TOMI Environmental Solutions, Inc.
For the period ended Mar 31, 2026. Filed May 8, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2026 · Filed May 8, 2026
TOMZ$2.15-1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-14.
0001654954-25-013088
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-08.
0001654954-26-004626
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 136 previous paragraphs and 87 current paragraphs.
19 unchanged; 19 reworded; 49 added; 96 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 15 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (49)
Current report
The first quarter of 2026 delivered improved financial results, with revenue of approximately $1.65 million reflecting a 5% increase over the first quarter of 2025 and a 67% sequential increase over the fourth quarter of 2025. Growth was primarily driven by increased equipment and CES-related sales to commercial service provider customers, partially offset by lower service revenue reflecting project completion timing. Total revenue and sales order backlog was $3.4 million as of March 31, 2026, providing strong visibility into near-term revenue conversion.
Current report
Our integrated project pipeline, encompassing SIS, Hybrid, and CES projects awaiting approval or unsigned contract, grew to approximately $4.3 million across 13 customers, an increase from the November 2025 $3 million integration sales pipeline. Notably, we secured a $440,000 annual purchase order for recurring decontamination services with a leading global medical technology company, reflecting the growing contribution of our high-margin iHP Corporate Service business.
Current report
Since 2024, BIT solution sales have shown steady annual growth of 21% from 2024 to 2025. This momentum has been maintained into the current quarter. Management expects BIT Solution sales to exceed 2025 levels, which management believes could support progress toward the Company's future profitability. Applicator sales in the current quarter exceeded total full-year 2025 applicator sales, representing a 139% year-over-year increase, reflecting growing adoption of our razor/blade consumable model.
Current report
Our iHP technology continued to gain market recognition across pharmaceutical, biotech, food safety, and international markets during the quarter. Key first quarter 2026 developments included regulatory authorization in Great Britain and Northern Ireland from the UK Health and Safety Executive, our first EU member state product authorization from the Dutch regulatory authority, a strategic partnership with Total Clean Air as our Preferred European Partner across the UK and EU, expanded Canadian operations through our distribution partner, and a new food safety case study demonstrating up to 95% reduction in sanitation testing costs.
Current report
Gross margin decreased from 60% in the three months ended March 31, 2025 to 50% in the current quarter, reflecting strategic price discounts to drive equipment adoption and an unfavorable product mix shift toward lower-margin equipment sales. Management views these factors as temporary, as growth in recurring high-margin BIT Solution consumable sales is expected to support margin recovery.
Current report
Operating expenses decreased $248,000, or 15%, to $1.5 million, reflecting disciplined cost management across professional fees, selling expenses, and general and administrative costs.
Current report
Post-Quarter Developments:
Current report
The following overview summarizes key factors affecting the Company’s financial performance for the quarter ended March 31, 2026 compared to the Company’s Consolidated Balance Sheet as of December 31, 2025 and should be read in conjunction with the selected financial metrics presented below.
Current report
The following table summarizes selected financial metrics based on the Company’s Consolidated Statement of Operations for the three months ended March 31, 2026 compared to March 31, 2025 and provides a high-level overview of the Company’s operating performance.
Current report
The following discussion should be read in conjunction with our consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. The following table presents our results of operations for the three months ended March 31, 2026, and 2025, together with the changes between the periods. The discussion below addresses the significant factors contributing to the changes in our results of operations.
Current report
Other income (expense) decreased $683,000 compared to three months ended March 31, 2025, reflecting the absence of the one-time Employee Retention Credit benefit of $535,000 and related interest of $83,000 recognized in the prior year period, with no comparable activity in the current quarter. Interest expense increased $65,000 reflecting higher outstanding debt balances on our convertible notes and the Agile Capital sale of future receipts agreement.
Current report
Revenue increased $77,000, or 5%, to $1.65 million for the three months ended March 31, 2026 compared to $1.58 million in the prior year period. Product revenue increased $311,000 (31%), driven by higher equipment and CES-related sales. Service revenue decreased $234,000 (41%), reflecting the timing of decontamination project completions and service engagements in the period.
Current report
Domestic revenue increased $58,000 (5%), driven by higher equipment and CES-related sales. International revenue increased $19,000 (5%), reflecting the onboarding of new customers in the UK.
