Breaking Down TOMI Environmental Solutions, Inc. (TOMZ) Financial Health: Key Insights for Investors

You're looking at TOMI Environmental Solutions, Inc. (TOMZ) and seeing a classic high-risk, high-reward setup, where a sharp operational rebound is fighting a serious balance sheet crunch. Honestly, the headline numbers from the Q3 2025 report are a mixed bag: revenue jumped 95% sequentially to $2.012 million, which is a great sign that their Binary Ionization Technology (BIT™) platform is gaining traction, especially with their recurring solution sales up 21% year-to-date. But let's be fair, the nine-month net loss is sitting at a painful $(1.943 million), and the company is facing a very real Nasdaq delisting risk, having dipped below the crucial $2,500,000 stockholders' equity requirement. The good news is the pipeline is strong-management expects about $3 million in pending contracts to close before year-end-but with only about $190,000 in cash as of September 30, 2025, that liquidity issue is defintely the elephant in the room. You need to know if the operational momentum can outrun the capital constraints, so let's break down the true health of this disinfection player.

Revenue Analysis

You need to know where TOMI Environmental Solutions, Inc. (TOMZ) is making its money, and the latest data shows a clear pivot: while overall revenue is down, the crucial, recurring part of the business is growing. For the nine months ending September 30, 2025, the company's total revenue was $4.619 million.

That nine-month figure represents a substantial year-over-year decline of 31% from the $6.670 million reported in the same period in 2024. This drop is a near-term risk, mostly pinned on customers delaying big capital expenditure (CapEx) decisions because of the uncertain economic environment. It's a common challenge right now. Still, the third quarter of 2025 saw a strong sequential rebound, with revenue of $2.012 million, a 95% jump over the second quarter.

The core of TOMI Environmental Solutions, Inc.'s business is its SteraMist technology, which uses Binary Ionization Technology (BIT) to create a powerful disinfectant fog. The revenue breaks down into two main segments:

• SteraMist Product Revenue: This is the sale of the SteraMist equipment and the proprietary BIT solution.
• Service and Training Revenue: This covers decontamination services, training, and licensing.

Here's the quick math on the segment contributions for the nine months ended September 30, 2025:

The significant change is the resilience of the recurring revenue. While big equipment sales (part of Product Revenue) took a hit from delayed CapEx, the recurring SteraMist solution sales actually increased 21% year-over-year for the nine months ended September 30, 2025. That's the sticky, high-margin revenue you defintely want to see growing. It suggests customers who already own the equipment are using more of the consumable solution, which is a positive utilization signal.

Geographically, the United States remains the primary market, contributing $3.294 million of the nine-month revenue, while international sales accounted for $1.325 million. The company is pushing for more global reach, with nearly 36% of Q3 2025 revenue generated internationally, up from 20% in Q2 2025. That's a good sign of market diversification. For a deeper dive into the company's long-term vision, you can review their Mission Statement, Vision, & Core Values of TOMI Environmental Solutions, Inc. (TOMZ).

Profitability Metrics

You're looking for a clear picture of TOMI Environmental Solutions, Inc. (TOMZ)'s financial engine, and the 2025 year-to-date numbers show a strong gross margin but significant bottom-line pressure. The company maintains an impressive gross profit margin, sitting at about 61.95% for the nine months ended September 30, 2025, but this is completely eroded by operating expenses, leading to substantial losses.

Here's the quick math for the first nine months of fiscal year 2025: on $4.619 million in revenue, TOMI Environmental Solutions, Inc. reported a gross profit of $2.861 million. But once you factor in the selling, general, and administrative costs, the operating loss widens to $2.208 million, resulting in a net loss of $1.943 million. That's a net loss margin of over 42%. That's a tough spot.

Gross Profit Strength vs. Industry Averages

The gross profit margin is defintely the bright spot here, and it speaks directly to the value of their core Binary Ionization Technology® (BIT™) platform. At 61.95% year-to-date, this margin is significantly higher than the average for the broader Environmental & Waste Services sector, which typically sees a gross profit margin around 34.65%.

To be fair, TOMI Environmental Solutions, Inc.'s business model, which includes high-margin recurring solution sales, is closer to a specialized Professional Services firm, where gross margins range from 55% to 65%. TOMI Environmental Solutions, Inc. is right in that top tier, which shows excellent cost management relative to the cost of goods sold (COGS).

