EX-99.2 4 exh_992.htm EXHIBIT 99.2

Exhibit 99.2

DAS Medical Holdings, LLC

and Subsidiaries

Consolidated Financial Statements (unaudited)

As of September 30, 2021 and 2020 and for each of the three and nine months ended September 30, 2021 and 2020

Unaudited Consolidated Financial Statements

Condensed Consolidated Balance Sheets			3
Condensed Consolidated Statements of Income			4
Condensed Consolidated Statement of Changes in Members’ Equity			5
Condensed Consolidated Statement of Cash Flows			6
Notes to Condensed Consolidated Financial Statements			7

DAS Medical Holdings, LLC and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30, 2021			September 30, 2020
Assets
Current assets:
Cash	$	16,759,400		$	7,438,832
Accounts receivable		2,566,396			3,392,406
Inventories		8,928,723			9,877,010
Short-term investments		1,699,309			654,421
Other current assets		57,709			51,270
Total current assets		30,011,537			21,413,939
Property, plant and equipment		4,083,523			3,748,232
Less accumulated depreciation and amortization		(1,333,055	)		(929,696	)
Net property, plant and equipment		2,750,468			2,818,536
Long-term investments		1,590,459			4,046,152
Alternative Investment		505,000			375,000
Goodwill and other intangible assets, net		69,808			77,222
Total assets	$	34,927,272		$	28,730,849

Liabilities and Members’ Equity
Current liabilities:
Accounts payable	$	3,402,846		$	3,580,297
Accrued expenses		137,828			151,907
Other current liabilities		-			11,000
Total current liabilities		3,540,674			3,743,204

Paycheck Protection Loan		-			203,400
Total liabilities		3,540,674			3,946,604

Members'equity attributable to controlling interest		27,276,844			21,727,652
Noncontrolling interests		4,109,754			3,056,593
Total members’ equity		31,386,598			24,784,245
Total liabilities and members' equity	$	34,927,272		$	28,730,849

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

DAS Medical Holdings, LLC and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Revenues, net	$	13,228,673		$	12,652,481		$	37,648,133		$	30,323,131
Cost of sales		9,792,668			8,991,057			27,394,959			21,772,895
Gross profit		3,436,005			3,661,424			10,253,174			8,550,236
Selling, general & administrative expenses		639,556			555,170			2,183,519			2,005,028
Operating income		2,796,449			3,106,254			8,069,655			6,545,208
Interest income and net gain on investments		(18,779	)		(33,337	)		(83,550	)		(93,131	)
Interest expense		-			-			-			13,368
Other expense, net		(60,844	)		-			(239,857	)		-
Income before income tax expense		2,876,072			3,139,591			8,393,062			6,624,971
Income tax expense		143,260			283,495			497,760			588,033
Net income		2,732,812			2,856,096			7,895,302			6,036,938
Net income attributable to noncontrolling interests	$	(246,255	)	$	(311,974	)	$	(805,551	)	$	(669,233	)
Net income attributable to controlling interests	$	2,486,557		$	2,544,122		$	7,089,751		$	5,367,705

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

DAS Medical Holdings, LLC and Subsidiaries

Condensed Consolidated Statements of changes in Members’ Equity

(Unaudited)

Three and Nine Month Periods Ended September 30, 2021
	Attributable					Total
	to Controlling			Noncontrolling		Members'
	Interest			Interests		Equity
Balance at December 31, 2020	$	22,209,741		$	3,304,202	$	25,513,943
Distributions		(250,000	)		50		(249,950	)
Net income		1,902,635			257,263		2,159,898
Balance at March 31, 2021	$	23,862,376		$	3,561,515	$	27,423,891
Distributions		(700,000	)		-		(700,000	)
Net income		2,700,558			302,034		3,002,592
Balance at June 30, 2021	$	25,862,934		$	3,863,549	$	29,726,483
Distributions		(1,072,697	)		-		(1,072,697	)
Net income		2,486,607			246,205		2,732,812
Balance at September 30, 2021	$	27,276,845		$	4,109,754	$	31,386,598


