SEC Form 10-K filed by TOMI Environmental Solutions Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

For the fiscal year ended December 31, 2025

or

For the transition period from                      to

Commission File Number 000-09908

Registrant’s telephone number, including area code: (800) 525-1698

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Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒     No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

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As of June 30, 2025, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the common stock held by non-affiliates of the registrant was approximately $12,112,176, based upon the closing price of the registrant’s common stock as reported on the Nasdaq Capital Market on such date.

As of March 20, 2026, the registrant had 20,540,539 shares of common stock outstanding.

Documents incorporated by reference

None.

TOMI ENVIRONMENTAL SOLUTIONS, INC.

ANNUAL REPORT ON FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2025

TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and we intend that such forward-looking statements be subject to the safe harbors created thereby. For this purpose, any statements contained in this Annual Report on Form 10-K, except for historical information, may be deemed to be forward-looking statements. You can generally identify forward-looking statements as statements containing the words “will,” “would,” “believe,” “expect,” “estimate,” “anticipate,” “intend,” “assume,” “can,” “could,” “plan,” “predict,” “should” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to projections of our future financial performance, trends in our businesses, or other characterizations of future events or circumstances are forward-looking statements.

The forward-looking statements included herein are based on current expectations of our management based on available information and involve a number of risks and uncertainties, all of which are difficult or impossible to predict accurately and many of which are beyond our control. As such, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Important factors that could affect our performance and cause results to differ materially from management’s expectations are described in the section entitled “Risk Factors,” Item 1A of this Annual Report on Form 10-K. These factors include, but are not limited to: our history of losses that may prevent us from achieving profitability in the future; our lack of long-term customer contracts and our inability to rely on our sales history or backlog as an indicator of our future sales; that we are subject to a variety of risks associated with doing business internationally; our success in business depends on our ability to adequately protect our intellectual property; and that our stock price is volatile and there is a limited market for our shares.

Readers should carefully review “Risk Factors”, as well as the additional risks described in other documents we file from time to time with the Securities and Exchange Commission. In light of the significant risks and uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by us or any other person that such results will be achieved, and readers are cautioned not to place undue reliance on such forward-looking information. Except as required by law, we undertake no obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

PART I

Item 1. Business

Overview

TOMI Environmental Solutions, Inc. ("TOMI," "we," "our," or the "Company") is a global provider of disinfection and decontamination solutions, offering environmentally friendly products and services for indoor air and surface treatment. Our flagship product line, SteraMist uses our patented Binary Ionization Technology (“BIT”) to deliver a low-concentration (7.8%) hydrogen peroxide-based fog or mist that effectively treats all indoor environments and surface areas.

Developed under a grant from the United States Defense Advanced Research Projects Agency (“DARPA”), SteraMist generates ionized Hydrogen Peroxide (“iHP”) through a high-voltage atmospheric cold plasma arc, converting hydrogen peroxide solution into submicron hydroxyl radical particles. This process achieves a 6-log (99.9999%) or greater kill rate against a broad spectrum of pathogens, leaving only oxygen and humidity as by-products. We maintain U.S. Environmental Protection Agency (“EPA”) registration for our BIT solution, along with applicable regulatory approvals in all 50 states, Washington D.C., Canada, and approximately 40 other countries.

We serve four primary market divisions: Life Sciences, Hospital-Healthcare, Food Safety, and Commercial. Within such industries, our revenue is derived from equipment sales, BIT Solution consumables, corporate decontamination services, and Installation/Operational/Performance Qualification (IQ/OQ/PQ) services.

Our mission: Innovating for a Safer World®.

2025 Highlights

While 2025 presented revenue headwinds, the year was marked by significant commercial momentum, new market entries, product validation across all four divisions, and a strong exit pipeline. The following summarizes key announcements and milestones during fiscal year 2025:

First Quarter

On January 10, 2025, we announced support for partners and clients preparing for emerging public health threats, including RSV, Human Metapneumovirus (HMPV), and highly pathogenic Avian Influenza (H5N1), leveraging SteraMist for infection prevention across government agencies, commercial clients, and school districts.

On February 4, 2025, we deployed SteraMist iHP technology to support wildfire recovery efforts in California communities.

On February 27, 2025, we achieved compliance recognition on the Avetta vendor management platform, reflecting our commitment to health, safety, and environmental (HSE) excellence. This follows our 2024 Gold Safety Award from Highwire. Affiliations with Avetta, Highwire, and ISNetworld open new avenues for TOMI with a broader network of industry leaders.

On March 20, 2025, we deployed SteraMist iHP technology at NASA’s Johnson Space Center, marking our expansion into the aerospace sector.

On March 21, 2025, we announced an expansion into aquaculture with new partner Algafeed.

On March 24, 2025, we announced a contract to install a SteraMist iHP Custom Engineered System (“CES”) at a leading university in Rhode Island, valued at approximately $450,000.

On March 25, 2025, we announced an OEM partnership with PBSC, a premier manufacturer of high-containment, material decontamination, and cleanroom solutions, integrating iHP into their passthrough hatches and chambers.

Second Quarter

On May 30, 2025, the Board of Directors (the “Board”) appointed Mr. David Vanston as Chief Financial Officer of the Company, bringing substantial financial accounting and reporting expertise to support the Company's operations and internal control improvement initiatives.

On June 12, 2025, SteraMist was honored with the 2025 “Disinfection and Decontamination Products Company of the Year” award from Medtech Outlook.

On June 16, 2025, we announced the first commercial installation of our new SteraMist Integration System – Standalone (“SIS-SA”) with a leading CDMO, marking the commercial launch of this product line.

On June 23, 2025, we announced that SteraMist demonstrated efficacy in combating Honeybee Colony Collapse, positioning TOMI to support global food security through environmental biosecurity.

Third Quarter

On July 16, 2025, we announced the successful SIS-SA installation in the pharmaceutical isolator market. Since that announcement, we have integrated SteraMist iHP into two additional enclosures with a strong pipeline for further installations.

On August 11, 2025, our East Coast distributor Ares Scientific announced an additional win with a new university client using our SIS platform, strengthening our academic vertical.

On August 12, 2025, we announced a major new customer in the eye health sector, comparable in scale to Pfizer and Merck, who implemented SteraMist iHP at two facilities in under four months and placed open BIT Solution orders for 2026.

On September 16, 2025, the Company announced the appointment of Francesco Fragasso to its Board, strengthening TOMI's corporate governance and bringing additional expertise to support the Company's strategic growth initiatives.

On September 18, 2025, the FDA broadened the permitted use of hydrogen peroxide as a direct food additive. This regulatory change significantly expands the potential application of SteraMist iHP in the food safety market, particularly for ready-to-eat food processing.

On September 24, 2025, we onboarded the first of three major commercial service provider companies in Q3, all of which show strong potential for expanded SteraMist iHP adoption through their franchise networks.

Fourth Quarter

On October 1, 2025, we announced the appointment of Harold W. Paul to the Company’s Board.

On October 1, 2025, we announced the purchase of SteraMist iHP equipment and BIT Solution totaling $175,000 by Trauma and Casualty Team (T.A.C.T.) franchises, a premier provider of decontamination services operating 18 franchises across the United States. T.A.C.T.'s adoption of SteraMist technology represents a key milestone in the Company's commercial growth strategy.

On November 5, 2025, the Company entered into an equity line of credit (“ELOC”) pursuant to which the Company has the option to sell, from time to time, up to $20,000,000 shares of its common stock over a 24-month period. The ELOC provides the Company with flexible access to capital on an as-needed basis, subject to applicable Nasdaq listing requirements.

On November 10, 2025, we showcased our SIS platform at the AALAS 76th National Meeting in Long Beach, California, a key lead generation event for our animal research vertical.

On November 26, 2025, we announced a custom integration pipeline valued at approximately $3 million, with ten active projects across our SIS and CES platforms. Strategic OEM partnerships with ESCO, Steelco, PBSC, Nuaire, and Getinge are driving platform growth and broader distribution.

On December 18, 2025, we secured a signed purchase order valued at approximately $500,000 from a global biopharmaceutical leader for the integration of SteraMist iHP into passthrough fill boxes used in sterile manufacturing.

On December 22, 2025, we announced the adoption of SteraMist iHP by a leading Cell and Gene Therapy (“CGT”) manufacturer for a commercial-scale pharmaceutical facility, including full IQ/OQ qualification and whole-facility iHP Corporate Service fogging of manufacturing suites, QC labs, and support spaces.

We are actively pursuing additional EPA labels and await further acceptance of our food safety label submitted in mid-2025, while preparing to file for a fifth label based on the above referenced studies conducted with Plum Island. Sales of our BIT Solution have remained stable, but we are fulfilling open orders and automatic shipments for customers, with a notable increase in demand from food safety clients. The FDA's late 2025 announcement, along with ongoing individual customer studies, has enhanced our visibility and sales in the Food Safety sector. While we face challenges with some international registrations, we are committed to overcoming these hurdles, which we believe will ultimately drive sales growth for TOMI. Additionally, we continue to invest in safety and compliance recognitions, such as Avetta and ISN, which are increasingly becoming prerequisites for many of our integration projects.

Regarding the referenced $3 million pipeline for integration projects on November 26, 2025, which encompasses our SIS platform, Hybrid, and CES offerings, approximately $1.6 million has been awarded, with $800,000 recognized since the announcement. While the SIS and iHP Passthrough was a success, we have since started our second project with OEM partner, PBSC. These projects vary in scope, including manufacturing, installation, and validation requirements, which may extend over multiple quarters depending on customer schedules. We anticipate the remaining pipeline to be awarded in the first half of 2026. Additionally, we have identified an extra $1.7 million in projected integration pipeline from bids written specific for iHP technology and from our existing customer and contractor relationships. This of course does not include our entire integration pipeline which stands at $10 million.   

The Science Behind the Technology

BIT technology was initially developed in response to weaponized anthrax spore attacks. It aerosolizes and activates a 7.8% hydrogen peroxide solution through an atmospheric cold plasma arc, producing a fine aqueous mist (0.3–3 μm) with a high concentration of hydroxyl radicals (“OH”). These radicals damage pathogens via oxidation of proteins, carbohydrates, and lipids, rendering DNA and RNA inactive and causing complete cellular disruption.

SteraMist BIT was EPA-registered (90150-2) in June 2015 as the first equipment-plus-solution combination hospital-healthcare disinfectant. Our EPA label supports claims against Staphylococcus, MRSA, Salmonella, H1N1, C. difficile spores, Norovirus, and Emerging Viral Pathogens including SARS-CoV-2 variants. In 2021, our 0.35% hydrogen peroxide product received separate EPA registration (90150-3). In 2022, SteraMist was added to the EPA’s List Q for rare and novel viruses. GLP efficacy data supports all label claims.

Our Customers

SteraMist is used by organizations across life sciences, hospital-healthcare, food safety, and commercial sectors. Our current client roster includes Fortune 100 pharmaceutical and healthcare companies such as Pfizer, Merck, AbbVie, Bausch & Lomb, ThermoFisher Scientific, Eli Lilly and Company, FUJIFILM Diosynth Biotechnologies USA, and Fresenius Kabi, as well as government agencies including the National Institutes of Health (“NIH”), the U.S. Department of Agriculture (“USDA”), Centers for Disease Control and Prevention (“CDC”), United States Army Medical Research Institute of Infectious Diseases and of Chemical Defense (“USAMRIID” and “USAMRICD”) and NASA’s Johnson Space Center. In food safety, our customers include Nestle, Sensient Technologies Corporation, Mayorga Organics, Lakeview Farms, LLC, Batory Foods, Danone, and Perdue. Healthcare customers include Tower Health, Novant Health, Corewell Health, NorthEast Medical Services, St. Jude Children’s Research Hospital, Edgewell Personal Care, and Mass General Brigham. And, we continue to work in tandem with service providers from franchises of DKI, First Onsite, Steri-Clean, Triumvirate Environmental, and Controlled Contamination Services, LLC.