Current report
Gross margin decreased from 60% in the three months ended March 31, 2025 to 50% in the current quarter. This decrease reflects strategic price discounts to drive equipment adoption and an unfavorable product mix shift, as equipment and CES-related sales comprised a higher proportion of total revenue compared to the prior year period. Management views these factors as temporary, as growth in recurring high-margin BIT Solution consumable sales is expected to support margin recovery in future periods.
Current report
Total operating expenses decreased $248,000 to $1.5 million in the current quarter from $1.7 million in the three months ended March 31, 2025. The decrease was primarily driven by lower general and administrative expenses of $136,000, reflecting reduced credit loss expense, and lower selling expenses of $49,000, due to reduced sales commissions and advertising spend, and lower professional and consulting fees of $59,000 combined, reflecting tighter controls over legal and advisory costs. While management continues to actively manage costs, revenue growth remains the primary driver of the Company's path to profitability.
Current report
As of March 31, 2026, we had cash and cash equivalents of $280,000 and working capital of approximately $394,000, compared to cash of $88,000 and working capital of $1.0 million at December 31, 2025. For the three months ended March 31, 2026, we incurred a net loss of approximately $810,000. Our accumulated deficit as of March 31, 2026 is $58.9 million.
Current report
These conditions raise substantial doubt about our ability to continue as a going concern within the next twelve months after the date these financial statements are issued. The consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might result from the outcome of this uncertainty. See Note 2 to our consolidated financial statements for further discussion of the going concern assessment.
Current report
The $630,000 decline in working capital from $1.0 million to $394,000 reflects the net loss incurred during the period and the Company's ongoing capital requirements. On the asset side, accounts receivable increased $73,000 on higher revenue, cash increased $192,000, and inventories remained relatively flat. On the liability side, accounts payable and accrued expenses increased $993,000, and deferred revenue increased $177,000 reflecting our deposit policy on customer orders.
Current report
During the three months ended March 31, 2026, pursuant to the ELOC, we issued 336,147 shares of Common Stock in exchange for aggregate gross proceeds of $149,413. We recorded a receivable of $48,034 for proceeds not yet received as of quarter end related to shares issued under the ELOC, which was included within prepaid expenses on our condensed consolidated balance sheet. The shares were issued pursuant to the Form S-3 registration statement (File No. 333-291563) and the prospectus supplement dated December 11, 2025. The Company intends to use the proceeds for working capital and general corporate purposes.
Current report
Management’s Plan to Address Going Concern
Current report
For a full discussion of management's plan to address the going concern conditions, including the ELOC, shelf registration, convertible note management, pipeline conversion and cost management initiatives, refer to Note 2 to our condensed consolidated financial statements.
Current report
Debt and Contractual Obligations
Current report
Our outstanding debt consists of $3,135,000 in convertible notes at 12% per annum, maturing 2028–2030, and a $175,725 remaining balance under the Agile Capital sale of future receipts agreement. Full terms are disclosed in Note 8 to our condensed consolidated financial statements.
Current report
Net cash provided by (used in) operating activities was $296,000 for the three months ended March 31, 2026, an improvement of $572,000, from $(276,000) in the prior year period, primarily driven by an increase in accounts payable and accrued expenses, partially offset by the net loss of approximately $810,000.
Current report
Net cash (used in) financing activities was $98,000 for the three months ended March 31, 2026, compared to net cash provided of $285,000 in the prior year period. In the prior year period, $285,000 was raised through convertible note issuances. For the three months ended March 31, 2026, net financing activities reflected repayments of $192,000 on the sale of future receipts agreement with Agile, partially offset by $94,000 in net ELOC proceeds, consisting of gross ELOC proceeds of $149,413, less $48,034 not yet received at quarter end and $7,250 in clearing costs expensed in operating activities.
Current report
Going Concern Assessment
Current report
The assessment of our ability to continue as a going concern is the most significant judgment reflected in our financial statements for the three months ended March 31, 2026. Under ASC 205-40, management is required to evaluate whether there is substantial doubt about the Company's ability to continue as a going concern within one year after the date the financial statements are issued. This evaluation requires management to consider all available information about the future, including the Company's projected cash flows, planned capital raising activities, anticipated operating improvements, and the probability and timing of successfully executing those plans.
