Q3 2025 TOMI Environmental Solutions Inc Earnings Call

Good afternoon and welcome to the TOMI Environmental Solutions, Incorporated third quarter 2025 financial results conference call. At this time, all participants are in listen-only mode, and a question-and-answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad and please note this conference is being recorded.

I will now turn the conference over to your host, Mr. John, Nesbitt of IMS investor relations. Sir. The floor is yours.

Good afternoon. Thank you for joining us today for the TOMI Environmental Solutions investor update conference call.

On today's call are Tommy's Chief Executive Officer and Chairman, Dr. Halden Shane; our Chief Operating Officer, EJ Shane; and our Chief Financial Officer, David Vanston.

A telephone replay of today's call will be available through November 28, 2025, the details of which are included in the company's press release issued today. A webcast replay will also be available on TOMI's website at.

Certain written and oral statements made by management of TOMI may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements should be evaluated in light of important risk factors that could cause our actual results to differ materially from our anticipated results. The information provided in this conference call is based upon the facts and circumstances known at this time. Please refer to our filings with the SEC, including our 10-Q for the quarter ended September 30, 2025.

For a discussion of these risk factors, the company here takes no obligation to update these forward-looking statements after the date of this call. I will now turn the call over to Tommy's Chief Executive Officer and Chairman of the Board, Dr. Halden Shane. Please go ahead. Thank you. Thank you, John. Good morning, good afternoon, or evening to everyone listening from around the world. Thank you for joining us for TOMI.

The Environmental Solutions, third quarter earning call.

Today we will share our third quarter 2025 results along with key updates and reasons we believe Tommy is on the cusp of a breakout after a challenge at the start of the year. The third quarter marked a decisive turning point. We delivered a 95% sequential revenue increase driven by expanding recurring revenue streams and deeper customer engagement.

As our service provider partners grew in number.

This includes both well-known industry leaders and smaller long-term players who are increasingly recognizing the value of clean tech and the superior advantages of our Steri. Missed IHP technology, our vision remains steadfast.

A future, where sales of Mobile Capital Equipment ihp, corporate service?

Our custom integration platforms, and of course, our core bit solution, business model, all grow in tandem a new growth engine, recurring Revenue, that's the theme.

Building on the momentum, our third-quarter revenue reached $2 million, marking a 95% increase over Q2. This growth was driven by strong equipment sales and, most notably, recurring bit solution sales, which have risen 21% year-to-date.

In 2025, we place significant emphasis on our existing customer base.

Ensuring implementation.

Usage and tailored protocol development for customers across all our industries. This focus has positively affected BIT solution sales, which has seen.

Stable and increased sales in each quarter by sustaining this momentum. While ramping up Capital Equipment Sales and successfully closing project bids for Automation Solutions, we will not only achieve our overall growth objectives but also enhance predictability, which is essential for scaling the business effectively. Another theme is momentum building, expanding our pipeline and backlog. Our sales order backlog was $0.9 million.

At the quarter end, that grew further to 1.3 million by October 31st.

With approximately $3 million in pending Seramis integration contracts expected to close before year-end.

Our active pipeline surpassed 15 million encompassing, both domestic and international customers across the industries. We currently serve, as well as emerging sectors showing strong interest.

These figures are more than just metrics.

They signal the business opportunities we anticipate in the coming quarters and extending into 2027.

Another theme: Visionary markets beyond traditional boundaries.

We are doubling down on investments in Innovation and customer success.

Our sturdiness IHP technology continues to gain industry recognition. This year, it has been named the Disinfection and Decontamination Products Company of the Year 2025.

Our Platinum customer roster includes top-tier leaders across every sector. We serve.

Further validating our solutions and positioning Tommy as a trusted partner in global health and safety regulatory developments, we are opening new markets. The FDA's broadened approval of hydrogen peroxide and our breakthrough demonstration of Sturm's efficacy against honeybee colony collapse position us to serve not only life sciences and healthcare, but also agriculture, food processing, and environmental biosafety.

The opportunity before us is vast, expanding the relevance and impact of Stereum missed on a global scale.

