TOMI Environmental Solutions Q2 2026 Earnings Call Transcript

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Provided by Quartr
August 14, 2026

Key Takeaways

  • Positive Sentiment: Q2 revenue rose 118% year over year to $2.25 million and 36% sequentially, driven by capital equipment, Custom Engineered Systems, applicators, and services. Gross margin improved sequentially to 61.7%, while the operating loss narrowed 78% to approximately $244,000.
  • Positive Sentiment: Management reported strengthening demand, with backlog increasing from $1.6 million at the end of 2025 to $2.6 million currently. The company reaffirmed 2026 revenue guidance of at least $12 million and said it expects to reach operating breakeven comfortably by the fourth quarter.
  • Positive Sentiment: SteraMist adoption is expanding across healthcare, life sciences, food safety, government, defense, and international markets. New regulatory progress—including the EPA’s expanded AgriMist label, additional European registrations, and advancement toward an FDA 510(k) submission—could broaden the company’s addressable market.
  • Positive Sentiment: TOMI continues developing higher-value recurring revenue opportunities, including its applicator-based “razor and blade” model, Hybrid systems, autonomous chambers, and potential biodefense applications. Applicator sales reached $355,000 in Q2, up from $13,000 a year earlier, supporting future BIT Solution demand.
  • Negative Sentiment: The planned Carbonium Core merger remains dependent on Nasdaq review and securing a required $10 million financing; management said negotiations are ongoing. TOMI also has only $322,000 in cash at quarter-end, has relied on equity-line proceeds, and amended convertible notes to lower the conversion price from $3.75 to $1.50 per share, creating potential dilution.
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Earnings Conference Call
TOMI Environmental Solutions Q2 2026
00:00 / 00:00

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Operator

Good day, everyone, and welcome to the TOMI Environmental Solutions Inc. second quarter 2026 financial results conference call. At this time, all participants are placed on a listen-only mode. If you have any questions or comments during the presentation, you may press star one on your phone to enter the question queue at any time, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to hand the floor over to your host, John Nesbett. Sir, the floor is yours.

John Nesbett
Founder and President at IMS Investor Relations

Thank you for joining us today for TOMI Environmental Solutions investor update conference call. On today's call is TOMI's Chief Executive Officer and Chairman, Dr. Halden Shane, Chief Operating Officer, E.J. Shane, and Interim Chief Financial Officer, Niro Srirathan. A telephone replay of today's call will be available through August 21st, 2026, the details of which are included in the company's press release. A webcast replay will also be available at TOMI's website, www.steramist.com. 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 actual results to differ materially from our anticipated results. The information provided on this conference call is based upon the facts and circumstances known at this time.

John Nesbett
Founder and President at IMS Investor Relations

Please refer to our filings with the Securities and Exchange Commission for a discussion of these risk factors. The company undertakes no obligation to update these forward-looking statements after the date of this call. I will now turn the call over to TOMI's Chief Executive Officer and Chairman of the Board, Dr. Halden Shane. Please go ahead.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

Thank you, John, and thank you all for joining us today. Since signing our definitive agreement with Carbonium Core at the end of June, we have stayed closely engaged with their company. The integration of these two complementary technologies, each delivering exceptional performance in its respective markets, continue to advance as planned. First, let me start with this. TOMI SteraMist decontamination business has now delivered growth for three consecutive quarters. Our second quarter 2026 results reflect another healthy quarter for TOMI, with continued positive momentum for the strategic initiatives we have implemented. As always, we remain committed to keeping shareholders informed as these efforts progress. In the second quarter of this year, we saw growth across four key metrics compared to both the first quarter of this year and the second quarter of last year.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

Those four areas were BIT Solution sales, mobile equipment, single applicators, which is where TOMI's patented iHP intellectual property resides, and support services, including qualifications, acceptance testing, and training programs. The increase in applicator sales and support services stem directly from initiatives introduced in late 2024 and early 2025, further validating our strategic focus. We continue to pursue new opportunities and additional growth strategies throughout 2026 without interruption. Our second quarter results demonstrated a revenue increase of 118% year-over-year and 36% sequentially from the first quarter of 2026. BIT Solution sales exceeded $700,000 for the first half of the year and continue to trend upward, which we believe positions us to finish the year with higher sales than in each of the prior two years, reaffirming our full-year revenue guidance.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

