TOMI Environmental Solutions, Inc. (TOMZ) Earnings Call Transcript & Summary

Thank you for joining us today for the TOMI Environmental Solutions investor update conference call. On today's call is TOMI's CEO and Chairman of the Board, Dr. Halden Shane, who will provide an overview of recent business highlights for the most recent quarter. TOMI's CFO, Nick Jennings, will follow up and discuss critical financial benchmarks before addressing any questions you may have. A telephone replay of today's call will be available through August 20, 2020, the details of which are included in the company's press release of August 7, 2020. A webcast replay will also be available at TOMI's website, www.tomimist.com. Please note that information contained within the call is relevant only to the date of which it was recorded, August 13, 2020, and you are therefore advised that time-sensitive information may no longer be accurate at the time of any replay. Certain written and oral statements made by management of TOMI may constitute forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by such words and phrases as we expect, expected to, estimate, estimated, current outlook, we look forward to, would equate to, projects, projections, projected to be, anticipate, anticipated, we believe, could be and other similar phrases. All statements addressing operating performances even of development that the company expects or anticipates will occur in the future including statements relating to the revenue growth, earnings per share growth or similar projections are forward-looking statements within the meaning of the Reform Act. They are forward-looking, and they should be evaluated in light of important risk factors that could cause our actual results to differ materially from our anticipated results. The information provided in this conference call is based upon the fact and circumstances known at this time. The company undertakes no obligation to update these forward-looking statements at the date of this call. I will now proceed to give the call to TOMI's CEO and Chairman of Board, Dr. Halden Shane. Sir, the floor is yours.