Strategic execution—laying the groundwork for 2026 to maintain and accelerate this momentum. As stated earlier, we are intensifying customer outreach through personalized engagement strategies.

Deploying targeted marketing campaigns that highlight real world, success stories.

We are stirring this for certified program and learning management system are empowering the market with essential education.

While onboarding Specialized Service Providers.

We are also in the process of updating improving and adding to our training programs, across all Delivery Systems looking ahead. Heading into 20126, tell me is sharpening its focus on bio security advancements, that address evolving, Global challenges from climate-driven health risks to supply chain vulnerabilities,

We will prioritize scaling our automation integrations for high-efficacy environments.

Exploring untapped opportunities in sustainable agriculture and public infrastructure, and fostering collaborative R&D with academic and industry partners. This will empower us to deliver solutions that enhance environmental resilience.

Safeguard communities worldwide and drive sustainable returns, ultimately positioning Towing.

As the go-to innovator in a rapidly changing world.

I will now hand the call over to our Chief Financial Officer, David Vanston, who will provide a brief overview of our financial results for the third quarter of 2025 compared to the same period last year. David? Thank you, Dr. Cheyne. In the third quarter of 2025, our revenue was $2 million, a decline from $2.5 million in Q3 2024, representing a 24% decrease in sales.

This is primarily driven by a timing reduction in the quarter of IHP services sales from a key customer who reorganized its operations. This impact is expected to be temporary, and the customer's operations and related service activity are expected to resume to a normal level in the near future.

Importantly, year to date, service demand remains robust, with quote activity and pipeline volume up approximately 35% year-over-year in the Life Sciences and food safety area.

This trend supports our expectation for continued growth in the fourth quarter and beyond.

For the 9 months ended September 30, 2025, TOMI Environmental Solutions, Inc. reported revenue of $760,000, an increase of 21% year on year, as stated by Dr. Cheyne, compared to the same period in 2014. We continue to drive recurring sales of solutions within our customer base.

A positive point was our gross profit margins remain strong at 61% as a percentage of sales for the three months ended September 30, 2025.

And for the same period last year, the consistency of our gross profit margin underscores the resilience of our product mix and disciplined cost management.

The 3 months ended September 30th, 2025, we experienced an operating loss of approximately $320,000 compared to an operating income of $149 in the same period last year.

Our net loss for the three months ended September 30, 2025, was approximately $450,000, or 2 cents a share.

Compared to a net income of $58,000, we are either up or flat compared to the same period last year.

As of September 30, 2025, our financial position includes cash and cash equivalents of approximately $690,000, working capital of $2.5 million, and shareholder equity of $2.2 million.

I will now turn the call over to our Chief Operating Officer, EJ Shane, to discuss the upcoming business highlights.

Thank you, David.

Our previously announced active projects are currently on schedule for delivery by the end of the year. We are currently negotiating an additional $3 million in custom and integrated contracts, with bids expected to close before the year-end.

2025 showcased Toley's evolution into a trusted technology partner for regulated industries implementing ceramics, with agencies such as NASA and Fort Dedric. Alongside repeat orders from global leaders, this underscores SteriTize's position as the gold standard for contamination control.

Information systems, automated, repeatable, and validated decontamination rooms and chambers remain in high demand, as the pharmaceutical industry evolves.

We believe our IHP technology is emerging as a benchmark for sterile environments, as evidenced by its adoption this year with Premier Companies. As of the third quarter, the outlook for pharmaceutical production positions is favorable, specifically in Virginia, for the next few years. This is particularly true with major commitments from Merck, Eli Lilly, and AstraZeneca, who are establishing new production sites.

As we build on the strong momentum we've shared today, the key question is obvious: how will we keep driving growth and BIT solutions? Sales, IHP service, capital equipment, and custom integrations. As Dr. Cheyne noted earlier, our BIT solution gains come from growth in personnel and operations, as well as better training for our current customers.

We will keep this going to drive steady adoption and stronger reach in key sectors.