Current report
For the three months ended March 31, 2026, we recorded a net loss of approximately $810,000. As of March 31, 2026, we had approximately $280,000 of cash and cash equivalents and an accumulated deficit of approximately $58.9 million. Based on these conditions, management concluded that substantial doubt exists about our ability to continue as a going concern within one year after the issuance of these financial statements. Management's conclusion is based on projected cash flows that assume successful execution of our capital raising plans, including continued drawdowns under our convertible note facilities and the potential utilization of the $20 million ELOC with Hudson Global Ventures, LLC entered into in November 2025, as well as anticipated revenue growth from our active commercial pipeline. If our assumptions regarding capital availability, revenue timing or operating costs prove incorrect, the Company's liquidity position could deteriorate more rapidly than projected, and there can be no assurance that the going concern doubt will be resolved within the anticipated timeframe. See Note 2 to the consolidated financial statements for further discussion.
Current report
A growing portion of our revenue is derived from our SIS and CES, which may involve multiple performance obligations including equipment supply, installation, validation and ongoing service. For these arrangements, management exercises significant judgment in identifying and allocating the transaction price among the distinct performance obligations and in determining the point at which control transfers to the customer. Delays in project completion or customer acceptance for these arrangements can affect the timing of revenue recognition and contribute to variability in our quarterly results.
Current report
We also record estimated allowances for sales returns, determined by using a specific identification method based on subsequent return activity and historical averages. As of March 31, 2026 and December 31, 2025, we recorded allowances of $76,064 and $47,844, respectively.
Current report
As of March 31, 2026 and December 31, 2025, deferred revenue totaled approximately $601,000 and $424,000, respectively, representing contracted amounts for which performance obligations had not yet been satisfied. The increase in deferred revenue reflects growth in our SIS and CES project pipeline and the timing of project milestones. Changes in assumptions regarding the timing of project completion or customer acceptance could affect the amount and timing of revenue recognized in future periods.
Current report
As of March 31, 2026, net accounts receivable totaled $761,789 compared to $689,153 as of December 31, 2025. The increase reflects higher revenue levels in the current period. Management exercises judgment in determining the appropriate allowance for credit losses, and changes in the creditworthiness of our customers, deterioration in economic conditions, or the loss of a significant customer relationship could result in allowance adjustments that materially affect our results of operations in a given period.
Current report
As of March 31, 2026 and December 31, 2025, our reserve for obsolete inventory was $500,000. Inventories, net of reserves, remained relatively flat at approximately $2.9 million as of March 31, 2026 and December 31, 2025, reflecting disciplined inventory management. If actual demand for our products differs materially from our forecasts, or if changes in our product offerings render existing inventory obsolete, additional write-downs may be required.
Current report
We assess long-lived assets, including property and equipment and acquired intangible assets, for potential impairment at the end of each fiscal year or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of the asset to the estimated future undiscounted cash flows expected to be generated by the asset. If an asset is considered impaired, the impairment charge recognized equals the amount by which the carrying value exceeds the asset's estimated fair value, which we determine using an income approach based on an internally developed discounted cash flow model. Key assumptions in this model include projected revenues and operating expenses, long-term growth rates, and estimated discount rates. These assumptions are based on our historical experience, industry data, and management's expectations about future business conditions.
Current report
We noted no long-lived asset impairment charges for the three months ended March 31, 2026 and 2025. Management's impairment analysis considered the going concern conditions described above and concluded that projected undiscounted cash flows, based on our current operating plan and capital raising assumptions, continue to support the carrying values of our long-lived assets. Changes in our revenue outlook, discount rates or other key assumptions could result in impairment charges in future periods.
Current report
Convertible Notes and Debt Discount
Current report
As of March 31, 2026, we had outstanding convertible notes with an aggregate principal balance of approximately $3.1 million, net of amortized debt discount and issuance costs of approximately $200,000, resulting in a carrying value of approximately $2.9 million. Our convertible notes were issued under two separate securities purchase agreements — the 2023 SPA, under which $2.6 million of notes were issued, and the 2025 SPA, under which up to $3.0 million of additional notes may be issued, of which $535,000 had been issued as of March 31, 2026. The notes bear interest at 12% per annum, are convertible at the option of the holder at $1.25 per share and mature on the fifth anniversary of their respective issuance dates.
Current report
The conversion features embedded in the 2023 Notes and 2025 Notes are considered clearly and closely related to the host debt instruments and do not require bifurcation under ASC 815. No modifications to the terms of the existing notes occurred during the three months ended March 31, 2026 and 2025.