Thank you. Hello, everyone, and welcome to TOMI Environmental Solutions Second Quarter 2020 Earnings Call. With me today is our Chief Financial Officer, Nick Jennings, who will lead us into our second quarter 2020 financial results. But first, I'll discuss an overview of recent developments and ongoing efforts of the SteraMist brand as sales and earnings were robust and consistent with our expectations across our current divisions, hospital health care, life sciences, TOMI Service Network, also known as TSN and food safety. In fact, new channels were opened as we saw a substantial increase in many commercial verticals, such as automobile, marine, aviation, medical first responders and medical transportation, police, fire, prisons and the education industries purchasing SteraMist directly and implementing SteraMist into their daily cleaning protocols. Thus far, in 2020, TOMI has excelled at maintaining seamless operations, adapting to this ever-changing and new world we all live in. As a leading provider in disinfection and decontamination, TOMI is in a strong position to play a leading role battling COVID-19 and continue to be the leading provider wherever we exit the current COVID-19 environment and move into the next normal. We are posed to finish 2020 in a stronger competitive position as we become the industry standard. Our focus remains on maximizing our post-COVID traction to continue to drive growth and profit as a leading provider in disinfection and decontamination. We have substantially increased our customer list in the first half of the year. Globally, we added 87 new customers and have trained approximately 150 users in the second quarter. This is a 358% increase over the second quarter of 2019. Total revenue for our second quarter was a record quarter for TOMI, with over $10 million, an increase of over $8 million or 512% when compared to the end of the second quarter of 2019. As reported during our last call, the first quarter of 2020 was a record-breaking quarter for TOMI. And our second quarter of 2020 for TOMI was another record breaker as we saw a 42% growth over our great first quarter. We are thrilled to have reached the $10 million mark for the quarter. We reported on the prior call, due to the strong demand, we required a 50% deposit on all machine orders, which brought our revenue to around $8 million for the first 7 weeks. All those orders have been shipped. Our revenue model is similar to the razor, razor blades as our recurring revenue is BIT solution reorder. Our second quarter BIT solution revenue increased a record 1,082% quarter-over-quarter. We expect our BIT solution revenue growth to continue to surge as TOMI expands its customer base and SteraMist is deployed as a disinfected and decontamination solution. And as I stated in our press release early in the second quarter, as we continue forward during these difficult times, we are committed to keeping pace with increased demand across the board, ensuring that those on the front lines of the fight against SARS-CoV-2 virus are well equipped with our technology and solution remains our #1 priority. SARS-CoV-2 was the launching point for TOMI products and services in the market, and we'll continue to see TOMI products recognized as the industry standard in disinfecting and decontamination. We expect that the adoption of our products and services will continue to be that standard in a post COVID-19 era. Several other key initiatives took place to date in 2020, expanding current and securing new intellectual property and product registrations. Increasing personnel, thus expanding operational departments and implementing additional quality controls and adding an additional overseas manufacturer. As previously reported, our product is qualified to meet the EPA emerging viral pathogen guidance, the novel coronavirus that causes COVID-19. The EPA emerging viral pathogen label is important because the occurrence of emerging viral pathogens is less common and predictable than established pathogens. There are currently no other EPA-registered combined technology solutions with a hospital health care disinfectant label and claim against COVID-19 that are on the EPA list for emerging viruses or pathogen. Keep in mind, our foundation was built on Binary Ionization Technology, BIT, solution that was developed by DARPA for the fight against weaponized anthrax spore and used exclusively in tandem with SteraMist equipment, including the surface unit and the environment unit. Both are currently listed on TOMI's EPA label and further amended to include emerging viral pathogen claims, best meeting the criteria against enveloped viruses and large nonenveloped viruses. BIT is also listed on EPA's List G for norovirus, H for MRSA, K for C. difficile, L for Ebola, M for Avian flu or influenza and N for emerging viral pathogens, including SARS-CoV-2. TOMI maintains this registration, 50 states, Canada and approximately 33 other countries. For those of you who are new to the disinfection industry and/or our SteraMist Brand of products and BIT solution, TOMI SteraMist is a leading provider in this industry due to our superior technology as the only disinfection and decontamination product that encompasses all of the following advantages: faster room turnover, ability to disinfect the hardest to reach smallest of areas, a noncorrosive product with superior material compatibility and with proven 6 log or higher efficacy. All meet the FDA requirements for an emergency utilization review application for reprocessing of N95 masks and PPE. Therefore, customers in our core industries, along with other industries, are searching for a quick, noncorrosive decontamination solution that can be used on the most sensitive of equipment. The SteraMist process provides the user with peace of mind as it reaches everywhere. Customers prefer SteraMist over its competitors' inferior methods such as self manual clean, line of sight, outdated ultraviolet, antiquated other hydrogen peroxide processes and potentially illegal electrostatic sprayers, and I use the word potentially illegal because if one puts an EPA-registered disinfectant product into the sprayer that has not been GLP-tested or Good Laboratory Procedure-tested, if true, then that provider or end user could be subject to regulatory enforcement. One must be very careful when it comes to altering the chemical composition of an EPA-registered product without EPA-sanctioned studies like SteraMist has. These sprayers were produced for indoor and outdoor pesticide control of flies, mosquitoes and pesticide for leafy plants. Our domestic revenue for the second quarter of 2020 was over $8 million when compared to the second quarter of 2019, which was $1.4 million, showing an increase of approximately $7 million or 488%. Through January 30, 2020, our domestic revenue reached approximately $12 million, representing an increase of over $9 million or 367% when compared to 2019. In health care, our health care hospital revenues alone grew by approximately 227% in second quarter of 2020 when compared to the same prior year period. The growth was primarily attributable to the significant demand for our product as a result of the SARS-CoV-2 coronavirus global endemic. We anticipate continued growth in this division as hospital healthcare facilities review and adopt mechanical no-touch cleaning in lieu or in combination to manual spray and wipe techniques to address this current and future outbreaks as well as the daily cleaning standards for the facility. An article was published by a long-term customer, Dana-Farber in Boston, on the research studies and protocol development of the decontamination of N95 masks and face shields. This protocol is under review with the FDA and allows the disinfection of 2,000 masks in 2 hours. Similar protocols developed at the University of Iowa and Cedars-Sinai of Los Angeles are also currently under review with the FDA, allowing for tens of thousands of PPE reprocessing daily. In a recent news article, a TOMI health care client, St. Luke's Boise state, says that SteraMist deactivates organisms on contact, resulting in a shorter chemical dwell time and eliminates the need for new employees to touch contaminated surfaces