Our products and services are offered through direct sales, independent representatives, and a global network of distributors and certified service providers operating under the SteraMist Pro Certified (“SPC”) program.

Industries and Market Segments

Our operations are organized around four divisions, each targeting specific regulatory and operational requirements:

Life Sciences

The life sciences sector was among the first to adopt SteraMist iHP, recognizing the limitations of traditional vaporized hydrogen peroxide (VHP) and harsh chemical gaseous methods. Pharmaceutical manufacturers, Contract Development and Manufacturing Organizations (“CDMOs”), and research institutions require fully automated, validated decontamination with minimal downtime. Our CES, Hybrid, and SIS product lines are specifically designed to address these requirements, with all installations undergoing full IQ/OQ/PQ validation. The onshoring of pharmaceutical manufacturing, particularly in Virginia with commitments from Merck, Eli Lilly, and AstraZeneca, positions us favorably for expanded adoption in the near term.

Hospital-Healthcare

Healthcare-associated infections (“HAIs”) affect 7–10% of hospitalized patients globally each year, creating significant demand for advanced disinfection. TOMI targets this market by providing rapid-turnaround disinfection for operating rooms, pharmacies, ambulances, and emergency environments. We are expanding our presence through partnerships with group purchasing organizations (“GPOs”) such as Vizient and through targeted educational campaigns aimed at facility managers and infection control professionals.

Food Safety

Food safety regulations require rigorous sanitation across all stages of food handling and processing. The FDA’s 2025 final rule broadening the permitted use of hydrogen peroxide as a direct food additive significantly enhances our positioning in this sector, opening the door for iHP application on food contact surfaces and food products themselves, particularly in the ready-to-eat (“RTE”) segment. In 2025, we experienced significant growth in interest within the Food Safety industry, as we conducted a diverse array of specialized tests in collaboration with industry stakeholders. We are committed to not only expanding our project pipeline but also enhancing awareness of our technology and building relevant relationships in the field, which offers effective application methods in an industry adapting to a new standard of cleanliness.

Commercial

Our Commercial division serves aviation, hospitality, education, government, emergency services, and restoration sectors through a growing network of certified service providers. We have established relationships with large franchise networks including T.A.C.T. (18 U.S. locations), Steri-Clean (approximately 60 franchises), and others. SteraMist’s unique combination of rapid deployment, no preconditioning requirements, and minimal PPE needs makes it well-suited for high-frequency commercial use.

As we advance our efforts to educate various sectors about the implementation of SteraMist iHP and the adoption of our handheld equipment in schools, transportation, and hospitality as standard protocols, we are witnessing an integration of our service providers, primarily from the commercial division, with our Life Sciences division. This convergence includes providers specializing in lab clean-up and Biological Safety Cabinets (BSCs) certification, who are increasingly adopting iHP technology, specifically the SIS platform of products. This development fosters competition among them, as our iHP technology offers a faster efficient solution that can effectively replace two steps in a traditional three-step cleaning process, enabling these providers to enhance productivity in their daily operations and offer iHP over the traditional solutions the industry has become accustomed to.

Research and Development

Our research and development efforts focus on improving, extending, and applying our proprietary iHP technology across new markets and use cases. Research and development expenses for the years ended December 31, 2025 and 2024 were approximately $290,000 and $291,000, respectively.

In the past, we have made significant strides in expanding our regulatory registrations and efficacy study portfolio to capitalize on new and existing market opportunities. Notably, we completed a second 24-month stability study for our 7.8% BIT Solution, which met EPA requirements and confirmed safe shipping and storage. Our 0.35% hydrogen peroxide product received EPA registration for greenhouse and pre- and post-harvest applications, while we pursued further studies on food safety pathogens. Additionally, we've received validation from the Department of Homeland Security's Plum Island Animal Disease Center for iHP's effectiveness against foot-and-mouth disease virus and African Swine Fever, while also working on new labels to support the cannabis industry and researching best practices for minimizing emergency responder exposure to synthetic opioids and exploring iHP as an alternative to ethylene oxide (EtO) in sterilization applications.

In 2025, we initiated several key projects that we continue to advance in the following years. Notably, we began drafting Standard Operating Procedures (SOPs) for live-use applications of iHP in bee hives and continued our international studies to comply with necessary regulations and timelines. We focused on developing SOPs for turnout gear for firefighters, assessing both carcinogen proofing and material compatibility to identify optimal iHP application methods for this group. Additionally, we addressed industry-specific requirements for food safety, particularly concerning Listeria monocytogenes, with positive results from onsite demonstrations and tests on food preservation involving cheese, strawberries, and cut cantaloupe. We also maintained our collaboration with universities to develop protocols for formal studies targeting C. auris, prions, and pinworms, while planning to conduct USP 1072 studies for our Life Sciences division. Lastly, we recognized the need for more data on live applications to tackle the underrepresented public health issue of mycotoxins globally.

We conduct annual self-audits of all SOPs and product compliance processes.

Revenue Sources

We have two sources of revenue, Product and Service, with BIT solution sales from equipment usage leading to a razor-blade model, recurring revenue.

Products Revenue line

The SteraMist product line encompasses both mobile and permanently integrated solutions. Handheld devices provide convenient point-and-spray application at 5 seconds per square foot. Automated environment systems achieve full room disinfection of spaces up to 103.8 m³ (3,663 ft³) using three applicators in approximately 45 minutes.

Off-the-Shelf Mobile Equipment

SteraPak

An all-in-one backpack system with rechargeable battery and cordless operation. Compatible with AC and DC power for use in all countries. Sold with a case of BIT Solution (eight 32-oz bottles).

SteraMist Surface Unit

The original handheld, fully portable unit for quick-turnover disinfection of any affected space. Sold with a case of BIT Solution (four-gallon bottles).

SteraMist Environment System (ENV)

A transportable, remotely controlled system for complete room disinfection. Supports manual and fogging modes; provides downloadable cycle data and audit reporting required by Life Sciences facilities. Sold with a case of BIT Solution (four-gallon bottles). The fourth-generation ENV, featuring a 24-volt universal outlet model, is now commercially available. This model converts more BIT Solution to hydroxyl radicals, lowering residual H₂O₂ PPM levels for faster re-entry times, and includes eight programmable outputs for integration with external equipment.

Total Disinfection Cart

Designed with input from healthcare EVS teams. Houses the Surface Unit, a portable H₂O₂ monitor, Carbon Air Scrubber, Respiratory Protection System, and a custom ICU 55-minute terminal cleaning protocol.

SteraMist Transport

An all-in-one dual-voltage fogging product for vehicles. Application time of 20 minutes per 1,000 cubic feet. Features remote start and cycle notification lights. Sold with a case of BIT Solution (eight 32-oz bottles). The Transport completed its soft launch phase in 2025 and has been placed with international customers and domestic distributors for live practical assessment.

NV+

A solution for smaller areas and budgets, featuring precise volume-based dosing, remote activation, audit reporting, and cleanroom compliance (GMP, cGMP, GLP). Delivers a 36-minute injection cycle for spaces up to 1,800 cubic feet via a telescopic rotating applicator.

Integration Product Offerings:

SteraMist Hybrid

Combines CES-style permanently installed stainless-steel applicators with the ENV generator via a central docking hub. Compliant with cGMP, GMP, and ISO standards. Supports four outputs and analog input from an H₂O₂ sensor. Designed for facilities that require automated decontamination within budget or timeline constraints that do not accommodate a full CES. The Hybrid was first installed at Xenith Pharmaceutical (f/k/a Indigo Pharmaceutical) and subsequently at BeSpoke Pharmaceuticals, with ongoing customer interest driven in part by referrals from existing installations.

SteraMist Integration System (SIS)

The SIS lineup provides versatile enclosure decontamination across three configurations: SIS-SA (stand-alone, stocked inventory), SIS-Pharm (made-to-order for pharmaceutical applications), and SIS-MFG (OEM-integrated for manufacturer partner enclosures). Launched in the second half of 2024, the SIS achieved its first commercial installation in Q2 2025 at a leading CDMO and has since been adopted across pharmaceutical isolators, biosafety cabinets, and OEM cleanroom enclosures. As of year-end 2025, we had ten active SIS and CES integration projects with a combined pipeline valued at approximately $3 million. Strategic OEM partnerships with ESCO, Steelco, PBSC, Nuaire, and Getinge are expanding our route to market for this platform.

Stainless Steel 90-Degree Applicator

Redesigned and manufactured to a 316 stainless steel 90-degree configuration. The ideal applicator for all SIS product lines; available with a flange for permanent or semi-permanent installation.

Custom Engineered System (CES)

A permanent installation for rooms requiring routine automated decontamination, fully integrated into the facility’s HVAC system with permanently mounted applicators and optional SCADA monitoring. Custom-designed, procured, and installed; all CES installations worldwide have undergone full IQ/OQ/PQ validation.

As of year-end 2025, we had ten active integration projects with a combined pipeline valued at approximately $3 million. Strategic OEM partnerships with ESCO, Steelco, PBSC, Nuaire, and Getinge are expanding our route to market for this platform.

Recent Developments

SteraMist engineering continues to advance turnkey decontamination integrations for cleanroom chambers, biosafety cabinets, passthroughs, isolators, and cage washers in collaboration with key enclosure manufacturers. Our 2025 engineering focus has centered on three priorities: expanding the SIS platform into new OEM channels, advancing the PBSC partnership toward its first completed collaborative installation, and scaling CES qualification capabilities in-house to reduce reliance on third-party consultants and improve margin on validation revenue.

Collectively, our installed base of CES, Hybrid, and SIS systems continues to grow, supporting recurring BIT Solution consumption and long-term customer relationships. We believe the shift toward automated, validated, and integrated decontamination, driven by pharmaceutical manufacturing trends including continuous bioprocessing, modular facilities, and AI-enabled manufacturing, positions our product portfolio favorably for continued adoption.

Competition

The disinfection, decontamination, and sanitization industry is intensely competitive and highly regulated across all four of our divisions. Comparable competitors include companies marketing hydrogen peroxide-based products, such as Steris Corporation, Bioquell (owned by Ecolab), and The Clorox Company, as well as numerous ultraviolet and quaternary ammonium chemical companies. Some competitors have longer operating histories, greater name recognition, and substantially greater financial and marketing resources.

SteraMist iHP achieves a 6-log (99.9999%) or greater kill rate, compared to 99.9% (sanitizing) or 99.99% (disinfection) achieved by most household and industrial disinfectants. Per EPA Registration Nos. 90150-2 and 90150-3.

SteraMist’s key competitive advantages include:

We go to market through a direct sales force, independent representatives, and exclusive and non-exclusive international distributors, supported by the SteraMist Pro Certified (SPC) service provider program and strategic alliances with construction companies, engineers, and design firms that facilitate CES and SIS adoption in new facility construction and renovation projects. This multi-channel approach, combined with our qualification services and growing OEM partnerships, creates a durable competitive position that is difficult to replicate quickly.

Manufacturing

We outsource the manufacturing and blending of our SteraMist® equipment and BIT™ Solution. Equipment is manufactured by ISO 9001 registered companies with facilities in Pennsylvania, Delaware, New Jersey, North Carolina, California, and Australia. Our BIT Solution is blended by an EPA-approved blender using a single active ingredient: 7.8% hydrogen peroxide. TOMI maintains full creative control throughout design and manufacturing, and neither our manufacturer nor blender may modify products without our written consent.