Three and Nine Month Periods Ended September 30, 2020
	Attributable						Total
	to Controlling			Noncontrolling			Members'
	Interest			Interests			Equity
Balance at December 31, 2019	$	17,501,406		$	2,729,474		$	20,230,880
Distributions		-			(152,327	)		(152,327	)
Net income		1,044,916			231,926			1,276,842
Balance at March 31, 2020	$	18,546,322		$	2,809,073		$	21,355,395
Distributions		-			(139,737	)		(139,737	)
Net income		1,778,667			125,334			1,904,001
Balance at June 30, 2020	$	20,324,989		$	2,794,669		$	23,119,658
Distributions		(1,141,459	)		(50,050	)		(1,191,509	)
Net income		2,544,122			311,973			2,856,096
Balance at September 30, 2020	$	21,727,652		$	3,056,593		$	24,784,245

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

DAS Medical Holdings, LLC and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended
	September 30,
	2021			2020
Cash flows from operating activities:
Net income	$	7,895,302		$	6,036,938
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		320,788			272,074
Gain and income on investments, net		(78,596	)		(1,105	)
Changes in operating assets and liabilities:
Receivables, net		(332,184	)		4,468,446
Inventories		1,881,717			(1,578,548	)
Other current assets		137,860			(45,703	)
Accounts payable		832,219			(3,038,100	)
Accrued expenses		(13,155	)		12,981
Other current liabilities		(11,899	)		11,000
Net cash provided by operating activities		10,632,052			6,137,983
Cash flows from investing activities:
Additions to property, plant, and equipment		(106,172	)		(952,861	)
Purchases of investments		(602,142	)		(3,092,350	)
Proceeds from sale of investments		1,738,834			1,262,804
Purchases of alternative investment		(50,000	)		(120,000	)
Net cash provided by (used in) investing activities		980,520			(2,902,407	)
Cash flows from financing activities:
Payments of / Proceeds from PPP loan		(203,400	)		203,400
Distrubutions paid		(2,022,647	)		(1,483,573	)
Net cash used in financing activities		(2,226,047	)		(1,280,173	)
Net increase in cash and cash equivalents		9,386,525			1,955,403
Cash and cash equivalents at beginning of period		7,372,875			5,483,429
Cash and cash equivalents at end of period	$	16,759,400		$	7,438,832

Supplemental disclosure of cash flow information
Cash paid for interest	$	-		$	13,368
Cash paid for taxes	$	442,985		$	259,495

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

DAS Medical Holdings, LLC and Subsidiaries

Notes to Condensed Consolidated Financial Statements

Organization and Business

DAS Medical Holdings, LLC (DAS) was organized under the laws of the state of Georgia in 2015. DAS is a world-class and innovative solutions provider to medical device manufacturers. As a contract manufacturer, DAS specializes in the design development and manufacturing of single use surgical equipment covers, robotic draping systems, and fluid control pouches.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of DAS, DAS Medical Corporation (DAS Corp), DAS Medical International, S.R.L. (DAS International), Inmobiliaria Abidor, S.R.L. (Abidor), One Degree Medical Holdings, LLC (One Degree), and Sterimed, LLC (Sterimed). The six entities are collectively referred to herein as the “Company”. Significant intercompany accounts and transactions have been eliminated in consolidation.

DAS Corp is 100% owned by DAS and was incorporated to hold the Company’s interest in DAS International.

DAS International provides contract manufacturing services in the Dominican Republic. DAS Corp owns 87% of DAS International. The outside investor’s 13% interest is included in the Company’s consolidated financial statements as noncontrolling interests.

Abidor owns certain real estate in the Dominican Republic. DAS International owns 99% of Abidor. The remaining 1% of ownership interest is held by a member of DAS. The Company considers any noncontrolling interest to be insignificant and has fully consolidated Abidor in the Company’s consolidated financial statements.

One Degree manufactures intraoperative patient warming solutions. DAS owns 95% of One Degree. The outside investor’s 5% interest is included in the Company’s consolidated financial statements as noncontrolling interests.