in order to disinfect an area, and it also prevents cross contamination. The hospital is concentrating on COVID-19 disinfections in the emergency department and specific patient isolation rooms but has plans to expand the use in other areas like the operatory suites and C. diff patient rooms. The SteraMist total disinfection cart has been a proven success in hospitals, such as St. Luke's and, with the increase in demand, resulted in TOMI upgrading the cart with improved mobility, extra space components and an improved locking mechanism. TOMI has also seen increase in hospital health care customer purchasing multiple SteraMist units in order to deploy throughout multiple locations and/or areas within the facility. In 2020, the Montgomery County, Pennsylvania Public Health purchased an environment unit and a surface package, which was soon followed by their public safety training campus purchasing a surface unit using a Homeland Security grant. In May 2020, Geisinger Health System purchased 8 SteraMist surface units for 8 separate locations, spanning from their Jersey Shore hospital location to their Wyoming Valley hospital facility. The Geisinger Health System placed an initial investment of approximately $200,000 in SteraMist and continue to place routine orders since May. TOMI has added psychiatric hospitals to their customer list. With the onboarding of [ Burke ] behavioral health and Greystone Park psychiatric health, each purchasing 5 SteraMist surface units to implement throughout their facilities, placing an initial investment of approximately $220,000. Some of TOMI's established customers, Bayhealth, New Orleans VA, Swedish American, the University of Iowa, all have multiple pieces of SteraMist equipment distributed across their health systems. Health care industry has not seen a slowdown in placing large orders of multiple SteraMist units, thereby, continuing the growth trend. Gila River Healthcare purchased their 5 surface units in July. TOMI's first Indian community, followed by a second Indian community as Fort Belknap reservation in Montana just received their unit. The new installations have the potential for additional orders this fiscal year. The health care industry certainly includes a range of subsegments including hospitals, emergency services, nursing homes, medical centers, pharmacies, diagnostic laboratories, medical device manufacturers, psychiatric institutes and so forth. As early in 2020, TOMI has sold to these subsegments, resulting in TOMI reevaluating their segments and subsegments, a topic in strategy, which will be discussed later in this call. As we have a growing customer -- number of customer experience team members, we are gathering more and more information about our current customer base, not just how they are using our equipment or drafting their protocols, but across all our divisions, TOMI is receiving substantial amount of press and referrals. For example, the director of environmental service in one of our premier hospitals stated, and I quote, "We absolutely love SteraMist, and we've been using the machine nonstop since the onset of SARS-CoV-2. There's a huge sense of security in knowing that the mist is getting everywhere versus light treatments that can't". In life sciences, recent current COVID events have delayed certain opportunities for our life science division as clinical development programs have been postponed. However, many of our customers continue work on testing, manufacturing and distributing medications. One of our recent customers, Gilead Sciences, continue to evaluate alternatives to their recent current processes. TOMI's second quarter 2020 revenue increased by 178% when compared to 2019. We continue to expand the use of SteraMist in support of pharmaceutical drug manufacturing, cell and gene therapy and to maintain a sterile environment for key United States manufacturers. Many of our current SteraMist customers are working to produce COVID-19 vaccines, companies like Pfizer, Sanofi, Merck, AstraZeneca and Medimmune continue to disinfect with a safe SteraMist BIT chemical protecting their operator, facility and the environment while providing the confidence to the American population that we will produce sterile vaccines. A select few of our iHP corporate service operators are temporarily on hold to comply with established state government guidelines. However, once restrictions have been lifted, iHP service corporate is ready to deploy at a moment's notice to be the first on the scene. TOMI continues to conduct national accounts in iHP corporate services, such as LifeNet Health, a leader in transplant solutions and regenerative medicine in which SteraMist is used to treat for their facilities twice a month in partner with our TOMI Service Network members. TOMI SteraMist expanded and continues to develop our federal government partnership with several new agencies, onboarding the technology during the recent pandemic to help make spaces safe for personnel. The federal government continues to see the expanded benefit of using a nonhazardous, low percentage hydrogen peroxide solution, which doesn't corrode facilities, leave behind a residue or of gas caustic odors harmful to personnel after use. SteraMist is being used throughout 6 National Institute of Health, NIH, facilities and continues to expand usage of SteraMist as a superior solution to mobilize and respond as needed to a site where 6 log kill is required. The Frederick County, Maryland Emergency Management and Public Safety team comprises the region's critical 9/11 call center, home to TOMI's operations offices. SteraMist was purchased to safeguard the 24/7 first responder staff from contracting COVID-19 and other viruses and bacteria, preventing crucial operations from being jeopardized. These critical highly trained staff members are a necessary resource for the community and not easily replaced should they fall ill. SteraMist will be used to disinfect 30 operator workstations in about 75 minutes to guarantee emergency response times are maintained to the standard. Just like the hospital health care industry, the life science industry, many players, which TOMI has recruited across the board, including research and clinical, pharmaceutical, pharmacy, government, manufacturing, packaging, blood banks, containment and biosafety labs, all of which are proud to be servicing with SteraMist. Our life science partners are truly the heart of the world and rightfully should be. The industry every year depends more and more on SteraMist to deliver the blood for their decontamination needs. Some items to note. The University of Virginia Center for Comparative Medicine began its germ-free mouse program in 2018 and became aware of SteraMist through its maintenance of a biosafety level 3 facility. Initially, they went through extensive validation testing SteraMist efficacy. They found that SteraMist's method of achieving sterility equivalent to other methods of high efficacy reported in literature but significantly saves time without compromise of sterility. The director stated and I quote, "Sterility is sterility, but personnel time is saved. So we purchased a second unit". Our research and development partnership with a global safety cabinet manufacturer resulted in a custom-built decontamination solution. We were successful in meeting their needs in less than 10 minutes without damaging any materials of research in a highly sterile environment involving germ-free research. Recently a paper titled, Determining The Effectiveness of Decontamination with ionized hydrogen peroxide was published in the Applied Biosafety journal funded by the University of Texas Medical Branch, UTMB, and the National Institute of Allergy and infectious disease, NIH NIAID and [ KAPES ] the lead author was Miguel Grimaldo, Director of Institutional Biocontainment, Galveston national lab, Galveston Texas. Moving on to our TSN service network. Our service network, the TSN division, added 35 new service providers in our second quarter of 2020, an increase of 1,067% compared to the second quarter of 2019. We expanded TSN membership and grew TSN revenue in the second quarter of 2020 by 1,392% when compared to 2019. TSN has proven to be a key