Zynex

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                    
Commission file number 001-38804
ZYNEX, INC.
(Exact name of registrant as specified in its charter)
Nevada
 
90-0275169
(State or other jurisdiction of

incorporation or organization)
 
(IRS Employer

Identification No.)
9655 Maroon Circle, Englewood, CO
 
80112
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (303) 703-4906
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Ticker symbol(s) 
Name of each exchange on which registered
Common Stock, $0.001 par value per share
ZYXI
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
Common Stock, $0.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐  Yes    ☒  No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. ☐ Yes    ☒  No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒  Yes    ☐ No
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 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 an 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.
Large accelerated filer
 
☐ 
Accelerated filer
 
☒
Non-accelerated filer
 
☐ 
Smaller reporting company
 
☒
 
 
 
 
Emerging growth company
 ☐
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. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive
officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  ☐  Yes    ☒  No
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of June 30, 2024, the last business day of the Registrant’s last completed second quarter,
based upon the closing price of the common stock as reported by the Nasdaq Stock Market on such date was approximately $143.4 million.
As of February 28, 2025, 42,217,888 shares of common stock are issued and 31,912,487 shares are outstanding.
Documents incorporated by reference:
Portions of the Registrant’s definitive proxy statement relating to its 2025 annual meeting of stockholders (the “Proxy Statement”) are incorporated by reference into Part III of this Annual Report
on Form 10-K where indicated. The Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

Table of Contents
TABLE OF CONTENTS
ZYNEX, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2024
 
Page
PART I
2
Item 1. Business
2
Item 1A. Risk Factors
10
Item 1B. Unresolved Staff Comments
29
Item 1C. Cybersecurity
30
Item 2. Properties
31
Item 3. Legal Proceedings
31
Item 4. Mine Safety Disclosures
31
Item 4A. Executive Officers of the Registrant
31
PART II
33
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
33
Item 6. [Reserved]
33
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
34
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
43
Item 8. Financial Statements and Supplementary Data
43
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
43
Item 9A. Controls and Procedures
44
Item 9B. Other Information
45
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
45
PART III
46
Item 10. Directors, Executive Officers and Corporate Governance
46
Item 11. Executive Compensation
46
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
46
Item 13. Certain Relationships and Related Transactions, and Director Independence
47
Item 14. Principal Accountant Fees and Services
47
PART IV
48
Item 15. Exhibits and Financial Statement Schedules
48
Item 16. Form 10-K Summary
50
Signatures
51

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This report includes statements of our expectations, intentions, plans, and beliefs that constitute “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Nonetheless, it is important for an investor to understand that these statements involve risks and uncertainties. These
statements relate to the discussion of our business strategies and our expectations concerning future operations, margins, profitability,
liquidity, and capital resources as well as analyses and other information that are based on forecasts of future results and estimates of
amounts not yet determinable. We have used words such as “may” “will” “should” “expect” “intend” “plan” “anticipate” “believe”
“think” “estimate” “seek” “expect” “predict” “could” “project” “potential” and other similar terms and phrases, including references to
assumptions, in this report to identify forward-looking statements. These forward-looking statements are made based on expectations and
beliefs concerning future events affecting us and are subject to uncertainties, risks, and factors relating to our operations and business
environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ
materially from those matters expressed or implied by these forward-looking statements.
Such risks and other factors also include those listed in Item 1A. “Risk Factors” and elsewhere in this report and our other filings with
the Securities and Exchange Commission. When considering these forward-looking statements, you should keep in mind the cautionary
statements in this report and the documents incorporated by reference. New risks and uncertainties arise from time to time, and we
cannot predict those events or how they may affect us. We assume no obligation to update any forward-looking statements after the date
of this report as a result of new information, future events or developments, except as required by applicable laws and regulations.
When used in this annual report, the terms the “Company,” “Zynex”, “we,” “us,” “ours,” and similar terms refer to Zynex, Inc., a Nevada
corporation, and our wholly-owned active subsidiaries, Zynex Medical, Inc. (“ZMI”) and Zynex Monitoring Solutions, Inc. (“ZMS”).

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PART I
ITEM 1. BUSINESS
History
Zynex, Inc. was founded by Thomas Sandgaard in 1996, when he founded two privately held companies that were eventually folded into
Zynex, Inc., a Nevada corporation. Zynex, Inc. is the parent company of two active subsidiaries; Zynex Medical, Inc. (“ZMI,” a wholly-
owned Colorado corporation) and Zynex Monitoring Solutions, Inc. (“ZMS,” a wholly-owned Colorado corporation).
Substantially all of the Company’s consolidated revenue in 2024 and 2023 is attributable to ZMI. Our headquarters are located in
Englewood, Colorado.
Overview
Zynex Medical, Inc. (ZMI):
ZMI designs, manufactures and markets medical devices that treat chronic and acute pain, as well as activate and exercise muscles for
rehabilitative purposes with electrical stimulation. The Company’s devices are intended for pain management to reduce reliance on
medications and provide rehabilitation and increased mobility through the utilization of non-invasive muscle stimulation,
electromyography technology, interferential current (“IFC”), neuromuscular electrical stimulation (“NMES”), and transcutaneous
electrical nerve stimulation (“TENS”). All of our medical devices are designed to be patient friendly and designed for home use. Our
devices are small, portable, battery operated, and include an electrical pulse generator which is connected to the body via electrodes. All
of our medical devices are marketed in the U.S. and are subject to FDA regulation and clearance. Our products require a physician’s
prescription before they can be dispensed in the U.S. Our primary product is the NexWave device. The NexWave is marketed to
physicians and therapists by our field sales representatives. The NexWave requires consumable supplies, such as electrodes and batteries,
which are shipped to patients, as needed.
ZMI distributes private labeled rehabilitation products such as back, knee and wrist braces, cervical and lumbar traction, and hot/cold
therapy (“Private Labeled Rehabilitation Products”). These complement our pain management products and are critical for physicians
and therapists. These products require a prescription and are covered by most insurance plans and Medicare.
ZMI designs, manufactures, and markets the NeuroMove product. The NeuroMove contains electromyography and electric stimulation
technology that is primarily used for stroke, spinal cord injury (“SCI”) and traumatic brain injury (“TBI”) rehabilitation by reaching parts
of the brain to re-connect with muscles, also known as neuroplasticity. The NeuroMove product is primarily marketed to medical clinics.
Zynex did not have material sales of this product in 2024 or 2023.
ZMI also designs, manufactures, and markets the InWave product, an in-home electrical stimulation device used to treat female urinary
incontinence. The device requires a prescription and is covered by most insurance plans and Medicare. Zynex did not have material sales
of this product in 2024 or 2023.
ZMI designs, manufactures and markets the M-Wave product, which was cleared by the FDA in February 2024. The M-Wave is a user-
friendly NMES device designed for muscle stimulation and re-education. M-Wave is a fully programmable, compact, battery-powered
device with adjustable treatment timer, compliance meter, biphasic or monophasic waveforms, and exceptional safety features. The M-
Wave is marketed to physicians and therapists and requires consumable supplies, electrodes and batteries, for use. The Company does not
anticipate a material financial impact of the M-Wave on the Company’s consolidated financial statements.
Zynex Monitoring Solutions (ZMS):
ZMS was formed in 2011 to develop and market medical devices for non-invasive patient monitoring beginning with our Zynex Fluid
Monitoring System. The monitor is a non-invasive medical device for monitoring relative fluid volume changes used in operating and
recovery rooms to detect fluid loss during surgery and internal bleeding during recovery. The CM-1500 received 510(k) clearance from
the FDA in February 2020 and the wireless CM-1600 received clearance in June 2023.

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The Zynex Fluid Monitoring System has been tested in several Institutional Review Board (“IRB”) approved clinical studies, both in
well-controlled healthy volunteer settings as well as in clinical use environments. In 2024, devices were placed in healthy volunteer
studies at national blood donation centers in order to evaluate the specific changes in the measured parameters as well as the device’s
patented Relative Index (“RI”) during minor blood loss.
We have built a number of commercial devices in pilot production and continue to refine the algorithms for the patented Relative Index.
We have received two U.S. utility patents for this unique application, the first in the fourth quarter of 2018 and the second in the first
quarter of 2021, and we believe this product could serve a currently unmet need in the market to enable safer surgeries and safer
monitoring of patients during recovery.
On December 22, 2021, ZMS acquired Kestrel Labs Inc. (“Kestrel”), which had two pulse-oximeter products in development and
multiple patents. In early 2022, the integration of Kestrel and its pulse oximetry products into the ZMS organization was completed.
Pulse oximetry is a commonly used noninvasive monitoring method for estimation of oxygen saturation in arterial blood. The
inaccuracies of traditional Light Emitting Diode (“LED”) based pulse oximeters have recently been highlighted specific to skin
pigmentation bias and the inability to accurately measure blood oxygen levels in the presence of other conditions such as in cases of
carbon monoxide poisoning or methemoglobinemia. ZMS’ investigational laser-based products are designed to address these
inaccuracies and include the novel NiCO™ CO-Oximeter, and HemeOx™, a total hemoglobin oximeter that is designed to enable
continuous noninvasive arterial blood monitoring. NiCO is anticipated to be submitted to the FDA for clearance in Q1 2025. NiCO is
currently undergoing Institutional Review Board (“IRB”) approved clinical studies on human subjects to measure hypoxemia.
Enrollments at the University of California, San Francisco and the initial phase of a healthy volunteer study at Duke Univeristy have
been completed. The completed enrollments at Duke will be submitted as part of the 510(k) submission for NiCO. Ongoing enrollments
at Duke will be used for future development.
As ZMS’ products are still in development, ZMS did not produce any revenue for the years ending December 31, 2024 and 2023.
In addition to the fluid volume monitor, ZMS filed for a provisional patent for a non-invasive sepsis monitor in December 2020 and an
updated utility patent, which was filed in December 2021.
SALES AND GROWTH STRATEGIES
To date, ZMI accounts for substantially all of our revenue and profit. We are focused on expanding our sales force to address what we
believe is an untapped market for electrotherapy products and pain management. As of December 31, 2024, we had approximately 350
field sales representatives on staff or in the hiring process. We continue to hire field sales representatives, focusing on the quality of each
candidate with the goal of increasing performance management standards for our sales force as a whole.
In an effort to increase revenue and diversification, we provide our prescribers and patients with diverse solutions for their pain
management needs. We are continually adding new complementary products to our ZMI sales channel, in addition to our current
Distributed Products. We believe adding these complementary products will increase our market share and, in the future, grow our core
business by providing our electrotherapy patients additional non-pharmacological pain relief and complementary products to our
manufactured devices.
Distribution and Revenue Streams:
Substantially all our revenue is generated through our ZMI subsidiary from our electrotherapy products.
We sell through a direct sales force in the United States. Our field sales representatives are engaged to sell in predefined geographic
markets and are compensated with a base salary plus incentive compensation aligned to corporate objectives. Our efforts to date have
been focused on the United States market.
Our revenue is derived from several sources including patients with insurance plans held by commercial health insurance carriers or
government payers who pay on behalf of their insureds. The remaining portion of revenue is primarily received from workers’
compensation claims, auto claims, attorneys representing injured patients, hospitals, clinics, and private-pay individuals.

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A large part of our revenue is recurring. Recurring revenue results primarily from the sale of surface electrodes and batteries sent to
existing patients with our devices. Electrodes and batteries are consumable items that are considered an integral part of our products.
Private Labeled Rehabilitation Products
In addition to our own products, we offer our suite of Private Labeled Rehabilitation Products, through our sales force, a number of
private labeled supplies and complementary products from other manufacturers. Customarily, there are no formal contracts between
vendors in the durable medical equipment industry. Replacement products and components are easily found, either from our own
products or other manufacturers, and purchases are made by purchase order.
Products
We currently market and sell Zynex-manufactured products and distribute private labeled rehabilitation products and supplies for
Zynex products, as indicated below:
Product Name
    
Description
Zynex Medical Products
 
 
 
          NexWave
Dual channel, multi-modality IFC, TENS, NMES device
 
 
          NeuroMove
Electromyography (EMG) — triggered electrical stimulation device
 
 
          InWave
Electrical stimulation for treatment of female urinary incontinence
 
 
          E-Wave
          M-Wave
NMES device
NMES device - cleared by FDA in February 2024
Private Labeled Supplies
          Electrodes
Supplies, re-usable for delivery of electrical current to the body
          Batteries
Supplies, for use in electrotherapy products
Private Labeled Rehabilitation Products
 
          Comfortrac/Saunders
Cervical traction
          JetStream/Pain Management Technologies
Hot/cold therapy
          LSO Back Braces 
Lumbar support
          Bracing (Knee and Wrist)
Rehabilitation brace support
          Dynacomp
Cold compression therapy
 Zynex Monitoring Solutions Products (Products in
Development, Not Yet Available for Sale)
 
          CM-1500
Zynex Fluid Monitoring System – cleared by FDA in February 2020

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          CM-1600
Zynex Wireless Fluid Monitoring System – cleared by FDA in June 2023
          NiCO CO-Oximeter
Laser-based Noninvasive CO-Oximeter (Not yet FDA cleared)
          HemeOx tHb Oximeter
Laser-based Total Hemoglobin Pulse Oximeter (Not yet FDA cleared)
Product Uses
Pain Management and Control
Standard electrotherapy is a clinically proven and medically accepted alternative to manage acute and chronic pain. Electrical stimulation
has been shown to reduce most types of local pain, such as tennis elbow, neck or lower back pain, arthritis, and others. The devices used
to accomplish this are commonly described as the TENS family of devices. Electrotherapy is not known to have any negative side
effects, a significant advantage over most pain relief medications. The benefits of electrotherapy can include pain relief, increased blood
flow, reduced edema, prevention of venous thrombosis, increased range-of-motion, prevention of muscle disuse atrophy, and reduced
urinary incontinence.
Electrotherapy introduces an electrical current applied through surface electrodes. The electrical current “distorts” a pain signal on its
way to the central nervous system and the brain, thus reducing the pain. Additionally, by applying higher levels of electricity, muscles
contract and such contraction is believed to assist in the benefits mentioned above.
Numerous clinical studies have been published over several decades showing the effectiveness of IFC and TENS for pain relief. Our
primary electrotherapy device, the NexWave, has received FDA 510(k) clearance. The NexWave is a digital IFC, TENS and NMES
device that delivers pain-alleviating electrotherapy.
Stroke and Spinal Cord Injury (“SCI”) Rehabilitation
Our proprietary NeuroMove product is a Class II medical device that has been cleared by the FDA for stroke rehabilitation. Stroke and
SCI usually affect a survivor’s mobility, functionality, speech, and memory, and the NeuroMove is designed to help the survivor regain
movement and functionality.
Sales of NeuroMove did not generate material revenue for the years ended December 31, 2024 and 2023.
Fluid Monitoring
Fluid monitoring involves measuring a patient’s fluid balance, especially regarding fluid inputs and outputs contributing to total
intravascular volume. Adequate fluid balance is vital for patient stability and recovery, as both low and high volumes outside of the
desired range are associated with complications. Maintaining effective circulating blood volume and pressure are key to assuring
adequate oxygen saturation and perfusion.
Monitoring methods used for hemodynamic and intravascular volume monitoring have been historically classified as (a) invasive, using a
central or pulmonary artery catheter, (b) minimally invasive, with the placement of an arterial line, and (c) noninvasive, where no device
is inserted into the body for clinical assessment.
The Zynex Fluid Monitoring System CM-1500 and the Zynex Wireless Fluid Monitoring System CM-1600 are noninvasive monitoring
devices designed to measure relative changes in fluid volume in adult patients. Fluid status is determined using Zynex’s proprietary
algorithm and expressed as the patented Relative Index™, a simple value designed to accurately trend patient vital signs and alert
clinicians for early intervention.
The CM-1500 was cleared by the FDA in 2020, and the wireless CM-1600 was cleared in June 2023 by the FDA.

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Pulse Oximetry Monitoring
Pulse oximetry is a noninvasive method of measuring the oxygen saturation level (“SpO2”) of arterial blood. As one of the most
common medical devices used in and out of hospitals around the world, pulse oximeters have gained widespread clinical acceptance as
the standard of care for monitoring oxygen saturation. SpO2 has become the “fifth vital sign”, which, together with heart rate, blood
pressure, respiratory rate, and temperature, provides crucial clinical information about a person’s health status.
The NiCO™ Noninvasive CO-Oximeter, the first laser photoplethysmographic patient monitoring technology, is designed to
noninvasively measure and monitor four crucial species of hemoglobin with unprecedented accuracy.
The HemeOx™ Total Hemoglobin Pulse Oximeter is designed to noninvasively measure total hemoglobin and oxygen saturation, two
critical parameters that typically require invasive arterial blood sampling for measurement. Total hemoglobin is a very commonly
ordered blood test in healthcare, and HemeOx™ measures it with the continuous and noninvasive ease of a pulse oximeter at the patient
bedside.
The NiCO™ Noninvasive CO-Oximeter and the HemeOx™ Total Hemoglobin Pulse Oximeter have not yet been cleared by the FDA.
MARKETS
Zynex Medical, Inc. (ZMI):
To date, the majority of our revenue has been generated by our ZMI electrotherapy products, private labeled supplies, and private labeled
rehabilitation products. Thus, we primarily compete in the home electrotherapy market for pain management and rehabilitation. We
estimate the annual domestic market for home electrotherapy and rehabilitation products at approximately $500 million to $1 billion.
During 2024 and 2023, we maintained our sales force of approximately 350-450 direct sales representatives to address what we believe is
an underserved electrotherapy market. The current opioid epidemic has been declared a health emergency, and we are uniquely
positioned to help reduce the number of opioids prescribed for treatment of chronic and acute pain symptoms. We are committed to
providing healthcare professionals with alternatives to traditional opioid-based treatment programs with our prescription-strength
products which have no side effects. This has never been more necessary than it is today considering the staggering statistics.
●
Pain impacts the lives of more Americans than diabetes, heart disease, and cancer combined.
●
Pain is the leading cause of disability, and seeking treatment for chronic or acute pain is the most common reason American’s
seek health care. Approximately 50 million Americans suffer from chronic pain.
●
Nearly 20 million Americans experienced high-impact chronic pain, defined as “limiting life or work activities on most days or
every day in the past 3 months”.
●
If pharmaceuticals such as opioids continue to be used as the first line of defense, America will continue to see a rise in opioid
misuse, addiction, and drug-related deaths.
Key characteristics of our electrotherapy and rehabilitation market are:
●
Collection cycles of initial payment from insurance carriers can range from less than 30 days to many months and considerably
longer for many attorney, personal injury, and workers’ compensation cases. Such delayed payment can negatively impact our
cash flow and can slow our growth or strain our liquidity. Collections are also impacted by whether effective billing
submissions are made by our billing and collections department to the third-party payers.
●
Prior to payment, third-party payers often make or take significant payment adjustments or discounts. This can also lead to
denials and billing disputes with third-party payers.

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●
The majority of our revenue is generated by the sale of medical devices and recurring patient supplies from our electrotherapy
products sold through ZMI. We are reliant on third-party payer reimbursement.
Zynex Monitoring Solutions (ZMS):
ZMS is focused on developing products within the non-invasive multi-parameter patient-monitoring marketplace. ZMS is currently
focusing on its laser pulse oximetry and total hemoglobin products acquired in its acquisition of Kestrel Labs. We believe our products,
once released into the marketplace (of which there can be no guarantee), will compete against multiple competitors, ranging from large
manufacturers with multiple business lines to small manufacturers that offer a limited range of products. ZMS has not generated any
revenue to date.
Competition
Since we are in the market for medical electrotherapy products, we face a mixture of competitors ranging from large manufacturers with
multiple business lines to small manufacturers that offer a limited selection of products. Our principal competitors include International
Rehabilitative Sciences, Inc. d/b/a RS Medical, EMSI, and H-Wave. In addition, we face competition from providers of alternative
medical therapies, such as pharmaceutical and medical device companies.
RESOURCES
Manufacturing and Product Assembly
Our manufacturing and product assembly strategy consists of the following elements:
●
Compliance with relevant legal and regulatory requirements.
●
Use of contract manufacturers as needed, thereby allowing us to quickly respond to changes in volume and avoid large capital
investments for assembly and manufacturing equipment of certain product components. We believe there is a large pool of
highly qualified contract manufacturers, domestically and internationally, for the type of manufacturing assistance needed for
our manufactured devices.
●
Utilization of in-house final assembly and test capabilities.
●
Development of proprietary software and hardware for all products in-house.
●
Testing all units in a real-world, in-house environment to help ensure the highest possible quality and patient safety while
reducing the cost of warranty repairs.
We utilize contract manufacturers located in the U.S. to manufacture components for our NexWave and NeuroMove units and for some
of our other products and assemble in-house for our NexWave and NeuroMove units. We do not have long-term supply agreements with
our contract manufacturers, but we utilize purchase orders with agreed upon terms for our ongoing needs. We believe there are numerous
suppliers that can manufacture our products and provide our required raw materials. Generally, we have been able to obtain adequate
supplies of our required raw materials and components. We are always evaluating our suppliers for price, quality, delivery time, and
service. The reduction or interruption in supply, and an inability to develop alternative sources for such supply, could adversely affect our
operations.
Intellectual Property
Zynex is committed to aggressively protecting the intellectual property rights the Company has worked so hard to obtain and to expand
our intellectual property portfolio for advances to our existing products and for new products as they are developed.
Zynex has received two U.S. utility patents, as well as a utility patent in Europe, for our fluid monitoring system. The acquisition of
Kestrel Labs, Inc. included an intellectual property portfolio surrounding the acquired laser photoplethysmographic technology. This

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expands both the size and scope of Zynex’s intellectual property portfolio to include key aspects of the exciting pulse oximetry market.
Additional patents for photoplethysmographic technology were filed in 2023 and 2024. Zynex also received issued trademarks for
NiCO™ and HemeOx™ by the US Patent Trade Office (“USPTO”) in 2023.
Zynex is trademarked in the U.S.
We utilize non-disclosure and trade secret agreements with employees and third parties to protect our proprietary information.
GOVERNMENT REGULATION
US Food and Drug Administration (FDA)
All of our ZMI products are classified as Class II (Medium Risk) devices by the FDA, and clinical studies with our products are
considered to be Non-Significant Risk Studies (“NSR”). Our business is regulated by the FDA, and all products typically require 510(k)
market clearance before they can be put into commercial distribution. Section 510(k) of the Federal Food, Drug and Cosmetic Act, is
available in certain instances for Class II devices. It requires that, before introducing most Class II devices into interstate commerce, the
sponsor must first submit information to the FDA demonstrating that the device is substantially equivalent in terms of safety and
effectiveness to a device legally marketed prior to March 1976 or to devices that have been reclassified in accordance with the provisions
of the Federal Food, Drug, and Cosmetic Act that do not require approval of a premarket approval application. When the FDA
determines that the device is substantially equivalent, the agency issues a “clearance” letter that authorizes marketing of the product. We
are also regulated by the FDA’s Quality System Regulation (“QSR”), which sets forth current Good Manufacturing Practice (“GMP”)
requirements for devices. We believe that our products have obtained or are good candidates for the requisite FDA clearance or are
exempt from the FDA clearance process. In November 2001, Zynex received FDA 510(k) clearance to market NeuroMove. In September
2011, Zynex received FDA 510(k) clearance to market the NexWave, our current generation IFC, TENS and NMES device. In August
2012, Zynex received FDA 510(k) clearance to market the InWave, our next generation muscle stimulator for treatment of female
incontinence. Failure to comply with FDA requirements could adversely affect us.
International
We comply with applicable regulatory requirements within the markets in which we currently sell. If and when we decide to enter
additional geographic areas, we intend to comply with applicable regulatory requirements within those markets.
In 2019, Zynex received ISO13485: 2016 certification for its compliance with international standards in quality management systems for
design, development, manufacturing, and distribution of medical devices. This certification is not only important as assurance that we
have the appropriate quality systems in place but is also crucial to our international expansion efforts as many countries require this
certification as part of their regulatory approval.
Government Regulation
The delivery of health care services and products has become one of the most highly regulated professional and business endeavors in the
United States. Both the federal government and individual state governments are responsible for overseeing the activities of individuals
and businesses engaged in the delivery of health care services and products. Federal law and regulations are based primarily upon the
Medicare and Medicaid programs. Each program is financed, at least in part, with federal funds. State jurisdiction is based upon the
state’s interest in regulating the quality of health care in the state, regardless of the source of payment. Many state and local jurisdictions
impose additional legal and regulatory requirements on our business including various states and local licenses, taxes, limitations
regarding insurance claim submission and limitations on relationships with referral parties. Failure to comply with this myriad of
regulations in a particular jurisdiction may subject us to fines or other penalties, including the inability to sell our products in certain
jurisdictions.

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Federal healthcare laws apply to us when we submit a claim to any other federally funded healthcare program, in addition to
requirements to meet government standards. The principal federal laws that we must abide by in these situations include:
●
Those that prohibit the filing of false or improper claims for federal payment.
●
Those that prohibit unlawful inducements for the referral of business reimbursable under federally funded healthcare programs.
The federal government may impose criminal, civil, and administrative penalties on anyone who files a false claim for reimbursement
from federally funded programs.
A federal law commonly known as the “anti-kickback law” prohibits the knowing or willful solicitation, receipt, offer, or payment of any
remuneration made in return for:
●
The referral of patients covered under federally funded healthcare programs; or
●
The purchasing, leasing, ordering, or arranging for any goods, facility, items, or service reimbursable under those programs.
Healthcare Regulation
Federal and state healthcare laws, including fraud and abuse and health information privacy and security laws, also apply to our business.
If we fail to comply with those laws, we could face substantial penalties and our business, results of operations, financial condition, and
prospects could be adversely affected. The laws that may affect our ability to operate include but are not limited to: the federal Anti-
Kickback Statute, which prohibits, among other things, soliciting, receiving, offering, or paying remuneration, directly or indirectly, to
induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as
the Medicare and Medicaid programs; and federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit,
among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare,
Medicaid, or other third-party payers that are false or fraudulent. Additionally, we are subject to state law equivalents of each of the
above federal laws, which may be broader in scope and apply regardless of whether the payer is a federal healthcare program, and many
of which differ from each other in significant ways and may not have the same effect, further complicate compliance efforts.
Numerous federal and state laws, including state security breach notification laws, state health information privacy laws, and federal and
state consumer protection laws, govern the collection, use, and disclosure of personal information. In addition, most healthcare providers
who are expected to prescribe our products and from whom we obtain patient health information are subject to privacy and security
requirements under the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology
and Clinical Health Act (“HIPAA”). We could be subject to criminal penalties if we knowingly obtain individually identifiable health
information from a HIPAA-covered entity, including healthcare providers, in a manner that is not authorized or permitted by HIPAA. The
legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing amount of
focus on privacy and data protection issues with the potential to affect our business, including recently enacted laws in a majority of
states requiring security breach notification. These laws could create liability for us or increase our cost of doing business.
In addition, the Physician Payments Sunshine Act, enacted as part of the Patient Protection and Affordable Care Act of 2010 (“ACA”),
created a federal requirement under the federal Open Payments program that requires certain manufacturers to track and report to the
Centers for Medicare and Medicaid Services (“CMS”), annually certain payments and other transfers of value provided to physicians and
certain advanced non-physician healthcare practitioners and teaching hospitals made in the previous calendar year, as well as ownership
and investment interests held by physicians and their immediate family members. In addition, there are also an increasing number of
state laws that require manufacturers to make reports to states on pricing and marketing information. These laws may affect our sales,
marketing, and other promotional activities by imposing administrative and compliance burdens on us. In addition, given the lack of
clarity with respect to these laws and their implementation, our reporting actions could be subject to the penalty provisions of the
pertinent state and federal authorities.

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Research and Development
Research and Development costs are expensed when incurred. During 2024 and 2023, we incurred approximately $12.0 million and $9.2
million in operating expenses, respectively, related to our ZMS operations. During 2024 and 2023, approximately $9.2 million and $7.7
million of operating expenses, respectively, required capitalization under Section 174 - “Amortization of Research and Experimental
Expenditures” tax treatment.
HUMAN CAPITAL
As of December 31, 2024, we employed approximately 1,000 full time employees.
Our employees are our most important assets and set the foundation for our ability to achieve our strategic objectives. All our employees
contribute to our success and, in particular, our sales representatives are instrumental in our ability to reach more patients in pain.
The success and growth of our business depends in large part on our ability to attract, retain and develop a diverse population of talented
and high-performing employees at all levels of our organization. To succeed in a competitive labor market, we have developed
recruitment and retention strategies, objectives, and measures that we focus on as part of the overall management of our business. These
strategies, objectives, and measures form our human capital management framework and are advanced through the following programs,
policies, and initiatives:
●
Competitive pay and benefits. Our compensation programs are designed to align the compensation of our employees with our
performance and to provide the proper incentives to attract, retain, and motivate employees to achieve superior results.
●
Training and development. We invest in learning opportunities that foster a growth mindset. Our formal offerings include a
tuition reimbursement program, an e-learning program that all corporate employees have access to, and in-house learning
opportunities through the Company’s Zynex Growth and Development program.
●
Health and Wellness. We invest in the health and wellness of our employees by offering monthly benefits and offer programs
and support to assist our employees.
ITEM 1A. RISK FACTORS
RISKS RELATED TO OUR BUSINESS AND THE INDUSTRY IN WHICH WE OPERATE
Unfavorable global economic conditions could adversely affect our business, financial condition, or results of operations.
Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets,
including conditions that are outside of our control, such as the impact of health and safety concerns, including SARS-CoV-2 (severe
acute respiratory syndrome coronavirus 2) pandemic (such as COVID-19) and various variants, as well as military conflicts or wars
(such as the ongoing conflicts between Russia and Ukraine and Israel and Palestine) that can cause exacerbated volatility and disruptions
to various aspects of the global economy, and other disruptions to global supply chains. Each of these events has caused or may continue
to result in extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn, whether due
to inflationary pressures or otherwise, could result in a variety of risks to our business, including weakened demand for our products and
our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could strain our suppliers,
possibly resulting in supply disruption, or cause delays in payments for our services by third-party payers or our collaborators. Any of the
foregoing could harm our business, and we cannot anticipate all the ways in which the current economic climate and financial market
conditions could adversely impact our business.

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Rapid technological change could cause our products to become obsolete and if we do not enhance our product offerings through our
research and development efforts, we may be unable to effectively compete.
The technologies underlying our products are subject to rapid and profound technological change. Competition intensifies as technical
advances in each field are made and become more widely known. We can give no assurance that others will not develop services,
products, or processes with significant advantages over the products, services, and processes that we offer or are seeking to develop. Any
such occurrence could have a material and adverse effect on our business, results of operations, and financial condition.
We plan to enhance and broaden our product offerings in response to changing customer demands and competitive pressure and
technologies, but we may not be successful. The success of any new product offering or enhancement to an existing product will depend
on numerous factors, including our ability to:
●
properly identify and anticipate physician and patient needs;
●
develop and introduce new products or product enhancements in a timely manner;
●
adequately protect our intellectual property and avoid infringing upon the intellectual property rights of third parties;
●
demonstrate the safety and efficacy of new products, including through the conduct of additional clinical trials;
●
obtain the necessary regulatory clearances or approvals for new products or product enhancements; and
●
achieve adequate coverage and reimbursement for our products.
If we do not develop and, when necessary, obtain regulatory clearance or approval for new products or product enhancements in time to
meet market demand, or if there is insufficient demand for these products or enhancements, our results of operations will suffer. Our
research and development efforts may require a substantial investment of time and resources before we are adequately able to determine
the commercial viability of a new product, technology, material, or other innovation. In addition, even if we are able to successfully
develop enhancements or new generations of our products, these enhancements or new generations of products may not be covered or
reimbursed by government healthcare programs such as Medicare or private health plans, may not produce sales in excess of the costs of
development, and/or may be quickly rendered obsolete by changing customer preferences or the introduction by our competitors of
products embodying new technologies or features.

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We are dependent on reimbursement from third-party payers, most of whom are larger than we are and have substantially more
employees and financial resources; changes in insurance reimbursement policies or application of them have resulted in decreased or
delayed revenues.
A large percentage of our revenues come from third-party payer reimbursement. Most of the third-party payers are large insurance
companies with substantially more resources than we have. Upon delivery of our products to our patients, we directly bill the patients’
private insurance companies or government payers for reimbursement. If the third-party payers do not remit payment on a timely basis or
if they change their policies to exclude or reduce coverage for our products, we would experience a decline in our revenue as well as cash
flow. In addition, we may deliver products to patients and invoice based on past practices and billing experiences only to have third-party
payers later deny coverage for such products.
In some cases, our delivered product may not be covered pursuant to a policy statement of a third-party payer, despite a payment history
with the third-party payer and benefits to the patients. A third-party payer may seek repayment of amounts previously paid for covered
products. We maintain an allowance for provider discounts and amounts intended to cover legitimate requests for repayment. Failure to
adequately identify and provide for amounts for resolution of repayment demands in our allowance for provider discounts could have a
material adverse effect on our results of operations and cash flows. For government healthcare programs, if we identify a deficiency in
prior claims or practices, we may be required to repay amounts previously reimbursed to us by government healthcare programs, which
could impact our reported revenues.
We frequently receive, and expect to continue to receive, refund requests from insurance providers relating to specific patients and dates
of service. Billing and reimbursement disputes are very common in our industry. These requests are sometimes related to a few patients
and other times include a significant number of refund claims in a single request which can accumulate to a significant amount. We
review and evaluate these requests and determine if any refund is appropriate. During the adjudication process, we review claims where
we are rebilling or pursuing additional reimbursement from that insurance provider. We frequently have significant offsets against such
refund requests which may result in amounts that are due to us in excess of the amounts of refunds requested by the insurance providers.
Therefore, at the time of receipt of such refund requests, we are generally unable to determine if a refund request is valid. Although we
cannot predict whether or when a request for repayment or our subsequent request for reimbursement will be resolved, it is not unusual
for such matters to be unresolved for an extended period of time. No assurances can be given with respect to our estimates for our
allowance for provider discounts refund claim reimbursements and offsets or the ultimate outcome of the refund requests.
We are dependent on our Medicare Supplier Number.
We are required to have a Medicare Supplier Number in order to have the ability to bill Medicare for services provided to Medicare
patients. Furthermore, all third-party and Medicaid contracts require us to have a Medicare Supplier Number. We are required to comply
with Medicare Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (“DMEPOS”) Supplier Standards in order to maintain
such number. If we are unable to comply with the relevant standards, we could lose our Medicare Supplier Number. Without such
number, we would be unable to continue our various third-party and Medicaid contracts. A significant portion of our revenues are
dependent upon our Medicare Supplier Number, the loss of which would materially and adversely affect our business, financial
condition, results of operations, and cash flows.
The Center for Medicare and Medicaid Services (“CMS”) requires that all Durable Medical Equipment providers must be accredited by a
CMS-approved accreditation organization. On February 1, 2013, we initially received accreditation from the Accreditation Commission
for Health Care (“ACHC”), and we have remained accredited to date. If we lost our accredited status, our business, financial condition,
revenues, and results of operations would be materially and adversely affected.

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We face periodic reviews and billing audits from governmental and private payers, and these audits could have adverse results that
may negatively impact our business.
As a result of our participation in the Medicaid program and our registration in the Medicare program, we are subject to various
governmental reviews and audits to verify our compliance with these programs and applicable laws and regulations. We also are subject
to audits under various government programs in which third-party firms engaged by CMS conduct extensive reviews of claims data and
medical and other records to identify potential improper payments under the Medicare program. Private payers also reserve the right to
conduct audits. If billing errors are identified in the sample of reviewed claims, the billing error can be extrapolated to all claims filed
which could result in a larger overpayment than originally identified in the sample of reviewed claims. Our costs to respond to and
defend reviews and audits may be significant and could have a material adverse effect on our business, financial condition, results of
operations, and cash flows. Moreover, an adverse review or audit could result in:
●
required refunding or retroactive adjustment of amounts we have been paid by governmental or private payers;
●
state or Federal agencies imposing fines, penalties, and other sanctions on us;
●
loss of our right to participate in the Medicare program, state programs, or one or more private payer networks; or
●
damage to our business and reputation in various markets.
Any one of these results could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
Failure to secure and maintain adequate coverage and reimbursement from third-party payers could adversely affect acceptance of
our products and reduce our revenues.
The majority of our revenues come from third-party payers, primarily insurance companies.
In the U.S., private payers cover the largest segment of the population, with the remainder either uninsured or covered by governmental
payers. The majority of the third-party payers outside the U.S. are government agencies, government sponsored entities, or other payers
operating under significant regulatory requirements from national or regional governments.
Third-party payers may decline to cover and reimburse certain procedures, supplies, or services. Additionally, some third-party payers
may decline to cover and reimburse our products for a particular patient even if the payer has a favorable coverage policy addressing our
products or previously approved reimbursement for our products. Furthermore, private and government payers may consider the cost of a
treatment in approving coverage or in setting reimbursement for the treatment.
Private and government payers are increasingly challenging the prices charged for medical products and services. Additionally, the
containment of healthcare costs has become a priority of governments. Adoption of additional price controls and cost-containment
measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures could further limit our revenues
and operating results. If third-party payers do not consider our products or the combination of our products with additional treatments to
be cost-justified under a required cost-testing model, they may not cover our products for their populations or, if they do, the level of
reimbursement may not be sufficient to allow us to sell our products on a profitable basis.
Reimbursement for the treatment of patients with medical devices is governed by complex mechanisms. These mechanisms vary widely
among countries, can be informal, somewhat unpredictable, and evolve constantly, reflecting the efforts of these countries to reduce
public spending on healthcare. As a result, obtaining and maintaining reimbursement for the treatment of patients with medical devices
has become more challenging. We cannot guarantee that the use of our products will receive reimbursement approvals and cannot
guarantee that our existing reimbursement approvals will be maintained in any country.
Our failure to secure or maintain adequate coverage or reimbursement for our products by third-party payers in the U.S. or in the other
jurisdictions in which we market our products could have a material adverse effect on our business, revenues, and results of operations
and cause our stock price to decline.

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We may not be successful in maintaining the reimbursement codes necessary to facilitate accurate and timely billing for our products
or physician services attendant to our products.
Third-party payers, healthcare systems, government agencies, or other groups often issue reimbursement codes to facilitate billing for
products and physician services used in the delivery of healthcare. If we are unable to maintain the Healthcare Common Procedure
Coding System codes (“HCPCS codes”) for physician services related to our products, our revenues and results may be affected by the
absence of such HCPCS codes, as physicians may be less likely to prescribe the therapy when there is no certainty that adequate
reimbursement will be available for the time, effort, skill, practice expense, and malpractice costs required to provide the therapy to
patients.
Outside the United States, we have not secured codes to describe our products or to document physician services related to the delivery
of therapy using our products. The failure to obtain and maintain these codes could affect the growth of our business.
Future changes in coverage and reimbursement policies for our products or reductions in reimbursement rates for our products by
third party payers could adversely affect our business and results of operations.
In the United States, our products are prescribed by physicians for their patients. Based on the prescription, which we consider an order,
we submit a claim for payment directly to third-party payers such as private commercial insurance carriers, government payers, and
others as appropriate, and the third-party payer reimburses us directly. Practices and policies around payment of the claims we submit can
vary over time, which could impact our results of operations from quarter to quarter. Federal and state statutes, rules, or other regulatory
measures that restrict coverage of our products or reimbursement rates could have an adverse effect on our ability to sell or rent our
products or cause physical therapists and physicians to dispense and prescribe alternative, lower-cost products, which could negatively
affect our revenues.
There are significant estimating risks associated with the amount of revenue, related refund liabilities, accounts receivable, and
provider discounts that we recognize, and if we are unable to accurately estimate these amounts, it could impact the timing of our
revenue recognition and cash collections, which have a significant impact on our operating results, or lead to a restatement of our
financial results.
There are significant risks associated with the estimation of the amount of revenues, related refund liabilities, accounts receivable, and
provider discounts that we recognize in a reporting period. The billing and collection process is complex due to ongoing insurance
coverage changes, geographic coverage differences, differing interpretations of coverage, differing provider discount rates, and other
third-party payer issues. Determining applicable primary and secondary coverage for our customers at any point in time, together with
the changes in patient coverage that occur each month, require complex, resource-intensive processes. Errors in determining the correct
coordination of benefits may result in refunds to payers. Revenues associated with government programs are also subject to estimating
risk related to the amounts not paid by the primary government payer that will ultimately be collectable from other government programs
paying secondary coverage, the patient’s commercial health plan secondary coverage or the patient. Collections, refunds, and pay or
retractions typically continue to occur for up to three years and longer after our products are provided. While we typically look to our
past experience in collections with a payer in estimating amounts expected to be collected on current billings, recent trends and current
changes in reimbursement practice, the overall healthcare environment, and other factors nonetheless could ultimately impact the amount
of revenues recorded and the receivables collected. If our estimates of revenues, related refund liabilities, accounts receivable, or
provider discounts are materially inaccurate, it could impact the timing of our revenue recognition and have a significant impact on our
operating results. It could also lead to a restatement of our financial results.

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Tax laws and regulations require compliance efforts that can increase our cost of doing business. Changes to these laws and
regulations could impact financial results.
We are subject to a variety of tax laws and regulations in the jurisdictions in which we do business. Maintaining compliance with these
laws can increase our cost of doing business, and failure to comply could result in audits or the imposition of fines or penalties. Further,
our future effective tax rates in any of these jurisdictions could be affected, positively or negatively, by changing tax priorities, changes
in statutory rates, or changes in tax laws or the interpretation thereof. The most significant recent example of this is the impact of the U.S
Tax Cuts and Jobs Act of 2017 (the “Tax Act”) which was enacted on December 22, 2017. These changes significantly revised the
ongoing U.S. corporate income tax law by lowering the U.S. federal corporate income tax rate from 35% to 21%, implementing a
territorial tax system, imposing a one-time tax on foreign unremitted earnings, and setting limitations on deductibility of certain costs,
among other things. The Company has implemented the Tax Act and does not expect any significant changes related to the Tax Act at
this time.
The impact of healthcare reform legislation and other changes in the healthcare industry and in healthcare spending on us is
currently unknown but may harm our business.
Our revenue is dependent on the healthcare industry and could be affected by changes in healthcare spending and policy. The healthcare
industry is subject to changing political, regulatory, and other influences. The Patient Protection and Affordable Care Act (“PPACA”)
made major changes in how healthcare is both delivered and reimbursed, and increased access to health insurance benefits to the
uninsured and underinsured population of the United States.
The PPACA, among other things, increased the number of individuals with Medicaid and private insurance coverage, implemented
reimbursement policies that tie payment to quality, facilitated the creation of accountable care organizations that may use capitation and
other alternative payment methodologies, strengthened enforcement of fraud and abuse laws, and encouraged the use of information
technology. Such changes in the regulatory environment may also result in changes to our payer mix that may affect our operations and
net revenue.
Certain provisions of the PPACA authorize voluntary demonstration projects, which include the development of bundling payments for
acute, inpatient hospital services, physician services, and post-acute services for episodes of hospital care. Further, the PPACA may
negatively impact payers by increasing medical costs generally, which could have an effect on the industry and potentially impact our
business and revenue as payers seek to offset these increases by reducing costs in other areas. The full impact of these changes on us
cannot be determined at this time.
We are also impacted by the Medicare Access and CHIP Reauthorization Act, under which physicians must choose to participate in one
of two payment formulas, Merit-Based Incentive Payment System (“MIPS”) or Alternative Payment Models (“APMs”). Beginning in
2019, MIPS allows eligible physicians to receive upward or downward adjustments to their Medicare Part B payments based on certain
quality and cost metrics, among other measures. As an alternative, physicians can choose to participate in an Advanced APM. Advanced
APMs are exempt from the MIPS requirements, and physicians who are meaningful participants in APMs will receive bonus payments
from Medicare pursuant to the law.
In addition, current and prior healthcare reform proposals have included the concept of creating a single payer or public option for health
insurance. If enacted, these proposals could have an extensive impact on the healthcare industry, including us. We are unable predict
whether such reforms may be enacted or their impact on our operations.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the
amounts that federal and state governments and other third-party payers will pay for healthcare services, which could harm our business,
financial condition, and results of operations.

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The Patient Protection and Affordable Care Act of 2010 has had an impact on our business, which may be in part beneficial and in
part detrimental.
In March 2010, broad federal healthcare reform legislation was enacted in the United States. This legislation did not become effective
immediately in total and may be modified prior to the effective date of some provisions. This legislation has had an impact on our
business in a variety of ways including increased number of Medicaid recipients, increased number of individuals with commercial
insurance, additional audits conducted by public health insurance plans such as Medicaid and Medicare, changes to the rules that govern
employer group health insurance, and other factors that influence the acquisition and use of health insurance from private and public
payers. This legislation has resulted in a change in reimbursement for certain durable medical equipment. We believe the new healthcare
legislation and these changes to reimbursement have caused uncertainty with prescribers, which we believe contributed to our drop in
orders and revenue during 2013 and 2014 and the lack of any significant increase in 2015. Orders and revenue increased in 2016 through
2024; however, we are currently unable to determine whether such trend will continue in future periods or whether the healthcare reform
legislation will have other adverse consequences to our business and results of operations. To the extent prescribers write fewer
prescriptions for our products or there is an adverse change to insurance reimbursement for our products, due to the new law or
otherwise, our revenue and profitability will be materially adversely affected.
The uncertainty of continuing healthcare changes and regulations may negatively affect our business.
There is some doubt on the continuation of the Affordable Care Act and the legislation that the current Congress will enact to replace it,
if any. Because we cannot be certain about the continuation of the Affordable Care Act or any changes or replacements thereto, even if
the Affordable Care Act remains the law of the land, there is also some doubt whether the President will support it or take regulatory
action to negatively impact its benefits. The amount of uncertainty creates concern on our customers’ willingness to buy products which
may or may not be covered by future healthcare benefits even if they are covered currently.
We are subject, directly or indirectly, to United States federal and state healthcare fraud and abuse and false claims laws and
regulations. Prosecutions under such laws have increased in recent years, and we may become subject to such litigation. If we are
unable to or have not fully complied with such laws, we could face substantial penalties.
Our operations are subject to various state and federal fraud and abuse laws, including, without limitation, the federal Anti-Kickback
Statute, the federal Stark Law, and the federal False Claims Act. These laws may impact, among other things, our sales, marketing, and
education programs.
The federal Anti-Kickback Statute prohibits persons from knowingly and willfully soliciting, offering, receiving, or providing
remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual or the furnishing or arranging for a
good or service, for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs.
Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration
is to induce referrals of federal healthcare covered business, the statute has been violated. In addition, a person or entity does not need to
have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. The Anti-Kickback Statute is
broad and, despite a series of narrow safe harbors, prohibits many arrangements and practices that are lawful in businesses outside of the
healthcare industry. Penalties for violations of the federal Anti-Kickback Statute include criminal penalties and civil sanctions such as
fines, imprisonment, and possible exclusion from Medicare, Medicaid, and other federal healthcare programs. Many states have also
adopted laws similar to the federal Anti-Kickback Statute, some of which apply to the referral of patients for healthcare items or services
reimbursed by any source, not only the Medicare and Medicaid programs.