We are nearly complete on updated training, with documents rolling out a more comprehensive program that emphasizes ongoing reservation. This approach not only raises customer standards for implementation and safety, but also may generate additional revenue in deeper product adoption, strengthening Toy's role as an essential partner.

Quarter 3 of 2025 unfolded and essential chapter and Tommy's Journey marked by breakthroughs that not only validated our recent Innovations, but also directly fed our pipeline of opportunities.

It began in July with the installation and commissioning of our Sissa for a neighboring pharmaceutical company, which falls under our Serumas Integrated System (SIS) platform of offerings targeting the pharmaceutical isolator market. A milestone that led to successful integrations into additional enclosures for Virginia Commonwealth University and the University of Miami, and a promising wave of future installations with both existing and prospective manufacturing partners.

In the Life Sciences and Manufacturing sectors, we see a powerful shift toward continuous bioprocessing, flexible facilities, and AI-enabled operations.

These advancements demand contamination solutions that integrate effortlessly with automation while minimizing downtime. Precisely where our Custom Engineered System, or CES, excels, offering rapid efficiency sterilization to support production and operational efficiency.

While our CES remains in demand due to its tailored capabilities, we recognize that its extended timeline from initial interest to full commissioning can be expensive.

As the CES pipeline continues to expand, we are strategically prioritizing our hybrid and the SIS products, which offer faster close rates and quicker integration and implementation within facilities.

This balanced approach ensures that all our custom automated offerings advance at a comparable pace, with the hybrid and SIS line serving as the ideal solution for the automated integration segment. This drives quicker revenue realization than the CES.

Building on our Q3 momentum, August marked a significant step forward when our East Coast distributor area scientist helped us secure a new university client for the SIS platform. This solidified our presence in the academic vertical and opened doors with specialized applications in research environments. This progress carried into this week's AAS conference, where we collaborated closely with Aries on promising upcoming projects and showcased our advanced product lineup alongside our enhanced engineering capabilities in programming and design.

Potential representative company for the West Coast, as well as opportunities for complementary products, that could generate fresh revenue streams by pairing seamlessly with our core technology.

Stay tuned for updates on these developments, as they may diversify our pipeline heading into next year in healthcare. New initiatives, like the Joint Commission's Accreditation 360 program set to launch in 2026, may also open new revenue streams for TOMI. The program will create a growing need for verifiable, auditable disinfection data, which TOMI delivers through its advanced logging and reporting features, helping providers meet stringent standards and enhance patient safety. In Q3, we celebrate a landmark addition to our roster of customers with a major player in the eye health industry.

Fashion law, rapidly adopted, our mobile handheld surface units and two facilities in under four months, and committed to open bid solution orders for 2026, promising sustained revenue streams and a sector and need for advanced durability.

In September, we made significant strides in Capital Equipment segments by onboarding a specialized service provider focused on healthcare and mold remediation quickly. This was followed by stair clean and tact purchasing mobile systems, with the latter expanding their Serum Mist line with foggers. We continue to speak with these three and other larger franchise service providers for a widespread adoption of Stereos IHP technology across their networks.

Our highly regarded, Fair Miss Pro certified, and SPC program continues to nurture a dynamic environment of partners and customers, enhancing implementation and long-term usage.

Large contract cleaning, bio-remediation, and restoration firms such as Dara Clean and TAC are scaling up their offerings to handle complex, high-margin jobs related to biohazard, mold, and mycotoxins.

This year has brought a transformative shift in our business development approach with initial purchases of 1 or 2 units at select locations, inspiring broader rollouts across the entire organization. This pattern is starting to play out successfully in both the life sciences and commercial industry.

To sustain this momentum, we continue developing these organic expansions, which are key to scaling our business and, of course, its model. A prime example is our growing relationship with Nestlé, which is gaining traction, and they have expressed a strong desire to establish our technology as the global standard across their nutritional facilities. Worldwide, we have already deployed multiple Stacks to various branches internationally, setting the stage for substantial recurring revenue and further international growth.

We continue to pursue the cannabis market under our Food Safety division in Q3, sparking some significant interest domestically and internationally, opening doors to promising new partnership discussions.