On the cost and cash front, our disciplined overhead management drove a 10% year-over-year reduction in quarterly operating expenses to $1.63 million, led by significant savings across general and administrative costs. This cost discipline, combined with $1.92 million in net proceeds raised through our equity line of credit, strengthened our balance sheet, expanding our working capital to $1.82 million and increasing cash and cash equivalents to $322,000 at quarter end. Additionally, we continue to make substantial operational progress towards remediating our historic material weakness. During the quarter, we strengthened our finance leadership with dedicated CPA oversight, formalized close and revenue recognition procedures, and instituted rigorous inventory and treasury controls. These proactive actions reflect our strong commitment to full remediation, operational discipline, and robust financial reporting. The ongoing health of the company continues to be reflected in a growing sales backlog.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

At the end of last year, TOMI reported a backlog of $1.6 million. That grew to $1.7 million by year end of this year's first quarter, then $2.2 million by the end of the second quarter, and currently stands at $2.6 million. This steady expansion in our sales backlog reflects the strength of our automated Integrated System and the expanded service offerings we have implemented. The backlog continues to grow even as we fulfill existing orders, demonstrating both sustained demand and strong execution across our sales efforts. We are pleased to report the delivery of SteraMist iHP chambers to a Fortune 500 medical device manufacturer, making an important milestone. This represents our first fully designed, manufactured, and assembled chamber engineered specifically for integration with our SteraMist standalone system, part of our integrated SIS platform. This is different from the pass-through system announced last year.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

This chamber is a distinct advancement in our technology platform and enables us to formally advance our 510(k) submission process with the FDA. Achieving 510(k) clearance would authorize the marketing of our technology for specific medical device applications in the U.S., significantly expanding our addressable market, enhancing regulatory credibility, and opening new commercial opportunities in the healthcare and life science sector. In parallel, we've been actively collaborating with two additional partners to develop a next generation, all-in-one, fully autonomous iHP chamber. This system is designed for the decontamination of medical devices, electronics recycling, pharmaceutical components, laboratory equipment, biotech materials, food packaging, aerospace components, and other high-value items requiring reliable enclosed decontamination. This new chamber is more intelligent than our original SteraBox and operates without the need for a separate mobile equipment attachment, offering a streamlined, fully integrated solution.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

One partnership is focused on serving our international customers, while the other targets the domestic market, allowing us to grow both sectors in tandem. April began on a strong note with a significant win at INTERPHEX, where we secured a new partnership with a top-tier American health company renowned for its innovative, pre-mixed, ready-to-use medication formulations. We have since joined forces with this organization on a range of projects and collaborations, closing the quarter with additional sales. The customer purchased equipment at the show, and they've continued to expand its requirements throughout the implementation of the project as it moved forward. While we are unable to share further details at this time, we anticipate this company will become one of our top customers. In addition, one of their senior technical leaders has joined TOMI in an advisory capacity, lending their expertise on the scientific and engineering front.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

We look forward to leveraging this individual's expertise across multiple integration projects for similar customers seeking to implement SteraMist iHP technology within their proprietary mechanical systems. Also in April, we completed the installation of a SteraMist Hybrid system at a highly respected private research university on the East Coast. The customer has already placed a second order scheduled for next year. In May, one of our newly associated government agencies purchased significant amount of accessories in preparation for the deployment of their environment system. Also during that same month, we onboarded several new food safety customers using the SteraPak.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

Moving to June, it continued this positive momentum with additional government orders from the Department of Health, expanded iHP adoption among existing food safety customers, and the installation of another fully automated Custom Engineered System in the U.K., the second pharmaceutical company in the region to implement our CES product line.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

We expect our U.K. partner, Total Clean Air, to drive further adoption in the near term across markets. Also in June, we expanded our domestic distribution network by adding new partners with established relationships and familiarity with our technology. This includes a distributor specialized in emergency services, contacts on the East Coast, and on the West Coast, our iHP Corporate Service partner secured a meaningful opportunity in healthcare sector and expanded its arsenal of iHP equipment and BIT Solution. In the healthcare sector, we have seen growing adoption of iHP technology by special pathogen units throughout the first half of this year, with additional opportunities developing for the second half of the year. These special pathogen units manage high-consequence infectious diseases and require rapid, validated, and comprehensive decontamination of rooms, equipment, and personal protective equipment.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

