TOMI Environmental Solutions (NASDAQ:TOMZ) reported higher first-quarter revenue, improved operating cash flow and a growing backlog, while management also outlined a proposed merger intended to diversify the company into nuclear-grade graphite and related materials.
Chief Executive Officer and Chairman Dr. Halden Shane said the first quarter of 2026 marked “a healthy start to the year,” citing a 5% year-over-year revenue increase and a 67% sequential increase from the fourth quarter of 2025. He said applicator sales in the quarter exceeded total applicator sales for all of 2025, representing 139% year-over-year growth.
Revenue rises as expenses decline
Chief Financial Officer David Vanston said revenue for the quarter ended March 31, 2026, was $1.6 million, up from $1.5 million in the same period a year earlier. Product revenue increased by $300,000, or 31%, driven by higher equipment and CES-related sales. Service revenue declined by $234,000, or 41%, which Vanston attributed to the timing of decontamination project completions and service engagements.
Gross profit was $832,000, or about 50% of revenue, compared with $952,000 in the prior-year quarter. Vanston said margins were affected by strategic price discounts to support equipment adoption and by a product mix shift toward lower-margin equipment sales. Management described those factors as temporary and said higher-margin recurring BIT solution consumables and applicator sales are expected to support margin recovery in future periods.
Total operating expenses fell to $1.48 million, down $248,000, or 15%, from $1.7 million a year earlier. The loss from operations improved to $626,000 from a loss of $754,000 in the prior-year period.
Net loss was $811,000, or $0.04 per basic and diluted share, compared with a net loss of $256,000, or $0.01 per share, in the first quarter of 2025. Vanston noted that the prior-year quarter included a non-recurring Employee Retention Credit of $535,000 and related interest of $83,000.
TOMI ended the quarter with $280,000 in cash and working capital of approximately $394,000, compared with $88,000 in cash and $1 million in working capital at the end of 2025. Vanston said the company generated $149,000 in gross proceeds during the quarter through the issuance of 336,147 shares under its $20 million equity line of credit.
Backlog and pipeline expand
Management said TOMI’s backlog increased from $1.6 million at year-end 2025 to $2.2 million currently. Shane said the backlog growth reflects demand for the company’s automated integrated systems and service offerings, even as the company fulfills existing orders.
At the end of the first quarter, TOMI received $440,000 in annual purchase orders for recurring decontamination services with what management described as a leading global medical technology company. The contract covers quarterly professional iHP decontamination services for cleanroom and laboratory environments.
Chief Operating Officer Elissa “EJ” Shane said the company’s immediate integration sales and pipeline totals $4 million across 14 customers, including seven orders received, with remaining projects awaiting capital approvals. She said those orders are in various stages of manufacturing and delivery, which will affect revenue timing.
Shane also said the company’s full sales opportunity pipeline across mobile capital equipment, automated integrated custom designs and iHP Corporate Service deployments is projected at $22 million to $33 million. Of that amount, $9 million is categorized as active, approved or anticipated for purchase this year based on customer requests or sales progression.
Commercial and regulatory milestones
During the quarter, TOMI sold and installed a SteraMist Hybrid system at a private East Coast research university for high-level decontamination of reusable medical equipment. Management said the company recently received a second award from that customer.
The company also sold a custom-engineered system in the United Kingdom to an international pharmaceutical manufacturer, integrated into Total Clean Air’s modular cleanroom platform. TOMI named Total Clean Air as its preferred European partner for SteraMist iHP technology following regulatory authorization in Great Britain and Northern Ireland.
Management said regulatory progress included authorization from the U.K. Health and Safety Executive for BIT solution and SteraMist iHP products, as well as product authorization from the Dutch Regulatory Authority. Shane said TOMI was also notified of further approvals in Germany, Belgium, Denmark and Hungary.
In food safety, TOMI highlighted a case study showing up to a 95% reduction in sanitization testing costs for an egg food manufacturer. The company also said its partner DisinfectCare secured a service contract at a major Mexican dairy facility, where testing supported SteraMist iHP efficacy while preserving product quality.
Carbonium Core merger under review
Shane said TOMI executed a non-binding letter of intent on April 30, 2026, to merge with Carbonium Core Inc., a U.S.-based producer of nuclear-grade graphite for advanced reactor technologies and AI data center infrastructure. Under the proposed transaction, Carbonium Core would become a wholly owned subsidiary of TOMI.
According to Shane, Carbonium Core’s former stockholders would receive TOMI common stock equal to 19.99% of shares outstanding before the merger, along with shares of a newly created series of convertible preferred stock. He said the deal implies an enterprise valuation of $120 million.
Management said it aims to finalize definitive agreements by May 30, 2026, with a 45-day exclusivity period in place. Shane emphasized that the letter of intent is non-binding and that completion remains subject to definitive agreements, due diligence, customary closing conditions and stockholder approval.
During the question-and-answer session, H.C. Wainwright analyst Amit Dayal asked about due diligence and potential investment needs for Carbonium Core. Shane said the target is in its early stages and that TOMI is forming a committee to assist with due diligence. He said investment requirements had not yet been determined.
Management points to growth expectations
In response to Dayal’s question on margins, Shane said management expects gross margins to rebound and does not plan to provide the same level of discounts again. Asked whether revenue should grow through 2026 or remain lumpy, Shane said the company “most definitely” expects growth through 2026 and into 2027 and beyond.
Management also discussed potential longer-term markets for SteraMist technology, including biological safety cabinets, food safety, unmanned aircraft, robotaxis and honeybee hive decontamination. Shane said the company is seeking to engage with the honeybee industry on a study related to viral contamination in combs, but did not provide a specific timeline.
Looking ahead, Shane said TOMI’s priorities for the remainder of the second quarter include advancing the Carbonium Core transaction, growing recurring revenue through BIT solution sales and service contracts, and strengthening balance sheet flexibility through its equity line of credit and additional financing initiatives.
About TOMI Environmental Solutions (NASDAQ:TOMZ)
TOMI Environmental Solutions, Inc is a provider of infection prevention and control technologies, specializing in advanced decontamination and disinfection solutions. The company develops and manufactures a range of proprietary products, including electrostatic sprayers, thermal foggers, vaporized hydrogen peroxide systems and mobile decontamination chambers. These technologies are designed to deliver broad-spectrum pathogen kill and odor elimination in both occupied and unoccupied spaces.
In addition to its equipment offerings, TOMI provides chemical disinfectants and surface coatings formulated to meet regulatory standards for hospital‐grade efficacy.