Intellectual Property

Our intellectual property portfolio is a key strategic asset supporting our global market position. We hold or have pending over 25 utility or design patents worldwide, protecting both the methods and systems underlying our SteraMist® BIT™ platform, with U.S. patents extending through 2038. Recent additions include patents for backpack decontamination units, mobile carts, and applicator technology in the United States, along with new protection in Singapore, Korea, and other jurisdictions.

We hold more than 30 design patents for decontamination devices, covering applicators, chambers, carts, and surface-mounted systems, across major global markets including the United States, China, Japan, Korea, and the United Kingdom. We continue to pursue applications in Europe, China, and Australia for further additional applications of SteraMist BIT, including food decontamination and iHP-enabled “immune building” biosecurity systems.

In addition, we maintain over 200 trademarks registered or pending in multiple classes across the globe, covering chemical formulations, sterilization equipment, services, and training.

Government Regulation

Our business is subject to government regulations in all countries in which we operate. In the United States, the EPA, FDA, and other authorities regulate the development, manufacture, sale, and distribution of our products. We believe we are currently compliant in all material respects with applicable regulatory requirements, and to date, every registration we have applied for has been accepted.

Human Capital

As of March 20, 2026, we employ 20 full-time executive, operational, and administrative personnel. Given our size, we operate with a lean, cross-functional team in which individual contributors carry significant responsibility across sales, service delivery, engineering, and regulatory affairs. We believe our relations with our employees are good and that our ability to attract and retain qualified personnel is supported by our differentiated technology platform and mission-driven culture.

Available Information

We make available free of charge on or through our corporate website, https://tomimist.com/, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements, and all amendments to those filings as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”). We provide several website addresses in this Annual Report on Form 10-K. These website addresses are intended to provide inactive, textual references only. The information contained on the websites is not part of or incorporated by reference into this Annual Report on Form 10-K, unless specifically stated therein.

In addition, the SEC maintains a website that contains reports, proxy statements, and other information about issuers, such as TOMI, who file electronically with the SEC. The address of the website is www.sec.gov.

Item 1A. Risk Factors

Our business routinely encounters and attempts to address risks, some of which will cause our future results to differ, sometimes materially, from those originally anticipated. Below, we have described our present view of certain important risks. The risk factors set forth below are not the only risks that we may face or that could adversely affect us. If any of the risks discussed in this Annual Report on Form 10-K actually occur, our business, financial condition and results of operations could be materially adversely affected. If this were to occur, the trading price of our securities could decline significantly. In assessing these risks, investors should also refer to the other information contained or incorporated by reference in our other filings with the SEC.

Risk Related to Our Company and Business

We have a history of losses and may not be able to achieve profitability in the future.

We generated a net loss of approximately $3.7 million and $4.5 million for the years ended December 31, 2025 and 2024, respectively.  We also had an accumulated deficit of $58.1 million as of December 31, 2025.  Prior to 2020, we did not generate any profit from our business operations.  The increase in our revenue and net income during 2020 was primarily due to a significant increase in demand for our products as protective measures against the spread of the COVID-19 disease during the pandemic. Such demand subsided in 2021 as the pandemic gradually came under control, which caused us to incur a net loss in 2021 and such trend has continued. In addition, if we decrease our headcount and expenses, we may be unable to support our continued product development and planned growth, and we may not be able to achieve profitability.

Our SteraMist® family of products currently accounts for the majority of our revenue, and our success is almost completely dependent on the success of our SteraMist® brand.

Our SteraMist^® family of products is currently our primary product offering, and we are completely dependent on its success. Successfully commercializing products such as ours is a complex and uncertain process. Our commercialization efforts will depend on the efforts of our management and sales team, our third-party manufacturers and suppliers and general economic conditions, among other factors, including the following:

We have hired and trained additional sales personnel. Despite this growth in sales personnel, we expect that our additional sales force will require lead time in the field to grow their network of accounts and achieve the productivity levels we expect them to reach in any individual vertical and or territory. Furthermore, the use of our products will often require or benefit from direct support from us. If our sales representatives do not achieve the productivity levels, we expect them to reach, our revenue will not grow at the rate we expect, and our financial performance will suffer.

We do not have long-term customer contracts, and our sales history or backlog cannot be relied upon as an indicator of our future sales.

We do not have long-term contracts with any of our customers, and our sales history or backlog cannot be relied upon as a future indicator of our revenues. Our contracts and purchase commitments with customers may be canceled under certain circumstances. As a result, we are exposed to competitive price pressures on every order, and our agreements with customers do not provide assurance of future sales. Our customers are not required to make minimum purchases and may cease purchasing our products at any time without penalty. As such, our unfilled orders and previously completed sales should not be relied on as a measure of anticipated demand or future revenue.

Our agreements with restoration industry specialists are not exclusive, which may allow our competitors to sell their products and services to such specialists.

Our agreements with restoration industry specialists under our TOMI Service Network program, which allows certain restoration specialists to use and sell our products, are not exclusive. This lack of exclusivity allows our competitors to sell products to the same restoration specialists, which could reduce our sales if our competitors’ products are used in lieu of our products. Additionally, the use of our and our competitors’ products by a restoration specialist may create market confusion between our products and the products of our competitors, which may adversely affect our brand reputation and business.

Our success depends upon broad market acceptance of our technology that has not yet been achieved in the Hospital-Healthcare market.

Our BIT technology as a Hospital-Healthcare disinfectant has been proven successful in reducing infections in hospital ICU, BIT having received full Hospital registration for Clostridium difficile spores from the EPA in mid-2017. Our sales are dependent upon broad market acceptance of our technology that replaces long-standing failing manual cleaning techniques such as quaternary ammonium compounds and bleach for disinfection, with our no-touch mechanical process. The failure to obtain broad market acceptance inevitably leads to substantially increased lead times for sales until our prospective customers, particularly in the Hospital-Healthcare market, are accustomed to the use of newer mechanical technology. The inability to timely meet our sales goals could adversely affect our financial condition and results of operations.

There is substantial doubt about the Company’s ability to continue as a going concern.

For the years ended December 31, 2025 and 2024, our net loss was approximately $3.7 million and $4.5 million, respectively, and the cash used in operations was approximately $1.2 million and $1.4 million, respectively. As of December 31, 2025, we had approximately $88,000 of cash and cash equivalents and an accumulated deficit of $58.1 million. These factors raise substantial doubt about our ability to continue as a going concern within one year after the date the financial statements are issued. We intend to fund ongoing activities by utilizing our current cash on hand, the cash generated from operations, and by raising additional capital through equity or debt financing. We continue to pursue various options to raise capital to enhance our cash position, including more recently by issuing convertible notes to accredited investors.

In November 2025, we entered into an ELOC, pursuant to which we have the right, but not the obligation, to sell up to $20,000,000 of shares of our common stock over a 24-month period subject to certain conditions. However, the availability of ELOC and our ability to sell stock depends substantially on the trading price and volume of our stock, which may materially limit our ability to utilize the ELOC to raise capital.

There can be no assurance that we will be successful in raising additional capital or that such capital, if available, will be on terms that are acceptable to us, as our ability to raise capital may be affected by various factors, including general market conditions, volatility of our stock price, investor interests and expectations, and our financial performance.

We are subject to a variety of risks associated with doing business internationally.

We sell our products internationally through exclusive and non-exclusive sales representatives and distributors in Canada, Mexico, Europe, Asia Pacific and Latin America. As a result, we are subject to a number of risks and complications associated with international sales and other operations. These include: risks associated with currency exchange rate fluctuations; requirements or preferences for domestic products or solutions, which could reduce demand for our products; difficulties in enforcing agreements and collecting receivables through some foreign legal systems; unexpected legal or regulatory changes; enhanced credit risks in certain countries and emerging market regions; significant variations in tax rates among the countries in which we do business, and tax withholding obligations in respect of our earnings; exchange controls or other trade restrictions including, constraints on our supply chain and the industries in which we operate; customs clearance and shipping delays; general economic and political conditions in countries where end users of our products are situated; natural disasters, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, travel, social distancing and quarantine policies, boycotts, curtailment of trade, and other business restrictions affecting our ability to sell our products; difficulties in enforcing intellectual property rights or weaker intellectual property right protections in some countries; and difficulties associated with compliance with a variety of laws and regulations governing international trade. The recent imposition by the United States of tariffs, sanctions or other restrictions on goods exported from the United States or imported into the United States, or countermeasures imposed in response to such government actions, could increase the cost of goods for our products or reduce our ability to sell products globally, which may adversely affect our operating results and financial condition.

We are subject to risks associated with international conflicts, geopolitical instability, and related economic disruptions.

Our business and operations may be adversely affected by geopolitical events and international conflicts, including armed conflicts, wars, terrorism, and political instability in regions where we operate or where our customers, suppliers, or distributors are located. Such events can cause significant disruptions to global supply chains, energy markets, financial markets, and international trade, any of which could adversely affect our ability to source products, serve international customers, and operate our business.

Current and ongoing geopolitical tensions, including conflicts in the Middle East and Eastern Europe, the imposition of economic sanctions, trade restrictions, and countermeasures by affected nations, have contributed to elevated energy costs, supply chain disruptions, and financial market volatility. The duration, scope, and ultimate resolution of these conflicts and related diplomatic and economic measures cannot be predicted, and the consequences for global commerce, energy supply, and financial stability remain uncertain.

These and any related geopolitical events could have a material adverse effect on our business, results of operations, financial condition, and cash flows.

If our procedures to ensure compliance with export control laws are ineffective, our business could be harmed.

Our sales to foreign entities are subject to far-reaching and complex export control laws and regulations. Violations of those laws and regulations could have material negative consequences for us including large fines, criminal sanctions, prohibitions on participating in certain transactions and government contracts, sanctions on other companies if they continue to do business with us and adverse publicity.

Climate-related risks, evolving environmental regulations, and increased focus on environmental, social and governance matters could adversely affect our business, financial condition and results of operations.

Our operations and those of our customers and suppliers may be subject to increased regulatory requirements related to climate change, greenhouse gas emissions, and environmental sustainability. Federal, state and foreign governmental authorities continue to consider and implement new or more stringent environmental regulations, including potential requirements relating to carbon emissions, energy consumption, chemical usage, and product lifecycle impacts. Compliance with any such new or expanded regulations could increase our operating costs, require modification of our manufacturing or distribution processes, or require changes to our product formulations, any of which could have a material adverse effect on our business, financial condition and results of operations.

Also, natural disasters, extreme weather events, floods, droughts and other disruptions — could adversely affect our operations, our suppliers' ability to deliver materials and components in a timely manner, and our customers' ability to operate their facilities. Such disruptions could reduce demand for our products, impair our supply chain, or require us to incur additional costs to maintain business continuity.

Separately, investors, customers, regulators and other stakeholders are increasingly focused on environmental, social and governance (“ESG”) matters. We may face pressure to adopt or report on ESG initiatives, set emissions reduction targets, or meet third-party sustainability standards. Failure to meet evolving ESG expectations, whether or not mandated by regulation, could harm our reputation, make it more difficult for us to attract or retain customers and employees, or adversely affect our access to capital. Responding to ESG demands may also require us to divert management attention and incur costs that could adversely affect our operating results. We cannot predict the ultimate scope or timing of future climate-related or ESG regulatory requirements, and our failure or inability to comply with applicable requirements or meet stakeholder expectations could have a material adverse effect on our business, financial condition and results of operations.

Our reliance upon third-party contractors, suppliers and manufacturers for the manufacture of our products increases the risk that we will not have enough of our products or such quantities at an acceptable cost, and reduces our control over the manufacturing process.

We rely upon third parties to supply us with our products. We outsource the manufacturing of our SteraMist® line of equipment to a single manufacturing company and use contract manufacturers to build our BIT-based systems, as we do not maintain our own manufacturing facilities. Our dependence on a single manufacturer for our primary equipment line means that any disruption to that relationship, whether due to financial difficulties, operational failures, loss of key personnel, or disagreements over terms, could have an immediate and material impact on our ability to fulfill customer orders and generate revenue. If we fail to maintain our relationship with our current primary manufacturer, we may not be able to effectively commercialize and market our products due to risks including increased product costs, limited inventory, and the possible misappropriation of our proprietary information, such as our trade secrets and know-how.

