We are subject to litigation, claims, investigations, and audits arising from time to time in the ordinary course of our business.

On September 29, 2020, the Company’s former Chief Executive Officer, Stephen D. Cooper, commenced an action against the Company entitled Stephen D. Cooper v. One Stop Systems, Inc. et al, in San Diego County Superior Court, Case No. 37-2020-00034492-CU-BC-CTL. Mr. Cooper alleged claims for (1) breach of written contract and (2) violation of California Labor Code Sections 201 and 203 in connection with the Company’s alleged failure to pay unpaid wages and an earned bonus following the Company’s termination of Mr. Cooper’s employment with the Company in February 2020. Mr. Cooper sought unspecified compensatory damages and statutory penalties.

The Company denied Mr. Cooper’s allegations. On December 8, 2020, the Company filed a cross-complaint (“Cross Complaint”) against Mr. Cooper for (1) breach of contract (in connection with a binding commitment letter and Mr. Cooper’s employment agreement); (2) intentional misrepresentation; (3) negligent misrepresentation; and (4) breach of fiduciary duty pursuant to which the Company sought compensatory damages, punitive damages, pre-judgment interest, attorneys’ fees, and the cost of suit incurred in connection with Mr. Cooper’s complaint and the Cross Complaint.

On June 28, 2021, pursuant to the parties’ agreement to resolve all of their disputes, the court entered a dismissal with prejudice of the litigation, including all claims and cross-claims. As a result, these actions have been resolved.

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-cancelable 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 modified in February 2019 and expires in August 2024. The Company also leases a 3,208 square foot facility in Salt Lake City, Utah that houses our Ion software development team which expires in June 2023. The Company is the lessee of 12,880 square feet located in Irvine, California which expires in June 2023. Bressner leases space comprised of 8,073 square feet on a month-to-month basis. All Company leases are operating leases with a weighted average remaining lease term of 32 months with a weighted average discount rate of 12.28%. For the three months ended March 31, 2022 and 2021, rent expense was $161,535 and $251,130, respectively.

Supplement Cash Flow Information:	For the Three Months Ended March 31, 2022
Cash paid for amounts included in the measurement of operating lease liabilities	$	160,910

The following table present a maturity of the Company’s operating lease liabilities as of March 31, 2022:

Year	Operating Leases
Remainder of 2022	$	487,015
2023		611,465
2024		417,288
2025		-
2026		-
Thereafter		-
Total lease payments		1,515,768
Less: Amount representing interest		(175,699	)
Present value of lease payment		1,340,069
Less: current portion of operating lease obligation		(545,642	)
Operating lease obligation, net of current portion	$	794,427

In the normal course of business, the Company may enter into purchase commitments for inventory components to be delivered based upon pre-established delivery schedules over a period that may exceed one year.

During the three month periods ended March 31, 2022 and 2021, the Company had two customers in each period that accounted for (in the aggregate) approximately 27% and 38%, respectively, of revenue for which each represented greater than 10% of our consolidated quarterly revenue.

As of March 31, 2022 and December 31 2021, the Company had two customer and three customers, respectively, that accounted for approximately 47% and 64%, respectively, of trade accounts receivables for which each customer’s balances represented greater than 10% of our consolidated trade accounts receivable balance.

During the three month periods ended March 31, 2022 and 2021, the Company had approximately 25% and 22%, respectively, of purchases from vendors/suppliers for which each represents greater than 10% of our consolidated purchases.