balance, shares at Sep. 30, 2020 | 63,750 | 16,748,514 | |||
Balance, amount at Sep. 30, 2020 | 13,251,396 | $ 638 | $ 167,485 | 49,287,039 | (36,203,765) |
Balance, shares at Dec. 31, 2020 | 63,750 | 16,761,514 | |||
Balance, amount at Dec. 31, 2020 | 13,202,574 | $ 638 | $ 167,614 | 52,142,400 | (39,108,078) |
Common Stock Issued for Services Provided, shares | 50,000 | ||||
Common Stock Issued for Services Provided, amount | 228,000 | $ 500 | 227,500 | ||
Net Income for the nine months ended September 30, 2020 | (2,775,952) | (2,775,952) | |||
Common Stock Issued in Private Placement, shares | 2,869,442 | ||||
Common Stock Issued in Private Placement, amount | 4,581,651 | $ 28,694 | 4,552,957 | ||
Balance, shares at Sep. 30, 2021 | 63,750 | 19,680,956 | |||
Balance, amount at Sep. 30, 2021 | 15,236,273 | $ 638 | $ 196,808 | 56,922,857 | (41,884,030) |
Balance, shares at Jun. 30, 2021 | 63,750 | 16,811,514 | |||
Balance, amount at Jun. 30, 2021 | 11,141,180 | $ 638 | $ 168,114 | 52,369,900 | (41,397,472) |
Net Income for the nine months ended September 30, 2020 | (486,558) | (486,558) | |||
Common Stock Issued in Private Placement, shares | 2,869,442 | ||||
Common Stock Issued in Private Placement, amount | 4,581,651 | $ 28,694 | 4,552,957 | ||
Balance, shares at Sep. 30, 2021 | 63,750 | 19,680,956 | |||
Balance, amount at Sep. 30, 2021 | $ 15,236,273 | $ 638 | $ 196,808 | $ 56,922,857 | $ (41,884,030) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash Flow From Operating Activities: | ||
Net Income (Loss) | $ (2,775,952) | $ 7,295,478 |
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities: | ||
Depreciation and Amortization | 225,666 | 521,486 |
Amortization of Right of Use Asset | 117,986 | 117,986 |
Amortization of Software Costs | 31,425 | 31,425 |
Equity Compensation Expense | 0 | 307,686 |
Value of Equity Issued for Services | 228,000 | 48,000 |
Reserve for Bad Debt | 360,000 | 205,000 |
Inventory Reserve | 0 | (100,000) |
Gain Upon Debt Extinguishment | (414,583) | 0 |
Decrease (Increase) in: | ||
Accounts Receivable | (171,332) | (2,214,625) |
Inventory | (1,006,689) | (1,923,030) |
Prepaid Expenses | 101,601 | (189,095) |
Vendor Deposits | (38,106) | (192,160) |
Other Receivables | 84,104 | (157,487) |
Other Assets | (195,579) | (354,991) |
Increase (Decrease) in: | ||
Accounts Payable | (375,248) | 1,436,766 |
Accrued Expenses | 157,377 | 288,508 |
Accrued Interest | 0 | (66,667) |
Customer Deposits | (38,822) | 0 |
Lease Liability | (113,039) | (109,747) |
Net Cash Provided by (Used in) Operating Activities | (3,823,191) | 4,944,535 |
Cash Flow From Investing Activities: | ||
Capitalized Patent and Trademark Costs | (45,807) | |
Purchase of Property and Equipment | (248,751) | (50,574) |
Net Cash Used in Investing Activities | (294,557) | (50,574) |
Cash Flow From Financing Activities: | ||
Proceeds from Issuance of Stock and Warrants | 4,581,651 | |
Proceeds from Exercise of Warrants and Options | 183,500 | |
Proceeds from Loan Payable | 410,700 | |
Repayment of Principal Balance on Convertible Note | (500,000) | |
Net Cash Provided by Financing Activities | 4,581,651 | 94,200 |
Increase In Cash and Cash Equivalents | 463,904 | 4,988,160 |
Cash and Cash Equivalents - Beginning | 5,198,842 | 897,223 |
Cash and Cash Equivalents - Ending | 5,662,746 | 5,885,383 |
Supplemental Cash Flow Information: | ||
Cash Paid for Income Taxes | 75,000 | 800 |
Cash Paid For Interest | 107,356 | |
Non-Cash Investing and Financing Activities: | ||
Accrued Equity Compensation | 27,189 | |
Conversion of Note Payable into Common Stock | 4,500,000 | |
Equipment, net Transferred to Inventory | $ 36,256 | |
Patent and trademark costs reclassified from Other Assets | $ 67,890 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 9 Months Ended |
Sep. 30, 2021 | |
DESCRIPTION OF BUSINESS | |
1. DESCRIPTION OF BUSINESS | NOTE 1. DESCRIPTION OF BUSINESS TOMI Environmental Solutions, Inc., a Florida corporation (“TOMI”, the “Company”, “we”, “our” and “us”) is a global provider of disinfection and decontamination essentials through our premier Binary Ionization Technology® (BIT™) platform, under which we manufacture, license, service and sell our SteraMist® brand of products, including SteraMist® BIT™, a hydrogen peroxide-based mist and fog. Our solution and process are environmentally friendly as the only biproduct from our decontamination process is oxygen and humidity. Our solution is organically listed in the United States and Canada it is sustainably a green product with no or very little carbon footprint. Our business is organized into five divisions: Healthcare, Life Sciences, TOMI Service Network, Food Safety and Commercial. Invented under a defense grant in association with the Defense Advanced Research Projects Agency (DARPA) of the U.S. Department of Defense, BIT™ is registered with the U.S. Environmental Protection Agency (EPA) and uses a low percentage hydrogen peroxide as its only active ingredient to produce a fog composed mostly of a hydroxyl radical ( . Our products are designed to service a broad spectrum of commercial structures, including, but not limited to, hospitals and medical facilities, bio-safety labs, pharmaceutical facilities, meat and produce processing facilities, universities and research facilities, vivarium labs, other service industries including cruise ships, office buildings, hotel and motel rooms, schools, restaurants, military barracks, police and fire departments, prisons, and athletic facilities. Our products are also used in single-family homes and multi-unit residences. Additionally, our products have been listed on the EPA’s List N as products that help combat COVID-19 and are actively being used for this purpose. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The interim unaudited condensed consolidated financial statements included herein, presented in accordance with generally accepted accounting principles utilized in the United States of America (“GAAP”), and stated in U.S. dollars, have been prepared by us, without an audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of TOMI and its wholly owned subsidiary, TOMI Environmental Solutions, Inc., a Nevada corporation. All intercompany accounts and transactions have been eliminated in consolidation. Reclassification of Accounts Certain reclassifications have been made to prior-year comparative financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or financial position. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the accompanying condensed consolidated financial statements and the accompanying notes. 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. 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. Fair Value Measurements The authoritative guidance for fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The guidance describes a fair value hierarchy based on the levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximated fair value because of the short maturity of these instruments. Cash and Cash Equivalents Cash and cash equivalents includes cash on hand, held at financial institutions and other liquid investments with original maturities of three months or less. At times, these deposits may be in excess of insured limits. At September 30, 2021 and December 31, 2020 there were no cash equivalents (or cash equivalents consisted of money market, etc) 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. We have a policy of reserving for doubtful accounts 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 three and nine months ended September 30, 2021 was approximately $93,000 and $511,000, respectively. Bad debt expense for the three and nine months ended September 30, 2020 was approximately $153,000 and $226,000, respectively. At September 30, 2021 and December 31, 2020, the allowance for doubtful accounts was $750,000 and $390,000, respectively. Inventories Inventories are valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method. Inventories consist primarily of finished goods and raw materials. 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 $0 as of September 30, 2021 and December 31, 2020, respectively. Property and Equipment We account for property and equipment at cost less accumulated depreciation. We compute depreciation using the straight-line method over the estimated useful lives of the assets, generally three to five years. Depreciation for equipment, furniture and fixtures and vehicles commences once placed in service for its intended use. Leasehold improvements are amortized using the straight-line method over the lives of the respective leases or service lives of the improvements, whichever is shorter. Leases In February 2016, the FASB issued ASU No. 2016-02 (ASC 842), Leases Codification Improvements to Topic 842, Leases Targeted Improvements Narrow-Scope Improvements for Lessors Codification Improvements Operating lease assets are included within operating lease right-of-use assets, and the corresponding operating lease liabilities are recorded as current portion of long-term operating lease, and within long-term liabilities as long-term operating lease, net of current portion on our condensed consolidated balance sheet as of September 30, 2021 and December 31, 2020. We have elected not to present short-term leases on the condensed consolidated balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of our leases do not provide an implicit rate of return, we used our incremental borrowing rate based on the information available at adoption date in determining the present value of lease payments. 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 three and nine months ended September 30, 2021 and 2020, was $10,475 and $31,425, respectively. Accounts Payable As of September 30, 2021, one vendor accounted for approximately 25% of accounts payable. As of December 31, 2020, two vendors accounted for approximately 32% of accounts payable. For the three and nine months ended September 30, 2021, two vendors accounted for 55% and 60% of cost of sales, respectively. For the three and nine months ended September 30, 2020, two vendors accounted for 66% and 77% of cost of sales, respectively. Accrued Warranties Accrued warranties represent the estimated costs, if any, that will be incurred during the warranty period of our products. We estimate the expected costs to be incurred during the warranty period and record the expense to the condensed consolidated statement of operations at the date of sale. Our manufacturers assume the warranty against product defects from date of sale, which we extend to our customers upon sale of the product. We assume responsibility for product reliability and results. As of September 30, 2021, and December 31, 2020, our warranty reserve was $68,000. (See Note 14). Income Taxes Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits that are, on a more likely than not basis, not expected to be realized in accordance with Accounting Standards Codification (ASC) guidance for income taxes. Net deferred tax benefits have been fully reserved at September 30, 2021 and December 31, 2020. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. Net Income (Loss) Per Share Basic net income or (loss) per share is computed by dividing our net income or (loss) by the weighted average number of shares of common stock outstanding during the period presented. Diluted income or (loss) per share is based on the treasury stock method and includes the effect from potential issuance of shares of common stock, such as shares issuable pursuant to the exercise of options and warrants and conversions of preferred stock or debentures. Potentially dilutive securities as of September 30, 2021 consisted of 3,424,771 shares of common stock issuable upon exercise of outstanding warrants, 132,500 shares of common stock issuable upon outstanding options and 63,750 shares of common stock issuable upon conversion of outstanding shares of Preferred A stock (“Convertible Series A Preferred Stock”). Potentially dilutive securities as of September 30, 2020 consisted of 1,686,633 shares of common stock issuable upon exercise of outstanding warrants, 101,250 shares of common stock issuable upon outstanding options and 63,750 shares of common stock issuable upon conversion of outstanding shares of Preferred A stock (“Convertible Series A Preferred Stock”). Diluted net income or (loss) per share is computed similarly to basic net income or (loss) per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if such additional shares were dilutive. Options, warrants, and preferred stock of approximately 3.6 million and 2.2 million shares of common stock were outstanding at September 30, 2021 and December 31, 2020, respectively, but were excluded from the computation of diluted net loss per share at September 30, 2021 due to the anti-dilutive effect on net loss per share. For the Three Months Ended September 30, (Unaudited) 2021 2020 Net Income (Loss) $ (486,558 ) $ 1,019,300 Net income (loss) attributable to common shareholders $ (486,558 ) $ 1,019,300 Weighted average number of shares of common stock outstanding: Basic 16,843,045 16,741,622 Diluted 16,843,045 18,593,255 Net income (loss) attributable to common shareholders per share: Basic $ (0.03 ) $ 0.06 Diluted $ (0.03 ) $ 0.05 The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: For the Three Months Ended September 30, (Unaudited) 2021 2020 Numerator: Net Income (Loss) $ (486,558 ) $ 1,019,300 Denominator: Basic weighted-average shares 16,843,045 16,741,622 Effect of dilutive securities Warrants - 1,686,633 Options - 101,250 Preferred Stock - 63,750 Diluted Weighted Average Shares 16,843,045 18,593,255 Net Income (Loss) Per Common Share: Basic $ (0.03 ) $ 0.06 Diluted $ (0.03 ) $ 0.05 Note: Warrants, options and preferred stock for the three months ended September 30, 2021 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. For the Nine Months Ended September 30, (Unaudited) 2021 2020 Net Income (Loss) $ (2,775,952 ) $ 7,295,478 Adjustments for convertible debt - as converted Interest on convertible debt - 40,689 Net income (loss) attributable to common shareholders $ (2,775,952 ) $ 7,366,167 Weighted average number of shares of common stock outstanding: Basic 16,805,145 16,429,360 Diluted 16,805,145 18,280,993 Net income (loss) attributable to common shareholders per share: Basic $ (0.17 ) $ 0.45 Diluted $ (0.17 ) $ 0.40 The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: For the Nine Months Ended September 30, (Unaudited) 2021 2020 Numerator: Net Income (Loss) $ (2,775,952 ) $ 7,295,478 Denominator: Basic weighted-average shares 16,805,145 16,429,360 Effect of dilutive securities Warrants - 1,686,633 Options - 101,250 Preferred Stock - 63,750 Diluted Weighted Average Shares 16,805,145 18,280,993 Net Income (Loss) Per Common Share: Basic $ (0.17 ) $ 0.44 Diluted $ (0.17 ) $ 0.40 Note: Warrants, options and preferred stock for the nine months ended September 30, 2021 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. Revenue Recognition We recognize revenue in accordance with Financial Accounting Standards Board (FASB) ASC 606, Revenue from Contracts with Customers. 