Sterimed manufactures sterile disposable equipment covers. Sterimed was acquired by DAS in 2015 from a third party in exchange for ownership in DAS, and is wholly owned.

On September 29, 2021, the members of DAS formed Parallax Investments, LLC (Parallax), a Georgia limited liability company. On October 14, 2021, all issued and outstanding equity interests in the Company were contributed to Parallax in exchange for all of the issued and outstanding membership interests of Parallax. .

Significant Accounting Standards Not Yet Adopted

Leases—In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-02 (ASU 2016-02), Leases (Topic 842). ASU 2016-02 amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. The new standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The guidance is expected to be effective for nonpublic business entities for fiscal years beginning after December 15, 2021. Early adoption is permitted. Subsequent to the issuance of ASU 2016-02, the FASB issued additional Accounting Standards Updates clarifying aspects of the new lease accounting standard, which will be effective upon adoption of ASU 2016-02. The Company plans to adopt ASU 2016-02 for the year ending December 31, 2022. The Company is still evaluating the effect that the updated standard will have on its consolidated financial statements and related disclosures.

Basis of Presentation

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (GAAP).

Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.

Revenue Recognition

The Company’s revenues primarily consist of revenue from the sale of drapes, machine covers, and other sterile medical devices. Under ASC Topic 606 - Revenue from Contracts with Customers (ASC 606), the amount of revenue recognized for any goods or services reflects the consideration that the Company expects to be entitled to receive in exchange for these goods or services. To achieve this core principle, the Company applies the following five-step approach: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to performance obligations in the contract; and (5) recognize revenue when or as a performance obligation is satisfied. The Company determines the accounting treatment for each contract at inception in accordance with ASC 606. Incidental items that are immaterial in the context of the contract are recognized as expense. The Company does not have any significant financing components. The incremental costs of obtaining a contract, which consist primarily of sales commissions, are reviewed and those costs where the amortization period is less than a year are expensed as they occur. As of December 31, 2020, the Company had no deferred expense related to incremental contract costs.

Performance Obligations—A performance obligation is a promise in a contract to transfer a distinct good or service to a customer and is the unit of account in ASC 606. This good or service must be distinct within the context of the contract. The transaction price of a contract is allocated to each distinct performance obligation and is recognized as revenue when, or as, the performance obligation is satisfied. To the extent a contract is deemed to have multiple performance obligations, management allocates the transaction price of the contract to each performance obligation using their best estimate of the standalone selling price of each distinct good or service in the contract.

Performance Obligations Satisfied at a Point in Time—Performance obligations that do not meet the criteria to be recognized over time are required to be recognized at a point in time, whereby revenues and gross profit are recognized only when a performance obligation is complete, and a customer has obtained control of a promised good or service. In determining when a performance obligation is complete for revenues recognized at a point in time, management measures transfer of control considering physical possession of the good or service, and the Company’s rights to payment.

The Company has determined that revenue from the sale of the Company’s products is generally recognized at the point in time when the products are shipped, and the customer takes ownership and assumes the risk of loss.

Cash

The Company’s cash accounts may exceed federally insured limits. The Company believes it mitigates any risks by depositing cash with major financial institutions.

Accounts Receivable

In the normal course of business, the Company extends unsecured credit to its customers. Accounts receivable are stated at estimated net realizable value. The Company performs on-going credit evaluations of its customers. The carrying amount of accounts receivable is reduced, if necessary, by a valuation allowance that reflects management’s best estimate of the amounts that will not be collected. Management individually reviews all past due balances, and based on that assessment of payment history, provides an allowance for the portion, if any, of the balance that will not be collected. All accounts or portions thereof considered uncollectible or to require excessive collection costs are written off. As of September 30, 2021, management determined that an allowance was not necessary as all amounts are fully collectible.

