Sturrimus faces 66% revenue decline amid economic uncertainty, yet anticipates service revenue growth and strategic partnerships to drive recovery in second half of 2025.

Dr. Shane - (00:00:00)

We expect repeat orders from customers during the latter half of the year. Years ago we developed this model and it is starting to bear its fruits as the solution is our razor blade in relationship to our razor razor blade model. Our solution is the key to our model and has the highest margins. In the second quarter we successfully validated the NASA project which is now operational. We are collaborating with the Space center on writing a publication and early approval to do so is promising. We remain optimistic about the sales trends for the remainder of the year across our BIS solution Steramis Integrated Systems (SIS) platform and are offered services both deployment and support along with our Custom Engineered System or ces. The quarter began on a strong note marked a significant win for our SIS platform totaling over 180,000 for a university with delivery scheduled for September. Our egg white manufacturing customer from the food industry continue to make device purchases as we welcome new opportunities from a servicing franchise that began purchasing our equipment in the first quarter and continued with additional orders in the second quarter. Notably, three of their servicing locations are now utilizing stirrepacks and we are in ongoing discussions to expand in other locations across the United States. Additionally, the USDA increased its usage of Steri Mist in the second quarter and we concluded the quarter with another SIS collaboration with a material handling equipment supplier in Illinois. The breadth of these orders demonstrate our success in developing strong and varied relationships in multiple industry verticals and as of June 12, Steramis was recognized as the Detection, Disinfection and Decontamination Product Company of the year for 2025. I will now hand the call over to our new Chief Financial Officer and please officially welcome David Vanston who will provide a brief overview of our financial Results for the second quarter of 2025 compared to the same period last year.

David Vanston - (00:02:47)

David thank you Dr. Shane. In the second quarter of 2025 our revenue was 1 million 31, a decline from 3 million in second quarter of 2024 representing a 66% decrease in sales. This was primarily driven by customers deferring capital expenditure products projects in our product sales mainly due to the uncertain economic environment with the impact of announced and implemented tariffs on their supply chains and long term planning. This is illustrated as this was not a factor in the second quarter of 2024 which had higher sales in mobile equipment of approximately a million and our Custom Engineered Systems (CES) of approximately half a million. As Dr. Shane referenced, the service based revenue for the three months ended June 30, 2025 was 378,000, an increase of 33% over the same period last year. The service based revenue for the six months was 955,000 representing an increase of 299% or 46% compared to the same period last year. This increase in service revenue was due to increased demand from our current and new life science customers, expansion of services in additional industries being served by our products and more stringent related procedures resulting in quotes of 35% increase year over year leading to expectations of continuing higher growth in the second half of the year. For the three months ended June 30, 2025, our gross margin as a percentage of sales improved to 66% up from 62% in the same quarter last year. The improved gross margins were attributable to to our product mix in sales, including higher sales of solutions service offerings in the three months end of June 25th compared to the same period last year. For the three months ended June 30, 2025 we experienced an operating loss of approximately 1.1 million compared to an operating income of 120,000 in the same period last year. Our net loss for the three months ended 6-30-25 was approximately 1.28 million or $0.06 per basic and diluted share compared to a net income of 30,000 or $0.00 per basic and diluted share in the same period last year. As of 6-30-25, our financial position includes cash and cash equivalents of approximately 569,000, working capital of 2.8 million and shareholders equity of 2.7 million. I will now turn over the call to our Chief Operating Officer, E.J. sheen to discuss upcoming business highlights. E.J.

E.J. Sheen - Chief Operating Officer - (00:06:03)