This is a high-quality product with strong pricing power. You can read more about the company's market position in Exploring TOMI Environmental Solutions, Inc. (TOMZ) Investor Profile: Who's Buying and Why?

Operating Efficiency and Profitability Trends

The real issue is the trend in operating and net profitability. For the nine months ended September 30, 2025, the operating loss of $2.208 million is more than double the operating loss of $956,000 reported in the same period a year ago. The net loss followed a similar path, widening from $1.221 million to $1.943 million.

This widening loss is a direct result of revenue falling from $6.670 million to $4.619 million year-over-year, coupled with increased operating expenses. The company has shown disciplined cost management by reducing selling, research, and administrative expenses year-to-date, but that wasn't enough to offset the revenue drop.

Here's a snapshot of the recent quarter (Q3 2025) versus the prior year, which shows the profit reversal:

The shift from a small operating income of $149,000 in Q3 2024 to an operating loss of $321,000 in Q3 2025 is a critical change. The company needs to grow revenue significantly to cover its fixed costs, or it must find a way to make those operating expenses much smaller. The recurring SteraMist solution sales, which were up 21% year-to-date, are a step in the right direction toward stable revenue, but the equipment sales need to follow suit to drive profitability.

Debt vs. Equity Structure

You're looking at TOMI Environmental Solutions, Inc. (TOMZ) to understand how they fund their growth, and the quick takeaway is this: the company is currently relying heavily on debt and is actively moving to raise fresh equity to shore up its balance sheet. This is a classic small-cap balancing act, but the leverage is high.

As of the third quarter of 2025, TOMI Environmental Solutions, Inc.'s total debt-which primarily consists of convertible notes and operating leases-stood at approximately $3.44 million. This is a significant amount when you compare it to the total shareholders' equity, which was only about $2.21 million at the same time. Here's the quick math on the key components:

• Long-Term Debt (Convertible Notes, net): $2,894,053
• Total Operating Lease Liabilities (Current and Long-Term): $547,698
• Total Shareholders' Equity: $2,206,482

The High-Leverage Reality: D/E Ratio

The core metric here is the Debt-to-Equity (D/E) ratio, which tells you how much debt the company uses to finance its assets relative to the funding from shareholders. For TOMI Environmental Solutions, Inc., the D/E ratio sits at about 156% (or 1.56:1) based on the Q3 2025 figures. Honestly, that's a high degree of financial leverage for a company in the broader Industrials sector.

To put that 156% D/E into perspective, the average for the overall US market is often closer to 83.3%. A major peer like Waste Management (WM), for example, operates with a D/E ratio near zero. A high D/E ratio means the company is relying more on borrowed money than on investor capital, which amplifies returns in good times but makes the company defintely more vulnerable to rising interest rates and operational setbacks. The company's net debt-to-equity ratio has climbed from a very low 3.1% over the past five years, showing a clear shift in financing strategy.

Recent Capital Actions and Near-Term Risk

The company's recent financing moves clearly show management is trying to balance this high leverage by prioritizing equity. In November 2025, TOMI Environmental Solutions, Inc. filed a $50 million universal shelf registration statement on Form S-3. This is essentially a ready-to-use authorization to issue a mix of securities-debt or equity-to raise capital quickly when needed.

More specifically, they established an Equity Line of Credit (ELOC) to sell up to $20,000,000 of common stock over a 24-month period. This is a direct signal that equity funding is the near-term focus, and it's a necessary move. The company also completed a $535,000 convertible note financing earlier in 2025.

The urgency here is real. Just days after the shelf filing, on November 21, 2025, Nasdaq informed the company that it was not meeting the critical $2,500,000 stockholders' equity requirement for listing. This means the company's capital structure isn't just a financial detail; it's a listing compliance issue. The ELOC and shelf registration are direct actions to remedy this equity shortfall, using shareholder funding to stabilize the balance sheet and support growth in their SteraMist technology. You can read more about the company's full financial picture in Breaking Down TOMI Environmental Solutions, Inc. (TOMZ) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You need to know if TOMI Environmental Solutions, Inc. (TOMZ) can cover its near-term bills, and the 2025 numbers show a mixed picture: the company has enough current assets to cover current debt, but not enough in its most liquid form. The liquidity position is adequate, but it relies heavily on selling inventory, which is a key risk to monitor.