They require a solution that delivers broad-spectrum efficacy against resilient pathogens and reduces manual intervention while maintaining the highest safety standards, capabilities that align directly with the strengths of our SteraMist iHP platform. We also secured a purchase from a healthcare facility for our first NV+ all-in-one stainless steel cart, featuring a rotating applicator, integrated lights, and full automation, which is scheduled for delivery by the end of the third quarter. It continues to be an active period on the registration and regulatory front. TOMI's innovative disinfection product is now approved for use in Austria, Italy, the Netherlands, Belgium, Denmark, Germany, Hungary, Spain, Great Britain, Northern Ireland, and Ireland. We have also added Switzerland through an amendment, and we expect additional approvals for France, Poland, Portugal, and Romania. NSF is rewriting the rules on biosafety cabinet decontamination.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

TOMI played a key role in advancing this decision at the NSF meeting in June. The industry is shifting away from listing legacy known methods and brands such as paraformaldehyde and moving towards strict performance-based criteria focused on efficacy, validation, and material compatibility, areas where SteraMist iHP technology excels. We continue to strengthen our intellectual property portfolio, submitting four new utility patent applications in the second quarter, giving us additional worldwide protection for our technology. This month, the EPA has granted a new unconditional registration for AgriMist, TOMI's fourth EPA label. This expanded label significantly broadens our approved use sites to include a wide range of food safety applications. The registration authorizes direct application of iHP to indoor-grown plants and fruits such as avocados for the prevention, control, and suppression of common plant pathogens.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

The label also permits applications up to and including the day of harvest, a key advantage consistently identified by cultivators. I will now turn the call over to our Interim Chief Financial Officer, Niro, for a view of TOMI's SteraMist Q2 financial results.

Niro Srirathan
Niro Srirathan
Interim CFO at TOMI Environmental Solutions Inc

Thank you, Dr. Shane. Our complete financial statements are included in our Form 10-Q filed with the SEC and detailed in today's press release. I will now walk through our key financial and operational metrics for the three months ended June 30th, 2026. Comparing our results to the prior year period. Revenue for the second quarter of 2026 was $2.25 million, representing a 118% increase compared to $1.03 million in Q2 2025, and a 36% sequential increase over Q1 2026 revenue of $1.65 million. Revenue and commercial performance. Our top-line acceleration was driven by growth across both our product and service divisions. Product revenue reached $1.86 million for the quarter, a 42% sequential increase over Q1 2026, and a 185% increase, or approximately $1.2 million, compared to Q2 2025.

Niro Srirathan
Niro Srirathan
Interim CFO at TOMI Environmental Solutions Inc

This growth was fueled by strong demand for capital equipment, Custom Engineered Systems, or CES, and expanding adoption of our SteraMist applicators. Service revenue also saw gains across both comparative periods, reaching $389,000, up 13% sequentially from $344,000 in Q1 2026, and up 3% year-over-year compared to $378,000 in Q2 2025. Geographically, U.S. revenue expanded 132% year-over-year to $1.91 million, while international revenue grew 62% to $339,000, bolstered by new customers onboarding in the U.K.. Gross margin. Gross profit for Q2 2026 more than doubled to $1.39 million, up 105% compared to $677,000 in Q2 2025. Gross margin was strong at 61.7%, representing an increase from 50.3% in Q1 2026, while remaining healthy compared to 65.7% in Q2 2025. The sequential expansion was driven by higher revenue volume and an optimal mix of equipment deployments alongside high-margin BIT Solution consumables.

Niro Srirathan
Niro Srirathan
Interim CFO at TOMI Environmental Solutions Inc

Applicator sales reached $355,000 for the quarter, up from $13,000 in Q2 2025, validating the momentum of our high-margin recurring razor and blade model. Operating expenses and operating loss. Total operating expenses for Q2 2026 were $1.63 million, a reduction of approximately $180,000, or 10%, compared to Q2 2025. This reduction reflects our continued overhead discipline across general and administrative costs, offset slightly by transaction-related professional and consulting fees associated with our strategic growth initiatives, including our reverse stock split, Schedule 14C filings, and the pending merger. Our loss from operations for Q2 2026 improved by 78% to approximately $244,000, compared to an operating loss of approximately $1.13 million in Q2 2025. This approximate $889,000 year-over-year reduction in operating loss demonstrates meaningful operating leverage and puts us within clear striking distance of operating breakeven.