Our current distributor, Sterile Grow, continues to market and slowly gain traction, adding to the referral base and efficacy-used data for the market.

We have officially entered a collaboration with Smithers, the largest testing lab in the United States, which we expect to yield lead referrals soon. Additionally, we will soon begin a study in Morocco that positions us for entry into the European and African medical cannabis markets.

A key Q3 highlight pertains to a regulatory change.

The FDA's final order amending regulations to permit hydrogen peroxide as a safe disinfectant, oxidizer, and bleaching agent in food for human consumption—while removing sulfur dioxide restrictions—this ruling is game-changing for steroids. Validating our bid solutions, food-grade hydrogen peroxide as the sole active ingredient, and providing a clear regulatory framework with a competitive edge in the multi-billion dollar food safety market.

By expanding applications Beyond environmental disinfection to direct food related, protocols, such as in the ready to eat or RTE industry, where convenience foods, like, prepackaged meals and salads demand pathogen control. It positions told me to capture a significant share across the supply chain.

With no residual concerns due to steroids, iat's breakdown, and through oxygen and humidity, we can now disinfect equipment processing lines and facilities, as well as food-present environments, to target threats like Salmonella, Listeria, and E. coli. This includes decontaminating packaging and storage areas, preventing cross-contamination, and sanitizing transportation vehicles for end-to-end hygiene.

This broadens our addressable market and drives revenue growth in high-demand sectors. Thank you. And I will return the call over to Dr. Cheyne for his closing statements.

Thank you, enjoy.

We remain focused on strengthening our organizational foundation, enhancing our suite management and division leadership, building out our sales and technical teams, and expanding our network of global distributors.

And reaffirm the soundness of our strategy. We are seeing steady improvement financially, operationally, and strategically. Our team is dedicated to driving growth and innovation across all divisions, leveraging our expanding portfolio of products and services.

We are encouraged by the opportunities that lie ahead in our sales backlog.

Remains strong, and the sales strategy implemented at the end of last year is beginning to deliver promising results.

We are motivated by the progress in our strategic partnerships and the growing interest from clients seeking to improve their operations with our solutions.

With continuous investment in infrastructure, technical expertise, and a stronger sales strategy, we believe we are well positioned for a successful fourth quarter, with momentum carrying into 2026.

I'd like to highlight a recent strategic milestone that positions us for substantial growth on November 5th. We entered into an equity purchase agreement with Hudson Global Ventures, giving us the flexible rights but not the obligation to sell up to $20 million in common stock over a 24-month period. Full details are in our Form 8-K filing. The agreement provides the flexibility for on-demand access to capital.

Without upfront commitments or heavy dilution, we are helping to fund the strategies, goals, and momentum we have described today. This includes our business development needs, hiring customer service specialists, technicians, programmers, trainers, and operational support to accelerate our pace while maintaining our strong reputation with customers across the industries we serve.

it also enable us to expand on key initiatives such as advancing, R&D regulatory, Pursuits and Market expansion ensuring, we seize opportunities in clean tech and biosecurity, while creating long-term value for shareholders,

Thank you for your continued support. As we unlock TOI's next era of growth, we're excited about what's ahead. Operator, let's open the call to questions. Thank you, sir. Ladies and gentlemen, at this time, you'll be conducting our question and answer session.

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1 moment, please, while we pause for questions. Thank you. Our first question is coming from Samir Joy with HC Wainwright. Your line is live.

Hey, good afternoon, uh, doc David EJ. Uh really good quarter. Congratulations on the nice turnaround and progress. Uh 1 of the uh things. Uh I think uh you announced uh was the FDA uh approval uh or clearance for the hydrogen peroxide usage. Um it opened the food RTE and prepackaged as as EJ outlined. Uh, what is what are your, uh, sales and marketing efforts towards this and have you identified initial targeted customers that you would pursue

So it it's relatively new, um, this approval, and we foresee that, uh, the food industry in itself. Both whether it's in processing storage, uh, packaging Transportation Etc. Uh can be a key marketing vertical for us. And, and I'm really excited about it because especially our type of

