TOMZ Sales Plunge 31%, Net Loss Widens Amid Rising Debt

TL;DR

**TOMZ is bleeding cash and piling on debt; steer clear until they show a path to profitability.**

AI Summary

TOMI Environmental Solutions, Inc. (TOMZ) reported a significant decline in financial performance for the nine months ended September 30, 2025, with net sales decreasing by 30.7% to $4,619,229 from $6,669,730 in the prior year. This led to a substantial net loss of $1,943,457, a 59.2% increase from the $1,221,030 net loss in the same period of 2024. Gross profit also fell by 30.0% to $2,860,840. The company's cash and cash equivalents decreased by 26.3% from $664,879 at December 31, 2024, to $490,022 at September 30, 2025. Accounts receivable saw a positive change, decreasing by $1,003,569, but the allowance for credit losses increased to $2,229,977 at September 30, 2025, from $1,494,347 at December 31, 2024. Long-term convertible notes payable increased to $2,894,053 from $2,360,494, indicating increased debt financing. The company continues to operate in disinfection and decontamination, leveraging its SteraMist brand and Binary Ionization Technology (BIT).

Why It Matters

TOMI Environmental Solutions' substantial revenue decline and widening net losses signal significant operational challenges, impacting investor confidence and potentially future growth prospects. The increase in convertible notes payable suggests a reliance on debt financing, which could strain the company's balance sheet and increase financial risk for investors. For employees, continued losses could lead to job insecurity or reduced investment in R&D. Customers might see less innovation or stability from a struggling provider. In the competitive disinfection market, TOMZ's financial weakness could allow rivals to gain market share, especially given its niche in environmentally friendly solutions.

Risk Assessment

Risk Level: high — The company reported a net loss of $1,943,457 for the nine months ended September 30, 2025, a significant increase from the $1,221,030 loss in the prior year. Cash and cash equivalents decreased by $174,857 during the nine-month period, and total shareholders' equity declined from $4,098,939 at December 31, 2024, to $2,206,482 at September 30, 2025, indicating a deteriorating financial position.

Analyst Insight

Investors should exercise extreme caution and consider divesting TOMZ shares given the consistent net losses, declining revenue, and increasing debt. Await clear evidence of a turnaround strategy, sustained revenue growth, and a path to profitability before considering any investment.

Financial Highlights

debt To Equity

2.65

revenue

$4,619,229

total Assets

$8,045,191

total Debt

$5,838,709

net Income

$(1,943,457)

gross Margin

61.9%

cash Position

$490,022

revenue Growth

-30.7%

Key Numbers

• $4,619,229 — Net Sales (Decreased by 30.7% for the nine months ended September 30, 2025, compared to $6,669,730 in 2024.)
• $(1,943,457) — Net Loss (Increased by 59.2% for the nine months ended September 30, 2025, from $(1,221,030) in 2024.)
• $490,022 — Cash and Cash Equivalents (Decreased by 26.3% from $664,879 at December 31, 2024, to September 30, 2025.)
• $2,894,053 — Convertible Notes Payable (Increased from $2,360,494 at December 31, 2024, to September 30, 2025.)
• $2,206,482 — Total Shareholders' Equity (Decreased from $4,098,939 at December 31, 2024, to September 30, 2025.)
• $1,231,971 — Gross Profit (Q3 2025) (Decreased from $1,561,127 in Q3 2024.)
• $2,229,977 — Allowance for Credit Losses (Increased from $1,494,347 at December 31, 2024.)
• $535,000 — Proceeds from Convertible Notes (Cash provided by financing activities for the nine months ended September 30, 2025.)
• $(576,780) — Net Cash Used in Operating Activities (For the nine months ended September 30, 2025, an improvement from $(1,452,862) in 2024.)
• 20,225,205 — Common Shares Outstanding (As of November 12, 2025.)