Inventories

Inventories consists of raw materials, work in progress, and finished goods and is stated at the lower of cost (average cost method) or net realizable value. An allowance for damaged or obsolete products is established, if necessary, based on management’s assessment of inventory on hand. As of September 30, 2021, management has determined that no such allowance is necessary.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed on a straight-line basis, over the estimated useful lives of the assets. Maintenance and repairs are expensed as incurred, while significant improvements are capitalized.

Investments

The Company’s investments are marketable securities recorded at fair value. Unrealized gains and losses on equity securities available for sale are reflected in other income (expense) on the consolidated statement of income. The estimate of fair value is based on publicly available market information or other estimates determined by management. Realized gains and losses from the sale of available for sale securities, if any, are determined on a specific identification method.

Alternative Investment

The Company’s alternative investment consists of contributions to a secured lending fund (the Fund). The Company has determined that it should report this investment under the cost method of accounting. Therefore, the Company recognizes dividend income to the extent such dividends represent the Company’s proportionate share of earnings. Dividends received in excess of the Company’s proportionate share of earnings are treated as a reduction in the investment. The Company evaluates its investment for other than temporary impairments at least annually, or more frequently if impairment indicators arise. No such impairments were recognized during the periods ended September 30, 2021 and 2020. On October 28, 2021, the Fund underwent an initial public offering and is now traded on the New York Stock Exchange. The Fund's advisor has designed a staged liquidity schedule over a period of eight months following the initial public offering. Subsequent to the initial public offering, the Company began classifying the Fund with other investments.

Impairment

Long-lived assets such as property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When indicators of impairment are present, the Company evaluates the carrying amount of such assets in relation to the operating performance and future estimated undiscounted net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The assessment of the recoverability of assets will be impacted if estimated future operating cash flows are not achieved. Management did not identify any conditions that would suggest an impairment of long-lived assets exists during the periods ended September 30, 2021 and 2020.

Goodwill and Other Intangible Assets

The acquisition of Sterimed resulted in the recording of goodwill and certain other intangible assets. Goodwill represents the excess cost over fair value of net assets acquired through acquisition. The other intangible assets acquired included customer lists and customer contracts. The Company amortizes all intangible assets related to the Sterimed acquisition on a straight-line basis over 15 years. Amortization expense for the nine months ended September 30, 2021 and 2020 was $7,413 and $7,413, respectively. Future amortization expense is expected to be approximately $7,413 each year until the assets are fully amortized during the year ended December 31, 2031.

The Company evaluates the carrying value of goodwill on an annual basis and between annual evaluations if events occur or circumstances change that would more likely than not reduce the fair value of goodwill below its carrying amount. When assessing whether goodwill is impaired, management considers first a qualitative approach to evaluate whether it is more likely than not the fair value of goodwill is below its carrying amount; if so, management considers a quantitative approach by analyzing changes in performance and market-based metrics as compared to those used at the time of the initial acquisition. No impairment loss was recognized for goodwill during the periods ended September 30, 2021 and 2020.

Foreign Currency Activities

The Company’s functional currency for all operations worldwide is the U.S. dollar. The Company conducts certain transactions in foreign currencies. Foreign currency transactions are remeasured into U.S. dollars at prevailing or current rates, respectively. Exchange gains and losses resulting from foreign currency transactions are recognized in current operations. Such foreign currency transactions, gains, and losses were inconsequential for the periods ended September 30, 2021 and 2020.

Income Taxes

DAS, One Degree, and Sterimed are limited liability companies treated as partnerships for income tax reporting purposes and, as such, are not subject to income tax. Instead, the members report their proportionate share of taxable income or loss on their own income tax return.

DAS Corp accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. During the periods ended September 30, 2021 and 2020, there were no deferred tax assets or liabilities to recognize.

DAS International and Abidor are included with the DAS Corp federal income tax return. DAS International and Abidor are also subject to certain taxes imposed by the Dominican Republic federal government.