Ology is, is a definite should be on. Top of their list is a choice. Yeah. No. It certainly makes sense. Uh, what you're saying and uh, uh, I'm sure it will open up a big big market for you. Um, on the on, the 3 2 performance, again, as I said, congrats on, uh, on the nice turnaround, uh, the operating expenses were also contained, uh, despite the nice Revenue increase, uh, should we expect these operating expenses, uh, at the operating expense level, as well as the gross margin level, uh, to continue to, uh, sort of improve financially. So, for your model, I think, uh, your expenses are going to increase. Um,

And, uh, you know, I think they're going to be positive in relation to revenue. David might have something to add to this, if you would like, David.

Yeah, I think for the gross margin I think you may you may you may dip 1 or 2% but nothing significant. You've already seen that over the year on Year. We're holding around the 60% margin. I mean, that helps us with the continuing solution sales that come in. So I don't expect on margin to be under too much pressure, but it's not pointed out. If we're going to scale up I would expect you know, the revenue line will go up at the same time, but the percentage of the total the operating expenses as a percentage of our total revenue will not significantly double

Yeah, that that is what I was driving at because I, I viewed it outline the R&D, uh, efforts and initiatives, so they will increase but not, uh, uh, but you will still have leverage and the revenues are probably going to increase faster. Yes, correct got it. Uh, last question, uh, on the international front. Uh, I think you did mention Morocco Africa, uh, what, what, what kind of, uh, uh, sales, uh, effort is, is, is in place. Do you have, uh, representatives in these countries? Uh, how should we think about um, how the sales are going to be realized?

So we have different distributors and some of these countries that are focused in them. Uh, I think that is a lot of our Global Partners uh, where we mentioned 1 in food, industry on the call earlier, uh, is going is implementing this and many of their facilities globally, uh, similar to that 2:00, see other types of partners that we have that have Global uh,

Footprints in various countries that are interested in increasing their demand and use.

For stirring this going forward. Yeah. Hey Doc, may I squeeze in 1 more, uh, because I think you had pointed out that your Capital Equipment Sales, uh, increased. Uh, I think that boards well for, uh, for Solutions sales. Uh, incoming quarters. Uh, uh, do you have, uh, visibility uh, on what kind of solutions, uh, sales you will see in the coming quarters? Um, I don't we, you know, again I think the first half of the year we had about a 414% increase in solution sales over 24. And in the third quarter, we're down to about uh I I believe it was in the mid 21% so it is averaged down a little bit. I think by the end of the fourth quarter, our recurring sales should pop up again because people wanting to get the solution in by end of year. And uh I think that's the key to this whole call is we get more technology.

Out there we do it via by manufacturing but via by also increasing our sales and our our sales strategies in these areas and more equipment lead to more solution sales which is the models that we drive a very successful business going forward.

um,

I have, uh,

Continued to steadily add to my stock position since my latest 13G amended filing in July.

Uh, so I'm very pleased with the, um, your results. And I know the, uh, efforts are, uh, superlative. So, thank you. Um, questions. Oh, you're welcome. Um, questions. Um,

In the um, uh, is there anything updates? You can give give me on the what's going on with Servicing?

Or trying to service the military and defense markets. I don't have one baby EJ, has something to say about that.

Um, hey John, yes, this past quarter. Um, a lot of our our service was uh directly attributed to 1 key site. Um, I can't really go into too much detail, but they are are looking to replace for malde and and have been and uh we're working with them. We did quite a few studies with them in Q3 we went there 8 or 9 times um, and had positive results.

Uh, I don't expect that 1 to show a close before the end of the year, but we are definitely expecting it to be a pretty big deal in 2026.

Okay, good. Um, okay. Uh, any updates on the, um, the cartel disinfection business?

DJ.

Um, no doc

I don't think we have anything yet.

Okay. Um, the, um, you mentioned, uh, and, uh,

Uh, press release, um, that, uh, you've now onboarded, uh, all three of the top major service provider companies in, um, healthcare mold remediation. And I was, um, uh, curious as to, uh, um, any expectations that we should have on a.

Rapid versus slow roll out by these parties.