Current report
Stock-Based Compensation
Current report
We account for stock-based compensation in accordance with ASC 718, Compensation — Stock Compensation. Stock-based awards, including stock options, restricted stock units and shares issued for services, are measured at their estimated fair value on the grant date and recognized as expense over the requisite service period. For stock options and warrant awards, fair value is determined using the Black-Scholes option pricing model, which requires management to make assumptions regarding the expected volatility of our common stock, the expected term of the award, the risk-free interest rate and expected dividend yield. We assume a dividend yield of zero, as we have not paid and do not intend to pay cash dividends on our common stock. Expected volatility is based on the historical volatility of our common stock over a period commensurate with the expected term of the award. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the grant date for the applicable expected term.
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Removed paragraphs (96)
Previous report
The third quarter of 2025 delivered improved financial results as we achieved 95% growth in revenue over the second quarter of 2025, and we continue to see positive trends in the market with demand for our product lines and recurring sales. The growth in the third quarter revenue was primarily attributable to increased purchases of mobile equipment by our commercial service provider customers and our enhanced integration capabilities, while maintaining our custom engineered solutions. We believe that maintaining and expanding the use of our technology for our service providers, coupled with continued growth quarter over quarter in submissions of bids for integration and custom installations, and the building of our sales and technical teams, will drive increased adoption of our SteraMist iHP technology across all our registered industries and geographies.
Previous report
As of September 30, 2025, our sales order backlog totaled approximately $0.9 million, which further increased to $1.3 million as of October 31, 2025. We are actively negotiating an additional $2 - $3 million in potential new contracts expected to close prior to year-end, reinforcing the strength of our business pipeline.
Previous report
Revenue for the three months ended September 30, 2025, was $2,012,000, down 21% from $2,542,000 in the three months ended September 30, 2024. This was primarily driven by a timing reduction in iHP service sales from FY 2024 as a key customer restructured one of their sites during the prior year. This impact is temporary, and the customers’ operations and related service activity are expected to resume on a normal schedule. Importantly, year-to-date service demand remains robust, with quote activity and pipeline volume up approximately 35% year-over-year, particularly in Life Sciences and Food Safety. This trend supports our expectation for continued growth in the fourth quarter and beyond.
Previous report
Gross profit margins remained 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 the gross profit margins underscores the resilience of our product mix and disciplined cost management.
Previous report
During the third quarter of 2025, our operating expenses increased by $141,000, or 10%, compared to the third quarter of 2024. The increase was primarily due to higher professional fees being offset by reduced selling expenses when compared to the same prior period.
Previous report
Our iHP technology continues to gain market recognition as the preferred decontamination solution for pharmaceutical, biotech and now aerospace applications. We successfully completed multiple high-profile installations this year; including but not limited to NASA’s Johnson Space Center, Virigina Commonwealth University (VCU), and University of Miami. These projects demonstrate the adaptability of our technology in high-containment environments. Underscoring TOMI’s competitive advantage, having successfully outperformed key hydrogen peroxide and harsh chemical gaseous competitors.
Previous report
Automated, repeatable, and validated decontamination rooms and chambers continue to be 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 at companies such as AbbVie, Bausch & Lomb and others. As of the third quarter, the onshoring of pharmaceutical production positions us favorably in Virginia for the next few years, particularly with major commitments from Merck, Eli Lilly, and AstraZeneca who are establishing new production sites. Additionally, there is a strong industry push toward continuous bioprocessing, flexible and modular facilities, and AI-enabled manufacturing, all of which require decontamination systems that integrate seamlessly with automation and minimize downtime—such as our SteraMist Integrated Systems (SIS), Hybrid, and Custom Engineered System (CES).
Previous report
Our OEM partnership with Pharma Biotech System Components LLC/Pharma Biotech System Components Ltd (PBSC), further strengthens our product mix and route to market, enabling us to integrate our SteraMist Integrated System (SIS) product into advanced high containment, material decontamination, and cleanroom solutions. We expect to commence our first collaboration installation in the fourth quarter of 2025.
Previous report
We are continuing to see revenue growth amongst our distributors, and international partners, particularly in Europe, positioning us for continued growth and expansion, as we work towards finalizing our pending regulatory approvals in the EU and UK.