Niro Srirathan
Niro Srirathan
Interim CFO at TOMI Environmental Solutions Inc

G&A savings were further supported by improved collection activity and a credit loss reserve benefit of approximately $144,000 during the quarter. Net loss and transaction impact. Net loss for the second quarter of 2026 improved by 69% to approximately $382,000, or $0.05 per basic and diluted share, compared to a net loss of approximately $1.24 million or $0.19 per share in Q2 2025. On a six-month basis, net loss improved 20% to approximately $1.19 million, compared to $1.49 million in the prior year period. All share and per share figures retroactively reflected our one for three reverse stock split affected on July 20th, 2026. It is worth noting that Q2 2026 operating expenses included approximately $300,000 in elevated advisory, legal, and diligence costs tied to the signing of the Carbonium Core agreement and planned merger.

Niro Srirathan
Niro Srirathan
Interim CFO at TOMI Environmental Solutions Inc

Excluding these transaction-related expenses, our core operating performance underscores the solid trajectory of our underlying SteraMist business. Cash flow, balance sheet, and capital access. We ended Q2 2026 with $322,000 in cash and cash equivalents, up from $88,000 at December 31st, 2025. Working capital expanded to $1.82 million, compared to $1.02 million at year-end 2025, while stockholders' equity increased significantly to $1.43 million, up from $589,000. As of June 30th, 2026, we maintained approximately $18.1 million in remaining contractual capacity under our ELOC facility. Following majority shareholder approval in June to waive the exchange cap on the relevant Nasdaq rules, the ELOC remains an available tool to support ongoing working capital requirements.

Niro Srirathan
Niro Srirathan
Interim CFO at TOMI Environmental Solutions Inc

Additionally, post-quarter on August 12th, 2026, we entered into an omnibus amendment with holders of our 2023 convertible notes, lowering the fixed conversion price from $3.75 to $1.50 per share, subject to adjustment in accordance with the terms of the notes and as adjusted for the reverse stock split. As of today, we believe we have met the Nasdaq stakeholders' equity requirement. Backlog and forward guidance. Looking ahead, our financial visibility remains robust. Our total sales order backlog stood at $2.2 million at quarter end and has expanded to $2.6 million post quarter. Booked orders and expected completions before year end exceed $6.2 million, supporting an active integrated project pipeline of $4.3 million across 13 projects and a broader commercial sales pipeline of approximately $35 million.

Niro Srirathan
Niro Srirathan
Interim CFO at TOMI Environmental Solutions Inc

Based on this visibility and our second half trajectory, we comfortably reaffirm our full-year 2026 revenue guidance of at least $12 million. Furthermore, our agreement and plan of merger executed on June 29, 2026 with Carbonium Core includes a $10 million minimum co-current financing condition prior to closing, which we expect will transform the combined company's balance sheet and growth trajectory. Investors are encouraged to review our quarterly report on Form 10-Q in full, including the risk factors and notes to the condensed consolidated financial statements. I will now turn the call over to our Chief Operating Officer, E.J. Shane, for an update on what to expect in the upcoming months and rest of the year.

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

Thank you, Niro, and good afternoon, everyone. TOMI's sales pipeline remains robust with a total identified interest currently standing at approximately $35 million. Of this amount, $8.6 million is in its advanced stages and are expected to close in 2026, assuming there is no material shifts in customer budgets. Several high-quality opportunities within this pipeline show the strength of our competitive positioning. A large-scale Custom Engineered System or CES project that is currently out for bid is valued at approximately $1 million. Originally anticipated to reach decision in June, the timeline has now shifted to September. This opportunity involves an existing customer, one that prioritize innovation and quality over lower cost alternates, and we believe the opportunity is well positioned for a favorable outcome. This remains the only project included in our previously communicated integration projections.

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

New additions to the pipeline include another $1 million project that was initiated in the second quarter. This is the one Dr. Shane mentioned earlier involving the installation of four applicators per proprietary machine line at a major multinational healthcare manufacturer. Additionally, we have one of our Canadian partners who has secured access to a bid for a potential order of eight Hybrid systems. The Hybrid system has proven to be a highly successful product development initiative. An early semi-Hybrid configuration delivered to a customer in 2020, prior to the full commercialization of our latest hardware and software platform, continues to generate strong reoccurring demand. That customer routinely purchases two full pallets of BIT Solution twice per year and is now planning a purchase of a second system and upgrade their previously purchased Hybrid to the latest configuration.

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

The core advantage of the Hybrid platform lies in its flexibility, not only in the underlying science and technology, but also in the expanded product ordering options we have developed over the past two years, giving our customer base greater adaptability to meet their operational needs. TOMI continues to expand its presence in the defense sector, having recently received approvals from defense contractors in Korea and defense agencies in Canada. While confidentiality agreements limit the disclosure of specific details, these relationships represent multi-year efforts with a significant long-term potential. We have developed a very detailed strategic plan specific to these two accounts, which we have been in contact with for years. TOMI has also authorized a local representative to distribute to the Defense Logistics Agency, or DLA, which manages the global defense supply chain for the U.S. military services and ally partners.