Key Players & Entities

• TOMI Environmental Solutions, Inc. (company) — registrant
• SEC (regulator) — U.S. Securities and Exchange Commission
• Nasdaq Capital Market (market) — exchange where TOMZ common stock is registered
• EPA (regulator) — U.S. Environmental Protection Agency
• DARPA (company) — Defense Advanced Research Projects Agency of the U.S. Department of Defense
• SteraMist (company) — brand of disinfection products
• Binary Ionization Technology (company) — premier technology platform
• COVID-19 (event) — pandemic impacting product usage
• Florida (location) — state of incorporation
• Maryland (location) — location of principal executive offices

FAQ

Risk Factors

• Deteriorating Financial Performance and Liquidity Concerns [high — financial]: Net sales declined 30.7% to $4,619,229 for the nine months ended September 30, 2025, leading to a 59.2% increase in net loss to $1,943,457. Cash and cash equivalents decreased by 26.3% to $490,022, while long-term convertible notes payable increased by 22.6% to $2,894,053. This trend suggests increasing reliance on debt financing amidst declining operational performance, raising concerns about the company's ability to meet its financial obligations.
• Increasing Allowance for Credit Losses [medium — financial]: The allowance for credit losses significantly increased from $1,494,347 at December 31, 2024, to $2,229,977 at September 30, 2025. This indicates a higher perceived risk of uncollectible accounts receivable, potentially signaling weakening customer financial health or increased credit risk within the company's customer base.
• Declining Gross Profit and Sales [high — operational]: Gross profit fell by 30.0% to $2,860,840 for the nine months ended September 30, 2025, mirroring the 30.7% decrease in net sales. This suggests challenges in either maintaining pricing power, controlling the cost of goods sold, or a combination of both, impacting the core profitability of the business.
• Decreasing Shareholders' Equity [high — financial]: Total Shareholders' Equity has decreased from $4,098,939 at December 31, 2024, to $2,206,482 at September 30, 2025. This substantial reduction, primarily driven by accumulated deficits, indicates a significant erosion of the company's net worth.
• Intense Competition in Disinfection Market [medium — market]: The company operates in the disinfection and decontamination market, which is highly competitive. While TOMI leverages its SteraMist brand and Binary Ionization Technology (BIT), the market likely includes numerous players offering various solutions, potentially pressuring pricing and market share.

Industry Context

TOMI Environmental Solutions operates in the highly competitive disinfection and decontamination market. The industry is driven by increasing awareness of hygiene and safety, particularly in healthcare, commercial, and residential sectors. Competitors range from traditional chemical disinfectant providers to other advanced technology-based solutions, requiring continuous innovation and effective market penetration strategies.

Regulatory Implications

The company's products are subject to regulatory approvals and standards related to disinfection efficacy and safety. Changes in environmental regulations or health guidelines could impact product development, market access, and operational costs. Compliance with these evolving standards is crucial for maintaining market position and avoiding penalties.

What Investors Should Do

1. Monitor cash burn rate and liquidity
2. Analyze the drivers of sales decline
3. Evaluate the impact of increased debt
4. Assess the increase in Allowance for Credit Losses

Key Dates

• 2025-09-30: Nine months ended September 30, 2025 Financial Reporting — Indicates a significant decline in net sales and an increase in net loss, highlighting current financial challenges.
• 2025-12-31: December 31, 2024 Balance Sheet Data — Provides a baseline for comparison of asset and liability changes, showing a decrease in cash and an increase in convertible notes payable.

Glossary

Allowance for Credit Losses

An estimate of the amount of accounts receivable that a company expects will not be collected. (An increase here suggests higher risk of uncollectible revenue, impacting profitability and cash flow.)

Convertible Notes Payable

Debt instruments that can be converted into a predetermined amount of the issuer's equity at certain times. (An increase indicates the company is taking on more debt, which may be convertible to equity, diluting existing shareholders.)

Accumulated Deficit

The total cumulative net losses of a company since its inception that have not been offset by net profits. (A large and growing accumulated deficit negatively impacts shareholders' equity and can signal ongoing unprofitability.)

Binary Ionization Technology (BIT)

A proprietary technology used by TOMI Environmental Solutions for disinfection and decontamination. (This is the core technology the company's products are based on, central to its value proposition and market differentiation.)

Year-Over-Year Comparison

Compared to the prior year, TOMI Environmental Solutions has experienced a significant downturn. Net sales have decreased by 30.7%, and the net loss has widened by 59.2%. Gross profit has also seen a substantial decline of 30.0%. While net cash used in operating activities improved from $(1,452,862) to $(576,780), this is overshadowed by the overall negative financial trajectory. The company's cash position has weakened, and its debt load, particularly long-term convertible notes, has increased, while shareholders' equity has diminished.