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The federal Ethics in Patient Referrals Act of 1989, commonly known as the “Stark Law”, prohibits, subject to certain exceptions,
physician referrals of Medicare and, as applicable under state law, Medicaid patients to an entity providing certain “designated health
services” if the physician or an immediate family member has any financial relationship with the entity. The Stark Law also prohibits the
entity receiving the referral from billing any good or service furnished pursuant to an unlawful referral. Various states have corollary
laws to the Stark Law, including laws that require physicians to disclose any financial interest they may have with a healthcare provider
to their patients when referring patients to that provider. Both the scope and exceptions for such laws vary from state to state. The federal
False Claims Act prohibits persons from knowingly filing, or causing to be filed, a false claim to, or the knowing use of false statements
to obtain payment from the federal government. The False Claims Act defines “knowingly” to include actual knowledge, acting in
deliberate ignorance of the truth or falsity of information, or acting in deliberate disregard of the truth or falsity of information. False
Claims Act liability includes liability for reverse false claims for avoiding or decreasing an obligation to pay or transmit money to the
government. This includes False Claims Act liability for failing to report and return overpayments within 60 days of the date on which
the overpayment is “identified”. Penalties under the False Claims Act can include exclusion from the Medicare program. In addition, the
government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes
a false or fraudulent claim for purposes of the False Claims Act. Suits filed under the False Claims Act, known as qui tam actions, can be
brought by any individual on behalf of the government and such individuals, commonly known as “whistleblowers”, may share in any
amounts paid by the entity to the government in fines or settlement. The frequency of filing qui tam actions has increased significantly in
recent years, causing greater numbers of medical device, pharmaceutical, and healthcare companies to have to defend a False Claims Act
action. When an entity is determined to have violated the federal False Claims Act, it may be required to pay up to three times the actual
damages sustained by the government, plus civil penalties for each separate false claim. Various states have also enacted laws modeled
after the federal False Claims Act.
HIPAA, and its implementing regulations, also created additional federal criminal statutes that prohibit knowingly and willfully
executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent
pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit
program, regardless of the payer (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick
or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits,
items, or services relating to healthcare matters. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have
actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
From time to time, the Company has been and is involved in various governmental audits, investigations, and reviews related to its
operations. Reviews and investigations can lead to government actions, resulting in the assessment of damages, civil or criminal fines or
penalties, or other sanctions, including restrictions or changes in the way we conduct business, loss of licensure, or exclusion from
participation in Medicare, Medicaid, or other government programs. Additionally, as a result of these investigations, healthcare providers
and entities may face litigation or have to agree to settlements that can include monetary penalties and onerous compliance and reporting
requirements as part of a consent decree or corporate integrity agreement, or Corporate Integrity Agreement (“CIA”). If we fail to
comply with applicable laws, regulations, and rules, the Company’s financial condition and results of operations could be adversely
affected. Furthermore, becoming subject to these governmental investigations, audits, and reviews may result in substantial costs and
divert management’s attention from the business as we cooperate with the government authorities, regardless of whether the particular
investigation, audit, or review leads to the identification of underlying issues.
We are unable to predict whether we could be subject to actions under any of these laws, or the impact of such actions. If we are found to
be in violation of any of the laws described above or other applicable state and federal fraud and abuse laws, we may be subject to
penalties, including civil and criminal penalties, damages, fines, exclusion from Medicare, Medicaid, and other government healthcare
reimbursement programs, and the curtailment or restructuring of operations.
Healthcare Fraud and Abuse
Our operations may be subject to federal and state healthcare laws and regulations including fraud and abuse laws, such as anti-kickback
and false claims laws, data privacy and security laws and transparency laws related to payments and/or other transfers of value made to
physicians and other healthcare professionals and teaching hospitals.
The federal Anti-Kickback Law prohibits unlawful inducements for the referral of business reimbursable under federally-funded
healthcare programs, such as remuneration provided to physicians to induce them to use certain tissue products or medical devices
reimbursable by Medicare or Medicaid. The federal Anti-Kickback Law is subject to evolving interpretations. For example, the

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government has enforced the federal Anti-Kickback Law to reach large settlements with healthcare companies based on, among other
things, inappropriate consultant arrangements with physicians or questionable joint venture arrangements. The majority of states also
have anti-kickback laws, which establish similar prohibitions that may apply to items or services reimbursed by any third-party payer,
including commercial insurers. Further, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education
Reconciliation Act of 2010, or collectively the Health Care Reform Law, among other things, amended the intent requirement of the
federal Anti-Kickback Law and criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge of this
statute or specific intent to violate it in order to have committed a violation. In addition, the Health Care Reform Law provided that the
government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Law constitutes a
false or fraudulent claim for purposes of the civil False Claims Act and certain criminal healthcare fraud statutes.
Additionally, the civil False Claims Act prohibits knowingly presenting or causing the presentation of a false, fictitious or
fraudulent claim for payment to the U.S. government. Actions under the False Claims Act may be brought by the Attorney General or as
a qui tam action by a private individual in the name of the government. The federal government is using the civil False Claims Act, and
the accompanying threat of significant liability, in its investigations of healthcare providers and suppliers throughout the country for a
wide variety of Medicare billing practices and has obtained multi-million and multi-billion dollar settlements in addition to individual
criminal convictions. In addition, off-label promotion has been pursued as a violation of the federal False Claims Act. Pursuant to FDA
regulations, we can only market our products for cleared or approved uses. Although physicians are permitted to use medical devices for
indications other than those cleared or approved by the FDA based on their independent medical judgment, we are prohibited from
promoting products for such off-label uses. Given the significant size of actual and potential settlements, it is expected that the
government will continue to devote substantial resources to investigating healthcare providers’ and suppliers’ compliance with the
healthcare reimbursement rules and fraud and abuse laws.
Additionally, the majority of states in which we market our products have similar fraud and abuse laws, such as anti-kickback, false
claims, anti-fee splitting and self-referral laws, which may apply to items or services reimbursed by any third-party payer, including
commercial insurers, and violations may result in substantial civil, criminal and administrative penalties.
The Health Care Reform Law also included the federal Physician Payments Sunshine Act, which requires device manufacturers for
which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program to disclose annually to CMS any
“transfer of value” made or distributed to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors),
other licensed health care practitioners, and teaching hospitals. Such information is now made publicly available in a searchable format,
and device manufacturers are now required to report and disclose any investment interests held by physicians and their family members
during the preceding calendar year. Failure to submit required information may result in significant civil monetary penalties for all
payments, transfers of value or ownership or investment interests not reported in an annual submission. Additionally, the commercial
compliance environment is continually evolving in the healthcare industry, and some states, including California, Massachusetts and
Vermont, mandate implementation of corporate compliance programs, along with the tracking and reporting of gifts, compensation and
other remuneration to physicians and other healthcare providers. The shifting compliance environment and the need to build and
maintain robust and expandable systems to comply in multiple jurisdictions with different compliance and/or reporting requirements
increases the possibility that a healthcare company may run afoul of one or more of the requirements.
Our business operations may also be subject to certain federal and state laws regarding the use and disclosure of individually identifiable
health information, such as the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health
Information Technology for Economic and Clinical Health Act of 2009, which impose obligations on certain entities with respect to
safeguarding the privacy, security and transmission of individually identifiable health information.
To enforce compliance with the federal laws, the U.S. Department of Justice, or DOJ, has increased its scrutiny of interactions between
healthcare companies and healthcare providers, which has led to an unprecedented level of investigations, prosecutions, convictions and
settlements in the healthcare industry. Dealing with investigations can be time- and resource-consuming. Additionally, if a healthcare
company settles an investigation with the DOJ or other law enforcement agencies, the company may be required to agree to additional
compliance and reporting requirements as part of a consent decree or corporate integrity agreement.
The U.S. and foreign government regulators have increased regulation, enforcement, inspections and governmental investigations of
the medical device industry, including increased U.S. government oversight and enforcement of the Foreign Corrupt Practices Act.
Whenever a governmental authority concludes that we are not in compliance with applicable laws or regulations, that authority can
impose fines, delay or suspend regulatory clearances, institute proceedings to detain or seize our products, issue a recall, impose

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operating restrictions, inform other agencies of ongoing or findings of investigations, enjoin future violations and assess civil penalties
against us or our officers or employees and can recommend criminal prosecution. Moreover, governmental authorities can ban or request
the recall, repair, replacement or refund of the cost of devices we distribute.
If a governmental authority were to conclude that we are not in compliance with applicable fraud and abuse laws and regulations, we and
our officers and employees could be subject to severe penalties including, for example, civil, criminal and administrative penalties,
damages, fines, disgorgement, individual imprisonment, exclusion from participation as a supplier of product to beneficiaries covered by
Medicare or Medicaid, additional reporting obligations and oversight if subject to a corporate integrity agreement or other agreement to
resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings,
and curtailment or restructuring of operations, any of which could adversely affect our ability to operate our business and the results of
our operations.
It is uncertain whether and how future legislation could affect prospects for our products or what actions federal, state or private payers
for health care treatment and services may take in response to any such health care reform proposals or legislation.
Claims made against us from time to time can result in litigation that could distract management from our business activities and
result in significant liability or damage to our brand.
 
As a company with expanding operations, we increasingly face the risk of litigation and other claims against us. We have no such claims
at present. Litigation and other claims may arise in the ordinary course of our business and include employee claims, commercial
disputes, landlord-tenant disputes, intellectual property issues, product-oriented allegations and slip and fall claims. These claims can
raise complex factual and legal issues that are subject to risks and uncertainties and could require significant management time.
Litigation and other claims against us could result in unexpected expenses and liabilities, which could materially affect our operations
and our reputation.
 
In addition, the medical device industry is characterized by extensive litigation and, from time to time, we are the subject of various
claims. Regardless of the outcome, such claims are expensive to defend and divert management and operating personnel from other
business issues. A successful claim or claims against us could result in payment of significant monetary damages and/or injunctive relief.
Litigation with customers, payers, employees and others could harm our reputation and impact operating results.
In the ordinary course of business, we may be involved in lawsuits and regulatory actions with customers, payers, employees and others.
These actions may involve claims for, among other things, compensation for alleged personal injury and product liability claims.
Additionally, we may be subject to employment-related claims alleging discrimination, harassment, wrongful termination and wage
issues, including those relating to overtime compensation. We are susceptible to claims filed by customers alleging responsibility for
breaches of contract or from product defects, and we are also subject to lawsuits filed by patent holders alleging patent infringement.
These types of claims, as well as other types of lawsuits to which we are subject from time to time, can distract management’s attention
from core business operations and impact operating results, particularly if a lawsuit results in an unfavorable outcome, or could harm the
Company’s reputation with customers, employees, investors and others.
Hospitals and clinicians may not buy, prescribe, or use our products in sufficient numbers, which could result in decreased revenues
and profits.
Hospitals and clinicians may not accept any of our products as effective, reliable, or cost-effective. Factors that could prevent such
institutional patient acceptance include:
●
if patients conclude that the costs of these products exceed the cost savings associated with the use of these products;
●
if patients are financially unable to purchase these products;
●
if adverse patient events occur with the use of these products, generating adverse publicity;
●
if we lack adequate resources to provide sufficient education and training to our patients;

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●
if frequent product malfunctions occur, leading clinicians to believe that the products are unreliable;
●
uncertainty regarding or change in government or third-party payer reimbursement policies for our products; and
●
if physicians or other health care providers believe that our products will not be reimbursed by insurers or decide to prescribe
competing products.
Because our sales are dependent on prescriptions from physicians, if any of these or other factors result in fewer prescriptions for our
products being written, we will have reduced revenues and may not be able to fully fund our operations. Although we experienced an
increase in orders for our ZMI products during 2024 and 2023 compared to prior years, we can make no assurances that demand for our
products will not decline in future periods.
Any new competitor could be larger than us and have greater financial and other resources than we do, and those advantages could
make it difficult for us to compete with them.
Many competitors to our products may have substantially greater financial, technical, marketing, and other resources. Competition could
result in fewer orders, reduced gross margins, and loss of market share. Our products are regulated by the FDA in the United States.
Competitors may develop products that are substantially equivalent to our FDA-cleared products, thereby using our products as predicate
devices to more quickly obtain FDA approval for their own products. If overall demand for our products should decrease, it could have a
material adverse effect on our operating results. Substantial competition is expected in the future in the area of stroke rehabilitation that
may directly compete with our NeuroMove product. These competitors may use standard or novel signal processing techniques to detect
muscular movement and generate stimulation to such muscles. Other companies may develop rehabilitation products that perform better
and/or are less expensive than our products, which could have a material adverse effect on our operating results.
Failure to keep pace with the latest technological changes could result in decreased revenues.
The market for some of our products is characterized by rapid change and technological improvements. Failure to respond in a timely
and cost-effective way to these technological developments could result in serious harm to our business and operating results. We have
derived, and we expect to continue to derive, a substantial portion of our revenues from the development and sale of products in the
medical device industry. As a result, our success will depend, in part, on our ability to develop and market product offerings that respond
in a timely manner to the technological advances of our competitors, evolving industry standards, and changing patient preferences.
There is no assurance that we will keep up with technological improvements.
Our business could be adversely affected by reliance on sole suppliers.
Notwithstanding our current multiple supplier approach, certain essential product components may be supplied in the future by sole, or a
limited group of, suppliers. Most of our products and components are purchased through purchase orders rather than through long-term
supply agreements, and large volumes of inventory may not be maintained. There may be shortages and delays in obtaining certain
product components. Disruption of the supply or inventory of components could result in a significant increase in the costs of these
components or could result in an inability to meet the demand for our products. In addition, if a change in the manufacturer of a key
component is required, qualification of a new supplier may result in delays and additional expenses in meeting customer demand for
products. These factors could adversely affect our revenues and ability to retain our experienced sales force.

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A third-party manufacturer’s inability to produce our products’ components on time and to our specifications could result in lost
revenue.
Third-party manufacturers assemble and manufacture components of the NexWave and NeuroMove and some of our other products to
our specifications. The inability of a manufacturer to ship orders of our products in a timely manner or to meet our quality standards
could cause us to miss the delivery date requirements of our patients for those items, which could result in cancellation of orders, refusal
to accept deliveries, or a reduction in purchase prices, any of which could have a material adverse effect on our revenues. Because of the
timing and seriousness of our business, and the medical device industry in particular, the dates on which patients need and require
shipments of products from us are critical. Further, because quality is a leading factor when patients, doctors, health insurance providers,
and distributors accept or reject goods, any decline in quality by our third-party manufacturers could be detrimental not only to a
particular order, but also to our future relationship with that particular patient.
We could experience cost increases or disruptions in supply of raw materials or other components used in our products.
Our third-party manufacturers that assemble and manufacture components for our products expect to incur significant costs related to
procuring raw materials required to manufacture and assemble our product. The prices for these raw materials fluctuate depending on
factors beyond our control, including market conditions and global demand for these materials and could adversely affect our business,
prospects, financial condition, results of operations, and cash flows. Further, any delays or disruptions in our supply chain could harm our
business. For example, COVID-19, including associated variants, could cause disruptions to and delays in our operations, including
shortages and delays in the supply of certain parts, including semiconductors, materials and equipment necessary for the production of
our products, and the internal designs and processes we or third-parties may adopt in an effort to remedy or mitigate impacts of such
disruptions and delays could result in higher costs. In addition, our business also depends on the continued supply of battery cells for our
products. We are exposed to multiple risks relating to availability and pricing of quality battery cells. These risks include:
●
the inability or unwillingness of battery cell manufacturers to build or operate battery cell manufacturing plants to supply the
numbers of battery cells (including the applicable chemistries) required to support the growth of the electric or plug-in hybrid
vehicle industry as demand for such cells increases;
●
disruption in the supply of battery cells due to quality issues or recalls by the battery cell manufacturers; and
●
an increase in the cost or decrease in the available supply of raw materials used in battery cells, such as lithium, nickel, and
cobalt.
Furthermore, currency fluctuations, tariffs, or shortages in petroleum and other economic or political conditions may result in significant
increases in freight charges and raw material costs. Substantial increases in the prices for raw materials or components would increase
our operating costs and could reduce our margins.
We depend upon third parties to manufacture and to supply key semiconductor chip components necessary for our products. We do
not have long-term agreements with our semiconductor chip manufacturers and suppliers, and if these manufacturers or suppliers
become unwilling or unable to provide an adequate supply of semiconductor chips, with respect to which there is a global shortage,
we would not be able to find alternative sources in a timely manner and our business would be adversely impacted.
Semiconductor chips are a vital input component to the electrical architecture of our products, controlling wide aspects of the products’
operations. Many of the key semiconductor chips we use in our products come from limited or single sources of supply, and therefore a
disruption with any one manufacturer or supplier in our supply chain would have an adverse effect on our ability to effectively
manufacture and timely deliver our products. We do not have any long-term supply contracts with any suppliers and purchase chips on a
purchase order basis. Due to our reliance on these semiconductor chips, we are subject to the risk of shortages and long lead times in
their supply. We are in the process of identifying alternative manufacturers for semiconductor chips. We have in the past experienced,
and may in the future experience, semiconductor chip shortages, and the availability and cost of these components would be difficult to
predict. For example, our manufacturers may experience temporary or permanent disruptions in their manufacturing operations due to
equipment breakdowns, labor strikes or shortages, natural disasters, component or material shortages, cost increases, acquisitions,
insolvency, changes in legal or regulatory requirements, or other similar problems.

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In particular, increased demand for semiconductor chips in 2020, due in part to the COVID-19 pandemic and increased demand for
consumer electronics that use these chips, resulted in a severe global shortage of chips in 2021 and 2022. As a result, our ability to source
semiconductor chips to be used in our products has been adversely affected. This shortage may result in increased chip delivery lead
times, delays in the production of our products, and increased costs to source available semiconductor chips. To the extent this
semiconductor chip shortage continues, and we are unable to mitigate the effects of this shortage, our ability to deliver sufficient
quantities of our products to fulfill our preorders and to support our growth through sales to new customers would be adversely affected.
In addition, we may be required to incur additional costs and expenses in managing ongoing chip shortages, including additional research
and development expenses, engineering design, and development costs in the event that new suppliers must be onboarded on an
expedited basis. Further, ongoing delays in production and shipment of products due to a continuing shortage of semiconductor chips
may harm our reputation and discourage additional preorders and sales, and otherwise materially and adversely affect our business and
operations.
If we need to replace manufacturers, our expenses and cost of goods could increase, resulting in lower profit margins.
We compete with other companies for the production capacity of our manufacturers and import quota capacity. Some of these
competitors have greater financial and other resources than we have and thus have an advantage in the competition for production and
import quota capacity. If we experience a significant increase in demand, or if we need to replace an existing manufacturer, we may have
to expand our third-party manufacturing capacity. We cannot assure that this additional capacity will be available when required on terms
that are acceptable to us or similar to existing terms, which we have with our manufacturers, either from a production standpoint or a
financial standpoint. We enter into a number of purchase order commitments specifying a time for delivery, method of payment, design
and quality specifications, and other standard industry provisions, but we do not have long-term contracts with any manufacturer. None
of the manufacturers we use produce our products exclusively. Should we be forced to replace one or more of our manufacturers, we may
experience increased costs or an adverse operational impact due to delays in distribution and delivery of our products to our patients,
which could cause us to lose patients or lose revenue because of late shipments.
We are a relatively small company with a limited number of products and staff. Sales fluctuations and employee turnover may
adversely affect our business.
We are a relatively small company. Consequently, compared to larger companies, sales fluctuations could have a greater impact on our
revenue and profitability on a quarter-to-quarter and year-to-year basis, and delays in patient orders could cause our operating results to
vary significantly from quarter-to-quarter and year-to-year. In addition, as a small company we have limited staff and are heavily reliant
on certain key personnel to operate our business. If a key employee were to leave the company, it could have a material impact on our
business and our results of operations, as we might not have sufficient depth in our staffing to fill the role that was previously being
performed. A delay in filling the vacated position could put a strain on existing personnel, result in a failure to satisfy our contractual
obligations, or to effectively implement our internal controls, which could materially harm our business.
If we are unable to retain the services of Mr. Sandgaard or if we are unable to successfully recruit qualified managerial and sales
personnel, we may not be able to continue our operations.
Our success depends to a significant extent upon the continued service of Mr. Thomas Sandgaard, our Chief Executive Officer, Founder,
and beneficial owner of approximately 50% of our outstanding stock as of February 28, 2025. Loss of the services of Mr. Sandgaard
could have a material adverse effect on our growth, revenues, and prospective business. There is currently no employment agreement
with Mr. Sandgaard. We do not maintain key-man insurance on the life of Mr. Sandgaard. In addition, to successfully implement and
manage our business plan, we will be dependent upon, among other things, successfully retaining and recruiting qualified managerial and
sales personnel. Competition for qualified individuals is intense. Various factors, such as marketability of our products, our reputation,
our liquidity, and sales commission structure can affect our ability to find, attract, or retain sales personnel. There can be no assurance
that we will be able to find and attract qualified new employees and sales representatives and retain existing employees and sales
representatives.

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We need to maintain insurance coverage, which could become very expensive or have limited availability.
Our marketing and sales of medical device products create an inherent risk of claims for product liability. As a result, we carry product
liability insurance and will continue to maintain insurance in amounts we consider adequate to protect us from claims. We cannot,
however, be assured that we have resources sufficient to satisfy liability claims in excess of policy limits if required to do so. Also, if we
are subject to such liability claims, there is no assurance that our insurance provider will continue to insure us at current levels or that our
insurance rates will not substantially rise in the future, resulting in increased costs to us or forcing us to either pay higher premiums or
reduce our coverage amounts, which would result in increased liability to claims.
Although we do not manufacture the products we distribute, if one of the products distributed by us proves to be defective or is
misused by a health care practitioner or patient, we may be subject to liability that could adversely affect our financial condition and
results of operations.
Although we do not manufacture the products that we distribute, a defect in the design or manufacture of a product distributed or
serviced by us, or a failure of a product distributed by us to perform for the use specified, could have a material and adverse effect on our
reputation in the industry and subject us to claims of liability for injuries and otherwise. Misuse of the product distributed by us by a
practitioner or patient that results in injury could similarly subject us to liability. Any substantial underinsured loss could have a material
and adverse effect on our business, financial condition, results of operations, and cash flows. Furthermore, any impairment of our
reputation could have a material and adverse effect on our revenues and prospects for future business.
We depend upon obtaining regulatory clearance of new products and/or manufacturing operations we develop and maintain
clearances of current products; failure to obtain or maintain such regulatory clearances could result in increased costs, lost revenue,
penalties, and fines.
Before marketing certain new products, we will need to complete one or more clinical investigations of each product. There can be no
assurance that the results of such clinical investigations will be favorable to us. We may not know the results of any study, favorable or
unfavorable to us, until after the study has been completed. Such data must be submitted to the FDA as part of any regulatory filing
seeking clearance to market the product. Even if the results are favorable, the FDA may dispute the claims of safety, efficacy, or clinical
utility and not allow the product to be marketed. The sales price of the product may not be enough to recoup the amount of our
investment in conducting the investigative studies, and we may expend significant funds on research and development on products that
are rejected by the FDA. Some of our products are marketed based upon our interpretation of FDA regulation allowing for changes to an
existing device. If our interpretations are incorrect, we could suffer consequences that could have a material adverse effect on our results
of operations and cash flows and could result in fines and penalties. There can be no assurance that we will have the financial resources
to complete development of any new products, complete the regulatory clearance process, or maintain regulatory compliance of existing
products.
We may not be able to obtain clearance of a 510(k) pre-market notification or grant of a de novo classification request or approval of
a pre-market approval application with respect to any products on a timely basis, if at all.
If timely FDA clearance or approval of new products is not obtained, our business could be materially adversely affected. Clearance of a
510(k) pre-market notification or de novo application may also be required before marketing certain previously marketed products,
which have been modified after they have been cleared. Should the FDA so require, the filing of a new 510(k) pre-market notification for
the modification of the product may be required prior to marketing any modified device. To determine whether adequate compliance has
been achieved, the FDA may inspect our facilities at any time. Such compliance can be difficult and costly to achieve and maintain. Our
compliance status may change due to future changes in, or interpretations of, FDA regulations or other regulatory agencies. Such
changes may result in the FDA withdrawing marketing clearance or requiring or requesting product recall. In addition, any changes or
modifications to a device or its intended use may require us to reassess compliance with good manufacturing practices guidelines,
potentially interrupting the marketing and sale of products. We may also fail to comply with complex FDA regulations due to their
complexity or otherwise. Failure to comply with regulations could result in enforceable actions, including product seizures, product
recalls, withdrawal of clearances or approvals, injunctions, and civil and criminal penalties, any of which could have a material adverse
effect on our operating results and reputation.

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Our products are subject to recall even after receiving FDA or foreign clearance or approval, which would harm our reputation and
business.
We are subject to medical device reporting regulations that require us to report to the FDA or respective governmental authorities in
other countries if our products cause or contribute to a death or serious injury or malfunction in a way that would be reasonably likely to
cause or contribute to death or serious injury if the malfunction were to recur. The FDA and similar governmental authorities in other
countries have the authority to require the recall of our products in the event of material deficiencies or defects in design or
manufacturing. A government mandated or voluntary recall by us could occur as a result of component failures, manufacturing errors or
design defects, including defects in labeling. 
Any recall would divert managerial and financial resources and could harm our reputation with customers. We cannot assure you that we
will not have product recalls in the future or that such recalls would not have a material adverse effect on our business. We have not
undertaken any voluntary or mandatory recalls to date.
We continue to incur expenses.
This area of medical device research is subject to rapid and significant technological changes. Developments and advances in the medical
industry by either competitors or other parties can affect our business in either a positive or negative manner. Developments and changes
in technology that are favorable to us may significantly advance the potential of our research, while developments and advances in
research methods outside of the methods we are using may severely hinder or completely halt our development.
We are a small company in terms of employees and technical and research resources. We expect to incur research and development, sales
and marketing, and general and administrative expenses. These amounts may increase, and recently have in connection with our efforts
to expand our sales force, before any commensurate incremental revenue from these efforts may be obtained and adversely affect our
potential profits, and we may lack the liquidity to pay for such expenditures. These factors may also hinder our ability to meet changes in
the medical industry as rapidly or effectively as competitors with more resources.
Substantial costs could be incurred defending against claims of intellectual property infringement.
Other companies, including competitors, may obtain patents or other proprietary intellectual property rights that would limit, interfere
with, or otherwise circumscribe our ability to make, use, or sell products. Should there be a successful claim of infringement against us,
and if we could not license the alleged infringed technology at a reasonable cost, our business and operating results could be adversely
affected. There has been substantial litigation regarding patent and other intellectual property rights in the medical device industry. The
validity and breadth of claims covered in medical technology patents involve complex legal and factual questions for which important
legal principles remain unresolved. Any litigation claims against us, independent of their validity, may result in substantial costs and the
diversion of resources with no assurance of success. Intellectual property claims could cause us to:
●
cease selling, incorporating, or using products that incorporate the challenged intellectual property;
●
obtain a license from the holder of the infringed intellectual property right, which may not be available on reasonable terms, if
at all; and
●
re-design our products excluding the infringed intellectual property, which may not be possible.
We may be unable to protect our trademarks, trade secrets, and other intellectual property rights that are important to our business.
We consider our trademarks, trade secrets, and other intellectual property an integral component of our success. We rely on trademark
law and trade secret protection and confidentiality agreements with employees, customers, partners, and others to protect our intellectual
property. Effective trademark and trade secret protection may not be available in every country in which our products are available. We
obtained utility patents on the fluid monitoring system in 2021 and 2018 in the U.S. and in 2020 in Europe. We cannot be certain that we
have taken adequate steps to protect our intellectual property, especially in countries where the laws may not protect

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our rights as fully as in the United States. In addition, if our third-party confidentiality agreements are breached, there may not be an
adequate remedy available to us. If our trade secrets become publicly known, we may lose competitive advantages.
We may fail to protect the privacy, integrity and security of customer information.
We possess and process sensitive customer information and Protected Health Information protected by the Health Insurance Portability
and Affordability Act (“HIPAA”). While we have taken reasonable and appropriate steps to protect that information, if our security
procedures and controls were compromised, it could harm our business, reputation, results of operations, and financial condition and may
increase the costs we incur to protect against such information security breaches, such as increased investment in technology, the costs of
compliance with healthcare privacy and consumer protection laws. A compromise of our privacy or security procedures could also
subject us to liability under certain healthcare privacy laws applicable to us.
Other federal and state laws restrict the use and protect the privacy and security of personally identifiable information are, in many cases,
are not preempted by HIPAA and may be subject to varying interpretations by the courts and government agencies. These varying
interpretations can create complex compliance issues for us and our partners and potentially expose us to additional expense, adverse
publicity and liability, any of which could adversely affect our business. There is ongoing concern from privacy advocates, regulators and
others regarding data privacy and security issues, and the number of jurisdictions with data privacy and security laws has been
increasing. Also, there are ongoing public policy discussions regarding whether the standards for de-identification, anonymization or
pseudonymization of health information are sufficient, and the risk of re-identification sufficiently small, to adequately protect patient
privacy. We expect that there will continue to be new proposed and amended laws, regulations and industry standards concerning
privacy, data protection and information security in the United States, such as the California Consumer Privacy Act (“CCPA”), as
amended by the California Privacy Rights Act (“CPRA”), which amendments went into effect on January 1, 2023. The CCPA creates
specific obligations with respect to processing and storing personal information, and the CPRA amendments created a new state agency
that is vested with authority to implement and enforce the CCPA. Additionally, a similar law went into effect in Virginia on January 1,
2023, and further US-state comprehensive privacy laws are set to go into effect throughout 2023, including laws in Colorado,
Connecticut, and Utah. These laws are substantially similar in scope and contain many of the same requirements and exceptions as the
CCPA, including a general exemption for clinical trial data and limited obligations for entities regulated by HIPAA. However, we cannot
yet determine the full impact these laws or other such future laws, regulations and standards may have on our current or future business.
Any of these laws may broaden their scope in the future, and similar laws have been proposed on both a federal level and in more than
half of the states in the U.S. A number of other states have proposed new privacy laws, some of which are similar to the above discussed
recently passed laws. Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions and
potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of
previously useful data and could result in increased compliance costs and/or changes in business practices and policies. The existence of
comprehensive privacy laws in different states in the country would make our compliance obligations more complex and costly and may
increase the likelihood that we may be subject to enforcement actions or otherwise incur liability for noncompliance.
Cyber-attacks and security vulnerabilities could lead to reduced revenue, increased costs, liability claims, or harm to our competitive
position.
Increased sophistication and activities of perpetrators of cyber-attacks have resulted in an increase in information security risks in recent
years. Hackers develop and deploy viruses, worms, and other malicious software programs that attack products and services and gain
access to networks and data centers. In addition to extracting sensitive information, such attacks could include the deployment of harmful
malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the
confidentiality, integrity and availability of information. The prevalent use of mobile devices also increases the risk of data security
incidents. If we experience difficulties maintaining existing systems or implementing new systems, we could incur significant losses due
to disruptions in our operations. Additionally, these systems contain valuable proprietary and confidential information and may contain
personal data of our customers. While we believe we have taken reasonable steps to protect such data, techniques used to gain
unauthorized access to data and systems, disable or degrade service, or sabotage systems, are constantly evolving, and we may be unable
to anticipate such techniques or implement adequate preventative measures to avoid unauthorized access or other adverse impacts to such
data or our systems. In addition, some of our third-party service providers and partners also collect and/or store our sensitive information
and our customers’ data on our behalf, and these service providers and partners are subject to similar threats of cyber-attacks and other
malicious internet-based activities, which could also expose us to risk of loss, litigation, and potential liability. A security breach could
result in disruptions of our internal systems and business applications, harm

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to our competitive position from the compromise of confidential business information, or subject us to liability under laws that protect
personal data. Additionally, actual, potential or anticipated attacks may cause us to incur increasing costs, including costs to deploy
additional personnel and protection technologies, train employees, and engage third-party experts and consultants. Specifically, as cyber
threats continue to evolve, we may be required to expend additional resources to continue to enhance our information security measures
and/or to investigate and remediate any information security vulnerabilities. Any of these consequences would adversely affect our
revenue and margins. Additionally, although we maintain cybersecurity insurance coverage, we cannot be certain that such coverage will
be adequate for data security liabilities actually incurred, will cover any indemnification claims against us relating to any incident, will
continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future
claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of
changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could
have a material adverse effect on our reputation, business, prospects, results of operations and financial condition.
We have identified material weakness in our internal controls over financial reporting and may identify additional material
weaknesses in the future or otherwise fail to maintain an effective system of internal controls, which may result in material
misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a 
reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or 
detected on a timely basis. We identified a material weakness in our internal controls over financial reporting as of December 31, 2024 
and 2023, related to information technology general controls (“ITGCs”) that were not designed and operating effectively to IT program 
and data changes affecting the Company’s financial IT applications and underlying accounting records, are identified, tested, authorized 
and implemented appropriately to validate that data produced by its relevant IT system(s) were complete and accurate.  Business process 
controls (automated and manual) that are dependent on the affected ITGCs were also deemed ineffective because they could have been 
adversely impacted. Also as of December 31, 2023, we identified a material weakness in our communications with our independent 
auditors as it relates to open or pending financial statement adjustments and the timing of decisions to take write-offs. Although the 
material weaknesses identified above did not result in any material misstatements in our consolidated financial statements for the periods 
presented and there were no changes to previously released financial results, our management concluded that these control weakness 
constitute a material weakness and that our internal control was not effective as of December 31, 2024. 
Our management is committed to take comprehensive actions to remediate the material weakness in internal control over financial
reporting. We are in the process of developing and implementing remediation plans to address the material weakness described above.
While we are committed to designing and implementing new controls and measures to remediate these material weaknesses, we cannot
assure you that the measures will be sufficient to remediate the material weaknesses or avoid the identification of additional material
weaknesses in the future. Our failure to implement and maintain effective internal control over financial reporting could result in errors
in our consolidated financial statements that could result in a restatement of our financial statements and could cause us to fail to meet
our periodic reporting obligations, any of which could diminish investor confidence in us and cause a decline in the price of our common
stock.
Expansion of our operations and sales internationally may subject us to additional risks, including risks associated with unexpected
events.
A component of our growth strategy is to expand our operations and sales internationally. There can be no assurance that we will be able
to successfully market, sell, and deliver our products in foreign markets, or that we will be able to successfully expand our international
operations. Global operations could cause us to be subject to unexpected, uncontrollable and rapidly changing risks, events, and
circumstances.
The following factors, among others, could adversely affect our business, financial condition and results of operations:
●
difficulties in managing foreign operations and attracting and retaining appropriate levels of senior management and staffing;
●
longer cash collection cycles;

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27
●
proper compliance with local tax laws which can be complex and may result in unintended adverse tax consequences;
●
difficulties in enforcing agreements through foreign legal systems;
●
failure to properly comply with U.S. and foreign laws and regulations applicable to our foreign activities including, without
limitation, product approval, healthcare and employment law requirements and the Foreign Corrupt Practices Act;
●
fluctuations in exchange rates that may affect product demand and may adversely affect the profitability in U.S. dollars of the
products we provide in foreign markets;
●
the ability to efficiently repatriate cash to the United States and transfer cash between foreign jurisdictions; and
●
changes in general economic conditions or political circumstances in countries where we operate.
Our acquisition of other companies could require significant management attention, disrupt our business, dilute stockholder value
and adversely affect our operating results.
As part of our business strategy, we have made and may in the future acquire or make investments in other companies, solutions or
technologies to, among other reasons, expand or enhance our product offerings. In the future, any significant acquisition would require
the consent of our lenders. Any failure to receive such consent could delay or prohibit us from acquiring companies that we believe could
enhance our business.
We may not ultimately strengthen our competitive position or achieve our goals from our recent or any future acquisition, and any
acquisitions we complete could be viewed negatively by users, customers, partners or investors. In addition, if we fail to successfully
integrate such acquisitions, or the technologies associated with such acquisitions, into our company, the revenues and operating results of
the combined company could be adversely affected. For example, in December 2021 we acquired Kestrel Labs, Inc. and we must
effectively integrate the personnel, products, technologies and customers and develop and motivate new employees. In addition, we may
not be able to successfully retain the customers and key personnel of such acquisitions over the longer term, which could also adversely
affect our business. The integration of our recently acquired business or future-acquired business will require significant time and
resources, and we may not be able to manage the process successfully. We may not successfully evaluate or utilize the acquired business
and accurately forecast the financial impact of the acquisition, including accounting charges.
We may have to pay cash, incur debt or issue equity securities to pay for any acquisition, each of which could affect our financial
condition or the value of our capital stock. For example, in connection with our acquisition of Kestrel Labs, Inc., we paid an approximate
value of $30.5 million, consisting of $16.1 million in cash which was financed through Bank of America N.A. and approximately $14.4
million in shares of our common stock, a portion of which was to be held in escrow. To fund any future acquisition, we may issue equity,
which would result in dilution to our stockholders, or incur more debt, which would result in increased fixed obligations and could
subject us to additional covenants or other restrictions that would impede our ability to manage our operations.
If we are not able to integrate acquired businesses successfully, our business could be harmed.
Our inability to successfully integrate our recent and future acquisitions could impede us from realizing all of the benefits of those
acquisitions and could severely weaken our business operations. The integration process may disrupt our business and, if implemented
ineffectively, may preclude realization of the full benefits expected by us and could harm our results of operations. In addition, the
overall integration of the combining companies may result in unanticipated problems, expenses, liabilities, and competitive responses,
and may cause our stock price to decline. The difficulties of integrating an acquisition include, among others:
●
unanticipated issues in integration of information, communications, and other systems;
●
unanticipated incompatibility of logistics, marketing, and administration methods;
●
maintaining employee morale and retaining key employees;

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28
●
integrating the business cultures of both companies;
●
preserving important strategic client relationships;
●
consolidating corporate and administrative infrastructures and eliminating duplicative operations; and
●
coordinating geographically separate organizations.
In addition, even if the operations of an acquisition are integrated successfully, we may not realize the full benefits of the acquisition,
including the synergies, cost savings, or growth opportunities that we expect. These benefits may not be achieved within the anticipated
time frame, or at all. For example, the failure to get regulatory approval to sell certain products of an acquired business may significantly
reduce the anticipated benefits of the acquisition and could harm our results of operations, even if we have put in place contingencies for
the delivery of closing consideration, such as the escrowed shares initially held back in our acquisition of Kestrel Labs, Inc. Further,
acquisitions may also cause us to:
●
issue securities that would dilute our current stockholders’ ownership percentage;
●
use a substantial portion of our cash resources;
●
increase our interest expense, leverage, and debt service requirements if we incur additional debt to pay for an
acquisition;
●
assume liabilities, including environmental liabilities, for which we do not have indemnification from the former
owners or have indemnification that may be subject to dispute or concerns regarding the creditworthiness of the
former owners;
●
record goodwill and non-amortizable intangible assets that are subject to impairment testing on a regular basis and
potential impairment charges;
●
experience volatility in earnings due to changes in contingent consideration related to acquisition liability
estimates;
●
incur amortization expenses related to certain intangible assets;
●
lose existing or potential contracts as a result of conflict of interest issues;
●
incur large and immediate write-offs; or
●
become subject to litigation.
Changes in financial accounting standards or practices may cause adverse, unexpected financial reporting fluctuations and affect
our reported results of operations.
We are required to prepare our financial statements in accordance with generally accepted accounting principles in the United States of
America (“GAAP”), which is periodically revised and/or expanded. From time to time, we are required to adopt new or revised
accounting standards issued by recognized authoritative bodies, including the Financial Accounting Standards Board (“FASB”) and the
SEC. It is possible that future accounting standards we are required to adopt may require additional changes to the current accounting
treatment that we apply to our financial statements and may require us to make significant changes to our reporting systems. Such
changes could result in a material adverse impact on our business, results of operations and financial condition.
The conversion feature of our  convertible  senior notes, if triggered, may adversely affect our financial condition and operating
results.

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29
We have outstanding a total of $60 million of convertible senior notes. See Note 8: Convertible Senior Notes to the Consolidated
Financial Statements included in “Part II, Item 8 - Financial Statements and Supplementary Data.” If the conversion feature of any of
those convertible senior notes is triggered, holders will be entitled to convert the notes at their option at any time during specified
periods. If one or more holders elect to convert their notes, we may be required, or may choose, to settle the obligation through the
payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their notes, we could be
required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the convertible notes as a current
rather than long-term liability, which would result in a material reduction of our net working capital.
RISKS RELATED TO OUR COMMON STOCK
Sales of significant amounts of shares held by Mr. Sandgaard, or the prospect of these sales, could adversely affect the market price
of our common stock
Sales of significant amounts of shares held by Mr. Sandgaard, or the prospect of these sales, could adversely affect the market price of
our common stock. Mr. Sandgaard’s stock ownership may discourage a potential acquirer from making a tender offer or otherwise
attempting to obtain control of the Company, which in turn could reduce our stock price or prevent our stockholders from realizing a
premium over our stock price.
Our existing stockholders may experience dilution if we elect to raise equity capital
Previously, we’ve raised capital in the form of debt and/or equity to meet our working capital needs. We may also choose to issue equity
or debt securities in the future to meet our liquidity or other needs which would result in additional dilution to our existing stockholders.
Although we will attempt to minimize the dilutive impact of any future capital-raising activities, we cannot offer any assurance that we
will be able to do so. We may have to issue additional shares of our common stock at prices at a discount from the then-current market
price of our common stock. If we raise additional working capital, existing stockholders may experience dilution.
We paid a dividend on our common stock, and cash used to pay dividends will not be available for other corporate purposes
In 2018, our Board of Directors declared a dividend of $0.07 per share, which was paid in January 2019. In 2021, our Board of Directors
declared a dividend of $0.10 per share, which was paid in January 2022. The decision to pay dividends in the future will depend on
general business conditions, the impact of such payment on our financial condition, and other factors our Board of Directors may
consider. If we elect to pay future dividends, this could reduce our cash reserves to levels that may be inadequate to fund expansions to
our business plan or unanticipated contingent liabilities.
Our stock price could become more volatile and your investment could lose value.
All of the factors discussed in this section could affect our stock price. A significant drop in our stock price could also expose us to the
risk of securities class actions lawsuits, which could result in substantial costs and divert management’s attention and resources, which
could adversely affect our business.
Conversion of our 5% convertible senior notes into common stock may dilute the ownership interests of existing stockholders or may
otherwise depress the price of our common stock.
If it were to occur, the conversion of our 5% convertible senior notes issued in May 2023 would dilute the ownership interests of existing
stockholders to the extent we deliver shares of common stock upon conversion of such notes. Any sales in the public market of such
shares could adversely affect prevailing market prices of our common stock. In addition, the existence of the convertible senior notes and
the anticipated conversion of the notes into shares of our common stock could depress the price of our common stock.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

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30
ITEM 1C. CYBERSECURITY
Risk Management and Strategy
We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our
information systems and protect the confidentiality, integrity, and availability of our data.
Managing Material Risks & Integrated Overall Risk Management
We have strategically integrated cybersecurity risk management into our broader risk management framework to promote a company-
wide culture of cybersecurity risk management. This integration ensures that cybersecurity considerations are an integral part of our
decision-making processes at every level. Our management team works closely with our IT department to continuously evaluate and
address cybersecurity risks in alignment with our business objectives and operational needs.
We have processes in place to assess, identify, manage, and address material cybersecurity threats and incidents. These include, among
other things: annual and ongoing security awareness training for employees; mechanisms to detect and monitor unusual network activity;
and containment and incident response tools. We regularly assess risks from cybersecurity and technology threats and monitor our
information systems for potential vulnerabilities. We monitor issues that are internally discovered or externally reported that may affect
our systems, and have processes to assess those issues for potential cybersecurity impact or risk.
We conduct periodic assessments and testing of our policies, standards, processes, and practices in a manner intended to address
cybersecurity threats and events. The results of such assessments, audits, and reviews are evaluated by management, and we adjust our
cybersecurity policies, standards, processes, and practices as necessary based on the information provided by these assessments, audits,
and reviews.
We are establishing incident response, business continuity, and disaster recovery plans designed to more formally address our response to
a cybersecurity incident.
Oversee Third-party Risk
Because we are aware of the risks associated with third-party service providers, we have implemented stringent processes to oversee and
manage these risks. We conduct basic security assessments of all third-party providers before engagement and maintain ongoing
monitoring to ensure compliance with our cybersecurity standards. The monitoring includes annual assessments of the System and
Organization Controls (SOC) reports of our providers and implementing complementary controls. This approach is designed to mitigate
risks related to data breaches or other security incidents originating from third-parties. Additionally, the Company leverages a number of
third-party tools and technologies as part of its efforts to enhance cybersecurity functions, such as a managed security service provider to
augment the Company’s incident response team, an endpoint detection and response system for continuous monitoring, detection, and
response capabilities, and a security information and event management solution to automate real-time threat detection, investigation,
and prioritization of high-fidelity alerts.
Governance
Our board of directors is responsible for overseeing our risk management program and cybersecurity is an element of this program. Our
cybersecurity risk assessment and management efforts are led by our Director of Information Technology, who is responsible for
implementing and overseeing processes for the monitoring of our information systems. This includes responsibility for the deployment of
cybersecurity measures and system audits to identify potential cybersecurity vulnerabilities. Our Director of Information Technology
reports directly to our COO.
Risks from Cybersecurity Threats
We have not encountered cybersecurity challenges that have materially impaired our operations or financial standing.

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31
ITEM 2. PROPERTIES
During February 2023, the Company entered into a lease agreement for approximately 41,427 square feet of office space for the
operations of ZMS in Englewood, Colorado. The lease commenced on July 1, 2023 and runs through December 31, 2028. At the
expiration of the lease term the Company has the option to renew the lease for one additional five-year period. The Company is entitled
to rent abatements for the first six months of the lease and tenant improvement allowances.
In April 2021, the Company signed a sublease for our corporate headquarters in Englewood, Colorado beginning in May 2021 for up to
approximately 110,754 square feet. This lease runs through April 2028.
The Company entered into a lease agreement for a warehouse and production facility with approximately 50,488 square feet in
September 2020. The lease continues through June 2026 with an option for a five-year extension through June 2031.
During March 2022, the Company entered into a lease agreement for approximately 4,162 square feet of office space for the operations
of ZMS in Boulder, Colorado. The lease began on April 1, 2022 and will run through April 1, 2025.
We believe these leased properties are sufficient to support our current requirements and that we will be able to locate additional facilities
as needed. See Note 12 to the Consolidated Financial Statements for additional information on these leases.
ITEM 3. LEGAL PROCEEDINGS
Travelers 
On August 23, 2023, Travelers Casualty Insurance Company of America and its affiliated entities (“Travelers”), on behalf of the People
of the State of California, filed a complaint under seal in California Superior Court, County of Los Angeles against ZMI. The complaint,
which was unsealed on December 16, 2024, alleged violations of the California Insurance Frauds Prevention Act (“IFPA”) for alleged
false billing practices for claims submitted to Travelers in California. Travelers sought civil penalties and assessments on behalf of
Travelers and the People of the State of California under the IFPA. ZMI disputed liability under the IFPA. Effective August 29, 2024,
ZMI and Travelers entered into two settlement agreements for the collective amount of $1 million to resolve the claims asserted by
Travelers in the IFPA action and for threatened claims for bills submitted to Travelers outside California. In addition to obtaining a broad
release of liability from Travelers and avoiding the substantial cost of further litigation, the settlement agreements also provide a billing
protocol for all future claims submitted to Travelers. At the time of the settlement agreements, the Company could not estimate the
likelihood of a particular outcome or probable cost resulting from the action because the State of California had not intervened in the
action, participated in settlement discussions, or consented to settlement or dismissal. On or about November 4, 2024, Travelers informed
ZMI the State of California would not object to settlement and dismissal. On December 13, 2024, the action was dismissed with
prejudice and the settlement payment was made to Travelers on December 19, 2024. 
Other Legal Proceedings
We are not a party to any other material pending legal proceedings.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 4A. EXECUIVE OFFICERS OF THE REGISTRANT
Set forth below is certain information concerning the Company’s executive officers.
Name
 
Age
 
Title and Business Experience
Thomas Sandgaard
 
66
 
President and Chief Executive Officer. Mr. Sandgaard founded the Company in
1996 after a successful European-based career in the semiconductor,
telecommunications and medical equipment industries with ITT, Siemens and
Philips Telecom. Mr. Sandgaard has been our President, CEO and

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32
Chairman since 1996. Mr. Sandgaard held middle and senior management
positions in the areas of international sales and distribution, technology
transfers, mergers and acquisitions and marketing. Mr. Sandgaard holds a
degree in electronics engineering from the University of Southern Denmark
and an MBA from Copenhagen Business School. Mr. Sandgaard currently does
not hold, and has not held in the past five years, directorships with any
company with a class of securities registered pursuant to section 12
of the Exchange Act or subject to the requirements of section 15(d) of such Act
or any company registered as an investment company under the Investment
Company Act of 1940
Daniel Moorhead
52
Chief Financial Officer. Mr. Moorhead joined the Company in June 2017 as the
Chief Financial Officer and is responsible for all finance and accounting
functions. Prior to joining Zynex, Mr. Moorhead was Chief Financial Officer
of Evolving Systems, Inc. (Nasdaq: EVOL) from January 2016 until
May 2017, after having served as Vice President of Finance & Administration
from December 2011 through December 2015 and in other financial
management roles from 2002-2005 and 2008-2011. Mr. Moorhead is a CPA
and holds a B.B.A. in Accounting from the University of Northern Colorado.
Anna Lucsok
39
Chief Operating Officer. Ms. Lucsok joined the company in 2018 and
previously served as Vice President of Reimbursement and Sales Operations
with Zynex Medical. In this position she was responsible for leading and
expanding Zynex’s order, reimbursement, patient experience, and inside sales
support operations. Ms. Lucsok brings more than nine years of healthcare
operations experience as well as critical knowledge of revenue cycle
management and medical care collections. She’s previously held key positions
with companies such as University of Colorado Hospital, the US Air Force and
Schryver Medical. Ms. Lucsok holds certification in medical billing as well as
completed her degree in Healthcare Administration and Management from
Colorado State University.

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33
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
On February 12, 2019, our common stock began trading on The Nasdaq Capital Market under the symbol “ZYXI”. Prior to uplisting to
the Nasdaq Capital Market, the Company’s common stock was quoted on the OTCQB (managed by OTC Markets, Inc) under the symbol
“ZYXI.”
As of February 28, 2025, there were 31,912,487 shares of common stock outstanding, approximately 153 record holders and 10,433
beneficial shareholders of our common stock.
Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
On February 29, 2024, the Company announced that its board of directors had approved a repurchase program of up to $20.0 million of
the Company’s common stock beginning on March 4, 2024, and continuing through the earlier of March 4, 2025, or when all $20.0
million worth of shares have been repurchased.
Under the Company’s repurchase program, the Company may repurchase its common stock from time to time in open market and
negotiated transactions. Repurchases will be made subject to market conditions, available liquidity, cash flow, applicable legal
requirements, and other factors. The specific prices, numbers of shares, and timing of purchase transactions will be determined by the
Company from time to time. The repurchase program does not obligate the Company to acquire any particular amount of common stock
and may be suspended or discontinued at any time. The repurchase program is intended to comply with Rule 10b-18 promulgated under
the Securities Exchange Act of 1934.
During the three months ended December 31, 2024, the Company did not repurchase any shares of its common stock. As of December 
31, 2024, the Company had $14.8 million remaining under the repurchase program that may be used to repurchase outstanding shares of 
common stock in the future.   
ITEM 6. [RESERVED]
Not required.