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

This partnership, established in the second quarter, is expected to streamline and accelerate government procurement of SteraMist iHP technology. In one of our largest markets, life sciences, we have received approval for one site of a longstanding global pharmaceutical partner for approximately $500,000 in SteraMist systems, with delivery scheduled for later this year. TOMI's iHP Corporate Service is also experiencing an increase in new opportunities. While year-over-year results to date are slightly lower due to a production change at a large customer that no longer requires decontamination services, TOMI has partially offset this impact and is actively expanding service opportunities. We are now developing pathways to deliver direct corporate services internationally to end users, building on our strong domestic relationships. We look forward to sharing additional updates on this initiative in the coming periods.

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

TOMI's recent expansion of SteraMist registrations across the EU and U.K. has significantly strengthened our established European network. In Poland, through our partnership with Medline, we expect to be able to sell SteraMist under the Decon Line brand once mutual recognition is approved. Additionally, TOMI has deepened its commercial pipelines through dedicated partners in Germany, the United Kingdom, and the Netherlands, many of whom bring well-established commercial life sciences, healthcare, and military networks. In the Americas, TOMI has added a new strategic partner to capture growth in the life sciences and industrial sectors. Located in Puerto Rico, Integrated Services for Productivity and Validation, or ISPV, is focused on driving adoption within the region's strong life sciences and food manufacturing industries. In Argentina and surrounding markets, TOMI is collaborating with new partners to pursue shared opportunities with major global accounts, including Pfizer, Fresenius Kabi, and Merck.

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

This expansion complements our longstanding partnership with Bacteria Free in Chile, which is now extending its reach from life sciences into the food safety sector. I would like to reiterate the strong signal that the SteraMist applicator purchases send. Year to date, applicator sales alone total nearly $400,000, representing approximately a 1,100% increase year over year, a trend we never needed to capture before. This growth clearly demonstrates that customers are expanding their deployment of our patented cold plasma technology. The applicator is a critical component that enables iHP cold plasma technology to be utilized, whether paired with a mobile delivery system or installed in a permanent or semi-permanent configuration. We only began emphasizing this strategy less than two years ago, and it builds on our consumable-driven model. In many ways, the applicator functions as a second razor in a razor and blade framework.

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

It carries a longer replacement cycle than pure consumables, such as our BIT Solution, yet it has a significantly shorter sales cycle than full capital equipment when integrated accordingly. This allows TOMI to capture meaningful revenue and margin today, while simultaneously locking in long-term reoccurring BIT Solution demand. We continue to make progress on the regulatory front through additional approvals we still require to fully unlock the opportunities tied to these requirements. Our food contact notification, FCN, efforts with the FDA, both broadly and specifically for baby formula production, remain ongoing. We secured a significant win in June with NSF Standards Department for Biological Safety Cabinets and are targeting a second milestone in October. On the FDA 510(k) medical device pathway, we advanced, as Dr. Shane referenced, and are now focused on compiling the necessary studies. Meanwhile, EU registrations continue to come in.

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

Collectively, these initiatives hold substantial potential given current market demands. The food safety sector remains promising, and we expect the approval of the No. 90150-4 EPA label to accelerate sales in this division. Through further progress, we depend on ongoing regulatory developments. Nestlé's planned expansion, for example, is contingent on securing additional international registrations beyond the EU and on updating EU registration requirements to include an alternate class. These efforts remain actively underway. Nestlé has now also added specific South American registrations to their original international requests, and our new partners referenced earlier are assisting with them. In summary, we see our strategies are working. We are actively supporting the resources required to advance our integration pipeline across all products, not solely the CES. Along with our services offerings and growing momentum, we are seeing from partners both domestically and internationally.