For the periods ended September 30, 2021 and 2020 the components of income tax are as follows:

	2021		2020
Federal	$	447,735	$	554,538
Foreign		50,025		33,495
Total	$	497,760	$	588,033

Management of the Company considers the likelihood of changes by taxing authorities in its income tax returns and would disclose potential significant changes that management believes are more likely than not to occur upon examination by tax authorities. Management has not identified any uncertain tax positions that require recognition or disclosure in the accompanying financial statements. The Company’s income tax returns for the past three years are subject to examination by tax authorities and may change upon examination.

Sales Tax

Sales taxes are imposed on all of the Company’s nonexempt sales at rates based on the destination of the product. The Company collects the sales tax from customers and remits the amount to the proper jurisdictions. The Company’s accounting policy is to exclude the tax collected from revenues and cost of sales.

Shipping and Handling

Shipping and handling fees charged to customers are included in revenue and shipping and handling costs incurred are included in cost of sales in the accompanying consolidated statement of income.

3. Inventories

Inventories consisted of the following at September 30, 2021 and 2020:

	September 30, 2021		September 30, 2020
Raw Materials	$	6,695,697	$	6,003,363
Work in process		188,257		543,608
Finished goods		2,044,769		3,330,039
Total	$	8,928,723	$	9,877,010

4. Property and Equipment

Property and equipment consisted of the following for the nine months ended September 30, 2021 and 2020:

		For the nine-months ended,
	Useful Lives	September 30, 2021			September 30, 2020
Machinery and equipment	3-5 years	$	2,529,226		$	2,408,073
Building	20 years		872,165			872,165
Leasehold improvements	3-10 years		652,945			442,016
Furniture and fixtures	3-10 years		29,187			25,978
Property and equipment, gross			4,083,523			3,748,232
Accumulated depreciation			(1,333,055	)		(929,696	)
Property and equipment, net		$	2,750,468		$	2,818,536

Depreciation expense for the periods ended September 30, 2021 and 2020 amounted to approximately $313,374 and 264,661, respectively.

5. Fair Value Measurements

The fair value measurement guidance defines fair value, establishes a framework for measuring fair value, and expands disclosure requirements about fair value measurements. Under the guidance, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The guidance also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability, developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect management’s assumptions about the factors market participants would use in valuing the asset or liability, developed based upon the best information available in the circumstances. The input levels are not necessarily an indication of the risk or liquidity associated with financial instruments at that level.

The fair value hierarchy prescribed by the guidance is broken down into three levels as follows:

	Level 1 –	unadjusted quoted prices for identical assets or liabilities at the measurement date in an active market that the entity has the ability to access.

	Level 2 –	other observable inputs available at the measurement date, other than quoted prices included in Level 1, either directly or indirectly, including:

quoted prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets in nonactive markets;

inputs other than quoted prices that are observable for the asset or liability;

inputs that are derived principally from or corroborated by other observable market data

Level 3 –

unobservable inputs that reflect the use of significant management judgment. These values are generally determined using pricing models for which assumptions utilize management’s estimate of market participant assumptions.

The following table provides information by level for the Company’s investments in marketable securities that are measured at fair value on a recurring basis at September 30, 2021:

	Level 1		Level 2		Level 3		Total
Marketable securities:
Mutual funds	$	1,699,309					$	1,699,309
Corporate bonds				1,590,459				1,590,459
Total	$	1,699,309	$	1,590,459	$	-	$	3,289,768

6. Paycheck Protection Program Loan

On April 30, 2020, DAS and Sterimed each applied for and were approved for a Small Business Administration (SBA) loan in conjunction with the Paycheck Protection Program (PPP). DAS and Sterimed received loan proceeds of $156,400 and $47,000, respectively, under unsecured promissory notes from the Company’s existing commercial bank (collectively, the PPP loan). The PPP was established by Congress and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). The PPP loans had a two-year term and bears interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred until the earlier of SBA loan forgiveness or October 2021. The PPP loans are included in non-current liabilities on the accompanying consolidated balance sheet. Under the terms of the CARES Act, PPP loan recipients can be granted forgiveness for all or a portion of loans granted under the PPP. Such forgiveness will be determined by the SBA, subject to limitations, based on the use of loan proceeds for payment of payroll costs, mortgage interest, rent, and utilities. The Company believes the loan proceeds were used in accordance with PPP loan forgiveness requirements.