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34
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The information and financial data discussed below is derived from our consolidated financial statements for the years ended December
31, 2024, and 2023. The consolidated financial statements of the Company were prepared and presented in accordance with generally
accepted accounting principles in the United States. The information and financial data discussed below is only a summary and was
prepared to provide a historical and narrative discussion of our financial condition and results of operations through the eyes of
management and should be read in conjunction with the historical financial statements and related notes of the Company contained
elsewhere in this Report. The consolidated financial statements contained elsewhere in this Report fully represent the Company’s
financial condition and operations; however, they are not indicative of the Company’s future performance. See “Cautionary Statement
Regarding Forward Looking Statements” above for a discussion of forward-looking statements and the significance of such statements in
the context of this Annual Report.
OVERVIEW
We operate in one primary business segment, electrotherapy and pain management products. As of December 31, 2024, the Company’s
only active subsidiaries are ZMI, a wholly-owned Colorado corporation, through which the Company conducts its U.S. electrotherapy
and pain management operations, and ZMS. ZMS, a wholly-owned Colorado corporation, has developed a fluid monitoring system,
which has received two utility patents and FDA approval in the U.S. ZMS also acquired Kestrel during 2021, which had two pulse-
oximeter products they are developing and numerous patents. However, ZMS has achieved no revenues to date.
The following information should be read in conjunction with our Consolidated Financial Statements and related notes contained in this
Annual Report.
HIGHLIGHTS
During the year ended December 31, 2024, the Company achieved the following:
●
Achieved a 16% increase in device orders, 4% growth in revenue, and operating cash flows of $12.7 million;
●
Recorded net income of $3.0 million and our 9th consecutive profitable year;
●
Achieved higher sales representative productivity with increased revenue per sales representative;
●
Due to strong results and related cash flow, we repurchased approximately $15.6 million worth of the Company’s common
stock;
●
Recognized as a “Best Company to Work For” by U.S. News & World Report and Top Workplaces
●
Ranked 9rd in the Top 25 Medical Device Companies for 2024 according to The Healthcare Technology Report;
●
Completed multiple IRB-approved clinical studies including multiple blood donation studies for detection of minor blood loss
in healthy adult subjects; and
●
Completed a hypoxemia study at the University of California, San Francisco and Calibration and Verification enrollments of a
multi-analyte human trial at Duke University for NiCO as well as various Q-Submissions and meetings with the FDA.
RECENT EVENTS
We were recently notified that TriCare, one of our government payers, was temporarily suspending payments as they review prior claims.
We have a meeting with Tricare in April and believe we have good evidence to get payments reinstated.   TriCare currently represents
approximately 20-25% of our annual revenue. As directed by Tricare, we continue to support both existing patients and new patients as
we receive their prescriptions.

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35
Due to the temporary payment suspension and lack of clarity on the timing of a resolution, we are restructuring our staff to align with
current revenue. We are decreasing our overall staff by approximately 10%, which primarily affects employees in our corporate
departments. This staff reduction along with other expense reductions made during the second half of 2024 and the first quarter of 2025
will result in savings of approximately $35 million annually. Although these processes are never easy, it is critical for us to be prudent
and conservative in adapting to external changes and execute these expense adjustments immediately.  We are confident that long-term,
our pain management business is still solid with significant growth potential.
INFLATION REDUCTION ACT
On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022, or IRA, into law, which among other things, (i) directs
the U.S. Department of Health and Human Services, or HHS, to negotiate the price of certain high-expenditure, single-source drugs and
biologics covered under Medicare, and subjects drug manufacturers to civil monetary penalties and a potential excise tax for offering a
price that is not equal to or less than the negotiated “maximum fair price” under the law; (ii) imposes rebates under Medicare Part B and
Medicare Part D to penalize drug price increases that outpace inflation; and (iii) redesigns the Medicare Part D program, increasing
manufacturer rebates within the catastrophic coverage phase. The IRA permits HHS to implement many of these provisions through
guidance, as opposed to regulation, for the initial years. These provisions began to take effect progressively beginning in fiscal year
2023, although they have been subject to legal challenges. It is currently unclear how the IRA will be effectuated but is likely to have a
significant impact on the pharmaceutical industry.
The IRA also includes various tax provisions, including an excise tax on stock repurchases, expanded tax credits for clean energy
incentives, and a corporate alternative minimum tax that generally applies to U.S. corporations with average adjusted financial statement
income over a three-year period in excess of $1 billion. The Company does not expect these tax provisions to materially impact its
financial statements.
SUMMARY
Net revenue increased 4% in 2024 to $192.4 million from $184.3 million in 2023. Net income was $3.0 million and $9.7 million for the
years ended December 31, 2024 and 2023, respectively.
Cash flows from operating activities decreased 28%, or $5.0 million, to $12.7 million for the year ended December 31, 2024. Net cash
flows from operations along with our current cash position allowed us to repurchase $15.6 million of common stock and maintain
working capital of $58.3 million for the year ended December 31, 2024.

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36
RESULTS OF OPERATIONS
The following table presents our consolidated statements of income in comparative format (in thousands).
For the Years Ended
 
December 31, 
$
    
2024
    
2023
    
change
NET REVENUE
 
   
  
    
Devices
$
 59,612
$
 58,822
$
 790
Supplies
 
 132,742
 
 125,500
 
 7,242
Total net revenue
 
 192,354
 
 184,322
 
 8,032
COSTS OF REVENUE AND OPERATING EXPENSES
 
  
 
  
 
  
Costs of revenue – devices and supplies
 
 39,429
 
 38,366
 
 1,063
Sales and marketing
 
 86,581
 
 86,659
 
 (78)
General and administrative
 
 60,354
 
 48,517
 
 11,837
Total costs of revenue and operating expenses
 
 186,364
 
 173,542
 
 12,822
Income from operations
 
 5,990
 
 10,780
 
 (4,790)
Other Income (expense)
 
  
 
  
 
  
Gain on disposal of assets
 19
 39
 (20)
Change in fair value of contingent consideration
 
 —
 
 2,854
 
 (2,854)
Interest expense
 
 (2,382)
 
 (1,094)
 
 (1,288)
Other income (expense), net
 
 (2,363)
 
 1,799
 
 (4,162)
Income from operations before income taxes
 
 3,627
 
 12,579
 
 (8,952)
Income tax expense
 
 633
 
 2,847
 
 (2,214)
Net income
$
 2,994
$
 9,732
$
 (6,738)
Net income per share:
 
  
 
  
 
  
Basic
$
 0.09
$
 0.27
$
(0.18)
Diluted
$
 0.09
$
 0.27
$
(0.18)
Weighted average basic shares outstanding
 
 31,941
 
 35,555
 
 (3,614)
Weighted average diluted shares outstanding
 
 32,299
 
 36,142
 
 (3,843)

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37
The following table presents our consolidated statements of income reflected as a percentage of total revenue:
For the Years Ended December 31, 
 
2024
2023
 
NET REVENUE
    
      
  
Devices
 
 31 %  
 32 %
Supplies
 
 69 %  
 68 %
Total net revenue
 
 100 %  
 100 %
COSTS OF REVENUE AND OPERATING EXPENSES
 
   
  
Costs of revenue – devices and supplies
 
 20 %  
 21 %
Sales and marketing
 
 45 %  
 47 %
General and administrative
 
 31 %  
 26 %
Total costs of revenue and operating expenses
 
 97 %  
 94 %
Income from operations
 
 3 %  
 6 %
Other income (expense)
 
   
  
Gain on disposal of assets
 — %  
 — %
Change in fair value of contingent consideration
 
 — %  
 2 %
Interest expense
 
 (1)%  
 (1)%
Other income (expense), net
 
 (1)%  
 1 %
Income from operations before income taxes
 
 2 %  
 7 %
Income tax expense
 
 0 %  
 2 %
Net income
 
 2 %  
 5 %
Net income per share:
 
   
  
Basic
 
 0.09  
 0.27
Diluted
 
 0.09  
 0.27
Weighted average basic shares outstanding
 
 31,941  
 35,555
Weighted average diluted shares outstanding
 
 32,299  
 36,142
Net Revenue
Net revenues are comprised of device and supply sales, constrained by estimated third-party payer reimbursement deductions. The
reserve for billing allowance adjustments and allowance for uncollectible accounts are adjusted on an ongoing basis in conjunction with
the processing of third-party payer insurance claims and other customer collection history. Inherent in these estimates is the risk that they
will have to be revised as additional information becomes available and constraints are released. If initial estimates are updated these
changes are accounted for as increases or decreases in the transaction price. Assuming the underlying performance obligation to which
the change in price relates has already been satisfied, those changes in transaction price are immediately recognized as increases or
decreases in revenue (not credit losses (bad debt expense)) in the period in which the estimate changes.
Product device revenue is primarily comprised of sales and rentals of our electrotherapy products and also includes private labeled
rehabilitation products such as our cervical traction, lumbar support, bracing, and hot/cold therapy products.
Supplies revenue is primarily comprised of sales of our consumable supplies to patients using our electrotherapy products, consisting
primarily of surface electrodes and batteries. Revenue related to both devices and supplies is reported net, after adjustments for estimated
third-party payer reimbursement deductions and estimated allowance for uncollectible accounts. The deductions are known throughout
the healthcare industry as billing adjustments whereby the healthcare insurers unilaterally reduce the amount they reimburse for our
products as compared to the sales prices charged by us. The deductions from gross revenue also take into account the estimated denials,
net of resubmitted billings of claims for products placed with patients which may affect collectability. See our

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38
Significant Accounting Policies in Note 2 to the Consolidated Financial Statements for a more complete explanation of our revenue
recognition policies.
We occasionally receive, and expect to continue to receive, refund requests from insurance providers relating to specific patients and
dates of service. Billing and reimbursement disputes are very common in our industry. These requests are sometimes related to a few
patients and other times include a significant number of refund claims in a single request. We review and evaluate these requests and
determine if any refund is appropriate. We also review claims that have been resubmitted or where we are pursuing additional
reimbursement from that insurance provider. We frequently have significant offsets against such refund requests which may result in
amounts that are due to us in excess of the amounts of refunds requested by the insurance providers. Therefore, at the time of receipt of
such refund requests we are generally unable to determine if a refund request is valid.
Net revenue increased $8.0 million or 4% to $192.4 million for the year ended December 31, 2024, from $184.3 million for the year
ended December 31, 2023. The growth in net revenue is primarily related to the 16% growth in device orders which led to an increased
customer base and drove higher sales of consumable supplies. During the fourth quarter of 2023, the Company placed an allowance of
$6.2 million on receivables which were determined to be uncollectible. The allowance was recorded to net revenue during the period.
Device Revenue
Device revenue is related to the purchase or lease of our electrotherapy products as well as complementary products including cervical
traction, lumbar support, knee braces and hot/cold therapy products. Device revenue increased $0.8 million or 1% to $59.6 million for
the year ended December 31, 2024, from $58.8 million for the year ended December 31, 2023. The increase in device revenue is related
to the growth in our device and complementary product orders of 16% from 2023 to 2024 as a result of increased sales representative
productivity.
Supplies Revenue
Supplies revenue is related to the sale of supplies, typically electrodes and batteries, for our products. Supplies revenue increased $7.2
million or 6% to $132.7 million for the year ended December 31, 2024, from $125.5 million for the year ended December 31, 2023. The
increase in supplies revenue is primarily related to growth in our customer base from higher device sales in 2024 and prior years.
Operating Expenses
Costs of Revenue –Devices and Supplies
Costs of revenue – devices and supplies consist primarily of device and supplies costs, operations labor and overhead, shipping and
depreciation. Costs of revenue increased $1.1 million or 3% to $39.4 million for the year ended December 31, 2024, from $38.4 million
for the year ended December 31, 2023. The increase in costs of revenue is directly related to the increase in device and supplies orders,
partially offset by the items noted below.
As a percentage of revenue, cost of revenue – devices and supplies decreased to 20% from 21% for the years ended December 31, 2024
and 2023, respectively. The decrease in cost of revenue – device and supply as a percentage of revenue during the year ended December
31, 2024 is due to the increased volumes related to increased revenue and expanding supplier portfolio mix. Both of which have allowed
us to negotiate lower costs with our suppliers.
Sales and Marketing Expense
Sales and marketing expense primarily consists of employee-related costs, including sales commissions and other direct costs associated
with these personnel including travel and marketing expenses. Sales and marketing expense for the year ended December 31, 2024
decreased $0.1 million to $86.6 million from $86.7 million for the year ended December 31, 2023. The decrease in sales and marketing
expense is primarily due to decreased headcount in the sales force, partially offset by higher commissions from increased orders. As a
percentage of revenue, sales and marketing expense decreased to 45% from 47% during the year ended December 31, 2024 compared the
same period in 2023. The decrease as a percentage of revenue is primarily due to the aforementioned decrease in expenses, and increased
revenue during the year ended December 31, 2024.

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39
General and Administrative Expense
General and administrative expense primarily consists of employee related costs, facilities expense, professional fees and depreciation
and amortization. General and administrative expense for the year ended December 31, 2024 increased 24% to $60.4 million from $48.5
million for the year ended December 31, 2023. The increase in general and administrative expense is primarily due to the following:
●
an increase of $3.5 million in compensation and benefits expense driven by headcount growth in our ZMI reimbursement team,
and an increase in subcontractor expense of $0.9 million, both of which are related to our 16% order growth during the period;
●
an increase of $1.1 million in compensation and benefits expense driven by headcount growth and inflationary salary increases
at ZMS, and an increase of $1.1 million for subcontractor expense related to new product development at ZMS; and
●
an increase of $5.2 million in other expenses, including professional fees of $3.8 million, and other general and administrative
costs of $1.4 million associated primarily with growth of the Company and order volume.
As a percentage of revenue, general and administrative expense increased to 31% for the year ended December 31, 2024 from 26% for
the year ended December 31, 2023. The increase as a percentage of revenue is primarily due to the aforementioned increase in expenses,
partially offset by increased revenue during the year ended December 31, 2024.
Other Income (Expense)
Other expense was $2.4 million for the year ended December 31, 2024, primarily related to interest expense of $2.4 million on our
Senior Convertible Notes, net of interest earned. Other income was $1.8 million for the year ended December 31, 2023, of which $2.9
million related to a gain on the change in fair value of contingent consideration offset by $1.1 million in interest expense related to our
Senior Convertible Notes, net of interest earned.
Income Tax Expense
We recorded income tax expense of $0.6 million and $2.8 million for the years ended December 31, 2024 and 2023, respectively. The
effective income tax rate was 17% and 23% for the years ended December 31, 2024 and 2023, respectively.
FINANCIAL CONDITION
As of December 31, 2024, we had working capital of $58.3 million, compared to $69.3 million as of December 31, 2023. The principal
source of working capital was $39.6 million in cash and cash equivalents and $18.0 million in accounts receivable. The decrease in
working capital is driven from the purchase of $15.6 million in treasury stock in 2024 partially offset by net income of $3.0 million. We
generated $12.7 million and $17.8 million in operating cash flows during the years ended December 31, 2024 and 2023, respectively.
LIQUIDITY AND CAPITAL RESOURCES
We have historically financed operations through cash flows from operations, debt and equity transactions. As of December 31, 2024,
our principal source of liquidity was $39.6 million in cash and cash equivalents, $18.0 million in accounts receivables, and our working
capital balance was $58.3 million.
In May 2023, the Company issued $52.5 million aggregate principal amount of 5.00% Convertible Senior Notes due May 15, 2026 (the
“2023 Convertible Senior Notes”). In May 2023, the Company issued an additional $7.5 million aggregate principal amount of the 2023
Convertible Senior Notes upon the exercise by the initial purchasers of their over-allotment option. Interest on the 2023 Convertible
Senior Notes is payable semiannually in arrears, beginning November 15, 2023. The 2023 Convertible Senior Notes will mature on May
15, 2026, unless earlier converted or repurchased, and are redeemable at the option of the Company on or after May 20, 2025 (See Note
8).

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40
Our anticipated uses of cash in the future will be to fund the expansion of our business.
Net cash provided by operating activities for the years ended December 31, 2024 and 2023 was $12.7 million and $17.8 million,
respectively. The decrease in cash provided by operating activities for the year ended December 31, 2024 was primarily due to lower
profitability and a decrease in accounts payable, slightly offset by an increase in inventory balances. Cash provided by operating
activities for the year ended December 31, 2023 was primarily due to cash collections related to net income of $9.7 million, offset by
increased inventory balances.
Net cash used in investing activities for the years ended December 31, 2024 and 2023 was $0.6 million and $1.0 million, respectively.
Cash used in investing activities for the year ended December 31, 2024 was primarily related to the purchase of computer, office and
warehouse equipment, and ongoing capital projects for ZMS operations. Cash used in investing activities for the year ended
December 31, 2023 was primarily related to the purchase of computer, office and warehouse equipment.
Net cash used in financing activities for the year ended December 31, 2024 was $17.1 million. The cash used in financing activities of
$17.1 million for the year ended December 31, 2024 was primarily due to purchases of $15.6 million in treasury stock.
Net cash provided by financing activities for the year ended December 31, 2023 was $7.6 million. The cash provided by financing
activities for the year ended December 31, 2023 was primarily due to net proceeds from the issuance of Senior Convertible Notes of
$57.0 million, offset by purchases of $37.9 million in treasury stock and principal payments made on long term debt totaling $10.7
million.
We believe our cash, together with anticipated cash flow from operations will be sufficient to meet our working capital, and capital
expenditure requirements for at least the next twelve months. In making this assessment, we considered the following:
●
our cash balance at December 31, 2024 of $39.6 million;
●
our working capital balance of $58.3 million;
●
our accounts receivable balance of $18.0 million;
●
our profitability over the last 9 years; and
●
our planned capital expenditures of approximately $1.5 million during 2025.
Contractual Obligations
The following table summarizes the future cash disbursements to which we are contractually committed as of December 31, 2024 (in
thousands).
    
Total
    
2025
    
2026
    
2027
    
2028
    
2029
     Thereafter
Operating leases
 
 15,469  
 4,632  
 4,428  
 4,237  
 2,172  
 —  
 —
Finance leases
 
 1,204  
 336  
 312  
 264  
 171  
 121  
 —
$ 16,673
$  4,968
$  4,740
$  4,501
$  2,343
$
 121
$
 —
We lease office and warehouse facilities under non-cancelable operating leases. The current office facility leases include our current and
former corporate headquarters and a production warehouse, all located in Englewood, Colorado and a lease in Boulder, Colorado for the
operations of ZMS Boulder. Rent expense was $3.5 million and $4.0 million for the years ended December 31, 2024 and 2023,
respectively. A portion of the rent expense was non-cash in nature as we received rent abatements during both years ending December
31, 2024 and 2023. For GAAP purposes, the rent is expensed over the lease term on a straight-line basis.
The Company also leases office equipment for its corporate and warehouse facilities under non-cancelable finance lease agreements.

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41
CRITICAL ACCOUNTING ESTIMATES
In preparing our consolidated financial statements in accordance with GAAP, we are required to make estimates and assumptions that
affect the amounts of assets, liabilities, revenue, costs and expenses, and disclosure of contingent liabilities that are reported in the
consolidated financial statements and accompanying disclosures. We believe that the estimates, assumptions and judgments involved in
the accounting policies described below have the greatest potential impact on our financial statements because they involve the most
difficult, subjective or complex judgments about the effect of matters that are inherently uncertain. Therefore, we consider these to be our
critical accounting estimates. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ
from these estimates and assumptions. See Note 2 to the Consolidated Financial Statements of this Annual Report on Form 10-K for
information about these critical accounting policies, as well as a description our other accounting policies.
Revenue Recognition and Accounts Receivable
Revenue is generated primarily from sales and leases of our electrotherapy devices and related supplies and complementary products.
Sales are primarily made with, and shipped, direct to the patient with a small amount of revenue generated from sales to distributors.
In the healthcare industry there is often a third party involved that will pay on the patients’ behalf for purchased or leased devices and
supplies. The terms of the separate arrangement impact certain aspects of the contract with patients covered by third party payers, such as
contract type and transaction price, but for purposes of revenue recognition the contract with the customer refers to the arrangement
between the Company and the patient.
The Company does not have any material deferred revenue in the normal course of business as each performance obligation is met upon
delivery of goods to the patient.
Device Sales
Device sales can be in the form of a purchase or a lease.
Revenue for purchased devices is recognized in accordance with Accounting Standards Codification (“ASC”) 606 – “Revenue from
Contracts with Customers” (ASC 606) when the device is delivered to the patient and all performance obligations are fulfilled.
Revenue related to devices out on lease is recognized in accordance with ASC 842, Leases. Using the guidance in ASC 842, we
concluded our transactions should be accounted for as operating leases based on the following criteria below:
●
The lease does not transfer ownership of the underlying asset to the lessee by the end of the lease term.
●
The lease does not grant the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.
●
The lease term is month to month, which does not meet the major part of the remaining economic life of the underlying asset.
However, if the commencement date falls at or near the end of the economic life of the underlying asset, this criterion shall not
be used for purposes of classifying the lease.
●
There is no residual value guaranteed and the present value of the sum of the lease payments does not equal or exceed
substantially all of the fair value of the underlying asset.
●
The underlying asset is expected to have alternative uses to the lessor at the end of the lease term.
Lease commencement occurs upon delivery of the device to the patient. The Company retains title to the leased device and those devices
are classified as property and equipment on the balance sheet. Since our leases are month-to-month and can be returned by the patient at
any time, revenue is recognized monthly for the duration of the period in which the patient retains the device.

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Supplies
Supplies revenue is recognized once supplies are delivered to the patient. Supplies needed for the device can be set up as a recurring
shipment or ordered through the customer support team or online store as needed.
Variable Consideration
A significant portion of the Company’s revenues are derived, and the related receivables are due, from patients with commercial or 
government health insurance plans. Revenues are estimated using the portfolio approach by third party payer type based upon historical 
rates of collection, the aging of receivables, trends in the historical reimbursement rates by third-party payer types and current 
relationships and experience with the third-party payers, which includes estimated constraints for third-party payer refund requests, 
deductions, allowance for uncollectible accounts, and billing allowance adjustments. Inherent in these estimates is the risk that they will 
have to be revised as additional information becomes available and constraints are released. If initial estimates are updated these changes 
are accounted for as increases or decreases in the transaction price. Assuming the underlying performance obligation to which the change 
in price relates has already been satisfied, those changes in transaction price are immediately recognized as increases or decreases in 
revenue (not credit losses (bad debt expense)) in the period in which the estimate changes.  Additionally, the complexity of third-party 
billing arrangements and the uncertainty of reimbursement amounts for certain products from third-party payers or unanticipated 
requirements to refund payments previously received may result in adjustments to amounts originally recorded. Due to continuing 
changes in the healthcare industry and third-party payer reimbursement, it is possible our forecasting model to estimate collections could 
change, which could have an impact on our results of operations and cash flows. Any differences between estimated settlements and final 
determinations are reflected as an increase or a reduction in revenue in the period when such final determinations are known. Historically 
these differences have been immaterial, and the Company has not had to go back and reassess the adjustments of future periods for past 
billing adjustments.
The Company monitors the variability and uncertain timing over third-party payer types in our portfolios. If there is a change in our
third-party payer mix over time, it could affect our net revenue and related receivables. We believe we have a sufficient history of
collection experience to estimate the net collectible amounts by third-party payer type. However, changes to constraints related to billing
adjustments and refund requests have historically fluctuated and may continue to fluctuate significantly from quarter to quarter and year
to year.
During the quarter ended December 31, 2023, the Company had a change in the estimate of uncollectable receivables. The result of this
change in allowance was a reduction of $6.2 million to net revenue ($4.6 million net of tax) or $0.14 per basic and diluted share for the
three months ended December 31, 2023, and $0.13 per basic and diluted share for the year ended December 31, 2023.
Stock-based Compensation
The Company accounts for stock-based compensation through recognition of the cost of employee services received in exchange for an
award of equity instruments, which is measured based on the grant date fair value of the award that is ultimately expected to vest during
the period. The stock-based compensation expenses are recognized over the period during which an employee is required to provide
service in exchange for the award (the requisite service period, which in the Company’s case is the same as the vesting period). For
awards subject to the achievement of performance metrics, stock-based compensation expense is recognized when it becomes probable
that the performance conditions will be achieved.
Income Taxes
Significant judgment is required in determining our provision for income taxes. We assess the likelihood that our deferred tax asset will
be recovered from future taxable income, and to the extent we believe that recovery is not likely, we establish a valuation allowance. We
consider future taxable income projections, historical results and ongoing tax planning strategies in assessing the recoverability of
deferred tax assets. However, adjustments could be required in the future if we determine that the amount to be realized is less or greater
than the amount that we recorded. Such adjustments, if any, could have a material impact on our results of our operations.

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43
We use a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions
taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be
sustained upon examination by taxing authorities.
The Inflation Reduction Act (“IRA”) was enacted into law on August 16, 2022. Included in the IRA was a provision to implement a 15%
corporate alternative minimum tax on corporations whose average annual adjusted financial statement income during the most recently
completed three-year period exceeds $1 billion. This provision is effective for tax years beginning after December 31, 2022. The IRA did
not have a material impact on our reported results, cash flows or financial position during the year ended December 31, 2024.
Acquisition Method of Accounting for Business Combinations
We allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed based on their
estimated fair values. The excess of the purchase price over these fair values is recorded as goodwill. We engage independent third-party
valuation specialists to assist us in determining the fair values of certain assets acquired and liabilities assumed. Such valuation require
management to make significant estimates and assumptions, especially with respect to intangible assets. Different valuations approaches
are used to value different types of intangible assets. Under the income approach, the relief from royalty method is a valuation technique
which is used to estimate the value of certain intangible assets. This method utilizes projected financial information and hypothetical
royalty rates to estimate the cost savings associated with asset ownership. The estimated cost savings are discounted for risk and the time
value of money to estimate an intangible asset’s fair value. Management’s estimates of fair value are based upon assumptions believed to
be reasonable, but which are inherently uncertain and unpredictable. If we do not achieve the results reflected in the assumptions and
estimates, our goodwill impairment evaluations could be adversely affected, and we may impair a portion or all of our intangible assets,
which would adversely affect our operating results in the period of impairment.
Impairment of Long-lived Assets, Including Goodwill
We assess impairment of goodwill annually and other long-lived assets when events or changes in circumstances indicates that their
carrying value amount may not be recoverable. Long-lived assets consist of property and equipment, net and goodwill and intangible
assets. Circumstances which could trigger a review include, but are not limited to: (i) significant decreases in the market price of the
asset; (ii) significant adverse changes in the business climate or legal or regulatory factors; (iii) or expectations that the asset will more
likely than not be sold or disposed of significantly before the end of its estimated useful life. If the estimated future undiscounted cash
flows, excluding interest charges, from the use of an asset are less than the carrying value, a write-down would be recorded to reduce the
related asset to its estimated fair value.
Contingent Considerations
We classified contingent consideration liabilities related to business acquisitions within Level 3 as factors used to develop the estimated
fair value were unobservable inputs that are not supported by market activity. We estimated the fair value of contingent consideration
liabilities using a Monte Carlo simulation which is based on equity volatility, the risk-free rate, the normal variate, projected milestone
dates, discount rates, and probabilities of payment.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “Smaller Reporting Company”, this Item and the related disclosure is not required.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements, the notes thereto, and the report thereon of Marcum LLP, are filed as part of this report starting on
page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE.
None.

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44
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures
Our management, including our Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of our disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934), as amended, or the
Exchange Act, as of December 31, 2024. Based on management’s review, with participation of our Chief Executive Officer and Chief
Financial Officer, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the quarter ended December 31,
2024, our disclosure controls and procedures were not effective due to the material weakness in internal control over financial reporting
as described below. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure
that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to
be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the
company’s management, including its principal executive and principal financial officers, or person performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
Management’s report on internal control over financial reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(e) of the Exchange Act). Management, with the participation of our Chief Executive Officer and Chief Financial
Officer, has assessed the effectiveness of internal control over financial reporting as of December 31, 2024, based upon the framework in
Internal Control- Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, or
COSO. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there
is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or
detected on a timely basis. Based upon this evaluation and the material weakness identified below, our management concluded that our
internal control over financial reporting was not effective as of December 31, 2024.
Material Weakness in Internal Control
We identified a material weakness related to Information Technology General Controls (“ITGCs”) that were not designed and operating
effectively to ensure IT program and data changes affecting the Company’s financial IT applications and underlying accounting records,
are identified, tested, authorized and implemented appropriately to validate that data produced by its relevant IT system(s) were complete
and accurate. Business process controls (automated and manual) that are dependent on the affected ITGCs were also deemed ineffective
because they could have been adversely impacted. We also identified a material weakness in the design and operating effectiveness
around the valuation of certain accounts receivables.
The material weaknesses identified above did not result in any material misstatements in our financial statements or disclosures, and
there were no changes to previously released financial results. Our management concluded that the consolidated financial statements
included in this Annual Report on Form 10-K, present fairly, in all material respects, our financial position, results of operations, and
cash flows for the periods presented in accordance with accounting principles generally accepted in the United States of America, or U.S.
GAAP.
The effectiveness of our internal control over financial reporting as of December 31, 2024, has been audited by Marcum LLP as stated in
their report, which is included in Item 8 of this Annual Report on Form 10-K.

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45
Remediation Plan
Our management is committed to maintaining a strong internal control environment. In response to the identified material weakness
above, management will take comprehensive actions to remediate the material weakness in internal control over financial reporting. We
are in the process of developing and implementing remediation plans to address the material weakness described above.
Changes in Internal Control over Financial Reporting
Except for the items referred to above, there were no changes in our internal control over financial reporting identified in connection with
the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2024
that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
Inherent Limitation on the Effectiveness of Internal Control
Our management, including our Chief Executive Officer and Chief Financial Officer, do not expect that our disclosure controls and
procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well
designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system will be met. Further,
the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance
that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be
circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The
design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become
inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent
limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Remediation of Previously Reported Material Weaknesses in Internal Control over Financial Reporting
As previously disclosed in “Part II. Item 9A. Controls and Procedures” in our Annual Report on Form 10-K for the year ended December
31, 2023, we did not design and maintain effective controls over the valuation of certain accounts receivable.
In 2024, we completed the redesign of the failed controls over the valuation of certain accounts receivable and performed the necessary
design walkthroughs and testing. We concluded the redesigned control was designed and operated as intended for the year ended
December 31, 2024.
ITEM 9B. OTHER INFORMATION
Rule 10b5-1 Trading Arrangement
During the three months ended December 31, 2024, Thomas Sandgaard, the Chief Executive Officer and Director of the Company,
terminated his 10b5-1 sales plan on November 15, 2024.
No other director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading
arrangement,” as each term is defined in Item 408(a) of Regulation S-K during the three months ended December 31, 2024.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.

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46
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
Except as set forth below, the information required by this item will be included in the Proxy Statement, which will be filed with the
Securities and Exchange Commission not later than 120 days after the end of our fiscal year ended December 31, 2024 in connection
with the solicitation of proxies for the Company’s 2025 annual meeting of stockholders and is incorporated herein by reference.
Insider Trading Policy
 
The Company has adopted an insider trading policy governing the purchase, sale, and/or other disposition of its securities by its directors,
officers, employees and independent contractors that the Company believes is reasonably designed to promote compliance with insider
trading laws, rules and regulations, and the exchange listing standards applicable to the Company.
 
Directors, executive officers, employees and other related persons may not buy, sell or engage in other transactions in the Company’s
shares while aware of material non-public information; buy or sell securities of other companies while aware of material non-public
information about those companies that they became aware of as a result of business dealings between the Company and those
companies; or disclose material non-public information to any unauthorized persons outside of the Company. The policy also restricts
trading and other transactions for a limited group of Company employees (including executives and directors) to defined window periods
that follow the Company's quarterly earnings releases and restricts trading and other transactions following announcement of a share
repurchase program. A copy of such policy is filed hereto as Exhibit 19.1.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item will be included in the Proxy Statement, which will be filed with the Securities and Exchange
Commission not later than 120 days after the end of our fiscal year ended December 31, 2024 and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.
EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2024 regarding shares of common stock available for issuance under our
equity incentive plans (in thousands except exercise price):
Number of
    
Number of Securities
Securities to be
Remaining   Available
Issued Upon
Weighted
for Future Issuance
Exercise of
Average Exercise
Under Equity
Outstanding
Price of
Compensation Plans
Options,
Outstanding
(excluding securities
Warrants
Options, Warrants
reflected in the first
    
and Rights
    
and Rights
    
column)
Plan Category
 
   
   
  
2005 Stock Option Plan (1) (2)
 
 1
$
 0.39  
 —
2017 Stock Option Plan (3)
 
 334
 
 1.78  
 3,140
Total
 
 335
$
 1.78  
 3,140
(1) All of these securities are available for issuance under the Zynex, Inc. 2005 Stock Option Plan, approved by the Board of Directors
on January 3, 2005 and by our stockholders on December 30, 2005.
(2) As of December 31, 2014, the 2005 Stock Option Plan expired. Expiration of the plan did not affect the rights and obligations of the
participants and the company arising under options previously granted.
(3) The 2017 Stock Option Plan was approved by stockholders on June 1, 2017.
The additional information required by this item will be included in the Proxy Statement, which will be filed with the Securities and
Exchange Commission not later than 120 days after the end of our fiscal year ended December 31, 2024 and is incorporated herein by
reference.

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47
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item will be included in the Proxy Statement, which will be filed with the Securities and Exchange
Commission not later than 120 days after the end of our fiscal year ended December 31, 2024 and is incorporated herein by reference.
The Board of Directors has determined that Messrs. Cress, Disbrow, and Michaels who together comprise the Audit Committee, are all
“independent directors” within the meaning of Rule 5605 of the NASDAQ Listing Rules.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item will be included in the Proxy Statement, which will be filed with the Securities and Exchange
Commission not later than 120 days after the end of our fiscal year ended December 31, 2024 and is incorporated herein by reference.

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48
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
F-1
Report of Independent Registered Public Accounting Firm (Marcum LLP, New York, NY PCAOB firm ID 688)
F-3
Consolidated Balance Sheets as of December 31, 2024 and 2023
F-5
Consolidated Statements of Income for the years ended December 31, 2024 and 2023
F-6
Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023
F-7
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024 and 2023
F-8
Notes to Consolidated Financial Statements
F-9
Exhibits:
Exhibit

Number
    
Description
2.1
Asset Purchase Agreement, dated March 9, 2012, among Zynex NeuroDiagnostics, Inc., NeuroDyne Medical Corp. and
the shareholders listed on Schedule A thereto (incorporated by reference to Exhibit 10.1 of the Company’s Current
Report on Form 8K filed on March 13, 2012)
 
 
3.1
Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 10.1 of the Company’s Current
Report on Form 8K filed on October 7, 2008)
 
 
3.2
Amended and Restated Bylaws (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8K
filed on October 7, 2008)
 
 
4.1
Zynex, Inc 2017 Stock Incentive Plan (incorporated by reference to Exhibit 4.1 to the Company’s Report on form S8
filed on September 6, 2017)
 
 
4.2
Description of registrant’s securities registered pursuant to Section 12 of the Securities Exchange Act of 1934
(incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K filed on March 22, 2022)
4.3
Indenture dated as of May 9, 2023, between Zynex, Inc. And U.S. Bank Trust Company, National Association, as trustee,
(incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on May 9, 2023)
4.4
Form of certificate representing the 5.00% Convertible Senior Notes due 2023 (included as Exhibit A to Exhibit 4.3)
 
 
10.1†
2005 Stock Option Plan (incorporated by reference to Exhibit 10.5 of the Company’s Annual Report on Form 10KSB for
the year ended December 31, 2004)
 
 
10.2†
Form of Indemnification Agreement for directors and executive officers (incorporated by reference to Exhibit 10.3 of the
Company’s Current Report on Form 8K filed on October 7, 2008)
 
 
10.3†
Employment agreement for Daniel J. Moorhead dated June 5, 2017 (incorporated by reference of Exhibit 10.1 to the
Company’s Report on Form 8K filed on June 8, 2017)
 
 
10.4*
Lease Agreement, effective February 16, 2023, between Two Maroon Circle Investors, LLC and Zynex, Inc.
 
 
10.5
Zynex, Inc. Non-Employee Director Compensation Plan (incorporated by reference to Exhibit 10.1 to the Company’s
Report on Form 8K filed on January 11, 2018)
 
 

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49
Exhibit

Number
    
Description
10.6
Equity Distribution Agreement, dated October 29, 2019 between Zynex, Inc. and Piper Jaffray & Co. (incorporated by
reference to Exhibit 1.1 of the Company’s Current Report on Form 8K filed on October 29, 2019)
10.7
Underwriting Agreement dated July 14, 2020, among certain selling stockholders, Piper Sandler & Co., and Zynex, Inc.
(incorporated by reference to Exhibit 1.1 of the Company’s Report on Form 8-K filed on July 17, 2020)
10.8
Lease Agreement, effective September 30, 2020, between GIG CW Compark, LLC and Zynex, Inc. (incorporated by
reference to Exhibit 10.1 of the Company’s Report on Form 8-K filed on October 6, 2020).
10.9
Sublease Agreement between Zynex, Inc. and Cognizant Trizetto Software Group, Inc. dated April 8, 2021 (incorporated
by reference to Exhibit 10.1 of the Company’s Report on Form 8-K filed on April 9, 2021)
10.10
Stock Purchase Agreement by and among Kestrel Labs, Inc., Zynex Monitoring Solutions Inc., Zynex, Inc. and Selling
Shareholders named herein dated as of December 22, 2021 (incorporated by reference to Exhibit 10.1 of the Company’s
Report on Form 8-K filed on December 23, 2021)
10.11
The Loan Agreement and accompanying documents dated December 22, 2021 among Bank of America N.A., Zynex
Medical, Inc., and Zynex Monitoring Solutions (incorporated by reference to Exhibit 10.1 of the Company’s Report on
Form 8-K filed on December 30, 2021)
10.12
Amendment to Stock Purchase Agreement by and among Kestrel Labs, Inc., Zynex Monitoring Solutions, Inc. And
Selling Shareholders named therein dated as of July 27, 2023 (incorporated by reference to Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed on July 31, 2023)
19.1*
Insider Trading Policy, as initially adopted on February 26, 2004 and as amended, from time to time.

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50
 Exhibit

Number
Description
21*
Subsidiaries of the Company
 
 
23.1*
Consent of Marcum LLP, Independent Registered Public Accounting Firm (Filed herewith)
 
 
31.1*
Certification of Chief Executive Officer Pursuant to Rule 13a14(a)/15d14(a) as Adopted Pursuant to Section 302 of
Sarbanes-Oxley Act of 2002
 
 
31.2*
Certification of Chief Financial Officer Pursuant to Rule 13a14(a)/15d14(a) as Adopted Pursuant to Section 302 of
Sarbanes-Oxley Act of 2002
 
 
32.1*
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 
 
32.2*
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
97
Zynex, Inc. Clawback Policy (incorporated by reference to Exhibit 97 of the Company’s Annual Report on Form 10-K
filed on March 12, 2024)
 
 
101.INS*
XBRL Instance Document
 
 
101.SCH*
XBRL Taxonomy Extension Schema Document
 
 
101.CAL*
XBRL Taxonomy Calculation Linkbase Document
 
 
101.LAB*
XBRL Taxonomy Label Linkbase Document
 
 
101.PRE*
XBRL Presentation Linkbase Document
 
 
101.DEF*
XBRL Taxonomy Extension Definition Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*
Filed herewith
†
Denotes management contract or compensatory plan or arrangement
ITEM 16. FORM 10-K SUMMARY
None.

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51
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
    
ZYNEX, INC.
 
Date: March 11, 2025
By : /s/ Thomas Sandgaard 
 
Thomas Sandgaard
 
Chairman, President, Chief Executive Officer and Principal
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
Date
     Name and Title
     Signature
March 11, 2025
Thomas Sandgaard,
/s/ Thomas Sandgaard
Chairman, President, Chief Executive Officer and Principal Executive Officer
 
March 11, 2025
Daniel Moorhead
/s/ Daniel Moorhead
 
Chief Financial Officer and Principal Financial Officer
 
 
 
 
March 11, 2025
Barry D. Michaels
/s/ Barry D. Michaels
 
Director
 
 
 
 
March 11, 2025
Michael Cress
/s/ Michael Cress
 
Director
 
 
 
 
March 11, 2025
Joshua R. Disbrow
/s/ Joshua R. Disbrow
 
Director
 

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F-1
Report of Independent Registered Public Accounting Firm On Internal Control Over Financial Reporting
To the Stockholders and Board of Directors of
Zynex, Inc.
Adverse Opinion on Internal Control over Financial Reporting
We have audited Zynex, Inc.’s (the "Company") internal control over financial reporting as of December 31, 2024, based on criteria
established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. In our opinion, because of the effect of the material weakness described in the following paragraph on the achievement of the
objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31,
2024, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission.
A material weakness is a control deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a
reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected
on a timely basis. The following material weakness has been identified and included in “Management's Annual Report on Internal Control
Over Financial Reporting”:
IT General Controls (“ITGC”), deficiencies were identified
It was determined that as of December 31, 2024, the Company's primary change management controls were not designed and
implemented effectively to ensure IT program and data changes affecting the Company’s financial IT applications and underlying
accounting records, are identified, tested, authorized and implemented appropriately to validate that data produced by its relevant IT
system(s) were complete and accurate . Other Information Technology General Controls, automated process-level controls, and manual
controls that are dependent upon the information derived from such financially relevant systems were also determined to be ineffective as
a result of such deficiency. Business process controls (automated and manual) that are dependent on the affected ITGCs were also deemed
ineffective because they could have been adversely impacted.
This  material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the fiscal December
31, 2024 consolidated financial statements, and this report does not affect our report dated March 11, 2025 on those financial statements.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”),
the consolidated balance sheet as of December 31, 2024 and  the related consolidated statements of income, stockholders’ equity, and
cash flows, and the related notes (collectively referred to as the “financial statements”) for the year ended December 31, 2024 of the
Company, and our report dated March, 11, 2025 expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the
effectiveness of internal control over financial reporting, included in the accompanying "Management Annual Report on Internal Control
Over Financial Reporting". Our responsibility is to express an opinion on the Company's internal control over financial reporting based on
our audit. We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit
of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk
that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed
risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that

Table of Contents
F-2
our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or
that degree of compliance with the policies or procedures may deteriorate.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2022.
New York, NY
March 11, 2025

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F-3
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors of
Zynex, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Zynex, Inc. (the “Company”) as of December 31, 2024 and 2023, the
related consolidated statements of income, stockholders’ equity and cash flows for each of the two years in the period ended December
31, 2024, and the related notes (collectively referred to as the “financial statements”).  In our opinion, based on our audits, the financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the
results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with
accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"),
the Company's internal control over financial reporting as of December 31, 2024, based on the criteria established in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in 2013 and our
report dated March 11, 2025, expressed an adverse opinion on the effectiveness of the Company’s internal control over financial
reporting because of the existence of material weaknesses.
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 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 audits to
obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. 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 provides 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.
Estimation of Transaction Price and Variable Consideration for Revenue Recognition including related Valuation of Accounts Receivable
Critical Audit Matter Description
The Company’s revenue is derived from sales and leases of electrotherapy devices and sales of related supplies and complementary
products. The Company recognizes revenue when control of the product has been transferred to the patient, in the amount that reflects

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F-4
the consideration the Company expects to receive. The Company estimates revenues using the portfolio approach based upon historical
rates of collection, aging of receivables, product mix, trends in historical reimbursement rates by third-party payer types, and current
relationships and experience with the third-party payers, which includes estimated variable consideration and relevant constraints for
third-party payer refund requests, deductions and adjustments.
We identified the Company's estimation of transaction price related to variable consideration for revenue recognition, including the
related valuation of accounts receivable, as a critical audit matter. Auditing the Company's determination of variable consideration and
the related constraint for revenue recognition including the recorded value for accounts receivable was challenging and complex due to
the high degree of subjectivity involved in evaluating management’s estimates. This required a high degree of auditor judgment and
increased extent of effort to audit and evaluate management’s key judgments.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to revenue recognition and accounts receivable include the following, among others:
●
We gained an understanding of the design of the controls over the Company's revenue recognition and valuation of accounts
receivable including those controls over the processes to develop key management estimates.
●
We performed testing throughout the year on a sample basis   to test the validity of sales transactions and cash receipts
application.
●
We evaluated the significant assumptions and the accuracy and completeness of the underlying data used in management’s
calculations, including evaluating management’s estimate of historical reimbursement experience as well as expected future
payment behavior through a combination of underlying data validation by inspection of source documents, independent
recalculation of management’s analysis, review of correspondence with third-party payers, inquiries with management and
evaluation of trends in collection rates and refund requests.
/s/ Marcum LLP
Marcum LLP
We have served as the Company’s auditor since 2022
New York, NY 

March 11, 2025

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F-5
ZYNEX, INC.
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
December 31, 
December 31, 
    
2024
    
2023
ASSETS
Current assets:
 
   
  
Cash and cash equivalents
$
39,631
$
44,579
Accounts receivable, net
 
18,022
 
26,838
Inventory, net
 
13,919
 
13,106
Prepaid expenses and other
 
3,607
 
3,332
Total current assets
 
75,179
 
87,855
Property and equipment, net
 
3,084
 
3,114
Operating lease asset
9,820
12,515
Finance lease asset
1,141
587
Deposits
 
408
 
409
Intangible assets, net of accumulated amortization
7,247
8,158
Goodwill
20,401
20,401
Deferred income taxes
 
4,799
 
3,865
Total assets
$
122,079
$
136,904
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
  
Current liabilities:
 
  
 
  
Accounts payable and accrued expenses
7,091
8,433
Operating lease liability
 
4,030
 
3,729
Finance lease liability
 
287
 
196
Income taxes payable
 
—
 
633
Accrued payroll and related taxes
 
5,456
 
5,541
Total current liabilities
 
16,864
 
18,532
Long-term liabilities:
 
  
 
  
Convertible senior notes, less issuance costs
58,567
57,605
Operating lease liability
 
10,151
 
14,181
Finance lease liability
789
457
Total liabilities
 
86,371
 
90,775
Commitments and contingencies (Note 14)
 
 
Stockholders’ equity:
 
  
 
  
Preferred stock, $0.001 par value; 10,000,000 shares authorized; no shares issued and outstanding as of December 31, 2024
and December 31, 2023
 
—
 
—
Common stock, $0.001 par value; 100,000,000 shares authorized; 42,233,415 issued and 31,878,512 outstanding as of
December 31, 2024, 41,980,166 issued and 32,933,776 outstanding as of December 31, 2023
 
32
 
33
Additional paid-in capital
 
93,088
 
90,878
Treasury stock of 9,856,758 and 8,545,044 shares at December 31, 2024 and December 31, 2023, respectively, at cost
 
(87,186)
(71,562)
Retained earnings
 
29,774
 
26,780
Total stockholders’ equity
 
35,708
 
46,129
Total liabilities and stockholders’ equity
$
122,079
$
136,904
See accompanying notes to consolidated financial statements.

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F-6
ZYNEX, INC.
CONSOLIDATED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
For the Years Ended December 31, 
    
2024
    
2023
NET REVENUE
   
  
Devices
$
59,612
$
58,822
Supplies
 
132,742
 
125,500
Total net revenue
 
192,354
 
184,322
COSTS OF REVENUE AND OPERATING EXPENSES
 
  
 
  
Costs of revenue - devices and supplies
 
39,429
 
38,366
Sales and marketing
 
86,581
 
86,659
General and administrative
60,354
48,517
Total costs of revenue and operating expenses
 
186,364
 
173,542
Income from operations
 
5,990
 
10,780
Other income (expense)
 
  
 
  
Gain on disposal of assets
19
39
Change in fair value of contingent consideration
—
2,854
Interest expense, net
 
(2,382)
 
(1,094)
Other income (expense), net
 
(2,363)
 
1,799
Income from operations before income taxes
 
3,627
 
12,579
Income tax expense
 
633
 
2,847
Net income
$
2,994
$
9,732
Net income per share:
 
 
Basic
$
0.09
$
0.27
Diluted
$
0.09
$
0.27
Weighted average basic shares outstanding
 
31,941
 
35,555
Weighted average diluted shares outstanding
 
32,299
 
36,142
See accompanying notes to consolidated financial statements.