Um, so yes. And I know you've been asking, you know, it wasn't ServiceMaster, but uh, bringing on stereo clean intact. And this other group, um, was uh, definitely a big deal in Q3, especially with their, their quick assessments add, uh, more units pretty quickly. Um, they're after their initial by, they do have a focus uh, more in biohazard and uh, micotoxinas.

To, to really keep working with them and gain live case, studies to be able to bring on the rest of their facilities. And then, of course, you know, additional franchises. Um, so I do see a, a dramatic shift in our service, provider ship. I think it's the way we've now outlined the way we train and support them with the program and and the learning management system that we offer to them.

Um, we're a little more aggressive in the correspondence and staying up to date with everything they're doing, so it is proving to be a good outcome. My next more, okay.

Great. Um, the uh, um,

a lot of attention is, is being paid, uh, and a lot of dollars is going to the, uh, uh, Data Center Market. Uh, Google just amounts, uh,

The thing we're planning on investing $40 billion in new data centers in Texas.

Um, so, uh, could you comment at all on any plans to try to penetrate?

The disinfection market for those types of facilities.

Sure, John that's that's 1 of our reasons that we are expanding and want to expand our sales teams in multiple verticals and that's 1. That makes a huge amount of interest and potentially success for us because they do need disinfection. They're large.

And to increase our existing sales force.

Got it. And, uh, besides the data centers in planning stages for being developed, there's also, uh, the current existing market, and many of them are crypto data centers that are being, uh, basically converted to, uh,

Use by the Magnificent 7.

Um, so that's true.

Um, I and last question is um, uh the FDA, you know, broadening the permitted use of hydrogen peroxide in the food industry. Um, and uh, um, I was wondering if you could maybe, uh, uh,

give us a few more details on how your, uh,

Increasing your awareness.

Um, for that.

Uh, Market, who we are. We are doing it on social media and.

We do have plans to increase it further. Uh, a lot. Like I said earlier, with the call from the analysts, we...

We know who they are, those that need our product, and sometimes they don't even know they can use our products. So it's more than an educational mode at the moment. But I think that...

Uh, you know, it's also in the medical supply, medical sterilization, and of medical materials, medical processing. Uh, you know,

Sites that have huge ethylene oxide sterilization. Uh, our products are great Replacements. So there's a lot of work. I, I a lot of low picking fruit for us to work at in those areas and those verticals, and as the team gets bigger and moves forward, uh, we will be focused on them.

Okay. And in marketing, are you, um, targeting the companies that have...

Hand problems in the past.

Did you say, are you targeting companies first that have had problems in the past with, uh, uh, infections and disease? We, we, we are John, but we, we did start our our initial. Um, you know, beginning point was to start with our current database and and the correspondence that we have had with food safety customers, um, probably passed a year and a half or 2 that couldn't come on board. Because, um, prior to the ruling, it was, uh, you know, had different restrictions for the EPA label. Um, so we're now in in correspondence with those, uh, with the new FDA petition and and we

Reaching out, how to create protocols under that guideline. Um, so we did start with, you know, individuals that we were already talking with.

Okay, good. And then, uh, um, one more thing I just thought about is, uh, any, um,

Um, progress, uh, or developments in...

the use of steroids for um, uh, replacing ethylene oxide in the uh, in in medical instruments sterilization Market

Under both accounts, uh, in food and in, uh, medical device treatment, um, the other, uh, you know Partnerships that that we're starting to, to build, uh, and and device manufacturing will also lead to that replacement. Being able to have ihp streamlined into different closures, to decontaminate, these devices, and, and other large Machinery that's used in both Industries, so it's it's definitely all being. Um hi prioritized uh, and and and discussion. Okay, thank you very much.

Of course, thanks for the questions.

You're welcome.

Thank you, ladies and gentlemen. This does conclude our question-and-answer session, so I would like to turn the call back over to Dr. Cheyne for any closing remarks.

I just want to thank everybody for joining us today and for the continued support. We will be speaking at our next earnings call. Many thanks, and have a wonderful day or evening, wherever you might be.

Thank you, operator.