Alternative production facilities may not be available in the event of a disruption. The number of third-party suppliers with the necessary manufacturing capability, regulatory expertise, and quality standards to produce our products is limited. Arranging for and qualifying an alternative supplier would be expensive and time-consuming, potentially requiring many months, during which period we could be unable to fulfill customer orders. This risk is amplified by the fact that a significant portion of our revenue is concentrated among a small number of customers; a supply disruption affecting our ability to deliver products could therefore have a disproportionate impact on our revenue and customer relationships. Additionally, supply chain disruptions, component shortages, and input cost inflation, including those attributable to U.S. tariff policy and countermeasures imposed by foreign governments, have previously impacted our suppliers' ability to deliver products to us in a timely manner and at acceptable costs, and may continue to do so.

Because of our reliance upon third parties to supply us with our products, we do not have control over the manufacturing process and are dependent on such suppliers for compliance with all regulations applicable to our products. This includes compliance with the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and EPA registration requirements that govern the manufacture of SteraMist® and its active ingredients. Third-party suppliers may fail, or be unable, to comply with applicable regulatory requirements, which could result in sanctions being imposed on us or our suppliers, including fines, injunctions, civil penalties, delays, suspension or withdrawal of regulatory approvals, seizures or recalls, and operating restrictions, any of which could significantly and adversely harm our business and results of operations. The loss of an EPA registration or a supplier's regulatory standing could require us to cease sales of affected products until the matter is resolved, which could take an extended period of time.

If we are unable to accurately forecast customer demand or effectively manage our inventory, our results of operations could be materially harmed.

We rely on demand forecasts to place orders with our third-party suppliers. Accurately predicting demand is inherently uncertain and may be adversely affected by factors outside our control, including competitive product introductions, shifts in customer preferences and changes in general economic conditions.

If we overestimate demand, we may accumulate excess inventory, resulting in inventory write-downs, write-offs, or obsolescence charges that would reduce our gross margins and adversely affect our financial results. As of December 31, 2025, our reserve for obsolete inventory was $500,000, compared to $1.1 million as of December 31, 2024, resulting from write-offs of inventory identified as obsolete, damaged, or no longer saleable during the year. Future demand shortfalls or product changes could require additional reserves or write-downs.

If we underestimate demand, we may be unable to fulfill customer orders in a timely manner, which could be potentially damaging to our customer relationships. In periods of rapidly increasing demand, our third-party suppliers may lack the capacity necessary to scale production quickly, further limiting our ability to meet demand.

Either outcome could have a material adverse effect on our revenue, gross margins, and results of operations.

Our success depends on our ability to adequately protect our intellectual property.

Our commercial success depends, in part, on our ability to obtain, maintain, defend, file new or enforce our existing patents, trademarks, trade secrets and other intellectual property rights covering our technologies and products throughout the world. We may, however, be unable to adequately preserve such rights due to several reasons, including the following:

Although we devote resources to the establishment and protection of our patents and trademarks, the actions we have taken or will take in the future may not be adequate to prevent violation of our patents, trademarks and proprietary rights by others or prevent others from seeking to block sales of our products as an alleged violation of their patents, trademarks and proprietary rights. In the future, litigation may be necessary to enforce our trademarks or proprietary rights, and we may be forced to defend ourselves against claimed infringement or the rights of others. Any such litigation could result in adverse determinations that could have a material adverse effect on our business, financial condition or results of operations.

In addition, we rely in part upon unpatented trade secrets, unpatented know-how, and continuing technological innovation which may not yet, or may never be, patented, to develop and maintain our competitive position, which we seek to protect, in part, by confidentiality agreements with our employees, third party manufacturers, and consultants. We also have agreements with our employees and consultants that oblige them to assign their inventions to us. It is possible that technology relevant to our business will be independently developed by a person that is not a party to such an agreement. In addition, if the employees and consultants who are parties to these agreements breach or violate the terms of these agreements, we may not have adequate remedies for any such breach or violation, and we could lose our trade secrets through such breaches or violations. To the extent that our commercial partners, collaborators, employees and consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. Further, our trade secrets could otherwise become known or be independently discovered by our competitors, which would harm our business.

The risk of loss of the Company’s intellectual property, trade secrets or other sensitive business information or disruption of operations could negatively impact the Company’s financial results.

The Company has sensitive information, including intellectual property, trade secrets, and other sensitive, business critical information as well as on-premises and cloud-based business applications critical to conducting business. In addition, our research and development facility uses modern computer systems. Cyber-incidents affecting the Company, its supply chain or customers could compromise confidential, business critical information, cause a disruption in the Company’s operations, harm the Company's reputation, or endanger the environment if the Company, its suppliers or customers do not effectively prevent, detect and recover from these or other security breaches. While the Company has not encountered cyber security challenges that have materially impaired our operations or financial condition it may be the target of cyber security related incidents.

Although management believes the Company has not experienced any cyber security related incident or losses to date related to these cyber security incidents, there can be no assurance that such losses will not be suffered in the future. The Company seeks to actively manage the risks within its control that could lead to business disruptions and cyber security incidents through a comprehensive cyber security program. As cyber security threats present themselves, the Company may be required to expend significant resources to enhance its control environment, processes, practices, and other protective measures. Despite these efforts, such events could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows.

We may be unable to enforce our intellectual property rights throughout the world.

Our ability to protect our intellectual property rights internationally is also subject to significant uncertainty. As part of our growth strategy, we are continuing to expand our operations internationally. The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. To the extent that we have obtained or are able to obtain patents, trademarks or other intellectual property rights in any foreign jurisdiction, it may be difficult to stop the infringement of our patents, trademarks or the misappropriation of other intellectual property rights. For example, some foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, some countries limit the availability of certain types of patent rights and enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide only limited or no benefit. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business. Accordingly, efforts to protect our intellectual property rights in such countries may be inadequate. In addition, future changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our technology and products and the enforcement of intellectual property rights.

We face significant competition in our industry, some of which have longer operating histories, more established products or greater resources than we have currently.

The decontamination and environmental infectious disease control industry is extremely competitive. The competition includes remediators and disinfection/decontamination companies such as Steris, Bioquell (Eco-lab) and Clorox, various miscellaneous hydrogen peroxide companies, ultraviolet companies and hundreds of quad ammonia-chemical companies. These competitors may have longer operating histories, greater name recognition, larger installed customer bases, a greater ability to provide similar products and services at a lower cost and substantially greater financial and marketing resources than us to develop new products and commercialize existing products. We believe that the principal factors affecting competition in our markets include name recognition, customer familiarity with products, effective marketing, competitive pricing strategies and the ability to receive referrals based on client confidence in the service. There are no significant barriers of entry that could keep potential competitors from opening similar facilities. Our ability to compete successfully in the industry will depend, in large part, upon our ability to market and sell our indoor decontamination and infectious disease control products and services. We may not be able to compete successfully in the remediation industry. Further, if one or more competitors successfully develops a decontamination product that is more effective, better tolerated, results in a better customer experience, is easier to use or otherwise more attractive than our products, our ability to continue to commercialize our products could be significantly and adversely affected due to a lack of ability to compete, which would have a material adverse effect on our business, financial condition and results of operations.

If the quality of our products do not meet the expectations of our customers, then our brand and reputation or our business could be adversely affected.

In the course of conducting our business, we must adequately address quality issues that may arise with our products, including defects in third-party components and inventory. We may not be able to eliminate or mitigate occurrences of these issues and associated liabilities. In addition, even in the absence of quality issues, we may be subject to claims and liability if the performance of products do not meet the expectations of our customers. If the quality of our products does not meet the expectations of customers, then our brand and reputation, and our ability to receive referral customer business, could be adversely affected.

Our long-term growth depends, in part, on our ability to enhance, develop, market and sell new products, and if we fail to do so we may be unable to compete effectively.

It is important to our business and our long-term growth that we continue to enhance and develop new products. We intend to continue to invest in research and development activities focused on improvements and enhancements to our existing intellectual property and product offerings. Our development goals include the development and commercialization of a variety of sanitizing robotic devices and backpack units. Despite our reasonable efforts, it may not be possible for us to innovate in a way to keep us competitive with other companies due to financial and time constraints which will negatively impact on our business.

The development and initial production and enhancement of the decontamination systems we produce is often accompanied by design and production delays and related costs. If we are unable to introduce new products on our anticipated timeframe or financial cost, our business, financial condition and results of operations may suffer due to failing to remain competitive in our market.

We have a limited management team size which may reduce our ability to effectively manage our business operations as it grows.

Despite our current hiring efforts for non-management employees and redefining job descriptions, we have a limited management team size. This limited management team may reduce our ability to effectively manage our business as it grows or responds to significant demand from customers. As we expand, we expect to increase the size of our management team. However, our management team may not be able to adequately manage our business, and any failure to do so could lead to a general negative impact to our business.

Our operations, and those of our suppliers, are subject to a variety of business continuity hazards and risks, any of which could interrupt production or operations or otherwise adversely affect our performance and results.

We are subject to business continuity hazards and other risks, including natural disasters, utility and other mechanical failures, labor difficulties, inability to obtain necessary licenses, permits or registrations, disruption of communications, data security and preservation, disruption of supply or distribution, safety regulation and labor difficulties. The occurrence of any of these or other events might disrupt or shut down operations, or otherwise adversely impact the production or profitability of a particular facility, or our operations as a whole. We may also be subject to certain liability claims in the event of an injury or loss of life, or damage to property and equipment, resulting from such events. Although we maintain property and casualty insurance, as well as other forms of insurance that we believe are customary for our industries, our insurance policies include limits and, as such, our coverage may be insufficient to protect against all potential hazards and risks incident to our business. Should any such hazards or risks occur, or should our insurance coverage be inadequate or unavailable, our business, prospects, financial condition and results of operations might be adversely affected.

Our products are subject to potential product liability claims which, if successful, could have a material adverse effect on our business, financial condition and results of operations.

We are exposed to significant risks for product liability claims if death, personal injury or property damage results from the use of our products. While we currently maintain insurance against product liability claims, we may experience material product liability losses in the future. Our insurance coverage may not continue to be available on terms that we accept, if at all, and our insurance coverage also may not adequately cover liabilities that we incur. A successful claim against us that exceeds our insurance coverage level or that is not covered by insurance, or any product recall, could have a material adverse effect on our business, financial condition and results of operations. In addition, product liability and other claims can divert the attention of management and other personnel for significant periods of time, regardless of the ultimate outcome. Further, claims of this nature may cause our customers to lose confidence in our products and us. As a result, an unsuccessful defense of a product liability or other claim could have a material adverse effect on our financial condition, results of operations and cash flows.

The misuse of our products may harm our reputation in the marketplace, result in injuries that lead to product liability suits or result in costly investigations, fines or sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.

Customers, technicians, or service providers could use our products in a manner that is inconsistent with the products’ intended use. We train our marketing personnel and sales representatives to not promote our products for uses outside of the intended use, however, we cannot otherwise prevent all instances of misuse. Further, the marketing and sales representatives that we have hired to help meet the demand for our products may not have received proper training or have the working knowledge needed to adequately advise our customers how to safely use our products. Misuse of our products may cause an increased risk of injury to customers, which could harm our reputation in the marketplace, as well as lead to potential product liability lawsuits.

If we are unable to develop and maintain an effective system of internal controls over financial reporting, or if the requirements of being a public company strain our resources, we may not be able to accurately report our financial results in a timely manner.