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F-7
ZYNEX, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)
For the Years Ended December 31, 
    
2024
    
2023
CASH FLOWS FROM OPERATING ACTIVITIES:
 
   
Net income
$
2,994
$
9,732
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation
2,901
2,684
Amortization
 
1,881
 
1,536
Non-cash reserve charges
—
(91)
Stock-based compensation
 
2,989
 
2,296
Non-cash lease expense
 
(1,033)
 
904
Benefit for deferred income taxes
(934)
(2,303)
Change in fair value of contingent consideration
—
(2,854)
Gain on disposal of assets
(19)
(39)
Change in operating assets and liabilities:
 
 
Short-term investments
—
(190)
Accounts receivable
 
8,816
 
8,225
Prepaid and other assets
 
(67)
 
(1,150)
Accounts payable and other accrued expenses
 
(2,072)
 
269
Inventory
 
(2,736)
 
(1,445)
Deposits
 
1
 
182
Net cash provided by operating activities
 
12,721
 
17,756
CASH FLOWS FROM INVESTING ACTIVITIES:
 
  
 
  
Purchase of property and equipment
(578)
(1,206)
Purchase of short-term investments
 
—
 
(9,810)
Maturity of short-term investments
—
10,000
Proceeds on sale of fixed assets
—
50
Net cash used in investing activities
 
(578)
 
(966)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
  
 
  
Payments on finance lease obligations
 
(334)
 
(128)
Cash dividends paid
 
(9)
 
(3)
Purchase of treasury stock
 
(15,625)
 
(37,924)
Excise tax payments on net treasury stock purchases
(473)
—
Proceeds from issuance of convertible senior notes, net of issuance costs
—
57,018
Proceeds from the issuance of common stock on stock-based awards
22
86
Principal payments on long-term debt
—
(10,667)
Taxes withheld and paid on employees’ equity awards
(672)
(737)
Net cash provided by (used in) financing activities
 
(17,091)
 
7,645
Net increase (decrease) in cash and cash equivalents
 
(4,948)
 
24,435
Cash and cash equivalents at beginning of year
 
44,579
 
20,144
Cash and cash equivalents at end of year
$
39,631
$
44,579
Supplemental disclosure of cash flow information:
 
  
 
  
Cash paid on interest
$
(3,000)
$
(739)
Cash paid for rent
$
(4,511)
$
(3,055)
Cash paid for income taxes
$
(2,582)
$
(6,456)
Supplemental disclosure of non-cash investing and financing activities:
 
 
Right-of-use assets obtained in exchange for new operating lease liabilities
$
—
$
4,214
Right-of-use assets obtained in exchange for new finance lease liabilities
$
831
$
464
Lease incentive
$
—
$
1,400
Vesting of restricted stock awards
$
—
$
(3)
Inventory transferred to property and equipment under lease
$
1,922
$
1,823
Capital expenditures not yet paid
$
149
$
366
Treasury Stock not yet paid
$
—
$
481
Non-cash dividend adjustment
$
(3)
$
(1)
Escrow share lock-up adjustment
$
—
$
(7,146)
Excise tax accrual
$
5
$
347
See accompanying notes to consolidated financial statements.

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F-8
ZYNEX, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2024 AND 2023
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
Additional
Total
Common Stock
Paid-in
Treasury
Retained
Stockholders’
    
Shares
     Amount      Capital     
Stock
     Earnings     
Equity
Balance at December 31, 2022
36,825,081
39
82,431
(33,160)
17,048
66,358
Exercised and vested stock-based awards
459,246
(3)
89
—
—
 
86
Stock-based compensation expense
—
—
2,296
—
—
2,296
Shares of common stock withheld to pay taxes on employees’ equity awards
(58,522)
—
(737)
—
—
(737)
Purchase of treasury stock
(4,292,029)
(3)
—
(38,402)
—
(38,405)
Excise tax adjustment
—
—
(347)
—
—
(347)
Escrow share lock-up adjustment
—
—
7,146
—
—
 
7,146
Net income
—
—
—
—
9,732
 
9,732
Balance at December 31, 2023
32,933,776
$
33
$
90,878
$ (71,562)
$
26,780
$
46,129
Exercised and vested stock-based awards
347,139
—
25
—
—
25
Stock-based compensation expense
—
—
2,989
—
—
2,989
Shares of common stock withheld to pay taxes on employees' equity awards
(90,689)
—
(672)
—
—
(672)
Purchase of treasury stock
(1,311,714)
(1)
—
(15,624)
—
(15,625)
Excise tax on net treasury stock purchases
—
—
(132)
—
—
(132)
Net income
—  
—  
—  
—  
2,994  
2,994
Balance at December 31, 2024
31,878,512
$
32
$
93,088
$ (87,186)
$
29,774
$
35,708
See accompanying notes to consolidated financial statements.

Table of Contents
F-9
ZYNEX, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2024 AND 2023
(1)   ORGANIZATION, NATURE OF BUSINESS
Organization
Zynex, Inc. (a Nevada corporation) has its headquarters in Englewood, Colorado. The term “the Company” refers to Zynex, Inc. and its
active and inactive subsidiaries. The Company operates in one primary business segment, medical devices which include electrotherapy
and pain management products. As of December 31, 2024, the Company’s only active subsidiaries are Zynex Medical, Inc. (“ZMI,” a
wholly-owned Colorado corporation) through which the Company conducts most of its operations, and Zynex Monitoring Solutions, Inc.
(“ZMS,” a wholly-owned Colorado corporation). ZMS has developed a fluid monitoring system which received initial approval by the
U.S. Food and Drug Administration (“FDA”) during 2020 and is pursuing CE Marking in Europe. ZMS has achieved no revenues to
date. The Company’s inactive subsidiaries include Kestrel Labs, Inc. (“Kestrel,” a wholly-owned Colorado corporation), Zynex Europe,
Zynex NeuroDiagnostics, Inc. (“ZND,” a wholly-owned Colorado corporation) and Pharmazy, Inc. (“Pharmazy”, a wholly-owned
Colorado Corporation), which was incorporated in June 2015. The Company’s compounding pharmacy operated as a division of ZMI
dba as Pharmazy through January 2016.
In December 2021, the Company acquired 100% of Kestrel Labs, Inc. (“Kestrel”), a laser-based, noninvasive patient monitoring
technology company. Kestrel’s laser-based products include the NiCO™ CO-Oximeter, a multi-parameter pulse oximeter, and
HemeOx™, a total hemoglobin oximeter that enables continuous arterial blood monitoring. Both NiCO and HemeOx are yet to be
presented to the U.S. Food and Drug Administration (“FDA”) for market clearance. All activities related to Kestrel flow through our
ZMS subsidiary.
Nature of Business
The Company designs, manufactures, and markets medical devices that treat chronic and acute pain, as well as activate and exercise
muscles for rehabilitative purposes with electrical stimulation. The Company’s devices are intended for pain management to reduce
reliance on medications and provide rehabilitation and increased mobility through the utilization of non-invasive muscle stimulation,
electromyography technology, interferential current (“IFC”), neuromuscular electrical stimulation (“NMES”) and transcutaneous
electrical nerve stimulation (“TENS”). All the Company’s medical devices are designed to be patient friendly and designed for home use.
The devices are small, portable, battery operated, and include an electrical pulse generator which is connected to the body via electrodes.
All of the medical devices are marketed in the U.S. and are subject to FDA regulation and approval. All of the products require a
physician’s prescription before they can be dispensed in the U.S. The Company’s primary product is the NexWave device. The NexWave
is marketed to physicians and therapists by the Company’s field sales representatives. The NexWave requires consumable supplies, such
as electrodes and batteries, which are shipped to patients on a recurring monthly basis, as needed. The Company also distributes private
labeled complementary rehabilitation products such as back, knee and wrist braces, cervical and lumbar traction, and hot/cold therapy
(“Private Labeled Rehabilitation Products”).
During the years ended December 31, 2024 and 2023, the Company generated all of its revenue in North America from sales and
supplies of its devices to patients and healthcare providers.
(2)   SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Zynex, Inc. and its subsidiaries. All intercompany balances
and transactions have been eliminated in consolidation.

Table of Contents
F-10
Use of Estimates
Preparation of financial statements in conformity with generally accepted accounting principles in the United States of America
(“GAAP”), requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates. The most significant management estimates used in the
preparation of the accompanying consolidated financial statements are associated with the expected net collectable value of its accounts
receivable and related revenue, inventory reserves, the life of its leased unit devices, stock-based compensation, valuation of long-lived
assets acquired in business combinations, valuation of contingent consideration, and realizability of deferred tax assets.
Fair Value of Financial Instruments
The Company’s financial instruments include cash, accounts receivable, accounts payable, and accrued liabilities. The carrying amounts
of financial instruments, including cash, accounts receivable, accounts payable, and accrued liabilities approximate their fair value due to
their short maturities. The Company measures its long-term debt at fair value which approximates book value as the long-term debt bears
market rates of interest.
The Company classified contingent consideration liabilities related to business acquisitions within Level 3 as factors used to develop the
estimated fair value were unobservable inputs that are not supported by market activity. The Company estimated the fair value of
contingent consideration liabilities using a Monte Carlo simulation. Changes in the fair value of contingent liabilities in subsequent
periods were recorded as a gain or (loss) in the statements of income.
Cash, Cash Equivalents, and Short-Term Investments
Cash equivalents consist of highly liquid investments with maturities of three months or less at the date of purchase. The Company
classifies investments with maturities of greater than three months but less than one year as short-term investments. Short-term
investments are classified as held-to-maturity as the Company has the positive intent and ability to hold the investments until maturity.
Held-to-maturity investments are carried at amortized cost. Due to the short-term nature, the carrying amounts reported in the condensed
consolidated balance sheet approximate fair value.
Accounts Receivable, Net
The Company’s accounts receivable represent unconditional rights to consideration and are generated when a patient receives one of the
Company’s devices, related supplies, or private labeled rehabilitation products. In conjunction with fulfilling the Company’s obligation to
deliver a product, the Company invoices the patient’s third-party payer and/or the patient. Billing adjustments represent the difference
between the list price and the reimbursement rates set by third-party payers, including Medicare, commercial payers, and amounts billed
directly to the patient. Specific amounts, if uncollected over a period of time, may be written-off after several appeals, which in some
cases may take longer than twelve months. Primarily all of the Company’s receivables are due from patients with commercial or
government health plans and worker’s compensation claims with a smaller portion related to private pay individuals, attorney, and auto
claims. The Company maintains a constraint for third-party payer refund requests, deductions, and adjustments. See Note 15 –
Concentrations for discussion of significant customer accounts receivable balances.

Table of Contents
F-11
Inventory, Net
Inventories are stated at the lower of cost or net realizable value. Cost is computed using standard costs, which approximates actual costs
on an average cost basis. Following are the components of inventory as of December 31, 2024 and 2023:
    
2024
    
2023
Raw materials
$
5,525
$
4,601
Work-in-process
 
143
 
530
Finished goods
7,085
6,929
Inventory in transit
 
1,320
 
1,346
$
14,073
$
13,406
Less: reserve
(154)
(300)
$
13,919
$
13,106
The Company monitors inventory for turnover and obsolescence and records losses for excess and obsolete inventory, as appropriate.
The Company provides reserves for estimated excess and obsolete inventories equal to the difference between the costs of inventories on
hand and the estimated market value based upon assumptions about future demand. If future demand is less favorable than currently
projected by management, additional inventory write-downs may be required.
Long-lived Assets
The Company records intangible assets based on estimated fair value on the date of acquisition. Long-lived assets consist of net property
and equipment and intangible assets. The finite-lived intangible assets are patents and are amortized on a straight-line basis over the
estimated lives of the assets.
The Company assesses impairment of long-lived assets when events or changes in circumstances indicate that their carrying value
amount may not be recoverable. Circumstances which could trigger a review include but are not limited to: (i) significant decreases in
the market price of the asset; (ii) significant adverse changes in the business climate or legal or regulatory factors; or (iii) expectations
that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life.
If the estimated future undiscounted cash flows, excluding interest charges, from the use of an asset are less than the carrying value, a
write-down would be recorded to reduce the related asset to its estimated fair value.
Useful lives of finite-lived intangible assets by each asset category are summarized below:
Estimated
Useful Lives
    
in years
Patents
 
11
Property and equipment is recorded at cost. Repairs and maintenance expenditures are charged to expense as incurred. We compute
depreciation expense on a straight-line basis over the estimated useful lives of the assets as follows:
Classification
    
Estimated Useful Life
Office furniture and equipment
 
5 to 7 years
Assembly equipment
 
7 years
Vehicles
 
5 years
Leasehold improvements
 
Shorter of useful life or term of lease
Leased devices
 
9 months

Table of Contents
F-12
Leases
The Company determines if an arrangement is a lease at inception or modification of a contract.
The Company recognizes finance and operating lease right-of-use assets and liabilities at the lease commencement date based on the
estimated present value of the remaining lease payments over the lease term. For our finance leases, the Company uses the implicit rate
to determine the present value of future lease payments. For our operating leases that do not provide an implicit rate, the Company uses
incremental borrowing rates to determine the present value of future lease payments. The Company includes options to extend or
terminate a lease in the lease term when it is reasonably certain to exercise such options. The Company recognizes leases with an initial
term of 12 months or less as lease expense over the lease term, and those leases are not recorded on our Consolidated Balance Sheets.
For additional information on our leases where the Company is the lessee, see Note 12 - Leases.
A significant portion of our device revenue is derived from patients who obtain our devices under month-to-month lease arrangements
where the Company is the lessor. Revenue related to devices on lease is recognized in accordance with Accounting Standards
Codification (“ASC”) 842, “Leases” (“ASC 842”). Using the guidance in ASC 842, we concluded our transactions should be accounted
for as operating leases based on the following criteria:
●
The lease does not transfer ownership of the underlying asset to the lessee by the end of the lease term.
●
The lease does not grant the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.
●
The lease term is month to month, which does not meet the major part of the remaining economic life of the underlying asset.
However, if the commencement date falls at or near the end of the economic life of the underlying asset, this criterion shall not
be used for purposes of classifying the lease.
●
There is no residual value guaranteed and the present value of the sum of the lease payments does not equal or exceed
substantially all of the fair value of the underlying asset.
●
The underlying asset is expected to have alternative uses to the lessor at the end of the lease term.
Lease commencement occurs upon delivery of the device to the patient. The Company retains title to the leased device and those devices
are classified as property and equipment on the balance sheet. Since our leases are month-to-month and can be returned by the patient at
any time, revenue is recognized monthly for the duration of the period in which the patient retains the device.
Revenue Recognition
Revenue is derived from sales and leases of the Company’s electrotherapy devices and sales of related supplies and complementary
products. Device sales can be in the form of a purchase or a lease. Supplies needed for the device can be set up as a recurring shipment or
ordered through the customer support team or online store as needed. The Company recognizes revenue when control of the product has
been transferred to the patient, in the amount that reflects the consideration the Company expects to receive. In general, revenue from
sales of devices and supplies is recognized once the product is delivered to the patient, which is when control is deemed to have
transferred to the patient.
Sales of devices and supplies are primarily shipped directly to the patient, with a small amount of revenue generated from sales to
distributors. In the healthcare industry, there is often a third party involved that will pay on the patients’ behalf for purchased or leased
devices and supplies. The terms of the separate arrangement impact certain aspects of the contracts, with patients covered by third party
payers, such as contract type and transaction price. For purposes of revenue recognition, the contract with the customer refers to the
arrangement between the Company and the patient. The Company does not have any material deferred revenue in the normal course of
business as each performance obligation is met upon delivery of goods to the patient. There are no substantial costs incurred through
support or warranty obligations.

Table of Contents
F-13
The following table provides a breakdown of net revenue related to devices accounted for as purchases subject to Accounting Standards
Codification (“ASC”) 606 – “Revenue from Contracts with Customers” (“ASC 606”) and leases subject to ASC 842 (in thousands):
For the Years Ended December 31, 
    
2024
    
2023
Device revenue
   
  
Purchased
$
28,770
$
23,971
Leased
 
30,842
 
34,851
Total device revenue
$
59,612
$
58,822
Supplies revenue
132,742
125,500
Total revenue
$
192,354
$
184,322
Revenues are estimated using the portfolio approach by third-party payer type based upon historical rates of collection, aging of
receivables, trends in historical reimbursement rates by third-party payer types, and current relationships and experience with the third-
party payers, which includes estimated constraints for third-party payer refund requests, deductions, allowance for uncollectible accounts
and billing allowance adjustments. Inherent in these estimates is the risk they will have to be revised as additional information becomes
available and constraints are released. If initial estimates are updated these changes are accounted for as increases or decreases in the
transaction price. Assuming the underlying performance obligation to which the change in price relates has already been satisfied, those
changes in transaction price are immediately recognized as increases or decreases in revenue (not credit losses (bad debt expense)) in the
period in which the estimate changes. Additionally, the complexity of third-party payer billing arrangements, the uncertainty of
reimbursement amounts for certain products from third-party payers, or unanticipated requirements to refund payments previously
received may result in adjustments to amounts originally recorded. Settlements with third-party payers for retroactive revenue
adjustments due to audits, reviews, or investigations are considered variable consideration and are included in the determination of the
estimated transaction price using the expected amount method. These adjustments to transaction price are estimated based on the terms
of the payment agreement with the payer, correspondence from the payer, and historical settlement activity, including an assessment to
ensure that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty
associated with the retroactive adjustment is subsequently resolved. Due to continuing changes in the healthcare industry and third-party
payer reimbursement, it is possible the Company’s forecasting model to estimate collections could change, which could have an impact
on the Company’s results of operations and cash flows. Any differences between estimated and actual collectability are reflected in the
period in which payment is received.
The Company monitors the variability and uncertain timing over third-party payer types in the portfolio. If there is a change in the
Company’s third-party payer mix over time, it could affect net revenue and related receivables. The Company believes it has a sufficient
history of collection experience to estimate the net collectible amounts by third-party payer type. However, changes to constraints related
to billing adjustments and refund requests have historically fluctuated and may continue to fluctuate significantly from quarter-to-quarter
and year-to-year.
Goodwill
Goodwill is recorded as the difference between the fair value of the purchase consideration and the estimated fair value of the net
identifiable tangible and intangible assets acquired.
Goodwill is not subject to amortization but is subject to impairment testing. The Company tests goodwill at least annually for
impairment. The Company tests more frequently if indicators are present or changes in circumstances suggest that impairment may exist.
These indicators include, among others, declines in sales, earnings, cash flows, or the development of a material adverse change in the
business climate. The Company assesses goodwill for impairment at the reporting unit level. The estimates of fair value and the
determination of reporting units requires management judgment.

Table of Contents
F-14
Debt Issuance Costs
Debt issuance costs are costs incurred to obtain new debt financing. Debt issuance costs are presented in the accompanying consolidated
balance sheets as a reduction in the carrying value of the debt and are accreted to interest expense using the effective interest method.
Advertising and Marketing Costs
Advertising and marketing costs are expensed as incurred. Advertising and marketing costs are included in Sales and marketing expense
in the Company's Consolidated Statements of Income.
Segment Information
The Company currently operates business as one operating segment which includes two revenue types: Devices and Supplies. While the
Company discloses device and supply revenue separately, management does not consider these to be separate segments, as they are sold
through the same sales channel, and supplies are contingent upon device orders. Management’s analysis and determination for allocation
of resources is not analyzed or broken out by revenue streams, but as one reporting unit. The determination of a single business segment
is consistent with the consolidated financial information regularly provided to the Company’s chief operating decision maker (“CODM”).
The Company’s CODMs are the Chief Executive Officer, Chief Financial Officer and Chief Operating Officer who review and evaluate
consolidated net income for purposes of assessing performance, making operating decisions, allocating resources, and planning and
forecasting for future periods. For financial information related to the Company’s one segment, see the consolidated financial statements
and related notes herein.
Stock-based Compensation
The Company accounts for stock-based compensation through recognition of the cost of employee services received in exchange for an
award of equity instruments, which is measured based on the grant date fair value of the award that is ultimately expected to vest during
the period. The stock-based compensation expenses are recognized over the period during which an employee is required to provide
service in exchange for the award (the requisite service period, which in the Company’s case is the same as the vesting period). For
awards subject to the achievement of performance metrics, stock-based compensation expense is recognized when it becomes probable
that the performance conditions will be achieved.
Earnings Per Share
The Company calculates basic earnings per share on the basis of the weighted-average number of shares of common stock outstanding
during the period. Diluted earnings per share is calculated using the weighted-average number of shares of common stock outstanding for
the period plus the effect of potential dilutive common shares during the period using the treasury stock method and if-converted method.
Potential shares of common stock outstanding include unvested restricted stock awards, vested and unvested unexercised stock options,
common stock purchase warrants, and convertible notes.
Research and Development
Research and Development costs are expensed when incurred. During 2024 and 2023, we incurred approximately $12.0 million and $9.2
million in operating expenses, respectively, related to our ZMS operations. During 2024 and 2023, approximately $9.2 million and $7.7
million of the expenses, respectively, required capitalization under Section 174 - “Amortization of Research and Experimental
Expenditures” tax treatment.
Income Taxes
The Company records deferred tax assets and liabilities for the estimated future tax effects of temporary differences between the tax
bases of assets and liabilities and amounts reported in the accompanying condensed consolidated balance sheets. Deferred tax assets

Table of Contents
F-15
and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance if, based on available
evidence, it is more likely than not that these benefits will not be realized.
Tax benefits are recognized from uncertain tax positions if it is more likely than not that the tax position will be sustained on examination
by the taxing authorities based on the technical merits of the position.
The Inflation Reduction Act (“IRA”) was enacted into law on August 16, 2022. Included in the IRA was a provision to implement a 15%
corporate alternative minimum tax on corporations whose average annual adjusted financial statement income during the most recently
completed three-year period exceeds $1 billion. This provision is effective for tax years beginning after December 31, 2022. The IRA did
not have a material impact on our reported results, cash flows, or financial position during the period ended December 31, 2024.
Recently Issued Accounting Pronouncements
In October 2023, the Financial Accounting Standards Board (“FASB”) issued ASU (“Accounting Standards Update”) 2023-06,
“Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative” (“ASU
2023-06”). This ASU incorporates certain SEC disclosure requirements into the FASB ASC. The amendments in the ASU are expected
to clarify or improve disclosure and presentation requirements of a variety of ASC Topics, allow users to more easily compare entities
subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the
requirements in the ASC with the SEC’s regulations. The ASU has an unusual effective date and transition requirements since it is
contingent on future SEC rule setting. If the SEC fails to enact required changes by June 30, 2027, this ASU is not effective for any
entities. Early adoption is not permitted. The Company is currently evaluating the impact that the adoption of this standard will have on
its consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): “Improvements to Reportable Segment
Disclosures” (“ASU 2023-07”) to update reportable segment disclosure requirements, primarily through enhanced disclosures about
significant segment expenses and information used to assess segment performance. This update is effective beginning with the
Company’s 2024 fiscal year annual reporting period, with early adoption permitted. The Company adopted the standard during the year
ended December 31, 2024 and the pronouncement did not have a material impact on the Company’s consolidated financial statements.
In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” (“ASU 2023-09”) to enhance the
transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income
taxes paid. This ASU applies to all entities subject to income taxes. This ASU will be effective for public companies for annual periods
beginning after December 15, 2024. The Company is currently evaluating the impact that the adoption of this standard will have on its
consolidated financial statements.
In March 2024, the FASB issued ASU 2024-02 “Codification Improvements – Amendments to Remove References to the Concepts
Statements.” This amendment to the Codification removes references to various Concept Statements. The amendments in this update are
effective for public business entities for fiscal years beginning after December 15, 2024. For all other entities, the amendments are
effective for fiscal years beginning after December 15, 2025. Early application of the amendments in this update is permitted for all
entities, for any fiscal year or interim period for which financial statements have not yet been issued (or made available for issuance). If
an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim
period. The Company is currently evaluating the impact that the adoption of this standard will have on its consolidated financial
statements.
Management does not believe that any other recently issued accounting pronouncements will have a material impact on the Company’s
consolidated financial statements.

Table of Contents
F-16
(3)   BUSINESS COMBINATIONS
On December 22, 2021, the Company and its wholly-owned subsidiary Zynex Monitoring Solutions, Inc., entered into a Stock Purchase
Agreement (the “Agreement”) with Kestrel and each of the shareholders of Kestrel (collectively, the “Selling Shareholders”). Under the
Agreement, the Selling Shareholders agreed to sell all of the outstanding common stock of Kestrel (the “Kestrel Shares”) to the
Company. The consideration for the Kestrel Shares consisted of $16.1 million cash and 1,467,785 shares of the Company’s common
stock (the “Zynex Shares”). All of the Zynex Shares were subject to a lock-up agreement for a period of one year from the closing date
under the Agreement (the “Closing Date”). The Agreement provides the Selling Shareholders with piggyback registration rights. 978,524
of the Zynex Shares were deposited in escrow (the “Escrow Shares”). The number of Escrow Shares were subject to adjustment on the
one-year anniversary of the Closing Date (or in connection with any Liquidation Event (as defined in the Agreement) that occurs prior to
such anniversary date) based on the number of shares equal to $10.0 million divided by a 30-day volume weighted average closing price
of the Company’s common stock. The Escrow Shares were adjusted on the anniversary date, which resulted in the cancellation of
156,673 Escrow Shares. Half of the Escrow Shares were to be released on submission of a dossier on a laser-based
photoplethysmographic device (the “Device”) to the FDA for permission to market and sell the Device in the United States. The other
half of the Escrow Shares were to be released upon determination by the FDA that the Device can be marketed and sold in the United
States.
On July 27, 2023, the Company, ZMS, Kestrel, and the Selling Shareholders, entered into an amendment to the Stock Purchase
Agreement (the “Amendment”). The parties entered into the Amendment to modify certain terms of the Agreement related to the
conditions to be satisfied for the release of the Escrow Shares to the Selling Shareholders. The Escrow Shares were released from escrow,
and simultaneously, the selling stockholders entered into a lock-up agreement. The lock-up agreement includes two lock-up periods
which release certain restrictions on the Selling Shareholders on December 31, 2023 and June 30, 2024, respectively. These shares are
included in the Company’s calculation of basic earnings per share.
The acquisition of Kestrel has been accounted for as a business combination under ASC 805 – “Business Combinations” (“ASC 805”).
Under ASC 805, assets acquired, and liabilities assumed in a business combination must be recorded at their fair values as of the
acquisition date.
(4)   PROPERTY AND EQUIPMENT
The components of property and equipment are as follows (in thousands):
    December 31, 2024    December 31, 2023
Property and equipment
   
  
Office furniture and equipment
$
3,210
$
2,768
Assembly equipment
 
425
 
178
Vehicles
 
75
 
75
Leasehold improvements
 
1,893
 
1,174
Leased devices
815
796
Capital projects
 
182
 
869
Total property and equipment at cost
$
6,600
$
5,860
Less accumulated depreciation
 
(3,516)
 
(2,746)
Total property and equipment, net
$
3,084
$
3,114
Total depreciation expense related to our purchased property and equipment was $1.0 million and $0.8 million for the years ended
December 31, 2024 and 2023, respectively. Total depreciation expense related to devices out on lease was $1.9 million for both the years
ended December 31, 2024 and 2023, respectively. Depreciation on leased units is reflected on the income statement as cost of revenue.

Table of Contents
F-17
(5)   GOODWILL AND OTHER INTANGIBLES
On December 22, 2021, the Company completed the acquisition of Kestrel, which resulted in goodwill of $20.4 million (see Note 3).
As of December 31, 2024, there were no impairment indicators of the Company’s net asset value.
The following table provides the summary of the Company’s intangible assets as of December 31, 2024.
Weighted-
 
Average
 
Gross
 
Remaining
 
Carrying
 
Accumulated  
Net Carrying  
Life (in
    
Amount
     Amortization     
Amount
    
years)
Acquired patents at December 31, 2023
$
10,000
$
(1,842)
$
8,158
9.00
Amortization expense
(911)
(911)
Acquired patents at December 31, 2024
$
10,000
$
(2,753)
$
7,247  
8.00
The following table summarizes the estimated future amortization expense to be recognized over the next five years:
    
December 31, 
    
(In thousands)
2025
908
2026
 
908
2027
 
908
2028
 
911
2029
 
908
Thereafter
 
2,704
Total future amortization expense
$
7,247
(6)   EARNINGS PER SHARE
The calculation of basic and diluted earnings per share for the years ended December 31, 2024 and 2023 are as follows (in thousands,
except per share data):
For the Years Ended December 31, 
    
2024
    
2023
Basic earnings per share
 
   
  
Net income
$
2,994
$
9,732
Basic weighted average shares outstanding
 
31,941
 
35,555
Basic earnings per share
$
0.09
$
0.27
Diluted earnings per share
 
  
 
  
Net income
$
2,994
$
9,732
Weighted average shares outstanding
 
31,941
 
35,555
Effect of dilutive securities - options and restricted stock
 
358
 
587
Diluted weighted-average shares outstanding
 
32,299
 
36,142
Diluted earnings per share
$
0.09
$
0.27

Table of Contents
F-18
For the years ended December 31, 2024 and 2023, 15,000 and 36,000 shares of common stock, respectively, were excluded from the
dilutive stock calculation because their effect would have been anti-dilutive.
For the years ended December 31, 2024 and 2023, convertible notes to purchase 5.6 million shares and 3.6 million shares, respectively,
resulting from the 2023 Convertible Senior Notes, were excluded from the dilutive stock calculation because their effect would have
been anti-dilutive (see Note 8 – Convertible Senior Notes).
(7)   NOTES PAYABLE
The Company entered into a loan agreement (the “Loan Agreement”) with Bank of America, N.A. (the “Bank”) in December 2021.
Under this Loan Agreement, the Bank extended two facilities to the Company. Specified assets were pledged as collateral. One facility
was a line of credit in the amount of $4.0 million available until December 1, 2024 (the “Facility 1”). Interest on Facility 1 was due on
the first day of each month beginning January 1, 2022. The interest rate was an annual rate equal to the sum of (i) the greater of the
BSBY Daily Floating Rate or (ii) the Index Floor (as defined in the Loan Agreement), plus 2.00%. The Company did not utilize the
facility during the years ended December 31, 2023 and December 31, 2022. During May 2023, the facility was terminated.
The other facility extended by the Bank to the Company was a fixed rate term loan in the amount of up to $16.0 million (the “Facility
2”). Facility 2 was entered into and funded in conjunction with the purchase of Kestrel Labs at an interest rate equal to 2.8% per
year. The Company had to pay interest on the first day of each month which began January 1, 2022, and the Company also repaid the
principal amount in equal installments of $444,444 per month. All unpaid interest and principal on Facility 2 was fully paid off and the
Facility was terminated during May 2023.
(8)   CONVERTIBLE SENIOR NOTES
In May 2023, the Company issued $52.5 million aggregate principal amount of 5.00% Convertible Senior Notes due May 15, 2026 (the
“2023 Convertible Senior Notes”). In May 2023, the Company issued an additional $7.5 million aggregate principal amount of the 2023
Convertible Senior Notes upon the exercise by the initial purchasers of their over-allotment option.
Interest on the 2023 Convertible Senior Notes is payable semiannually in arrears, beginning November 15, 2023. The 2023 Convertible
Senior Notes will mature on May 15, 2026, unless earlier converted or repurchased, and are redeemable at the option of the Company on
or after May 20, 2025. The 2023 Convertible Senior Notes are direct, unsecured, and unsubordinated obligations of the Company,
ranking equally with all of the Company’s other unsecured and unsubordinated indebtedness from time to time outstanding, and are
effectively subordinated to all secured indebtedness of the Company.
Holders may convert their 2023 Convertible Senior Notes at their option prior to the close of business on the business day preceding
September 30, 2023, but only under the following circumstances: during any calendar quarter (and only during such calendar quarter), if
the last reported sale price of the Company’s common stock for at least twenty trading days (whether or not consecutive) during the
period of thirty consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is
greater than or equal to 130% of the conversion price on each applicable trading day as determined by the Company; during the five
business day period after any ten consecutive trading day period (the “Measurement Period”) in which the trading price per $1,000
principal amount of 2023 Convertible Senior Notes for each trading day of the Measurement Period was less than 98% of the product of
the last reported sale price of the common stock and the conversion rate on each such trading day; or upon the occurrence of certain
corporate events specified in the indenture governing the 2023 Convertible Senior Notes.
On or after February 15, 2026, a holder may convert all or any portion of its 2023 Convertible Senior Notes at any time prior to the close
of business on the second scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions.
The Company will settle conversions of the 2023 Convertible Senior Notes by paying cash up to the aggregate principal amount of the
2023 Convertible Senior Notes to be converted and paying or delivering, as the case may be, cash, shares of common stock, or a
combination of cash and shares of common stock, at the Company’s election, in respect of the remainder, if any, of the Company's

Table of Contents
F-19
conversion obligation in excess of the aggregate principal amount of the 2023 Convertible Senior Notes being converted. The 2023
Convertible Senior Notes are initially convertible at a rate of 92.8031 shares of common stock per $1,000 principal amount converted,
which is approximately equal to $10.78 per share of common stock. The conversion rate will be subject to adjustment upon the
occurrence of certain specified events but will not be adjusted for accrued and unpaid interest. In addition, upon the occurrence of a
make-whole fundamental change, which includes certain change in control transactions, the approval by Zynex’s stockholders of any
plan or proposal for the liquidation or dissolution of Zynex and certain de-listing events with respect to Zynex’s common stock, the
Company will, in certain circumstances, increase the conversion rate by a number of additional shares of common stock for conversions
in connection with the make-whole fundamental change. On December 31, 2024, the closing price of the Company’s common stock was
$8.01 and the conversion feature of our outstanding convertible senior notes allows their holders to convert principal at a conversion
price of $10.78. Under such circumstances, if all outstanding principal of $60.0 million would have been converted into conversion
shares, the market value of such shares would have been $44.6 million.
Upon the occurrence of a fundamental change, holders of the 2023 Convertible Senior Notes may require the Company to purchase all or
a portion of their 2023 Convertible Senior Notes, in principal amounts equal to $1,000 or an integral multiple thereof, for cash at a price
equal to 100% of the principal amount of the 2023 Convertible Senior Notes to be purchased plus any accrued and unpaid interest. $3.0
million of coupon interest expense and $1.0 million of bond amortization costs were included in interest expense, net in the consolidated
statement of income for the year ended December 31, 2024. Unamortized issuances costs of $1.4 million and $2.4 million were included
in the Company’s Consolidated Balance Sheet as of December 31, 2024 and 2023, respectively. The effective interest rate on the 2023
Convertible Senior Notes was 6.8% during both years ended December 31, 2024 and 2023. $1.9 of coupon interest expense and $0.6
million of bond amortization costs were included in interest expense, net in the consolidated statement of income for the year ended
December 31, 2023.
The following table summarizes the minimum interest payments over the next two years until maturity in May 2026.
    
(In thousands)
2025
$
3,000
2026
 
1,500
                                                  
(9)   STOCK-BASED COMPENSATION PLANS
Zynex, Inc. 2017 Stock Incentive Plan
In June 2017, our stockholders approved the 2017 Stock Incentive Plan (the “2017 Stock Plan”) with a maximum of 5.5 million shares
reserved for issuance. Awards permitted under the 2017 Stock Plan include stock options and restricted stock. Awards issued under the
2017 Stock Plan are at the discretion of the Board of Directors. The 2017 Stock Plan mandates a maximum award term of 10 years and
stipulates that stock options be granted with prices not less than fair market value on the date of grant. Stock option awards generally vest
over four years. Restricted stock awards typically vest quarterly over three years for grants issued to members of our Board of Directors
and quarterly or annually over two to four years for grants issued to employees. For stock option awards, all awards granted under the
2017 Stock Plan are stock-settled with common stock issued upon exercise. For restricted stock awards, shares are issued to the recipient
upon grant with a restrictive legend and are not included in the calculation of outstanding shares until vesting occurs. At December 31,
2024, there were 3.2 million shares available for future grants under the 2017 Stock Plan.
Zynex, Inc. 2005 Stock Option Plan
The 2005 Stock Option Plan (the “2005 Stock Plan”) expired as of December 31, 2014. Vesting provisions of the expired plan were to be
determined by the Board of Directors. All stock options under the 2005 Stock Plan expire no later than ten years from the date of grant.
Options granted in 2015, 2016, and through May 2017 prior to the approval of the 2017 Stock Incentive Plan were approved and certified
by the Board of Directors on September 6, 2017 under the existing 2005 Stock Plan.

Table of Contents
F-20
As of December 31, 2024, the Company had the following stock options outstanding and exercisable:
    
    
Outstanding Number of Options
Exercisable Number of Options
(in thousands)
(in thousands)
Plan Category
 
   
  
2005 Stock Option Plan
 
1
1
2017 Stock Option Plan
 
334
334
Total
 
335
335
The Company received $0.1 million cash proceeds related to option exercises during the year ended December 31, 2024. The Company
received cash proceeds of $0.1 million related to option exercises during the year ended December 31, 2023.
During both years ended December 31, 2024 and 2023, no stock option awards were granted under the 2017 Stock Plan.
The following table summarizes stock-based compensation expenses recorded in the condensed consolidated statements of income (in
thousands):
  For the Years Ended December 31, 
    
2024
    
2023
Cost of Revenue
$
37
$
34
Sales and marketing expense
 
578
 
253
General, and administrative
2,374
2,009
Total stock-based compensation expense
$
2,989
$
2,296
The excess tax benefit associated with our stock-based compensation plans for the years ended December 31, 2024 and 2023 was
minimal in both periods.
A combined summary of stock option activity for all plans for the years ended December 31, 2024 and 2023 is presented below:
Weighted-
Weighted-
Average
Aggregate
Number of 
Average
Remaining
Intrinsic
Shares
Exercise
Contractual
Value
     (in thousands)     
Price
     Term (Years)      (in thousands)
Outstanding at December 31, 2022
 
793
$
2.67
5.03  
8,908
Granted
 
—
$
—
 
Exercised
 
(206)
$
6.30
 
Forfeited
 
(238)
$
0.79
 
Outstanding at December 31, 2023
 
349
$
1.82
4.12
$
3,163
Granted
 
—
$
—
 
Forfeited
(4)
$
3.14
Exercised
 
(10)
$
2.65
 
Outstanding at December 31, 2024
 
335
$
1.78
3.09
$
2,086
Exercisable at December 31, 2024
 
335
$
1.78
3.09
$
2,086

Table of Contents
F-21
    
Outstanding
     Weighted average          
    
    
    
Remaining
    
    
Number of
Remaining
Exercisable
 Exercisable
Weighted Average
Options
Contractual
Weighted Average
 Number of
Contractual 
Exercisable
Range
(in thousands)
Life (years)
Strike Price
Options (in thousands)
Life (years)
Strike Price
$0 to $2.00
 
144
2.44
0.43
144
2.44
0.43
$2.01 to $4.00
 
185
3.55
2.63
185
3.55
2.63
$4.01 to $10.00
 
6
4.71
8.13
6
4.71
8.13
 
335  
3.09
$
1.78  
335  
3.09
$
1.78
During the year ended December 31, 2024 there was no unvested stock option activitity. A summary of our unvested stock options as of
December 31, 2023 and related activity is presented below:
     Non-vested         
Shares
Weighted
Under
Average
Option
Grant Date
(in thousands)
Fair Value
Non-vested at December 31, 2022
 
237
$
5.90
Granted
 
—
 
—
Vested
 
(31)
 
3.18
Forfeited
 
(206)
 
6.30
Non-vested at December 31, 2023
 
—
$
—
A summary of restricted stock award activity under the 2017 Stock Plan for the years ended December 2024 and 2023 are presented
below:
Number of
Shares
 
Weighted Average
     (in thousands)      Grant Date Fair Value
Outstanding at December 31, 2022
 
431
$
11.92
Granted
 
286
9.54
Forfeited
 
(13)
11.13
Vested
 
(202)
11.56
Outstanding at December 31, 2023
502
$
10.73
Granted
274
10.31
Forfeited
(20)
10.27
Vested
(257)
11.19
Outstanding at December 31, 2024
 
499
$
10.28
The fair market value of restricted shares for share-based compensation expensing is equal to the closing price of our common stock on
the date of grant. The vesting on the Restricted Stock Awards typically occurs quarterly over three years for the Board of Directors and
quarterly or annually over two to four years for employees. As of December 31, 2024, there was approximately $4.0 million of total
unrecognized compensation costs related to unvested stock options and restricted stock. These costs are expected to be recognized over a
weighted average period of 2.4 years.
The total intrinsic value of stock option exercises for the years ended December 31, 2024 and 2023 was $0.1 million and $1.9 million,
respectively. The total fair value of restricted stock awards vested during the years ended December 31, 2024 and 2023 was $2.5 million
and $2.1 million, respectively.

Table of Contents
F-22
(10)   STOCKHOLDERS’ EQUITYs
Treasury Stock
On October 31, 2022, the Company’s Board of Directors approved a program to repurchase up to $10.0 million of the Company’s
common stock at prevailing market prices either in the open market or through privately negotiated transactions through October 31,
2023. From the inception of the plan through December 31, 2022, the Company purchased 495,138 shares of its common stock for $6.6
million or an average price of $13.43 per share. During 2023, the Company purchased 232,698 shares of its common stock for $3.3
million or an average price of $14.41 per share, which completed this program.
On May 10, 2023, the disinterested members of the Board of Directors and Audit Committee approved the purchase of 300,000 shares of
the Company’s common stock from Thomas Sandgaard, Chairman, President, Chief Executive Officer and Principal Executive Officer,
at the closing market price on May 10, 2023 of $9.61 per share for $2.9 million. See Note 17 - Related Parties for additional information.
On June 13, 2023, the disinterested members of the Board of Directors and Audit Committee approved the purchase of 300,000 shares of
the Company’s common stock from Thomas Sandgaard, Chairman, President, Chief Executive Officer and Principal Executive Officer,
at the closing market price on June 13, 2023, of $8.62 per share for $2.6 million. See Note 17 - Related Parties for additional
information.
On June 13, 2023 the Company announced that its Board of Directors approved a program to repurchase up to $10.0 million of the
Company’s common stock at prevailing market prices either in the open market or through privately negotiated transactions through June
13, 2024. From the inception of the plan through September 13, 2023, the Company purchased 1,242,892 shares of its common stock for
$10.0 million or an average price of $8.05 per share, which completed this program.
On September 11, 2023, the Company announced that its Board of Directors approved a program to repurchase up to $10.0 million of the
Company’s common stock at prevailing market prices either in the open market or through privately negotiated transactions through
September 13, 2024. From the inception of the plan through October 19, 2023, the Company purchased 1,204,239 shares of its common
stock for $10.0 million or an average price of $8.30 per share, which completed this program.
On November 1, 2023, the Company announced that its Board of Directors approved a program to repurchase up to $20.0 million of the
Company’s common stock at prevailing market prices either in the open market or through privately negotiated transactions through
October 31, 2024. From the inception of the plan through December 31, 2023, the Company purchased 1,012,200 shares of its common
stock for $9.6 million or an average price of $9.47 per share. During the quarter ended March 31, 2024, the Company
purchased 821,000 shares of common stock for $10.4 million or an average price of $11.73, which completed this program.
On February 29, 2024, the Company announced that its board of directors had approved a repurchase program of up to $20.0 million of
the Company’s common stock beginning on March 4, 2024, and continuing through the earlier of March 4, 2025, or when all $20.0
million worth of shares have been repurchased. From the inception of the plan through December 31, 2024, the Company
purchased 423,894 shares of its common stock for $5.2 million or an average price of $12.29 per share. During the quarter ended
December 31, 2024, the Company did not purchase any shares of its common stock.

Table of Contents
F-23
Warrants
A summary of stock warrant activity for the years ended December 31, 2024 and 2023 are presented below:
Weighted
Weighted
Average
Aggregate
Number of
Average
Remaining
Intrinsic
Warrants
Exercise
Contractual
Value
     (in thousands)    
Price
     Life (Years)      (in thousands)
Outstanding at December 31, 2022
 
99
$
2.39
1.76   $
1,140
Granted
 
—
$
—
 
 
Exercised
 
(15)
$
2.27
 
 
Forfeited(1)
 
(4)
$
2.27
 
 
Outstanding and exercisable at December 31, 2023
 
80
$
2.43
 
0.76
$
677
Granted
 
—
$
—
 
Exercised
 
(58)
$
2.42
 
Forfeited(2)
 
(22)
$
2.45
 
 
Outstanding and exercisable at December 31, 2024
 
—
$
—
 
—
$
—
(1) Warrants were exercised under a net exercise provision in the warrant agreement. As a result, approximately 4,000 warrants were
forfeited in lieu of cash payment for shares during 2023.
(2) Warrants were exercised under a net exercise provision in the warrant agreement. As a result, approximately 22,000 warrants were
forfeited in lieu of cash payment for shares during 2024.
(11)   INCOME TAXES
The pre-tax income from continuing operations on which the provision for income taxes was computed is as follows for the years ended
December 31, 2024 and 2023 (in thousands):
    
2024
    
2023
United States
$
3,627
$
12,579
Foreign
 
—
 
—
Total
 
3,627
 
12,579
Income tax expense consists of the following for the years ended December 31, 2024 and 2023 (in thousands):
    
2024
    
2023
Current tax expense:
 
   
  
Federal
$
1,136
$
3,433
State
 
431
 
1,717
Total tax expense:
 
1,567
 
5,150
Deferred tax benefit
 
  
 
  
Federal
 
(711)
 
(1,873)
State
 
(223)
 
(430)
Total deferred tax benefit
$
(934)
$
(2,303)
Total
$
633
$
2,847

Table of Contents
F-24
A reconciliation of income tax computed at the U.S. statutory rate of 21% to the effective income tax rate is as follows:
    
2024
    
2023
 
Statutory rate
 
21 %  
21 %
State taxes
 
3 %  
7 %
Meals and entertainment
10 %  
3 %
Excess officer's compensation
1 %  
3 %
Stock based compensation
 
— %  
(7)%
Research and development credit
 
(17)%  
(4)%
Other
(1)%  
— %
Effective rate
 
17 %  
23 %
The tax effects of temporary differences that give rise to deferred tax assets (liabilities) at December 31, 2024 and 2023 are as follows (in
thousands):
    
2024
    
2023
Deferred tax assets:
 
   
  
Accrued expenses
$
40
$
34
Lease liability
 
3,652
 
4,540
Inventory
 
263
 
261
Stock based compensation
 
611
 
371
Section 174 costs
 
4,259
 
2,829
Deferred tax assets
$
8,825
$
8,035
Deferred tax liabilities:
 
  
 
  
Property and equipment
 
(447)
 
(469)
Finance lease
 
(294)
 
(149)
Prepaid expenses
 
(215)
 
(198)
Right-of-use asset
 
(2,680)
 
(3,172)
Amortization
 
(390)
 
(182)
Deferred tax liabilities
$
(4,026)
$
(4,170)
Net deferred tax assets
$
4,799
$
3,865
The accounting standard related to income taxes applies to all tax positions and defines the confidence level that a tax position must meet
in order to be recognized in the financial statements. The accounting standard requires that the tax effects of a position be recognized
only if it is “more-likely-than-not” to be sustained by the taxing authority as of the reporting date. If a tax position is not considered
“more-likely-than-not” to be sustained, then no benefits of the position are to be recognized. Differences between financial and tax
reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits. This standard also provides guidance
on the presentation of tax matters and the recognition of potential interest and penalties. As of December 31, 2024 and 2023, the
Company does not have an unrecognized tax liability.
The Company does not classify penalty and interest expense related to income tax liabilities as an income tax expense. Penalties and
interest are included within general and administrative expenses on the consolidated statements of income.
The Company files income tax returns in the U.S. and various state jurisdictions, and there are open statutes of limitations for taxing
authorities to audit our tax returns from 2021 through the current period.