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. To determine revenue recognition for contracts with customers we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) we satisfy the performance obligation(s). At contract inception, we assess the goods or services promised within each contract, assess whether each promised good or service is distinct and identify those that are performance obligations. We must use judgment to determine: 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; 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. Title and risk of loss generally pass to our customers upon shipment. Our Customers include end users as well as dealers and distributors who market and sell our products. Our revenue is not contingent upon resale by the dealer or distributor, and we have no further obligations related to bringing about resale. Shipping and handling costs charged to customers are included in Product Revenues. The associated expenses are treated as fulfillment costs and are included in Cost of Revenues. Revenues are reported net of sales taxes collected from Customers. Disaggregation of Revenue The following table presents our approximate revenues disaggregated by revenue source. Product and Service Revenue For the three months ended September 30, (Unaudited) 2021 2020 SteraMist Product $ 1,657,000 $ 3,677,000 Service and Training 548,000 615,000 Total $ 2,205,000 $ 4,292,000 Revenue by Geographic Region For the three months ended September 30, (Unaudited) 2021 2020 United States $ 2,028,000 $ 3,446,000 International 177,000 846,000 Total $ 2,205,000 $ 4,292,000 Product and Service Revenue For the nine months ended September 30, (Unaudited) 2021 2020 SteraMist Product $ 4,329,000 $ 19,557,000 Service and Training 1,415,000 1,817,000 Total $ 5,744,000 $ 21,374,000 Revenue by Geographic Region For the nine months ended September 30, (Unaudited) 2021 2020 United States $ 5,017,000 $ 15,437,000 International 727,000 5,937,000 Total $ 5,744,000 $ 21,374,000 Product revenue includes sales from our standard and customized equipment, solution and accessories sold with our equipment. Revenue is recognized upon transfer of control of promised products to customers in an amount that reflects the consideration we expect to receive in exchange for those products. Service and training revenue include sales from our high-level decontamination and service engagements, validation of our equipment and technology and customer training. 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. Costs to Obtain a Contract with a Customer We apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling expenses. Contract Balances As of September 30, 2021, and December 31, 2020 we did not have any unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Arrangements with Multiple Performance Obligations Our contracts with customers may include multiple performance obligations. We enter into contracts that can include various combinations of products and services, which are primarily distinct and accounted for as separate performance obligations. Significant Judgments 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. Equity Compensation Expense We account for equity compensation expense in accordance with FASB ASC 718, “Compensation—Stock Compensation.” Under the provisions of FASB ASC 718, equity compensation expense is estimated at the grant date based on the award’s fair value. The valuation methodology used to determine the fair value of options and warrants issued as compensation during the period is the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions including volatility of the stock price, the average risk-free interest rate, and the weighted average expected life of the options. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common Stock and does not intend to pay dividends on its Common Stock in the foreseeable future. The expected forfeiture rate is estimated based on management’s best assessment. On July 7, 2017, our shareholders approved the 2016 Equity Incentive Plan, or the 2016 Plan. The 2016 Plan authorizes the grant of stock options, stock appreciation rights, restricted stock, restricted stock units and performance units/shares. Up to 2,000,000 shares of common stock are authorized for issuance under the 2016 Plan. Shares issued under the 2016 Plan may be either authorized but unissued shares, treasury shares, or any combination thereof. Provisions in the 2016 Plan permit the reuse or reissuance by the 2016 Plan of shares of common stock for numerous reasons, including, but not limited to, shares of common stock underlying canceled, expired, or forfeited awards of stock-based compensation and stock appreciation rights paid out in the form of cash. Equity compensation expense will typically be awarded in consideration for the future performance of services to us. All recipients of awards under the 2016 Plan are required to enter into award agreements with us at the time of the award, and awards under the 2016 Plan are expressly conditioned upon such agreements. For the nine months ended September 30, 2021 and 2020, we issued 50,000 shares of fully vested common stock, respectively, pursuant to the 2016 Plan to our directors. Concentrations of Credit Risk Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents. We maintain cash balances at financial institutions which exceed the current Federal Deposit Insurance Corporation limit of $250,000 at times during the year. Long-Lived Assets Including Acquired Intangible Assets We assess long-lived assets for potential impairments at the end of each year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the asset. In evaluating long-lived assets for impairment, we measure recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If our long-lived assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value. We base the calculations of the estimated fair value of our long-lived assets on the income approach. For the income approach, we use an internally developed discounted cash flow model that includes, among others, the following assumptions: projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. We base these assumptions on our historical data and experience, industry projections, micro and macro general economic condition projections, and our expectations. We had no long-lived asset impairment charges for the three and nine months ended September 30, 2021 and 2020. Advertising and Promotional Expenses We expense advertising costs in the period in which they are incurred. Advertising and promotional expenses included in selling expenses for the three and nine months ended September 30, 2021 were approximately $145,000 and $552,000, respectively. Advertising and promotional expenses included in selling expenses for the three and nine months ended September 30, 2020 were approximately $56,000 and $156,000, respectively. Research and Development Expenses We expense research and development expenses in the period in which they are incurred. For the three and nine months ended September 30, 2021, research and development expenses were approximately $93,000 and $495,000, respectively. For the three and nine months ended September 30, 2020, research and development expenses were approximately $45,000 and $245,000, respectively. Business Segments We currently have one reportable business segment due to the fact that we derive our revenue primarily from one product. A breakdown of revenue is presented in “Revenue Recognition” in Note 2 above. Recent Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective on a prospective or retrospective basis beginning on January 1, 2020, with early adoption permitted. We elected to adopt this guidance early, in 2020 on a prospective basis. The guidance did not have a material impact on our condensed Consolidated Financial Statements. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2021 | |
INVENTORIES | |
3. INVENTORIES | NOTE 3. INVENTORIES Inventories consist of the following at: September 30, 2021 (Unaudited) December 31, 2020 Finished goods $ 4,396,402 $ 3,404,025 Raw Materials 391,802 377,490 $ 4,788,204 $ 3,781,515 |
VENDOR DEPOSITS
VENDOR DEPOSITS | 9 Months Ended |
Sep. 30, 2021 | |
VENDOR DEPOSITS | |
4. VENDOR DEPOSITS | NOTE 4. VENDOR DEPOSITS At September 30, 2021 and December 31, 2020, we maintained vendor deposits of $426,818 and $388,712, respectively, for open purchase orders for inventory. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended |
Sep. 30, 2021 | |
PROPERTY AND EQUIPMENT | |
5. PROPERTY AND EQUIPMENT | NOTE 5. PROPERTY AND EQUIPMENT Property and equipment consist of the following at: September 30, 2021 (Unaudited) December 31, 2020 Furniture and fixtures $ 357,236 $ 357,236 Equipment 1,614,751 1,580,743 Vehicles 60,703 60,703 Computer and software 214,860 203,704 Leasehold improvements 386,120 386,120 Tenant Improvement Allowance 405,000 405,000 Capitalized Costs in Progress – Tooling and Molds 203,589 - 3,242,257 2,993,507 Less: Accumulated depreciation 1,943,198 1,695,404 $ 1,299,060 $ 1,298,103 For the three and nine months ended September 30, 2021, depreciation was $67,383 and $218,398, respectively. For the three and nine months ended September 30, 2020, depreciation was $83,932 and $241,445, respectively. For the three and nine months ended September 30, 2021 and 2020, amortization of tenant improvement allowance was $9,798 and $19,597, respectively and was recorded as lease expense and included within general and administrative expense on the consolidated statement of operations. As of September 30, 2021, we had capitalized costs in progress not yet placed into service in connection with tooling and molds pursuant to ASC 340-10. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2021 | |
INTANGIBLE ASSETS | |
6. INTANGIBLE ASSETS | NOTE 6. INTANGIBLE ASSETS Intangible assets consist of patents and trademarks related to our Binary Ionization Technology. We amortize the patents over the estimated remaining lives of the related patents. The trademarks have an indefinite life. Amortization expense was $2,422 and $7,268 for the three and nine months ended September 30, 2021, respectively. Amortization expense was $93,347 and $280,041 for the three and nine months ended September 30, 2020. Definite life intangible assets consist of the following: September 30, 2021 (Unaudited) December 31, 2020 Intellectual Property and Patents $ 3,054,259 $ 3,000,012 Less: Accumulated Amortization 2,864,259 2,856,991 Patents, net $ 190,000 $ 143,021 Indefinite life intangible assets consist of the following: Trademarks 639,345 579,895 Total Intangible Assets, net $ 829,345 $ 722,916 Approximate future amortization is as follows: Year Ended: Amount October 1 – December 31, 2021 $ 3,000 December 31, 2022 13,000 December 31, 2023 13,000 December 31, 2024 13,000 December 31, 2025 13,000 Thereafter 135,000 $ 190,000 |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2021 | |
LEASES | |