Our management is responsible for establishing and maintaining adequate internal controls over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with U.S. GAAP. A material weakness is a deficiency, or combination of deficiencies, in internal controls such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. Any failure to maintain effective internal controls could severely inhibit our ability to accurately report our financial condition, results of operations, or cash flows. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines that we have a material weakness in our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our securities could decline.

As disclosed in Item 9A of this Form 10-K, we concluded that as of December 31, 2025, material weaknesses existed because: (I) there are limited resources within the finance and accounting departments with sufficient knowledge and experience in applying U.S. GAAP, including developing appropriate accounting estimates, reserves, and allowances in a timely manner and maintaining proper segregation of duties; and (II) policies and procedures with respect to the review, supervision, and monitoring of our accounting and SEC reporting functions were either not fully designed and in place or not operating effectively. For a detailed description of the material weaknesses and the remediation actions taken during fiscal year 2025, please see Item 9A, Controls and Procedures.

While we have taken a number of remediation actions during fiscal year 2025, the material weaknesses had not been fully remediated as of December 31, 2025, and there is no guarantee that our remediation efforts will be successfully completed or that new control deficiencies will not arise. Failure to remediate these material weaknesses, or the identification of additional deficiencies, could result in inaccurate financial reporting, regulatory sanctions, or a loss of investor confidence in our financial statements.

In addition, as a public company subject to SOX, the Exchange Act, and Dodd-Frank, we incur significant legal, accounting, and compliance costs. These requirements consume substantial management time, may make it more difficult to attract and retain qualified board members and executive officers, and could expose us to sanctions, regulatory investigations, or litigation if we fail to maintain effective controls. Our compliance with Section 404 of SOX requires ongoing investment as we work to complete the remediation of the identified material weaknesses.

Risk Related to Our Securities

Our stock price is volatile and there is a limited market for our shares.

The stock markets generally have experienced, and will probably continue to experience, extreme price and volume fluctuations that have affected the market price of the shares of many small-cap companies. Factors that may affect the volatility of our stock price include the following:

We do not intend to pay dividends for the foreseeable future.

We have not paid dividends on our common stock since inception. The continued operation and expansion of our business will require substantial funding. Accordingly, we currently intend to retain earnings, if any, for use in the business and we do not anticipate that we will pay any cash dividends on shares of our common stock at this time. Any determination to pay dividends in the future will be at the discretion of our Board and will depend upon results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our Board deems relevant. Investors seeking cash dividends should not purchase our common stock. Accordingly, realization of a gain on your investment will depend on the appreciation of the price of our common stock, which may never occur.

We have a substantial number of options, warrants, convertible notes and convertible preferred stock outstanding, which could give rise to additional issuances of our common stock and potential dilution of ownership to existing shareholders.

As of December 31, 2025, we had outstanding convertible notes, options, warrants, convertible preferred stock and restricted stock units representing approximately 6.0 million potential shares of our common stock. Additionally, 66,666 RSUs remain unvested and will result in automatic share issuance upon vesting through May 2027, with no exercise price. To the extent any of these securities are exercised, converted or vest, existing shareholders will experience dilution.

Our outstanding convertible notes impose financial obligations, carry risks of dilution upon conversion, and may adversely affect our ability to raise additional capital.

As of December 31, 2025, we had outstanding convertible notes payable with an aggregate principal amount of approximately $3.1 million, net of amortized debt discount of approximately $222,000, resulting in a carrying value of approximately $2.9 million on our balance sheet. These notes bear interest at a rate of 12% per annum, payable in equal monthly installments, and are convertible into shares of our common stock at the option of the holder at a conversion price of $1.25 per share, subject to adjustment. The notes mature on the fifth anniversary of their respective issuance dates.

The interest payments required under our convertible notes represent a recurring cash obligation that could strain our liquidity, particularly given our going concern conditions and our current cash position of approximately $88,000 as of December 31, 2025. Our failure to make required interest payments when due could constitute an event of default under the applicable securities purchase agreements, which could result in the acceleration of the outstanding principal balance and materially and adversely affect our financial condition and results of operations.

If the holders of our convertible notes elect to convert some or all of their notes into shares of our common stock at the $1.25 per share conversion price, existing shareholders would experience dilution. As of December 31, 2025, the outstanding convertible notes were convertible into approximately 2,508,000 shares in the aggregate. Because our common stock has recently traded significantly below the $1.25 conversion price, voluntary conversion is currently unattractive to holders. However, if our stock price recovers above the conversion price, the likelihood of conversion and the resulting dilutive impact on existing shareholders would increase materially.

In addition, we have the right to require holders to convert the notes if our common stock maintains a closing bid price at or above $1.55 per share for any twenty trading days within a thirty consecutive trading day period. Given the recent trading price of our common stock, there is no assurance that such forced conversion conditions will be met within a timeframe sufficient to reduce our debt obligations. Furthermore, the existence of our outstanding convertible notes, and any future issuances of convertible debt, may make it more difficult for us to obtain additional equity or debt financing on acceptable terms, as potential investors or lenders may view the conversion and dilution risk as an impediment to investment. Our inability to raise additional capital when needed could have a material adverse effect on our business, financial condition and results of operations.

Substantial future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price.

Our common stock is traded on the NASDAQ Capital Market (“Nasdaq”) and, despite certain increases of trading volume from time to time, there have been periods when our common stock could be considered thinly traded, meaning that the number of persons interested in purchasing our common stock at or near bid prices at any given time may be relatively small. Equity or equity-related financing transactions that result in a large amount of newly issued shares that become readily tradable, or sales of significant numbers of shares by current shareholders, have placed, and in the future could place, downward pressure on the trading price of our stock. In addition, during times of lower trading volume, a shareholder who desires to sell a large number of shares of common stock may need to sell the shares in increments over time to mitigate any adverse impact of the sales on the market price of our stock.

If our shareholders sell, or the market perceives that our shareholders intend to sell, substantial amounts of our common stock in the public market, the market price of our common stock could fall. Sales of a substantial number of shares of our common stock may make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. In the event that the price of our stock falls, we may become involved in securities class action litigation that could divert management’s attention and harm our business.

In the future, we may also issue our securities if we need to raise additional capital or in connection with acquisitions. The number of shares of our common stock issued in connection with a financing or acquisition could constitute a material portion of our then-outstanding shares of our common stock.

We may not be able to maintain compliance with Nasdaq’s listing standards, which could limit shareholders’ ability to trade our common stock.

As a listed company on Nasdaq, we are required to meet certain financial, public float, bid price, and liquidity standards on an ongoing basis. If we fail to meet these continued listing requirements, our common stock may be subject to delisting, which could materially impact its liquidity and make it more challenging for shareholders to buy and sell our shares.

We are currently subject to two concurrent Nasdaq deficiency proceedings. On November 17, 2025, we received a deficiency notice that our closing bid price had been below the minimum $1.00 per share requirement (Nasdaq Listing Rule 5550(a)(2)) for 30 consecutive business days. We have until May 18, 2026 to regain compliance, which may include a potential reverse stock split subject to shareholder approval.

Additionally, as of December 31, 2025, the Company's total stockholders' equity of $588,504 is below the $2,500,000 minimum required under Nasdaq Listing Rule 5550(b)(1). On November 21, 2025, the Company received a deficiency letter from the Listing Qualifications Department (the "Staff") of the Nasdaq Stock Market notifying the Company that, based on its Form 10-Q for the period ended September 30, 2025, which reported stockholders' equity of $2,206,482, the Company no longer complies with the minimum stockholders' equity requirement for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(1), and that the Company does not meet the alternatives of market value of listed securities or net income from continuing operations. We submitted a compliance plan within the required 45-day period; if accepted, Nasdaq may grant an extension of up to 180 days from November 21, 2025.

Both deficiencies are subject to concurrent review by Nasdaq. There is no guarantee that we will be able to regain compliance with either requirement within the applicable timeframes, and failure to do so may subject us to delisting proceedings.

We are a “smaller reporting company” under the U.S. federal securities laws, and the reduced reporting requirements applicable to smaller reporting companies could make our common stock less attractive to investors.

We are a “smaller reporting company” under U.S. federal securities laws. For as long as we continue to be a smaller reporting company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not smaller reporting companies. Investors may not find our common stock attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

Our anti-takeover provisions could prevent or delay a change in control of our company, even if such change in control would be beneficial to our shareholders.

Provisions of our articles of incorporation, as amended, and amended by laws as well as provisions of Florida law could discourage, delay or prevent a merger, acquisition or other change in control of our company, even if such change in control would be beneficial to our shareholders. These include: maintaining authorized but unissued shares of our capital stock that could be issued by our Board to increase the number of outstanding shares and thwart a takeover attempt; no provision for the use of cumulative voting for the election of directors; maintaining a staggered board, limiting the speed at which our shareholders may replace our entire Board, and limiting the ability of our shareholders to call special meetings.

In addition, Florida Business Corporation Act, or FBCA, § 607.0902 generally provides that shares acquired in excess of certain specified thresholds, without first obtaining the approval of our Board, will not possess any voting rights unless such voting rights are approved by a majority of our disinterested shareholders. Additionally, FBCA § 607.0901 requires that, subject to certain exceptions, any affiliated transaction with a shareholder that owns more than 15% of the voting shares of the corporation, referred to as an “interested shareholder,” receive the approval of either the corporation’s disinterested directors or a supermajority vote of disinterested shareholders, or, absent either such approval, that a statutory “fair price” be paid to the shareholders in the transaction. The shareholder vote requirement is in addition to any shareholder vote required under any other section of the FBCA or our articles of incorporation, as amended.

The concentration of our common stock ownership with our executive officers, directors and affiliates will limit your ability to influence corporate matters.

Our executive officers, directors and owners of 5% or more of our outstanding common stock and their respective affiliates beneficially owned, in the aggregate approximately 22.8% of our outstanding common stock as of March 11, 2026. This percentage includes outstanding shares of common stock, convertible preferred stock, warrant and stock options that are vested and exercisable as of that date. These shareholders will therefore have significant influence over management and affairs and over all matters requiring shareholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or our assets, for the foreseeable future. This concentrated control will limit our shareholders’ ability to influence corporate matters and, as a result, we may take actions that our shareholders do not view as beneficial. This ownership could negatively affect the value of our common stock.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 1C. Cybersecurity

Cybersecurity Risk Management and Strategy

Our third-party IT and cybersecurity provider is responsible for the day-to-day management of our cybersecurity risk program, which includes the following principal elements:

Risk identification and assessment. Our third-party provider conducts ongoing monitoring and periodic assessments of our information technology environment to identify cybersecurity vulnerabilities and threats, including risks arising from our use of cloud-based platforms, remote access systems, and third-party software applications. Assessments consider both internal risks and external threat intelligence relevant to our industry and operational profile.

Technical and procedural safeguards. Our third-party provider has implemented and maintains a combination of technical controls, including access controls, network monitoring, endpoint protection, data backup and recovery procedure, and procedural safeguards governing acceptable use, credential management, and data protection. Our provider periodically reviews and updates these controls as our technology environment and the broader threat landscape evolve.

Third-party and vendor risk. Our third-party IT provider assists us in evaluating the cybersecurity practices of vendors and service providers that have access to our systems or data prior to engagement. We seek appropriate representations from key service providers regarding their security practices; however, we may have limited ability to verify such representations or to compel remediation in the event a third-party provider experiences a security incident that affects our data or operations.

Incident response. Our third-party IT provider maintains incident response procedures designed to detect, contain and remediate cybersecurity events. These procedures include defined escalation protocols to ensure that any significant cybersecurity incident is promptly communicated to our senior management and, where appropriate, to the Audit Committee of our Board.