Previous report
In evaluating sales related performance, management analyzes our revenue recognized for GAAP purposes which is presented in our quarterly and annual statement of operations as well as our sales orders we receive from customers during those same accounting periods. We define a “sales order” as a document we generate for our internal use in processing a customer order. Our sales orders essentially translate the format of the customer purchase orders we receive from our customers into the format used by us. We also evaluate our “customer sales backlog” which is defined as pending sales orders where revenue has not yet been recognized. Management believes analyzing the sales order and backlog metrics are useful in measuring our overall sales and business development performance as it gauges the overall volume of sales and business development activities. We also disclosed the expected amount of potential sales under contract or in current negotiation with customers, and such amount may be subject to risks and uncertainties as negotiation may not result in any order or enforceable contract.
Previous report
Positive Impact of New FDA Rule on our Food Safety Market
Previous report
The FDA’s final rule broadening the permitted use of hydrogen peroxide (H₂O₂) as a direct food additive, including its recent expansion as a secondary direct food additive, is expected to positively impact our positioning in the food safety market. This regulatory change opens the door for using our iHP technology directly on food contact surfaces and the food products themselves, particularly in the ready-to-eat (RTE) segment, which represents a key focus area for SteraMist. We have observed significant momentum in the food industry, with customers expressing interest in applying our technology across various aspects of processing. Additionally, we have received interest from several universities in conducting studies on the direct treatment of food to reduce microbial loads or allergen residues. We believe this interest may continue to grow in the future, driven by industry trends toward 'natural' food additives and colorings.
Previous report
On November 5, 2025, we entered into the Purchase Agreement with Hudson pursuant to which and upon the terms and subject to the conditions set forth therein, the Company has the right, but not the obligation, to sell to Hudson up to $20,000,000 of shares of its Common Stock, over the Commitment Period. Concurrently with entering into the Purchase Agreement, the Company also entered into a Registration Rights Agreement with Hudson, pursuant to which the Company agreed to register the issuances and sales of shares of Common Stock under the Purchase Agreement, the Registrable Securities (as defined in the Registration Rights Agreement), pursuant to a registration statement to be filed under the Securities Act of 1933, as amended.
Previous report
At any time and from time to time during the Commitment Period, on any business day selected by the Company, the Company may direct Hudson to purchase shares of its Common Stock by delivering a Put Notice. The purchase price per share for each purchase of shares subject to a Put Notice will be equal to the lesser of (i) 92% of the average of the three lowest trading prices of the Common Stock on the Nasdaq Capital Market during the ten trading days immediately preceding the Put Date and (ii) 92% of the lowest closing price of the Common Stock during the Valuation Period as defined in the Purchase Agreement.
Previous report
Under applicable Nasdaq rules, the Company may not issue or sell to Hudson under the Purchase Agreement shares of Common Stock in excess of 19.99% of the shares of Common Stock outstanding immediately prior to the execution of the Purchase Agreement (the “Exchange Cap”) without first obtaining stockholder approval as required by Nasdaq Rule 5635(d). The Company is not obligated to sell any shares to Hudson under the Purchase Agreement, and Hudson is not obligated to purchase any shares that would exceed the Exchange Cap. Pursuant to the Purchase Agreement, the Company agrees to issue 52,000 shares of Common Stock to Hudson as Commitment Shares in consideration for Hudson’s commitment to enter into the transaction.
Previous report
The Purchase Agreement contains customary representations, warranties, covenants, and closing conditions. The Company may terminate the Purchase Agreement at any time by written notice to Hudson, subject to certain limitations.
Previous report
2025 Events:
Previous report
On January 10, 2025, we announced that we are supporting partners and clients preparing for emerging public health threats as concerns grow over Respiratory Syncytial Virus (RSV), Human Metapneumovirus (HMPV), and the highly pathogenic Avian Influenza (H5N1). TOMI is leveraging its SteraMist technology to provide innovative infection prevention strategies essential to safeguard the health of government agencies, commercial clients, and school districts nationwide.
Previous report
On January 30, 2025, we announced positive momentum in early revenue trends for the Company with year-over-year growth in its BIT Solution sales and iHP Corporate Service.
Previous report
On February 4, 2025, we announced the deployment of our SteraMist iHP technology to support recovery efforts in California communities impacted by recent wildfires.