division to address the demand for disinfecting and decontaminating services during the outbreak. As businesses update their cleaning procedures and requirements, we anticipate that TSN providers will continue to service their current and new customers, bringing SteraMist to the fight against the coronavirus pandemic and post COVID. Members of this network are now generously spread throughout North America in 44 states and multiple Canadian provinces. TOMI expects to have a TSN member in all 50 states by the end of 2020. TOMI is also able to expand its class of service providers beyond North America's TSN, reaching service providers worldwide, including U.S. territories and across the globe. Our service providers treat everyday establishments. Some items to note. A McDonald's in New York had an individual test positive for COVID. So our provider for that construction treated the establishment so employees would feel safe and secure to return to work. In a proactive effort to keep patrons, The Shooting Edge healthy and protected in Alberta, Canada, the gun club reached out to our member, Calgary Contents, and treated the facility with SteraMist as material compatibility was the utmost importance for their inventory. Ace Hardware was also treated by local provider, Flood Department, after employee tested positive. Flood technicians immediately deployed using SteraMist in the retail storage and stock rooms. And Ace was thankful for their immediate response and great customer service. The often crowded environment of jails poses a danger for the transmission of the virus. Thus, a Middletown city jail addressed the issue by contacting our member, DryPatrol, who completed the job with success. PGA Champions Tour, in continuing to offer the safest atmosphere for players and staff, the PGA Tour has invited Enviro-Mist, one of TOMI's original TSN members, to disinfect tournament facilities nightly with SteraMist. The Buffalo Ridge Clubhouse part of the Bass Pro Big Cedar golf properties will host 2 PGA Champion Tour events over 9 days beginning in August 19. Our technology will thoroughly disinfect all players and staff areas, locker rooms, training, dining and scoring areas. Such high level disinfection is the ideal complement to the enhanced cleaning protocols introduced by the PGA Tour and Big Cedar Lodge. In addition to disinfecting facility, Enviro-Mist has been protecting the PGA Tour's shuttling trailers and trucks since the restart of golf in June. Our U.S. Canadian service provider network is growing. The larger the network, the more awareness nationwide of superior product and its potential. The more the members, the more the network develops from one another and the faster each individual company benefits in their SteraMist investment. In fact, some members are reporting SteraMist saved their businesses during this pandemic and have expressed gratitude to the TOMI support team in educating them on disinfection. We are grateful for our extensive service network, and we applaud all our members for their allegiance to SteraMist and for being at the forefront in the fight against coronavirus and other pathogens. Food safety. Further developments on the manufacturing front include a heavy [ Stork House ] SteraMist backpack. This product line will provide our TSN partners a solution for compact spaces that their business model continuously finds themselves while maintaining superior advantages. This new product is set to launch next year, has made some substantial advancements in its development in the second quarter and we think will be able to be used in the food safety industry. Our Food Safety division has shown only a slight increase due to closures and partnerships stalled from the COVID pandemic. However, TOMI showed a 100% increase in revenue in the second quarter when compared to 2019. TOMI remains confident that food safety presents significant potential as an opportunity for substantial growth with continued product research and compliance testing. The food safety industry in North America is coming under closer scrutiny with the implementation and enforcement of new and established guidelines. Our consultants have submitted a request to expand our current label to include a 1% acceptable concentration of hydrogen peroxide, which will go into our backpack. This year, TOMI received 2 additional published food safety papers, testing the efficiency and impact of the iHP process of our cold plasma arc when compared to an old method of soaking in hydrogen peroxide only. Studies detailed positive effects of SteraMist on various aspects of fresh produce quality and storage methods. Further, a fourth paper is set to be published shortly. On the SteraMist claim of no residue left behind after treatment. These published studies correlate nicely as TOMI's primary objective for this industry is to prevent and minimize food decay without the use of harsh chemicals that leave toxic residues which could create the lucrative opportunity to supplement or replace current pesticides and fungicides currently being used by industry leaders. The SteraMist Select surface unit has been proven effective for not only the life sciences but the food safety industry as well. In the second quarter of 2020, the USDA, United States Department of Agriculture, and FSIS, the Food Safety Inspection Service and OPHS, Office of Public Health and Safety, purchased 3 of these units. FSIS, a public health regulatory agency of the USDA, protects consumers by ensuring that meat, poultry and egg products are safe, wholesome, and accurately labeled. FSIS has 3 laboratories located in Athens, Georgia, St. Louis, Missouri and Albany, California. These regulatory laboratories analyze meat, poultry and egg products to ensure that they are free of adulteration. The labs are part of the critical infrastructure of the country and continue to operate during the coronavirus pandemic to provide a safe supply of food products. As the Select surface unit is portable and flexible, the disinfection unit can be used in multiple areas and on different types of surfaces, which is ideal for these labs. Per their statement of work, the units were purchased initially to provide lab workers a safe environment to work in. However, since SteraMist technology inactivates viruses and kills bacteria, the units will also be useful. After the treatment of the current pandemic won as the lab at all 3 sites routinely handled a variety of pathogenetic bacteria. TOMI is working in the Virginia State University Agricultural Research Station and its partner, [ Arkoma ], on a food safety pilot study based on novel, nonthermo and environmentally friendly technology to control food borne pathogen on industrial hemp seeds and strawberries as representative models. The study will investigate the efficacy of ionized hydrogen peroxide in inactivating food borne pathogens, determining the optimum treatment conditions on microbial and physical quality of 2 model products. Recently, the USDA's Research, Education, Economic mission area in the Northeast purchased a SteraMist Select surface unit. And TOMI is seeing a slight increase in the interest of universities assembling funding to purchase SteraMist disinfection for their dining halls in order to bring students back-to-school and open their dining halls and cafes, very important for students to go back to school. As mentioned in my introduction, new channels were open as disinfecting and decontamination protocols have been firmly implemented and enhanced across the world. To date, TOMI has shipped equipment to and onboarded a total of 27 customers in a variety of new commercial channels domestically and internationally. As mentioned earlier, these customers include but are not limited to use sites such as aviation, frozen manufacturing companies, police and fire departments -- we love our police and fire, prisons, automobile, marine, education, regulatory and consulting agencies, retail, housing and recreation and, of course, state emergency preparedness for countries and cities to use SteraMist throughout their community. As we move forward, TOMI will continue to access the markets they serve due to the increased demand in our new channels. Beginning In