We have not experienced any cybersecurity incidents that have materially impaired our operations or financial condition. However, there can be no assurance that we will not be subject to such incidents in the future, including incidents affecting our third-party IT provider or other vendors. Our reliance on a third-party provider means that we are dependent on that provider's continued performance, financial stability and operational integrity. A failure by our third-party IT provider to adequately perform its responsibilities, or a cybersecurity incident affecting the provider itself, could expose us to risks that we may not be able to detect or remediate in a timely manner. Additional information regarding risks arising from cybersecurity threats is provided under the risk factor captioned "The risk of loss of the Company's intellectual property, trade secrets or other sensitive business information or disruption of operations could negatively impact on the Company's financial results" in Item 1A of this Annual Report.

Governance; Board Oversight

At the management level, our senior management team maintains primary responsibility for our relationship with our third-party IT and cybersecurity provider, including reviewing the scope of services provided, evaluating the provider's performance, and ensuring that cybersecurity matters are escalated appropriately within the organization. While we do not employ a dedicated Chief Information Security Officer, we rely on the expertise of our third-party provider to supply the specialized knowledge and experience necessary to manage our cybersecurity risks effectively. We periodically assess whether the scope and capabilities of our third-party provider remain appropriate given the evolution of our business and the threat environment, and we engage additional specialists on an as-needed basis to address specific risks or conduct targeted assessments.

Item 2. Properties

Our U.S. headquarters, a 9,000 square foot office space, is located at 8430 Spires Way, Frederick, MD 21701. The facility includes a warehouse, training room, quality control room, qualification laboratory, with its own drive-in custom iHP^™ SteraMist^® Complete Room System. The warehouse is significantly larger than our previous headquarters, allowing TOMI to store its new product lines and stock a greater variety of inventory–quickly delivering a customer purchase. The training room is integrated with the newest technology to be able to present SteraMist^® virtually around the world. As the company keeps up with the demand for SteraMist^®, there is a dedicated quality control room to allow our service engineers to work on machines for quick and efficient service to our customers. The lease for our U.S. headquarters has a 10-year term and provides for annual rent of approximately $169,000 with approximately three years remaining.

Item 3. Legal Proceedings

We currently are not a party to any legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on our results of operations, financial position or cash flows.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

Market Information

Our common stock is currently listed on Nasdaq Capital Market under the symbol “TOMZ.”

Shareholders

As of March 11, 2026, there were 67 record holders of our common stock; however, we believe we have approximately 5,000 stockholders, including those held in street name. On March 11, 2026, the last reported sale price of our common stock on the Nasdaq was $0.67 per share.

Dividends

We have not paid and do not currently intend to pay cash dividends on our common stock in the foreseeable future. Our policy is to retain all earnings, if any, to provide funds for operation and expansion of our business. The declaration of dividends, if any, will be subject to the discretion of our Board, which may consider such factors as our results of operations, financial condition, capital needs and acquisition strategy, among others.

Recent Sales of Unregistered Securities

During the year ended December 31, 2025, we entered into Securities Purchase Agreements (the “2025 SPA”) with certain accredited investors pursuant to which we agreed to sell and issue to certain Investors in a private placement transaction, pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, in one or more closings up to an aggregate principal amount of $3,000,000 of Convertible Notes (the “2025 Notes”). Pursuant to the 2025 SPA and as of December 31, 2025, we sold and issued $535,000 in convertible promissory notes initially convertible into 428,000 shares of common stock at a conversion price of $1.25 per share. As of December 31, 2025, approximately $2,465,000 remains available for issuance under the 2025 SPA, subject to the terms and conditions thereof. The 2025 Notes mature and are due on the fifth anniversary of the respective issuance dates in 2030. The 2025 Notes bear simple interest at a rate of 12% per annum, payable in equal monthly installments. The 2025 Notes are convertible into shares of our Common Stock, at the option of the holder, at a conversion price of $1.25 per share, which shall not exceed $1.55 per share. In addition, we can require the Investors to convert the 2025 Notes at the then current conversion price at any time after 90 days from the issue date if the Common Stock has a closing bid price of $1.55 per share or higher on any twenty (20) days within a thirty (30) day period of consecutive trading days, or if a “fundamental change” occurs (as defined in the 2025 SPA). The 2025 Notes are unsecured and senior to other indebtedness subject to certain exceptions. Interest expense related to the 2025 Notes for the year ended December 31, 2025 was $44,675.

Issuer Repurchases of Equity Securities

None.

Item 6. [Reserved]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations relates to the years ended December 31, 2025 and 2024. This discussion and analysis should be read in conjunction with our financial statements and the notes to those financial statements that are included elsewhere in this Annual Report on Form 10-K.

Business Highlights and Recent Events

Fiscal year 2025 was a year of meaningful commercial progress for TOMI Environmental Solutions, Inc. Despite a revenue[DV1]  decline driven primarily by the timing of large equipment purchases that occurred in the prior year, the Company advanced its strategic platform across multiple fronts: launching new product lines, securing landmark customers, establishing OEM partnerships with global manufacturers, and entering new markets including aerospace, aquaculture, cell and gene therapy. Our SteraMist® iHP™ technology is now protected by more than 30 utility and design patents through 2038 and is deployed in over 40 countries across our four divisions: Life Sciences, Hospital-Healthcare, Food Safety, and Commercial.

In a significant expansion of our technology platform into the medical device sector, the heart monitoring device project is nearing completion and is scheduled for Factory Acceptance Testing ("FAT") in the near term. This initiative — developed collaboratively with a strategic partner utilizing our SIS iHP product platform — reflects our ability to design and deploy iHP technology within highly regulated medical device environments and underscores our commitment to advancing healthcare through innovation. Upon successful FAT completion, we intend to submit our iHP device for U.S. market clearance through the 510(k) premarket notification pathway, a well-established regulatory route for medical devices of this classification. We view this milestone as a meaningful step in positioning iHP as a platform technology across the broader medical device industry, and we look forward to progressing this opportunity alongside our core decontamination business.

The SteraMist Integration System ("SIS"), launched in the second half of 2024, achieved its first commercial installation in Q2 2025 at a leading CDMO and has since been adopted across pharmaceutical isolators, biosafety cabinets, and OEM-integrated enclosures,reflecting the growing adoption of iHP as the preferred decontamination solution in advanced life sciences manufacturing environments. This momentum is underpinned by a powerful macro tailwind: announced U.S. onshoring investments in pharmaceutical manufacturing now exceed $370 billion in aggregate commitments from major drugmakers, driving sustained demand for validated decontamination systems that integrate seamlessly with new facility construction. By year-end, we had 10 active integration projects with a combined pipeline valued at approximately $3 million. In December 2025, we secured a signed purchase order of approximately $500,000 from a global biopharmaceutical leader for iHP integration into sterile manufacturing passthrough fill boxes, and a leading Cell and Gene Therapy manufacturer adopted SteraMist iHP as a commercial-scale pharmaceutical facility. We note that the conversion of certain CES projects to recognized revenue has been subject to timing delays, as pharmaceutical facility construction and capital deployment decisions in the United States were affected during 2025 by uncertainty surrounding tariff policy and its downstream impact on equipment costs, materials procurement, and supply chain planning. Management views this as a timing issue reflecting broader macroeconomic conditions rather than a change in underlying customer demand, and industry forecasters project that pharmaceutical manufacturing construction activity will recover and accelerate through 2026–2027 as policy clarity improves.

Our OEM partnership strategy gained significant momentum during 2025. Partnerships with PBSC (formalized March 2025), ESCO, Steelco, Nuaire, and Getinge are embedding iHP directly into cleanroom enclosures, passthrough hatches, and biosafety cabinets at the point of manufacture, opening a scalable distribution channel that extends our reach without proportional increases in direct sales cost. In the Commercial division, T.A.C.T. franchises purchased $175,000 of SteraMist equipment and BIT Solution in Q4 2025, and our expanding relationships with franchise networks Steri-Clean (approximately 60 locations) are building a recurring BIT Solution revenue stream consistent with our razor-blade revenue model.

Regulatory developments during 2025 further validated and broadened our platform across multiple new verticals. In September 2025, the FDA expanded the permitted use of hydrogen peroxide as a direct food additive, significantly extending the application of SteraMist iHP to food contact surfaces and ready-to-eat food processing, a market where we have demonstrated efficacy against foot-and-mouth disease virus, African Swine Fever, and mycotoxins. In Q1, we deployed iHP at NASA's Johnson Space Center, marking our entry into aerospace, and in August we announced a new major customer in the eye health sector implementing iHP across two facilities. SteraMist was recognized as the 2025 "Disinfection and Decontamination Products Company of the Year" by Medtech Outlook, affirming the competitive differentiation of our technology across an expanding range of industries and applications.

Notwithstanding this commercial progress, the Company recorded a net loss of approximately $3.7 million for fiscal year 2025, compared to $4.5 million in 2024. Management continues to pursue additional financing through equity and convertible debt instruments, including the $20 million ELOC entered into with Hudson Global Ventures in November 2025, and remains focused on converting its strong commercial pipeline into recognized revenue in 2026. The financial results of operations are discussed in detail in the sections that follow.

The following overview summarizes key factors affecting the Company’s financial performance for the year ended December 31, 2025 compared to the prior year and should be read in conjunction with the selected financial metrics presented below.

The following table summarizes selected financial metrics for the years ended December 31, 2025 and 2024 and provides a high-level overview of the Company’s operating performance.

The following discussion should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. The following table presents our results of operations for the years ended December 31, 2025, and 2024, together with the changes between the periods. The discussion below addresses the significant factors contributing to the changes in our results of operations.

Revenue decreased $2.1 million, or 27%, to $5.6 million for the year ended December 31, 2025 compared to $7.7 million in the prior year. The decrease was primarily attributable to the timing of certain customer equipment purchases that occurred in the prior year period. Service revenue remained relatively consistent, reflecting ongoing demand for the Company’s decontamination and service solutions. The Company continues to engage with existing and new customers regarding installations and service engagements across its target markets.

Domestic revenue declined primarily due to lower equipment sales, while international revenue remained relatively stable year over year, including sales of our product into various countries, including Canada, the UK and Europe.

Gross margin improved to 54.6% in 2025 from 46.0% in 2024, despite a 27% decline in revenue. The improvement was primarily driven by the Company recording an allowance for  inventory reserve of  approximately $1.1 million in 2024. Further details of the reserve movement are set out in Note 3. Excluding reserve movements, underlying gross margin was relatively stable year over year, with a modest decline reflecting reduced fixed cost absorption on lower overall sales volume.

Total operating expenses decreased $0.7 million, or 10%, to $6.9 million in 2025 from $7.7 million in the prior year. Selling expenses decreased $353,000 (31%) to $775,000, driven by lower sales commissions, and less spend advertising and trade shows, consistent with the 34% decline in product sales volume during the year. General and administrative expenses decreased $588,000 (11%) to $4.5 million, primarily due to a significant reduction in credit loss expense to $267,000 in 2025 from $1.1 million in 2024, reflecting improved collections and accounts receivable management. Professional fees increased $146,000 (24%) and consulting fees increased $92,000 (41%), reflecting higher legal and advisory costs associated with public company compliance, Nasdaq deficiency proceedings, and strategic initiatives during the year. Research and development and depreciation and amortization were essentially flat year over year.

Liquidity and Capital Resources

As of December 31, 2025, we had cash and cash equivalents of $88,000 and working capital of $1.0 million, compared to cash of $665,000 and working capital of $3.8 million at December 31, 2024. For the year ended December 31, 2025, we incurred a net loss of $3.7 million and used $1.2 million of cash in operating activities. Our accumulated deficit as of December 31, 2025 is $58.1 million.

These conditions raise substantial doubt about our ability to continue as a going concern within   the next twelve months after the date these financial statements are issued. The consolidated financial statements have been prepared on a going concern basis and do not include any adjustments that might result from the outcome of this uncertainty. See Note 2 to our consolidated financial statements for further discussion of the going concern assessment.