As of the second quarter of 2025, TOMI Environmental Solutions, Inc. maintained a current ratio of 2.08. This means the company holds $2.08 in current assets (cash, receivables, inventory) for every dollar of current liabilities. That's defintely a healthy buffer, well above the 1.0 standard, but the quick ratio tells a different story.

The quick ratio (or acid-test ratio) strips out inventory-the least liquid current asset-to see how fast the company can pay off its short-term debt. For TOMI Environmental Solutions, Inc. as of Q2 2025, that ratio was only 0.82. This is below the cautionary 1.0 mark, suggesting that if a sudden need for cash arose, the company would have to liquidate some of its significant inventory of $3,267,460 to meet obligations of $2,593,063. The reliance on inventory is clear.

Looking at working capital (current assets minus current liabilities), the trend shows a slight dip in the near-term. The working capital position was approximately $2,809,688 at the end of Q2 2025, which then narrowed to $2.5 million by the end of Q3 2025. This decrease isn't a crisis, but it's a trend we need to watch, especially as the company continues to invest in its core business and expand its Mission Statement, Vision, & Core Values of TOMI Environmental Solutions, Inc. (TOMZ).

The cash flow statement for the trailing twelve months (TTM) ended June 30, 2025, shows that cash is still being used, not generated. Operations consumed about $350,000 in cash, though this is a significant improvement-an approximately $876,000 reduction in cash used in operations compared to the nine months ended September 30, 2024. That's a positive step toward cash flow neutrality.

Investing activities used another $230,000, mostly for capital expenditures and intangible asset purchases, which is normal for a growth-focused technology company. To cover these cash outflows and maintain working capital, TOMI Environmental Solutions, Inc. has relied on financing, specifically completing a $535,000 convertible note financing during 2025. This financing is a necessary stop-gap, but it adds to the long-term debt structure.

Here's the quick math on liquidity risks and opportunities:

• Risk: Quick ratio below 1.0 means short-term debt is not covered by cash and receivables.
• Opportunity: Operating cash use is shrinking, a strong signal of improving efficiency.
• Action: Monitor Accounts Receivable collection-it's crucial to turn that $1,054,071 into cash quickly.

The key takeaway is that TOMI Environmental Solutions, Inc. is managing its liquidity, but it's a tightrope walk. They are making progress in slowing the cash burn from operations, but until operating cash flow turns positive, the company will remain reliant on financing activities, like issuing notes, to fund its growth and cover its short-term needs.

Valuation Analysis

You're looking at TOMI Environmental Solutions, Inc. (TOMZ) and trying to figure out if the current stock price of around $0.75 makes sense. Honestly, the valuation metrics tell a complex story, typical of a small-cap company focused on growth over immediate profit. You can't just look at one number here; you have to see the whole picture.

The core issue is profitability. The Price-to-Earnings (P/E) ratio is currently negative, sitting around -2.7x, because the company is posting negative earnings. This immediately tells you that traditional earnings-based valuation models aren't useful yet. The company's focus is on expanding its proprietary Binary Ionization Technology (BIT) platform, which you can read more about in their Mission Statement, Vision, & Core Values of TOMI Environmental Solutions, Inc. (TOMZ).

Here's the quick math on what the market is telling us about TOMI Environmental Solutions, Inc. (TOMZ) as of late 2025:

• P/E Ratio: -2.7x (Negative earnings make this metric unusable).
• Price-to-Book (P/B) Ratio: Around 5.77.
• EV/EBITDA: EBITDA is negative at -$5.07 million, making the Enterprise Value-to-EBITDA (EV/EBITDA) ratio less meaningful.

A P/B ratio of 5.77 is high. This means the market is pricing the stock at nearly six times the value of the company's net assets (what's left if all assets were sold and all debts paid). High P/B ratios often signal that investors are betting heavily on future growth and intellectual property, not on the current balance sheet. The stock is a growth play, defintely not a value one.