Thank you, David. We have several active projects on schedule for delivery by the end of the year and we are currently negotiating an additional $2 million in our custom and integrated contracts with bids expected to close before the year end. In March this year, we announced our first formal OEM partnership with PBSC, a leading manufacturer specializing in high containment material decontamination and clean room solutions. This collaboration has proven to enhance our Steramis Integrated System (SIS), product offerings. Further, in our last call, I provided an in depth explanation between the Custom Engineered System or the ces, and the Steramis Integrated System (SIS). In summary, both offerings consist of custom and integrated solutions that are increasingly becoming more turnkey with each new success. As we continue to collaborate with our established manufacturing partners such as PBSC for the many types of enclosures in this industry, I anticipate a smoother and faster delivery process in the years ahead. We recently announced a new WIN for our SIS platform with a university located in Miami. This contract is not with pbse. Instead, it represents a second engagement with a different manufacturing partner that previously collaborated with us on a delivery to a university in Virginia earlier this year. This progression demonstrates our expanding partner network and continuing momentum across academic deployments with this strategy. Regarding our pipeline for these two product offerings and the hybrid, we continue to see growth. As of June 30, 2025, bids range from approximately $105,000 to $1.8 million, an increase from the previous call at 800,000, with a total of $7 million. In active opportunities for our hybrid, the SIS and CES, we have seen an increase in our service pipeline with the number of quotes for services up approximately 35% year over year across both the life Sciences and Food safety divisions. This surge in demand will play a crucial role in supporting our future revenue growth. An example, we renewed a collaboration with the United States Army Medical Research Institute of Infectious diseases, a premier DoD biomedical research and biodefense facility. This quarter we have secured a pipeline of four weeks worth of decontamination service engagements. Facing capital equipment constraints, we are jointly developing a scalable solution to fully replace their current archaic methods. USAMRIT operates BSL3 and BSL4 facilities and collaborates with military and civilian agencies. Their objective is to implement Steramis in newer spaces, expanding our addressable market and validating our technology in high containment environments. Furthermore, we have observed a shift in the clientele within our service provider network seeking to partner with us. These new partners are strategic and come with growth plans. The Steramis Pro Certified program and our referral database have significantly contributed to this transformation in our client base. We expect to be onboarding a group with a strong remediation and government background that has already secured a bid in the healthcare sector. We are excited to provide support for the substantial project which will require multiple systems and is set for September of this year. We are also experiencing a surge in opportunities from our distributors including Aries Distribution on the East Coast, Avantor Sciences in the United States and various places in the agricultural sector, all of whom are acquiring new clients that could significantly influence the industry that may have a positive impact on our business operations and sales. Additionally, our long term international partners in Germany, the Netherlands and Italy have developed strong pipelines pending our final EU and UK registration approvals over the past few months. The agencies in Europe have taken a more active approach in their reviewing of our submissions, so we have some confidence about the approvals being received. Very Shortly, our food safety division is expanding significantly in service jobs and we are currently in discussions with recommendations from our Soli Organics customer to a new client in the leafy greens sector. This new customer is interested in installing similar equipment and ideally our latest Steramis Integrated System (SIS) as the Soli project was one implementation that led to the development of the program behind this new system. Additionally, we see an upcoming opportunity with a multinational food and drink processing empire that has previously made smaller purchases of Steripacs. They are now interested in expanding their order with an additional 25 units and we will keep you updated on this progress. We're also in talks with an avocado produce wholesaler that expressed interest in partnering with us a few years ago, but regulatory hurdles held us back. We're now collaborating with them and the FDA to secure a Food Contact Notification or fcn, which may assist us in the food safety industry to utilize ceramics ihp. Once approved, we will be able to market our products for food contact applications to facilities that comply with this FDA regulation. Our existing customers are highly satisfied and actively using our equipment and we're seeing increasing feedback and willingness to share their positive results. This supports future sales across multiple industries and we are adopting a more assertive approach within the current framework. Each new customer adds value One of our key distributor opportunities for this year is a highly regarded company whose parent organization utilizes our IHP corporate service team. They offer a selection of supplies for laboratories, life sciences, safety and facility management including chemicals, consumables, equipment, instruments, diagnostics and more. Mobile equipment remains our most challenging segment to forecast. That said, we just secured the second order from a globally recognized leader in IHELT this quarter for our Steramis surface units. As I projected and noted on our last call, we also expect the universities to finalize deals this quarter due to year end capital spending. With several opportunities still in the pipeline for our handheld spray delivery systems. I thank you all and will return the call over to Dr. Shane.

Dr. Shane - (00:12:32)

Thank you Ajay as we continue to focus on strengthening our infrastructure by enhancing personnel in our C suite, management and division leaders, sales and technical expertise alongside expanding our network of global distributors. While the second quarter presented its challenges for TOMI Environmental Solns, we are fully committed to driving growth and innovation with our dedicated team. We are focused on expanding all our divisions with many product and service offerings we now offer and we are optimistic about the opportunities ahead. Our sales backlog is significant and encouraging and the new sales strategy we implemented at the end of last year is demonstrating promising results. We are excited about the strategic partnerships and the increasing interest from our clients looking to enhance their operations with our solution. As we continue to navigate the regulatory landscape, we remain hopeful that upcoming registrations will make a significant impact on our growth path. We thank our new cfo, David Vanston for his role in helping us manage personnel constraints and laying the groundwork for further support. With our emphasis on building infrastructure, enhancing our technical expertise and strengthening sales, we are confident that we are on the path to a successful second half of the year. We are constantly adding new interested investors to our company and I want to take a moment to welcome them all and I want to thank them for joining our mission of making the world a safer place. Our IR firm is always available for any investor to send questions and they will forward them off to management. My takeaways from this quarter is that the solution model is starting to work. Recognized revenue was a bit disappointing, but management is energized to make the second half of the year and beat our budget. The product has been accepted by the largest companies in the world and we are thrilled about that. Operator, let's open the call to questions.

Operator - (00:15:14)

Thank you very much. We will now be conducting our question and answer session. If you would like to ask a question, please press Star one on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press Star two if you would like to remove your question from the queue. For anyone using speaker equipment, it might be necessary to pick up your handset before you press the keys. Please wait a moment whilst we poll for questions. Thank you. Our first question is coming from Zach Thompson of Liberty Management. Zach, your line is live.