Table of Contents
F-25
(12)   LEASES
The Company categorizes leases at their inception as either operating or financing leases. Leases include various office and warehouse
facilities which have been categorized as operating leases, while certain equipment is leased under financing leases.
During March 2022, the Company entered into a lease agreement for approximately 4,162 square feet of office space for the operations
of ZMS in Boulder, Colorado. The lease began on April 1, 2022 and will run through April 1, 2025. The rent and common area
maintenance charges are equal to $17.00 per square foot with annual increases of 3%. Upon lease commencement, the Company
recorded an operating lease liability and corresponding right-of-use asset for $0.2 million each.
During February 2023, the Company entered into a lease agreement for approximately 41,427 square feet of office space for the
operations of ZMS in Englewood, CO. The lease commences on July 1, 2023 and runs through December 31, 2028. At the expiration of
the lease term the Company has the option to renew the lease for one additional five-year period. The Company is entitled to rent
abatements for the first six months of the lease and tenant improvement allowances. Payments based on the initial rate of $24.75 per
square foot begin in January 2024. The price per square foot increases by an additional $0.50 during each subsequent twelve-month
period of the lease after the abatement period. Upon lease commencement, the Company recorded an operating lease liability of
$4.2 million and a corresponding right-of-use asset for $2.8 million. 
The Company’s operating leases do not provide an implicit rate, and therefore the Company uses its incremental borrowing rate as the
discount rate when measuring the lease liability. The incremental borrowing rate represents an estimate of the interest rate the Company
would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease.
The Company’s weighted average borrowing rate was determined to be 4.84% for its operating lease liabilities. The Company’s
equipment lease agreements have a weighted average rate of 5.02% which was used to measure its finance lease liability.
As of December 31, 2024, the Company’s operating and financing leases have a weighted average remaining term of 3.36 years and 4.18
years, respectively.
The table below reconciles the undiscounted future minimum lease payments under the Company’s operating and finance leases to the
total operating and capital lease liabilities recognized on the consolidated balance sheets as of December 31, 2024 (in thousands):
    Operating Lease Liability    Finance Lease Liability
2025
 
4,632  
336
2026
 
4,428  
312
2027
 
4,237  
264
2028
 
2,172  
171
2029
 
—  
121
Total undiscounted future minimum lease payments
$
15,469
$
1,204
Less: difference between undiscounted lease payments and
discounted lease liabilities:
 
(1,288)
 
(128)
Total lease liabilities
$
14,181
$
1,076
Operating and finance lease costs were $3.8 million and $4.2 million for years ended December 31, 2024 and 2023, respectively, which
were included in the consolidated statement of income under the following headings (in thousands):

Table of Contents
F-26
For the years ended December 31, 
Operating Lease expense
2024
2023
Costs of revenue - devices and supplies
$
378
$
367
Sales and marketing expense
870
1,105
General and administrative
2,292
2,542
Total operating lease expense
$
3,540
$
4,014
Finance Lease expense
Amortization of right-of-use asset:
Selling, general and administrative
$
106
$
116
General and administrative
117
31
Total amortization of right-of-use asset
223
147
Interest expense and other
 
31
 
24
Total finance lease expense
$
254
$
171
(13)   FAIR VALUE CONSIDERATION
The Company’s asset and liability classified financial instruments include cash, accounts receivable, accounts payable, accrued liabilities,
and contingent consideration. The carrying amounts of financial instruments, including cash, accounts receivable, accounts payable, and
accrued liabilities approximate their fair value due to their short maturities. The Company measures its long-term debt at fair value which
approximates book value as the long-term debt bears market rates of interest. The fair value of acquisition-related contingent
consideration is based on a Monte Carlo models. The valuation policies are determined by management, and the Company’s Board of
Directors is informed of any policy change.
Authoritative guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in
an orderly transaction between market participants at the measurement date. The guidance 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 that market participants would use in pricing the asset or liability
developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the
Company’s assumptions of what market participants would use in pricing the asset or liability developed based on the best information
available in the circumstances. The hierarchy is broken down into three levels based on reliability of the inputs as follows:
Level I: Inputs that reflect unadjusted quoted prices in active markets that are accessible to Zynex for identical assets or liabilities;
Level II: Inputs include quoted prices for similar assets and liabilities in active or inactive markets or that are observable for the asset or
liability either directly or indirectly; and
Level III: Unobservable inputs that are supported by little or no market activity.
The Company’s assets and liabilities, which are measured at fair value, on a recurring basis, are classified in their entirety based on the
lowest level of input that is significant to their fair value measurement. The Company’s policy is to recognize transfers in and/or out of
fair value hierarchy as of the date on which the event or change in circumstances caused the transfer. The Company has consistently
applied the valuation techniques discussed below in all periods presented.
The Company classified its contingent consideration liability in connection with the acquisition of Kestrel within Level 3 as factors used
to develop the estimated fair value are unobservable inputs that are not supported by market activity.

Table of Contents
F-27
The contingent consideration related to Kestrel was valued at $9.7 million using a Monte Carlo simulation as of December 22, 2021. As
of December 31, 2022, the contingent consideration was estimated at $10.0 million, and the adjustment of $0.3 million during 2022 was
recorded as a loss on change in fair value of contingent consideration in the Company’s Consolidated Statements of Income. The fair
value of acquisition-related contingent consideration was based on a Monte Carlo model prior to December 31, 2023. See Note 3 -
Business Combinations for additional details on the removal of contingent consideration during the year ended December 31, 2023. The
following table presents the Company’s financial liabilities that were accounted for at fair value on a recurring basis prior to
December 31, 2023, which were included within Level III of the fair value hierarchy:
    
Contingent Consideration
Balance as of December 31, 2022
$
10,000
   Change in fair value of contingent consideration
(2,854)
   Escrow share adjustment
(7,146)
Balance as of December 31, 2023
$
—
(14)  COMMITMENTS AND CONTINGENCIES
See Note 12 for details regarding commitments under the Company’s long-term leases.
From time to time, the Company may become party to litigation and other claims in the ordinary course of business. To the extent that
such claims and litigation arise, management provides for them if losses are determined to be both probable and estimable. On occasion,
the Company engages outside counsel related to a broad range of topics including employment law, third-party payer matters, intellectual
property, and regulatory and compliance matters.
The Company is currently not a party to any material pending legal proceedings that would give rise to potential loss contingencies.
(15)  CONCENTRATIONS
The Company is exposed to concentration of credit risk related primarily to its cash balances. The Company maintains its cash balances
in major financial institutions that exceed amounts insured by the FDIC (up to $250,000, per financial institution). The Company has not
experienced any realized losses in such accounts and believes it is not exposed to any significant credit risk related to its cash.
The Company had three major vendors from which it sourced approximately 46% and four major vendors from which it sourced
approximately 45%, respectively, of supplies for its electrotherapy products for the years ended December 31, 2024 and 2023.
Management believes that the Company’s relationships with its suppliers are good. If the relationships were to be replaced, there may be
a short-term disruption for a period of time during which products may not be available and additional expenses may be incurred as the
Company locates additional or replacement suppliers.
The Company had gross receivables from no third-party payers which made up 10% of the accounts receivable balance at December 31,
2024 and 2023, respectively.
(16)  RETIREMENT PLAN
In 2012, the Company established a defined contribution retirement plan for its employees under section 401(k) of the Internal Revenue
Code (the “401(k) Plan”) that is available to all employees 18 years of age or older with at least three months of service. All employee
contributions are fully vested immediately and employer contributions vest over a period of four years. The Company has a discretionary
employee match program and currently matches 35% of the first 6% of an employee’s contributions.
During the years ended December 31, 2024 and 2023, the Company recorded an expense of $0.9 million and $0.8 million, respectively,
under the aforementioned plan associated with the Company match.

Table of Contents
F-28
(17)   RELATED PARTIES
On May 10, 2023, the disinterested Board and Audit Committee approved the purchase of 300,000 common shares of ZYXI from Mr.
Sandgaard, Chairman, President, Chief Executive Officer and Principal Executive Officer, at the closing market price on May 10, 2023
of $9.61 per share, resulting in a total transactional value of $2,883,000.
On June 13, 2023, the disinterested Board and Audit Committee approved the purchase of 300,000 common shares of ZYXI from Mr.
Sandgaard at the closing market price on June 13, 2023 of $8.62 per share, resulting in a total transactional value of $2,586,000.
At the time of each aforementioned transaction, the disinterested Board and Audit Committee Members deemed it to be in the best
interest of the Company to purchase the shares as they believe the current market price for the Company’s stock is undervalued and the
Company’s cash position is such that the purchase of shares from Mr. Sandgaard is a good use of the Company’s funds at the time of
each transaction. For each transaction, the following impacts were discussed before approval of the sale:
(i) the Company’s cash position and capital needs for its continuing operations; (ii) the alternative uses for the cash used to purchase the
Sandgaard Shares, including repayment of outstanding indebtedness; (iii) the possible effect on earnings per share and book value per
share; and (iv) and the potential effect of the trading of the Company’s shares, if Mr. Sandgaard were to sell the shares in the open
market.
(18)  SUBSEQUENT EVENTS
We implemented a restructuring of our staff during March 2025 related to the temporary TriCare payment suspension. We are decreasing
our overall staff by approximately 15%, which primarily affects employees in our corporate departments. This staff reduction along with
other expense reductions made during the second half of 2024 and the first quarter of 2025 will result in savings of approximately $35
million annually.

Exhibit 10.4
LEASE AGREEMENT
BY AND BETWEEN
TWO MAROON CIRCLE INVESTORS, LLC,
a Delaware limited liability company
AS LANDLORD
AND
ZYNEX, INC.,
a Nevada corporation
AS TENANT
DATED FEBRUARY ___, 2023

i
TABLE OF CONTENTS
1. DEMISE
2
2. PREMISES
2
3. TERM
4
4. RENT
4
5. UTILITIES AND SERVICES
15
6. LATE CHARGE
19
7. SECURITY DEPOSIT
20
8. POSSESSION; COMPLETION OF THE LANDLORD WORK
20
9. USE OF PREMISES; COMPLIANCE WITH LAWS
21
10.ACCEPTANCE OF PREMISES
23
11.SURRENDER
23
12.ALTERATIONS AND ADDITIONS
24
13.MAINTENANCE TO AND REPAIRS OF PREMISES
26
14.LANDLORD’S INSURANCE
27
15.TENANT’S INSURANCE
27
16.INDEMNIFICATION
29
17.SUBROGATION
30
18.SIGNS
30
19.FREE FROM LIENS
31
20.ENTRY BY LANDLORD
31
21.DESTRUCTION AND DAMAGE
32
22.CONDEMNATION
34
23.ASSIGNMENT AND SUBLETTING
35
24.DEFAULT
39

ii
25.LANDLORD’S REMEDIES
41
26.LANDLORD’S RIGHT TO PERFORM TENANT’S OBLIGATIONS
43
27.ATTORNEY’S FEES
44
28.TAXES
44
29.EFFECT OF CONVEYANCE
44
30.TENANT’S ESTOPPEL CERTIFICATE
45
31.SUBORDINATION
45
32.ENVIRONMENTAL COVENANTS
46
33.NOTICES
49
34.WAIVER
49
35.HOLDING OVER
49
36.SUCCESSORS AND ASSIGNS
50
37.TIME
50
38.BROKERS
50
39.LIMITATION OF LIABILITY
50
40.FINANCIAL STATEMENTS
51
41.RULES AND REGULATIONS
51
42.MORTGAGEE PROTECTION
52
43.RELOCATION
52
44.PARKING
52
45.ENTIRE AGREEMENT; NO ORAL MODIFICATION; JOINT AND SEVERAL LIABILITY
53
46.INTEREST
54
47.GOVERNING LAW; CONSTRUCTION
54
48.REPRESENTATIONS AND WARRANTIES OF TENANT
54
49.NAME OF BUILDING
56

iii
50.SECURITY
56
51.JURY TRIAL WAIVER; CONSENT TO VENUE
57
52.RECORDATION
57
53.RIGHT TO LEASE
57
54.FORCE MAJEURE
57
55.QUIET ENJOYMENT
57
56.ACCEPTANCE
58
57.NO SETOFF
58
58.NON-DISCLOSURE OF LEASE TERMS
58
59.MISCELLANEOUS
59
60.INTENTIONALLY OMITTED.
59
61.TEMPORARY SPACE
59
62.RIGHT OF FIRST OFFER
60
63.RENEWAL OPTION
61

iv
INDEX OF EXHIBITS
A Diagram of the Premises
B Tenant Improvements
C [Intentionally Omitted]
D Rules and Regulations
E Form of Estoppel Certificate
F [Intentionally Omitted]
G Exterior Sign Criteria

v
INDEX OF DEFINED TERMS
Accessibility Laws
22
Additional Rent
4
Alteration
23
Alterations
23
Annual Statement
11
Anti-Terrorism Law
55
Appraisal Panel
62
Base Insurance Expenses
11
Base Operating Expenses
11
Base Rent
4
Base Taxes
11
Base Utility Expenses
11
Base Year
11
Basic Lease Information
1
Building
2
Building Standard
73
Building Systems
5
Building’s Sustainability Practices
6
business days
58
Casualty Discovery Date
31
Change Order
75
Commencement Date
4
Common Areas
2
Comparable Buildings
xi
Comparison Leases
63
Comparison Renewal Buildings
63
Computation Year
11
Condemnation
33
Construction Allowance
76
Construction Documents
67
Construction Rules and Regulations
23
Contractor
69
Cost-Saving Capital Improvements
7
CSG
1
CSG Fifth Amendment
1
CSG First Amendment
1
CSG Fourth Amendment
1
CSG Lease
1
CSG Lease Termination
1
CSG Second Amendment
1
CSG Seventh Amendment
1
CSG Sixth Amendment
1
CSG Sublease
1
CSG Subleased Premises
1

vi
CSG Third Amendment
1
Data Center
18
Default
38
Determination
62
Discretionary Allowance Amount
67
Electric Service Provider
15
Environmental Laws
46
EV Chargers
xi
Executive Order No. 13224
55
Existing Monument Signage
30
Expense Adjustment Deadline
11
Expense Claim
14
Expenses
4
Expiration Date
4
Exterior Building Signage
30
Exterior Signage
30
Force Majeure
57
Government-Required Capital Improvements
7
Green Building Standards
6
Hazardous Materials
46
Independent CPA
14
Institutional Owner Practices
7
Insurance Expenses
9
Landlord
44
Landlord Allowance Contest
77
Landlord Insureds
27
Landlord Parties
50
Landlord Self-Help Contest
40
Landlord Work
68
Landlord’s Agents
20
Landlord’s Determination
62
Landlord’s Representative
67
Laws
21
Lease
1
Major-Trade Subcontractors
24
Maximum Allowance Amount
67
Maximum Density
21
Mold Conditions
26
Negotiation Period
61
New Monument Signage
30
Normal Business Hours
15
Notice of Landlord Default
39
Offer Notice
60
Operating Expenses
4
Original CSG Lease
1
Original Landlord
1

vii
Parking Areas
2
Permitted Alterations
25
Permitted Capital Improvements
7
Permitted Transfer Costs
36
Pierce
xi
Potential Allowance Payment Default
77
Potential Self-Help Default
40
Preliminary Plans
67
Premises
2
Prevailing Market Rate
63
Private Restrictions
21
Prohibited Person
55
Project
2
Proportionate Share
12
Renewal Notice
61
Renewal Option
61
Renewal Term
61
Rent
13
Report Date
14
Required Removal Alterations
25
Required Sustainability Practices
5
ROFO Acceptance Notice
60
ROFO Space
59
Rules and Regulations
51
Security Deposit
20
SNDA
45
Space Planning Allowance
67
Substantially Completed
67
Successor Landlord
45
Superior Lease(s)
45
Superior Lessor
45
Superior Mortgage(s)
45
Superior Mortgagee
45
Taxes
10
Temporary Space
59
Tenant Improvements
67
Tenant’s Agents
21
Tenant’s Consultant
14
Tenant’s Determination
62
Tenant’s Property
27
Tenant’s Representative
67
Third-Party Tenant
60
Total Cost
68
Transfer Premium
35
USA Patriot Act
55
Utilities
9

viii
Utility
9
Utility Expenses
9
Variable Expenses
12
Visitors
53
Work Letter
2
worth at the time of award
41

ix
LEASE AGREEMENT
BASIC LEASE INFORMATION
Lease Date:
February         , 2023
Landlord:
TWO MAROON CIRCLE INVESTORS, LLC, 
a Delaware limited liability company
Landlord’s Address:
c/o UBS Realty Investors LLC
2515 McKinney Avenue, Suite 800
Dallas, TX 75201
Attention: Asset Manager Two Maroon Circle
All notices sent to Landlord under this Lease shall be sent to the above
address, with simultaneous copies to:
UBS Realty Investors LLC
Ten State House Square, 15th Floor
Hartford, CT 06103-3604
Attention: General Counsel
and
Bonnie Keyes
Senior Real Estate Manager
CBRE
Property Management
10065 E. Harvard Ave. Ste. 101
Denver, CO 80231
Telephone: 720 531 3335
Direct: 720 531 3333
bonnie.keyes@cbre.com
Tenant:
ZYNEX, INC.,
a Nevada corporation
Tenant’s Contact Person:
Dan Moorhead, Chief Financial Officer
Tenant’s Address and
Telephone Number:
c/o Zynex Medical
9655 Maroon Circle, Englewood, Co 80112
Attention: Dan Moorhead, Chief Financial Officer
Telephone: 720-282-1530
dmoorhead@Zynex.com

x
Premises Square
Footage:
Approximately Forty-one Thousand Four Hundred Twenty-seven
(41,427) rentable square feet
Premises Address:
Two Maroon Circle 9555 Maroon Circle Englewood, Colorado 80112
Project:
Two Maroon Circle, together with the land on which the Project is
situated and all Common Areas
Tenant’s Proportionate
Share of Project:
48.41%, subject to adjustment as provided in Paragraph ‎4(c)
Length of Term:
Sixty-six (66) months
Commencement Date:
July 1, 2023
Expiration Date:
December 31, 2028
Base Rent:
Months
Rentable Sq.
Ft.
Annual
Base Rate
(per rsf)
Annual Base
Rent
Monthly Base
Rent
1 – 6
41,427
x $0.00
=$0.00
$0.00
7 – 18
41,427
x $24.75
= $1,025,318.25 $85,443.19
19 – 30
41,427
x $25.25
= $1,046,031.75 $87,169.31
31 – 42
41,427
x $25.75
= $1,066,745.25 $88,895.44
43 – 54
41,427
x $26.25
= $1,087,458.75 $90,621.56
55- 66
41,427
x $26.75
= $1,108,172.25 $92,347.69
Prepaid Base Rent:
Eighty-five Thousand Four Hundred Forty-three and 19/100 Dollars
($85,443.19)
Prepaid Additional Rent:
None
Month(s) to which Prepaid Base Rent will be
Applied:
Seventh (7th) month of the Term
Base Year:
2023
Security Deposit:
Ninety-two Thousand Three Hundred Forty-seven and 69/100 Dollars
($92,347.69)
Guarantor:
None

xi
Permitted Use:
General office use consistent with the standards of a “Class A” office
building in the vicinity and submarket of the Premises (a, “Comparable
Building” or “Comparable Buildings”). Landlord covenants and agrees
that Tenant’s historic use of the Premises per the terms and provision of
the CSG Sublease (as defined below) complies with the Permitted Use as
set forth herein. To Landlord’s current actual knowledge, Landlord hereby
represents, warrants and covenants that, except as otherwise expressly set
forth in this Lease, there are no restrictions or prohibitions, whether of
record or otherwise, on Tenant’s Permitted Use. Notwithstanding
anything contained herein to the contrary, Tenant shall not be bound by
amendments to any matters of record that unreasonably (i) adversely
affect Tenant’s ability to use the Premises, (ii) adversely impact Tenant’s
parking; and/or (iii) increase Tenant’s Rent (as defined herein) obligations
hereunder or increase any other obligation of Tenant hereunder. Landlord
represents and warrants, to the current actual knowledge of Carl Pierce, as
the representative of Landlord in charge of the asset management of the
Project as of Lease Date (“Pierce”), without a duty of investigation and
based solely on that certain title commitment number ABC70794249
issued by Land Title Guarantee Company for the Project (a copy of which
has been provided to Tenant), there is nothing in any declaration,
easement agreement or similar agreement recorded in the real property
records of Douglas County, Colorado affecting the Building (including,
without limitation, any Private Restrictions, defined below) that conflicts
with the terms and conditions of this Lease.
Reserved Parking Spaces:
Eight (8) exclusive and designated covered parking spaces, four (4) of
which are served by electric vehicle (or EV) chargers (the “EV
Chargers”)
Unreserved Parking
Spaces:
One Hundred Fifty-eight (158) nonexclusive and undesignated parking
spaces
Broker(s):
CBRE (Landlord’s Broker)
Savills (Tenant’s Broker)

LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into by and between Landlord and Tenant as of the Lease Date.
The defined terms used in this Lease Agreement which are defined in the Basic Lease Information attached to this Lease
Agreement (“Basic Lease Information”) shall have the respective meanings and definitions given them in the Basic Lease
Information. The Basic Lease Information, the exhibits, the addendum or addenda described in the Index of Exhibits, and
this Lease Agreement are and shall be construed as a single instrument and are referred to herein as this “Lease.”
BACKGROUND
A.
Maroon Office Partners II, LLC, a Colorado limited liability company (“Original Landlord”),
Landlord’s predecessor-in-interest, and CSG Systems, Inc., a Delaware corporation (“CSG”), entered into that certain
Office Lease dated as of September 28, 1999 initially for the first (1st), second (2nd) and third (3rd) floors of the Building
consisting of Sixty-three Thousand Five Hundred Seventy-nine rentable square feet (the “Original CSG Lease”).
B.
The Original CSG Lease has been amended by that certain First Amendment to Lease Agreement dated
as of November 11, 1999 (the “CSG First Amendment”); that certain Second Amendment to Lease Agreement dated as
of March 14, 2000 (the “CSG Second Amendment”); that certain Third Amendment to Lease Agreement dated as of
September 23, 2005 (the “CSG Third Amendment”); that certain Fourth Amendment to Lease Agreement dated as of
March  30, 2006 (the “CSG Fourth Amendment”); that certain Fifth Amendment to Lease Agreement dated as of
April  30, 2007 (the “CSG Fifth Amendment”), which was terminated by the Sixth Amendment; that certain Sixth
Amendment to Lease Agreement dated as of January 22, 2014 (the “CSG Sixth Amendment”); and that certain Seventh
Amendment to Lease Agreement dated as of January  31, 2023 (the “CSG Seventh Amendment”) the Original CSG
Lease, as amended by the CSG First Amendment, the CSG Second Amendment, the CSG Third Amendment, the CSG
Fourth Amendment, the CSG Sixth Amendment, and the CSG Seventh Amendment, is referred to herein as the “CSG
Lease”). The premises under the CSG Lease consist of the entire Building.
C.
Pursuant to Section 9 of the CSG Sixth Amendment (adding a new Section 10(B) to the Original CSG
Lease), CSG has exercised its right to terminate the CSG Lease effective as of July 1, 2023 (such termination being the
“CSG Lease Termination ”).
D.
Tenant and CSG have entered into that certain Agreement of Sublease dated as of October 20, 2017 (as
amended, the “CSG Sublease”), pursuant to which Tenant currently subleases the entire Building (the “CSG Subleased
Premises”). The CSG Sublease is scheduled to expire on June  30, 2023, and the Term of this Lease will commence
immediately after the CSG Lease is terminated as more particularly set forth herein.

2
F.
Landlord and Tenant have agreed to enter into this Lease for the first (1st) and second (2nd) floors of the
Building after the expiration of the CSG Sublease and the termination of the CSG Lease pursuant to the CSG Lease
Termination, all as more particularly set forth herein.
AGREEMENT
1.
DEMISE
In consideration for the rents and all other charges and payments payable by Tenant, and for the agreements, terms
and conditions to be performed by Tenant in this Lease, LANDLORD DOES HEREBY LEASE TO TENANT, AND
TENANT DOES HEREBY HIRE AND TAKE FROM LANDLORD, the Premises described below (the “Premises”),
upon the agreements, terms and conditions of this Lease for the Term hereinafter stated.
2.
PREMISES
(a)
The Premises demised by this Lease are located in that certain building (the “Building”) specified in the
Basic Lease Information, which Building is located in that certain real estate development (the “Project”) specified in the
Basic Lease Information. The Premises have the address and contain the square footage specified in the Basic Lease
Information. The location and approximate dimensions of the Premises are depicted on Exhibit A, which is attached hereto
and incorporated herein by this reference. Tenant shall have the non-exclusive right (in common with the other tenants,
Landlord and any other person granted use by Landlord) to use the Common Areas (as hereinafter defined), except that
with respect to the Project’s parking areas (the “Parking Areas”), Tenant shall have only the rights, if any, set forth in the
Basic Lease Information and in Paragraph ‎44 below. For purposes of this Lease, “Common Areas” means all areas and
facilities outside the Premises and within the exterior boundary line of the Project that are, from time to time, provided and
designated by Landlord for the non-exclusive use of Landlord, Tenant and other tenants of the Project and their respective
employees, visitors, clients, customers and invitees. Landlord covenants and agrees to provide the Common Areas in a
manner and quality substantially commensurate with that of a Comparable Building for the Term.
(b)
Except as provided in this Lease, the Premises shall be leased by Tenant in “as is” condition without any
improvements or alterations by Landlord unless Landlord has expressly agreed to make such improvements or alterations
in a tenant improvement work letter attached hereto as Exhibit B (the “Work Letter”). If Landlord has agreed to make any
such improvements or alterations, then the Premises demised by this Lease and the Common Areas shall include any
Landlord Work (as that term is defined in the Work Letter) to be constructed by Landlord. Landlord shall construct any
Landlord Work on the terms and conditions set forth in the Work Letter. Landlord and Tenant agree to and shall be bound
by the terms and conditions of the Work Letter, if any.
(c)
Notwithstanding anything contained in this Lease to the contrary, Landlord represents and warrants that,
to Landlord’s current actual knowledge, as of the Lease Date, the Premises and all structural elements and Building
Systems (as defined herein) (including, without limitation, the electrical, HVAC, and mechanical and plumbing systems,
and including any

3
portions of those systems that exclusively service the Premises), the fire and life safety systems and the path of travel
requirements will be (i) in good working order and condition; and (ii) are in compliance with all Laws. If the Premises,
structural elements or systems do not comply with the foregoing as of the Lease Date, Landlord shall not be in default, but
agrees to perform, at its sole cost and expense, without reimbursement from Tenant, all necessary work to bring the
Premises, structural elements or systems in compliance herewith; provided, however, that the foregoing will not be an
ongoing warranty after the Lease Date, and if such items require repair or replacement due to failure after the Lease Date,
then Landlord will be entitled to reimbursement for such costs to the extent permitted in accordance with this Lease.
(d)
To the extent Tenant performs the Tenant Improvements (as that term is defined the Work Letter) prior to
the Commencement Date, Tenant will conduct them pursuant to the Work Letter attached to this Lease, but also as
“Alterations” under Section 10 of the Original CSG Lease. The CSG Seventh Amendment approves Tenant’s performance
of the Tenant Improvements per the terms of the CSG Sublease and Landlord’s performance of the Landlord Work.
(e)
Landlord has the right, in its commercially reasonable discretion exercised in a manner commensurate
with that of owners of Comparable Buildings, from time to time, to (provided that the same are commensurate with that of
Comparable Buildings): (i) make changes to the Common Areas, the Building and/or the Project, including, but not limited
to, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, ingress, egress,
direction of driveways, entrances, hallways, corridors, lobby areas and walkways; (ii)  close temporarily any of the
Common Areas for maintenance purposes so long as reasonable access to the Premises remains available; (iii)  add
additional buildings and improvements to the Common Areas or remove existing buildings or improvements therefrom;
(iv) use the Common Areas while engaged in making additional improvements, repairs or alterations to the Project or any
portion thereof, and (v) do and perform any other acts, alter or expand, or make any other changes in, to or with respect to
the Common Areas, the Building and/or the Project as Landlord may deem appropriate. Without limiting the foregoing, but
subject to the same limitations outlined above, Landlord reserves the right from time to time to install, use, maintain, repair,
relocate and replace pipes, ducts, conduits, wires, meters, and equipment for service to the Premises or to other parts of the
Building which are above the ceiling surfaces, below the floor surfaces, within the walls and in the central core areas of the
Building which are located within the Premises or elsewhere in the Building. Landlord shall use reasonable efforts while
conducting any of the foregoing activities to minimize any interference with Tenant’s use of the Premises, but Landlord
shall not be subject to liability nor shall Tenant be entitled to any compensation or abatement or diminution of Rent (as
defined below) as a result of such activities, alterations or changes, except as expressly provided in this Lease; provided,
however, that Landlord shall not exercise any of the foregoing rights or any other reserved rights in a manner that will
unreasonably (A) affect Tenant’s use and occupancy of the Premises for the Permitted Use hereunder; (B) increase Tenant’s
obligations hereunder; (C) decrease Tenant’s rights hereunder; and/or (D) impair access, views, light or parking in and for
the Premises or the signage for the Premises, if any.
(f)
No rights to any view or to light or air over any property, whether belonging to Landlord or any other
person, are granted to Tenant by this Lease. If at any time any windows of the Premises are temporarily darkened or the
light or view therefrom is obstructed, the same shall be without liability to Landlord and without any reduction or
diminution of Tenant’s obligations

4
under this Lease. Noise, dust or vibration or other incidents to construction of improvements on lands adjacent to the
Building, whether or not owned by Landlord, shall in no way affect this Lease or impose any liability on Landlord.
Landlord shall have the absolute right at all times, including an emergency situation, to limit, restrict, or prevent access to
the Premises, the Building, and/or the Project in response to an actual, suspected, perceived, or publicly or privately
announced health or security threat.
3.
TERM
The term of this Lease (the “Term”) shall commence on July 1, 2023 (the “Commencement Date”) and shall
terminate on December 31, 2028 (the “Expiration Date”).
4.
RENT
(a)
Base Rent. Tenant shall pay to Landlord, in advance on the first day of each month of the Term, without
further notice or demand and without abatement, offset, rebate, credit or deduction for any reason whatsoever, except as
otherwise provided in this Lease, the monthly installments of rent specified in the Basic Lease Information (the “Base
Rent”).
Upon execution of this Lease, Tenant shall pay to Landlord the Security Deposit and Prepaid Base Rent to be
applied toward Base Rent for the month(s) of the Term specified in the Basic Lease Information.
As used in this Lease, the term “Additional Rent” means all sums of money, other than Base Rent, that shall
become due from and payable by Tenant pursuant to this Lease, and “Expenses” means the total of Operating Expenses,
Insurance Expenses, Utility Expenses, and Taxes.
(b)
Additional Rent.
(1)
During the Term, in addition to the Base Rent, Tenant shall pay to Landlord as Additional Rent,
in accordance with this Paragraph ‎4, (A) Tenant’s Proportionate Share of the total dollar increase, if any, in Operating
Expenses (as defined below) attributable to each Computation Year (as defined below) over Base Operating Expenses (as
defined below), (B) Tenant’s Proportionate Share of the total dollar increase, if any, in Insurance Expenses (as defined
below) attributable to each Computation Year over Base Insurance Expenses (as defined below), (C) Tenant’s Proportionate
Share of the total dollar increase, if any, in Utility Expenses (as defined below) attributable to each Computation Year over
Base Utility Expenses (as defined below), and (D) Tenant’s Proportionate Share of the total dollar increase, if any, in Taxes
(as defined below) attributable to each Computation Year over Base Taxes (as defined below). If during any Computation
Year, Operating Expenses, Insurance Expenses, Utility Expenses or Taxes decrease below the amount of Base Operating
Expenses, Base Insurance Expenses, Base Utility Expenses or Base Taxes, respectively, Tenant’s Proportionate Share of the
applicable passthrough for such Computation Year shall be $0, and Tenant shall not be entitled to any decrease in Base
Rent or credit against amounts due hereunder.

5
(2)
As used in this Lease, the following terms shall have the meanings specified:
(A)
“Operating Expenses” means the total reasonable costs and expenses paid or incurred
by Landlord in connection with the ownership, operation, maintenance, management and repair of the Premises, the
Building and/or the Project or any part thereof, including, but not limited to, all the following items, subject to the
limitations below:
(i)
Common Area Operating Expenses. All costs to operate, maintain, repair,
replace, supervise, insure and administer the Common Areas, including any Parking Areas and all costs of resurfacing and
restriping Parking Areas, owned or controlled by Landlord for the use of tenants, supplies, materials, labor and equipment
used in or related to the operation and maintenance of the Common Areas, (including, signs and directories for the
Building and/or the Project, landscaping (including, but not limited to, maintenance contracts and fees to landscaping
consultants), amenities, sprinkler systems, sidewalks, walkways, driveways, curbs, lighting systems and security services,
if any, provided by Landlord for the Common Areas, and any charges, assessments, costs or fees levied by any association
or entity of which the Project or any part thereof is a member or to which the Project or any part thereof is subject.
(ii)
Parking Charges; Public Transportation Expenses. Any parking charges or
other costs levied, assessed or imposed by, or at the direction of, or resulting from statutes or regulations, or interpretations
thereof, promulgated by any governmental authority or insurer in connection with the use or occupancy of the Building or
the Project, and the cost of maintaining any public transit system, vanpool, transportation management program, or other
public or semi-public transportation requirements imposed in connection with Landlord’s ownership and operation of the
Building and/or the Project.
(iii)
Maintenance and Repair Costs. All costs to maintain, repair, and replace the
Premises, the Building and/or the Project or any part thereof and the personal property used in conjunction therewith
(including insurance deductibles) and including, but not limited to: (a) all costs paid under maintenance, management and
service agreements such as contracts for janitorial, security and refuse removal; (b) all costs to maintain, repair and replace
the roof coverings of the Building or the Project or any part thereof; (c) all costs to monitor, maintain, repair and replace
the heating, ventilation, air conditioning, plumbing, sewer, drainage, electrical, fire protection, escalator, elevator, life
safety and security systems and other mechanical, electrical and communications systems and equipment serving the
Premises, the Building and/or the Project or any part thereof (collectively, the “Building Systems”); (d) the cost of all
cleaning and janitorial services and supplies, the cost of window glass replacement and repair; (e) the cost of maintenance,
depreciation and replacement of machinery, tools and equipment (if owned by Landlord) and for rental paid for such
machinery, tools and equipment (if rented) used in the operation or maintenance of the Building; and (f) costs of energy
audits and commissioning the Building for purposes of improving energy efficiency and of applying for, obtaining,
maintaining, managing, and reporting associated with the Building’s Sustainability Practices and the applicable Green
Building Standards, if any (as those terms are defined below), but only to the extent (1)  intended to reduce (or avoid
increases in) Operating Expenses, but only to the extent of the cost savings reasonably anticipated by Landlord (based

6
upon sound documentation) to result therefrom at the time of such expenditure to be incurred in connection therewith,
(2) reasonably necessary as a result of government-mandated energy conservation measures or energy usage requirements;
and/or (3) reasonably necessary in order to comply with government-mandated emission reductions (the costs described in
clauses (2) and (3), as and only to the extent government-mandated, are, collectively, the “Required Sustainability
Practices”).
(a)
As used in this Lease, the term “Building’s Sustainability
Practices” means the operations and maintenance practices for the Building, whether
incorporated into the Building’s Rules and Regulations, Construction Rules and
Regulations, separate written sustainability policies or otherwise reasonably
implemented by Landlord with respect to the Building or the Project, as the same may
be revised from time to time, addressing, among other things: energy efficiency; energy
measurement and reporting; water usage; recycling, composting, and waste
management; indoor air quality; and chemical use.
(b)
As used in this Lease, the term “Green Building Standards” means
one or more of the following: the U.S. EPA’s Energy Star® Portfolio Manager, the
Green Building Initiative’s Green Globes™ building rating system, the U.S. Green
Building Council’s Leadership in Energy and Environmental Design (LEED®)
building rating system, the ASHRAE Building Energy Quotient (BEQ), the Global
Real Estate Sustainability Benchmark (GRESB), or other standard for high
performance buildings adopted by Landlord with respect to the Building or the Project,
as the same may be revised from time to time.
(iv)
Life Safety and Security Costs. All costs to install, maintain, monitor, repair
and replace all life safety systems, including, but not limited to: (a)  all fire alarm systems, serving the Premises, the
Building, and/or the Project or any part thereof (including all maintenance contracts and fees payable to life safety
consultants) whether such systems are or shall be required by Landlord’s insurance carriers, Laws (as hereinafter defined)
or otherwise; and (b) all costs of security and security systems at the Project, including, but not limited to, (i) wages and
salaries (including management fees) of all employees engaged in the security of the Project, (ii) all supplies, materials,
equipment, and devices used in the security of the Project, and any upgrades thereto, and (iii) all service or maintenance
contracts with independent contractors for Project security, including, but not limited to, alarm service personnel, security
guards, watchmen, and any other security personnel.
(v)
Management and Administration. All costs for management and
administration of the Premises, the Building, and/or the Project or any part thereof, including, but not limited to, fees and
costs for property management services, accounting, auditing, sustainability measuring, monitoring and reporting, billing,
postage, salaries and benefits

7
for all employees and contractors engaged in the management, operation, maintenance, repair and protection of the
Building and the Project up to the level of property manager, whether located at the Project or off-site, payroll taxes and
legal and accounting costs and fees for licenses and permits related to the ownership and operation of the Project.
Notwithstanding anything contained herein to the contrary, Tenant’s Proportionate Share of any Landlord’s management
and other fees and any administrative fees shall not exceed four percent (4%) of the gross Rent of the Project.
(vi)
Capital Improvements. Amounts paid for capital improvements or other
costs incurred in connection with the Building or the Project (a)  which are intended to reduce (or avoid increases in)
Expenses, but only to the extent of the cost savings reasonably anticipated by Landlord (based upon sound documentation)
to result therefrom at the time of such expenditure to be incurred in connection therewith (collectively, “Cost-Saving
Capital Improvements”), or (b) that are required by a governmental authority subsequent to the Lease Date
(“Government-Required Capital Improvements”, and with Cost-Saving Capital Improvements, collectively, the
“Permitted Capital Improvements”); provided, however, unless required by Laws or in order to comply with Landlord’s
repair and maintenance obligations under this Lease, in no event shall Permitted Capital Improvements include
(1) cosmetic capital improvements to the Project or Building, or (2) the replacement of any Building or Project structure
(other than sealants in any Building’s curtain walls). Expenditures for Cost-Saving Capital Improvements shall be
amortized over the applicable pay-back period based on the cost and estimated savings of the applicable Cost-Saving
Capital Improvement; expenditures for Government-Required Capital Improvements shall be amortized over the useful life
of such Permitted Capital Improvement (as determined by Landlord’s accountants in accordance with Institutional Owner
Practices (as defined below)). Tenant shall only be responsible for payment as Expenses of such Permitted Capital
Improvement which are amortized during the Term. If Landlord is required to amortize a Permitted Capital Improvement,
the cost shall be amortized with an interest factor on the unamortized cost of such item equal to eight percent (8%) per
annum. “Institutional Owner Practices” means sound accounting and property management principles consistently
applied which are consistent with the practices of the majority of the owners of similarly situated buildings located in
Denver metropolitan area that are Comparable Buildings.
(vii)
Compliance with Laws. All non-capital costs to comply with the
requirements of any Laws.
Notwithstanding anything in this Paragraph ‎4(b) to the contrary, Insurance Expenses, Utility Expenses and Taxes shall not
be deemed to constitute “Operating Expenses” for purposes of this Paragraph ‎4(b)(2)(A).
(B)
Exclusions from Operating Expenses. Notwithstanding anything contained herein to
the contrary, Expenses and Additional Rent shall not include: (i) all costs associated with the creation and operation of the
business of the entity which constitutes “Landlord” (as distinguished from the costs of Project operations) including, but
not limited to, Landlord’s general corporate overhead and general administrative expenses or such costs that would be
normally included in a management fee (e.g., placement/recruiting fee for employees, corporate accounting, health/sports
club dues, employee parking and transportation charges,

8
tickets to special events, bank charges, etc.); (ii) costs incurred by Landlord in connection with the original design and
construction of the Building or in connection with correcting any defects in the initial construction of the Building, the
Common Areas and/or the Project, and costs that were actually paid by Landlord’s warranty; (iii) capital costs, except for
Permitted Capital Improvements (as defined below); (iv) the costs of contract services provided by Landlord or its
subsidiaries or affiliates, together with overhead or profits paid to subsidiaries or affiliates of Landlord, or to any party as a
result of a non‐competitive selection process, for management or other services to the Building and/or Project, or for
supplies or other materials, to the extent that the costs of such services, supplies, or materials exceed the costs that would
have been paid had the services, supplies or materials been provided by parties unaffiliated with the Landlord on a
competitive basis and are consistent with those incurred by Comparable Buildings; (v) except for the management fee
outlined above, wages, salaries and other compensation paid to any executive employee of Landlord and/or Landlord’s
property manager (and/or executive employee of any agents of Landlord engaged in management of the Building or
Project) above the grade of Building manager; (vi) any cost or expense related to removal, cleaning, abatement or
remediation of (1)  Hazardous Materials (as defined herein), including without limitation, hazardous substances in the
ground water or soil (or vapors or other air quality contaminants arising from Hazardous Materials in the groundwater or
soils), whether or not such removal is required by Laws, or (2) mold, yeast, fungi or other similar biological agent, whether
visible or invisible, or hidden, that exceeds permissible or regulated limits, requires remediation or abatement; (viii)
Landlord’s gross receipts taxes, personal and corporate income taxes, inheritance and estate taxes, other business taxes and
assessments, franchise, gift and transfer taxes; (ix) any fines, costs, penalties or interest resulting from the negligence,
misconduct (including illegal activities) or omission of the Landlord, any other tenant, or any of their respective agents,
contractors, or employees; (x) any penalties or damages that Landlord pays to Tenant under this Lease or to other tenants in
the Building or Project under their respective leases, except to the extent same are caused by Tenant’s failure to timely
comply with its obligations under this Lease; (xi) any rental payments and related costs pursuant to any ground lease of
land underlying all or any portion of the Building and/or Project and common areas; (xii) any costs, fee, dues, contributions
or similar political or charitable expenses; (xiii) any rental either actual or not, for the Landlord’s and/or Landlord’s
property manager’s leasing office; (xiv) acquisition costs for high‐end sculptures, paintings, or other objects of art or the
display of such items, but excluding plants located in the lobby of the Building; (xv) costs incurred in connection with the
original design and construction of the Building or Project; (xvi) costs for reserves of any kind; (xvii) costs incurred in
connection with modifying, upgrading or replacing the Building’s telecommunication system; (xviii) except for Permitted
Capital Improvements, payments of principal, finance charges or interest on debt or amortization on any mortgage, deed of
trust of other debt, and rental payments (or increases in same) under any ground or underlying lease or leases (except to the
extent the same may be made to pay or reimburse, or may be measured by real estate taxes); (xix) interest, amortization
payments, late charges, fees and other charges on any mortgage or other evidence of indebtedness, whether or not secured
by all or any portion of the property, except as specifically set forth above; (xx) leasing commissions, attorney’s fees and
related costs, incurred by Landlord or its agents in connection with negotiations for leases with tenants, other occupants or
prospective tenants or other occupants, and similar costs incurred in connection with disputes with and/or enforcement of
any agreement related to the sale of the Building and/or Project, and any leases with tenants, other occupants, or
prospective tenants or other occupants of the Building or Project; (xxi) “Tenant allowances,” “tenant concessions,”

9
work letters, and other costs or expenses (including permit, license and inspection fees) incurred in completing, fixturing,
furnishing, renovating or otherwise improving, decorating or redecorating space for tenants or other occupants of the
Project, or vacant, leasable space in the Project, including space planning/interior design fees for the same; (xxii) except for
Permitted Capital Improvements, depreciation, other “non-cash” expense items or amortization of capital improvements;
(xxiii) except as otherwise set forth in the Lease, compensation paid to clerks, attendants or other persons in commercial
concessions (such as a snack bar, restaurant or newsstand), if any, operated by Landlord or any subsidiary or affiliate of
Landlord); (xxiv) unless it becomes customary for this insurance to be carried by landlords in Comparable Buildings,
premiums and other charges with respect to terrorism insurance and earthquake insurance (unless required by Landlord’s
lender or is obtained by Landlord as part of an insurance program covering a portfolio of properties with discounted pricing
due to such portfolio); (xxv) costs of repairs, replacements or other work occasioned by fire, windstorm or other casualty,
or the exercise by governmental authorities of the right of eminent domain to the extent of insurance proceeds received;
(xxvi) legal fees, however incurred, except to the extent such legal fees were intended to reduce Expenses; (xxvii) costs of
electricity for the common areas that is directly billed to, or specifically requested by, any tenant of the Project, and/or any
HVAC outside of normal business hours provided to any tenant of the Building; (xxviii) rentals and other related operating
expenses, if any, incurred in leasing air conditioning systems, elevators or other equipment ordinarily considered to be of
capital nature, except temporary rentals and related expenses for a reasonable period to keep permanent systems in
operation while Landlord is diligently proceeding with necessary repairs; (xxix) any bad debts loss, rent loss or reserves for
bad debts or rent loss or operating reserves; (xxx) attorneys’ fees awarded to any tenant pursuant to any lease, or incurred
as a result of Landlord’s negligence, misconduct or failure to maintain any insurance required of Landlord under this Lease
or any other lease or occupancy agreement; (xxxi) any costs or expenses that are incurred directly or indirectly with respect
to Landlord’s indemnity obligations under this Lease or any other lease or occupancy agreement related to the Building or
Project; (xxxii) coastal windstorm or flood insurance deductibles, if any; (xxxiii) impact or development fees; (xxxiv) tap-
in or connection fees; (xxxv)  fines, interest and penalties incurred due to the late payment of Expenses due to the
negligence or intentional omission of Landlord; (xxxvi) any costs of any services sold or provided to other occupants for
which Landlord is entitled to be reimbursed by such other occupants as an additional charge or rental over and above the
basic rent (and escalations thereof); and (xxxvii) costs, fees and expenses for the operation, maintenance and management
of any parking that are recovered by Landlord by the revenues from such parking, it being the intent that Operating
Expenses may include such costs, fees and expenses to the extent the same are not otherwise recovered by revenues.
(C)
“Insurance Expenses” means the total costs and expenses paid or incurred by
Landlord in connection with obtaining insurance on the Premises, the Building and/or the Project or any part thereof or
interest therein, including, but not limited to, premiums for “Causes of Loss – Special Form” property insurance,
commercial general liability insurance, rent loss or abatement insurance, flood or surface water coverage, and other
insurance as Landlord deems necessary provided that the same in all instances is comparable to the insurance being
obtained for Comparable Buildings using Institutional Owner Practices (as defined below), and any commercially
reasonable deductibles paid under policies of any such insurance. The foregoing shall not be deemed an agreement by
Landlord to carry any particular insurance relating to the Premises, Building, or Project.