Previous report
On February 27, 2025, we announced we achieved compliance, recognition and validation by a third vendor management and compliance management platform, Avetta, reflecting the Company’s commitment to health, safety, and environmental (HSE) excellence for its customers. In April of 2024, we received the Gold Safety Award from Highwire. Affiliations with Avetta, Highwire, and ISNetworld platforms opens new avenues for TOMI to engage with a broader network of industry leaders and stakeholders. The collaboration fosters a culture of continuous improvement, enabling TOMI to enhance its service and integration offerings and stay ahead of evolving industry standards.
Previous report
On March 6, 2025, we announced that Dr. Halden Shane, Chairman of the Board and Chief Executive Officer of TOMI, will be participating in the Q1 Investor Summit Event, which was held virtually on March 11, 2025.
Previous report
On March 20, 2025, we announced the deployment of SteraMist iHP technology at the NASA Johnson Space Center, marking the Company’s expansion into the aerospace sector.
Previous report
On March 21, 2025, we announced the expansion into Aquaculture with new partner, Algafeed.
Previous report
On March 24, 2025, we announced a contract to install a SteraMist iHP CES at a leading university in Rhode Island, valued at approximately $450,000.
Previous report
On March 25, 2025, we announced an OEM partnership with PBSC, a premier manufacturer specializing in high containment, material decontamination, and cleanroom solutions.
Previous report
On June 12, 2025, we announced that SteraMist was honored with the prestigious 2025 “Disinfection and Decontamination Products Company of the Year” award.
Previous report
On June 16, 2025, we announced the advancement of our new product line, the SteraMist Integration System with the Standalone or SIS-SA making its debut as the first system installed with a leading CDMO.
Previous report
On June 23, 2025, we announced the demonstration of SteraMist efficacy in combating Honeybee Colony collapse. Honeybees are essential pollinators, contributing $20–30 billion annually to the U.S. agricultural economy and $387 billion globally. The USDA and industry stakeholders continue to search for scalable, effective tools to mitigate this crisis. With SteraMist, TOMI is now positioned to play a key role in protecting global food security through environmental biosecurity in years to come.
Previous report
On July 16, 2025, we announced the successful first installation of our new SteraMist Integration System – Standalone (SIS-SA) in the life sciences sector, beginning with pharmaceutical isolator market. Since this announcement, we have successfully integrated SteraMist iHP in two additional enclosures and anticipate a strong pipeline for further installations with both current and new manufacturing partners.
Previous report
On August 11, 2025, we announced an additional win by our East Coast distributor, Ares Scientific, with a new university client and our SIS platform offerings. These developments further strengthen our pipeline in the academic vertical and acceptance to our SIS line.
Previous report
On August 12, 2025, we announced a major new customer for the year. A key highlight from the announcement was the addition of a major company—comparable to Pfizer and Merck in the eye health industry—to our platform adopters. This client not only implemented SteraMist iHP technology at two site facilities in less than four months but has also placed open BIT Solution orders for 2026, which we expect to support ongoing revenue growth in this important sector in need of sterility.
Previous report
On September 4, 2025, we announced our presence at the H.C. Wainwright Annual Global Investment Conference.
Previous report
On September 16, 2025, we announced participation in the iAccess Alpha Virtual Best Ideas Fall Investment Conference 2025.
Previous report
On September 16, 2025, we announced the appointment of Francesco Fragasso to our Board of Directors.
Previous report
On September 18, 2025, we announced FDA broadens permitted use of Hydrogen Peroxide; Ruling significantly expands potential application of SteraMist iHP.
Previous report
On September 24, 2025, we announced a specialized service provider for Healthcare and Mold Remediation. This was the first of three major service provider companies we onboarded in Quarter 3, all of which have shown strong potential for expanded use of SteraMist iHP technology in their franchises. Our SteraMist Pro Certified program continues to be well received, supporting our efforts to finally build a robust network of certified partners.
Previous report
Intellectual Property
Previous report
Our intellectual property (IP) portfolio represents a key strategic asset, supporting our global leadership in disinfection and decontamination technologies. We currently hold or have pending over 25 utility or design patents worldwide, providing protection for both the methods and systems underlying our SteraMist® BIT™ platform. Our U.S. patents extend protection through 2038.
