Company: TOMZ
Filing Date: 2025-09-30
Form Type: ARS
Source: 0001654954-25-011264
Chunk: 110

Company: TOMI Environmental Solutions, Inc.
Filing Date: 2025-09-30
Form: ARS
Chunk 110
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 |        | 320,000 |
| Total             |     | $      | 420,000 |

| F-18 |

NOTE 7. LEASES

In April 2018, we entered into a 10-year lease agreement for a new 9,000-square-foot facility that contains office, warehouse, lab and research and development space in Frederick, Maryland. The lease agreement commenced in December 2018 when the property was ready for occupancy. The agreement provided for annual rent of $143,460, an escalation clause that increases the rent 3% year over year, a landlord tenant improvement allowance of $405,000 and additional landlord work as discussed in the lease agreement. We took occupancy of the property on December 17, 2018 and the lease was amended in March 2019 to provide for a 4-month rent holiday and a commencement date of April 1, 2019. A 7% discount rate was determined using our incremental borrowing rate based on the information available at adoption date in determining the present value of lease payments. Lease expense for operating lease payments is recognized on a straight-line basis over the lease term.

The balances for our operating lease where we are the lessee are presented as follows within our consolidated balance sheet:

|                                                   | Operating leases: |   | December 31, 2024 |     |   | December 31, 2023 |
|:--------------------------------------------------|:------------------|:--|------------------:|:----|:--|------------------:|
| Assets:                                           |                   |   |                   |     |   |                   |
| Operating lease right-of-use asset                |                   | $ |           399,254 |     | $ |           467,935 |
| Liabilities:                                      |                   |   |                   |     |   |                   |
| Current Portion of Long-Term Operating Lease      |                   | $ |           129,132 |     | $ |           115,658 |
| Long-Term Operating Lease, Net of Current Portion |                   |   |           513,395 |     |   |           642,527 |
| Total                                             |                   | $ |           642,527 |     | $ |           758,185 |

The components of lease expense are as follows within our consolidated statement of operations:

|                         |     |   | For the Year Ended December 31,  2024 |     |   | For the Year Ended December 31,