10
(D)
“Utility Expenses” means the cost of all water, gas, sewers, oil and other utilities
(individually, “Utility” and collectively, “Utilities”), including any surcharges, and any amounts, taxes, charges,
surcharges, assessments or impositions levied, assessed or imposed upon the Premises, the Building and/or the Project or
any part thereof, or upon Tenant’s use and occupancy thereof, as a result of any rationing of Utility services or restriction
on Utility use affecting the Premises, the Building and/or the Project, as provided in Paragraph  ‎5 below; provided,
however, that the foregoing will specifically exclude any administrative fees or mark up associated with such Utility
services. Notwithstanding the foregoing, Utility Expenses will expressly exclude the cost of electricity for standard office
operations. There shall be no duplication of costs for reimbursements in calculating Expenses. Landlord shall calculate all
Expenses in accordance with Institutional Owner Practices.
(E)
“Taxes” means all real estate taxes and assessments, which shall include any form of
tax, assessment (including any special or general assessments and any assessments or charges for Utilities or similar
purposes included in any tax bill for the Building or the Project or any part thereof imposed by any authority having the
direct or indirect power to tax, or by any city, county, state or federal government or any improvement or other district or
division thereof, whether such tax is determined by the area of the Premises, the Building and/or the Project or any part
thereof, or the Rent and other sums payable hereunder by Tenant or by other tenants, including, but not limited to, (i) any
gross income, gross receipts or excise tax levied by any of the foregoing authorities with respect to receipt of Rent and/or
other sums due under this Lease; (ii) upon any legal or equitable interest of Landlord in the Premises, the Building and/or
the Project or any part thereof, (iii)  upon this transaction or any document to which Tenant is a party creating or
transferring any interest in the Premises, the Building and/or the Project; (iv) levied or assessed in lieu of, in substitution
for, or in addition to, existing or additional taxes against the Premises, the Building and/or the Project, whether or not now
customary or within the contemplation of the parties; or surcharged against the Parking Areas. “Taxes” shall also include
legal and consultants’ fees, costs and disbursements incurred in connection with proceedings to contest, determine or
reduce Taxes, Landlord specifically reserving the right, but not the obligation, to contest by appropriate legal proceedings
the amount or validity of any Taxes, limited, however, to the amount of reduction of Taxes. Notwithstanding anything
contained herein to the contrary, Taxes will not include (i) any inheritance, estate, succession, transfer, gift, franchise,
corporate, income or profit tax or capital levy imposed upon Landlord; (ii) any ad valorem real property taxes and
assessments levied upon or with respect to any separately assessed premises; (iii) any estate or death tax imposed on
Landlord or with respect to the Premises as a result of the death of Landlord or its partners; (iv) any special assessments
levied for improvements made by or at the request of Landlord regardless when levied or any special assessments levied
for improvements benefiting the Building or Project that were levied before the initial completion thereof; (v) any taxes or
special assessments attributable to any undeveloped portion to the Project (or any land adjacent to the Project); (vi) any
charges in the nature of impact fees attributable to Landlord’s development of the Project (or of a project which is adjacent
to the Project); or (vii) the amount by which any tax or assessment exceeds the amount Landlord would pay if the Building
were Landlord’s sole asset and the rents therefrom its sole income. With respect to any special assessment or charge which
would otherwise be included in Taxes and which may be paid in installments, Tenant shall be responsible to pay only those
installments, or parts of installments, which would have become due and payable during the Term of this Lease had the
payments been

11
made in installments over the maximum permitted time period. In addition and notwithstanding anything contained herein
to the contrary, Taxes will not include fees or other charges levied upon or with respect to the rents and additional charges
payable by tenants of the Project and imposed by any city, county, special district or other taxing authority having
jurisdiction (“Rent Taxes”) unless such Rent Taxes are assessed, levied or imposed in replacement of, or in lieu of, real
property taxes otherwise payable hereunder, in which event Taxes shall include Rent Taxes for all purposes under this
Lease or unless applicable Laws requires that such rent taxes be paid by tenants. Tenant will have the right to contest any
personal property taxes payable by Tenant, provided Tenant (1) provides Landlord with written notice of such contest, and
(2)  makes timely payment of the contested Taxes or special assessments hereunder. Landlord will contest Taxes if, in
Landlord’s reasonable judgment, it is prudent to conduct such contest, and it will be conclusive evidence that Landlord’s
judgment is reasonable if Landlord does not contest Taxes after consulting with a third-party tax consultant (including,
without limitation, a national tax consulting firm) who has advised that a contest would not be worthwhile.
(F)
“Base Year” means the calendar year specified in the Basic Lease Information.
(G)
“Base Operating Expenses” means the amount of Operating Expenses for the Base
Year.
(H)
“Base Insurance Expenses” means the amount of Insurance Expenses for the Base
Year.
(I)
“Base Taxes” means the amount of Taxes for the Base Year.
(J)
“Base Utility Expenses” means the amount of Utility Expenses for the Base Year.
(K)
“Computation Year” means each twelve (12) consecutive month period commencing
January 1 of each year during the Term following the Base Year.
(L)
“Expense Adjustment Deadline” means June 1 of the calendar year following the
year in which this Lease expires or terminates. Notwithstanding anything to the contrary contained in this Lease, Tenant
shall have no obligation to pay any Expenses to Landlord which are first billed by Landlord after the Expense Adjustment
Deadline; provided, however, nothing contained herein shall be deemed to relieve Tenant from its liability to pay Tenant’s
Proportionate Share of Expenses under this Lease which were billed by Landlord prior to the Expense Adjustment
Deadline.
(c)
Payment of Additional Rent.
(1)
Prior to the commencement of each Computation Year or as soon thereafter as practicable (but
in no event later than May 1), Landlord shall notify Tenant of Landlord’s estimate of the total amounts that will be payable
by Tenant under Paragraph ‎4(b) for the ensuing Computation Year, and Tenant shall pay such estimated Additional Rent on
a monthly basis, in

12
advance, on the first day of each month. Tenant shall continue to make said monthly payments until notified by Landlord of
a change therein. If at any time or times Landlord determines that the amounts payable under Paragraph ‎4(b) for the current
Computation Year will vary from Landlord’s estimate given to Tenant by five percent (5%) or more, Landlord, by notice to
Tenant, may revise the estimate for such Computation Year, and subsequent payments by Tenant for such Computation
Year shall be based upon such revised estimate. By May 1 of each calendar year following the initial Computation Year,
Landlord shall provide to Tenant a statement (“Annual Statement”) showing the actual Additional Rent due to Landlord
under Paragraph ‎4(b) for the prior Computation Year. If the total of the monthly payments of Additional Rent that Tenant
has made for the prior Computation Year under Paragraph ‎4(b) is less than the actual Additional Rent chargeable to Tenant
for such prior Computation Year, then Tenant shall pay the difference in a lump sum within thirty (30) days after receipt of
such Annual Statement from Landlord. Any overpayment by Tenant of Additional Rent under Paragraph ‎4(b) for the prior
Computation Year shall, at Landlord’s option (except at the expiration of this Lease), be credited against past due or current
amounts owed by Tenant or returned to Tenant in a lump sum payment within ten (10) days after delivery of such Annual
Statement. Notwithstanding anything contained in this Lease to the contrary, Landlord hereby waives all right to collect
Additional Rent for which an Annual Statement complying with the requirements of this Paragraph has not been submitted
to Tenant within eighteen  (18) months after the end of the Computation Year during which such Additional Rent was
incurred.
(2)
Landlord’s then-current annual operating and capital budgets for the Building and the Project or
the pertinent part thereof shall be used for calculating Tenant’s monthly payment of estimated Additional Rent for the
current year, subject to adjustment as provided above. Even though this Lease has expired or terminated and Tenant has
vacated the Premises, with respect to the year in which this Lease expires or terminates, subject to the provisions of this
Lease, Tenant shall remain liable for payment of any amount due to Landlord in excess of the estimated Additional Rent
previously paid by Tenant, and, conversely, Landlord shall remain liable to promptly return to Tenant any overpayment of
Additional Rent.
(3)
Landlord, in its reasonable discretion, may allocate Operating Expenses, Insurance Expenses,
Utility Expenses, or Taxes among office, retail or other portions or occupants of the Project, provided that such allocation
is commensurate with Institutional Owner Practices. With respect to Expenses which Landlord allocates to the Building,
Tenant’s “Proportionate Share” shall be the percentage set forth in the Basic Lease Information as Tenant’s Proportionate
Share of the Building, as adjusted by Landlord from time to time for a remeasurement of or changes in the physical size of
the Building, whether such changes in size are due to an addition to or a sale or conveyance of a portion of the Building or
otherwise. With respect to Expenses which Landlord allocates to the Project as a whole or to only a portion of the Project,
Tenant’s “Proportionate Share” shall be, with respect to Operating Expenses, Insurance Expenses, Utility Expenses or
Taxes which Landlord allocates to the Project as a whole, the percentage set forth in the Basic Lease Information as
Tenant’s Proportionate Share of the Project and, with respect to Expenses which Landlord allocates to only a portion of the
Project, a percentage calculated by Landlord from time to time in its reasonable discretion (and in a manner commensurate
with Institutional Owner Practices) and furnished to Tenant in writing, in either case as adjusted by Landlord from time to
time for a remeasurement of or changes in the physical size of the Project, whether such changes in size are due to an
addition to or a sale or

13
conveyance of a portion of the Project or otherwise. Notwithstanding the foregoing, Landlord may equitably adjust
Tenant’s Proportionate Share for all or part of any item of expense or cost reimbursable by Tenant that relates to a repair,
replacement, or service that benefits only the Premises or only a portion of the Building and/or the Project that services
Tenant specifically.
(4)
If the average occupancy level of the Building or the Project for the Base Year and/or any
subsequent Computation Year is not ninety-five percent (95%) occupied, then the Operating Expenses and Utility Expenses
that vary by rates of occupancy such as utilities, trash removal and janitorial services (as opposed to those fixed expenses
that do not vary by occupancy levels) (“Variable Expenses”) for such year shall be adjusted by Landlord, in its reasonable
discretion and in a manner commensurate with the standards of Comparable Buildings, to reflect the Variable Expenses
which would have been paid or incurred had the Building or the Project, as applicable, been ninety-five percent (95%)
occupied during such year. Notwithstanding the terms of the preceding sentence, Landlord covenants and agrees that
Tenant’s Proportionate Share of any adjusted Variable Expenses shall not exceed Tenant’s Proportionate Share of the actual
out-of-pocket costs paid by Landlord for such variable components of Operating Expenses and Utility Expenses that vary
by rates of occupancy, it being the intent of Landlord and Tenant that such adjustment of Variable Expenses shall not
operate as a profit mechanism or reserve fund for the benefit of Landlord.
(5)
Without limiting the foregoing terms of Paragraph ‎4(c), Landlord reserves the right from time to
time to remeasure the Building and/or the Project in accordance with the commonly used or current or revised standards
promulgated from time to time by the Building Owners and Managers Association (BOMA) or other generally accepted
measurement standards utilized by Landlord consistent with Institutional Owner Practices and to thereafter adjust the
Proportionate Share of Tenant and any other affected tenants of the Building and/or Project. Following receipt of written
notice from Landlord of such re-measurement, the Base Rent, Tenant’s Proportionate Share of the Project, and all other
future amounts payable by Tenant hereunder based upon the rentable area of the Premises shall be adjusted in accordance
with the revised measurement of the Premises.
(6)
Notwithstanding any contrary provision hereof, if, after Landlord’s delivery of any Annual
Statement, an increase or decrease in Taxes occurs for the applicable Computation Year or Base Year (whether by reason of
reassessment, supplemental assessment, error, or otherwise), Taxes for such Computation Year or the Base Year (and in the
case of an adjustment in the Base Year, the Taxes for subsequent Computation Years) shall be retroactively adjusted. If, as a
result of such adjustment, Tenant has underpaid or overpaid Tenant’s Proportionate Share of Taxes, Tenant shall pay
Landlord the amount of such underpayment within thirty (30) days after receipt of an invoice therefor, or Landlord, at
Landlord’s option, shall credit the amount of such overpayment against past due or current amounts owed by Tenant or
return the overpayment to Tenant in a lump sum payment.
(d)
General Payment Terms. The Base Rent, Additional Rent and all other sums payable by Tenant to
Landlord hereunder, any late charges assessed pursuant to Paragraph  ‎6 below and any interest assessed pursuant to
Paragraph ‎46 below, are referred to collectively as the “Rent.” All Rent shall be paid in lawful money of the United States
of America and through a domestic branch of a United States financial institution, by check or electronic payment. Checks

14
are to be made payable to Two Maroon Circle Investors, LLC as managed by CBRE, Inc. and mailed to Two Maroon
Circle, Bldg ID #GWN001, P.O. Box 82550, Goleta, California 93118-2550 and mailed to: at any time during the Term, or
to such other person or place as Landlord may, from time to time, designate to Tenant in writing by thirty (30) days’
advance notice. Wiring instructions for electronic payments will be provided separately. Rent for any fractional part of a
calendar month at the commencement or termination of the Term shall be appropriately prorated.
(e)
No writing on any check, or statement in any letter or other document accompanying any payment of
Rent from Tenant, and no acceptance by Landlord of less than the full amount of Rent owing, shall effect any accord and
satisfaction. Any such partial payment shall be treated as a payment on account, and Landlord may accept such payment
without prejudice to Landlord’s right to recover any balance due or to pursue any other remedy permitted by this Lease.
Accordingly, Tenant hereby waives the provisions of Colorado Law that would permit an accord and satisfaction contrary
to the provisions of this Paragraph ‎4(e). Tenant waives any right to specify the items against which any Rent paid is to be
credited, and Landlord may apply such payments to any Rent due or past due under this Lease. No payment, receipt or
acceptance of Rent following (i) any Default (which, for avoidance of doubt under this Lease, means beyond notice and
cure); (ii) the commencement of any action against Tenant; (iii) termination of this Lease or the entry of judgment against
Tenant for possession of the Premises; or (iv)  the exercise of any other remedy by Landlord, shall cure the Default,
reinstate this Lease, grant any relief from forfeiture, continue or extend the Term, or otherwise affect or constitute a waiver
of Landlord’s right to or the exercise of any remedy, including Landlord’s right to terminate this Lease and recover
possession of the Premises.
(f)
Annual Statements Binding. Every Annual Statement given by Landlord pursuant to Paragraph ‎4(c)
shall be conclusive and binding upon Tenant, unless within one hundred eighty (180) days after receipt of the applicable
Annual Statement, Tenant shall notify Landlord, in writing, that it disputes the correctness thereof, specifying the particular
respects in which the Annual Statement is claimed to be incorrect (“Expense Claim”). Pending the determination of such
dispute, Tenant shall, within thirty (30) days after receipt of such Annual Statement, pay Additional Rent in accordance
with Landlord’s Annual Statement and such payment shall be without prejudice to Tenant’s position.
(g)
Audit Rights. Provided that Tenant timely delivers an Expense Claim to Landlord, Tenant’s Consultant
(as defined below) shall have the right, at Tenant’s sole cost and expense, upon at least thirty (30) days’ prior notice to
Landlord, at any time during regular business hours, to review and photocopy Landlord’s records pertaining to Expenses
for the immediately preceding Computation Year only, and only to the extent reasonably necessary to evaluate the Expense
Claim. The inspection of Landlord’s records must be completed within thirty (30) days after such records are made
available to any private accounting, consulting or brokerage firm engaged by Tenant (“Tenant’s Consultant”) to inspect
Landlord’s records shall not be compensated on a contingency basis, in whole or in part. If, following the date Landlord
receives the written report of Tenant’s Consultant (the “Report Date”), Landlord disputes the findings therein, and
Landlord and Tenant are not able to resolve their differences within thirty (30) days following the Report Date, the dispute
shall be resolved by binding arbitration as follows: Landlord and Tenant shall each designate an independent certified
public accountant, who shall in turn jointly select an independent certified public accountant (the

15
“Independent CPA”). Within sixty  (60) days after selection, the Independent CPA shall review the relevant records
relating to Tenant’s Expense Claim and determine the proper amount payable by Tenant, which determination shall be final
and binding upon the parties. If the Independent CPA determines that the amount of Expenses billed to Tenant was
incorrect, the appropriate party shall pay to the other party the deficiency or overpayment, as applicable, within thirty (30)
days following delivery of the Independent CPA’s decision, without interest. The fees and costs of the Independent CPA
shall be paid by Tenant unless the Independent CPA determines that Tenant has overpaid Expenses for the applicable
Computation Year, in the aggregate, by more than four percent (4%), in which case Landlord shall pay the reasonable fees
and costs of the Independent CPA. The fees and costs of Tenant’s Consultant shall be paid by Tenant unless it is determined
that Tenant has overpaid Expenses for the applicable Computation Year, in the aggregate, by more than four percent (4%),
in which case Landlord shall pay the fees and costs of Tenant’s Consultant, excluding travel and lodging costs, with
Landlord’s obligation limited to a maximum of Five Thousand Dollars  ($5,000.00). Tenant shall keep all information
obtained by Tenant in connection with its review of Landlord’s records confidential and obtain the agreement of Tenant’s
Consultant and the Independent CPA to keep all such information confidential. Landlord may condition inspection of
Landlord’s records by Tenant’s Consultant or the Independent CPA upon receipt of an executed commercially reasonable
confidentiality agreement acceptable to Landlord and Tenant. Tenant agrees that Tenant’s sole right to inspect Landlord’s
books and records and to contest the amount of Expenses payable by Tenant shall be as set forth in this Paragraph ‎4(g), and
Tenant hereby waives any and all other rights pursuant to Laws to inspect such books and records and/or to contest the
amount of Expenses payable by Tenant.
5.
UTILITIES AND SERVICES
(a)
Subject to applicable Laws and the provisions of this Paragraph  ‎5, Landlord shall furnish or make
customary arrangements with utility and service providers to furnish to the Premises the following in a manner
commensurate with that of Comparable Buildings: (1)  electricity for lighting and operation of low-power usage office
machines; (2) cold or tepid water to points of supply in the Premises, if any, and to the Building restrooms, in volumes
provided to typical office tenants in the Building; (3) elevator service; (4) heat and air conditioning from 7:00 a.m. to
6:00 p.m. on weekdays and 8:00 a.m. to 1:00 p.m. Saturdays, excluding legal holidays generally recognized by Comparable
Buildings (“Normal Business Hours”); and (5)  janitorial services for the Premises on weekdays (excluding legal
holidays).
(b)
If requested by Tenant, Landlord shall furnish heat and air conditioning at times other than Normal
Business Hours upon twenty-four (24) hours’ notice, and the actual cost of such services, including labor, depreciation on
equipment, administration expenses and utility costs (including electricity costs), which costs are currently $75.00 for the
first hour and $35.00 for each hour thereafter, and will be subject to periodic increase, provided that any such increase is
commensurate with the market for Comparable Buildings, and all such amounts shall be paid by Tenant as Additional Rent,
payable concurrently with the next installment of Base Rent.
(c)
Subject to the limitations in this Lease on Landlord’s reserved rights set forth in Landlord reserves the
right to change the electricity provider and to provide electricity (or

16
supplemental electricity) from alternative energy sources, e.g., solar panels, at any time and from time to time in Landlord’s
sole discretion (any such provider being referred to herein as the “Electric Service Provider”). Tenant shall obtain and
accept electric service for the Premises only from and through Landlord, in the manner and to the extent expressly provided
in this Lease, at all times during the Term of this Lease, and Tenant shall have no right (and hereby waives any right Tenant
may otherwise have) (i) to contract with or otherwise obtain any electric service for or with respect to the Premises or
Tenant’s operations therein from any provider of electric service other than the Electric Service Provider, or (ii) to enter
into any separate or direct contract or other arrangement with the Electric Service Provider for the provision of electrical
service to the Premises. Subject to the limitations in this Lease on Landlord’s reserved rights set forth in ,Tenant shall
reasonably cooperate with Landlord and the Electric Service Provider at all times to facilitate the delivery of electrical
service to Tenant at the Premises and to the Building, including, but not limited to, allowing Landlord and the Electric
Service Provider, and their respective agents and contractors, (i) to install, repair, replace, improve and remove any and all
electric lines, feeders, risers, junction boxes, wiring, and other electrical equipment, machinery and facilities now or
hereafter located within the Building or the Premises for the purpose of providing electrical service to or within the
Premises or the Building, and (ii) reasonable access for the purpose of maintaining, repairing, replacing or upgrading such
electrical service from time to time. Subject to the limitations in this Lease on Landlord’s reserved rights set forth in this
Lease, Tenant shall provide such information and specifications regarding Tenant’s use or projected use of electricity at the
Premises as shall be required from time to time by Landlord or the Electric Service Provider to efficiently provide electrical
service to the Premises or the Building. Except as expressly provided in this Lease, in no event shall Landlord be liable or
responsible for any loss, damage, expense or liability, including, but not limited to, loss of business or any consequential
damages, arising from any failure or inadequacy of the electrical service being provided to the Premises or the Building,
whether resulting from any change, failure, interference, disruption, or defect in the supply or character of the electrical
service furnished to the Premises or the Building, or arising from the partial or total unavailability of electrical service to
the Premises or the Building, from any cause whatsoever, or otherwise, nor shall any such failure, inadequacy, change,
interference, disruption, defect or unavailability constitute an actual or constructive eviction of Tenant, or entitle Tenant to
any abatement or diminution of Rent or otherwise relieve Tenant from any of its obligations under this Lease.
(d)
Tenant acknowledges that the Premises, the Building and/or the Project may become subject to the
rationing of Utility services and electricity or restrictions on Utility and/or electricity use as required or offered by a utility
company, governmental agency or other similar entity having jurisdiction thereof. Tenant’s tenancy and occupancy
hereunder shall be subject to such rationing or restrictions as may be imposed upon Landlord, Tenant, the Premises, the
Building and/or the Project, and Tenant shall in no event be excused or relieved from any covenant or obligation to be kept
or performed by Tenant by reason of any such rationing or restrictions. Tenant shall comply with energy conservation
programs implemented by Landlord by reason of rationing, restrictions or Laws.
(e)
Except as expressly provided in this Lease, Landlord shall not be liable for any loss (including, but not
limited to, any injury or damage to or interference with Tenant’s business), cost, injury or damage to property caused by or
resulting from any variation, interruption, or failure of Utilities or electricity due to any cause whatsoever. Except as
expressly provided in this Lease,

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no temporary interruption or failure of such services incident to the making of repairs, alterations, improvements, or due to
accident, strike, or conditions or other events shall be deemed an eviction of Tenant or relieve Tenant from any of its
obligations hereunder. Except as expressly provided in this Lease and except for the negligence or willful misconduct of
Landlord or the Landlord’s Agents (as defined below) (but subject to any mutual waiver of subrogation), in no event shall
Landlord be liable to Tenant for any damage to the Premises or Tenant’s Property or for any loss of business or any damage
or injury to any property therein or thereon occasioned by bursting, rupture, leakage or overflow of any plumbing or other
pipes (including, but not limited to, water, steam, and/or refrigerant lines), sprinklers, tanks, drains, drinking fountains or
washstands, or other similar cause in, above, upon or about the Premises, the Building, or the Project.
(f)
Landlord shall have no liability for the failure to provide adequate heating, ventilation or air conditioning
due to the arrangement of partitioning in the Premises or changes thereto, or the failure of Tenant to keep heating,
ventilation and air conditioning vents in the Premises free of obstruction. Tenant shall not, without Landlord’s prior written
consent, use heat-generating machines, machines other than normal fractional horsepower office machines, equipment or
lighting other than Building standard lights in the Premises, which may affect the temperature otherwise maintained by the
air conditioning system or increase the water normally furnished for the Premises by Landlord. If such consent is given,
Landlord shall have the right to install supplementary air conditioning units or other facilities in the Premises, including
supplementary or additional metering devices, and the cost thereof, including the cost of installation, operation and
maintenance, increased wear and tear on existing equipment and other similar charges, as well as charges for electricity to
operate such machines, equipment or lighting, shall be paid by Tenant to Landlord upon billing by Landlord. In addition,
Tenant will be responsible for all electrical costs of operating the EV Chargers. Tenant shall not use water, heat or air
conditioning in excess of that normally supplied by Landlord. Tenant’s consumption of electricity shall not exceed the
Building’s capacity considering all other tenants of the Building.
(g)
Tenant shall separately arrange with, and pay directly to, the applicable telecommunications and data
companies or providers, as the case may be, for the furnishing, installation and maintenance of all Tenant’s
telecommunications and data services at the Premises. Except as expressly provided in this Lease and except for the
negligence or willful misconduct of Landlord or the Landlord’s Agents (but subject to any mutual waiver of subrogation),
Landlord shall not be liable for any damages resulting from interruption of, or Tenant’s inability to receive such service,
and any such inability shall not relieve Tenant of any of its obligations under this Lease. Tenant will not install, remove or
relocate computer, telecommunications or other similar data transmission equipment or lines in the plenum areas above the
Premises or in any Common Areas of the Building (including, without limitation, chases, shafts or conduits) without
Landlord’s prior written consent, which consent will not be unreasonably withheld, conditioned or delayed. If Landlord
gives such consent, all equipment must be installed within the Premises or in the plenum areas above the Premises (and not
in any Building mechanical, electrical, telecommunications or similar room), and in accordance with such conditions as
Landlord may reasonably impose. All telecommunications cabling and wiring shall be installed, repaired, maintained,
modified, terminated, and removed at Tenant’s expense by an experienced and qualified contractor and in accordance with
the Building’s riser management program then in effect. All cabling and wiring shall be appropriately installed to prevent
electromagnetic fields or radiation that interferes with other cabling or wiring and shall be surrounded by a protective

18
conduit reasonably acceptable to Landlord. Tenant shall label all telephone, computer, or other data cabling at the time of
installation. Tenant shall be responsible, at Tenant’s expense, for any and all of Tenant’s telephones, printers, computers,
telephone switching, telephone panels and related equipment. Landlord makes no representation to Tenant regarding the
condition, security, or suitability for Tenant’s purposes of the cabling, wiring or equipment presently located within the
Building. Except as expressly provided in this Lease and except for the negligence or willful misconduct of Landlord or the
Landlord’s Agents (but subject to any mutual waiver of subrogation), Tenant shall protect, defend, indemnify, and hold
harmless Landlord and Landlord’s Agents from and against any and all claims, damages, liabilities, cost and expenses of
every kind and nature, including attorneys’ fees, incurred by or asserted against Landlord arising out of or resulting from
Tenant’s installation, use, repair, maintenance or removal of telecommunications cabling or wiring. Tenant shall have no
obligation to remove cabling, wiring and associated equipment installed by Tenant.
(h)
Consumption Data. Tenant shall, within ten (10) days after request by Landlord, provide consumption
data in a form reasonably required by Landlord for: (i) any utility billed directly to Tenant or any subtenant or licensee of
Tenant; and (ii) any submetered or separately metered utility supplied to the Premises, which Landlord is not responsible
for reading. If Tenant utilizes separate service providers from those of Landlord, Tenant hereby consents to Landlord
obtaining the consumption data directly from such service providers and, within ten (10) days after written request, Tenant
shall execute and deliver to Landlord and the service providers such written releases as the service providers may request
evidencing Tenant’s consent to deliver the consumption data to Landlord.
(i)
Data Center. Tenant may not operate a Data Center in the Premises without the express written consent
of Landlord. The term “Data Center” shall have the meaning set forth in the U.S. Environmental Protection Agency’s
ENERGY STAR® program and is a space specifically designed and equipped to meet the needs of high-density computing
equipment, such as server racks, used for data storage and processing. The space may have dedicated, uninterruptible
power supplies and cooling systems, and the costs for the electricity to serve the Data Center, over and above standard
office electrical usage, will be paid by Tenant as Additional Rent. Data Center functions may include traditional enterprise
services, on-demand enterprise services, high-performance computing, internet facilities and/or hosting facilities. A Data
Center does not include space within the Premises utilized as a “server closet” or for a computer training area. In
conjunction with the completion and operation of a Data Center, Tenant shall furnish the following information to
Landlord:
(1)
Within ten (10) days after completion, Tenant shall report to Landlord the total gross floor area
(in square feet) of the Data Center measured between the principal exterior surfaces of the enclosing fixed walls and
including all supporting functions dedicated for use in the Data Center, such as any raised-floor computing space, server
rack aisles, storage silos, control console areas, battery rooms, mechanical rooms for cooling equipment, administrative
office areas, elevator shafts, stairways, break rooms and restrooms. If Tenant alters or modifies the area of a Data Center,
Tenant shall furnish an updated report to Landlord on the square footage within ten (10) days following completion of the
alterations or modifications.

19
(2)
Within ten (10) days following the close of each month of operation of a Data Center, Tenant
shall provide Landlord with monthly energy readings in a format reasonably determined by Landlord at the output of the
Uninterruptible Power Supply (UPS), measured in total kWh utilized for the preceding month (as opposed to instantaneous
power readings).
(j)
Landlord has the right, at Landlord’s sole cost and expense (except to the extent they are Cost-Saving
Capital Improvements), to install on-site power (i.e. solar fuel cells or small wind), and Tenant will cooperate as necessary
with such installations. To the extent such credits are allocated to the utility provider or other third party to offset the cost
of such installations or the applicable utility provider as an inducement or requirement to providing such power, Tenant
shall have no right to the benefit of any such renewable energy credits resulting from on-site renewable energy generation
even if Tenant uses such energy.
(k)
Notwithstanding anything contained in this Lease to the contrary, if Tenant is prevented from using a
Substantial Portion (as defined below) of the Premises or any portion thereof, as a result of (i) any repair, maintenance or
alteration performed by Landlord (including any remediation of any Hazardous Materials (including mold) caused by any
party other than Tenant, its employees, agents or contractors), or which Landlord failed to perform, required by this Lease,
which interferes with Tenant’s access to, or use of, a Substantial Portion of the Premises, (ii) any exercise by Landlord of
any of Landlord’s reserved rights under this Lease, or (iii) any interruption, within the reasonable control of Landlord, of
services under this Lease, utilities, parking or access to a Substantial Portion of the Premises as required by the Lease (any
such set of circumstances as set forth in items (i) through (iii) above, to be known as an “Abatement Event”), then Tenant
shall give Landlord notice of such Abatement Event, and if such Abatement Event continues for two (2) business
consecutive days after Landlord’s receipt of any such notice (the “Eligibility Period”), then the Rent shall be abated or
reduced, as the case may be, after expiration of the Eligibility Period for such time that Tenant continues to be so prevented
from using the Premises or a portion thereof, in the proportion that the rentable area of the portion of the Premises that
Tenant is prevented from using bears to the total rentable area of the Premises. In the event of any Abatement Event,
Landlord shall use commercially reasonable prompt and diligent efforts to commence and complete the repairs or work
needed to minimize the impact to Tenant of such Abatement Event. “Substantial Portion” shall mean (1) any portion of
the Premises consisting of Five Thousand (5,000) or more contiguous square feet, (2) all reasonable means of access to the
Premises, or (3) any material portion of the parking area or other area in the Project for which Tenant has an express right
to use and/or occupy, whether by license or other specified right set forth in the Lease with the applicable abatement tied to
the number of Tenant’s employees or agents who are actually affected by such interruption in parking. The foregoing
provisions regarding Abatement Events shall not apply in case of damage to or destruction of the Premises. No abatement
of rent as hereinabove described will apply to the extent such Abatement Event is the direct result of any Tenant alterations
or the negligence or willful misconduct of Tenant.
6.
LATE CHARGE
Late payment of Base Rent or other amounts due hereunder will cause Landlord to incur costs not contemplated
by this Lease, the exact amount of which will be extremely difficult to ascertain. If any Base Rent or other sums due from
Tenant are not received by Landlord or by

20
Landlord’s designated agent within five (5) days after their due date, then Tenant shall pay to Landlord a late charge equal
to five percent (5%) of such overdue amount. Landlord and Tenant hereby agree that such late charges represent a fair and
reasonable estimate of the cost that Landlord will incur by reason of Tenant’s late payment and shall not be construed as a
penalty. Landlord’s acceptance of such late charges shall not constitute a waiver of Tenant’s default with respect to such
overdue amount or estop Landlord from exercising any of the other rights and remedies granted under this Lease.
Notwithstanding anything contained herein to the contrary, Tenant shall not be obligated to pay any late charge hereunder
until Landlord has given Tenant five (5) days’ written notice of the delinquent payment (which may be given at any time
during the delinquency); provided, however, that such written notice shall not be required more than two (2) times in any
twelve (12)-month period.
7.
SECURITY DEPOSIT
Concurrently with Tenant’s execution of this Lease, Tenant shall deposit with Landlord the security deposit (the
“Security Deposit”) specified in the Basic Lease Information as security for the full and faithful performance of each and
every term, covenant and condition of this Lease. Landlord may use, apply or retain the whole or any part of the Security
Deposit as may be reasonably necessary (a) remedy any Default by Tenant under this Lease, (b) to reimburse Landlord for
the payment of any amount which Landlord may reasonably spend or be required to spend by reason of Tenant’s Default,
and (c) to compensate Landlord for any other loss or damage which Landlord may suffer by reason of Tenant’s Default.
Landlord shall not be required to keep the Security Deposit separate from its general funds and Tenant shall not be entitled
to any interest thereon. If Landlord so uses or applies all or any portion of the Security Deposit, then within ten (10) days
after written demand therefor, Tenant shall deposit cash with Landlord in an amount sufficient to restore the Security
Deposit to the full extent of the required amount, and if such failure continues after such ten (10) day period for five (5)
days after Landlord delivers a second notice to Tenant, then Tenant’s failure to so restore the Security Deposit shall be a
Default under this Lease, without any further notice or cure period. If Landlord transfers its interest in this Lease, Landlord
shall transfer the then remaining amount of the Security Deposit to Landlord’s successor in interest, and thereafter
Landlord shall have no further liability to Tenant with respect to such Security Deposit. Within sixty (60) days following
the later of the expiration or termination of this Lease or Tenant’s surrender of the Premises, Landlord shall return the
Security Deposit to Tenant, or, at the option of Landlord, to the last assignee of Tenant’s interest in this Lease, after first
deducting any amounts owing to Landlord per the terms hereof.
8.
POSSESSION; COMPLETION OF THE LANDLORD WORK
(a)
Tenant’s Right of Possession. Subject to Landlord’s obligations to complete the Landlord Work and
Paragraph ‎8‎(b), Tenant will continue possession of the Premises immediately after the expiration of the CSG Lease.
(b)
Delay in Completing the Landlord Work. If, for any reason whatsoever, Landlord has not Substantially
Completed (as defined in the Work Letter) the Landlord Work on or before the Commencement Date, this Lease shall not
be void or voidable, nor shall Landlord, or Landlord’s agents, advisors, employees, partners, shareholders, directors,
invitees, independent contractors or Landlord’s manager (collectively, “Landlord’s Agents”)

21
be liable to Tenant for any loss or damage resulting therefrom. Subject to any contrary provisions in the Work Letter,
Tenant shall not be liable for Rent until Landlord has Substantially Completed the Landlord Work, and if Tenant’s payment
of Rent is postponed in accordance with the foregoing, the Expiration Date shall be extended by the same number of days
that elapsed after the previously scheduled date that Rent was scheduled to commence until the Landlord Work was
Substantially Completed.
(c)
Surrender of Remaining Portion of CSG Subleased Premises. For avoidance of doubt, as of June 30,
2023 (i.e., the date immediately prior to the Commencement Date), Tenant will surrender, in accordance with the CSG
Sublease, all portions of the CSG Subleased Premises that are not part of this Lease (i.e., the common areas on the first (1st)
floor and the entire third (3rd) and fourth (4th) floors), subject, however, to Tenant’s rights under Paragraph ‎61 below.
9.
USE OF PREMISES; COMPLIANCE WITH LAWS
(a)
Permitted Use. The use of the Premises by Tenant and Tenant’s assignees and subtenants and their
respective agents, employees, partners, shareholders, directors, and contractors (collectively, “Tenant’s Agents”) shall be
solely for the Permitted Use specified in the Basic Lease Information and for no other use. Tenant shall not permit any
waste or any unreasonably objectionable or unreasonably unpleasant odor, smoke, dust, gas, noise or vibration to emanate
from the Premises. The Premises shall not be used to create any nuisance or trespass, for any illegal purpose, for any
purpose not permitted by Laws (as hereinafter defined), for any purpose that would invalidate the insurance or increase the
premiums for insurance on the Premises, the Building or the Project. If any of Tenant’s office machines or equipment
disturb any other tenant in the Building, then Tenant shall provide adequate insulation or take such other action as may be
necessary to eliminate the noise or disturbance. Tenant shall pay to Landlord, as Additional Rent, any increases in
premiums on policies resulting from Tenant’s Permitted Use or any other use or action by Tenant or Tenant’s Agents which
increases Landlord’s premiums or requires additional coverage by Landlord to insure the Premises. Tenant shall not allow
occupancy density greater than that permitted by Laws (“Maximum Density”). Tenant agrees not to overload the floor(s)
of the Building. Tenant shall not use the Premises in any manner that will cause the Building or any part thereof not to
conform to Required Sustainability Practices; provided, however, that in no event will Required Sustainability Practices
have the effect of preventing Tenant from conducting its business at the Premises in a manner consistent with the Permitted
Use.
(b)
Compliance with Governmental Regulations and Private Restrictions. Except as set forth in
Paragraph ‎9(c) below and subject to the express limitations elsewhere stated in this Lease, Tenant and Tenant’s Agents
shall, at Tenant’s expense, faithfully observe and comply with (i) all municipal, state and federal laws, statutes, codes,
rules, regulations, ordinances, requirements, and orders (collectively, “Laws”), now in force or which may hereafter be in
force pertaining to the use, condition, configuration or occupancy of the Premises, or Tenant’s use of the Building or the
Project, including reasonably cooperating with Landlord to comply with such Laws, and including, but not limited to,
making all modifications required within the Premises, whether or not presently foreseeable; (ii) all recorded covenants,
conditions and restrictions affecting the Project (“Private Restrictions”) now in force or which may hereafter be in force;
(iii) the requirements of any board of fire underwriters

22
or similar body now or in the future constituted; (iv) the Rules and Regulations (as defined in Paragraph ‎41 of this Lease);
and (v) the Required Sustainability Practices. The judgment of any court of competent jurisdiction, or the admission of
Tenant in any action or proceeding against Tenant, whether Landlord be a party thereto or not, that Tenant has violated any
Laws or Private Restrictions, shall be conclusive of that fact as between Landlord and Tenant. Notwithstanding the
foregoing or anything contained in this Lease to the contrary, Tenant shall not be required to make or pay for (1) structural
repairs, improvements or modifications, or (2)  capital improvements or modifications to the utility or building service
equipment not exclusively serving the Premises and same shall be performed by Landlord, unless required (A) as a
consequence of Tenant’s particular manner of use or occupation of the Premises, (B) due to the uninsured negligent acts or
omissions of Tenant or any agent, employee, or contractor of Tenant, or (C) due to Tenant’s alteration or improvements to
the Premises.
(c)
Compliance with Accessibility Laws. The Premises, the Building and the Project are subject to, among
other Laws, the requirements of the Americans with Disabilities Act, a federal law codified at 42 U.S.C. 12101 et seq.,
including, but not limited to Title III thereof, and all regulations and guidelines related thereto, together with any and all
similar laws, rules, regulations, ordinances, codes and statutes now or hereafter enacted by local or state agencies having
jurisdiction thereof, as the same may be in effect on the date of this Lease and may be hereafter modified, amended or
supplemented (collectively, the “Accessibility Laws”). Any Alterations (as defined in Paragraph ‎12(a)) to be constructed
hereunder shall comply with the requirements of all Laws, including, but not limited to, Accessibility Laws, and all costs
incurred to comply therewith shall be a part of and included in the cost of the Alterations. Tenant shall be solely
responsible for conducting its own independent investigation of this matter and for ensuring that the design of all
Alterations strictly complies with all requirements of all Laws, including, but not limited to, Accessibility Laws. Subject to
reimbursement pursuant to Paragraph ‎4 above (if and to the extent expressly permitted by the terms thereof), if any barrier
removal work or other work is required to cause the Common Areas, the structure of the Building or the Project or the
Building Systems to comply with Laws, including, but not limited to Accessibility Laws, then such work shall be the
responsibility of Landlord; provided that if such work is required as a result of Tenant’s use of the Premises or any work or
Alteration made to the Premises by or on behalf of Tenant, then such work shall be performed by Landlord at the sole cost
and expense of Tenant. Notwithstanding the foregoing provisions of this Paragraph ‎9(c), Tenant acknowledges that the
Building or the Project may have certain non-compliant features which have been legally grandfathered, and that, unless
required by governmental authority, Landlord may, but shall not be obligated to, upgrade or otherwise correct such non-
compliance pursuant to this Paragraph ‎9(c) or any other provision of this Lease.
Except as otherwise expressly provided in this provision, Tenant shall be responsible at its sole cost and expense
for fully and faithfully complying with all applicable requirements of Accessibility Laws due to Tenant’s construction or
installation of the Tenant Improvements and/or Tenant’s particular use of the Premises (as opposed to general office use).
Within ten  (10) days after receipt, Tenant shall advise Landlord in writing, and provide Landlord with copies of (as
applicable), any written notices alleging violation of Accessibility Laws relating to any portion of the Premises, the
Building or the Project; any claims made in writing regarding noncompliance with Accessibility Laws and relating to any
portion of the Premises, the Building or the Project; or any governmental or regulatory actions or investigations instituted
or threatened regarding

23
noncompliance with Accessibility Laws and relating to any portion of the Premises, the Building or the Project.
(d)
Roof Access. At no time during the Term shall Tenant have access to the roof of the Building or have the
right to install, operate or maintain a satellite-earth communications station (antenna and associated equipment),
microwave equipment and/or an FM antenna or any other equipment on the Building or the Project. Notwithstanding the
foregoing, to the extent the installation, maintenance or removal of Exterior Signage (as defined below) reasonably requires
access to the roof of the Building, Tenant will have the right to access the roof of the Building after appropriate notice to
Landlord, subject to Paragraph ‎18.
(e)
24-Hour Access. Tenant and its employees and agents will have access to the Premises twenty-four (24)
hours per day, every day of the Term (as long as Tenant’s right to possession of the Premises has not been terminated),
subject to Landlord’s reasonable security measures, if any.
10.
ACCEPTANCE OF PREMISES
By its execution hereof, except as provided in this Lease, Tenant acknowledges that it has occupied the Premises
prior to the Commencement Date and had the opportunity to fully inspect the Premises. Tenant hereby certifies, to Tenant’s
current actual knowledge, to Landlord that neither Tenant nor any of its employees, agents, or contractors observed or has
any knowledge of any mold, mildew, Mold Conditions (as hereinafter defined) or moisture within the Premises.
Except as provided in this Lease, Tenant accepts the Premises as suitable for Tenant’s intended use and as being in good
and sanitary operating order, condition and repair, AS IS, and without representation or warranty by Landlord or
Landlord’s Agents as to the condition, use or occupancy which may be made thereof or the compliance of the Premises
with applicable Laws, including Accessibility Laws.
11.
SURRENDER
On the last day of the Term, or on the sooner termination of this Lease, Tenant shall surrender the Premises to
Landlord (a)  in good condition and repair (damage by acts of God, fire, casualty, condemnation, Landlord’s repair
obligations and ordinary wear and tear excepted). In addition, on or before the expiration or sooner termination of this
Lease, Tenant, at Tenant’s expense, shall remove the following items and repair any damage caused by such
removal(damage by acts of God, fire, casualty, condemnation, Landlord’s repair obligations and ordinary wear and tear
excepted):  all of Tenant’s Property (as defined in Paragraph ‎15(b)) and Tenant’s signage from the Premises, the Building
or the Project; and (ii) subject to the provisions of Paragraph ‎12, any Required Removal Alterations (as defined below)
made by or on behalf of Tenant and designated by Landlord for removal. Tenant’s removal and disposal of items pursuant
to this Paragraph ‎11 must comply with Laws. All Tenant Improvements and Alterations (other than the Required Removal
Alterations) shall remain in the Premises as the property of Landlord. Any of Tenant’s Property not so removed by Tenant
shall be deemed abandoned and may be stored, removed, and disposed of by Landlord, at Tenant’s expense, and Tenant
waives all claims against Landlord for any damages resulting from Landlord’s retention and disposition of such property;
provided that

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Tenant shall remain liable to Landlord for all costs incurred in storing and disposing of such abandoned property of Tenant.
12.
ALTERATIONS AND ADDITIONS
(a)
Subject to Paragraph  ‎12‎(j), Tenant shall not make, or permit to be made, any alteration, addition or
improvement (individually, an “Alteration” and collectively, the “Alterations”) to the Premises or any part thereof without
the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed; provided,
however, that it shall be deemed reasonable for Landlord to withhold its consent to any Alteration which affects the
structural portions of the Premises, the Building or the Project, or affects the Building Systems or any portion thereof.
“Construction Rules and Regulations” means Landlord’s standard rules and regulations relating to construction and
alterations, as updated and revised from time to time, provided that the same are subject to the same limitations elsewhere
stated in this Lease concerning rules and in no event shall the Construction Rules and Regulations require any security,
deposits or performance bonds.
(b)
Any Alteration to the Premises shall be made at Tenant’s sole cost and expense, in compliance with (i) all
applicable Laws and all requirements requested by Landlord, including, but not limited to, the requirements of any insurer
providing coverage for the Premises, the Building or the Project or any part thereof and (ii) the Required Sustainability
Practices, to the extent applicable. All Alterations shall be completed in accordance with plans and specifications approved
in writing by Landlord, and shall be constructed and installed in a good and workmanlike manner by a licensed and
reputable contractor with experience office tenant improvement work similar in scope. In connection with any Alteration,
Tenant shall deliver plans and specifications therefor to Landlord. No review by Landlord of such plans and specifications
shall be deemed to create any liability of any kind on the part of Landlord or to constitute a representation on the part of
Landlord or any professional consulted by Landlord in connection with such review and approval, that such plans and
specifications are correct or accurate, or comply with applicable Laws. Tenant acknowledges and agrees that Tenant, at
Tenant’s expense, is responsible for performing all accessibility and other work required to be performed in connection
with the Alterations, including, but not limited to, any “path of travel” or other work outside the Premises resulting from
the Alterations. Before Alterations may begin, valid building permits and any other required permits or licenses must be
furnished to Landlord, and, once the Alterations begin, Tenant will diligently and continuously pursue their completion.
Landlord shall have the right (but not an obligation) to monitor construction of the Alterations, and to require corrections of
faulty construction or any material deviation from the plans for such Alterations as approved if and only to the extent the
Alterations impact Building Systems and/or the structural aspects of the Building, and Tenant shall reimburse Landlord for
its third-party, actual, out-of-pocket costs for such monitoring.
(c)
Tenant (or Tenant’s general contractor) shall maintain during the course of construction, at its sole cost
and expense, builders’ risk insurance for the amount of the completed value of the Alterations on an all-risk non-reporting
form covering all improvements under construction, including building materials, and other insurance in amounts and
against such risks as Landlord shall reasonably require in connection with the Alterations. In addition, Tenant shall

25
ensure that its general contractor and its subcontractors for so-called major trades (the “Major-Trade
Subcontractors”)procure and maintain in full force and effect during the course of construction a commercial general
liability, and if necessary, an umbrella liability policy of insurance naming Landlord Insureds as additional insureds. The
minimum limit of coverage of such policy shall be not less than Five Million Dollars ($5,000,000.00) per occurrence and
not less than Five Million Dollars ($5,000,000.00) per project aggregate, and the commercial general liability policy shall
contain a separation of insureds endorsement. Such insurance shall further insure Landlord and Tenant against liability for
property damage of at least Five Million Dollars ($5,000,000.00).
(d)
All Alterations, including, but not limited to, heating, lighting, electrical, air conditioning, fixed
partitioning, drapery, wall covering and paneling, built-in cabinet work and carpeting installations made by Tenant,
together with all property that has become an integral part of the Premises or the Building, shall at once be and become the
property of Landlord, and shall not be deemed trade fixtures or Tenant’s Property. Tenant shall not be required to remove
any of the proposed Alterations provided, however, that if, at the time the plans for the applicable Alterations are submitted
to Landlord for approval, Landlord identifies any proposed Alterations that both (i) are uncommon for most standard office
space in Comparable Buildings (by way of example only, and not to be construed as Landlord’s consent to any of the
following, such uncommon Alterations would include an internal stairwell connecting portions of the Premises and not
located in or connecting to the Common Areas; structural changes such as reinforced floors to support heavy equipment;
and a laboratory exhaust hood vented to the outside), and (ii) Landlord requires to be removed at the expiration or earlier
termination of the Term (as applicable, such identified Alterations being “Required Removal Alterations”), then Tenant
will be required to remove the Required Removal Alterations on or before the expiration or earlier termination of the Term
in accordance with Paragraph ‎11.
(e)
Notwithstanding anything herein to the contrary, before installing any equipment or lights which generate
an undue amount of heat in the Premises, or if Tenant plans to use any high-power usage equipment in the Premises, Tenant
shall obtain the written permission of Landlord. Landlord may refuse to grant such permission unless Tenant agrees to pay
the costs to Landlord for installation of supplementary air conditioning capacity or electrical systems necessitated by such
equipment.
(f)
Tenant shall not make any Alterations, notwithstanding consent from Landlord to do so, until Tenant
notifies Landlord in writing of the date Tenant desires to commence such Alterations in order that Landlord may post
appropriate notices to avoid any liability to contractors or material suppliers for payment for the Tenant’s improvements.
Tenant will at all times permit such notices to be posted and to remain posted until the completion of the Alterations.
(g)
Tenant shall not use or employ materials that are susceptible to the growth of mold, particularly in areas
where moisture accumulation is common.
(h)
All trash which may accumulate in connection with Tenant’s construction activities shall be removed by
Tenant at its own expense from the Premises and the Building.