In connection with applying for the PPP loan, the Company was required to certify, among other things, that the economic uncertainty, at the time, made the PPP loan necessary to support the Company’s operations. Management made this certification in good faith after analyzing the effects of the COVID-19 pandemic on the Company. Management believes the Company satisfied all eligibility criteria for the PPP loan, and that the receipt of the PPP loan was consistent with the broad objectives of the CARES Act.

DAS was granted full forgiveness by the SBA on February 24, 2021. Sterimed was granted full forgiveness by the SBA on June 9, 2021.

7. Revolving Line of Credit

DAS International maintains a revolving credit agreement with a financial institution for borrowings up to $2,000,000, limited by the available borrowing base, as defined in the agreement. Borrowings under the agreement bear interest at one month LIBOR plus 2.25%, or approximately 2.33% on September 30, 2021. The Company is required to maintain certain covenants as a part of the revolving credit agreement and was in compliance with all covenants as of September 30, 2021. There were no outstanding borrowings under the agreement during or as of September 30 ,2021. The Company terminated the revolving credit agreement effective December 17, 2021.

8. Employee Benefit Plan

On June 1, 2020, the Company established the DAS Medical Holdings Company Retirement Plan (the Plan). The Plan covers substantially all of the Company’s U.S. employees. Employer contributions under the Plan are at the Company’s discretion. The Company contributed $28,619 and $9,910 to the Plan for the periods ended September 30, 2021 and 2020.

9. Commitments, Concentrations, and Contingencies

Operating Leases

The Company leases various office and warehouse space from third-party sources under
non-cancelable operating leases with payments due through August 2025. As of September 30, 2021, minimum future lease payments due under the non-cancelable operating leases are as follows:

	Amount
2021	$	115,738
2022		401,009
2023		264,008
2024		270,244
2025		182,934
Total	$	1,233,933

Rent expense from third-party sources for the period ended September 30, 2021 amounted to $255,463.

Concentration Risk

For the nine-month periods ended September 30, 2021 and 2020, one customer accounted for approximately 93% and 93%, respectively of the Company’s sales. Approximately 73% and 75% of the Company’s accounts receivable was due from the same customer at September 20, 2021 and 2020, respectively. For the nine-month periods ended September 30, 2021 and 2020, two vendors accounted for approximately 40% and 39% of the Company’s purchases, and at September 30, 2021 and 2020, approximately 32% and 49% of accounts payable was related to the same two vendors.

Foreign Operations

Approximately 95% of the Company’s products are manufactured by DAS International in the Dominican Republic. Property and Equipment of approximately $2,750,000 and inventory of approximately $8,670,000 related to the manufacturing facility in the Dominican Republic are included in the Company’s consolidated balance sheet at September 30, 2021. Operations outside the United States are subject to risks inherent in operating under different legal systems and various political and economic environments. Among the risks are changes in existing tax laws, possible limitations on foreign investment and income repatriation, government price or foreign exchange controls, and restrictions on currency exchange. The Company does not engage in hedging activities to mitigate its exposure to fluctuations in foreign currency exchange rates.

Litigation

The Company may be subject to routine litigation, claims, or assessments in the normal course of business. The Company has no threatened or pending legal proceedings that warrant recognition or disclosure in the consolidated financial statements.

10. Related Party Transactions

The Company leases an office building owned by a member of DAS, who was also the former owner of Sterimed, with payments due through July 2025. As of September 30, 2021, minimum future lease payments due under the related party lease is as follows:

	Amount
2021	$	11,430
2022		45,720
2023		45,720
2024		45,720
2025		26,670
Total	$	175,260

Rent expense paid to a related party for the period ended September 30, 2021 amounted to $34,290.

During the period ended September 30, 2021, One Degree made guaranteed payments to its outside investor totaling $75,000 related to the individual’s continued role in One Degree’s business operations.