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

This is in addition to the regulatory advancements already underway. While I shared only a high-level view earlier, we are currently conducting numerous additional use site scenario tests that we expect will further unlock value. I thank you all for your time today. We hope this provides useful insight into the continued direction and opportunity ahead for the SteraMist iHP brand. I will now return the call back to our CEO, Dr. Halden Shane.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

Thank you, E.J. and Niro. Before we open the call to questions, I want to leave you with a bigger picture. SteraMist isn't a story about potential anymore. It's a story about proof. Three consecutive quarters of growth, a backlog that keeps expanding even as we fulfill it. Our regulatory footprint already spans a wide range of countries, now across Europe, and we're continuing to add to it. An expected pipeline of $35 million and growing faster, and a technology platform that is now trusted in some of the most demanding, highest consequence environments on the planet, from operating rooms and clean rooms to national labs and next generation energy infrastructure. Every division, every geography, every product line I've walked you through today, is moving in the same direction forward. We are investing in people, partners, and product needed to meet the demand.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

I am also very happy to announce the improved financial performance this quarter and the recent agreement with certain noteholders to convert approximately $2.3 million of their outstanding convertible notes into shares. We believe we will be able to retain compliance with stockholder equity requirements under Nasdaq's continuing listing rules, subject to final review and approval by the Nasdaq hearing panel. In reference to Carbonium Core's potential merger on August 7, President Donald Trump convened a historic roundtable at the State Department with over 200 mining executives and university officials to announce $3 billion in federal investment aimed at securing U.S. critical mineral supply chains and reducing reliance on China. Trump declared the initiative a step towards reclaiming American statute as a mineral superpower, quote unquote. Emphasizing that these resources are essential for national defense, advanced weaponry, and economic independence. Carbonium Core will produce nuclear graphite and lithium.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

Based on President Trump's coalition founding principles and recent U.S. investment announcements under the Trump administration, the scope explicitly includes battery and energy minerals, lithium, cobalt, nickel, graphite, magnesium, and silicone. The combined value packed by independent valuations companies between Carbonium Core and TOMI is $180 million. Carbonium Core has a valuation of $120 million, and TOMI has a valuation of $60 million, thus the combined value of $180 million. As far as SteraMist, we will be building a better, bigger company, hiring more personnel, expanding our product line to deploy for preventive disinfection using robotics for autonomous vehicles, along with drones for biosecurity. My take on the current worldwide view on preventive preparedness for the future is everyone has a fear of infection. As AI can simply produce a blueprint for biological weapons, the fear is worth being prepared.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

To be prepared for the next release of a biological weapon is going to be key to surviving in the future in the world that we all live in. SteraMist is your go-to biodefense weapon for survival. I want to take a moment to thank our investors, both old and new, for their continued support of TOMZ. All of you have been amazing. Last but not least, our amazing small team of 20 in Frederick and our partners around the world. We hope this team will grow to 200 in the next three years. However, the 20 has kicked some ass to get us in the direction we're going in. Operator, please open the call.

Operator

Certainly. Everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you're listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star one on your phone. Please hold while we poll for questions. Thank you. Your first question is coming from Amit Dayal from H.C. Wainwright. Your line is live.

Amit Dayal
Amit Dayal
Analyst at H.C. Wainwright

Thank you. Greetings, everyone, and congrats on all the progress on many different fronts. A question around the AgriMist offering. Is any of this part of the pipeline, or will this add to the pipeline when you start commercializing this product?

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

It's going to add to the pipeline. Everything discussed thus far does not include the AgriMist potential.

Amit Dayal
Amit Dayal
Analyst at H.C. Wainwright

Understood. Thank you, E.J., for that. With respect to the medical device clearance, what are the next milestones on that front?

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

It's all going to be related around studies with this one customer base. Now that it's delivered and installed, we have to create protocols, establish and then conduct them, and then report them to the FDA. There's still some time ahead of us, but

Amit Dayal
Amit Dayal
Analyst at H.C. Wainwright

Is this like a 12-month, 18-month or less sort of timeline?

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

Give me another quarter and I'll have a better idea for you.

Amit Dayal
Amit Dayal
Analyst at H.C. Wainwright

Okay. Thank you. With respect to the Carbonium deal, at what state of diligence are we, and what are the next milestones on that front?

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

So we really have two levels of completion that need to occur. One is for Nasdaq to go ahead and give us a clean bill of health in relationship to listing. I believe we've been well over $1 for the last four weeks, and I believe we're in compliance with that. Just recently, we went ahead and created enough shareholder equity. I believe it's a little over $3.3 million at this moment, provided the notes that have converted or are in the process of converting. So, I think that's one aspect. The other aspect is raising $10 million for the joint companies, and we're still in negotiations with doing that.

Amit Dayal
Amit Dayal
Analyst at H.C. Wainwright

Then from the diligence you've done so far, Doc, on Carbonium, are they already sort of positioned to generate revenues in the near term or is the company still in sort of product development phase?

