NOTE 8—COMMITMENTS AND CONTINGENCIES

The Company has $1,151,000 in operating lease obligations payable through 2030 and $603,000 in other contractual obligations which includes purchase commitments, contractual services and software license agreements. The contractual services include $220,000 payable through March 31, 2027. The software license agreements of $16,000 are all payable through March 31, 2027. The Company also has $367,000 in open purchase order commitments payable through September 20, 2026 of which $272,000 (74%) is to one electronics vendor.

As it relates to the AIO Agreement described in Note 6, the Company has commitments to share a defined portion of monitoring and SaaS-related revenue generated under the agreement with AIO The Company is obligated to remit to AIO a share of (i) the Company’s revenue from ongoing monitoring contracts utilizing AIO’s products, net of data, communication, cloud server, and billing costs, and (ii) the Company’s revenue from SaaS arrangements involving AIO’s products, net of the cost of products sold, installation costs, and other directly attributable costs. The applicable share is initially 50%, and is reduced to 43% once cumulative amounts paid to AIO under this provision exceed $2.0 million, and further reduced to 34% once cumulative amounts paid exceed $4.0 million. Amounts due are to be calculated and remitted on a quarterly basis.