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(i)
Promptly following completion of any Alteration, Tenant shall furnish to Landlord “field-marked” plans
therefor.
(j)
Notwithstanding anything contained herein to the contrary, Tenant may perform interior, non-structural
Alterations in the Premises that do not affect the Building Systems of the Building, roof or exterior walls and do not, in any
one calendar year, exceed an aggregate cost of Two Hundred Fifty Thousand Dollars ($250,000.00) without Landlord’s
consent, subject, however, to the other applicable provisions of this Paragraph ‎12 (“Permitted Alterations”).
13.
MAINTENANCE TO AND REPAIRS OF PREMISES
(a)
Maintenance by Tenant. Except for Landlord’s obligations as set forth in Paragraph  ‎13‎(c) below,
throughout the Term, Tenant shall, at its sole expense, subject to Paragraphs ‎5(a) and ‎13(c) hereof, (1) keep and maintain in
good order and condition the Premises and Tenant’s Property, (2) keep and maintain in good order and condition, repair and
replace all of Tenant’s security systems in or about or serving the Premises, and (3) maintain and replace all specialty
lamps, bulbs, starters and ballasts. Tenant shall not do or allow Tenant’s Agents to do anything to cause any damage,
deterioration or unsightliness to the Premises, the Building or the Project. All maintenance and repairs, including, but not
limited to, janitorial and cleaning services, pest control and waste management and recycling performed by or on behalf of
Tenant must comply with the Required Sustainability Practices, to the extent applicable.
(b)
Reporting Mold Conditions. Tenant shall immediately notify Landlord in writing if it observes,
suspects, or has reason to believe the presence of mold and conditions reasonably expected to give rise to or be attributed to
mold or fungus, including observed or suspected instances of water damage, condensation, seepage, leaks or other water
collection or penetration (from any source, internal or external), mold growth, mildew, repeated complaints of respiratory
ailments or eye irritation by Tenant’s employees or any other occupants of the Premises, or any notice from a governmental
agency of complaints regarding the indoor air quality at the Premises (the “Mold Conditions”) exist in, at, or about the
Premises or a surrounding area. In the event of suspected mold or Mold Conditions in, at, or about the Premises and
surrounding areas, Landlord may, at Landlord’s sole cost and expense, cause an inspection of the Premises to be conducted,
during such time as Landlord may designate, to determine if mold or Mold Conditions are present in, at, or about the
Premises.
(c)
Maintenance by Landlord. Subject to the provisions of Paragraphs ‎13(a), ‎21 and ‎22, and further subject
to Tenant’s obligation under Paragraph ‎4 to reimburse Landlord (if and to the extent permitted by the terms thereof), in the
form of Additional Rent, for Tenant’s Proportionate Share of the cost and expense of the following items, Landlord shall
repair and maintain the following in compliance with Laws and in a manner commensurate with the standards of
Comparable Buildings: roof coverings; the Common Areas; any glass outside of or on the exterior of the Premises, routine
maintenance of exterior walls, painting, sealing, patching and waterproofing of the exterior walls; the Building Systems
serving the Premises (excluding any specialty systems installed by or for Tenant) and the Building; the Parking Areas and
pavement, landscaping, sprinkler systems, sidewalks, driveways, curbs, and lighting systems in the Common Areas.
Subject to the Paragraphs ‎13(a), ‎21 and ‎22, Landlord, at its own cost and expense, shall

27
repair and maintain the following: the structural portions of the roof (specifically excluding the roof coverings), the
foundation, the footings, the floor slab, and the load bearing walls and exterior walls of the Building; provided, however,
that the foregoing reference to “load bearing walls and exterior walls of the Building” will not be construed as limiting
Landlord’s right to reimbursement for maintenance of glass outside of or on the exterior of the Premises, routine
maintenance of exterior walls, painting, sealing, and patching and waterproofing of the exterior walls, as set forth in the
first sentence of this Paragraph ‎13‎(c). Notwithstanding anything in this Paragraph ‎13 to the contrary, Landlord shall have
the right to either repair or to require Tenant to repair any damage to any portion of the Premises, the Building and/or the
Project caused by or created due to any uninsured act, omission, negligence or willful misconduct of Tenant or Tenant’s
Agents and to restore the Premises, the Building and/or the Project, as applicable, to the condition existing prior to the
occurrence of such damage; provided, however, that in the event Landlord elects to perform such repair and restoration
work, Tenant shall reimburse Landlord within thirty (30) days after demand for all costs and expenses incurred by Landlord
in connection therewith. Landlord’s obligation hereunder to repair and maintain is subject to the condition precedent that
Landlord shall have received notice of the need for such repairs and maintenance and a reasonable time to perform such
repair and maintenance. Tenant shall promptly report in writing to Landlord any defective condition known to it which
Landlord is required to repair.
14.
LANDLORD’S INSURANCE
Landlord shall purchase and keep in force a special causes of loss (all risk) property insurance policy in a full
replacement value covering the Building and the Project. Landlord may also purchase and maintain such additional
insurance coverage as Landlord may from time to time deem prudent, or as may be required by Landlord’s lender,
including commercial general liability insurance and insurance coverage against the risks of flood damage, terrorism (but
only if terrorism insurance is required by Landlord’s lender or is obtained by Landlord as part of an insurance program
covering a portfolio of properties with discounted pricing due to such portfolio) or other perils, and rental loss coverage,
provided that the same is in compliance with the terms of this Lease and any limitations elsewhere stated in this Lease. All
insurance carried by Landlord shall be in such amounts, issued by such companies, and on such terms and conditions as
Landlord may from time to time determine, and the premiums for all insurance maintained by Landlord from time to time
shall be included in Insurance Expenses. Tenant shall, at its sole cost and expense, comply with any and all reasonable
requirements pertaining to the Premises, the Building and the Project of any insurer necessary for the maintenance of
reasonable property and commercial general liability insurance, covering the Building and the Project.
15.
TENANT’S INSURANCE
(a)
Commercial General Liability Insurance. Tenant shall, at Tenant’s expense, secure and keep in force a
commercial general liability insurance policy covering the Premises, insuring Tenant, and naming Landlord and Landlord’s
property manager and lenders as additional insureds (collectively, including Landlord, “Landlord Insureds”) against any
liability arising out of the ownership, use, occupancy or maintenance of the Premises. The minimum combined limit of
coverage of such policies shall be in the amount of not less than Five Million Dollars ($5,000,000.00) per occurrence and
annual aggregate solely dedicated to the Premises. The commercial general liability policy shall include an extended
liability endorsement

28
providing contractual liability coverage (which shall include coverage for Tenant’s indemnification obligations in this
Lease), and shall contain a separation of insureds endorsement. Such insurance shall further insure Landlord and Tenant
against liability for property damage of at least Five Million Dollars ($5,000,000.00). If the required coverage is
maintained by an excess/umbrella policy, the insurance shall be excess over and no less broad than all coverages described
herein. The limit of any insurance shall not limit the liability of Tenant hereunder. No policy maintained by Tenant under
this Paragraph ‎15(a) shall contain a deductible greater than One Hundred Thousand Dollars ($100,000.00). Such policies of
insurance shall be issued as primary policies and not contributing with or in excess of coverage that Landlord may carry.
Tenant’s commercial general liability insurance shall be written on ISO occurrence form CG 00 01 04 13 (or a substitute
form providing equivalent coverage).
(b)
Personal Property Insurance. Tenant shall, at Tenant’s expense, maintain in full force and effect on all
of its personal property, furniture, furnishings, trade or business fixtures, cabling and equipment (collectively, “Tenant’s
Property”) on the Premises, special causes of loss (all risk) property insurance in an amount equal to 100% of the full
replacement cost thereof and including coverage for sprinkler leakage. The policy shall be issued on ISO form CP 1030
and shall not contain a deductible greater than Fifteen Thousand Dollars ($15,000.00). During the Term of this Lease, the
proceeds from any such insurance shall be used for the repair or replacement of Tenant’s Property. Landlord shall have no
interest in the insurance upon Tenant’s Property and will sign all documents reasonably necessary in connection with the
settlement of any claim or loss by Tenant respecting Tenant’s Property. Landlord will not carry insurance on Tenant’s
Property.
(c)
Automobile Liability. Tenant shall, at Tenant’s expense, maintain automobile liability insurance
including coverage on owned, hired, and non-owned automobiles and other vehicles, if used in connection with the
performance of the work, with Bodily Injury and Property Damage limits of not less than One Million Dollars
($1,000,000.00) per accident.
(d)
Worker’s Compensation Insurance; Employer’s Liability Insurance. Tenant shall, at Tenant’s
expense, maintain in full force and effect worker’s compensation insurance with not less than the minimum limits required
by law, and employer’s liability insurance with a minimum limit of One Hundred Thousand Dollars ($100,000) per
accident, and Five Hundred Thousand Dollars ($500,000) each employee by disease and One Hundred Thousand Dollars
($100,000) policy limit by disease) One Million Dollars ($1,000,000.00) per accident and disease.
(e)
Business Interruption Insurance. [Intentionally Deleted].
(f)
General Requirements; Evidence of Coverage. Each certificate shall expressly provide that such
policies shall not be cancelable or otherwise subject to modification, except after the insurer endeavoring to provide thirty
(30) days prior written notice to Landlord and the other parties named as additional insureds as required in this Lease
(except for cancellation for nonpayment of premium, in which event cancellation shall not take effect until at least ten (10)
days’ notice has been given to Landlord). In addition, within ten (10) days after Landlord’s request, Tenant shall provide
true and complete copies of all insurance policies and endorsements required under this Lease. If Tenant does not comply
with the requirements of this Paragraph ‎15, Landlord may, following applicable notice and a ten (10) business day cure
period, at its option

29
and at Tenant’s expense, purchase such insurance coverage to protect Landlord Insureds. The cost of such insurance shall
be paid to Landlord by Tenant, as Additional Rent, within thirty (30) days after demand.
(g)
Vendors’ Insurance. In addition to the insurance Tenant is required to carry under this Lease, Tenant
acknowledges that Landlord will require Tenant’s vendors and contractors entering the Building to carry such insurance as
Landlord shall reasonably determine to be necessary, and satisfactory evidence of such insurance must be delivered to
Landlord prior to entry into the Building by such vendors and contractors.
16.
INDEMNIFICATION
(a)
Of Landlord. Except for the gross negligence or willful misconduct of Landlord or the Landlord’s
Agents, Tenant shall defend, protect, indemnify and hold harmless Landlord and Landlord’s Agents against and from any
and all claims, suits, liabilities, judgments, costs, demands, causes of action and expenses (including, but not limited to,
reasonable attorneys’ fees, costs and disbursements) to the extent arising (1) in the Premises, (2) from any act, neglect,
fault, willful misconduct or omission of Tenant or Tenant’s Agents, or from any breach or default in the terms of this Lease
by Tenant or Tenant’s Agents, and (3) from any action or proceeding brought on account of items (1) or (2). If any action or
proceeding is brought against Landlord by reason of any such claim, upon notice from Landlord, Tenant shall defend the
same at Tenant’s expense by counsel reasonably satisfactory to Landlord.
(b)
Of Tenant. Except to the extent of the gross negligence or willful misconduct of Tenant or the Tenant’s
Agents, Landlord shall defend, protect, indemnify and hold harmless Tenant and Tenant’s Agents against and from any and
all claims, suits, liabilities, judgments, costs, demands, causes of action and expenses (including, but not limited to,
reasonable attorneys’ fees, costs and disbursements) to the extent arising (1)  in the Common Areas; (2)  from any
negligence or willful misconduct of Landlord or Landlord’s Agents, and (3) from any action or proceeding brought on
account of items (1) and (2). If any action or proceeding is brought against Tenant by reason of any such claim, upon notice
from Tenant, Landlord shall defend the same at Landlord’s expense by counsel reasonably satisfactory to Tenant.
(c)
Release. As a material part of the consideration to Landlord, except as expressly provided in this Lease,
Tenant hereby releases Landlord and Landlord’s Agents from responsibility for, waives its entire claim of recovery for and
assumes all risk of (i) damage to property or injury to persons in or about the Premises, the Building or the Project from
any cause whatsoever (except to the extent caused by the gross negligence or willful misconduct of Landlord or Landlord’s
Agents or by the failure of Landlord to observe any of the material terms and conditions of this Lease, if such failure has
persisted for an unreasonable period of time after Landlord’s receipt of written notice of such failure), or (ii) loss resulting
from business interruption or loss of income at the Premises. The obligations, releases and waivers of Tenant under this
Paragraph ‎16 shall survive any termination of this Lease.
(d)
No Impairment of Insurance. The foregoing indemnities shall not relieve any insurance carrier of its
obligations under any policies required to be carried by either party pursuant

30
to this Lease, to the extent that such policies cover the peril or occurrence that results in the claim that is subject to the
foregoing indemnities.
17.
SUBROGATION
Landlord and Tenant hereby mutually waive any claim against the other party and the other party’s Agent(s) for
any loss or damage to any of their property located on or about the Premises, the Building or the Project that is caused by
or results from perils covered by property insurance carried by the respective parties, to the extent of the proceeds of such
insurance actually received with respect to such loss or damage, whether or not due to the negligence of the other party or
its Agents. Because the foregoing waivers will preclude the assignment of any claim by way of subrogation to an insurance
company or any other person, each party shall immediately notify its insurer, in writing, of the terms of these mutual
waivers and have its insurance policies endorsed to prevent the invalidation of the insurance coverage because of these
waivers. Nothing in this Paragraph ‎17 shall relieve a party of liability to the other for failure to carry insurance required by
this Lease.
18.
SIGNS
(a)
Tenant shall not place or permit to be placed in, upon, or about the Building or the Project, any exterior
lights, decorations, balloons, flags, pennants, banners, advertisements or notices without obtaining Landlord’s prior written
consent, except as set forth in this Paragraph ‎18. Tenant shall remove any sign, advertisement or notice placed on the
Premises, the Building or the Project by Tenant upon the expiration of the Term or sooner termination of this Lease, and
Tenant shall repair any damage or injury to the Premises, the Building or the Project caused thereby (ordinary wear and
tear, damage by casualty or condemnation and Landlord’s repair obligations excepted), all at Tenant’s expense. If any signs
are not removed, or necessary repairs not made, Landlord shall have the right to remove the signs and repair any damage or
injury to the Premises, the Building or the Project at Tenant’s sole cost and expense.
(b)
Tenant shall have the right to maintain its existing monument signage (the “Existing Monument
Signage”) in its current location, and Tenant, at Tenant’s sole cost and expense, will have the right to modify such Existing
Monument Signage. Tenant, at Tenant’s sole cost and expense, will have the right to install exterior signage on the Building
façade (the “Exterior Building Signage”) in a mutually acceptable location on the Building. The Existing Monument
Signage, any new monument signage (the “New Monument Signage”), and any Exterior Building Signage is, collectively,
the “Exterior Signage”. Any Exterior Building Signage and/or New Monument Signage will be subject to (i) Landlord’s
reasonable approval; (ii)  approval by the Meridian Design Control Committee; and (iii)  compliance with all Douglas
County governmental requirements, if any. The manufacture and affixation of any Exterior Building Signage and/or New
Monument Signage shall be carried out by Tenant, at Tenant’s sole cost and expense, subject, however, to Landlord having
the right to determine the appropriate method of attaching and installing any New Monument Signage on the monument or
any Exterior Building Signage on the Building, as applicable, although with respect to the Exterior Building Signage,
Landlord will permit Tenant and its contractors access to the portions of the Building, including the roof, as necessary to
install, maintain, repair, remove

31
and replace the Exterior Signage. Tenant’s signage contractors will comply with Landlord’s reasonable requirements
relating to insurance, access to the Building and other similar matters in accordance with Institutional Owner Practices.
Tenant will keep all Exterior Signage in good condition and repair. If any of the Exterior Signage is damaged or
inoperative, Tenant will commence repair of the applicable Exterior Signage as soon as possible, but in no event later than
five (5) business days after receipt of notice from Landlord, and thereafter Tenant will diligently pursue completion of such
repair. Upon Tenant’s failure to timely commence or complete such repairs, Landlord, at Landlord’s option, may repair
such damaged or inoperative Exterior Signage at Tenant’s expense. Tenant will have the obligation to remove, at Tenant’s
sole cost, all Exterior Signage from the Project at the expiration or earlier termination of the Term, and to repair any
damage resulting from such removal, ordinary wear and tear, Landlord’s maintenance obligations and casualty and
condemnation excepted.
19.
FREE FROM LIENS
Tenant shall keep the Premises, the Building and the Project free from any liens arising out of any work
performed, material furnished or obligations incurred by or for Tenant. In the event that Tenant shall not, within thirty (30)
days following the imposition of any such lien, cause the lien to be released of record by payment or posting of a proper
bond, Landlord shall have in addition to all other remedies provided herein and by law, the right but not the obligation, to
cause same to be released by such means as it shall deem proper, including payment of the claim giving rise to such lien.
All such sums paid by Landlord and all expenses incurred by it in connection therewith (including, but not limited to,
attorneys’ fees) shall be payable to Landlord by Tenant within thirty (30) days after demand. Landlord shall have the right
at all times to post and keep posted on the Premises any notices permitted or required by law or that Landlord shall deem
proper for the protection of Landlord, the Premises, the Building and the Project, from mechanics’ and materialmen’s liens.
Tenant shall give to Landlord at least five  (5) business days’ prior written notice of commencement of any repair or
construction on the Premises.
20.
ENTRY BY LANDLORD
Tenant shall permit Landlord and Landlord’s Agents to enter into and upon the Premises at all reasonable times,
upon 24 hours’ advance notice (except in the event of an emergency, in which case only reasonable notice under the
circumstances shall be required), and subject to Tenant’s reasonable security arrangements, to inspect the same, to show the
Premises to prospective purchasers, lenders or tenants (and with respect to tenants, during the last twelve (12) months of
the Term only), to post notices of non-responsibility, to provide services, alter, improve, maintain and repair the Premises
or the Building as required or permitted of Landlord under the terms hereof, or for any other business purpose, without any
rebate of Rent and without any liability to Tenant for any loss of occupation or quiet enjoyment of the Premises thereby
occasioned, except as may be expressly provided in this Lease. Except as may be provided in this Lease, no such entry
shall be construed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction or constructive
eviction of Tenant from the Premises. Subject to the limitations on Landlord’s reserved rights elsewhere stated in this
Lease, Landlord may temporarily close entrances, doors, corridors, elevators or other facilities without liability to Tenant
by reason of such closure in the case of an emergency and when Landlord otherwise deems such closure necessary.

32
21.
DESTRUCTION AND DAMAGE
(a)
Tenant shall give Landlord prompt notice of any damage to the Premises and/or the Building. If the
Premises are damaged by fire or other perils covered by insurance carried by Landlord, Landlord shall, at Landlord’s
option:
(1)
In the event of total destruction of the Premises (which shall mean destruction or damage in
excess of twenty-five percent (25%) of the full insurable value thereof), elect either to commence promptly to repair and
restore the Premises and prosecute the same diligently to completion, in which event this Lease shall remain in full force
and effect; or not to repair or restore the Premises, in which event this Lease shall terminate. Landlord shall give Tenant
written notice of its election within sixty (60) days after the date Landlord obtains actual knowledge of such destruction
(the “Casualty Discovery Date”). If Landlord elects to terminate this Lease, such notice shall specify a termination date,
which shall be no fewer than thirty (30) days or more than sixty (60) days after the date of such notice.
(2)
In the event of a partial destruction (which shall mean destruction or damage to an extent not
exceeding twenty-five percent (25%) of the Premises of the full insurable value thereof) for which Landlord will receive
insurance proceeds sufficient to cover the cost to repair and restore such partial destruction, and, in Landlord’s reasonable
judgment, the damage to the Premises can be substantially repaired or restored to the condition existing immediately prior
to such damage or destruction within two hundred seventy (270) days after the Casualty Discovery Date (when such repairs
are made without payment of overtime or other premiums), Landlord shall commence and proceed diligently with the work
of repair and restoration, in which event this Lease shall continue in full force and effect. If in Landlord’s reasonable
judgment such repair and restoration requires longer than said two hundred seventy (270) day period, or, if the insurance
proceeds to be received by Landlord are not sufficient to fully cover the cost of such repair and restoration, Landlord may
elect either to repair and restore the Premises, in which event this Lease shall continue in full force and effect, or not to
repair or restore the Premises, in which event this Lease shall terminate. Landlord shall give Tenant written notice of its
election within sixty (60) days after the Casualty Discovery Date. If Landlord elects to terminate this Lease, such notice
shall specify a termination date, which shall be no fewer than thirty (30) days or more than sixty (60) days after the date of
such notice.
(b)
If the Premises are damaged by any peril not fully covered by insurance proceeds to be received by
Landlord, Landlord may elect either to commence promptly to repair and restore the Premises and prosecute the same
diligently to completion, in which event this Lease shall remain in full force and effect; or not to repair or restore the
Premises, in which event this Lease shall terminate. Landlord shall give Tenant written notice of its election within
sixty (60) days after the Casualty Discovery Date. If Landlord elects to terminate this Lease, such notice shall specify a
termination date, which shall be no fewer than thirty (30) days or more than sixty (60) days after the date of such notice.
(c)
Notwithstanding anything to the contrary in this Paragraph ‎21, Landlord shall have the right to terminate
this Lease, exercisable by notice to Tenant within sixty  (60) days after the Casualty Discovery Date, in each of the
following instances:

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(1)
If more than fifteen percent (15%) of the full insurable value of the Building or the Project is
damaged or destroyed, whether or not the Premises are damaged.
(2)
In Landlord’s reasonable judgment, repair and restoration of damage to portions of the Building
or the Project necessary for Tenant’s access to or use and occupancy of the Premises cannot reasonably be completed
within two hundred seventy (270) days from the Casualty Discovery Date (when such repairs are made without payment of
overtime or other premiums), whether or not the Premises are damaged.
(3)
If the Building or the Project or any portion thereof necessary for Tenant’s access to or use and
occupancy of the Premises is damaged or destroyed and the insurance proceeds therefor are not sufficient to cover the costs
of repair and restoration, whether or not the Premises are damaged.
(4)
If the Premises, the Building or the Project or any portion thereof is damaged or destroyed
during the last twelve (12) months of the Term.
(5)
Any Superior Mortgagee or Superior Lessor shall require that insurance proceeds or any portion
thereof be used to retire debt under any Superior Mortgage or shall terminate a Superior Lease (as all of such capitalized
terms are defined in Paragraph ‎31).
(d)
Upon any destruction hereunder, Rent shall be abated proportionately in the ratio which Tenant’s use of
the Premises is impaired during the period of such repair or restoration until the date that is the earlier of ninety (90) days
after Landlord has substantially completed the repair and restoration work in the Premises or the previously damaged
Premises are ready for occupancy for the Permitted Use; provided, however, that Tenant will, in any case, diligently
prosecute such repair or restoration to completion. Except as expressly provided in the immediately preceding sentence
with respect to abatement of Base Rent, Tenant shall have no claim against Landlord for, and hereby releases Landlord and
Landlord’s Agents from responsibility for and waives its entire claim of recovery for any cost, loss or expense suffered or
incurred by Tenant as a result of any damage to or destruction of the Premises, the Building or the Project or the repair or
restoration thereof, including, but not limited to, any cost, loss or expense resulting from any loss of use of the whole or
any part of the Premises, the Building or the Project and/or any inconvenience or annoyance occasioned by such damage,
repair or restoration.
(e)
If Landlord is obligated to or elects to repair or restore the Premises as provided above, Landlord shall be
obligated to repair or restore only the tenant improvements existing as of the date of this Lease plus any of the Landlord
Work constructed by Landlord or Tenant in the Premises pursuant to the Work Letter or Alterations approved by Landlord,
substantially to their condition existing immediately prior to the occurrence of the damage or destruction; and Tenant shall
promptly repair and restore, at Tenant’s expense, Alterations which were not approved by Landlord.
(f)
Notwithstanding anything contained herein to the contrary, Landlord may not terminate this Lease
pursuant to this Paragraph unless Landlord also terminates all other similarly situated leases in the Building.

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22.
CONDEMNATION
(a)
If fifteen percent (15%) or more of the Premises, the Building, the Project or the Parking Areas for the
Building or the Project is taken for more than one hundred eighty (180) consecutive days for any public or quasi-public
purpose by any lawful governmental power or authority, by exercise of the right of appropriation, inverse condemnation,
condemnation or eminent domain, or sold to prevent such taking (each such event being referred to as a “Condemnation”),
Landlord may, at its option, terminate this Lease as of the date possession must be surrendered to the condemning party. If
fifteen percent (15%) or more of the Premises is taken for more than one hundred eighty (180) consecutive days and if the
Premises remaining after such Condemnation and any repairs by Landlord would be untenantable (in Landlord’s and
Tenant’s reasonable opinion) for the conduct of Tenant’s business operations, Tenant shall have the right to terminate this
Lease as of the date possession must be surrendered to the condemning party. If either party elects to terminate this Lease
as provided herein, such election shall be made by written notice to the other party given within thirty (30) days after the
nature and extent of such Condemnation have been finally determined. If neither Landlord nor Tenant elects to terminate
this Lease to the extent permitted above, Landlord shall promptly proceed to restore the Premises, to the extent of any
Condemnation award received by Landlord, to substantially the same condition as existed prior to such Condemnation,
allowing for the reasonable effects of such Condemnation, and a proportionate abatement shall be made to the Base Rent
corresponding to the time during which, and to the portion of the floor area of the Premises (adjusted for any increase
thereto resulting from any reconstruction) of which, Tenant is deprived on account of such Condemnation and restoration,
as reasonably determined by Landlord. Except as expressly provided in the immediately preceding sentence with respect to
abatement of Base Rent, Tenant shall have no claim against Landlord for, and hereby releases Landlord and Landlord’s
Agents from responsibility for and waives its entire claim of recovery for any cost, loss or expense suffered or incurred by
Tenant as a result of any Condemnation, whether permanent or temporary, or the repair or restoration of the Premises, the
Building or the Project or the Parking Areas for the Building or the Project following such Condemnation, including, but
not limited to, any cost, loss or expense resulting from any loss of use of the whole or any part of the Premises, the
Building, the Project or the Parking Areas and/or any inconvenience or annoyance occasioned by such Condemnation,
repair or restoration.
(b)
Landlord shall be entitled to any and all compensation, damages, income, rent, awards, or any interest
therein whatsoever which may be paid in connection with any Condemnation, and Tenant shall have no claim against
Landlord for the value of any unexpired Term of this Lease or otherwise; provided, however, that Tenant shall be entitled to
receive any award separately allocated by the condemning authority to Tenant for Tenant’s relocation expenses or the value
of Tenant’s Property (specifically excluding fixtures, Alterations and other components of the Premises which under this
Lease or by law are or at the expiration of the Term will become the property of Landlord), provided that such award does
not reduce any award otherwise allocable or payable to Landlord.
(c)
If, as a result of any Condemnation, all or any part of the Premises is taken for one hundred eighty (180)
consecutive days or less, then a proportionate abatement shall be made to Rent corresponding to the time during which, and
to the portion of the floor areas of the Premises of which, Tenant is deprived on account of such Condemnation, as
reasonably determined by

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Landlord, and Landlord shall be entitled to any and all compensation, damages, income, rent, awards or any interest therein
whatsoever which may be paid in connection with any such temporary Condemnation.
23.
ASSIGNMENT AND SUBLETTING
(a)
Tenant shall not voluntarily or by operation of law, (1) mortgage, pledge, hypothecate or encumber this
Lease or any interest herein, or (2) assign or transfer this Lease or any interest herein, sublease the Premises or any part
thereof, or any right or privilege appurtenant thereto, or allow any other person (the employees and invitees of Tenant
excepted) to occupy or use the Premises, or any portion thereof, without first obtaining the written consent of Landlord,
which consent shall not be withheld unreasonably as set forth below in this Paragraph ‎23, provided that Tenant is not then
in Default under this Lease.
Tenant shall not voluntarily or by operation of law assign or transfer any right or interest under this Lease,
including, but not limited to, the right to initiate any collections, lawsuits, audits or other findings of fact.
(b)
When Tenant requests Landlord’s consent to such assignment or subletting, it shall notify Landlord in
writing of the name and address of the proposed assignee or subtenant, the nature and character of the business of the
proposed assignee or subtenant, and the proposed assignee’s or subtenant’s proposed use of the Premises, and shall provide
current financial statements for the proposed assignee or subtenant, which financial statements shall be audited, or if
audited financial statements are unavailable, such statements shall be certified by an executive officer of the proposed
assignee or subtenant, and shall in any event be prepared in accordance with reasonable accounting principles, consistently
applied. Tenant shall also provide Landlord with a copy of the proposed sublease or assignment agreement, or, in the case
of an assignment by operation of law, a copy of the proposed agreement that would affect the assignment, in all cases
including all material terms and conditions thereof, and all other information reasonably requested by Landlord concerning
the proposed sublease or assignment and the parties involved therein. Landlord shall have the option, to be exercised within
thirty (30) days of receipt of the foregoing, to (1) consent to the proposed assignment or sublease, or (2) refuse its consent
to the proposed assignment or sublease, provided that (A) such consent shall not be unreasonably withheld so long as
Tenant is not then in Default under this Lease, and (B) in the case of a sublease, as a condition to providing such consent,
Landlord may require attornment from the proposed subtenant on terms and conditions acceptable to Landlord.
(c)
Without otherwise limiting the criteria upon which Landlord may withhold its consent, Landlord shall be
entitled to consider all reasonable criteria including, but not limited to, the following: (1) whether the use to be made of the
Premises by the proposed subtenant or assignee will conflict with any so-called “exclusive” use then in favor of any other
tenant of the Building or the Project, and whether such use would be prohibited by any other provision of this Lease,
including any Rules and Regulations then in effect, or under applicable Laws, and whether such use imposes a greater load
upon the Premises and the Building and Project services than imposed by Tenant, and (2) the creditworthiness and financial
stability of the proposed assignee or subtenant. In any event, Landlord may withhold its consent to any assignment or
sublease, if any one or more of the following circumstances apply: (i) the actual use proposed to be conducted

36
in the Premises or portion thereof conflicts with the provisions of Paragraph ‎9(a) or ‎(b) above or with any other lease which
restricts the use to which any space in the Building or the Project may be put, (ii) the proposed assignment or sublease
requires alterations, improvements or additions to the Premises or portions thereof, (iii)  the portion of the Premises
proposed to be sublet is irregular in shape and/or does not permit safe or otherwise appropriate means of ingress and
egress, or does not comply with governmental safety and other codes, (iv) the proposed subtenant or assignee is either a
governmental or quasi-governmental agency or instrumentality thereof; (v)  the proposed subtenant or assignee, or any
person or entity which directly or indirectly, controls, is controlled by, or is under common control with, the proposed
subtenant or assignee, either (x) occupies space in the Project at the time of the request for Landlord’s consent, or (y) is
negotiating with Landlord or has negotiated with Landlord to lease space in the Project during the six (6) month period
immediately preceding the date Landlord receives Tenant’s request for consent; or (vi)  if the proposed subtenant or
assignee is a Prohibited Person, as defined in Paragraph ‎48.
(d)
If Landlord approves an assignment or subletting, Tenant shall pay to Landlord, as Additional Rent, fifty
percent (50%) of any Transfer Premium received by Tenant. The term “Transfer Premium” means all rent and additional
rent paid by an assignee or subtenant in excess of the Rent payable by Tenant under this Lease (on a rentable square foot
basis, if less than the entire Premises is transferred), after deducting Permitted Transfer Costs. As used herein, “Permitted
Transfer Costs” means the actual costs incurred and paid by Tenant for (i) any third party leasing commissions that are
reasonable and customary for the market in which the Premises are located, (ii) any tenant improvement allowance paid by
Tenant to the assignee or subtenant for improvements made in the Premises with Landlord’s approval, and (iii) all other
reasonable costs and expenses incurred by Tenant in connection with the transfer. For purposes of the foregoing
calculation, the leasing commissions and any tenant improvement allowance shall be amortized on a straight-line basis
over the term of the applicable assignment or sublease. If Tenant shall enter into multiple transfers, the Transfer Premium
shall be calculated independently with respect to each transfer. The Transfer Premium due Landlord hereunder shall be
earned and paid monthly, within fifteen (15) days after Tenant receives any Transfer Premium from the transferee. The
assignment or sublease agreement, as the case may be, after approval by Landlord, shall not be amended or terminated
without Landlord’s prior written consent, and shall contain a provision directing the assignee or subtenant to pay the rent
and other sums due thereunder directly to Landlord upon receiving written notice from Landlord that Tenant is in default
under this Lease with respect to the payment of Rent. In the event that, notwithstanding the giving of such notice, Tenant
collects any rent or other sums from the assignee or subtenant, then Tenant shall hold such sums in trust for the benefit of
Landlord and shall immediately forward the same to Landlord. Landlord’s collection of such rent and other sums shall not
constitute an acceptance by Landlord of attornment by such assignee or subtenant.
(e)
Notwithstanding any assignment or subletting, Tenant and any guarantor or surety of Tenant’s obligations
under this Lease shall at all times remain fully and primarily responsible and liable for the payment of the Rent and for
compliance with all of Tenant’s other obligations under this Lease (regardless of whether the approval of Landlord, or any
such guarantor or surety, has been obtained for any such assignment or subletting).

37
(f)
Tenant shall pay Landlord’s reasonable fees (including, but not limited to, the fees and expenses of
Landlord’s counsel), incurred in connection with Landlord’s review and processing of documents regarding any proposed
assignment or sublease, not to exceed, in the aggregate, Five Thousand Dollars ($5,000.00).
(g)
A consent to one assignment, subletting, occupancy or use shall not be deemed to be a consent to any
other or subsequent assignment, subletting, occupancy or use, and consent to any assignment or subletting shall in no way
relieve Tenant of any liability under this Lease. Any assignment or subletting without Landlord’s consent shall be void, and
shall, at the option of Landlord, constitute a default under this Lease, subject to Paragraph ‎24(a).
(h)
Notwithstanding anything in this Lease to the contrary, if Landlord consents to a subletting by Tenant in
accordance with this Paragraph ‎23, Tenant’s subtenant shall have no right to further sublease all or any portion of the
Premises. In furtherance of the foregoing, Tenant acknowledges and agrees on behalf of itself and any subtenant claiming
under it (and any such subtenant by accepting such sublease shall be deemed to acknowledge and agree) that no sub-
subleases shall be permitted at any time.
(i)
If this Lease is assigned, whether or not in violation of the provisions of this Lease, Landlord may collect
Rent from the assignee. If the Premises or any part thereof is sublet or used or occupied by anyone other than Tenant,
whether or not in violation of this Lease, Landlord may, after a Default by Tenant, collect Rent from the subtenant or
occupant. In either event, Landlord may apply the net amount collected to Rent, but no such assignment, subletting,
occupancy or collection shall be deemed a waiver of any of the provisions of this Paragraph ‎23, or the acceptance of the
assignee, subtenant or occupant as tenant, or a release of Tenant from the further performance by Tenant of Tenant’s
obligations under this Lease. If a third party (other than an assignee of this Lease or a subtenant or occupant of the
Premises) pays Landlord Rent (whether or not on behalf of Tenant) or otherwise performs obligations to be performed by
Tenant under this Lease, Landlord’s acceptance of such Rent or performance shall not release Tenant from the further
performance by Tenant of Tenant’s obligations under this Lease. The consent by Landlord to an assignment, mortgaging,
pledging, encumbering, transfer, use, occupancy or subletting shall not, except as otherwise provided herein, in any way be
considered to relieve Tenant from obtaining the express written consent of Landlord to any other or further assignment,
mortgaging, pledging, encumbering, transfer, use, occupancy or subletting.
(j)
Without limiting the other transaction(s) that may constitute or result in an assignment of this Lease, each
of the following shall be deemed to be an assignment under this Lease: (1) the merger or consolidation of Tenant with or
into another entity, whether or not Tenant is the surviving entity, except a merger of Tenant into a wholly-owned subsidiary
to effect a reincorporation in another state; (2) except in the case of a public offering of securities registered with the
Securities and Exchange Commission, a transfer, issuance, or dilution of greater than fifty percent (50%) of the ownership
or beneficial interests (whether stock, partnership interest, membership interest or otherwise) in Tenant, either in a single
transaction or a series of transactions (whether related or unrelated), such that the ultimate owners or holders (whether
direct or indirect) of such interests on the date of this Lease cease to own more than fifty percent (50%) of the ownership or
beneficial interest in Tenant; (3)  the reorganization or restructuring of Tenant, including by a spin-off or split-off; and
(5) the change in the identity of the “controlling persons”

38
as, under the organizational documents of Tenant, the persons required to approve any act involving the management or
operation of the business of Tenant. For purposes of this Paragraph  ‎23, (A)  the term “controlling persons” means the
directors if Tenant is a corporation, the managing members or managers if Tenant is a limited liability company, the general
partners if Tenant is a partnership, or other persons having equivalent control over said approval if another entity, and
(B) the term “organizational documents” means the charter, bylaws, and shareholders’ agreement if Tenant is a corporation,
the articles of organization or certificate of formation and operating agreement if Tenant is a limited liability company, the
partnership agreement if Tenant is a partnership, or equivalent documents governing Tenant’s organization and governance
if Tenant is another entity.
(k)
References in this Lease to use or occupancy by anyone other than Tenant shall not be construed as
limited to subtenants and those claiming under or through subtenants, but shall also include licensees or others claiming
under or through Tenant, immediately or remotely.
(l)
No assignment or sublease shall be binding on Landlord unless the proposed assignee or subtenant
delivers to Landlord a fully executed counterpart of the assignment, sublease or other agreement that contains (1) in the
case of an assignment, the assumption by the assignee of all obligations of Tenant under this Lease, or (2) in the case of a
sublease, recognition by the subtenant of the provisions of this Paragraph ‎23 (including that such sublease is subject to this
Lease and all of the terms, covenants and conditions contained in this Lease), and which assignment, sublease or other
agreement shall otherwise be in form and substance satisfactory to Landlord, but the failure or refusal of a proposed
assignee or subtenant to deliver such instrument shall not release or discharge such assignee or subtenant from the
provisions and obligations of this Paragraph  ‎23, and, at Landlord’s option, shall constitute a default under this Lease,
subject to Paragraph  ‎24(a). Each subletting and/or assignment pursuant to this Paragraph shall be subject to all of the
covenants, agreements, terms, provisions and conditions contained in this Lease and each of the covenants, agreements,
terms, provisions and conditions of this Lease shall be automatically incorporated therein. By accepting such assignment or
entering into such sublease, an assignee or subtenant shall be deemed to have assumed and agreed to comply with each and
every covenant, agreement, term, provision and conditions of this Lease, other than such contrary or inconsistent
obligations to which Landlord has specifically consented in writing. If Landlord shall consent to, or reasonably withhold its
consent to, any proposed assignment or sublease, Tenant shall indemnify, defend and hold harmless Landlord against and
from any and all loss, liability, damages, costs and expenses (including reasonable counsel fees and expenses) resulting
from any claims that may be made against Landlord by the proposed assignee or subtenant or by any brokers or other
persons claiming a commission or similar fee in connection with the proposed assignment or sublease.
(m)
Notwithstanding anything contained herein to the contrary, Tenant may (i)  assign this Lease to a
successor to Tenant by merger, reorganization, recapitalization or consolidation involving Tenant or the purchase of all or
substantially all of Tenant’s assets, shares or interests, or (ii) assign this Lease or sublet all or a portion of the Premises to
an Affiliate (defined below), without the consent of Landlord and without being subject to the terms of this Paragraph ‎23
above (but all of this Paragraph  ‎23 will apply thereafter to the surviving entity, assignee or Affiliate, as applicable),
provided that all of the following conditions are satisfied: (A) Tenant must not be in default beyond notice and cure;
(B) Tenant must give Landlord written notice when legally

39
permissible to do so; (C) the transfer is not a subterfuge by Tenant to avoid its obligations under this Lease to get consent to
a transfer; and (D) if the entity of Tenant ceases to exist, the tangible net worth of the assignee or successor by merger
immediately after the transfer will have a tangible net worth equal to or greater than Twenty-five Million and 00/100
Dollars ($25,000,000.00). Tenant’s notice to Landlord shall include information and documentation evidencing the
permitted transfer and showing that each of the above conditions has been satisfied. “Affiliate” shall mean an entity
controlled by, controlling or under common control with Tenant and the term “control” shall mean ownership of a majority
of the voting shares/rights of the applicable entity. Notwithstanding the foregoing, and subject to the terms and conditions
of this Lease, Tenant shall have the right to co-locate one or more Affiliates or other companies which Tenant typically co-
locates with in up to ten percent (10%) of the area of the Premises.
24.
DEFAULT
(a)
The occurrence of any one of the following events shall constitute a default on the part of Tenant
(“Default”):
(1)
Failure to pay any installment of Base Rent or any other monies due and payable hereunder, said
failure continuing for a period of five (5) days after written notice that the same is due; provided, however, that such
written notice shall not be required more than two (2) times in any twelve (12)-month period, and after a second (2nd) such
notice in twelve (12) months, a Default will occur when any installment of Base Rent or any other monies due and payable
hereunder is not paid when the same is due;
(2)
A general assignment for the benefit of creditors by Tenant or any guarantor or surety of
Tenant’s obligations hereunder;
(3)
The filing of a voluntary petition in bankruptcy by Tenant or any Guarantor, the filing by Tenant
or any Guarantor of a voluntary petition for an arrangement, the filing by or against Tenant or any Guarantor of a petition,
voluntary or involuntary, for reorganization, or the filing of an involuntary petition in bankruptcy by the creditors of Tenant
or any Guarantor, said involuntary petition remaining undischarged for a period of sixty (60) days;
(4)
Receivership, attachment, or other judicial seizure of substantially all of Tenant’s assets on the
Premises, such attachment or other seizure remaining undismissed or undischarged for a period of sixty (60) days after the
levy thereof;
(5)
Failure of Tenant to execute and deliver to Landlord any estoppel certificate, subordination
agreement, or lease amendment within the time periods and in the manner required by Paragraphs ‎30 or ‎31 or ‎42, and such
failure continues for a period of five (5) days after a second written reminder notice, and/or failure by Tenant to deliver to
Landlord any financial statement as required by Paragraph ‎40, and such failure continues for a period of five (5) days after
a second written reminder notice;
(6)
An assignment or sublease, or attempted assignment or sublease, of this Lease or the Premises
by Tenant contrary to the provisions of Paragraph ‎23, unless such assignment or sublease is expressly conditioned upon
Tenant having received Landlord’s consent thereto;

40
(7)
Failure of Tenant to restore the Security Deposit to the amount and within the time period
provided in Paragraph ‎7 above;
(8)
Failure in the performance of any of Tenant’s covenants, agreements or obligations hereunder
(except those failures specified as Defaults in subparagraphs  (1) through (7) or any other subparagraphs of this
Paragraph ‎24, which shall be governed by the notice and cure periods set forth in such other subparagraphs), which failure
continues for thirty (30) days after written notice thereof from Landlord to Tenant, provided that, if Tenant has commenced
to cure such failure and such failure cannot be cured within such thirty (30) day period despite reasonable diligence, Tenant
shall not be in default under this subparagraph so long as Tenant thereafter diligently and continuously prosecutes the cure
to completion and actually completes such cure within one hundred eighty (180) days after the giving of such written
notice.
(b)
Landlord’s Default.
(1)
If Landlord fails to perform its obligations under this Lease, Landlord shall not be in default
unless Landlord fails to perform such obligations within thirty  (30) days after written notice by Tenant to Landlord
specifying the nature of the obligations Landlord has failed to perform (a “Notice of Landlord Default”); provided,
however, that if the nature of Landlord’s obligations is such that more than thirty (30) days are required for performance,
then Landlord shall not be in default if Landlord commences performance within such thirty (30) day period and thereafter
diligently prosecutes the same to completion. If Landlord is unable to fulfill or is delayed in fulfilling any of Landlord’s
obligations under this Lease by reason of Force Majeure, then no such inability or delay by Landlord and no such entry or
work by Landlord shall constitute an actual or constructive eviction, in whole or in part, or entitle Tenant to any abatement
or diminution of Rent, or relieve Tenant from any of its obligations under this Lease, or impose any liability on Landlord or
Landlord’s Agents. Notwithstanding any provision of this Lease to the contrary, Tenant shall have no right to terminate this
Lease on account of any breach or default by Landlord. Tenant shall have all rights and remedies at law or in equity for a
default by Landlord.
(2)
If Tenant delivers a Notice of Landlord Default pursuant to Paragraph ‎24‎(b)‎(1) with respect to a
failure by Landlord to make a repair to, or perform maintenance with respect to, the Premises or Project that Landlord is
required to make or perform under this Lease and such failure (a) materially adversely affects Tenant’s ability to use the
Premises for the Permitted Use (a “Potential Self-Help Default ”), and (b) continues for thirty (30) days after delivery of
the applicable Notice of Landlord Default to Landlord, Tenant may give Landlord a second written notice specifying the
nature of the Potential Self-Help Default and containing the following phrase on the first page of such notice in all capital
letters and bold face type (or such notice will not be deemed validly given): “LANDLORD’S FAILURE TO
COMMENCE THE REPAIR OR MAINTENANCE DESCRIBED IN THIS NOTICE WITHIN TEN (10) DAYS
WILL ENTITLE TENANT TO PERFORM SUCH REPAIR OR MAINTENANCE AT LANDLORD’S EXPENSE
WITHOUT FURTHER NOTICE.” At any time after Tenant delivers a Notice of Landlord Default with respect to a
Potential Self-Help Default and before Tenant commences to exercise its self-help rights under this Paragraph  ‎24‎(b),
Landlord will have the right, by notice delivered to Tenant, to contest, in good faith, the existence of the applicable
Potential Self-Help Default (a

41
“Landlord Self-Help Contest” ). If Landlord does not so commence to perform such repair or maintenance within ten (10)
days after receipt of such second notice from Tenant and does not deliver notice of a Landlord Self-Help Contest, then
Tenant shall have the right to perform such obligation so long as (i)  Tenant uses a qualified, licensed and bondable
contractor; and (ii) Tenant’s performance does not affect the structural components of the Building; the Building Systems;
the exterior of the Building; or any other tenant or occupant of the Building. In such case, Landlord shall repay to Tenant
the amount expended for reasonable repair or maintenance costs within thirty  (30) days after receiving Tenant’s paid
receipt for such repair or maintenance, and if Landlord does not repay such amount within such thirty (30) day period,
Tenant may deliver a second notice of such amount due, and if Landlord does not repay such amount within five  (5)
business days after delivery of such second notice, Tenant will be permitted to offset such amount against the monthly
installments of Base Rent coming due under this Lease. Notwithstanding the foregoing, if Landlord delivers a notice of a
Landlord Self-Help Contest, then Tenant will not exercise the self-help rights described above unless and until the
Landlord Self-Help Contest is resolved and Landlord does not commence to perform such repair or maintenance within
five (5) business days after such resolution of the applicable Landlord Self-Help Contest.
25.
LANDLORD’S REMEDIES
(a)
Termination. In the event of any Default by Tenant, then in addition to any other remedies available to
Landlord at law or in equity and under this Lease, Landlord may terminate this Lease immediately and all rights of Tenant
hereunder by giving written notice of termination to Tenant. If Landlord elects to terminate this Lease, then Landlord may
recover from Tenant:
(1)
the worth at the time of award of any unpaid Rent and any other sums due and payable which
have been earned at the time of termination; plus
(2)
the worth at the time of award of the amount by which the unpaid Rent and any other sums due
and payable which would have been earned after termination until the time of award exceeds the amount of such rental loss
Tenant proves could have been reasonably avoided; plus
(3)
the worth at the time of award of the amount by which the unpaid Rent and any other sums due
and payable for the balance of the Term of this Lease after the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; plus
(4)
any other amount necessary to compensate Landlord for all the detriment proximately caused by
Tenant’s failure to perform its obligations under this Lease or which in the ordinary course would be likely to result
therefrom, including, but not limited to, (A) any costs or expenses incurred by Landlord (1) in retaking possession of the
Premises; (2) in maintaining, repairing, preserving, restoring, replacing, cleaning, altering, remodeling or rehabilitating the
Premises or any affected portions of the Building or the Project, including such actions undertaken in connection with the
reletting or attempted reletting of the Premises to a new tenant or tenants; (3) for leasing commissions, advertising costs
and other expenses of reletting the Premises; or (4) in carrying the Premises, including taxes, insurance premiums, utilities
and security costs;

42
(B) any unearned brokerage commissions paid in connection with this Lease; (C) reimbursement of any previously waived
or abated Base Rent or Additional Rent or any free rent or reduced rent granted hereunder; and (D) any concession made or
paid by Landlord for the benefit of Tenant including, but not limited to, any moving allowances, contributions, payments or
loans by Landlord for tenant improvements or build-out allowances (including, but not limited to, any unamortized portion
of the Construction Allowance as defined in Exhibit B, such Construction Allowance to be amortized over the Term in the
manner reasonably determined by Landlord), if any, and any outstanding balance (principal and accrued interest) of the
Tenant Improvement Loan, if any), or assumptions by Landlord of any of Tenant’s previous lease obligations; plus
(5)
such reasonable attorneys’ fees and expenses incurred by Landlord as a result of a Default, and
court costs in the event suit is filed by Landlord to enforce such remedy; and plus
(6)
at Landlord’s election, such other amounts in addition to or in lieu of the foregoing as may be
permitted from time to time by applicable Law.
As used in subparagraphs (1) and (2) above, the “worth at the time of award” is computed by allowing interest at an annual
rate equal to eight percent (8%) per annum or the maximum rate permitted by applicable Laws, whichever is less. As used
in subparagraph (3) above, the “worth at the time of award” is computed by discounting such amount at the discount rate of
Federal Reserve Bank of Kansas City at the time of award, plus three percent (3%). Tenant hereby waives for Tenant and
for all those claiming under Tenant all right now or hereafter existing to redeem by order or judgment of any court or by
any legal process or writ, Tenant’s right of occupancy of the Premises after any termination of this Lease.
(b)
Re-entry. In the event of any Default by Tenant, Landlord shall also have the right, with or without
terminating this Lease, in compliance with applicable Laws, to re-enter the Premises, by force if necessary, and remove all
persons and property from the Premises; such property may be removed and stored in a public warehouse or elsewhere at
the cost of and for the account of Tenant.
(c)
Reletting. In the event of the abandonment of the Premises by Tenant or if Landlord elects to re-enter as
provided in Paragraph ‎25(b) or takes possession of the Premises pursuant to (i) legal proceeding or (ii) any notice provided
by Law, then if Landlord does not elect to terminate this Lease as provided in Paragraph ‎25(a), Landlord may from time to
time, without terminating this Lease, relet the Premises or any part thereof for such term or terms and at such rental or
rentals and upon such other terms and conditions as Landlord in its sole discretion may deem advisable with the right to
make alterations and repairs to the Premises in Landlord’s sole discretion. If Landlord elects to so relet, then rentals
received by Landlord from such reletting shall be applied in the following order: (1) to reasonable attorneys’ fees and
expenses incurred by Landlord as a result of a Default and court costs in the event suit is filed by Landlord to enforce such
remedies; (2)  to the payment of any indebtedness other than Rent due hereunder from Tenant to Landlord; (3)  to the
payment of any costs of such reletting; (4) to the payment of the costs of any alterations and repairs to the Premises; (5) to
the payment of Rent due and unpaid hereunder; and (6) the residual amount, if any, shall be held by Landlord and applied
in payment of future Rent and other sums payable by Tenant hereunder as the same may become due and payable

43
hereunder. If the portion of such rentals received from such reletting during any month, which is applied to the payment of
Rent hereunder, is less than the Rent payable during the month by Tenant hereunder, then Tenant shall pay such deficiency
to Landlord. Such deficiency shall be calculated and paid monthly. Tenant shall also pay to Landlord, as soon as
ascertained, any costs and expenses incurred by Landlord in such reletting or in making such alterations and repairs not
covered by the rentals received from such reletting.
(d)
Termination. No re-entry or taking of possession of the Premises by Landlord pursuant to this
Paragraph ‎25 shall be construed as an election to terminate this Lease unless a written notice of such intention is given to
Tenant or unless the termination thereof is decreed by a court of competent jurisdiction. Notwithstanding any reletting
without termination by Landlord because of any Default by Tenant, Landlord may at any time after such reletting elect to
terminate this Lease for any such Default.
(e)
Cumulative Remedies. The remedies herein provided are not exclusive and Landlord shall have any and
all other remedies provided herein or by law or in equity.
(f)
No Surrender. No act or conduct of Landlord, whether consisting of the acceptance of the keys to the
Premises, or otherwise, shall be deemed to be or constitute an acceptance of the surrender of the Premises by Tenant prior
to the expiration of the Term, and such acceptance by Landlord of surrender by Tenant shall only be effective upon a
written acknowledgment of acceptance of surrender signed by Landlord. The surrender of this Lease by Tenant, voluntarily
or otherwise, shall not work a merger unless Landlord elects in writing that such merger take place, but shall operate as an
assignment to Landlord of any and all existing subleases, or Landlord may, at its option, elect in writing to treat such
surrender as a merger terminating Tenant’s estate under this Lease, and thereupon Landlord may terminate any or all such
subleases by notifying the subtenant of its election so to do within five (5) business days after such surrender.
Notwithstanding anything contained in this Lease to the contrary, Landlord shall have an affirmative duty to mitigate its
damages hereunder in accordance with Colorado law. Notwithstanding anything contained herein to the contrary, Landlord
and Tenant hereby waive any consequential, punitive and special damages, compensation or claims for inconvenience or
loss of business, rents, or profits, whether or not caused by the willful and wrongful act of Landlord or Tenant and/or any
party acting by, through or under Landlord or Tenant; provided, however, that the foregoing sentence will not limit
Landlord’s ability to collect the damages as described in Paragraph ‎25‎(a), nor will it apply to Paragraph ‎35.
26.
LANDLORD’S RIGHT TO PERFORM TENANT’S OBLIGATIONS
(a)
Without limiting Landlord’s rights and remedies under this Lease, if Tenant shall Default under this
Lease, Landlord may at Landlord’s option, without any obligation to do so, and perform any such term, provision,
covenant, or condition, or make any such payment, and by doing so Landlord shall not be liable or responsible for any loss
or damage thereby sustained by Tenant or anyone holding under or through Tenant or any of Tenant’s Agents.

