Company: TOMZ
Filing Date: 2025-09-30
Form Type: ARS
Source: 0001654954-25-011264
Chunk: 97

Company: TOMI Environmental Solutions, Inc.
Filing Date: 2025-09-30
Form: ARS
Chunk 97
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 even if the risk of loss is remote.

We have a policy of reserving for credit losses based on our best estimate of the amount of potential credit losses in existing accounts receivable. We periodically review our accounts receivable to determine whether an allowance is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be at risk. Our allowance for credit losses was as follows for the years ended December 31, 2024 and 2023:

|                             |     |   | December 31, 2024 |   |     |   | December 31, 2023 |   |
|:----------------------------|:----|:--|------------------:|:--|:----|:--|------------------:|:--|
| Allowance for credit losses |     | $ |         1,494,347 |   |     | $ |         1,678,000 |   |
| Credit Loss Expense         |     |   |         1,050,543 |   |     |   |           272,517 |   |
| Adjustment to allowance     |     |   |          (314,913 | ) |     |   |          (456,170 | ) |
| Allowance for credit losses |     | $ |         2,229,977 |   |     | $ |         1,494,347 |   |

Long-term trade accounts receivable, are principally amounts arising from the sale of goods and services with a contractual maturity date or realization period of greater than one year and are recognized as "Long-Term Accounts Receivable" in our Consolidated Balance Sheet.

| F-11 |

Inventories

Inventories are valued at the lower of cost or net realizable value using the first-in, first-out (FIFO) method. Inventories consist primarily of finished goods and raw materials.

We expense costs to maintain certification to cost of goods sold as incurred.

We review inventory on an ongoing basis, considering factors such as deterioration and obsolescence, and future customer demand. We record an allowance for estimated losses when the facts and circumstances indicate that particular inventories may not be usable or realized when comparing current inventory levels to anticipated demand for our product. Our reserve for obsolete inventory was $1,100,000 and $95,000 as of December 31, 2024 and December 31, 2023, respectively.

Property and Equipment

We account for property and equipment at cost