We are subject to litigation, claims, investigations, and audits arising from time to time in the ordinary course of our business. When applicable, we record accruals for contingencies when it is probable that a liability will be incurred, and the amount of loss can be reasonably estimated. While the outcome of lawsuits and other proceedings against us cannot be predicted with certainty, in our opinion, individually or in the aggregate, no such lawsuits are expected to have a material effect on our consolidated financial position or results of operations.

In the opinion of management, after consultation with legal counsel, the ultimate disposition of any such matters as of June 30, 2025, are not expected to have a materially adverse effect on the consolidated financial position or results of operations of the Company.

The Company has made certain indemnities, under which it may be required to make payments to an indemnified party, in relation to certain transactions. The Company indemnifies its directors, officers, employees, and agents to the maximum extent permitted under the laws of the State of Delaware. In connection with its facility lease, the Company has indemnified its lessor for certain claims arising from the use of the facilities. The duration

of the indemnities varies, and in many cases is indefinite. These indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated to make any payments for these obligations and no liabilities have been recorded for these indemnities in the accompanying consolidated balance sheets.

The Company leases its offices, manufacturing, and warehouse facility in San Diego County under a non-cancellable operating lease. Our corporate headquarters are in a leased space comprising of approximately 29,342 square feet in Escondido, California under a lease that was last modified and extended in September 2023 and expires in August 2030. The Company also leases a 3,208 square foot facility in Salt Lake City, Utah, under a lease expiring in June 2025, that houses our Ion software development team. The Company extended the lease in Salt Lake City for an additional 12 months, with the lease commencing in July 2025 and expiring in June 2026, and the leased space was reduced from 3,208 square feet to 925 square feet. Additionally, we lease a 1,632 square foot facility located in Anaheim, California, with the lease expiring in July 2025. Bressner leases space in Germany comprising of 11,836 square feet on a month-to-month basis. In June 2024, Bressner leased an additional 2,500 square feet of office space in Germany on a month-to-month basis with payments of approximately $5,950 per month, beginning in October 2024.

In May 2025, Bressner entered into a lease agreement for approximately 15,629 square feet of office and warehouse space in Germany, with an initial lease term ending on June 30, 2030. The lease has an option to renew for additional five-year term that the Company is reasonably certain to exercise. Bressner expects to occupy the new facility in the second half of 2025, at which time the month to month lease for the other facility will be discontinued.

Other information related to leases as of the three and six month periods ended June 30, 2025 and 2024 was as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2025		2024		2025		2024
Operating lease expense	$	278,673	$	201,487	$	483,563	$	375,902
Total lease expense	$	278,673	$	201,487	$	483,563	$	375,902

Cash paid for amounts included in the measurement of operating lease liabilities:
Operating cash flows from operating leases	$	130,756	$	174,014	$	260,318	$	348,429

Weighted-average remaining lease term - operating leases					97.1 months		69.5 months
Weighted-average discount rate - operating leases					9.04%		13.60%

The following table presents the maturity of the Company’s operating lease liabilities as of June 30, 2025:


Year	Operating Leases
Remaining 2025	$	398,105
2026		769,530
2027		762,487
2028		766,426
2029		783,223
Thereafter		2,204,577
Total lease payments		5,684,348
Less: Amount representing interest		(1,380,789	)
Present value of lease payment		4,303,559
Less: current portion of operating lease obligation		(457,302	)
Operating lease obligation, net of current portion	$	3,846,257

In the normal course of business, the Company may enter into purchase commitments for inventory components to be delivered based upon non-cancellable, pre-established, delivery schedules that are over a period that may exceed one year. Total non-cancellable purchase orders as of June 30, 2025 were $1,583,476.

During the three month periods ended June 30, 2025 and 2024, the Company had one and two customers, respectively, that accounted for (in the aggregate) approximately 12% and 27% of revenue, respectively. During the six month period ended June 30, 2025, the Company did not have any customers that accounted for 10% or more of total revenue. In the six month period ended June 30, 2024, the Company had one customer that accounted for approximately 11% of revenue. No other customers represented greater than 10% of our consolidated revenue in that period.

As of June 30, 2025 and December 31, 2024, the Company had one and two customers, respectively, that accounted for (in the aggregate) approximately 10% and 35%, respectively, of trade accounts receivables for which each of such customer’s balances represented 10% or greater of our consolidated trade accounts receivable balance.

During the three month periods ended June 30, 2025 and 2024, the Company had approximately 40% and 52%, respectively, of aggregate purchases from three and two vendors/suppliers, respectively, for which each represents greater than 10% of our consolidated purchases. During the six month periods ended June 30, 2025 and 2024, the Company had approximately 31% and 41%, respectively, of aggregate purchases from two vendors/suppliers in each period for which each represents greater than 10% of our consolidated purchases.