the third quarter of 2020, we will add a fifth division, commercial. Our commercial division will most likely encompass the most versatile of and expand over a wide range of sub classifications. Internationally, our international business continues to grow. Some of our 2020 items to note, [ the Launcher Solution ] based out of Guam, a leader in hospitality, industry exhibiting versatility and expertise in a broad range of products and services it offers to the hotels, hospitals and federal establishments on Guam. Many of their premier SteraMist services can be found online, all throughout the territory, which provided a revenue of approximately $200,000 in 2020 for TOMI. TOMI previously welcomed Shield Aviation in our customer lineup as a German-based airline cleaning and disinfection service. Shield Aviation continues to expand into multiple territories within aircraft, both large and small. They're active throughout the EU and assisting TOMI in third-party testing on aviation controls, which should assist TOMI worldwide in the aviation category. In fact, the owner states and I quote, "When looking for a suitable disinfection system for airplanes and helicopters, we discovered iHP which is also compatible with the rules of the European Union Aviation Safety Agency, EASA, with no negative effects on aircraft structures and electronics, as well as a very short exposure time, it is the perfect solution for aviation." [ Shells ] now has multiple SteraMist units and deploys throughout Germany's European aviation market. Israel-based CleanCore, an existing customer onboarded in 2019, followed by a large investment in SteraMist in early 2020, providing a total revenue of approximately $2.3 million for the company. The company is specializing initially in water and fire damage. Remediation industrial cleaning has diversified and created a subsidiary Clean-Bit Environmental Solutions, bringing SteraMist to a vast array of industries throughout the region. Further, the organization's superb business team has assisted in providing valuable and effective marketing to assist in the awareness of the SteraMist brand. Clean-Bit started a subsidiary in Thailand with one of TOMI's international partners and is moving into life sciences and veterinarian industries. Internationally, our revenue was over $1.6 million, representing an increase of $1.4 million or 675% when compared to the second quarter of 2019. And for the year, international revenue increased over $4.7 million. We anticipate substantial growth in our international revenue in the second half of 2020. The increase in our international revenue was attributable to the continued use and expansion of our SteraMist line of products in Canada, Europe, Asia and the Middle East. We expect our international revenue to grow as more countries adopt our products and services as well as the ever-changing requirements for disinfection and decontamination. In addition, our international revenue is also attributed to our long-term partners in Italy, Spain, [ Philly ] and South Korea, GD Sciences, the latter who is finalizing arrangements in the pharmaceutical class, providing the necessary user requirements specifications for purchases this year. Also, GD Sciences has over 10 South Korean hospitals using SteraMist. In the second quarter, TOMI entered into a distribution sales agreement with 2 privately owned Portugal-based companies. One specializes in worldwide distribution of hemostasis, autoimmunity, acute care and in vitro diagnostics. The agreement requires for the purchase of 500,000 by the end of 2020 with a 20% increase each year thereafter. Second company is responsible for manufacturing of the walk-through disinfection chamber that will be using our technology as a platform along with selling our existing products to their clients in Portugal and Spain. The walk-through chamber promotes good practices of prevention, sanitation and disinfection in the access of spaces with large flow of person. I can see these in front of large apartments and hotels and transportation. TOMI has also entered into agreement with an Indonesian company for distribution in many verticals, including Indonesian Armed Forces, Ministry of Health and Ministry of Defense. Earlier this year, TOMI entered into agreement with L3M International Pte Ltd. L3M is a distributor for the Singaporean health care industry and the Singaporean Ministry of Education and the education sector. L3M is scheduled to purchase an additional 2 surface units that they've entered into a partnership with a neighbor and disinfection service provider in Malaysia. Malaysia has plans of opening its border at the end of August, in which L3M is prepared to combat the second wave with their new partner by their side. As TOMI expands worldwide, we entered in service centers across the globe to the ease of servicing our equipment. L3M based in Singapore, as noted above, is being trained in our Frederick operations facility and will co-manage a large Singapore-based service facility. Similar training and protocols have been brought to our partners in South Korea and Whiteknights in the United Kingdom. Along with our long-established Singaporean partners, SteraMist is currently working with the civil defense. TOMI has added an additional partner, Victory Knights Management and Consulting Services for distribution to Homeland Security and the defense in Singapore. TOMI is under agreement with a number of separate manufacturers internationally in the development of the SteraBot. One is [ RV Technologies ] in Hong Kong, who has already shipped its first SteraBot robot to a health care customer in an Eastern European or Baltic country for validation and trial. Our robots, going forward, will be used indoor and outdoor area disinfection. The robot will be able to perform both manual and automatic remote control for indoor and outdoor disinfection tests. This robotic system will be commissioned with appropriate types of disinfection operation and battery-driven chassis with processing units, including obstacle avoidance, navigation and indoor positioning. TOMI continues to expand in intellectual property, protecting both trademark and patents. To date, TOMI has over 400 published granted or pending design and utility patents or patent applications worldwide. These include filings related for countries, including, but not limited to the EU, Israel, Singapore and Canada. Further, TOMI has over 160 trademarks worldwide between world and logo marks, either active or pending acceptance. These include our most recent applications for the SteraMist robot, the SteraBot. Further, TOMI continues to test and validate each component of its DC voltage prototype with their original manufacturer in the United States. This unit will allow for improved compliance, with regional standards for electrical system and equipment as well as streamlined product manufacturing. In order to meet the worldwide demand for superior disinfection and decontamination technology, TOMI has successfully brought on an additional manufacturer in the Australian marketplace, which will enable our products to be efficiently delivered to Asia and international customers. Planet Innovation specializes in health care technology and private commercialization, and their geography for our current international client base is a perfect fit. TOMI team reports that the last few months have been pleasurable and seamless in collaborating with Planet Innovation and look forward to bringing the SteraMist backpack to production. As we move into the third quarter of 2020, TOMI now has a focus on 5 divisions, hospital health care, life sciences, TSN or TOMI Service Network, food safety and commercial, each encompassing their identifiable or overlapping classifications. Thus, TOMI has taken a stride in developing its accounting and operations department with the hiring of a controller, billing specialists and additional logistics administrator, safeguarding our quality control standards. Further in development is the migration to a new software system to manage business finances, operations and customer relations, NetSuite. I will now and happily turn the call over to TOMI's Chief Financial Officer, Nick Jennings.