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

I think that they are going through their prototype, which is going to be underway shortly. The contract between Oak Ridge National Laboratory and Carbonium Core is in its final stages. Also, I believe there's a contract between the United States Department of Energy and Carbonium Core that's in its final stages. Once that occurs, the prototype will produce, I believe, enough graphite to create revenue. I am not sure the exact timing. I think a lot of the specifics would be terrific to have the CEO of Carbonium Core on a call or a fireside chat with you guys, and we can go over some information.

Amit Dayal
Amit Dayal
Analyst at H.C. Wainwright

Okay. Yeah, we can take that offline. Yeah, that's all I have for now. I'll take my other questions on our follow-up call. Thank you.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

Thanks, Amit.

Operator

Thank you. And once again, everyone, if you have any questions or comments, please press star then one on your phone. Your next question is coming from John Nelson. Your line is live.

Analyst

Hi. Congratulations on delivering a terrific quarter to you and your team, Halden.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

Thank you so much, John. Thank you.

Analyst

Cheers.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

A lot of work.

Analyst

Yeah. I'll say. I've several questions. You had just kind of wrapped up with some comments on SteraMist and the biodefense sector of the government. How would you envision SteraMist could be used in biodefense?

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

Well, for one, a lot of equipment, both military and non-military, is having increased demands put on it for disinfection and decontamination. That's where the concept of the drone program would come in, where the drones are equipped with our unit, kind of similar to the backpack, and they're able to decontaminate large pieces of equipment aerially and up close.

Analyst

Okay. In the news, at least one area of news where I always think about how useful SteraMist would be is in the FEMA disaster area, especially with the floods in Indiana, for example, and other parts of the country. Have you been able to make any inroads with FEMA as far as supplying them with SteraMist for treatment of things like mold and other contaminations that come along with the disasters that they've had to deal with?

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

I'll let E.J. answer that, but take Kansas.

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

Yes.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

I know in Kansas, the state has our equipment. Whether they use it or not in mold post-disaster, I am not positive. Maybe E.J. has some more information about federal disasters managed by FEMA.

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

Yes, of course. As Doc said, Department of Health own our equipment for emergency response to their individual counties and states. Yes, FEMA has been a long-term customer of TOMI. We are just not allowed to share everything that they use our equipment for, but they have quite a few of our foggers.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

Thanks, John.

Analyst

Okay. Thanks.

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

Yeah.

Analyst

Question, tariffs. Have tariffs had any effect on TOMI's income statement or balance sheet, and are you paying tariffs now, or when would you expect any refunds from tariffs?

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

Niro?

Niro Srirathan
Niro Srirathan
Interim CFO at TOMI Environmental Solutions Inc

Yeah, I'm not aware of any tariffs at the moment. Yeah, something we need to look into. But yeah, I don't think we are paying any tariffs.

Analyst

Okay. Can you give us shareholders a little more details on the Hybrid system that you've developed and what it can do?

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

Of course. The Hybrid system, John, is a mix of our mobile fogger and permanent applicators. The whole strategy behind the last year and a half or so has been allowing the customer to decide how and when they want to use the equipment. It's just the purchase of applicators and BIT Solution, those are the two musts, and any sort of delivery system of their choice that can mix and match for their budgets. They're allowed to use it throughout their facility. It's to gauge facility-wide use versus just one-off purchasing.

Analyst

Okay. Is the cart applicator a part of that Hybrid type system?

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

No. The cart is our NV+. That is all-encompassing, so there is no detachments to that individual product. This is a big win for us because we see the strategy behind that cart really good for healthcare facilities and it was a healthcare facility that purchased. We are interested to deliver that by the end of September and hopefully many more after.

Analyst

Okay. Who makes your applicator products? Who is your supplier for those?

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

We actually have moved the applicators to in-house assembly.

Analyst

Oh, okay.

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

Yeah.

Analyst

You mentioned the AgriMist product, and the EPA registration for SteraMist, AgriMist across post-harvest agriculture, cannabis, and hemp. And you mentioned the use on things like avocados. Would it take an FDA ruling to get it approved for fresh produce and/or pre-bagged produce products?

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

I do not think so.