7. LEASES | NOTE 7. LEASES In April 2018, we entered into a 10-year lease agreement for a new 9,000-square-foot facility that contains office, warehouse, lab and research and development space in Frederick, Maryland. The lease agreement was scheduled to commence on December 1, 2018 or when the property was ready for occupancy. The agreement provided for annual rent of $143,460, an escalation clause that increases the rent 3% year over year, a landlord tenant improvement allowance of $405,000 and additional landlord work as discussed in the lease agreement. We took occupancy of the property on December 17, 2018 and the lease was amended in March 2019 to provide for a 4-month rent holiday and a commencement date of April 1, 2019. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term. The balances for our operating lease where we are the lessee are presented as follows within our condensed consolidated balance sheet: Operating leases: September 30, 2021 (Unaudited) December 31, 2020 Assets: Operating lease right-of-use asset $ 595,874 $ 631,527 Liabilities: Current Portion of Long-Term Operating Lease $ 89,059 $ 81,223 Long-Term Operating Lease, Net of Current Portion 885,252 953,190 $ 974,311 $ 1,034,413 The components of lease expense are as follows and are included within general and administrative expense on our condensed consolidated statement of operations: For the Three Months Ended September 30, 2021 (Unaudited) For the Three Months Ended September 30, 2020 (Unaudited) Operating lease expense $ 39,329 $ 39,329 For the Nine Months Ended September 30, 2021 (Unaudited) For the Nine Months Ended September 30, 2020 (Unaudited) Operating lease expense $ 117,986 $ 117,986 Other information related to leases where we are the lessee is as follows: September 30, 2021 (Unaudited) December 31, 2020 Weighted-average remaining lease term: Operating leases 7.50 years 8.25 years Discount rate: Operating leases 7.00 % 7.00 % Supplemental cash flow information related to leases where we are the lessee is as follows: For the Three Months Ended September 30, 2021 (Unaudited) For the Three Months Ended September 30, 2020 (Unaudited) Cash paid for amounts included in the measurement of lease liabilities: $ 38,049 $ 36,940 For the Nine Months Ended September 30, 2021 (Unaudited) For the Nine Months Ended September 30, 2020 (Unaudited) Cash paid for amounts included in the measurement of lease liabilities: $ 113,049 $ 109,747 As of September 30, 2021, the maturities of our operating lease liability are as follows: Year Ended: Operating Lease October 1 – December 31, 2021 $ 38,049 December 31, 2022 155,621 December 31, 2023 160,290 December 31, 2024 165,098 December 31, 2025 170,051 Thereafter 575,131 Total minimum lease payments 1,264,241 Less: Interest 289,930 Present value of lease obligations 974,311 Less: Current portion 89,059 Long-term portion of lease obligations $ 885,252 |
CAPITALIZED SOFTWARE DEVELOPMEN
CAPITALIZED SOFTWARE DEVELOPMENT COSTS | 9 Months Ended |
Sep. 30, 2021 | |
CAPITALIZED SOFTWARE DEVELOPMENT COSTS | |
8. CAPITALIZED SOFTWARE DEVELOPMENT COSTS | NOTE 8. 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: September 30, 2021 (Unaudited) December 31, 2020 Capitalized Software Development Costs $ 125,704 $ 125,704 Less: Accumulated Amortization (104,753 ) (73,327 ) Capitalized Software Development Costs - net $ 20,951 $ 52,377 Amortization expense for the three and nine months ended September 30, 2021 was $10,475 and $31,425, respectively. Amortization expense for the three and nine months ended September 30, 2020 was $10,475 and $31,425, respectively. |
CLOUD COMPUTING SERVICE CONTRAC
CLOUD COMPUTING SERVICE CONTRACT | 9 Months Ended |
Sep. 30, 2021 | |
CLOUD COMPUTING SERVICE CONTRACT | |
9. CLOUD COMPUTING SERVICE CONTRACT | NOTE 9. CLOUD COMPUTING SERVICE CONTRACT In May 2020 we entered into a cloud computing service contract with a vendor. The contract provides for annual payments in the amount of $30,409 and has a term of 5 years. The annual contract payments are capitalized as a prepaid expense and amortized over a twelve-month period. We have incurred implementation costs of $62,677 in connection with the cloud computing service contract which have been capitalized in prepaid expenses and other assets as of September 30, 2021. In accordance with ASU No. 2018-15, such implementation costs are being amortized over the remaining contract terms beginning January 1, 2021, which was when the cloud-based service contract was placed in service. Amortization expense for the three and nine months ended September 30, 2021 was $3,482 and $10,446, respectively. Amortization expense for the three and nine months ended September 30, 2020 was $0. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2021 | |
Shareholders' Equity: | |
10. SHAREHOLDERS' EQUITY | NOTE 10. SHAREHOLDERS’ EQUITY Our Board of Directors (the “Board”) may, without further action by our shareholders, from time to time, direct the issuance of any authorized but unissued or unreserved shares of preferred stock in series and at the time of issuance, determine the rights, preferences and limitations of each series. The holders of such preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding-up by us before any payment is made to the holders of our common stock. Furthermore, the Board could issue preferred stock with voting and other rights that could adversely affect the voting power of the holders of our common stock. Reverse Stock Split On September 9, 2020, the Board approved a reverse stock split of our common stock and our Convertible Series A Preferred Stock, in each case, at a ratio of 1-for-8 and without any change to the respective par value thereof (the “Reverse Stock Split”), and, on September 10, 2020, we filed an Articles of Amendment to our Articles of Incorporation with the Department of State of the State of Florida to effect the Reverse Stock Split. The Reverse Stock Split became effective as of September 10, 2020. All per-share and share amounts have been retroactively restated in this Quarterly Report on Form 10-Q for all periods presented to reflect the reverse stock split. Convertible Series A Preferred Stock Our authorized Convertible Series A Preferred Stock, $0.01 par value, consists of 1,000,000 shares. At September 30, 2021 and December 31, 2020, there were 63,750 shares issued and outstanding. The Convertible Series A Preferred Stock is convertible at the rate of one share of common stock for one share of Convertible Series A Preferred Stock. Convertible Series B Preferred Stock Our authorized Convertible Series B Preferred Stock, $1,000 stated value, 7.5% cumulative dividend, consists of 4,000 shares. At September 30, 2021 and December 31, 2020, there were no shares issued and outstanding, respectively. Each share of Convertible Series B Preferred Stock may be converted (at the holder’s election) into two hundred shares of our common stock. Common Stock In January 2020, we issued 50,000 shares of fully vested common stock valued at $48,000 to members of our Board (see Note 12). In March 2020, 1,041,667 shares of common stock were issued in connection with the conversion of convertible notes payable aggregating $4,500,000. In March 2020, 10,417 shares of common stock were issued in connection with the exercise of warrants for which we received proceeds of $57,500. In May 2020, 2,500 shares of common stock were issued in connection with the exercise of options for which we received proceeds of $1,000. In June 2020, 26,940 shares of common stock were issued in connection with the exercise of warrants for which we received proceeds of $62,500. In July 2020, 26,940 shares of common stock were issued in connection with the exercise of warrants for which we received proceeds of $62,500 In January 2021, we issued 50,000 shares of common stock valued at $228,000 to members of our Board (see Note 12). In September 2021, we sold 2,869,442 shares of common stock through a registered direct offering and issued 1,434,721 warrants in a concurrent private placement. We received net proceeds from the transaction of $4,581,651, after deducting the placement agent’s fees and other estimated offering expenses. The Warrants are exercisable at an exercise price of $1.68 per share, are exercisable immediately upon issuance and have a term of exercise equal to five years from the date of issuance. In addition, we issued 172,167 warrants to the placement agent which have a term of five years and an exercise price of $2.18. Stock Options There were no options granted for the nine months ended September 30, 2021. In January 2020 we issued two options to purchase an aggregate of 31,250 shares of common stock to our Chief Operating Officer at an exercise price of $0.80 and $0.96 per share in satisfaction of accrued compensation. The options were valued at a total of $23,595 and have a term of 5 years. We utilized the Black-Scholes method to fair value the options received by the COO with the following assumptions: volatility, 135%; expected dividend yield, 0%; risk free interest rate, 1.64%; and a life of 5 years. The grant date fair value of each share of common stock underlying the options was $0.72 and $0.80. The value of the stock option was included in accrued expenses at December 31, 2019. The following table summarizes stock options outstanding as of September 30, 2021 and December 31, 2020: September 30, 2021 (Unaudited) December 31, 2020 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Outstanding, beginning of period 132,500 $ 2.72 77,500 $ 2.56 Granted - - 62,500 3.96 Exercised - - (2,500 ) 0.40 Expired - - (5,000 ) 16.80 Outstanding, end of period 132,500 $ 2.72 132,500 $ 2.72 Options outstanding and exercisable by price range as of September 30, 2021 were as follows: Outstanding Options Average Weighted Remaining Contractual Exercisable Options Range Number Life in Years Number Weighted Average Exercise Price $ 0.80 27,500 3.45 27,500 $ 0.80 $ 0.88 31,250 2.26 31,250 $ 0.88 $ 0.96 25,000 2.27 25,000 $ 0.96 $ 2.16 5,000 3.25 5,000 $ 2.16 $ 4.40 12,500 4.35 12,500 $ 4.40 $ 7.06 31,250 4.00 31,250 $ 7.06 132,500 3.14 132,500 $ 2.72 Stock Warrants In January 2020 we issued a warrant to purchase 156,250 shares of common stock to our Chief Executive Officer at an exercise price of $1.20 per share pursuant to an employment agreement. The warrant was valued at $164,201 and has a term of 5 years. We utilized the Black-Scholes model to fair value the warrant received by our Chief Executive Officer with the following assumptions: volatility, 136%; expected dividend yield, 0%; risk free interest rate, 1.64%; and a life of 5 years. The grant date fair value of each share of common stock underlying the warrant was $1.04. In January 2020 we issued a warrant to purchase 5,208 shares of common stock to an employee at an exercise price of $0.96 per share in satisfaction of accrued compensation. The warrant was valued at $3,594 and has a term of 5 years. We utilized the Black-Scholes model to fair value the warrant received by the employee with the following assumptions: volatility, 135%; expected dividend yield, 0%; risk free interest rate, 1.58%; and a life of 5 years. The grant date fair value of each share of common stock underlying the warrant was $0.72. The value of the warrants was expensed in the fourth quarter of 2019 and included in accrued expenses at December 31, 2019. In February 2020 we issued a warrant to purchase 18,750 shares of common stock to an employee at an exercise price of $1.20 per share. The warrant was valued at $18,571 and has a term of 3 years. We utilized the Black-Scholes model to fair value the warrant received by the employee with the following assumptions: volatility, 155%; expected dividend yield, 0%; risk free interest rate, 1.64%; and a life of 3 years. The grant date fair value of each share of common stock underlying the warrant was $0.96. In April 2020 we issued a warrant to purchase 12,500 shares of common stock to the CEO at an exercise price of $4.00 per share pursuant to an employment agreement. The warrant was valued at $49,693 and has a term of 10 years. We utilized the Black-Scholes model to fair value the warrant received by the CEO with the following assumptions: volatility, 173%; expected dividend yield, 0%; risk free interest rate, 0.68%; and a life of 10 years. The grant date fair value of each share of common stock underlying the warrant was $4.00. In April 2020 we issued a warrant to purchase6,250 shares of common stock to the COO at an exercise price of $4.00 per share pursuant to an employment agreement. The warrant was valued at $24,846 and has a term of 10 years. We utilized the Black-Scholes model to fair value the warrant received by the COO with the following assumptions: volatility, 173%; expected dividend yield, 0%; risk free interest rate, 0.68%; and a life of 10 years. The grant date fair value of each share of common stock underlying the warrant was $4.00. In April 2020 we issued a warrant to purchase 6,250 shares of common stock to the CFO at an exercise price of $4.00 per share pursuant to an employment agreement. The warrant was valued at $24,846 and has a term of 10 years. We utilized the Black-Scholes model to fair value the warrant received by the CFO with the following assumptions: volatility, 173%; expected dividend yield, 0%; risk free interest rate, 0.68%; and a life of 10 years. The grant date fair value of each share of common stock underlying the warrant was $4.00. In April 2020 we issued a warrant to purchase 3,750 shares of common stock to a consultant at an exercise price of $4.00 per share. The warrant was valued at $14,908 and has a term of 10 years. We utilized the Black-Scholes model to fair value the warrant received by the consultant with the following assumptions: volatility, 173%; expected dividend yield, 0%; risk free interest rate, 0.68%; and a life of 10 years. The grant date fair value of each share of common stock underlying the warrant was $4.00. On February 11, 2021, we agreed to amend (the “Warrant Amendment”) the warrant to purchase 125,000 shares of TOMI common stock, par value $0.01 (the “Common Stock”), issued by TOMI to Dr. Halden S. Shane, TOMI’s Chief Executive Officer and a director on TOMI’s board of directors, on February 11, 2014 (the “Warrant”), to provide TOMI an option to