Thank you, Dr. Shane. I'll provide a brief overview of our financial results for the second quarter of 2020 compared to the prior year period. For the 3 months ended June 30, 2020, compared to June 30, 2019, total net revenue was $10.28 million compared to $1.639 million representing an increase of $8.389 million or 512%. The increase in revenue was attributable to increased global demand for disinfection and infectious disease control products in response to the SARS-CoV-2 coronavirus global pandemic. In the second quarter, we saw a significant demand for our product with our hospital health care, TSN and new commercial sales channels. To further break down revenue, SteraMist product-based revenues was $9.235 million and $1.504 million, representing an increase of $7.731 million or 514%. Service-based revenue was approximately $793,000 and $135,000, respectively, representing a year-over-year increase of 487%. Domestic revenue was $8.392 million and $1.428 million, respectively, an increase of $6.964 million or 488%. International revenue was approximately $1.636 million and $211,000, respectively, representing an increase of $1.425 million or 675%. Gross margins were 55.5% compared to 59.5%. The lower gross profit was attributable to product mix and sales. Income from operations was $3.657 million compared to a loss from operations of $535,000, representing an increase of $4.291 million. The increase in net income relates to higher revenue and gross profit, offset by increased operating costs. Net income was $3.657 million or $0.03 on a per share basis compared to a net loss of $585,000 or $0.00 on a per share basis, representing an increase of $4.242 million. EBITDA was $3.829 million compared to an adjusted loss of $356,000. For additional income on the calculation of EBITDA and the reconciliation to our GAAP net income, please refer to today's press release. Cash provided from operations for the 6 months ended June 30, 2020, was $5.385 million compared to cash used in operations of $120,000 for the same prior year period. Next, I would like to go through some of the key items on our balance sheet. As of June 30, 2020, and December 31, 2019, cash and cash equivalents of approximately $6.628 million and $897,000, representing an increase of $5.371 million. Working capital was $10.583 million and negative $1.266 million, representing an increase of $11.848 million for the year. Shareholder equity was $12.159 million and $890,000, representing an increase of $11.269 million for the year. Our cash and liquidity position improved in the second quarter due to higher revenue and gross profit, which led to strong cash flows generated from our operations. Our operating margins also remained strong at 36.5% and 37% for the 3 and 6 months ended June 30, 2020, respectively. As Dr. Shane mentioned earlier, we have expanded our accounting department and are currently implementing a new ERP system, NetSuite. We anticipate the new system will improve our reporting, allow us to further automate processes and will improve the overall operations of our company. Looking forward, we are excited to continue to grow the business and plan on adding more employees and expanding our Frederick facility to accommodate our growth. Now I will turn the call back over to Dr. Shane.