The $2.7 million decline in working capital from $3.8 million to $1.0 million reflects the net loss incurred during the year and the Company's ongoing capital requirements. On the asset side, accounts receivable decreased $1.2 million on lower revenue, cash decreased $577,000, and inventories declined $652,000 following write-offs and demand-adjusted purchasing. On the liability side, accrued expenses increased $405,000, a $254,000 current obligation arose from the Agile Capital sale of future receipts facility entered into during the year, and deferred revenue increased $212,000 reflecting our deposit policy on customer orders. These increases in current liabilities were partially offset by a $444,000 reduction in accounts payable.

Management’s Plan to Address Going Concern

Management has evaluated the conditions that give rise to substantial doubt about our ability to continue as a going concern and has developed the following plan to address those conditions. Each element of this plan is subject to execution risk and there can be no assurance that it will be successfully implemented.

Shelf Registration Statement and Equity Line of Credit

Our $20 million ELOC with Hudson Global Ventures, LLC became fully operational upon the effectiveness of our Form S-3 registration statement on December 8, 2025, under which the Company is registered up to $50,000,000 of securities for offer and sale from time to time. We may, at our sole discretion, draw down between $25,000 and $2,000,000 per draw, subject to applicable exchange caps. In February 2026, we made our first draw generating gross proceeds of $94,130. Management believes this facility provides meaningful near-term liquidity, with capacity to provide up to approximately $4 million in the short term, subject to market conditions. Further details are provided in Note 10 to our consolidated financial statements.

Capital Markets Access

Our effective Form S-3 shelf registration statement (File No. 333-291563) provides a registered platform to raise up to $50,000,000 of securities from time to time. We have engaged Bancroft Capital as an investment banking advisor to explore additional financing opportunities, including equity and equity-linked transactions with existing and new investors.

Convertible Note Management

We are evaluating options to reduce our outstanding convertible note obligations, including potential conversion into equity or repayment using proceeds from the Hudson Global equity line, either of which would reduce total debt and improve stockholders' equity. Details of our convertible notes are set out in Note 9 to our consolidated financial statements.

Pipeline Conversion to Revenue

As of December 31, 2025, we had ten active SIS and CES integration projects with a combined contract value of approximately $3 million, including a $500,000 signed purchase order from a global biopharmaceutical leader received in December 2025. Our broader commercial sales pipeline of management-tracked opportunities exceeded $18 million at year-end, with quoted opportunities of approximately $11 million in progress. These figures represent potential future revenue and are not committed orders or guarantees of future performance. Conversion of this pipeline is a primary driver of our 2026 liquidity plan. Certain CES project conversions were delayed during 2025 by the tariff-driven slowdown in U.S. pharmaceutical facility capital decisions, which management views as a temporary, externally driven timing issue rather than a change in underlying demand.

Sales Backlog and Revenue Visibility

Our sales backlog grew during 2025 to approximately $1.8 million, reflecting improved visibility into near-term revenue conversion and continued contribution from our recurring consumables and service revenue base.

Cost Management

We reduced total operating expenses by $731,000, or 10%, in 2025. We continue to actively manage controllable costs while preserving the technical and commercial capacity required to execute on our pipeline.

Customer Deposit Policy

Our customer deposit policy, implemented during 2025, requires deposits on equipment orders ahead of fulfilment. This policy reduces working capital exposure and is expected to generate incremental operating cash flow benefits in 2026 as it becomes fully embedded across our order intake process.

While management believes the actions described above provide a reasonable basis to address the going concern conditions, there can be no assurance that we will successfully execute this plan, that our pipeline will convert to revenue on the anticipated timeline, or that additional capital will be available on terms acceptable to us. If we are unable to execute this plan, we may be required to delay, reduce, or eliminate certain operations, which could materially adversely affect our business, financial condition, and results of operations.

Debt and Contractual Obligations

Our outstanding debt as of December 31, 2025 consists of: (i) $2,600,000 in principal of 12% convertible notes issued under our November 2023 Securities Purchase Agreement, maturing November 2028; and (ii) $535,000 in principal of 12% convertible notes issued under our 2025 Securities Purchase Agreement, maturing in 2030. All notes are convertible into common stock at $1.25 per share (not to exceed $1.55 per share), are unsecured, and are senior to other indebtedness subject to certain exceptions. Total note principal outstanding is $3,135,000, with a net carrying value of $2,912,000 after amortized debt issuance costs. Annual cash interest on the outstanding principal at 12% is approximately $376,000. Full terms are disclosed in Note 9 to our consolidated financial statements.

In addition to our convertible notes, we have a $367,425 balance under our sale of future receipts agreement with Agile Capital Funding, subject to weekly repayments of $15,975. Our operating lease for our Frederick, Maryland headquarters requires annual rent of approximately $169,000 through April 2029. We have no off-balance-sheet financing arrangements, unconsolidated variable interest entities, or material guarantees.

A breakdown of our statement of cash flows for the year ended December 31, 2025 and 2024 is provided below:

Operating Activities

Net cash used in operating activities was $1,197,000 for the year ended December 31, 2025, an improvement of $243,000, or 17%, from $1,440,000 in 2024. The improvement was primarily driven by a $904,000 reduction in accounts receivable on lower revenue and an $800,000 decrease in inventory, reflecting our revised deposit policy on customer orders and disciplined inventory management implemented during the year. These inflows were partially offset by a $271,000 decrease in accounts payable. Non-cash charges consisted primarily of depreciation and amortization of $271,000, credit loss expense of $267,000, and equity-based compensation of $198,000, which also served to contain cash consumption relative to the reported net loss of $3.7 million.

Investing Activities

Net cash used in investing activities was $136,000 for the year ended December 31,2025, compared to $262,000 in 2024, reduction of $126,000. The improvement was driven primarily by the deferral of non-essential capital expenditures, with property and equipment additions of $5,000 in 2025 versus $108,000 in 2024. Patent and trademark capitalization was $130,000 essentially flat with $154,000 in 2024.

Financing Activities

Net cash provided by financing activities was $755,000 in 2025 compared to $28,000 in 2024. The improvement reflects two capital raises completed during the year: $535,000 raised through the issuance of 12% convertible promissory notes under the 2025 Securities Purchase Agreement (SPA), and $300,000 received through a sale of future receipts agreement with Agile Capital Funding, LLC, partially offset by $80,000 in repayments on that facility, an increase of $727,000.

Critical Accounting Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. The estimation process requires assumptions to be made about future events and conditions, and as such, is inherently subjective and uncertain. Actual results could differ materially from our estimates.

The SEC defines critical accounting estimates as those that are, in management's view, most important to the portrayal of our financial condition and results of operations and the most demanding of our judgment. We consider the following estimates to be critical to an understanding of our consolidated financial statements and the uncertainties associated with the complex judgments made by us that could impact our results of operations, financial position and cash flows.

Going Concern Assessment

The assessment of our ability to continue as a going concern is the most significant judgment reflected in our financial statements for the year ended December 31, 2025. Under ASC 205-40, management is required to evaluate whether there is substantial doubt about the Company's ability to continue as a going concern within one year after the date the financial statements are issued. This evaluation requires management to consider all available information about the future, including the Company's projected cash flows, planned capital raising activities, anticipated operating improvements, and the probability and timing of successfully executing those plans.

For the year ended December 31, 2025, we recorded a net loss of approximately $3.7 million and used approximately $1.2 million of cash in operations. As of December 31, 2025, we had approximately $88,000 of cash and cash equivalents and an accumulated deficit of approximately $58.1 million. Based on these conditions, management concluded that substantial doubt exists about our ability to continue as a going concern within one year after the issuance of these financial statements. Management's conclusion is based on projected cash flows that assume successful execution of our capital raising plans, including continued drawdowns under our convertible note facilities and the potential utilization of the $20 million Equity ELOC with Hudson Global Ventures, LLC entered into in November 2025, as well as anticipated revenue growth from our active commercial pipeline. If our assumptions regarding capital availability, revenue timing or operating costs prove incorrect, the Company's liquidity position could deteriorate more rapidly than projected, and there can be no assurance that the going concern doubt will be resolved within the anticipated timeframe. See Note 2 to the consolidated financial statements for further discussion.

Revenue Recognition

We recognize revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers. We recognize revenue when we transfer promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those goods or services. To determine revenue recognition for contracts with customers we perform the following five steps: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when or as we satisfy the performance obligations.

We must use judgment to determine: (a) the number of performance obligations based on the determination under step (ii) above and whether those performance obligations are distinct from other performance obligations in the contract; (b) the transaction price under step (iii) above; and (c) the stand-alone selling price for each performance obligation for the allocation of transaction price under step (iv) above. Title and risk of loss generally pass to our customers upon shipment. Shipping and handling costs charged to customers are included in product revenues, and the associated expenses are treated as fulfillment costs included in cost of revenues. Revenues are reported net of sales taxes collected from customers.

Product revenue includes sales from our standard and customized equipment, BIT Solution and accessories. Revenue is recognized upon transfer of control of promised products to customers in an amount that reflects the consideration we expect to receive. Service and training revenue includes sales from our high-level decontamination and service engagements, equipment validation and customer training, and is recognized as the agreed-upon services are rendered.

A growing portion of our revenue is derived from our SIS and CES, which may involve multiple performance obligations including equipment supply, installation, validation and ongoing service. For these arrangements, management exercises significant judgment in identifying and allocating the transaction price among the distinct performance obligations and in determining the point at which control transfers to the customer. Delays in project completion or customer acceptance for these arrangements can affect the timing of revenue recognition and contribute to variability in our quarterly results.

We also record estimated allowances for sales returns, determined by using a specific identification method based on subsequent return activity and historical averages. For the years ended December 31, 2025 and 2024, we recorded an allowance of $47,844 and $227,000, respectively.

As of December 31, 2025 and December 31, 2024, deferred revenue totaled approximately $424,000 and $212,000, respectively, representing contracted amounts for which performance obligations had not yet been satisfied. The increase in deferred revenue reflects growth in our SIS and CES project pipeline and the timing of project milestones. Changes in assumptions regarding the timing of project completion or customer acceptance could affect the amount and timing of revenue recognized in future periods.

Arrangements with Multiple Performance Obligations

Our contracts with customers may include multiple performance obligations. We enter into contracts that can include various combinations of products and services, which are primarily distinct and accounted for as separate performance obligations. This is particularly the case for our SIS and CES, which may involve equipment supply, installation, validation services and ongoing maintenance components. Where a contract contains multiple performance obligations, we allocate the total transaction price to each distinct performance obligation based on its relative stand-alone selling price, estimated using observable market prices where available or using a cost-plus-margin approach where direct market evidence is not available.

Significant Judgments

Our contracts with customers for products and services often dictate the terms and conditions of when control of the promised products or services is transferred to the customer and the amount of consideration to be received in exchange for those products and services. For standard equipment and BIT Solution sales, control transfers and revenue is recognized at the point of shipment, which is when title and risk of loss pass to the customer. For service and training arrangements, revenue is recognized as services are rendered. For SIS and CES arrangements involving installation and validation milestones, management exercises judgment in determining the point at which control transfers, which may be upon completion of installation, customer acceptance, or satisfaction of specific contractual milestones. The timing of these measures can affect the period in which revenue is recognized and contribute to variability in our quarterly results. We also record an estimated allowance for anticipated product returns, determined using a specific identification method based on subsequent return activity and historical average calculations.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported and disclosed in the accompanying consolidated financial statements and notes. Actual results could differ materially from these estimates. On an ongoing basis, we evaluate our estimates, including those related to the allowance for credit losses, inventory obsolescence reserves, allowances for sales returns, the fair value of stock-based awards, the realizability of deferred tax assets, the useful lives of intangible assets and property and equipment, and contingent liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Accounts Receivable

Accounts receivable are stated at the amount management expects to collect from outstanding balances. We do not generally require collateral to support customer receivables. In accordance with ASC 326, Current Expected Credit Losses, we estimate and record expected credit losses over the entire life of our accounts receivable, considering historical collection experience, customer creditworthiness, specific customer risk, current economic conditions and reasonable and supportable forecasts of future conditions. We make a risk-based evaluation of collectability at the point of sale, which is further reviewed on both an individual and collective basis during each reporting period.