Key Financial Figures

• $0.01 — ch registered Common stock, par value $0.01 per share TOMZ Nasdaq Capital Marke

Filing Documents

• tomz_10q.htm (10-Q) — 1187KB
• tomz_ex311.htm (EX-31.1) — 13KB
• tomz_ex312.htm (EX-31.2) — 13KB
• tomz_ex321.htm (EX-32.1) — 5KB
• tomz_ex322.htm (EX-32.2) — 5KB
• tomz_10qimg2.jpg (GRAPHIC) — 1KB
• 0001654954-25-013088.txt ( ) — 6027KB
• tomz-20250930.xsd (EX-101.SCH) — 54KB
• tomz-20250930_lab.xml (EX-101.LAB) — 340KB
• tomz-20250930_cal.xml (EX-101.CAL) — 54KB
• tomz-20250930_pre.xml (EX-101.PRE) — 295KB
• tomz-20250930_def.xml (EX-101.DEF) — 165KB
• tomz_10q_htm.xml (XML) — 1013KB

Financial Statements

Financial Statements. 4 Item 2

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations. 26 Item 3

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk. 39 Item 4

Controls and Procedures

Controls and Procedures. 39 PART II OTHER INFORMATION Item 1 Legal Proceedings. 41 Item 1A Risk Factors. 41 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds. 41 Item 3 Defaults Upon Senior Securities. 41 Item 4 Mine Safety Disclosures. 41 Item 5 Other Information. 41 Item 6 Exhibits. 41

SIGNATURES

SIGNATURES 42 EXHIBIT INDEX 43 2 Table of Contents

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q, or this Form 10-Q, contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and we intend that such "forward looking statements" be subject to the safe harbors created thereby. For this purpose, any statements contained in this Form 10-Q, except for historical information, may be deemed "forward-looking statements". You can generally identify "forward-looking statements" as statements containing the words "will," "would," "believe," "expect," "estimate," "anticipate," "intend," "assume," "can," "could," "plan," "predict," "should" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, trends in our businesses, or other characterizations of future events or circumstances are "forward-looking statements". "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". The "forward-looking statements" included herein are based on current expectations of our management based on available information and involve a number of risks and uncertainties, all of which are difficult or impossible to predict accurately and many of which are beyond our control. As such, our actual results could differ materially and adversely from those expressed in any "forward-looking statements" as a result of various factors, some of which are listed under the section "Risk Factors" in our most recent annual report on Form 10-K previously filed with the Securities and Exchange Commission on April 14, 2025, as amended. Readers should carefully review these risks, as well as the addi

: FINANCIAL INFORMATION

PART I: FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements. TOMI ENVIRONMENTAL SOLUTIONS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS September 30, 2025 December 31, Current Assets: (Unaudited) 2024 Cash and Cash Equivalents $ 490,022 $ 664,879 Accounts Receivable - net 619,965 1,881,138 Inventories - net (Note 3) 3,364,260 3,578,202 Vendor Deposits (Note 4) 222,065 35,895 Prepaid Expenses 333,997 332,999 Total Current Assets 5,030,309 6,493,113 Property and Equipment – net (Note 5) 678,528 875,449 Other Assets: Intangible Assets – net (Note 6) 1,359,205 1,250,574 Operating Lease - Right of Use Asset (Note - 7) 342,229 399,254 Other Assets 634,920 675,348 Total Other Assets 2,336,354 2,325,176 Total Assets $ 8,045,191 $ 9,693,738 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts Payable $ 1,258,483 $ 1,924,379 Accrued Expenses and Other Current Liabilities (Notes 13 and 14) 828,723 455,675 Deferred Revenue 309,752 211,724 Current Portion of Long-Term Operating Lease (Note 7) 139,917 129,132 Total Current Liabilities 2,536,875 2,720,910 Long-Term Liabilities: Long-Term Operating Lease, Net of Current Portion (Note 7) 407,781 513,395 Convertible Notes Payable, net of discount of $ 240,947 and $ 239,506 at September 30, 2025 and December 31, 2024, respectively (Note 9) 2,894,053 2,360,494 Total Long-Term Liabilities 3,301,834 2,873,889 Total Liabilities 5,838,709 5,594,799 Commitments and Contingencies (Notes 7, 9 and 11) - - Shareholders' Equity: Cumulative Convertible Series A Preferred Stock; par value $ 0.01 per share, 1,000,000 shares authorized; 63,750 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively 638 638 Cumulative Convertible Series B Preferred Stock; $ 1,000 stated value; 7.5 % Cumulative dividend; 4,000 shares authorized; none issued and outstanding at September 30, 2025 and December 31

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