Looking at the Enterprise Value-to-EBITDA (EV/EBITDA) ratio, the company's TTM (trailing twelve months) EBITDA is negative, around -$5.07 million. This metric is designed for profitable companies, so its negative value just reinforces the fact that TOMI Environmental Solutions, Inc. (TOMZ) is burning cash to fuel its expansion efforts.

Stock Price Trajectory and Analyst Consensus

Over the last 12 months, the stock has been volatile, trading between a 52-week low of $0.63 and a high of $1.50. Despite the volatility, the stock has managed a modest 1-year gain of +4.83%. This suggests that while the business itself is still finding its footing, the market has rewarded the stock slightly over the past year, likely on news of new contracts or strategic initiatives.

The analyst community has a mixed, but generally optimistic, view. The consensus rating is a Hold, which is a classic fence-sitting position. Still, the average consensus target price is significantly higher than the current price, sitting at $3.50.

What this estimate hides is the high-risk, high-reward nature of the stock. The individual ratings are split: one analyst has a Buy rating, one has a Hold, and one has a Sell. The spread is wide, so you need to understand which side of the risk you fall on.

One final note: TOMI Environmental Solutions, Inc. (TOMZ) does not pay a dividend, so the dividend yield is 0.00%. This is standard for a small-cap company prioritizing capital reinvestment for growth over shareholder payouts.

Your action here is clear: if you are a patient, risk-tolerant investor who believes in the long-term potential of their SteraMist technology, the stock is undervalued based on the consensus target. But if you require positive earnings or a low P/B ratio, the stock is currently too expensive and speculative.

Risk Factors

You're looking at TOMI Environmental Solutions, Inc. (TOMZ) and seeing a unique technology, but the financial filings from late 2025 show some immediate, serious risks you need to weigh against the potential. The direct takeaway is this: the company is facing significant liquidity and operational challenges, compounded by an urgent Nasdaq delisting threat.

For the nine months ended September 30, 2025, the company reported a Net Loss of nearly $(1.943 million), which is a widening of the loss from the prior year. This financial strain is the root of the most immediate external risk: the threat to their Nasdaq listing. Honestly, that's the one to watch right now.

Immediate Financial and Delisting Risks

The most pressing risk is the company's non-compliance with Nasdaq listing standards, which was formally announced in November 2025. This isn't just a technicality; it signals sustained market and financial weakness. The company received two deficiency letters.

• Minimum Bid Price: The stock traded below the minimum $1.00 per share for 30 consecutive business days. They have until May 18, 2026, to regain compliance.
• Stockholders' Equity: TOMI Environmental Solutions, Inc. does not comply with the minimum $2,500,000 stockholders' equity requirement. They have a 45-day window from November 21, 2025, to submit a plan to fix this.

The nine-month operating loss of $(2.208 million) and a cash balance of only about $490,000 at the end of Q3 2025 underscore the liquidity risk. This low cash position makes it defintely harder to execute on growth plans and address the capital-intensive nature of their business. Here's the quick math: continued losses erode equity, which directly feeds the delisting risk.

Operational and Market Headwinds

External market conditions have directly impacted the top line. Total Revenue for the nine months ended September 30, 2025, was $4.619 million, a sharp 31% drop from the same period in 2024. This was primarily driven by customers delaying capital expenditure (CapEx) projects, citing an uncertain economic environment and the impact of announced tariffs on their supply chains. This points to a reliance on large, lumpy equipment sales, which are the first to get cut when corporate budgets tighten.

The company operates in a specialized, high-stakes decontamination market, which means competition is fierce and the barrier to entry for new, equally effective technologies is a constant threat. Plus, any adverse regulatory change to the use of their core Binary Ionization Technology (BIT™), or ionized Hydrogen Peroxide (iHP™) platform, could immediately cripple their business model.

Mitigation and Opportunity Mapping

To be fair, TOMI Environmental Solutions, Inc. isn't just sitting still. The company is actively working to shift its revenue mix toward more predictable, recurring income. SteraMist solution sales, the consumable part of their business, increased by 21% year-over-year for the nine months ended September 30, 2025. That's a good sign for long-term stability.

They are also showing commercial momentum, with management actively negotiating an additional $2 million to $3 million in potential new contracts expected to close before year-end. Plus, the FDA's final rule on the broader use of hydrogen peroxide as a direct food additive is a clear regulatory tailwind that could open up a much larger food safety market for their iHP technology.