repurchase the Warrant from Dr. Shane at a negotiated price. In connection with the Warrant Amendment, TOMI repurchased the warrant from Dr. Shane (the “Repurchase”) for an aggregate cash consideration of $314,500, representing a 15% discount of the net exercise cash value of the Warrant, which was calculated using the closing price of the Common Stock on the Nasdaq on February 11, 2021 of $5.36, less the exercise price of the warrants in the amount of $2.40. On the same date, the Warrant Amendment and the Repurchase was considered, approved and adopted by a disinterested majority of TOMI’s board of directors. The $314,500 charge in connection with the warrant amendment has been included in General and Administrative expenses for the nine months ended September 30, 2021. In September 2021, we issued 1,434,721 warrants in a private placement in connection with the sale common stock through a registered direct offering. The Warrants are exercisable at an exercise price of $1.68 per share, are exercisable immediately upon issuance and have a term of exercise equal to five years from the date of issuance. In addition, we issued 172,167 warrants to the placement agent which have a term of five years and an exercise price of $2.18. The following table summarizes the outstanding common stock warrants as of September 30, 2021 and December 31, 2020: September 30, 2021 (Unaudited) December 31, 2020 Number of Warrants Weighted Average Exercise Price Number of Warrants Weighted Average Exercise Price Outstanding, beginning of period 2,049,133 $ 2.55 2,155,065 $ 3.12 Granted 1,606,888 1.73 585,447 4.97 Exercised - - (76,796 ) (2.77 ) Expired (231,250 ) (2.88 ) (614,583 ) (6.40 ) Outstanding, end of period 3,424,771 $ 2.22 2,049,133 $ 2.55 Warrants outstanding and exercisable by price range as of September 30, 2021 were as follows: Outstanding Warrants Average Weighted Remaining Contractual Exercisable Warrants Exercise Price Number Life in Years Number Weighted Average Exercise Price $ 0.64 31,250 2.15 31,250 $ 0.64 $ 0.80 158,125 2.01 158,125 $ 0.80 $ 0.96 473,958 1.19 473,958 $ 0.96 $ 1.12 6,250 2.55 6,250 $ 1.12 $ 1.20 175,000 3.13 175,000 $ 1.20 $ 1.36 1,250 1.07 1,250 $ 1.36 $ 1.68 1,434,721 5.00 1,434,721 $ 1.68 $ 2.16 31,250 0.25 31,250 $ 2.16 $ 2.18 172,167 5.00 172,167 $ 2.18 $ 2.32 523,061 0.42 523,061 $ 2.32 $ 2.40 12,500 0.01 12,500 $ 2.40 $ 4.00 28,750 8.57 28,750 $ 4.00 $ 6.95 375,000 9.00 375,000 $ 6.95 $ 8.40 1,488 1.88 1,488 $ 8.40 3,424,771 3.91 3,424,771 $ 2.65 There were no unvested warrants outstanding as of September 30, 2021. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
11. COMMITMENTS AND CONTINGENCIES | NOTE 11. COMMITMENTS AND CONTINGENCIES Legal Contingencies We may become a party to litigation in the normal course of business. In the opinion of management, there are no legal matters involving us that would have a material adverse effect upon our financial condition, results of operations or cash flows. In addition, from time to time, we may have to file claims against parties that infringe on our intellectual property. Product Liability As of September 30, 2021 and December 31, 2020, there were no claims against us for product liability. COVID-19 Pandemic The COVID-19 pandemic has increased the global demand for disinfection products and services that help prevent the spread and transmission of COVID-19 virus. The Company’s products have been identified as an essential disinfectant and decontamination vendor by various agencies and countries, which have materially affected its business and results of operations. The Company experienced a substantial increase in demand for our products and services in 2020 due to the pandemic. Throughout 2021, the Company experienced a reduction of demand due to various factors, including the closure of our major customers’ business operations due to the pandemic, which resulted in the suspension of many of its ongoing long-term projects. It is difficult to predict how COVID-19 pandemic will affect the Company’s financial performance in the remainder of 2021, as the global economy gradually reopens, customers adjust and change their operations, and the Company implements new marketing and sales strategies in response. |
CONTRACTS AND AGREEMENTS
CONTRACTS AND AGREEMENTS | 9 Months Ended |
Sep. 30, 2021 | |
INTANGIBLE ASSETS | |
12. CONTRACTS AND AGREEMENTS | NOTE 12. CONTRACTS AND AGREEMENTS Executive Agreements Halden S. Shane On September 22, 2020, we entered into a three-year employment agreement with Dr. Shane, effective October 1, 2020. The agreement provides for a base annual salary of $500,000. The agreement also provides for a signing bonus of 375,000 warrants. Dr. Shane is also entitled to a cash performance bonus and an annual issuance of an option to purchase 31,250 shares of common stock from the 2016 Plan at the discretion of the Board. The agreement also provides that we will reimburse Dr. Shane for the expenses associated with the use of an automobile up to $750 a month. The term of the agreement is three years. In the event Dr. Shane is terminated as CEO as a result of a change in control, Dr. Shane will be entitled to a lump sum payment of two years’ salary at the time of such termination. The Board may terminate Dr. Shane for cause by written notification to Dr. Shane; provided, however, that no termination for cause will be effective unless Dr. Shane has been provided with prior written notice and opportunity for remedial action and fails to remedy within 30 days thereof, in the event of a termination by the Company (i) by reason of willful dishonesty towards, fraud upon, or deliberate injury or attempted injury to, the Company, (ii) by reason of material breach of his employment agreement and (iii) by reason of gross negligence or intentional misconduct with respect to the performance of duties under the agreement. Upon termination for cause, Dr. Shane will be immediately paid an amount equal to his gross salary. The Board may terminate Dr. Shane other than for cause at any time upon giving notice to Dr. Shane. Upon such termination, Dr. Shane will be immediately paid an amount equal to his gross salary. Elissa J. Shane On October 1, 2020, we entered into an employment agreement with Elissa J. Shane, effective October 1, 2020. Pursuant to her employment agreement, Ms. Shane will receive an annual base salary of at least $270,000, subject to annual review and discretionary increase by the Compensation Committee of the Board. Ms. Shane is eligible to receive an annual cash bonus and other annual incentive compensation. The agreement originally provided for a grant of 93,750 warrants. Additionally, in connection with the execution of her employment agreement, on October 1, 2020, we issued Ms. Shane a warrant to purchase 93,750 shares of Common Stock at an exercise price of $6.17 per share. These provisions were subsequently amended to provide for the issuance to Ms. Shane of 31,250 options from the 2016 Equity Plan at the closing price of $7.06 on the date of grant in lieu of the warrant grant and the 93,750 warrants were cancelled. Ms. Shane acknowledged that the 31,250 options were in full consideration of the amount she was entitled to under the agreement. Her employment agreement also provides that we will reimburse Ms. Shane for reasonable and necessary business and entertainment expenses that she incurs in performing her duties. During the term of her employment, Ms. Shane will also be entitled to up to four weeks of paid vacation time annually, which will accrue up to six weeks, and to participate in our benefit plans and programs, including but not limited to all group health, life, disability and retirement plans. Ms. Shane is also entitled to the sum of $1,000 per month as a vehicle allowance. The initial term of her employment agreement is three years, which may be automatically extended for successive one-year terms, unless either party provides the other with 120 days’ prior written notice of its intent to terminate the agreement. In the event Ms. Shane is terminated as COO as a result of a change in control, Ms. Shane will be entitled to a lump sum payment of one and a half years’ salary at the time of such termination. Agreements with Directors In December 2017, we increased the annual fee to the members of our Board to $40,000, to be paid in cash on a quarterly basis, with the exception of the audit committee chairperson, whose annual fee we increased to $45,000, also to be paid in cash on a quarterly basis. Director compensation also includes the annual issuance of our common stock. For the nine months ended September 30, 2020, we issued an aggregate of 50,000 shares of common stock that were valued at $48,000 to members of our Board. For the nine months ended September 30, 2021, we issued an aggregate of 50,000 shares of common stock that were valued at $228,000 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 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: Year Ended: Amount October 1 - December 31, 2021 $ - December 31, 2022 30,000 December 31, 2023 30,000 December 31, 2024 30,000 December 31, 2025 - $ 90,000 Other Agreements TOMI Service Network (“TSN”) is a national service network composed of existing full-service restoration industry specialists that have entered initially into licensing agreements with us to become Primary Service Providers (“PSPs”). The licensing agreements originally granted protected territories to PSPs to perform services using our SteraMist ® |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 9 Months Ended |
Sep. 30, 2021 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
13. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 13. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following at: September 30, 2021 (Unaudited) December 31, 2020 Commissions $ 288,823 $ 151,709 Payroll and related costs 240,233 84,000 Director fees 31,250 41,250 Sales Tax Payable 4,410 9,784 Income Taxes Payable (Note 16) 2,000 77,000 Accrued warranty (Note 14) 68,000 68,000 Other accrued expenses 20,625 70,106 Total $ 655,341 $ 501,849 |
ACCRUED WARRANTY
ACCRUED WARRANTY | 9 Months Ended |
Sep. 30, 2021 | |
ACCRUED WARRANTY | |
14. ACCRUED WARRANTY | NOTE 14. ACCRUED WARRANTY Our manufacturers assume the warranty against product defects from date of sale, which we extend to our customers upon sale of the product. We assume responsibility for product reliability and results. The warranty is generally limited to a refund of the original purchase price of the product or a replacement part. We estimate warranty costs based on historical warranty claim experience. The following table presents warranty reserve activities at: September 30, 2021 (Unaudited) December 31, 2020 Beginning accrued warranty costs $ 68,000 $ 30,000 Provision for warranty expense 18,834 101,041 Settlement of warranty claims (18,834 ) (63,041 ) Ending accrued warranty costs $ 68,000 $ 68,000 |
LOAN PAYABLE
LOAN PAYABLE | 9 Months Ended |
Sep. 30, 2021 | |
LOAN PAYABLE | |
15. LOAN PAYABLE | NOTE 15. LOAN PAYABLE On April 21, 2020, we received $410,700 in loan funding from the Paycheck Protection Program (the "PPP") established pursuant to the recently enacted Coronavirus Aid, Relief, and Economic Security Act of 2020 (the "CARES Act") and administered by the U.S. Small Business Administration ("SBA"). The unsecured loan (the "PPP Loan") is evidenced by a promissory note of the Company, dated April 21, 2020 (the "Note") in the principal amount of $410,700 with City National Bank (the "Bank"), the lender. Under the terms of the Note and the PPP Loan, interest accrues on the outstanding principal at the rate of 1.0% per annum. The term of the Note is two years, though it may be payable sooner in connection with an event of default under the Note. In May of 2021, the loan principal and related interest was forgiven and we recognized a gain upon debt extinguishment in our statement of operations in the amount of $414,583 for the nine months ended September 30, 2021. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2021 | |
INCOME TAXES | |
16. INCOME TAXES | NOTE 16. INCOME TAXES For the three and nine months ended September 30, 2021 and 2020, our provision for income tax was $0. Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits, which are, on a more likely than not basis, not expected to be realized in accordance with ASC guidance for income taxes. As of September 30, 2021 and December 31, 2020, we recorded a valuation allowance of $4,307,000 and $3,530,000, respectively for the portion of the deferred tax assets that we do not expect to be realized. Management believes that based on the available information, it is more likely than not that the remaining U.S. deferred tax assets will not be realized, such that a valuation allowance is required against U.S. deferred tax assets. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. |
CUSTOMER CONCENTRATION
CUSTOMER CONCENTRATION | 9 Months Ended |
Sep. 30, 2021 | |
CLOUD COMPUTING SERVICE CONTRACT | |
17. CUSTOMER CONCENTRATION | NOTE 17. CUSTOMER CONCENTRATION Two customers accounted for 29% of net revenue for the three months ended September 30, 2021. We had no customers/distributor whose revenue individually represented 10% or more of our total revenue for the nine months ended September 30, 2021. For the nine months ended September 20, 2020, one customer accounted for 11% of net revenue We had two customers/distributors that accounted for 25% of accounts receivable as of September 30, 2021. Three customers/distributors accounted for 36% of accounts receivable as of December 31, 2020. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2021 | |
SUBSEQUENT EVENTS | |
18. SUBSEQUENT EVENTS | NOTE 18. SUBSEQUENT EVENTS On October 26, 2021, we filed a Form S-3 Registration Statement which registered 1,606,888 shares of common stock issuable upon the exercise of outstanding common stock purchase warrants acquired in connection with registered direct offering on September 26, 2021 and due the placement agents. The registration statement was declared effective by the SEC on November 8, 2021. See note 10 (common stock) for additional details. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | The interim unaudited condensed consolidated financial statements included herein, presented in accordance with generally accepted accounting principles utilized in the United States of America (“GAAP”), and stated in U.S. dollars, have been prepared by us, without an audit, pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations, although we believe that the disclosures are adequate to make the information presented not misleading. |
Principles of Consolidation | The accompanying condensed consolidated financial statements include the accounts of TOMI and its wholly owned subsidiary, TOMI Environmental Solutions, Inc., a Nevada corporation. All intercompany accounts and transactions have been eliminated in consolidation. |
Reclassification of Accounts | Certain reclassifications have been made to prior-year comparative financial statements to conform to the current year presentation. These reclassifications had no effect on previously reported results of operations or financial position. |
Use of Estimates | The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the accompanying condensed consolidated financial statements and the accompanying notes. 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. 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. |
Fair Value Measurements | The authoritative guidance for fair value measurements defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or the most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact. The guidance describes a fair value hierarchy based on the levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value, which are the following: Level 1: Quoted prices in active markets for identical assets or liabilities. Level 2: Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the value of the assets or liabilities. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximated fair value because of the short maturity of these instruments. |
Cash and Cash Equivalents | Cash and cash equivalents includes cash on hand, held at financial institutions and other liquid investments with original maturities of three months or less. At times, these deposits may be in excess of insured limits. At September 30, 2021 and December 31, 2020 there were no cash equivalents (or cash equivalents consisted of money market, etc) |
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. We have a policy of reserving for doubtful accounts 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 three and nine months ended September 30, 2021 was approximately $93,000 and $511,000, respectively. Bad debt expense for the three and nine months ended September 30, 2020 was approximately $153,000 and $226,000, respectively. At September 30, 2021 and December 31, 2020, the allowance for doubtful accounts was $750,000 and $390,000, respectively. |
Inventories | Inventories are valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method. Inventories consist primarily of finished goods and raw materials. 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 $0 as of September 30, 2021 and December 31, 2020, respectively. |
Property and Equipment | We account for property and equipment at cost less accumulated depreciation. We compute depreciation using the straight-line method over the estimated useful lives of the assets, generally three to five years. Depreciation for equipment, furniture and fixtures and vehicles commences once placed in service for its intended use. Leasehold improvements are amortized using the straight-line method over the lives of the respective leases or service lives of the improvements, whichever is shorter. |
Leases | In February 2016, the FASB issued ASU No. 2016-02 (ASC 842), Leases Codification Improvements to Topic 842, Leases Targeted Improvements Narrow-Scope Improvements for Lessors Codification Improvements Operating lease assets are included within operating lease right-of-use assets, and the corresponding operating lease liabilities are recorded as current portion of long-term operating lease, and within long-term liabilities as long-term operating lease, net of current portion on our condensed consolidated balance sheet as of September 30, 2021 and December 31, 2020. We have elected not to present short-term leases on the condensed consolidated balance sheet as these leases have a lease term of 12 months or less at lease inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise. All other lease assets and lease liabilities are recognized based on the present value of lease payments over the lease term at commencement date. Because most of our leases do not provide an implicit rate of return, we used our incremental borrowing rate based on the information available at adoption date in determining the present value of lease payments. |
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 three and nine months ended September 30, 2021 and 2020, was $10,475 and $31,425, respectively. |
Accounts Payable | As of September 30, 2021, one vendor accounted for approximately 25% of accounts payable. As of December 31, 2020, two vendors accounted for approximately 32% of accounts payable. For the three and nine months ended September 30, 2021, two vendors accounted for 55% and 60% of cost of sales, respectively. For the three and nine months ended September 30, 2020, two vendors accounted for 66% and 77% of cost of sales, respectively. |
Accrued Warranties | Accrued warranties represent the estimated costs, if any, that will be incurred during the warranty period of our products. We estimate the expected costs to be incurred during the warranty period and record the expense to the condensed consolidated statement of operations at the date of sale. Our manufacturers assume the warranty against product defects from date of sale, which we extend to our customers upon sale of the product. We assume responsibility for product reliability and results. As of September 30, 2021, and December 31, 2020, our warranty reserve was $68,000. (See Note 14). |
Income Taxes | Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits that are, on a more likely than not basis, not expected to be realized in accordance with Accounting Standards Codification (ASC) guidance for income taxes. Net deferred tax benefits have been fully reserved at September 30, 2021 and December 31, 2020. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. |
Net Income (Loss) Per Share | Basic net income or (loss) per share is computed by dividing our net income or (loss) by the weighted average number of shares of common stock outstanding during the period presented. Diluted income or (loss) per share is based on the treasury stock method and includes the effect from potential issuance of shares of common stock, such as shares issuable pursuant to the exercise of options and warrants and conversions of preferred stock or debentures. Potentially dilutive securities as of September 30, 2021 consisted of 3,424,771 shares of common stock issuable upon exercise of outstanding warrants, 132,500 shares of common stock issuable upon outstanding options and 63,750 shares of common stock issuable upon conversion of outstanding shares of Preferred A stock (“Convertible Series A Preferred Stock”). Potentially dilutive securities as of September 30, 2020 consisted of 1,686,633 shares of common stock issuable upon exercise of outstanding warrants, 101,250 shares of common stock issuable upon outstanding options and 63,750 shares of common stock issuable upon conversion of outstanding shares of Preferred A stock (“Convertible Series A Preferred Stock”). Diluted net income or (loss) per share is computed similarly to basic net income or (loss) per share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential shares of common stock had been issued and if such additional shares were dilutive. Options, warrants, and preferred stock of approximately 3.6 million and 2.2 million shares of common stock were outstanding at September 30, 2021 and December 31, 2020, respectively, but were excluded from the computation of diluted net loss per share at September 30, 2021 due to the anti-dilutive effect on net loss per share. For the Three Months Ended September 30, (Unaudited) 2021 2020 Net Income (Loss) $ (486,558 ) $ 1,019,300 Net income (loss) attributable to common shareholders $ (486,558 ) $ 1,019,300 Weighted average number of shares of common stock outstanding: Basic 16,843,045 16,741,622 Diluted 16,843,045 18,593,255 Net income (loss) attributable to common shareholders per share: Basic $ (0.03 ) $ 0.06 Diluted $ (0.03 ) $ 0.05 The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: For the Three Months Ended September 30, (Unaudited) 2021 2020 Numerator: Net Income (Loss) $ (486,558 ) $ 1,019,300 Denominator: Basic weighted-average shares 16,843,045 16,741,622 Effect of dilutive securities Warrants - 1,686,633 Options - 101,250 Preferred Stock - 63,750 Diluted Weighted Average Shares 16,843,045 18,593,255 Net Income (Loss) Per Common Share: Basic $ (0.03 ) $ 0.06 Diluted $ (0.03 ) $ 0.05 Note: Warrants, options and preferred stock for the three months ended September 30, 2021 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. For the Nine Months Ended September 30, (Unaudited) 2021 2020 Net Income (Loss) $ (2,775,952 ) $ 7,295,478 Adjustments for convertible debt - as converted Interest on convertible debt - 40,689 Net income (loss) attributable to common shareholders $ (2,775,952 ) $ 7,366,167 Weighted average number of shares of common stock outstanding: Basic 16,805,145 16,429,360 Diluted 16,805,145 18,280,993 Net income (loss) attributable to common shareholders per share: Basic $ (0.17 ) $ 0.45 Diluted $ (0.17 ) $ 0.40 The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: For the Nine Months Ended September 30, (Unaudited) 2021 2020 Numerator: Net Income (Loss) $ (2,775,952 ) $ 7,295,478 Denominator: Basic weighted-average shares 16,805,145 16,429,360 Effect of dilutive securities Warrants - 1,686,633 Options - 101,250 Preferred Stock - 63,750 Diluted Weighted Average Shares 16,805,145 18,280,993 Net Income (Loss) Per Common Share: Basic $ (0.17 ) $ 0.44 Diluted $ (0.17 ) $ 0.40 Note: Warrants, options and preferred stock for the nine months ended September 30, 2021 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. |
Revenue Recognition | We recognize revenue in accordance with Financial Accounting Standards Board (FASB) ASC 606, Revenue from Contracts with Customers. 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. To determine revenue recognition for contracts with customers we perform the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as) we satisfy the performance obligation(s). At contract inception, we assess the goods or services promised within each contract, assess whether each promised good or service is distinct and identify those that are performance obligations. We must use judgment to determine: 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; 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. Title and risk of loss generally pass to our customers upon shipment. Our Customers include end users as well as dealers and distributors who market and sell our products. Our revenue is not contingent upon resale by the dealer or distributor, and we have no further obligations related to bringing about resale. Shipping and handling costs charged to customers are included in Product Revenues. The associated expenses are treated as fulfillment costs and are included in Cost of Revenues. Revenues are reported net of sales taxes collected from Customers. Disaggregation of Revenue The following table presents our approximate revenues disaggregated by revenue source. Product and Service Revenue For the three months ended September 30, (Unaudited) 2021 2020 SteraMist Product $ 1,657,000 $ 3,677,000 Service and Training 548,000 615,000 Total $ 2,205,000 $ 4,292,000 Revenue by Geographic Region For the three months ended September 30, (Unaudited) 2021 2020 United States $ 2,028,000 $ 3,446,000 International 177,000 846,000 Total $ 2,205,000 $ 4,292,000 Product and Service Revenue For the nine months ended September 30, (Unaudited) 2021 2020 SteraMist Product $ 4,329,000 $ 19,557,000 Service and Training 1,415,000 1,817,000 Total $ 5,744,000 $ 21,374,000 Revenue by Geographic Region For the nine months ended September 30, (Unaudited) 2021 2020 United States $ 5,017,000 $ 15,437,000 International 727,000 5,937,000 Total $ 5,744,000 $ 21,374,000 Product revenue includes sales from our standard and customized equipment, solution and accessories sold with our equipment. Revenue is recognized upon transfer of control of promised products to customers in an amount that reflects the consideration we expect to receive in exchange for those products. Service and training revenue include sales from our high-level decontamination and service engagements, validation of our equipment and technology and customer training. 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. Costs to Obtain a Contract with a Customer We apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. We generally expense sales commissions when incurred because the amortization period would have been one year or less. These costs are recorded within selling expenses. Contract Balances As of September 30, 2021, and December 31, 2020 we did not have any unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. Arrangements with Multiple Performance Obligations Our contracts with customers may include multiple performance obligations. We enter into contracts that can include various combinations of products and services, which are primarily distinct and accounted for as separate performance obligations. Significant Judgments 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. |
Equity Compensation Expense | We account for equity compensation expense in accordance with FASB ASC 718, “Compensation—Stock Compensation.” Under the provisions of FASB ASC 718, equity compensation expense is estimated at the grant date based on the award’s fair value. The valuation methodology used to determine the fair value of options and warrants issued as compensation during the period is the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions including volatility of the stock price, the average risk-free interest rate, and the weighted average expected life of the options. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common Stock and does not intend to pay dividends on its Common Stock in the foreseeable future. The expected forfeiture rate is estimated based on management’s best assessment. On July 7, 2017, our shareholders approved the 2016 Equity Incentive Plan, or the 2016 Plan. The 2016 Plan authorizes the grant of stock options, stock appreciation rights, restricted stock, restricted stock units and performance units/shares. Up to 2,000,000 shares of common stock are authorized for issuance under the 2016 Plan. Shares issued under the 2016 Plan may be either authorized but unissued shares, treasury shares, or any combination thereof. Provisions in the 2016 Plan permit the reuse or reissuance by the 2016 Plan of shares of common stock for numerous reasons, including, but not limited to, shares of common stock underlying canceled, expired, or forfeited awards of stock-based compensation and stock appreciation rights paid out in the form of cash. Equity compensation expense will typically be awarded in consideration for the future performance of services to us. All recipients of awards under the 2016 Plan are required to enter into award agreements with us at the time of the award, and awards under the 2016 Plan are expressly conditioned upon such agreements. For the nine months ended September 30, 2021 and 2020, we issued 50,000 shares of fully vested common stock, respectively, pursuant to the 2016 Plan to our directors. |
Concentrations of Credit Risk | Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash and cash equivalents. We maintain cash balances at financial institutions which exceed the current Federal Deposit Insurance Corporation limit of $250,000 at times during the year. |
Long-Lived Assets Including Acquired Intangible Assets | We assess long-lived assets for potential impairments at the end of each year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the asset. In evaluating long-lived assets for impairment, we measure recoverability of these assets by comparing the carrying amounts to the future undiscounted cash flows the assets are expected to generate. If our long-lived assets are considered to be impaired, the impairment to be recognized equals the amount by which the carrying value of the asset exceeds its fair market value. We base the calculations of the estimated fair value of our long-lived assets on the income approach. For the income approach, we use an internally developed discounted cash flow model that includes, among others, the following assumptions: projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates. We base these assumptions on our historical data and experience, industry projections, micro and macro general economic condition projections, and our expectations. We had no long-lived asset impairment charges for the three and nine months ended September 30, 2021 and 2020. |
Advertising and Promotional Expenses | We expense advertising costs in the period in which they are incurred. Advertising and promotional expenses included in selling expenses for the three and nine months ended September 30, 2021 were approximately $145,000 and $552,000, respectively. Advertising and promotional expenses included in selling expenses for the three and nine months ended September 30, 2020 were approximately $56,000 and $156,000, respectively. |
Research and Development Expenses | We expense research and development expenses in the period in which they are incurred. For the three and nine months ended September 30, 2021, research and development expenses were approximately $93,000 and $495,000, respectively. For the three and nine months ended September 30, 2020, research and development expenses were approximately $45,000 and $245,000, respectively. |
Business Segments | We currently have one reportable business segment due to the fact that we derive our revenue primarily from one product. A breakdown of revenue is presented in “Revenue Recognition” in Note 2 above. |
Recent Accounting Pronouncements | In August 2018, the FASB issued ASU No. 2018-15, “Intangibles-Goodwill and Other-Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract.” This guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance is effective on a prospective or retrospective basis beginning on January 1, 2020, with early adoption permitted. We elected to adopt this guidance early, in 2020 on a prospective basis. The guidance did not have a material impact on our condensed Consolidated Financial Statements. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Net Income (Loss) Per Share | For the Three Months Ended September 30, (Unaudited) 2021 2020 Net Income (Loss) $ (486,558 ) $ 1,019,300 Net income (loss) attributable to common shareholders $ (486,558 ) $ 1,019,300 Weighted average number of shares of common stock outstanding: Basic 16,843,045 16,741,622 Diluted 16,843,045 18,593,255 Net income (loss) attributable to common shareholders per share: Basic $ (0.03 ) $ 0.06 Diluted $ (0.03 ) $ 0.05 The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: For the Three Months Ended September 30, (Unaudited) 2021 2020 Numerator: Net Income (Loss) $ (486,558 ) $ 1,019,300 Denominator: Basic weighted-average shares 16,843,045 16,741,622 Effect of dilutive securities Warrants - 1,686,633 Options - 101,250 Preferred Stock - 63,750 Diluted Weighted Average Shares 16,843,045 18,593,255 Net Income (Loss) Per Common Share: Basic $ (0.03 ) $ 0.06 Diluted $ (0.03 ) $ 0.05 Note: Warrants, options and preferred stock for the three months ended September 30, 2021 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. For the Nine Months Ended September 30, (Unaudited) 2021 2020 Net Income (Loss) $ (2,775,952 ) $ 7,295,478 Adjustments for convertible debt - as converted Interest on convertible debt - 40,689 Net income (loss) attributable to common shareholders $ (2,775,952 ) $ 7,366,167 Weighted average number of shares of common stock outstanding: Basic 16,805,145 16,429,360 Diluted 16,805,145 18,280,993 Net income (loss) attributable to common shareholders per share: Basic $ (0.17 ) $ 0.45 Diluted $ (0.17 ) $ 0.40 The following provides a reconciliation of the shares used in calculating the per share amounts for the periods presented: For the Nine Months Ended September 30, (Unaudited) 2021 2020 Numerator: Net Income (Loss) $ (2,775,952 ) $ 7,295,478 Denominator: Basic weighted-average shares 16,805,145 16,429,360 Effect of dilutive securities Warrants - 1,686,633 Options - 101,250 Preferred Stock - 63,750 Diluted Weighted Average Shares 16,805,145 18,280,993 Net Income (Loss) Per Common Share: Basic $ (0.17 ) $ 0.44 Diluted $ (0.17 ) $ 0.40 Note: Warrants, options and preferred stock for the nine months ended September 30, 2021 are not included in the computation of diluted weighted average shares as such inclusion would be anti-dilutive. |
Disaggregation of Revenue | For the three months ended September 30, (Unaudited) 2021 2020 SteraMist Product $ 1,657,000 $ 3,677,000 Service and Training 548,000 615,000 Total $ 2,205,000 $ 4,292,000 Revenue by Geographic Region For the three months ended September 30, (Unaudited) 2021 2020 United States $ 2,028,000 $ 3,446,000 International 177,000 846,000 Total $ 2,205,000 $ 4,292,000 Product and Service Revenue For the nine months ended September 30, (Unaudited) 2021 2020 SteraMist Product $ 4,329,000 $ 19,557,000 Service and Training 1,415,000 1,817,000 Total $ 5,744,000 $ 21,374,000 Revenue by Geographic Region For the nine months ended September 30, (Unaudited) 2021 2020 United States $ 5,017,000 $ 15,437,000 International 727,000 5,937,000 Total $ 5,744,000 $ 21,374,000 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
INVENTORIES | |
Inventories | September 30, 2021 (Unaudited) December 31, 2020 Finished goods $ 4,396,402 $ 3,404,025 Raw Materials 391,802 377,490 $ 4,788,204 $ 3,781,515 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
PROPERTY AND EQUIPMENT | |
Property and Equipment | September 30, 2021 (Unaudited) December 31, 2020 Furniture and fixtures $ 357,236 $ 357,236 Equipment 1,614,751 1,580,743 Vehicles 60,703 60,703 Computer and software 214,860 203,704 Leasehold improvements 386,120 386,120 Tenant Improvement Allowance 405,000 405,000 Capitalized Costs in Progress – Tooling and Molds 203,589 - 3,242,257 2,993,507 Less: Accumulated depreciation 1,943,198 1,695,404 $ 1,299,060 $ 1,298,103 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
INTANGIBLE ASSETS | |
Definite Life Intangible Assets | September 30, 2021 (Unaudited) December 31, 2020 Intellectual Property and Patents $ 3,054,259 $ 3,000,012 Less: Accumulated Amortization 2,864,259 2,856,991 Patents, net $ 190,000 $ 143,021 |
Indefinite Life Intangible Assets | Trademarks 639,345 579,895 Total Intangible Assets, net $ 829,345 $ 722,916 |
Approximate Future Amortization | Year Ended: Amount October 1 – December 31, 2021 $ 3,000 December 31, 2022 13,000 December 31, 2023 13,000 December 31, 2024 13,000 December 31, 2025 13,000 Thereafter 135,000 $ 190,000 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
LEASES | |
Lease Expense | For the Three Months Ended September 30, 2021 (Unaudited) For the Three Months Ended September 30, 2020 (Unaudited) Operating lease expense $ 39,329 $ 39,329 For the Nine Months Ended September 30, 2021 (Unaudited) For the Nine Months Ended September 30, 2020 (Unaudited) Operating lease expense $ 117,986 $ 117,986 |
Operating Lease | Operating leases: September 30, 2021 (Unaudited) December 31, 2020 Assets: Operating lease right-of-use asset $ 595,874 $ 631,527 Liabilities: Current Portion of Long-Term Operating Lease $ 89,059 $ 81,223 Long-Term Operating Lease, Net of Current Portion 885,252 953,190 $ 974,311 $ 1,034,413 |
Other Information Related to Leases | September 30, 2021 (Unaudited) December 31, 2020 Weighted-average remaining lease term: Operating leases 7.50 years 8.25 years Discount rate: Operating leases 7.00 % 7.00 % |
Supplemental Cash Flow Information related to leases | For the Three Months Ended September 30, 2021 (Unaudited) For the Three Months Ended September 30, 2020 (Unaudited) Cash paid for amounts included in the measurement of lease liabilities: $ 38,049 $ 36,940 For the Nine Months Ended September 30, 2021 (Unaudited) For the Nine Months Ended September 30, 2020 (Unaudited) Cash paid for amounts included in the measurement of lease liabilities: $ 113,049 $ 109,747 |
Maturities of Lease Payments | Year Ended: Operating Lease October 1 – December 31, 2021 $ 38,049 December 31, 2022 155,621 December 31, 2023 160,290 December 31, 2024 165,098 December 31, 2025 170,051 Thereafter 575,131 Total minimum lease payments 1,264,241 Less: Interest 289,930 Present value of lease obligations 974,311 Less: Current portion 89,059 Long-term portion of lease obligations $ 885,252 |
CAPITALIZED SOFTWARE DEVELOPM_2
CAPITALIZED SOFTWARE DEVELOPMENT COSTS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
CAPITALIZED SOFTWARE DEVELOPMENT COSTS | |
Capitalized Software Development Costs | September 30, 2021 (Unaudited) December 31, 2020 Capitalized Software Development Costs $ 125,704 $ 125,704 Less: Accumulated Amortization (104,753 ) (73,327 ) Capitalized Software Development Costs - net $ 20,951 $ 52,377 |
HAREHOLDERS' EQUITY (Tables)
HAREHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Shareholders' Equity: | |
Stock Options Outstanding | September 30, 2021 (Unaudited) December 31, 2020 Number of Options Weighted Average Exercise Price Number of Options Weighted Average Exercise Price Outstanding, beginning of period 132,500 $ 2.72 77,500 $ 2.56 Granted - - 62,500 3.96 Exercised - - (2,500 ) 0.40 Expired - - (5,000 ) 16.80 Outstanding, end of period 132,500 $ 2.72 132,500 $ 2.72 |
Options Outstanding and Exercisable by Price Range | Outstanding Options Average Weighted Remaining Contractual Exercisable Options Range Number Life in Years Number Weighted Average Exercise Price $ 0.80 27,500 3.45 27,500 $ 0.80 $ 0.88 31,250 2.26 31,250 $ 0.88 $ 0.96 25,000 2.27 25,000 $ 0.96 $ 2.16 5,000 3.25 5,000 $ 2.16 $ 4.40 12,500 4.35 12,500 $ 4.40 $ 7.06 31,250 4.00 31,250 $ 7.06 132,500 3.14 132,500 $ 2.72 |
Stock Warrants Outstanding | September 30, 2021 (Unaudited) December 31, 2020 Number of Warrants Weighted Average Exercise Price Number of Warrants Weighted Average Exercise Price Outstanding, beginning of period 2,049,133 $ 2.55 2,155,065 $ 3.12 Granted 1,606,888 1.73 585,447 4.97 Exercised - - (76,796 ) (2.77 ) Expired (231,250 ) (2.88 ) (614,583 ) (6.40 ) Outstanding, end of period 3,424,771 $ 2.22 2,049,133 $ 2.55 |
Warrants Outstanding and Exercisable by Price Range | Outstanding Warrants Average Weighted Remaining Contractual Exercisable Warrants Exercise Price Number Life in Years Number Weighted Average Exercise Price $ 0.64 31,250 2.15 31,250 $ 0.64 $ 0.80 158,125 2.01 158,125 $ 0.80 $ 0.96 473,958 1.19 473,958 $ 0.96 $ 1.12 6,250 2.55 6,250 $ 1.12 $ 1.20 175,000 3.13 175,000 $ 1.20 $ 1.36 1,250 1.07 1,250 $ 1.36 $ 1.68 1,434,721 5.00 1,434,721 $ 1.68 $ 2.16 31,250 0.25 31,250 $ 2.16 $ 2.18 172,167 5.00 172,167 $ 2.18 $ 2.32 523,061 0.42 523,061 $ 2.32 $ 2.40 12,500 0.01 12,500 $ 2.40 $ 4.00 28,750 8.57 28,750 $ 4.00 $ 6.95 375,000 9.00 375,000 $ 6.95 $ 8.40 1,488 1.88 1,488 $ 8.40 3,424,771 3.91 3,424,771 $ 2.65 |
CONTRACTS AND AGREEMENTS (Table
CONTRACTS AND AGREEMENTS (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
CONTRACTS AND AGREEMENTS (Tables) | |
Approximate Minimum Contract Payments | Year Ended: Amount October 1 - December 31, 2021 $ - December 31, 2022 30,000 December 31, 2023 30,000 December 31, 2024 30,000 December 31, 2025 - $ 90,000 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following at: September 30, 2021 (Unaudited) December 31, 2020 Commissions $ 288,823 $ 151,709 Payroll and related costs 240,233 84,000 Director fees 31,250 41,250 Sales Tax Payable 4,410 9,784 Income Taxes Payable (Note 16) 2,000 77,000 Accrued warranty (Note 14) 68,000 68,000 Other accrued expenses 20,625 70,106 Total $ 655,341 $ 501,849 |
ACCRUED WARRANTY (Tables)
ACCRUED WARRANTY (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
ACCRUED WARRANTY | |
Warranty Reserve Activity | September 30, 2021 (Unaudited) December 31, 2020 Beginning accrued warranty costs $ 68,000 $ 30,000 Provision for warranty expense 18,834 101,041 Settlement of warranty claims (18,834 ) (63,041 ) Ending accrued warranty costs $ 68,000 $ 68,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Net Income (Loss) | $ (486,558) | $ 1,019,300 | $ (2,775,952) | $ 7,295,478 |
Interest on convertible debt | 0 | 40,689 | ||
Net Income (Loss) Attributable to Common Shareholders | $ (486,558) | $ 1,019,300 | $ (2,775,952) | $ 7,366,167 |
Weighted Average Number of Common Shares Outstanding: | ||||
Basic | 16,843,045 | 16,741,622 | 16,805,145 | 16,429,360 |
Diluted | 16,843,045 | 18,593,255 | 16,805,145 | 18,280,993 |
Net income (loss) attributable to common shareholders per share: | ||||
Basic | $ (0.03) | $ 0.06 | $ (0.17) | $ 0.44 |
Diluted | $ (0.03) | $ 0.05 | $ (0.17) | $ 0.40 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Net Income (Loss) | $ (486,558) | $ 1,019,300 | $ (2,775,952) | $ 7,295,478 |
Basic Weighted-Average Shares | 16,843,045 | 16,741,622 | 16,805,145 | 16,429,360 |
Diluted Weighted Average Shares | 16,843,045 | 18,593,255 | 16,805,145 | 18,280,993 |
Basic | $ (0.03) | $ 0.06 | $ (0.17) | $ 0.44 |
Diluted | $ (0.03) | $ 0.05 | $ (0.17) | $ 0.40 |
Diluted Net Income or Loss [Member] | ||||
Net Income (Loss) | $ (486,558) | $ 1,019,300 | $ (2,775,952) | $ 7,295,478 |
Basic Weighted-Average Shares | 16,843,045 | 16,741,622 | 16,805,145 | 16,429,360 |
Warrants | 0 | 1,686,633 | 0 | 1,686,633 |
Options | 0 | 101,250 | 0 | 101,250 |
Preferred Stock | 0 | 63,750 | 0 | 63,750 |
Diluted Weighted Average Shares | 16,843,045 | 18,593,255 | 16,805,145 | 18,280,990 |
Basic | $ (0.03) | $ 0.06 | $ (0.17) | $ 0.44 |
Diluted | $ (0.03) | $ 0.05 | $ (0.17) | $ 0.40 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Net Revenue | $ 2,204,569 | $ 4,291,588 | $ 5,743,549 | $ 21,373,503 |
United States | ||||
Net Revenue | 2,028,000 | 3,446,000 | 5,017,000 | 15,437,000 |
International | ||||
Net Revenue | 177,000 | 846,000 | 727,000 | 5,937,000 |
Product and Service Revenue | ||||
Net Revenue | 2,205,000 | 4,292,000 | 5,744,000 | 21,374,000 |
Revenue by Geographic Region | ||||
Net Revenue | 2,205,000 | 4,292,000 | 5,744,000 | 21,374,000 |
SteraMist Product | ||||
Net Revenue | 1,657,000 | 3,677,000 | 4,329,000 | 19,557,000 |
Service & Training | ||||
Net Revenue | $ 548,000 | $ 615,000 | $ 1,415,000 | $ 1,817,000 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Jul. 07, 2017 | |
Bad Debt Expense | $ 93,000 | $ 153,000 | $ 511,000 | $ 226,000 | ||
Allowance for Doubtful Accounts | 750,000 | 750,000 | $ 390,000 | |||
Inventory Reserve | 0 | 0 | 0 | |||
Amortization of Capitalized Software Development Costs | 10,475 | 10,475 | 31,425 | 31,425 | ||
Warranty Reserve | 68,000 | 68,000 | 68,000 | |||
Advertising and Promotional Expenses | 145,000 | 56,000 | 552,000 | 156,000 | ||
Research and Development Expenses | $ 93,000 | $ 45,000 | $ 495,000 | $ 245,000 | ||
Cash balances at financial institutions | $ 250,000 | |||||
Common stock, shares authorized | 250,000,000 | 250,000,000 | 250,000,000 | |||
2016 Equity Incentive Plan | ||||||
Preferred stock shares | 3,600,000 | 3,600,000 | ||||
Common stock, shares authorized | 2,200,000 | 2,200,000 | 2,000,000 | |||
2016 Equity Incentive Plan | Director [Member] | ||||||
Common stock, shares issued | 50,000 | 50,000 | ||||
Warrants | ||||||
Potentially Dilutive Securities | 3,424,771 | 1,686,633 | ||||
Cumulative Convertible Series A Preferred Stock | ||||||
Potentially Dilutive Securities | 63,750 | 63,750 | ||||
Preferred stock shares | 1,000,000 | 1,000,000 | 1,000,000 | |||
Stock Options | ||||||
Potentially Dilutive Securities | 132,500 | 101,250 | ||||
Two Vendors | Cost of Sales [Member] | ||||||
Concentration Risk, Percentage | 55.00% | 66.00% | 60.00% | 77.00% | ||
Two Vendors | Accounts Payable | ||||||
Concentration Risk, Percentage | 25.00% | 32.00% |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
INVENTORIES | ||
Finished Goods | $ 4,396,402 | $ 3,404,025 |
Raw Materials | 391,802 | 377,490 |
Inventory | $ 4,788,204 | $ 3,781,515 |
VENDOR DEPOSITS (Details Narrat
VENDOR DEPOSITS (Details Narrative) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
VENDOR DEPOSITS (Details Narrative) | ||
Vendor Deposits | $ 426,818 | $ 388,712 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
PROPERTY AND EQUIPMENT | ||
Furniture and Fixtures | $ 357,236 | $ 357,236 |
Equipment | 1,614,751 | 1,580,743 |
Vehicles | 60,703 | 60,703 |
Computer and Software | 214,860 | 203,704 |
Leasehold Improvements | 386,120 | 386,120 |
Tenant Improvement Allowance | 405,000 | 405,000 |
Capitalized Costs in Progress - Tooling and Molds | 203,589 | 0 |
Property and Equipment, Gross | 3,242,257 | 2,993,507 |
Less: Accumulated Depreciation | 1,943,198 | 1,695,404 |
Property and Equipment, Net | $ 1,299,060 | $ 1,298,103 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
PROPERTY AND EQUIPMENT | ||||
Depreciation | $ 67,383 | $ 83,932 | $ 218,398 | $ 241,445 |
Amortization of Tenant Improvement Allowance | $ 9,798 | $ 9,798 | $ 19,597 | $ 19,957 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
INTANGIBLE ASSETS | ||
Intellectual Property and Patents | $ 3,054,259 | $ 3,000,012 |
Less: Accumulated Amortization | 2,864,259 | 2,856,991 |
Intangible Assets, Net | $ 190,000 | $ 143,021 |
INTANGIBLE ASSETS (Details 1)
INTANGIBLE ASSETS (Details 1) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
INTANGIBLE ASSETS | ||
Trademarks | $ 639,345 | $ 579,895 |
Total Intangible Assets, Net | $ 829,345 | $ 722,916 |
INTANGIBLE ASSETS (Details 2)
INTANGIBLE ASSETS (Details 2) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Amortization | ||
October 1 - December 31, 2021 | $ 3,000 | |
December 31, 2022 | 13,000 | |
December 31, 2023 | 13,000 | |
December 31, 2024 | 13,000 | |
December 31, 2025 | 13,000 | |
Thereafter | 135,000 | |
Intangible Assets, Net | $ 190,000 | $ 143,021 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
INTANGIBLE ASSETS | ||||
Amortization Expense | $ 2,422 | $ 93,347 | $ 7,268 | $ 280,041 |
LEASES (Details)
LEASES (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
Assets | ||
Operating Lease Right of Use Asset | $ 595,874 | $ 631,527 |
Liabilities | ||
Current Portion of Long-Term Operating Lease | 89,059 | 81,223 |
Long-Term Operating Lease, Net of Current Portion | 885,252 | 953,190 |
Total | $ 974,311 | $ 1,034,413 |
LEASES (Details 1)
LEASES (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
LEASES | ||||
Operating Lease Expense | $ 39,329 | $ 39,329 | $ 117,986 | $ 117,986 |
LEASES (Details 2)
LEASES (Details 2) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
LEASES | ||
Weighted-Average Remaining Lease Term: Operating Leases | 7.50 years | 8.25 years |
Discount Rate: Operating Leases | 7.00% | 7.00% |
LEASES (Details 3)
LEASES (Details 3) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
LEASES | ||||
Cash Paid for Amounts Included in the Measurement of Lease Liabilities | $ 38,049 | $ 36,940 | $ 113,049 | $ 109,747 |
LEASES (Details 4)
LEASES (Details 4) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
LEASES | ||
October 1 - December 31, 2021 | $ 38,049 | |
December 31, 2022 | 155,621 | |
December 31, 2023 | 160,290 | |
December 31, 2024 | 165,098 | |
December 31, 2025 | 170,051 | |
Thereafter | 575,131 | |
Total minimum lease payments | 1,264,241 | |
Less: interest | 289,930 | |
Present value of lease obligations | 974,311 | $ 1,034,413 |
Less: current portion | 89,059 | 81,223 |
Long-term portion of lease obligations | $ 885,252 | $ 953,190 |
LEASES (Details Narrative)
LEASES (Details Narrative) | 1 Months Ended |
Apr. 30, 2018USD ($)ft² | |
LEASES | |
Area of lease facility | ft² | 9,000 |
Annual rent lease | $ 143,460 |
Increases rent percentage escalation clause | 3.00% |
Landlord tenant improvement allowance | $ 405,000 |
CAPITALIZED SOFTWARE DEVELOPM_3
CAPITALIZED SOFTWARE DEVELOPMENT COSTS (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
CAPITALIZED SOFTWARE DEVELOPMENT COSTS | ||
Capitalized Software Development Costs, Gross | $ 125,704 | $ 125,704 |
Less: Accumulated Amortization | (104,753) | (73,327) |
Capitalized Software Development Costs, Net | $ 20,951 | $ 52,377 |
CAPITALIZED SOFTWARE DEVELOPM_4
CAPITALIZED SOFTWARE DEVELOPMENT COSTS (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
CAPITALIZED SOFTWARE DEVELOPMENT COSTS | ||||
Amortization of Capitalized Software Development Costs | $ 10,475 | $ 10,475 | $ 31,425 | $ 31,425 |
CLOUD COMPUTING SERVICE CONTR_2
CLOUD COMPUTING SERVICE CONTRACT (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
May 31, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
CLOUD COMPUTING SERVICE CONTRACT (Details Narrative) | |||||
Annual payments on contract received | $ 30,409 | ||||
Prepaid expenses and other assets | $ 62,677 | $ 62,677 | |||
Amortization expense | $ 3,482 | $ 0 | $ 10,446 | $ 0 |
SHAREHOLDERS EQUITY (Details)
SHAREHOLDERS EQUITY (Details) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Number of Options | ||
Outstanding, Beginning Balance | 132,500 | 77,500 |
Granted | 0 | 62,500 |
Exercised | 0 | (2,500) |
Expired | 0 | 5,000 |
Outstanding, Ending Balance | 132,500 | 132,500 |
Weighted Average Exercise Price | ||
Outstanding, Beginning Balance | $ 2.72 | $ 2.56 |
Granted | 0 | 3.96 |
Exercised | 0 | 0.40 |
Expired | 0 | 16.80 |
Outstanding, Ending Balance | $ 2.72 | $ 2.72 |
SHAREHOLDERS EQUITY (Details 1)
SHAREHOLDERS EQUITY (Details 1) - $ / shares | 9 Months Ended | |||
Sep. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Outstanding, Beginning Balance | 132,500 | 132,500 | 132,500 | 77,500 |
Exercisable Options | 132,500 | |||
Average Weighted Remaining Contractual Life in Years, Outstanding | 3.14 | |||
$ 0.80 | ||||
Outstanding, Beginning Balance | 27,500 | |||
Exercisable Options | 27,500 | |||
Average Weighted Remaining Contractual Life in Years, Outstanding | 3.45 | |||
Weighted Average Exercise Price, Exercisable | $ 0.80 | |||
$ 0.88 | ||||
Outstanding, Beginning Balance | 31,250 | |||
Exercisable Options | 31,250 | |||
Average Weighted Remaining Contractual Life in Years, Outstanding | 2.26 | |||
Weighted Average Exercise Price, Exercisable | $ 0.88 | |||
$ 0.96 | ||||
Outstanding, Beginning Balance | 25,000 | |||
Exercisable Options | 25,000 | |||
Average Weighted Remaining Contractual Life in Years, Outstanding | 2.27 | |||
Weighted Average Exercise Price, Exercisable | $ 0.96 | |||
$ 2.16 | ||||
Outstanding, Beginning Balance | 5,000 | |||
Exercisable Options | 5,000 | |||
Average Weighted Remaining Contractual Life in Years, Outstanding | 3.25 | |||
Weighted Average Exercise Price, Exercisable | $ 2.16 | |||
$ 4.40 | ||||
Outstanding, Beginning Balance | 12,500 | |||
Exercisable Options | 12,500 | |||
Average Weighted Remaining Contractual Life in Years, Outstanding | 4.35 | |||
Weighted Average Exercise Price, Exercisable | $ 4.40 | |||
$ 7.06 | ||||
Outstanding, Beginning Balance | 31,250 | |||
Exercisable Options | 31,250 | |||
Average Weighted Remaining Contractual Life in Years, Outstanding | 4.00 | |||
Weighted Average Exercise Price, Exercisable | $ 7.06 |