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

No. The No. 90150-4 EPA label, what it does is it opens us up to allow the facility to decide. We still have FDA clearance based on a letter of a little over a year ago which allows our type of hydrogen peroxide, our CAS number, to be used direct on food contact surfaces and food areas. When it comes to the facility, they can either choose to follow on the FDA ruling based on that, or now with the No. 90150-4 EPA label, the instructions and guidance per that agency. Because it does, one of the key conversations you always have with end users is who are they regulated by. Sometimes it is both, and that gets a little tricky. But now we are covered either way.

Analyst

Okay. Just watching another timely news article item that made me think of TOMI and its potential use by the military is the consternation over the extended period of time for the aircraft carrier USS Lincoln in the Middle East and the problems that seem to be breaking out there. Have you explored with the Defense Department the potential use of SteraMist as far as the naval involvement?

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

We have not.

E.J. Shane
E.J. Shane
COO at TOMI Environmental Solutions Inc

Yeah, go ahead.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

No, it's a great idea, but we haven't. We've been so busy doing what we're doing now. It's something that they should consider. The question would be how to go ahead and write the protocols quick enough to get it over there. I'm not too sure, though. Hopefully won't be there too much longer.

Analyst

It's the same. I know you're limited in as far as the resources for developing new markets. It seems like SteraMist would also be very useful for the U.S. government programs that are funded in helping countries in Africa deal with the Ebola outbreak?

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

Yes, that's true. We handled the Ebola outbreak in Western Africa when it first occurred years ago, and we're always ready to help and assist on the current one, which seems to be growing. They're well aware of us, and the World Health Organization is well aware of us and has used us in the past.

Analyst

Okay. Then a market that was discussed maybe a year or two ago was the ethylene oxide replacement use in medical instruments sterilization. Has there been any progress or changes in that particular type of market?

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

There are a lot of companies looking to get out of using ethylene oxide. The question where the 510(k) comes in to help us is it shows that we're able to confirm taking that market away from chemicals like that. As we come closer and as E.J. was talking about the 510(k) and this major company, they will be establishing data on our product, and that data will be utilized to progress the 510(k) forward. Once we do get that, I think those markets will open up fairly quickly.

Analyst

Okay. Your CFO mentioned that TOMI was within striking distance of break even. Do you have any comments to share with us on the timeline or path to profitability for TOMI?

Niro Srirathan
Niro Srirathan
Interim CFO at TOMI Environmental Solutions Inc

Yes.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

Well, I think. Go ahead, Niro. No, take it. Go ahead.

Niro Srirathan
Niro Srirathan
Interim CFO at TOMI Environmental Solutions Inc

Yeah. Based on our sort of sales trajectory, we're planning on hitting the $12 million mark this year in revenue, and that will definitely cover our operating expenses and help us break even. From the way we are going, looking at cost cutting as well, and revenue increasing, I think by Q4 we'll be hitting that break even mark comfortably.

Analyst

Okay. Then big increase quarter-over-quarter, or I should say quarter-over-prior year in the professional and consulting fees. Do you think that they will continue at the current level, increase, or decrease over the next couple of quarters?

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

Well, I think that—

Niro Srirathan
Niro Srirathan
Interim CFO at TOMI Environmental Solutions Inc

Sorry, go on, Dr. Shane. Sorry.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

No, I think most of it has to do with the Carbonium Core merger. A good part of them. I think that once that merger is finished, those fees will decrease. Right, Niro?

Niro Srirathan
Niro Srirathan
Interim CFO at TOMI Environmental Solutions Inc

That is correct. We spent close to $300,000 this quarter due to the merger deal. Once that goes through, that professional fees will start dropping.

Analyst

Okay. Great. All right. Since this is a public forum, I am the third largest shareholder, and I have been steadily adding to my position over the last quarter. I am enthusiastic about TOMI and their future, whether or not the Carbonium Core merger goes through or not. So excellent work. Keep it up. Thank you.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

Thank you, John. Thank you for your help. Thanks.

Operator

Thank you. That concludes our Q and A session. I will now hand the conference back to Dr. Halden Shane for closing remarks. Please go ahead.

Halden Shane
Halden Shane
CEO and Chairman at TOMI Environmental Solutions Inc

I want to thank everybody again for joining and hope wherever you are in the world, you have a pleasant day and evening. Thank you.

Executives
    • Halden Shane
      Halden Shane
      CEO and Chairman
    • Niro Srirathan
      Niro Srirathan
      Interim CFO
    • E.J. Shane
      E.J. Shane
      COO
Analysts
    • John Nesbett
      Founder and President at IMS Investor Relations
    • Amit Dayal
      Analyst at H.C. Wainwright
    • Analyst
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