As of December 31, 2025, net accounts receivable totaled $689,153 compared to approximately $1,881,000 as of December 31, 2024. The decrease reflects collections on prior-period balances as well as lower revenue levels in the current year. Management exercises judgment in determining the appropriate allowance for credit losses, and changes in the creditworthiness of our customers, deterioration in economic conditions, or the loss of a significant customer relationship could result in allowance adjustments that materially affect our results of operations in a given period.

Inventories

Inventories are valued at the lower of cost or net realizable value using the first-in, first-out method. Inventories consist primarily of finished goods. We review inventory on an ongoing basis, considering factors such as deterioration, obsolescence, and anticipated future customer demand, and we record an allowance for estimated losses when facts and circumstances indicate that particular inventory items may not be usable or saleable. The determination of the appropriate reserve requires management to exercise judgment regarding expected future demand, the useful life of specific inventory items, and the potential for product design changes or regulatory developments that could render existing inventory obsolete.

As of December 31, 2025, our reserve for obsolete inventory was $500,000, compared to $1.1 million as of December 31, 2024. The decrease in the reserve reflects inventory disposals and adjustments to our demand estimates during the year. Inventories, net of reserves, totaled approximately $2.9 million as of December 31, 2025, compared to approximately $3.6 million as of December 31, 2024. If actual demand for our products differs materially from our forecasts, or if changes in our product offerings render existing inventory obsolete, additional write-downs may be required.

Long-Lived Assets Including Acquired Intangible Assets

We assess long-lived assets, including property and equipment and acquired intangible assets, for potential impairment at the end of each fiscal year or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount of the asset to the estimated future undiscounted cash flows expected to be generated by the asset. If an asset is considered impaired, the impairment charge recognized equals the amount by which the carrying value exceeds the asset's estimated fair value, which we determine using an income approach based on an internally developed discounted cash flow model. Key assumptions in this model include projected revenues and operating expenses, long-term growth rates, and estimated discount rates. These assumptions are based on our historical experience, industry data, and management's expectations about future business conditions.

We noted no long-lived asset impairment charges for the years ended December 31, 2025 and 2024. Management's impairment analysis considered the going concern conditions described above and concluded that projected undiscounted cash flows, based on our current operating plan and capital raising assumptions, continue to support the carrying values of our long-lived assets. Changes in our revenue outlook, discount rates or other key assumptions could result in impairment charges in future periods.

Convertible Notes and Debt Discount

As of December 31, 2025, we had outstanding convertible notes with an aggregate principal balance of approximately $3.1 million, net of amortized debt discount and issuance costs of approximately $222,000, resulting in a carrying value of approximately $2.9 million. Our convertible notes were issued under two separate securities purchase agreements — the 2023 SPA, under which $2.6 million of notes were issued, and the 2025 SPA, under which up to $3.0 million of additional notes may be issued, of which $535,000 had been issued as of December 31, 2025. The notes bear interest at 12% per annum, are convertible at the option of the holder at $1.25 per share and mature on the fifth anniversary of their respective issuance dates.

The conversion features embedded in the 2023 Notes and 2025 Notes are considered clearly and closely related to the host debt instruments and do not require bifurcation under ASC 815. No modifications to the terms of the existing notes occurred during the years ended December 31, 2025 and 2024.

Stock-Based Compensation

We account for stock-based compensation in accordance with ASC 718, Compensation — Stock Compensation. Stock-based awards, including stock options, restricted stock units and shares issued for services, are measured at their estimated fair value on the grant date and recognized as expense over the requisite service period. For stock options and warrant awards, fair value is determined using the Black-Scholes option pricing model, which requires management to make assumptions regarding the expected volatility of our common stock, the expected term of the award, the risk-free interest rate and expected dividend yield. We assume a dividend yield of zero, as we have not paid and do not intend to pay cash dividends on our common stock. Expected volatility is based on the historical volatility of our common stock over a period commensurate with the expected term of the award. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the grant date for the applicable expected term.

During the year ended December 31, 2025, we recognized approximately $198,000 of stock-based compensation expense, including shares issued to directors and shares issued for services rendered. Changes in the assumptions used in the Black-Scholes model, or modifications to existing awards, could result in materially different fair value estimates and compensation expense amounts.

Income Taxes and Valuation Allowance

We account for income taxes in accordance with ASC 740, Income Taxes, using the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and tax bases of assets and liabilities, as well as for net operating loss and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance to the extent that management concludes it is more likely than not that some or all of the deferred tax assets will not be realized.

We recorded no income tax expense or benefit for the years ended December 31, 2025 and 2024 due to our net operating losses and the maintenance of a full valuation allowance against our net deferred tax assets. As of December 31, 2025, our total valuation allowance was approximately $9,719,000, an increase of approximately $1,027,000 from $8,692,000 as of December 31, 2024, primarily reflecting additional deferred tax assets arising from current-year losses. As of December 31, 2025, we had available federal net operating loss carryforwards of approximately $28,310,000 and state net operating loss carryforwards of approximately $25,784,000. Net operating losses generated after December 31, 2017 carry forward indefinitely; those generated prior to 2018 expire at various dates through 2037. NOL’s generated after 2017 carry forward indefinitely but are limited to offset 80% of taxable income in any given year.

The judgment to maintain a full valuation allowance is the most significant estimate within our income tax accounting. This judgment is based on our cumulative history of operating losses, our going concern conditions, and the uncertainty surrounding the timing and amount of future taxable income sufficient to realize these assets. We reassess this conclusion at each reporting date. If our operating results improve materially and we conclude it is more likely than not that a portion of our deferred tax assets will be realized, we would reduce the valuation allowance accordingly, which could result in a material income tax benefit in the period of that determination. We adopted ASU 2023-09, Improvements to Income Tax Disclosures, in the fourth quarter of 2025 on a prospective basis; the required disaggregated rate reconciliation and taxes paid disclosures are included in Note 15 to the consolidated financial statements.

Recently issued accounting pronouncements not yet adopted

In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses (Subtopic 220-40), subsequently clarified by ASU No. 2025-01 issued in January 2025. This ASU requires disaggregated disclosure of specific expense categories, including purchases of inventory, employee compensation, depreciation and amortization, within relevant income statement captions, and also requires disclosure of total selling expenses and their definition. The ASU is effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the provisions of this ASU, which will likely result in additional required disclosures once adopted.

In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This ASU provides a practical expedient permitting an entity to assume that conditions at the balance sheet date remain unchanged over the life of the asset when estimating expected credit losses for current-classified accounts receivable and contract assets. The ASU is effective for annual periods beginning after December 15, 2025, including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the provisions of this ASU and do not expect it to have a material impact on our consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The ASU clarifies interim disclosure requirements and the applicability of Topic 270. The objective of the amendments is to provide further clarity about the current interim disclosure requirements. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. Adoption of this ASU can be applied either a prospective or a retrospective approach. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.

In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements. The ASU addresses thirty-three items, representing the changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. Generally, the amendments in this Update are not intended to result in significant changes for most entities. The ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026. The adoption method of this ASU may vary, on an issue-by-issue basis. Early adoption is permitted. We are currently evaluating the provisions of this ASU and do not expect this ASU to have a material impact on our consolidated financial statements.

Recently adopted accounting pronouncements

In December 2023, FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. The Company adopted ASU 2023-09 in the fourth quarter of 2025 using a prospective transition method.

On July 4, 2025, the U.S. H.R.1, an act to provide for reconciliation pursuant to title II of H. Con. Res. 14. (the “OBBBA”) was enacted. The OBBBA introduces multiple tax law and other legislative changes, including modifications to income tax provisions such as domestic research and development expenses, capital expenditures, and U.S. taxation of international earnings; the repeal or acceleration of the sunset of certain tax credits under the 2022 Inflation Reduction Act and elimination of certain penalties for violations of certain regulatory credit programs. We have recognized the effects of the OBBBA provisions in our financial results to the extent they are applicable to the year ended December 31, 2025. We will continue to evaluate the impact of these provisions on our 2026 and subsequent consolidated financial statements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

Item 8. Financial Statements and Supplementary Data

The consolidated financial statements of TOMI Environmental Solutions, Inc. and the related notes, together with the report of our independent registered public accounting firm, appear beginning on page 32 of this Annual Report on Form 10-K.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of TOMI Environmental Solutions, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of TOMI Environmental Solutions, Inc. (the Company) as of years ended December 31, 2025 and 2024, and the related consolidated statements of operations, shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has recurring net losses, negative cash flows from operations, and has a retained deficit as of December 31, 2025. These factors raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Allowance for credit losses

As described further in Note 2 to the consolidated financial statements, the Company maintains an allowance for credit losses against its accounts receivable balances based on the future estimated credit losses. As of December 31, 2025, the allowance for credit losses was $1.1 million, or 60.9% of total accounts receivable. This estimate is determined based on internally developed qualitative and quantitative factors derived from the aging of receivables, the Company’s past collection history with customers, forward looking information and economic trends and conditions.

We have identified the evaluation of the Company’s estimation of allowance for credit losses as a critical audit matter. There is an established policy for determining overall allowance for credit losses. The Company evaluates customers into two economic pools for delinquent customers and industry specific with additional judgement in place for certain account balances that require additional evaluation and assessment which are used in estimating losses related to customer receivables. There is also a degree of subjectivity in management's assessment of the completeness and accuracy of the allowance for credit losses, specifically the portion of the receivable expected to be collected, which requires a significant level of auditor judgement in auditing the estimate.

Our audit procedures related to the allowance for credit losses included:

Inventory – Valuation associated with excess and obsolete (E&O) inventory

As further described in Note 2  & 3  to the financial statements, inventory is stated at the lower of cost or net realizable value. At the balance sheet date, the Company evaluated inventories for excess quantities and obsolescence (E&O) and included an inventory reserve against its inventory balances. As of December 31, 2025, the inventory reserve was $500 thousand, or approximately 14.6% of total inventory. To estimate the amount of inventory that may be in excess or obsolete, the Company reviews inventory quantities on hand as well as historical and projected sales volumes. The Company’s model assumes that inventory will be distributed on a first-in-first-out basis. Due to the nature of the inventory and the levels of inventory purchased in prior years, as well as recent sales trends, estimating the amount of inventory that is in excess or potentially obsolete involves significant judgments and estimates.

Given the significant judgments associated with evaluating the valuation of E&O inventory, auditing the reasonableness of management’s estimates and assumptions involved especially subjective judgment and an increased extent of effort, therefore we identified the estimates used to determine the valuation of the E&O inventory as a critical audit matter.

Our audit procedures related to the Company’s valuation of E&O inventory included the following:

/s/ Rosenberg Rich Baker Berman P.A.

We have served as the Company’s auditor since 2021.

Somerset, New Jersey

March 31, 2026

TOMI ENVIRONMENTAL SOLUTIONS, INC.

CONSOLIDATED BALANCE SHEETS

The accompanying notes are an integral part of the consolidated financial statements.

TOMI ENVIRONMENTAL SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

The accompanying notes are an integral part of the consolidated financial statements.

TOMI ENVIRONMENTAL SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

For the years ended December 31, 2025 and 2024

The accompanying notes are an integral part of the consolidated financial statements.

TOMI ENVIRONMENTAL SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS