TOMI Environmental Solutions(US:TOMZ)2020-03-30 11:03Product Technology and Efficacy - SteraMist® BIT™ is registered with the EPA as a hospital-healthcare disinfectant and general broad-spectrum surface disinfectant, with registrations for mold control and air and surface remediation[23]. - The sole active ingredient of BIT™ is a low percentage (7.8%) Hydrogen Peroxide, producing a germ-killing aerosol that effectively kills pathogenic organisms without damaging equipment[22]. - SteraMist® has demonstrated a reduction of C. diff spore rates in U.S. hospitals, contributing to the control of MERS and Ebola globally[24]. - The technology has achieved a six-log reduction against Geobacillus stearothermophilus, a standard for sterilization validation studies[25]. - SteraMist® technology achieves a 99.9999% or six-log kill rate on various pathogens, significantly outperforming traditional cleaning methods[73]. - The SteraMist® Environment System can disinfect a sealed space of up to 103.8 m³ in just over 75 minutes, showcasing its efficiency[29]. - The SteraMist® Surface Unit allows for disinfection of surfaces in just five seconds per square foot, enabling quick turnover of affected spaces[27]. - The company’s technology is designed to be easily integrated into existing cleaning procedures, requiring no manual wiping and leaving no residues[22]. Market Presence and Expansion - SteraMist® is currently registered in all fifty U.S. states and many other countries, indicating its broad market reach[23]. - SteraMist® products are sold in 22 countries worldwide, indicating a broad international market presence[63]. - The TOMI Service Network has expanded to include over 103 service partner companies across the United States and Canada, enhancing corporate service capabilities[47]. - The company is exploring the use of BIT™ Solution and iHP™ process in the global medical and recreational cannabis market[50]. - The company is targeting the food safety market, which presents substantial growth opportunities due to new regulations under the FDA Food Safety Modernization Act[127]. Financial Performance - The company incurred net losses of approximately $2.3 million and $3.2 million for the years ended December 31, 2019 and 2018, respectively, indicating ongoing financial challenges[75]. - The company achieved record annual revenue of approximately $6,347,000 for the year ended December 31, 2019, representing a 14% increase compared to $5,585,000 in 2018[132]. - Total revenue for the year ended December 31, 2019, was approximately $6,347,000, representing an increase of 14% compared to $5,585,000 in 2018[167]. - Gross profit for 2019 was approximately $3,914,000, with a gross profit margin of 61.7%, up from 55.8% in 2018[172]. - Net loss for the year ended December 31, 2019, was approximately $2,298,000, an improvement from a net loss of $3,230,000 in 2018[186]. - Cash used in operating activities decreased to approximately $814,000 in 2019 from $1,767,000 in 2018, primarily due to improved collection of accounts receivable[195]. - Research and development expenses decreased by approximately 63% to $341,000 in 2019 from $916,000 in 2018[178]. - Selling expenses increased by approximately 22% to $1,655,000 in 2019 compared to $1,360,000 in 2018, reflecting increased investment in sales and marketing initiatives[176]. Customer and Service Growth - The Hospital-Healthcare division added 16 new facilities in 2019, resulting in a 167% increase in customer base compared to the prior year[130]. - Service-based revenue reached $1,348,000 in 2019, a 44% increase from $933,000 in 2018, driven by increased service engagements[134]. - Domestic revenue grew by 19% to $5,002,000 in 2019, up from $4,197,000 in 2018, due to heightened demand for equipment, solutions, and services[135]. - The company added 54 new customers globally in 2019, marking a 13% increase over 2018[130]. - Increased demand for disinfecting and decontamination services has led to a significant rise in service revenue[205]. Risks and Challenges - The company faces significant risks related to international operations, which could adversely affect sales and financial condition due to potential border closures and political conditions[78]. - The company relies on third-party contractors and suppliers for product components, and any disruption in these relationships could materially impact business operations[80]. - The COVID-19 pandemic has led to numerous confirmed cases worldwide, significantly affecting businesses and commerce, with ongoing uncertainty regarding its impact on operations[81]. - The introduction of new products often encounters design and production delays, which could hinder timely market entry and affect financial performance[82]. - The company has not yet achieved broad market acceptance for its BIT™ technology, which is crucial for sales growth in the healthcare sector[88]. - The company is dependent on key personnel, and the loss of executives could adversely affect operations and strategic direction[89]. - The decontamination industry is highly competitive, with established competitors potentially limiting the company's growth and financial results[87]. - The company is subject to potential product liability claims, which could have a material adverse effect on its financial condition and operations[92]. Stock and Equity Information - The company's stock price is volatile, influenced by various factors including product development success and market conditions, with limited trading volume on the OTCQB exchange[96][97]. - The company has not paid dividends on its common stock since inception and does not intend to do so for the foreseeable future, focusing on retaining earnings for business expansion[98]. - As of December 31, 2019, the company had outstanding options and warrants to purchase an aggregate of 17.9 million shares of common stock, which could lead to potential dilution for existing shareholders[103]. - The last reported sale price of the company's common stock on the OTCQB was $0.62 per share as of March 23, 2020[112]. - The company has a total of 771 record holders of its common stock as of March 24, 2020[112]. Intellectual Property and Patents - The company has filed for and received protection for a total of 20 utility patents related to SteraMist® BIT™, with the latest patent providing protection until 2038[58]. - The company registered two new design patents in Europe and Japan in November 2019, enhancing its intellectual property portfolio[164]. Future Outlook - The company expects a strong customer pipeline and more predictable sales as customers mature through the product adoption cycle[168]. - The demand for TOMI products and services has increased significantly due to the SARS CoV-2 pandemic, leading to higher revenue and cash flow[199]. - The company anticipates continued growth in demand for its products and services throughout 2020, positively impacting working capital[200]. - The expansion of the internal sales force and international distributors is aimed at driving revenue growth in both domestic and global markets[199]. - Staffing has been increased to meet the heightened demand, resulting in the hiring and onboarding of additional employees[205].