TOMI Environmental Solutions Inc. Faces Contradictions on BIT Growth, Scaling Hurdles, and FDA Timelines in Q4 Earnings Call

Date of Call: Mar 31, 2026

Financials Results

• Revenue: $5.6M for 2025, compared to $7.7M in 2024 (down 27% YOY)
• EPS: Net loss of $0.19 per share for 2025, improved from a net loss of $0.22 per share in 2024
• Gross Margin: 55% for 2025, up from 46% in 2024

Guidance:

• First quarter 2026 revenue is greater than first quarter 2025.
• Estimated 2026 revenue is around $12 million, barring any unknowns.
• Anticipate approximately $3 million in sales from five specific customers and trends in support services and BIT Solution sales for 2026.
• When factoring in IHP deployment services, expect $6 million in revenue from five customers and three revenue streams for 2026.

Business Commentary:

Revenue Decline and Market Challenges:

• TOMI Environmental Solutions reported revenue of $5.6 million for the year ended December 31, 2025, compared to $7.7 million in 2024, indicating a 27% decline.
• The decrease was primarily driven by the timing of customer equipment purchases, influenced by factors such as tariffs, economic uncertainty, and political issues like the war in the Middle East.

Strategic Focus on Recurring Revenue:

• The company's support service backlog increased by 16% and BIT Solution backlog by 24% in the first quarter of 2026 compared to the same period last year.
• This trend reflects TOMI's strategic shift towards open bid solution orders and annual service offerings, prioritizing recurring revenue over one-time equipment sales.

Geographic and Regulatory Expansion:

• TOMI received approvals from the HSE and BPR submissions, officially recognizing the company in the United Kingdom and the Netherlands.
• This regulatory progress is expected to facilitate expansion into other EU countries and strengthen partnerships, such as the preferred partnership with Total Clean Air in the U.K.

Technology Validation and Customer Growth:

• The SteraMist Integrated System achieved its first commercial installation in June 2025, and by year-end, there were four fully operational installations.
• Customer growth was bolstered by key partnerships and contracts, including a signed purchase contract with a global biopharmaceutical leader and adoption by a leading cell and gene therapy manufacturer.

Sentiment Analysis:

Overall Tone: Positive

• CEO states 'I generally feel as I review the progress our team has made' and 'We are entering 2026 with operational momentum, growing recurring revenue, and expanding global customer base, and a clear strategy to drive sustainable growth.' He also highlights 'the pipeline that we have is the strongest we’ve ever had' and expresses optimism about converting pipeline into recognized revenue.

Q&A:

• Question from Carl Wright (Lonetown Capital): Could you provide some more insight into the global opportunities you mentioned in the quarter?
  Response: With recent EU registrations and distributor relationships, the expectation is for other EU states to follow, enabling distributors to pursue opportunities.

• Question from Carl Wright (Lonetown Capital): Could you provide a little more color about how we should think about operating expenses in the business just going forward?
  Response: Operating expenses are expected to grow in line with revenue, but leverage is present, so they should not see a significant jump and may decrease as a percentage with growth.

• Question from John Nelson (Private Investor): Are you seeing any signs of it improving? You must be seeing some signs of it improving because of your first quarter comments. But are you seeing any of those customers that were deferring CapEx projects starting to move on them?
  Response: Yes, the company is seeing signs of improvement with deferred capital expenditure projects beginning to move forward.

• Question from John Nelson (Private Investor): The BIT Solution revenues for 2025 versus 2024. Can you provide any details on the comparisons there?
  Response: BIT Solution revenues increased from 2024 to 2025 and this trend is continuing into 2026, driven by the shift to open orders and support services.

• Question from John Nelson (Private Investor): Are most of your customers in 25 using significantly more BIT Solution than they did the prior year?
  Response: Yes, most customers are using significantly more BIT Solution than the prior year, with an increase in solution sales.

• Question from John Nelson (Private Investor): You had mentioned briefly the use for treating marijuana plants? Mites. Is it mites, or is it for the powdery mildew?
  Response: It is for powdery mildew on plants; the company is awaiting an EPA label for this application but has live use cases and partnerships.