SHAREHOLDERS EQUITY (Details 2)
SHAREHOLDERS EQUITY (Details 2) - $ / shares | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Shareholders' Equity: | ||
Outstanding, Beginning Balance | 2,049,133 | 2,155,065 |
Granted | 1,606,888 | 585,447 |
Exercised | 0 | (76,796) |
Expired | (231,250) | (614,583) |
Outstanding, Ending Balance | 3,424,771 | 2,049,133 |
Weighted Average Exercise Price | ||
Outstanding, Beginning Balance | $ 2.55 | $ 3.12 |
Granted | 1.73 | 4.97 |
Exercised | 0 | (2.77) |
Expired | (2.88) | (6.40) |
Outstanding, Ending Balance | $ 2.22 | $ 2.55 |
SHAREHOLDERS EQUITY (Details 3)
SHAREHOLDERS EQUITY (Details 3) | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Outstanding, Beginning Balance | 3,424,771 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 3 years 10 months 28 days |
Exercisable Warrants | 3,424,771 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 2.65 |
$ 0.80 | |
Outstanding, Beginning Balance | 158,125 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 2 years 4 days |
Exercisable Warrants | 158,125 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 0.80 |
$ 0.96 | |
Outstanding, Beginning Balance | 473,958 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 1 year 2 months 9 days |
Exercisable Warrants | 473,958 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 0.96 |
$ 2.16 | |
Outstanding, Beginning Balance | 31,250 |
Exercisable Warrants | 31,250 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 2.16 |
$ 1.68 | |
Outstanding, Beginning Balance | 1,434,721 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 5 years |
Exercisable Warrants | 1,434,721 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 1.68 |
$ 0.64 | |
Outstanding, Beginning Balance | 31,250 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 2 years 1 month 24 days |
Exercisable Warrants | 31,250 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 0.64 |
$ 1.12 | |
Outstanding, Beginning Balance | 6,250 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 2 years 6 months 18 days |
Exercisable Warrants | 6,250 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 1.12 |
$ 1.20 | |
Outstanding, Beginning Balance | 175,000 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 3 years 1 month 17 days |
Exercisable Warrants | 175,000 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 1.20 |
$ 1.36 | |
Outstanding, Beginning Balance | 1,250 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 1 year 26 days |
Exercisable Warrants | 1,250 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 1.36 |
$ 2.32 | |
Outstanding, Beginning Balance | 523,061 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 5 months 1 day |
Exercisable Warrants | 523,061 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 2.32 |
$ 2.40 | |
Outstanding, Beginning Balance | 12,500 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 4 days |
Exercisable Warrants | 12,500 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 2.40 |
$ 2.18 | |
Outstanding, Beginning Balance | 172,167 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 5 years |
Exercisable Warrants | 172,167 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 2.18 |
$ 4.00 | |
Outstanding, Beginning Balance | 28,750 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 8 years 6 months 26 days |
Exercisable Warrants | 28,750 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 4 |
$ 6.95 | |
Outstanding, Beginning Balance | 375,000 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 9 years |
Exercisable Warrants | 375,000 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 6.95 |
$ 8.40 | |
Outstanding, Beginning Balance | 1,488 |
Average Weighted Remaining Contractual Life in Years, Outstanding | 1 year 10 months 17 days |
Exercisable Warrants | 1,488 |
Weighted Average Exercise Price, Exercisable | $ / shares | $ 8.40 |
SHAREHOLDERS EQUITY (Details Na
SHAREHOLDERS EQUITY (Details Narrative) - USD ($) | Feb. 11, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Reverse stock split | reverse stock split of our common stock and our Convertible Series A Preferred Stock, in each case, at a ratio of 1-for-8 and without any change to the respective par value thereof (the “Reverse Stock Split”), and, on September 10, 2020 | ||
Common stock par value | $ 0.01 | ||
Aggregate cash consideration | $ 314,500 | ||
Common stock share sold | 2,869,442 | ||
Warrant issued | $ 1,434,721 | ||
Proceeds from issuance of warrants | $ 4,581,651 | ||
Exercise price of warrant | $ 1.68 | ||
Warrant amendment, description | In connection with the Warrant Amendment, TOMI repurchased the warrant from Dr. Shane (the “Repurchase”) for an aggregate cash consideration of $314,500, representing a 15% discount of the net exercise cash value of the Warrant, which was calculated using the closing price of the Common Stock on the Nasdaq on February 11, 2021 of $5.36, less the exercise price of the warrants in the amount of $2.40. On the same date, the Warrant Amendment and the Repurchase was considered, approved and adopted by a disinterested majority of TOMI’s board of directors. | ||
Common stock value | $ 196,810 | $ 167,615 | |
Private Placement [Members] | |||
Warrant issued | $ 1,434,721 | ||
Exercise price of warrant | $ 1.68 | ||
Placement Agent [Members] | |||
Warrant issued | $ 172,167 | ||
Exercise price of warrant | $ 2.18 | ||
January 2020 [Member] | |||
Common stock shares fully vested, shares | 50,000 | ||
Common stock shares fully vested, amount | $ 48,000 | ||
March 2020 [Member] | |||
Common stock shares issued upon conversion of convertible notes payable, shares | 1,041,667 | ||
Common stock shares issued upon conversion of convertible notes payable, amount | $ 4,500,000 | ||
Common stock shares issued upon exercise of warrants, shares | 10,417 | ||
Common stock shares issued upon exercise of warrants, amount | $ 57,500 | ||
July 2020 [Member] | |||
Common stock shares issued upon exercise of warrants, shares | 26,940 | ||
Common stock shares issued upon exercise of warrants, amount | $ 62,500 | ||
June 2020 [Member] | |||
Common stock shares issued upon exercise of warrants, shares | 26,940 | ||
Common stock shares issued upon exercise of warrants, amount | $ 62,500 | ||
May 2020 [Member] | |||
Common stock shares issued upon exercise of option, shares | 2,500 | ||
Common stock shares issued upon exercise of option, amount | $ 1,000 | ||
January 2021 [Member] | |||
Common stock share issued | 50,000 | ||
Common stock value | $ 228,000 | ||
Cumulative Convertible Series A Preferred Stock | |||
Cumulative Convertible Preferred Stock; Shares Authorized | 1,000,000 | 1,000,000 | |
Cumulative Convertible Preferred Stock; Shares Issued | 63,750 | 63,750 | |
Cumulative Convertible Preferred Stock; Shares Outstanding | 63,750 | 63,750 | |
Cumulative Convertible Preferred Stock; Par Value | $ 0.01 | $ 0.01 | |
Cumulative Convertible Series B Preferred Stock | |||
Cumulative Convertible Preferred Stock; Shares Authorized | 4,000 | 4,000 | |
Cumulative Convertible Preferred Stock; Shares Issued | 0 | 0 | |
Cumulative Convertible Preferred Stock; Shares Outstanding | 0 | 0 | |
Cumulative Convertible Preferred Stock; Par Value | $ 1,000 | $ 1,000 | |
Stock Options | January 2020 [Member] | CEO [Member] | |||
Volatility rate | 135.00% | ||
Expected dividend yield | 0.00% | ||
Risk free interest rate | 1.64% | ||
Aggregate shares purchase of stock option | 31,250 | ||
Fair value of stock option | $ 23,595 | ||
Grant fair value of per share | $ 0.80 | ||
Exercise price | $ 0.96 | ||
Stock Warrant [Member] | January 2020 [Member] | CEO [Member] | |||
Volatility rate | 136.00% | ||
Expected dividend yield | 0.00% | ||
Risk free interest rate | 1.64% | ||
Grant fair value of per share | $ 1.04 | ||
Exercise price | $ 1.20 | ||
Warrants issued upon purchase share of common stock | 156,250 | ||
Fair value of stock warrant | $ 164,201 | ||
Stock Warrant [Member] | February 2020 [Member] | CEO [Member] | |||
Volatility rate | 155.00% | ||
Expected dividend yield | 0.00% | ||
Risk free interest rate | 1.64% | ||
Grant fair value of per share | $ 0.96 | ||
Exercise price | $ 1.20 | ||
Warrants issued upon purchase share of common stock | 18,750 | ||
Fair value of stock warrant | $ 18,571 | ||
Stock Warrant [Member] | April 2020 [Member] | CEO [Member] | |||
Volatility rate | 173.00% | ||
Expected dividend yield | 0.00% | ||
Risk free interest rate | 0.68% | ||
Grant fair value of per share | $ 4 | ||
Exercise price | $ 4 | ||
Warrants issued upon purchase share of common stock | 12,500 | ||
Fair value of stock warrant | $ 49,693 | ||
Stock Warrant 1 [Member] | January 2020 [Member] | CEO [Member] | |||
Volatility rate | 135.00% | ||
Expected dividend yield | 0.00% | ||
Risk free interest rate | 1.58% | ||
Grant fair value of per share | $ 0.72 | ||
Exercise price | $ 0.96 | ||
Warrants issued upon purchase share of common stock | 5,208 | ||
Fair value of stock warrant | $ 3,594 | ||
Stock Warrant 1 [Member] | April 2020 [Member] | CEO [Member] | |||
Volatility rate | 173.00% | ||
Expected dividend yield | 0.00% | ||
Risk free interest rate | 0.68% | ||
Grant fair value of per share | $ 4 | ||
Exercise price | $ 4 | ||
Warrants issued upon purchase share of common stock | 6,250 | ||
Fair value of stock warrant | $ 24,846 | ||
Stock Warrant 2 [Member] | April 2020 [Member] | CEO [Member] | |||
Volatility rate | 173.00% | ||
Expected dividend yield | 0.00% | ||
Risk free interest rate | 0.68% | ||
Grant fair value of per share | $ 4 | ||
Exercise price | $ 4 | ||
Warrants issued upon purchase share of common stock | 6,250 | ||
Fair value of stock warrant | $ 24,846 | ||
Stock Warrant 3 [Member] | April 2020 [Member] | CEO [Member] | |||
Volatility rate | 173.00% | ||
Expected dividend yield | 0.00% | ||
Risk free interest rate | 0.68% | ||
Grant fair value of per share | $ 4 | ||
Exercise price | $ 4 | ||
Warrants issued upon purchase share of common stock | 3,750 | ||
Fair value of stock warrant | $ 14,908 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
COMMITMENTS AND CONTINGENCIES | ||
Claims against product liability | $ 0 | $ 0 |
CONTRACTS AND AGREEMENTS (Detai
CONTRACTS AND AGREEMENTS (Details) | Sep. 30, 2021USD ($) |
CONTRACTS AND AGREEMENTS (Details) | |
October 1 - December 31, 2021 | $ 0 |
December 31, 2022 | 30,000 |
December 31, 2023 | 30,000 |
December 31, 2024 | 30,000 |
December 31, 2025 | 0 |
Total Minimum Payments | $ 90,000 |
CONTRACTS AND AGREEMENTS (Det_2
CONTRACTS AND AGREEMENTS (Details Narrative) - USD ($) | Oct. 01, 2020 | Sep. 22, 2020 | Dec. 31, 2017 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 |
Vehicle allowance | $ 60,703 | $ 60,703 | ||||
Executive Agreements (Halden S. Shane) | ||||||
Term of agreement | three years | |||||
Base annual salary | $ 500,000 | |||||
Warrants | 375,000 | |||||
Issuance of option to purchase shares of common stock | 31,250 | |||||
Reimburse of expenses associated with use of automobile | $ 750 | |||||
Executive Agreements (Elissa J. Shane) | ||||||
Vehicle allowance | $ 1,000 | |||||
Term of agreement | three years | |||||
Base annual salary | $ 270,000 | |||||
Warrants | 93,750 | |||||
Warrant to purchase shares of common stock | 93,750 | |||||
Options full consideration of the amount entitled | 31,250 | |||||
2016 Equity Plan | ||||||
Issuance of option to purchase shares of common stock | 31,250 | |||||
Closing price per share | $ 7.06 | |||||
Warrants cancelled | 93,750 | |||||
Board of Members | ||||||
Increased annual fee | $ 40,000 | |||||
Issued shares of common stock during period | 50,000 | 50,000 | ||||
Issued shares of common stock during period, value | $ 228,000 | $ 48,000 | ||||
Committee Chairperson | ||||||
Increased annual fee | $ 45,000 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) | Sep. 30, 2021 | Dec. 31, 2020 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
Commissions | $ 288,823 | $ 151,709 |
Payroll and related costs | 240,233 | 84,000 |
Director Fees | 31,250 | 41,250 |
Sales Tax Payable | 4,410 | 9,784 |
Income Taxes Payable (Note 16) | 2,000 | 77,000 |
Accrued warranty (Note 14) | 68,000 | 68,000 |
Other accrued expenses | 20,625 | 70,106 |
Total | $ 655,341 | $ 501,849 |
ACCRUED WARRANTY (Details)
ACCRUED WARRANTY (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
ACCRUED WARRANTY | ||
Beginning accrued warranty costs | $ 68,000 | $ 30,000 |
Provision for warranty expense | 18,834 | 101,041 |
Settlement of warranty claims | (18,834) | (63,041) |
Ending accrued warranty costs | $ 68,000 | $ 68,000 |
LOAN PAYABLE (Details Narrative
LOAN PAYABLE (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2021 | Apr. 21, 2020 | |
LOAN PAYABLE | ||
Loan funding from (Paycheck Protection Program) | $ 410,700 | |
Gain on extinguishment debt | $ 414,583 | |
PPP Loan interest rate per annum on outstanding principal | 1.00% |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
INCOME TAXES | |||||
Provision for Income Taxes | $ 0 | $ 77,000 | $ 0 | $ 77,000 | |
Deferred Tax Asset Valuation Allowance | $ 4,307,000 | $ 4,307,000 | $ 3,530,000 |
CUSTOMER CONCENTRATION (Details
CUSTOMER CONCENTRATION (Details Narrative) | 3 Months Ended | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Sep. 30, 2021 | Dec. 31, 2020 | |
Two Customer | Revenue, Net | |||
Concentration Risk Percentage | 29.00% | ||
One Customer | Revenue, Net | |||
Concentration Risk Percentage | 11.00% | ||
Three Customers | Accounts Receivable | |||
Concentration Risk Percentage | 25.00% | 36.00% |