Thank you, Nick. For my closing remarks, we are all very encouraged, and I look forward to a continued strong growth in the second half of 2020. We are also encouraged by the substantial progress and promising business development initiatives undertaking that target to secure our new revenue channel while adding new customers and penetrating our current client base. We plan to achieve such growth by continuing to excel in our marketing collateral and initiatives, expanding customer referrals, ongoing public relations, provide the best 5-star customer service and always growing our sales and customer service seats. We are also planning to expand and almost double our new Frederick facility to accommodate growth. Also in the plan is an uplift to Nasdaq markets in the coming months. Trading under the symbol of TOMZ. Our research and development will continue to be a top priority as we develop new products, protect current and new intellectual property and further and finalize many ongoing outstanding international product registrations. TOMI will continue to work on increasing shareholder value through our revenue growth, customer penetration, IT initiatives and effective deployment of capital. As we have advised on previous calls, we reiterate that TOMI is a long-term growth opportunity, and we are striving for SteraMist to become the standard in the industry. TOMI continues to leverage our capabilities to meet the needs of our health care providers and first responders that are at the forefront of this pandemic. I'd like to thank, once again, thank the first responders and their families who have risked much in their occupation. And finally, I want to thank all of our TOMI team members who deliver quality service every day to our customers domestically and across the world. I'd like to thank everyone who joined our call, listened to our call over the Internet, stay tuned for good things ahead. I've answered, under fair disclosure, many of your email questions, and we will always strive to innovate for a safer world. Operator, we have a few minutes. I'll open the floor to take a few questions, either by e-mail.