Previous report
Recent additions to our portfolio include patents for backpack decontamination units, mobile carts, and applicator technology in the United States, along with new protection in Singapore, Korea, and other jurisdictions. We continue to pursue additional filings to broaden our coverage across Europe, China, and Australia.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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This Management’s Discussion and Analysis of Financial Condition and Results of Operations (this “MD&A”) and other parts of this Quarterly Report on Form 10-Q (“Form 10-Q”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Forward-looking statements are not guaranteeing future performance and the TOMI Environmental Solutions, Inc. (the “Company,” “TOMI,” “we,” and “our”) actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of the Company’s annual report on Form 10-K for the year ended December 31, 2024, filed with the U.S. Securities and Exchange Commission (the “SEC”) on April 14, 2025, as amended (the “Annual Report”) under the heading “Risk Factors.” The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
Current wording
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (this “MD&A”) and other parts of this Quarterly Report on Form 10-Q (“Form 10-Q”) contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Forward-looking statements are not guaranteeing future performance and the TOMI Environmental Solutions, Inc. (the “Company,” “TOMI,” “we,” and “our”) actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A of the Company’s annual report on Form 10-K for the year ended December 31, 2025, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 31, 2026 (the “Annual Report”) under the heading “Risk Factors.” The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.
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Hudson Global Ventures Equity Purchase Agreement
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Equity Purchase Agreement — Hudson Global Ventures, LLC
Previous wording
On November 5, 2025, we entered into an Equity Purchase Agreement with Hudson Global Ventures, LLC, pursuant to which and upon the terms and subject to the conditions set forth therein, we have the right, but not the obligation, to sell to Hudson up to $20,000,000 of shares of our common stock, par value $0.01 per share, from time to time over a 24-month period.
Current wording
On November 5, 2025, the Company entered into a Purchase Agreement with Hudson Global, pursuant to which the Company has the right, but not the obligation, to sell to Hudson Global up to $20,000,000 of shares of Common Stock over a 24-month Commitment Period. See Note 9 for additional information on the Purchase Agreement.
Previous wording
A breakdown of our statement of cash flows for the nine months ended September*** ***30, 2025 and 2024 is provided below:
Current wording
A breakdown of our statement of cash flows for the three months ended March 31, 2026 and 2025 is provided below:
Previous wording
Net cash used in investing activities of approximately $133,000.
Current wording
Net cash (used in) investing activities was $5,000 for the three months ended March 31, 2026, consisting of equipment purchases.
Previous wording
Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimation process requires assumptions to be made about future events and conditions, and as such, is inherently subjective and uncertain. Actual results could differ materially from our estimates.
Current wording
Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimation process requires assumptions to be made about future events and conditions, and as such, is inherently subjective and uncertain. Actual results could differ materially from our estimates.
Previous wording
We recognize revenue in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (“ASC, Topic 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.
Current wording
We recognize revenue in accordance with ASC Topic 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 with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when or as we satisfy the performance obligations.
Previous wording
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 for each distinct performance obligation identified in step (ii) 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.
Current wording
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 for the allocation of transaction price under step (iv) above.
Previous wording
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 resale of our products by dealers and distributors. 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.
Current wording
Title and risk of loss generally pass to our customers upon shipment. Shipping and handling costs charged to customers are included in product revenues, and the associated expenses are treated as fulfillment costs included in cost of revenues. Revenues are reported net of sales taxes collected from customers.
Previous wording
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.
Current wording
Product revenue includes sales from our standard and customized equipment, BIT Solution and accessories. Revenue is recognized upon transfer of control of promised products to customers in an amount that reflects the consideration we expect to receive. Service and training revenue includes sales from our high-level decontamination and service engagements, equipment validation and customer training, and is recognized as the agreed-upon services are rendered.
Previous wording
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.
Current wording
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. This is particularly the case for our SIS and CES, which may involve equipment supply, installation, validation services and ongoing maintenance components. Where a contract contains multiple performance obligations, we allocate the total transaction price to each distinct performance obligation based on its relative stand-alone selling price, estimated using observable market prices where available or using a cost-plus-margin approach where direct market evidence is not available.
Previous wording
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. We also record an estimated allowance for anticipated product returns.
Current wording
Our contracts with customers for products and services often dictate the terms and conditions of when control of the promised products or services is transferred to the customer and the amount of consideration to be received in exchange for those products and services. For standard equipment and BIT Solution sales, control transfers and revenue is recognized at the point of shipment, which is when title and risk of loss pass to the customer. For service and training arrangements, revenue is recognized as services are rendered. For SIS and CES arrangements involving installation and validation milestones, management exercises judgment in determining the point at which control transfers, which may be upon completion of installation, customer acceptance, or satisfaction of specific contractual milestones. The timing of these measures can affect the period in which revenue is recognized and contribute to variability in our quarterly results. We also record an estimated allowance for anticipated product returns, determined using a specific identification method based on subsequent return activity and historical average calculations.