If you want a deeper dive into the financials that underpin these risks, check out Breaking Down TOMI Environmental Solutions, Inc. (TOMZ) Financial Health: Key Insights for Investors. Your next step is clear: monitor the Nasdaq compliance plan submission-that's the near-term catalyst that will clarify the company's path forward.

Growth Opportunities

You're looking at TOMI Environmental Solutions, Inc. (TOMZ) and trying to map out a path to sustainable growth, which is smart, because the latest financials show a mixed picture. The direct takeaway is that while overall revenue for the nine months ended September 30, 2025, was down 31% to $4.619 million due to customer-delayed capital expenditures, the company's high-margin, recurring revenue model is accelerating, giving us a clear line of sight on future performance.

The core of TOMI's future lies in its patented Binary Ionization Technology (BIT) platform, which uses ionized Hydrogen Peroxide (iHP). This is the razor-and-blade model in action: sell the equipment, then secure the high-margin, recurring sales of the BIT Solution consumable. The gross profit margin held strong at 61% in the third quarter of 2025, proving the value of this model. Honestly, that margin is a significant competitive advantage.

Analysis of Key Growth Drivers and Earnings Estimates

The near-term growth is driven by a few key product innovations and market expansions that are already translating into concrete sales figures for the 2025 fiscal year. The company is successfully diversifying beyond its core SteraMist mobile units into larger, more integrated systems. Here's the quick math on the near-term pipeline:

• SteraMist Integrated System (SIS): Contracts worth $575,000 for three offerings are secured in 2025.
• Custom-Engineered Systems (CES) and Hybrid Projects: The first deal for 2025 is valued at $3.7 million, with plans to close five additional deals estimated at $1.4 million.
• Total Sales Pipeline: The potential demand across the CES, Hybrid, and SIS product lines is approximately $15 million, with $7 million designated as high priority.

This growing backlog is crucial. The sales order backlog expanded to $1.3 million as of October 31, 2025, and there are approximately $3 million in pending contracts expected to close before the year-end. This visibility into future revenue is what investors should focus on, even with the Q3 2025 operating loss of $(321,000).

Strategic Market Expansion and Competitive Edge

TOMI Environmental Solutions, Inc. is making strategic moves that position it to capitalize on new, highly regulated markets. The recent U.S. Food and Drug Administration (FDA) decision to broaden the permitted use of hydrogen peroxide as a secondary direct food additive is a game-changer, opening up significant opportunities in the food industry for SteraMist. Also, international revenue jumped to nearly 36% of Q3 revenue, compared to 20% in Q2 2025, showing the global push is defintely working.

The company's competitive advantage is built on the SteraMist technology itself. It achieves a six-log kill rate-meaning it eliminates 99.9999% of pathogens-in seconds, and its residue is only oxygen and water vapor. This safety and efficacy is why partners like Trauma and Casualty Team (T.A.C.T.) franchises are expanding their use, with a recent equipment and BIT Solution purchase totaling $175,000. They are also expanding their service network into mold and mycotoxins remediation in the healthcare industry, securing a major contract to remediate a 400,000-cubic-feet space at a hospital.

The strategic partnerships are key to scaling globally without massive capital outlay. They are working with PBSC Biotech and six other regional partners in markets like Malaysia, India, and Italy, and are actively exploring new partnerships in countries such as Panama, Nigeria, Israel, and Australia. This is a smart way to drive international adoption. For a deeper dive into the company's long-term vision, you can check out the Mission Statement, Vision, & Core Values of TOMI Environmental Solutions, Inc. (TOMZ).

The company is positioned to leverage its technology in emerging biosecurity and clean manufacturing trends. The one analyst covering the stock has a 12-month price target of $3.50, which suggests a significant upside if the current pipeline converts as expected. Still, you must weigh the growth potential against the recent Nasdaq deficiency notices regarding the minimum $1.00 bid price and the $2.5 million stockholders' equity requirement. This is a high-growth, high-risk scenario.

Next Step: Finance should model the expected Q4 2025 revenue based on the $1.3 million backlog and the $3 million in pending contracts to get a full-year revenue estimate by the end of the week.