Zach Thompson - Equity Analyst at Liberty Management - (00:15:53)

Hey, guys, thanks for taking the question. So I see that Solutions sales increased 40% in the first half. Could you give us, you know, even at a high level, the margins that you realize in solution sales compared to the rest of the business? Thank you, Zach. Yeah, we were very excited about our solution sales and we are extremely excited about it going forward. From what we can see, that's our model and more equipment that we get out there. Obviously, solution sales go up. It has high margins solution sales and we're very happy about that. And it has shown by increasing our gross margins to 66% this quarter in light of everything else. But thank you so much for that question. Got it. Thank you. That's all for me.

Operator - (00:16:51)

Thank you very much. Our next question is coming from John Nelson, who's a private investor. John, your line is live.

John Nelson - Private Investor - (00:17:00)

Thank you. Hi. Hi. The Trump strategy in bringing back pharma manufacturing to the United States. Can you talk a little bit about what that kind of opportunity might mean for your company?

Dr. Shane - (00:17:26)

That's a great question, John. It's amazing, to tell you the truth. You know, first of all, the regulatory standards are very high and we need them all. And you know, with the new plants that they're building, the ones that have been closed that they're taking over and with all the new opportunities for business in America, I think that it's going to open up a whole bunch of opportunities for us going forward. Many of these large companies are aware of our product and I think that over the next couple years we should be getting tremendous orders from them. We're hoping that we're going to be able to get into the ground floor of a lot of these new facilities that they're starting to build and break ground on. And that's not the only industry. There's many other ones. I mean the whole server industry, the microchip industry and so much more that's going to need a successful decontamination process that's quick and doesn't create a lot of caustic problems with their equipment and doesn't have to be wiped, et cetera is just opening up a whole avenue of places for us.

John Nelson - Private Investor - (00:18:47)

Okay, thanks. Second question is, are any of the specific customers that had deferred capex projects in the second quarter come back and notified you that they're moving ahead with any of these projects?

Dr. Shane - (00:19:11)

I believe so. Let me refer that to either David or EJ and let them answer it.

David Vanston - (00:19:19)

I'll answer part to help you there, John. If you looked at our customer deposits, you'll see that we've got a significant increase. As Dr. Shane pointed out, we have, you know, our Deferred revenue is 700,000. If around the 400,000 range is where our customer deposits. There's at least two customers who are going to come back in the Q1 of 2026. I'll hand over to EJ for more details.

E.J. Sheen - Chief Operating Officer - (00:19:58)

I think that's covered, David, but yes, I mean some of them were also, you know, just one off of them based on terms and delivery were already delivered this quarter in the first month. And yes, we do have the one project that we did a press release with the university in Boston, which is a custom build in, will be delivered in the quarter two of next year. But that's the only large scale project. The rest are due to set for either this quarter or the beginning of Q4.

John Nelson - Private Investor - (00:20:27)

Okay, great. And then E.J. could you describe A bit more with a bit more detail about how Steramist would be used if you get the FDA approvals that you been attempting.

E.J. Sheen - Chief Operating Officer - (00:20:47)

Sure, John. There's two FDA approvals I'm working with. One is still the 510(k) for medical devices. So that was a big part of last quarter's script. And that's still an ongoing project with the decon chambers we're developing that are set for delivery in the beginning of Q4. So once we do that and process the data, the 510 should be an easier line through for receipts. The reference on today's call for the FCN is primarily based for an easier in to the many opportunities we're seeing in food safety alone. So primarily avocados, seeds, items that aren't necessarily a direct spray on food to eating. Right. It's more still items that are protected by some barrier where we would be able to have approval from the facility to spray direct on. So in the avocado industry specifically, there's a mold issue. And of course we see salmonella and listeria in food areas which we know we have the efficacy on. So all we need is a stamp from the FDA to also prove that based on the studies we already have. So I'm looking for that to help in those opportunities.

John Nelson - Private Investor - (00:22:05)

Okay, good. And then any new uses that you've come across or developed for Steramist?

E.J. Sheen - Chief Operating Officer - (00:22:20)

Yeah, I mean, we're always doing internal tests and we have consultants and an individual that focuses on application of new processes. One is spray on flowers to increase the length of time that, you know, floors can deliver. And we're seeing promising results there. But after, you know, we do our internal test, there's always, you know, many other hurdles to overcome to make sure we can enter into those industries, but we do always looking for additional applications.

John Nelson - Private Investor - (00:22:56)

Okay. That is all the questions that I have. Thank you.

Operator - (00:23:04)

Of course.

Jeff - (00:23:05)

Thanks, Jeff.

Operator - (00:23:07)

Thank you very much. Just a reminder there, if there are any remaining questions, you can still join the queue by pressing star1 on your phone keypad now.

UNKNOWN - (00:23:21)

Okay.

Operator - (00:23:22)

I'm not seeing anyone else in the queue at the moment, so I will hand back to the management team for closing comments.

Dr. Shane - (00:23:30)

Well, again, I just want to thank everybody for listening to the earning call and for supporting the company like always. And I hope everybody has, wherever they are, a splendid day or splendid evening. And operator, you can disconnect. Thank you.

Operator - (00:23:48)

Thank you very much. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. We thank you for your participation.