Previous wording
The preparation of 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 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 allowance for credit losses, inventory, 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.
Current wording
The preparation of 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 consolidated financial statements and notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to the allowance for credit losses, inventory obsolescence reserves, allowances for sales returns, the fair value of stock-based awards, the realizability of deferred tax assets, the useful lives of intangible assets and property and equipment, and contingent liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
Previous wording
Accounts receivables are stated at the amount management expects to collect from outstanding balances. The Company generally does not require collateral to support customer receivables. Management assesses the collectability of outstanding customer invoices and maintains an allowance resulting from the expected non-collection of customer receivables. In estimating this reserve, management considers factors such as historical collection experience, customer creditworthiness, specific customer risk, and current and expected general economic conditions For those customers to whom we extend credit, in accordance with the Current Expected Credit Loss (CECL) model, we make a risk-based evaluation at the point of sale which is further reviewed on both an individual and collective (pool) basis during each reporting period based on ASC 326. We are required to estimate and report expected credit losses over the entire life of a financial asset, considering historical data, current conditions, and future forecasts, even if the risk of loss is remote.
Current wording
Accounts receivable are stated at the amount management expects to collect from outstanding balances. We do not generally require collateral to support customer receivables. In accordance with ASC 326, Current Expected Credit Losses, we estimate and record expected credit losses over the entire life of our accounts receivable, considering historical collection experience, customer creditworthiness, specific customer risk, current economic conditions and reasonable and supportable forecasts of future conditions. We make a risk-based evaluation of collectability at the point of sale, which is further reviewed on both an individual and collective basis during each reporting period.
Previous wording
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. We expense costs to maintain certification to cost of goods sold as incurred.
Current wording
Inventories are valued at the lower of cost or net realizable value using the first-in, first-out method. Inventories consist primarily of finished goods. We review inventory on an ongoing basis, considering factors such as deterioration, obsolescence, and anticipated future customer demand, and we record an allowance for estimated losses when facts and circumstances indicate that particular inventory items may not be usable or saleable. The determination of the appropriate reserve requires management to exercise judgment regarding expected future demand, the useful life of specific inventory items, and the potential for product design changes or regulatory developments that could render existing inventory obsolete.
Previous wording
In November 2024, FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40). In January 2025, ASU No. 2025-01 was issued to clarify the effective date for all public business entities. The ASU requires the disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation, and amortization, within relevant income statement captions. This ASU also requires disclosure of the total amount of selling expenses along with the definition of selling expenses. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. Early adoption is also permitted. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements once adopted. We are currently evaluating the provisions of this ASU.
Current wording
In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40), subsequently clarified by ASU No. 2025-01 issued in January 2025. This ASU requires disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation and amortization, within relevant income statement captions, and also requires disclosure of total selling expenses and their definition. The ASU is effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the provisions of this ASU, which will likely result in additional required disclosures once adopted.
Previous wording
In December 2023, FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. The Company will adopt ASU 2023-09 in its fourth quarter of 2025 using a prospective transition method.
Current wording
In December 2023, FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. The Company adopted ASU 2023-09, applied on a prospective basis as of January 1, 2025. Because the ASU affects disclosures only, adoption did not affect our consolidated financial statements.
Previous wording
In July 2025, FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendments in this update provide a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current classified accounts receivable and contract assets. This update is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years. Adoption of this ASU can be applied prospectively for reporting periods after its effective date. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.
Current wording
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU provides a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current-classified accounts receivable and contract assets. The ASU is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years, with early adoption permitted. We adopted ASU 2025-05 in the first quarter of 2026 on a prospective basis and did not elect the practical expedient. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements or on the allowance for credit losses as of March 31, 2026.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Product revenue includes sales from our standard and customized equipment, solutions 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.
Previous report — wording carried elsewhere
We review inventory on an ongoing basis, considering factors such as deterioration and obsolescence, and future customer demand. We record an allowance for estimated losses when the facts and circumstances indicate that particular inventories may not be usable or realized when comparing our current inventory levels to anticipated demand for our product