Company: TOMZ
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001654954-25-009631
Chunk: 11

Company: TOMI Environmental Solutions, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 1
Chunk 11
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 fixed payments and are captured in the future minimum lease payments calculation. In determining the discount rate to use in calculating the present value of lease payments, we used our incremental borrowing rate based on the information available at adoption date in determining the present value of lease payments. We have also elected the practical expedient to not separate lease and non-lease components for all asset classes, meaning all consideration that is fixed, or in-substance fixed, will be captured as part of our lease components for balance sheet purposes. Furthermore, all variable payments included in lease agreements will be disclosed as variable lease expense when incurred. Generally, variable lease payments are based on usage and common area maintenance. These payments will be included as variable lease expense in the period in which they are incurred. Accounts Payable As of June 30, 2025, one vendor accounted for approximately 49% of accounts payable. As of December 31, 2024, one vendor accounted for approximately 60% of accounts payable. For the three and six months ended June 30, 2025, two vendors accounted for 50% and 49% of cost of sales, respectively. For the three and six months ended June 30, 2024, two vendors accounted for 82% and 73% of cost of sales, respectively.

 11Table of Contents

Accrued Warranties Accrued warranties represent the estimated costs, if any, that will be incurred during the warranty period of our products. We estimate the expected costs to be incurred during the warranty period and record the expense to the consolidated statement of operations at the date of sale. Our manufacturers assume the warranty against product defects from date of sale, which we extend to our customers upon sale of the product. We assume responsibility for product reliability and results. As of June 30, 2025, and December 31, 2024, our warranty reserve was $30,000 and $30,000, respectively. (See Note 14). Income Taxes Deferred income tax assets and liabilities are determined based on differences between the financial statement reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws in effect when the differences are expected to reverse. The measurement of deferred income tax assets is reduced, if necessary, by a valuation allowance for any tax benefits that are, on a more likely than not basis, not expected to be realized in accordance with FASB ASC Topic 740, Income Taxes guidance for income taxes. Net