[Operator Instructions] Our first question comes from [ Zack Sklar ].

I'm wondering if you can give us any indication of future revenues for the upcoming quarter.

We -- Zack, we don't give forward looking numbers yet. Probably in 2021, we will. But currently, we don't. We look forward to having a great second half. Thank you for the question.

Next on the line, we have [ John Lee ].

Can you talk about your capacity and how much your added capacity will add to potential revenues?

We're able to handle our current capacity. We're hoping that -- and we know by expanding, capacity-wise, both from our office and staff-wise, we'll able to handle anything that we have in our pipeline, which is a very large pipeline at the moment.

Great. And also what... [Technical Difficulty]

Next on the line, we have [ Barry Mills ]. I see he disconnected. Okay. Next, we have [ Alex Gillman ].

Dr. Shane, I was hoping maybe you or the CFO can provide some guidance on the deposit system. And some of the guidance that you gave us maybe it was unintentionally in Q1 of the robust performance in the first half versus the second half and what exactly happened there? Because I think that's kind of what led to today's price situation.

Well, I don't comment on stock market prices, nothing organic.

What I'm -- the heart of my question is, how does the deposit system work for you guys? And are you currently still seeing a bunch of deposits being put down?

So we -- we started taking deposits. As you know, we had so much equipment and inventory, and we had to replenish it. To replenish it, we took deposits in mid March, which probably showed that we had the revenue we had. And then we started to fill those. You have to understand that our equipment is technical, it requires training. Our company is so big. And by selling hundreds and hundreds which we have sold, you'll see that it requires a lot of staff to get this in the operations and out in the public working, and that's the reason. So thank you for the question.

Next on line, we have Marty [indiscernible].

I want to congratulate you all on a phenomenal quarter, and thank you for being in the front lines of this COVID pandemic. I just had some questions regarding the FDA and your workings with them. Is there some kind of -- as far as time line on things that you guys are looking on getting cleared or approved through the FDA, especially in the food and safety area?

So as you would assume, working with any government agency, they don't give you time lines. We know that there are 6 levels of -- let's say, that you have to go through with the FDA, and I think we've passed through level 5. So I can't give you a time line. The same thing with the FDA -- with the food safety, we go through the EPA for this label, and they have a certain PRIA, which is a time limit that they allow to -- until they give you an okay, and we think that we'll have that label sometime maybe late 2020 or early 2021. I hope this answers your question. Operator, we have time for 1 more question.

Our last question comes from [ George Froley ].

Dr. Shane. It was a great quarter. But there's just too many shares outstanding. I mean, the stock, whatever you did, the market didn't like it. It's off 30%, 40% today to low percentages, I mean, telling you a message. I think you've got a reverse split like 10 or 12 for 1. So something meaningful can be shown on the earnings call.

Okay. Thanks, [ George ]. Have a good day. I think we'll go ahead and close it out. Thank you all for listening.

Okay. Ladies and gentlemen, this does conclude today's teleconference. You may now disconnect your lines, and enjoy the rest of your day.