• Question from John Nelson (Private Investor): Have you explored uses of SteraMist in the military?
  Response: The company is too small and overwhelmed currently to pursue military contracts actively but has completed some requests for information and sees potential, especially with recent COVID variant concerns.

• Question from John Nelson (Private Investor): If you do get a significant amount of new orders, how easy or difficult that would be for you.
  Response: Immediate scale-up could be managed with the current team, but significant growth would require capital to increase company size across divisions.

• Question from John Nelson (Private Investor): As for you’ve done an excellent job of adding significant distributors both domestically and internationally. Is that still a significant part of efforts going forward to add even more distributors?
  Response: Yes, adding distributors remains a significant part of the strategy, with current talks with many new distributors.

Contradiction Point 1

BIT Solution Revenue Growth Trajectory

Contradiction on the consistency and predictability of BIT Solution revenue growth.

John Nelson (Private Investor) - John Nelson (Private Investor)

2025Q4: BIT Solution revenues increased from 2024 to 2025 and this trend is continuing into 2026. This growth is attributed to the company's strategic shift towards open order policies and long-term service offerings. The increase is also supported by more predictable and recurring sales patterns. - EJ Shane(COO)

What were BIT Solution's 2025 revenues compared to 2024? - Sameer Joshi (H.C. Wainright)

20251115-2025 Q3: Solution sales growth has varied, averaging around 21% year-to-date. - Halden Shane(CEO)

Contradiction Point 2

Company Scaling Capacity and Resource Allocation

Contradiction on the ease of immediate vs. long-term operational scaling.

John Nelson (Private Investor) - John Nelson (Private Investor)

2025Q4: Immediate scale-up of operations would be manageable with the current team of about 20, similar to how they handled COVID demand. However, significant long-term scaling would require additional capital and expansion of the company's divisions. - Dr. Halden Shane(CEO)

What is the scalability of operations in response to a significant increase in new orders? - John Nelson (Private Investor)

20251115-2025 Q3: Data centers represent a significant opportunity, but TOMI currently lacks the employee resources to focus on it. Capital is needed to expand the sales force to target this vertical... - Halden Shane(CEO)

Contradiction Point 3

Status of Deferred Customer Projects

Contradiction on whether deferred projects are being delivered or only expected to resume in the future.

John Nelson (Private Investor) - John Nelson (Private Investor)

2025Q4: Yes, signs of improvement are being seen, which is reflected in the stronger first-quarter 2026 performance compared to first-quarter 2025. The company is now beating its first-quarter 2025 revenue in 2026. - Dr. Halden Shane(CEO)

Are you seeing signs of improvement in customers deferring capital expenditures due to economic uncertainty, tariffs, and Middle East tensions? - John Nelson (Private Investor)

2025Q2: Our deferred revenue is $700,000. There are at least 2 customers expected to resume in Q1 2026. - David Vanston(CFO)

Contradiction Point 4

Nature of SteraMist FDA Approval Timelines

Contradiction on the specificity and certainty of timelines for key FDA approvals.

John Nelson (Private Investor) - John Nelson (Private Investor)

2025Q4: The company is currently working with honeybee associations and the Department of Agriculture to seek real-world application opportunities. A live use case with a local university is being pursued. - Dr. Halden Shane(CEO), EJ Shane(COO)

How does the technology address Deformed Wing Virus in honeybees? - John Nelson (Private Investor)

2025Q2: We are pursuing two FDA approvals: ... 1. A 510(k) for medical devices (decon chambers), expected early in Q4. - Elissa Shane(COO)

Contradiction Point 5

Growth Drivers for Solutions Sales

Conflicting explanations for the primary driver of BIT Solution revenue growth.

John Nelson (Private Investor) - John Nelson (Private Investor)

2025Q4: BIT Solution revenues increased from 2024 to 2025 and this trend is continuing into 2026... This growth is attributed to the company's strategic shift towards open order policies and long-term service offerings. - EJ Shane(COO)

What were BIT Solution's revenues for 2025 compared to 2024? - Jeff (Capital)

2025Q1: The 'razor-razor blade' model is driving sales: initial technology sales ('razors') are increasing, leading to higher consumable sales ('blades'). Large orders from existing high-users are contributing to the growth... - Halden Shane(CEO)