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(b)
If Landlord performs any of Tenant’s obligations hereunder in accordance with this Paragraph ‎26, the full
amount of the cost and expense incurred or the payment so made or the amount of the loss so sustained shall immediately
be owing by Tenant to Landlord, and Tenant shall pay to Landlord within thirty (30) days after demand, as Additional Rent,
the full amount thereof with interest thereon from the date of payment by Landlord at the lower of (i) eight percent (8%)
per annum, or (ii) the highest rate permitted by applicable Laws.
27.
ATTORNEY’S FEES
If either party hereto fails to perform any of its obligations under this Lease or if any dispute arises between the
parties hereto concerning the meaning or interpretation of any provision of this Lease, then the party not prevailing in such
dispute shall pay any and all costs and expenses incurred by the other party on account of such default and/or in enforcing
or establishing its rights hereunder, including, but not limited to, court costs, expert fees and costs and attorneys’ fees and
disbursements. In addition to other circumstances, a party shall be deemed to have prevailed in any such action if such
action is dismissed upon the payment by the other party of the sums allegedly due or the performance of obligations
allegedly not complied with, or if such party obtains substantially the relief sought by it in the action, irrespective of
whether such action is prosecuted to judgment. The reasonable costs to which the prevailing party is entitled shall include
costs of investigation, copying costs, electronic discovery costs, electronic research costs, telephone charges, mailing and
delivery charges, information technology support charges, consultant and expert witness fees and costs, travel expenses,
court reporter fees, transcripts of court proceedings not ordered by the court, mediator fees and attorneys’ fees incurred in
discovery and contempt proceedings. The non-prevailing party shall also pay the attorneys’ fees and costs incurred by the
prevailing party in any post-judgment proceedings to collect and enforce the judgment. The covenant in the preceding
sentence is separate and several and shall survive the merger of this provision into any judgment in connection with this
Lease.
28.
TAXES
Tenant shall be liable for and shall pay directly to the taxing authority, prior to delinquency, all taxes levied
against Tenant’s Property or Alterations made by or on behalf of Tenant. If any Alteration installed by or on behalf of
Tenant or any of Tenant’s Property is assessed and taxed with the Project or the Building, Tenant shall pay such taxes to
Landlord within thirty (30) days after delivery to Tenant of a statement therefor.
29.
EFFECT OF CONVEYANCE
The term “Landlord” as used in this Lease means, from time to time, the then current owner of the Building or
the Project containing the Premises, so that, in the event of any sale or other transfer of the Building or the Project,
Landlord shall be and hereby is entirely freed and relieved of all covenants and obligations of Landlord hereunder, and it
shall be deemed and construed, without further agreement between the parties and the purchaser or other transferee at any
such sale or other transfer, that the purchaser or other transferee of the Building or the Project has assumed and agreed to
carry out any and all covenants and obligations of Landlord hereunder.

45
30.
TENANT’S ESTOPPEL CERTIFICATE
From time to time, upon written request of Landlord, which request shall occur only once per year, except in
connection with a bona fide sale or financing, Tenant shall execute, acknowledge and deliver to Landlord or its designee,
an estoppel certificate in substantially the form attached hereto as Exhibit E or such other commercially reasonable form
as may be requested by any prospective lender or purchaser of the Project or any portion thereof. Any such estoppel
certificate may be relied upon by a prospective purchaser of Landlord’s interest or a mortgagee of (or holder of a deed of
trust encumbering) Landlord’s interest or assignee of any mortgage or deed of trust upon Landlord’s interest in the
Premises. If Tenant fails to provide such estoppel certificate within fifteen (15) days after receipt by Tenant of a written
request by Landlord as herein provided, and such failure continues for five (5) business days after a second (2nd) request
from Landlord, then such failure shall, at Landlord’s election, constitute a Default under this Lease. In addition, without
waiving any other rights or remedies, Landlord may charge Tenant an administrative fee of Two Hundred Dollars
($200.00) for each day that Tenant is delinquent in delivering an estoppel certificate.
31.
SUBORDINATION
(a)
Subject to the terms hereof, this Lease, and all rights of Tenant hereunder, are and shall be subject and
subordinate to all ground leases, overriding leases and underlying leases affecting the Building or the Project now or
hereafter existing and each of the terms, covenants and conditions thereto (the “Superior Lease(s)”), and to all mortgages
or deeds of trust which may now or hereafter affect the Building, the Project or any of such leases and each of the terms,
covenants and conditions thereto (the “Superior Mortgage(s)”), whether or not such mortgages or deeds of trust shall also
cover other land, buildings or leases, to each and every advance made or hereafter to be made under such mortgages or
deeds of trust, and to all renewals, modifications, replacements and extensions of such leases and such mortgages or deeds
of trust and spreaders and consolidations of such mortgages or deeds of trust. The lessor under a Superior Lease or its
successor in interest is herein called “Superior Lessor”; and the holder of a Superior Mortgage is herein called “Superior
Mortgagee.”
(b)
Tenant shall promptly execute, acknowledge and deliver any reasonable instrument that Landlord, the
lessor under any such lease or the holder of any such mortgage or deed of trust or any of their respective successors in
interest may reasonably request to evidence such subordination; if Tenant fails to execute, acknowledge or deliver any such
instrument within twenty (20) days after request therefor, Tenant hereby irrevocably constitutes and appoints Landlord as
Tenant’s attorney-in-fact, coupled with an interest, to execute and deliver any such instrument for and on behalf of Tenant.
(c)
If any Superior Lessor or Superior Mortgagee shall succeed to the rights of Landlord under this Lease,
whether through possession or foreclosure action or delivery of a new lease or deed (such party so succeeding to
Landlord’s rights herein called “Successor Landlord”), then, subject to the terms and conditions of any SNDA (as defined
below) then in effect, Tenant shall attorn to and recognize such Successor Landlord as Tenant’s landlord under this Lease
(without the need for further agreement) and shall promptly execute and

46
deliver any reasonable instrument that such Successor Landlord may request to evidence such attornment. In such event,
and subject to the terms and conditions of any SNDA then in effect, this Lease shall continue in full force and effect as a
direct lease between the Successor Landlord and Tenant upon all of the terms, conditions and covenants set forth in this
Lease.
(d)
Notwithstanding anything contained herein, but subject to the terms and conditions of any SNDA then in
effect, with respect to any Superior Lease or Superior Mortgage, as long as Tenant is not in default in the payment of Rent
to be paid by Tenant under this Lease, and the performance of all covenants, agreements and conditions to be performed by
Tenant under this Lease after receipt of any applicable notice and the expiration of any applicable cure period, and
provided that Tenant attorns to the party acquiring title to the Premises as a result of the foreclosure, termination or transfer
in lieu thereof of any such interest, then neither Tenant’s right to quiet enjoyment under this Lease, nor the right of Tenant
to continue to occupy the Premises and to conduct its business thereon, in accordance with the terms of this Lease, will be
interfered with by the holder of any such interest or by any successor thereto or any successor to Landlord as a result of the
foreclosure or termination thereof or transfer in lieu thereof, or by virtue of any such foreclosure, termination or transfer.
(e)
Landlord hereby represents and warrants to Tenant that no Superior Lessors and no Superior Mortgagees
exist as of the Lease Date. Landlord will use commercially reasonable efforts to obtain a commercially reasonable form of
subordination, non-disturbance and attornment agreement (an “SNDA””) from all existing Superior Lessors and Superior
Mortgagees that may hereafter affect the Building, the Project, with such commercially reasonable changes to which
Tenant and the applicable Superior Lessor or Superior Mortgagee may agree.
32.
ENVIRONMENTAL COVENANTS
(a)
Definitions.
(1)
As used in this Lease, the term “Hazardous Materials” means (i) any substance or material that
is included within the definitions of “hazardous substances,” “hazardous materials,” “toxic substances,” “pollutant,”
“contaminant,” “hazardous waste,” or “solid waste” in any Environmental Law; (ii) petroleum or petroleum derivatives,
including crude oil or any fraction thereof, all forms of natural gas, and petroleum products or by-products or waste;
(iii) polychlorinated biphenyls (PCB’s); (iv) asbestos and asbestos containing materials (whether friable or non-friable);
(v) lead and lead based paint or other lead containing materials (whether friable or non-friable); (vi) urea formaldehyde;
(vii) microbiological pollutants; (viii) batteries or liquid solvents or similar chemicals; (ix) radon gas; and (x) mildew,
fungus, mold, bacteria and/or other organic spore material.
(2)
As used in this Lease, the term “Environmental Laws” means all statutes, terms, conditions,
limitations, restrictions, standards, prohibitions, obligations, schedules, plans and timetables that are contained in or
promulgated pursuant to any federal, state or local laws (including rules, regulations, ordinances, codes, judgments, orders,
decrees, contracts, permits, stipulations, injunctions, the common law, court opinions, and demand or notice letters issued,
entered, promulgated or approved thereunder), relating to pollution or the protection of the environment, including laws
relating to emissions, discharges, releases or

47
threatened releases of Hazardous Materials into ambient air, surface water, ground water or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials,
including, but not limited to, the: Comprehensive Environmental Response Compensation and Liability Act of 1980
(CERCLA), as amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA), 42 U.S.C. 9601 et seq.;
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976 (RCRA), 42 U.S.C. 6901
et seq.; Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq.; Toxic Substances Control Act, 15 U.S.C. 2601 et seq.;
Clean Air Act, 42 U.S.C. 7401 et seq.; and the Safe Drinking Water Act, 42 U.S.C. § 300f et seq. “Environmental Laws”
shall include any statutory or common law that has developed or develops in the future regarding mold, fungus,
microbiological pollutants, mildew, bacteria and/or other organic spore material. “Environmental Laws” shall not include
laws relating to industrial hygiene or worker safety, except to the extent that such laws address asbestos and asbestos
containing materials (whether friable or non-friable) or lead and lead based paint or other lead containing materials.
(b)
Tenant will not permit Hazardous Materials to be present in, on or about the Premises, except for normal
quantities of cleaning and other business supplies customarily used and stored in an office and will comply with all
Environmental Laws relating to the use, storage or disposal of any such Hazardous Materials.
(c)
If Tenant’s use of Hazardous Materials in, on or about the Premises results in a release, discharge or
disposal of Hazardous Materials in, on, at, under, or emanating from, the Premises, the Building, or the Project, Tenant
shall investigate, clean up, remove or remediate such Hazardous Materials in full compliance with the requirements of
(A)  all Environmental Laws and (B)  any governmental agency or authority responsible for the enforcement of any
Environmental Laws.
(d)
Upon reasonable notice to Tenant, and with a reasonable basis for conducting an inspection, Landlord
may enter the Premises for the purposes of inspection and, if reasonably warranted, testing to determine whether there
exists on the Premises any Hazardous Materials or other condition or activity that is in violation of the requirements of this
Lease or of any Environmental Laws. The right granted to Landlord herein shall not create a duty on Landlord’s part to
inspect the Premises, or liability on the part of Landlord for Tenant’s use, storage or disposal of Hazardous Materials, it
being understood that Tenant shall be solely responsible for all liability in connection therewith. Any testing conducted by
Landlord under this Paragraph ‎32‎(d) will be at Landlord’s sole cost.
(e)
Tenant shall surrender the Premises to Landlord upon the expiration or earlier termination of this Lease
free of Hazardous Materials caused by Tenant or its employees, agents or contractors and in a condition which complies
with all Environmental Laws. Tenant’s obligations and liabilities pursuant to this Paragraph ‎32 shall be in addition to any
other surrender requirements in this Lease and shall survive the expiration or earlier termination of this Lease.
(f)
Tenant shall indemnify and hold harmless Landlord from and against any and all claims, damages, fines,
judgments, penalties, costs, losses (including loss in value of the Premises, the Building, and/or the Project, damages due to
loss or restriction of rentable or usable space, and damages due to any adverse impact on marketing of the Premises, the
Building, and/or the Project,

48
and any and all sums paid for settlement of claims), liabilities and expenses (including, but not limited to, attorneys’,
consultants’, and experts’ fees) to the extent incurred by Landlord during or after the Term of this Lease and to the extent
attributable to (i) any Hazardous Materials introduced, in, on, under or about the Premises, the Building and/or the Project
by Tenant or Tenant’s Agents, or resulting from the action or inaction of Tenant or Tenant’s Agents, or (ii) Tenant’s breach
of any provision of this Paragraph ‎32. This indemnification includes, without limitation, any and all costs incurred by
Landlord due to any investigation of the site or any cleanup, removal or restoration mandated by a federal, state or local
agency or political subdivision.
(g)
Landlord represents and warrants to Tenant that, to the current actual knowledge of Pierce, none of the
Project or the Premises is or has been used for the handling, generation, manufacture, production, storage, discharge,
treatment, removal, transport or disposal of Hazardous Materials, except in compliance with applicable Environmental
Laws or in such a manner that would not require notification to any governmental authority or any removal or remedial
action under any Environmental Law. Landlord shall indemnify and hold harmless Tenant from and against any and all
claims, damages, fines, judgments, penalties, costs, losses, liabilities and expenses (including, but not limited to, attorneys’,
consultants’, and experts’ fees) to the extent incurred by Tenant during or after the Term of this Lease and to the extent
attributable to (i) any Hazardous Materials introduced, in, on, under or about the Premises, the Building and/or the Project
by Landlord or Landlord’s Agents, or resulting from the action or inaction of Landlord or Landlord’s Agents; or (ii) any
violation of the representation and warranty in the first sentence of this Paragraph ‎32‎(g). This indemnification includes,
without limitation, any and all costs incurred by due to any investigation of the site or any cleanup, removal or restoration
mandated by a federal, state or local agency or political subdivision. Landlord will be obligated to remove, clean up and
remediate any Hazardous Materials found to be existing in, on, under or about the Premises that are Landlord’s obligation
to remove, clean up or remediate under Environmental Laws without cost or expense to Tenant, so long as such Hazardous
Materials were not placed by Tenant or its employees, agents or contractors in, on, under or about the Premises either
during the Term or during the term of the CSG Sublease; provided, however, that nothing in this Paragraph ‎32‎(g) will limit
Landlord’s ability to pursue claims for reimbursement or damages from third parties other than Tenant; and provided
further that if such Hazardous Materials were placed by Tenant or its employees, agents or contractors in, on, under or
about the Premises either during the Term or during the term of the CSG Sublease, then Tenant will be obligated to remove,
clean up and remediate any such Hazardous Materials without cost or expense to Landlord.
(h)
As and when requested by Landlord during the Term, Tenant shall provide Landlord (in the format
requested by Landlord and reasonably necessary or desirable to comply with the Required Sustainability Practices) with
data concerning Tenant’s energy consumption, water consumption, waste recycling, and the operation of Building Systems
pursuant to the Required Sustainability Practices.
(i)
Tenant and Tenant’s Agents shall comply with the Required Sustainability Practices, to the extent
applicable. Tenant shall not materially, adversely affect (as reasonably determined by Landlord) the indoor air quality of
the Premises or the Building, including, but not limited to, by the type of equipment, furniture, furnishings, fixtures or
personal property that is brought into the Premises, the materials used in the construction of any tenant improvements or

49
Alterations in the Premises, the cleaning supplies used in the maintenance of the Premises, or the violation of any non-
smoking policy adopted by Landlord.
(j)
Tenant agrees that Landlord may provide data from Tenant to Landlord’s consultants, lenders or
prospective lenders, purchasers or prospective purchasers, or other third parties having a reasonable need to know such
information.
(k)
The provisions of this Paragraph ‎32 shall survive the expiration or earlier termination of this Lease.
33.
NOTICES
Except as expressly provided herein or in Paragraph  ‎20 to the contrary, all notices and demands which are
required or may be permitted to be given to either party by the other hereunder shall be in writing and shall be sent by
United States mail, postage prepaid, certified, or by personal delivery, or by nationally recognized overnight courier,
addressed to the addressee at Tenant’s Address or Landlord’s Address as specified in the Basic Lease Information, or to
such other place as either party may from time to time designate in a notice to the other party given as provided herein.
Copies of all notices and demands given to Landlord shall additionally be sent to Landlord’s property manager at the
address specified in the Basic Lease Information or at such other address as Landlord may specify in writing from time to
time. Notice shall be deemed given upon actual receipt (or attempted delivery if delivery is refused), if personally
delivered, or one (1) business day following deposit for overnight delivery with a nationally recognized overnight courier
that provides a receipt, or on the third (3rd) day following deposit in the United States mail in the manner described above.
In no event shall either party use a post office box or other address which does not accept overnight delivery.
Notwithstanding the foregoing, notices from Landlord and Tenant regarding general Building operational matters may be
sent via e-mail to the e-mail address(es) provided by Tenant to Landlord and Landlord to Tenant for such purpose.
34.
WAIVER
The waiver of any breach of any term, covenant or condition of this Lease shall not be deemed to be a waiver of
such term, covenant or condition or of any subsequent breach of the same or any other term, covenant or condition herein
contained. The subsequent acceptance of Rent by Landlord shall not be deemed a waiver of any preceding breach by
Tenant, other than the failure of Tenant to pay the particular Rent so accepted, regardless of Landlord’s knowledge of such
preceding breach at the time of acceptance of such Rent. No delay or omission in the exercise of any right or remedy of
Landlord or Tenant in regard to any Default by Tenant or default by Landlord, as applicable, shall impair such a right or
remedy or be construed as a waiver. Any waiver of a default (regardless of whether it has matured into a Default) must be
in writing and shall not be a waiver of any other default (regardless of whether it has matured into a Default) concerning
the same or any other provisions of this Lease.
35.
HOLDING OVER
Any holding over after the expiration of the Term, without the express written consent of Landlord, shall
constitute a Default and, without limiting Landlord’s remedies provided in this Lease, such holding over shall be construed
to be a tenancy at sufferance, at a rental rate equal to

50
one hundred fifty percent (150%) of the Base Rent last due under this Lease, plus Additional Rent, and shall otherwise be
on the terms and conditions herein specified, so far as applicable; provided, however, in no event shall any renewal or
expansion option, option to purchase, or other similar right or option contained in this Lease be deemed applicable to any
such tenancy at sufferance. Notwithstanding the foregoing, with Landlord’s consent, which consent will not be
unreasonably withheld, conditioned or delayed, Tenant shall have the right to holdover in the Premises for up to ninety (90)
days and at a rate equal to one hundred fifty percent (150%) of the last month’s Base Rent, plus Additional Rent, during the
Term. If the Premises are not surrendered at the end of the Term, the sooner termination of this Lease or the extension
period contemplated by the prior sentence, and in accordance with the provisions of Paragraphs ‎11 and ‎32(e), and Landlord
has notified Tenant that Tenant’s failure to timely vacate the Premises will adversely affect Landlord’s ability to deliver the
Premises (or any portion thereof) to an incoming Tenant, then Tenant shall indemnify, protect, defend and hold Landlord
harmless from and against any and all loss or liability resulting from delay by Tenant in so timely surrendering the
Premises, including, but not limited to, any loss or liability resulting from any claim against Landlord made by any
succeeding tenant or prospective tenant founded on or resulting from such delay and losses to Landlord due to lost
opportunities to lease all or any portion of the Premises to any such succeeding tenant or prospective tenant, together with,
in each case, actual attorneys’ fees and costs.
36.
SUCCESSORS AND ASSIGNS
The terms, covenants and conditions of this Lease shall, subject to the provisions as to assignment, apply to and
bind the heirs, successors, executors, administrators and assigns of all of the parties hereto.
37.
TIME
Time is of the essence of this Lease and each and every term, condition and provision herein.
38.
BROKERS
Landlord and Tenant each represents and warrants to the other that neither it nor its officers or agents nor anyone
acting on its behalf has dealt with any real estate broker, except the Broker(s) specified in the Basic Lease Information in
the negotiating or making of this Lease, and each party agrees to indemnify and hold harmless the other from any claim or
claims, costs and expenses, including attorneys’ fees and expenses, incurred by the indemnified party in conjunction with
any such claim or claims of any other broker or brokers to a commission or other compensation in connection with this
Lease as a result of the actions of the indemnifying party. Landlord shall pay the Brokers any commissions per a separate
written agreement.
39.
LIMITATION OF LIABILITY
In the event of any default or breach by Landlord under this Lease or any claim arising in connection with
Landlord’s operation, management, leasing, repair, renovation, alteration or any other matter relating to the Premises, the
Building, or the Project, Tenant’s remedies shall be limited solely and exclusively to an amount equal to the interest in the
Building and Project of the then-current Landlord. “Landlord Parties” means, collectively,

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Landlord, its partners, shareholders, officers, directors, employees, members, investment advisors, or any successor in
interest of any of them. Neither Landlord, nor any of the Landlord Parties shall have any personal liability in connection
with this Lease, and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons
claiming by, through or under Tenant. The limitations of liability contained in this Paragraph ‎39 shall inure to the benefit of
Landlord’s and Landlord Parties’ present and future members, managers, partners, beneficiaries, officers, directors,
trustees, shareholders, advisors, agents and employees, and their respective partners, heirs, successors and assigns. Under
no circumstances shall any present or future partner of Landlord (if Landlord is a partnership), future member or manager
of Landlord (if Landlord is a limited liability company) or trustee or beneficiary of Landlord (if Landlord or any partner or
member of Landlord is a trust), have any liability for the performance of Landlord’s obligations under this Lease.
Notwithstanding any contrary provision herein, neither Landlord nor any Landlord Parties shall be liable under any
circumstances for, and Tenant hereby waives and releases Landlord and Landlord Parties from, all liability for punitive,
special or consequential damages arising under or in connection with this Lease, including, but not limited to, loss of
profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill, loss of use, or any other injury or
damage to, or interference with, Tenant’s business, in each case, however occurring. The provisions of this paragraph shall
apply only to Landlord and Landlord Parties and shall not be for the benefit of any insurer.
40.
FINANCIAL STATEMENTS
From time to time, upon written request of Landlord, which request shall occur only once per year, except in
connection with a bona fide sale or financing, within twenty (20) days after Landlord’s request, Tenant shall deliver to
Landlord the then current financial statements of Tenant, which will include audited statements, if available at the time of
Landlord’s request, and in any case, will include interim periods following the end of the last fiscal year for which any
annual statements are available, including a balance sheet and profit and loss statement for the most recent prior year, all
prepared in accordance with reasonable accounting principles, consistently applied. If Tenant customarily has its financial
statements prepared or compiled by a certified public accountant, the such financial statements delivered to Landlord will
be prepared by such certified public accountant; if Tenant does not customarily have its financial statements prepared or
compiled by a certified public accountant, then the financial statements will be prepared and certified by Tenant’s chief
financial officer or the person holding substantively the same position within Tenant’s organization. The terms hereof shall
not apply to “Tenant” to the extent Tenant is a publicly traded entity.
41.
RULES AND REGULATIONS
Tenant shall comply, and shall cause Tenant’s Agents to comply, with the rules and regulations attached hereto as
Exhibit D, along with any modifications, amendments and supplements thereto, and such reasonable rules and regulations
as Landlord may adopt in the future, from time to time, for the orderly and proper operation of the Building and the Project
(collectively, the “Rules and Regulations”). The Rules and Regulations may include, but shall not be limited to, the
following: (a) restriction of employee parking to a limited, designated area or areas; and (b) regulation of the removal,
storage and disposal of Tenant’s refuse and other rubbish. The then-current Rules and Regulations shall be

52
binding upon Tenant upon delivery of a copy of them to Tenant. Landlord shall not be responsible to Tenant for the failure
of any other person to observe and abide by any of said Rules and Regulations. Notwithstanding anything contained in this
Lease to the contrary, Landlord will use commercially reasonable efforts to enforce all Rules and Regulations or other rules
or procedures in a uniform and non-discriminatory manner. Notwithstanding anything contained herein to the contrary or
Landlord’s authority to promulgate new or modify the existing Rules and Regulations or other rules or procedures, (a)
Landlord shall notify Tenant in writing at least thirty (30) days’ in advance of any new or modified Rules and Regulations
(or other rules or procedures) from time to time established, and (b) in the event of any conflict between any provision of
this Lease and any Rules and Regulations (or other rules or procedures), the provision of this Lease shall control and
prevail. Notwithstanding anything contained herein to the contrary, Tenant shall not be bound by Rules and Regulations (or
other rules or procedures) that unreasonably (i) adversely affect Tenant’s ability to use the Premises, (ii) adversely impact
Tenant’s parking; (iii) increase Tenant’s Rent obligations hereunder or increase any other obligation of Tenant hereunder,
and/or (iv) diminish any of Tenant’s rights hereunder.
42.
MORTGAGEE PROTECTION
See Paragraph ‎31.
43.
RELOCATION
Landlord shall not have the right to relocate the Premises at any time during the Term.
44.
PARKING
(a)
Tenant shall license the full number of both the Reserved Parking Spaces and the Unreserved Parking
Spaces in the Parking Areas as specified in the Basic Lease Information throughout the Term, and any extension thereof,
subject to the provisions of this Paragraph ‎44; provided, however, that the number of parking spaces allocated to Tenant
hereunder shall be reduced on a proportionate basis in the event any of the parking spaces in the Parking Areas are taken or
otherwise eliminated as a result of any Condemnation or casualty event affecting such Parking Areas. Tenant shall pay the
parking charges imposed by Landlord for such Reserved Parking Spaces, which charges will be limited to seventy-five
dollars  ($75.00) per month during the initial Term, in advance, as Additional Rent, on the first day of each month;
provided, however, that Tenant will be responsible for paying, as Additional Rent, all costs of electricity used by the EV
Chargers during the Term. The Unreserved Parking Spaces will be at no charge during the initial Term.
(b)
Upon the expiration or earlier termination of this Lease, Tenant’s rights with respect to all parking spaces
shall immediately terminate. Further, if Tenant fails to pay parking charges when the same shall be due, then, upon written
notice from Landlord, in addition to all other remedies available to Landlord, Landlord may immediately suspend Tenant’s
right to use such parking spaces until such charges are paid in full. If Tenant’s rights to parking spaces terminate, or if
Tenant relinquishes its rights to any parking, then Tenant shall not have any right to any such terminated spaces or
relinquished parking unless and until Tenant cures any failure to pay applicable charges with respect to such spaces and
then only after at least one (1) full month has

53
elapsed after Tenant delivers notice to Landlord of Tenant’s election to resume use of such parking space(s).
(c)
Notwithstanding the foregoing, (i) Landlord shall not be required to enforce Tenant’s right to use such
parking spaces; and (ii) the use of all such parking spaces shall be for the parking of standard size passenger automobiles,
small pick-up trucks, vans and sport utility vehicles used by Tenant, its officers and employees only and shall be subject to
applicable Laws. Parking spaces and any Tenant rights hereunder may not be assigned or transferred separate and apart
from this Lease. All Unreserved Parking Spaces will be on a first-come, first-served basis in common with other tenants of
and Visitors to the Project in parking spaces provided by Landlord from time to time in the Project’s Parking Areas. The
Reserved Parking Spaces shall be located in the area(s) designated by Landlord from time to time. Tenant’s license to use
all such parking spaces shall be subject to such terms, conditions, rules and regulations as Landlord or the operator of the
Parking Area may impose from time to time, subject, however, to the limitations on rules expressly set forth in this Lease.
(d)
Each vehicle shall, at Landlord’s option, bear a permanently affixed and visible identification sticker
provided by Landlord. Tenant shall not and shall not permit its Agents to park any vehicles in locations other than those
specifically designated by Landlord for Tenant’s use. The license granted hereunder is for self-service parking only and
does not include additional rights or services. Except for the negligence or willful misconduct of Landlord or the
Landlord’s Agents, neither Landlord nor its Agents shall be liable for: (i) loss or damage to any vehicle or other personal
property parked or located upon or within any such parking spaces or any Parking Areas whether pursuant to this license or
otherwise and whether caused by fire, theft, explosion, strikes, riots or any other cause whatsoever; or (ii) injury to or death
of any person in, about or around such parking spaces or any Parking Areas or any vehicles parking therein or in proximity
thereto whether caused by fire, theft, assault, explosion, riot or any other cause whatsoever, and Tenant hereby waives any
claim for or in respect to the above and against all claims or liabilities arising out of loss or damage to property or injury to
or death of persons, or both, relating to any of the foregoing. Tenant shall not assign any of its rights hereunder and if an
attempted assignment is made, it shall be void.
(e)
Tenant recognizes and agrees that visitors, clients and/or customers (collectively “Visitors”) to the Project
and the Premises must park automobiles or other vehicles only in areas designated by Landlord from time to time as being
for the use of such Visitors, and Tenant shall ask its Visitors to park only in the areas designated by Landlord from time to
time for the use of Tenant’s Visitors. Parking for Visitors is free of charge.
45.
ENTIRE AGREEMENT; NO ORAL MODIFICATION; JOINT AND SEVERAL LIABILITY
This Lease, including the Exhibits and any Addenda attached hereto, which are hereby incorporated herein by this
reference, contains the entire agreement of the parties hereto, and no representations, inducements, promises or agreements,
oral or otherwise, between the parties, not embodied herein or therein, shall be of any force and effect. This Lease may not
be changed orally, and no amendment or modification of this Lease shall be binding or valid unless expressed in writing
and executed and delivered by Landlord and Tenant in the same manner as the execution

54
of this Lease. If two or more individuals, corporations, partnerships or other business associations (or any combination of
two or more thereof) shall sign this Lease as Tenant, the liability of each such individual, corporation, partnership or other
business association to perform Tenant’s obligations hereunder shall be joint and several, and the act of or notice from, or
notice or refund to, or the signature of, any one or more of them, in connection with any matter arising under this Lease,
including, but not limited to, any renewal, extension, expiration, termination or modification of this Lease, shall be binding
upon each and all of the persons and entities comprising Tenant with the same force and effect as if each and all of them
had so acted or so given or received such notice or refund or so signed. In like manner, if Tenant shall be a partnership or
other business association, the members of which are, by virtue of statute or federal law, subject to personal liability, then
the liability of each such member shall be joint and several.
46.
INTEREST
Any installment of Rent and any other sum due from Tenant under this Lease which is not received by Landlord
within five (5) days from when the same is due shall bear interest from the date such payment was originally due under this
Lease until paid at the lesser of (a) eight percent (8%) per annum or (b) an annual rate equal to the maximum rate of
interest permitted by applicable Laws. Payment of such interest shall not excuse or cure any Default by Tenant. In addition,
Tenant shall pay all costs and attorneys’ fees incurred by Landlord in collection of such amounts if Tenant engages an
attorney to serve a “notice to pay or quit” or its substantive equivalent, indicating that Landlord intends to commence an
eviction action. Notwithstanding anything contained herein to the contrary, Tenant shall not be obligated to pay any interest
hereunder until Landlord has given Tenant five (5) days written notice of the delinquent payment (which may be given at
any time during the delinquency); provided, however, that such notice shall not be required more than two (2) times in any
twelve (12)-month period.
47.
GOVERNING LAW; CONSTRUCTION
This Lease shall be construed and interpreted in accordance with the laws of state in which the Premises are
located. The parties acknowledge and agree that no rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall be employed in the interpretation of this Lease, including the Exhibits and any Addenda
attached hereto. All captions in this Lease are for reference only and shall not be used in the interpretation of this Lease.
Whenever required by the context of this Lease, the singular shall include the plural, the masculine shall include the
feminine, and vice versa. If any provision of this Lease is finally determined by a court of competent jurisdiction or by
arbitration, to be illegal or unenforceable, such determination shall not affect any other provision of this Lease, and all such
other provisions shall remain in full force and effect.
48.
REPRESENTATIONS AND WARRANTIES OF TENANT
Tenant (and, if Tenant is a corporation, partnership, limited liability company or other legal entity, such
corporation, partnership, limited liability company or entity) hereby makes the following representations and warranties,
each of which is material and being relied upon by Landlord, is true in all respects as of the date of this Lease, and shall
survive the expiration or

55
earlier termination of this Lease. Tenant shall re-certify such representations and warranties to Landlord periodically, upon
Landlord’s reasonable request.
(a)
If Tenant is an entity, Tenant is duly organized, validly existing and in good standing under the laws of
the state of its organization, and is qualified to do business in the state in which the Premises are located, and the persons
executing this Lease on behalf of Tenant have the full right and authority to execute this Lease on behalf of Tenant and to
bind Tenant without the consent or approval of any other person or entity. Tenant has full power, capacity, authority and
legal right to execute and deliver this Lease and to perform all of its obligations hereunder. This Lease is a legal, valid and
binding obligation of Tenant, enforceable in accordance with its terms.
(b)
Tenant has not (1) made a general assignment for the benefit of creditors, (2) filed any voluntary petition
in bankruptcy or suffered the filing of an involuntary petition by any creditors, (3) suffered the appointment of a receiver to
take possession of all or substantially all of its assets, (4)  suffered the attachment or other judicial seizure of all or
substantially all of its assets, (5) admitted in writing its inability to pay its debts as they come due, or (6) made an offer of
settlement, extension or composition to its creditors generally.
(c)
Anti-Terrorism
(1)
Tenant is not in violation of any Anti-Terrorism Law;
(2)
neither Tenant nor any holder of any direct or indirect equitable, legal or beneficial interest in
Tenant is, as of the date hereof:
(A)
conducting any business or engaging in any transaction or dealing with any Prohibited
Person, or any “forbidden entity” (as defined in Illinois Public Act 094-0079), including the governments of Cuba, Iran,
Sudan, North Korea and Syria and, including the making or receiving of any contribution of funds, goods or services to or
for the benefit of any Prohibited Person or forbidden entity;
(B)
dealing in, or otherwise engaging in any transaction relating to, any property or
interests in property blocked pursuant to Executive Order No. 13224; or
(C)
engaging in or conspiring to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate any of the prohibitions set forth in, any Anti-Terrorism Law; and
(3)
neither Tenant nor any of its affiliates, officers, directors, shareholders, members or lease
guarantor, as applicable, is a Prohibited Person.
If at any time any of these representations becomes false, then it shall be considered a default under this Lease.
As used herein, “Anti-Terrorism Law” is defined as any law relating to terrorism, anti-terrorism, money-
laundering or anti-money laundering activities, including, but not limited to, the United States Bank Secrecy Act, the
United States Money

56
Laundering Control Act of 1986, Executive Order No. 13224, Title 3 of the USA Patriot Act, Illinois Public Act 094-0079,
and any regulations promulgated under any of them. As used herein “Executive Order No. 13224” is defined as Executive
Order No. 13224 on Terrorist Financing effective September 24, 2001, and relating to “Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism,” as may be amended from time to
time. “Prohibited Person” is defined as (i) a person or entity that is listed in the Annex to Executive Order No. 13224, or a
person or entity owned or controlled by an entity that is listed in the Annex to Executive Order No. 13224; (ii) a person or
entity with whom Landlord is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism
Law; or (iii) a person or entity that is named as a “specially designated national and blocked person” on the most current
list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website,
http://www.treas.gov/ofac/t11sdn.pdf or at any replacement website or other official publication of such list. “USA Patriot
Act” is defined as the “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001” (Public Law 107-56), as may be amended from time to time.
49.
NAME OF BUILDING
If Landlord chooses to change the name or address of the Building and/or the Project, such change shall not affect
in any way Tenant’s obligations under this Lease, and, except for the name or address change, all terms and conditions of
this Lease shall remain in full force and effect. Tenant agrees further that such name or address change shall not require a
formal amendment to this Lease, but shall be effective upon Tenant’s receipt of written notification from Landlord of said
change.
50.
SECURITY
(a)
While Landlord may in its sole and absolute discretion engage security personnel to patrol the Building
or the Project, Landlord is not obligated to do so, and is not providing any security services for the Premises. Landlord
shall not be liable to Tenant for, and Tenant waives any claim against Landlord with respect to, any bodily injury, loss by
theft or any other damage suffered or incurred by Tenant or Tenant’s Agents in connection with any unauthorized entry into
the Premises or any other breach of security with respect to the Premises, the Building or the Project.
(b)
Tenant hereby agrees to the exercise by Landlord and Landlord’s Agents, within their sole discretion, of
such security measures as, but not limited to, the evacuation of the Premises, the Building or the Project for cause,
suspected cause or for drill purposes, the denial of any access to the Premises, the Building or the Project, and other
similarly related actions that it deems necessary to prevent any threat of property damage or bodily injury. The exercise of
such security measures by Landlord and Landlord’s Agents, and the resulting interruption of service and cessation of
Tenant’s business, if any, shall not be deemed an eviction or disturbance of Tenant’s use and possession of the Premises, or
any part thereof, or render Landlord or Landlord’s Agents liable to Tenant for any resulting damages or relieve Tenant from
Tenant’s obligations under this Lease.

57
51.
JURY TRIAL WAIVER; CONSENT TO VENUE
(a)
Landlord and Tenant hereby each waives any right to trial by jury with respect to any action or
proceeding (i) brought by Landlord, Tenant or any other party, relating to (A) this Lease and/or any understandings or prior
dealings between the parties hereto, or (B) the Premises, the Building or the Project or any part thereof, or (ii) to which
Landlord or Tenant is a party.
(b)
Landlord and Tenant hereby waive any rights each may have in the selection of venue with respect to any
action or proceeding (i)  brought by Landlord, Tenant, or any other party, relating to (A)  this Lease and/or any
understandings or prior dealings between the parties hereto, or (B) the Premises, the Building or the Project or any part
thereof, or (ii) to which Landlord is a party. Landlord and Tenant hereby stipulate and agree that the venue of any such suit
shall be in Douglas County, Colorado.
52.
RECORDATION
Neither this Lease, nor any memorandum, affidavit or other writing with respect thereto, shall be recorded by
Tenant or by anyone acting through, under or on behalf of Tenant, and any recording thereof shall make this Lease null and
void at Landlord’s election.
53.
RIGHT TO LEASE
Landlord reserves the absolute right to effect such other tenancies in the Project as Landlord in the exercise of its
sole judgment shall determine to best promote the interest of the Project. Tenant does not rely on the fact, nor does
Landlord represent, that any specific tenant or type or number of tenants shall, during the Term, occupy or not occupy any
space in the Project.
54.
FORCE MAJEURE
Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, acts of God, inability to obtain services,
labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, fire or other casualty, and
other causes beyond the reasonable control of the party obligated to perform, except with respect to the obligations
imposed with regard to Rent and other charges to be paid by Tenant or Landlord pursuant to this Lease (collectively,
“Force Majeure”), notwithstanding anything to the contrary contained in this Lease, shall excuse the performance of such
party for a period equal to any such prevention, delay or stoppage, and therefore, if this Lease specifies a time period for
performance of an obligation of either party, that time period shall be extended by the period of any delay in such party’s
performance caused by Force Majeure.
55.
QUIET ENJOYMENT
Landlord covenants, in lieu of any implied covenant of quiet possession or quiet enjoyment, that so long as Tenant
is in compliance with the covenants and conditions set forth in this Lease, Tenant shall have the right to quiet enjoyment of
the Premises without hindrance or interference from Landlord or those claiming by, through or under Landlord.

58
56.
ACCEPTANCE
This Lease shall only become effective and binding upon full execution hereof by Landlord and delivery of a
signed copy to Tenant. No contractual or other rights shall exist between Landlord and Tenant with respect to the Premises
until both have executed and delivered this Lease, notwithstanding that deposits have been received by Landlord and
notwithstanding that Landlord has delivered to Tenant an unexecuted copy of this Lease. Further, if Tenant fails to deliver
to Landlord any Security Deposit and/or Prepaid Rent within five (5) business days after the due date specified herein,
Landlord may elect to terminate this Lease by giving written notice of such termination to Tenant at any time prior to
Landlord’s receipt of any required Security Deposit and Prepaid Rent. The submission of this Lease to Tenant shall be for
examination purposes only, and does not and shall not constitute a reservation of or an option for Tenant to lease or
otherwise create any interest on the part of Tenant in the Premises.
57.
NO SETOFF
Except as may be expressly set forth herein, this Lease shall be construed as though the covenants herein between
Landlord and Tenant are independent, and Tenant shall not be entitled to any setoff, offset, abatement or deduction of Rent
if Landlord fails to perform its obligations hereunder.
58.
NON-DISCLOSURE OF LEASE TERMS
The terms of this Lease are strictly confidential and constitute proprietary information of Landlord, and disclosure
of the terms hereof could adversely affect Landlord. Tenant shall keep its partners, members, manager, officers, directors,
employees, agents, real estate brokers and sales persons and attorneys from disclosing the terms of this Lease to any other
person without Landlord’s prior written consent, except to its partners, members, manager, officers, directors, employees,
agents, Tenant’s Consultant, real estate brokers and sales persons and attorneys in connection with Tenant’s performance of
its obligations hereunder (or exercise of its rights), to an assignee of this Lease or subtenant of the Premises, or to a person
to whom disclosure is required in connection with any action brought to enforce this Lease; provided that Tenant shall
inform such persons of the confidentiality of the Lease terms and shall obtain their agreement to abide by the
confidentiality provisions of this Paragraph ‎58 prior to such disclosure. If Tenant is required to disclose this Lease or any
terms thereof to governmental agencies pursuant to applicable Laws, Tenant shall, prior to making such disclosure, submit
a written request to the applicable authorities that this Lease be exempt from such disclosure requirements and take other
actions reasonably necessary to avoid such disclosure. Tenant shall provide Landlord with a copy of such request and all
related documents promptly following the submission thereof to the applicable authorities and shall keep Landlord
apprised of the status of such request and all responses thereto. Tenant shall, in any event, use commercially reasonable
efforts to provide Landlord with not less than ten (10) days’ notice prior to disclosing this Lease or any term thereof to any
court or governmental agency. Further, Landlord agrees that Tenant’s broker shall be entitled to disclose the basic economic
terms of this Lease to typical brokerage reporting services.

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59.
MISCELLANEOUS
The words “include,” “includes,” and “including” shall be deemed to be followed by the phrase “but not limited
to” and lists following such words shall not be interpreted to be exhaustive or limited to items of the same type as those
enumerated. The word “days” means calendar days, except if the last day for performance occurs on a Saturday, Sunday or
legal holiday, then the next succeeding business day shall be the last day for performance. The phrase “business days”
means Monday through Friday, excluding holidays. Should Landlord be advised by counsel that any part of the payments
by Tenant to Landlord under this Lease may be characterized as unrelated business income under the United States Internal
Revenue Code and its regulations, Tenant agrees that this Lease may be modified as may be required, but only to the extent
required, to avoid such characterization as unrelated business income, and agrees to execute such documents as are
reasonably required therefor and to deliver the same to Landlord within ten (10) business days following a request therefor;
provided, however, that any such modification shall not increase any expense payable by Tenant hereunder or in any other
way materially and adversely change the rights and obligations of Tenant hereunder.
60.
INTENTIONALLY OMITTED.
61.
TEMPORARY SPACE
Beginning on the Commencement Date, if and only if Tenant has not achieved substantial completion of the
Tenant Improvements (as defined in Exhibit  B) in the Premises by June  30, 2023, or if the Landlord Work is not
Substantially Completed and such failure prevents Tenant from completing the Tenant Improvements or Tenant’s
occupancy of the Premises, and subject to all terms and conditions of this Lease and all applicable Laws, Tenant will be
permitted to remain in the third (3rd) floor of the Building (the “Temporary Space ”) through August 31, 2023, or such
later date if required because of Landlord’s failure to Substantially Complete the Landlord Work. Tenant’s rights hereunder
to use the Temporary Space are conditioned upon this Lease being in full force and effect and there being no Default
hereunder; provided, however, that Tenant will not be required to pay Rent with respect to the Temporary Space until
September 1, 2023; provided, however, that if the Landlord Work is not Substantially Completed by September 1, 2023,
then such date shall be extended until the date that the Landlord Work is Substantially Complete. If Tenant has not
achieved substantial completion of the Tenant Improvements in the Premises by September 1, 2023, and such failure is not
due to delays caused by Landlord (including a failure to complete the Landlord Work), and Tenant has provided at least
sixty (60) days’ notice to Landlord that Tenant will continue to occupy the Temporary Space from and after September 1,
2023 (which such notice shall not be required if the Landlord Work is not Substantially Completed), then Tenant will be
permitted to continue to occupy the Temporary Space, but Base Rent will be due thereon at an annual rate of $24.75 per
rentable square foot multiplied by the rentable area of the Temporary Space occupied by Tenant, plus Expenses, all
prorated based on the actual time Tenant occupies the Temporary Space from and after September  1, 2023; provided,
however, that to the extent the Tenant Improvements are not substantially completed by September 1, 2023, as a direct
result of delays caused by Landlord (including a failure to complete the Landlord Work), then Tenant will not be obligated
to pay such Rent for the Temporary Space from and after September  1, 2023 until such delay is rectified (including
substantially completing the Landlord Work). Landlord will have no obligation to

60
modify or repair the Temporary Space or to install any leasehold improvements in the Temporary Space; Tenant accepts the
Temporary Space in its current as-is, where-is and with-all-faults condition. If Tenant is permitted to use the Temporary
Space pursuant to this Paragraph ‎61 Tenant will remove all of its property from the Temporary Space on or before the later
of August 31, 2023 or five (5) business days after the Tenant Improvements are substantially completed if Tenant has
complied with the terms and conditions of this Paragraph ‎61. Except for a transfer permitted under this Lease without
Landlord’s consent, such rights to the Temporary Space will not be assignable without the express written consent of
Landlord, which consent may be withheld in Landlord’s sole and absolute discretion. Further, Tenant’s use of the
Temporary Space will be subject to all applicable provisions of this Lease, including without limitation, Paragraph ‎15 as if
the Temporary Space were included within the definition of the Premises leased to Tenant hereunder.
62.
RIGHT OF FIRST OFFER
(a)
Terms of Right. If at any time during the Term, any space on the third (3rd) or fourth (4th) floors of the
Building (the “ROFO Space”) becomes available or is becoming available for lease, as evidenced by Landlord delivering
a proposal to a bona fide Third-Party Tenant (the “Third-Party Tenant”), Landlord will notify Tenant that such ROFO
Space is available for lease or is becoming available, and such notice will set forth the terms upon which Landlord is
willing to lease the ROFO Space to prospective tenants, including the Third-Party Tenant (the “Offer Notice”). The ROFO
Space shall not be deemed available or becoming available for lease to the extent the ROFO Space is subject to a then-
existing lease, as such lease may be modified, amended, extended or renewed. Provided that a Default does not then exist,
and subject to the provisions of this Paragraph ‎62, Tenant will have ten (10) business days after the receipt of the Offer
Notice in which to deliver a written notice to Landlord exercising Tenant’s right to lease all, but not less than all, of the
ROFO Space subject to the applicable Offer Notice (the “ROFO Acceptance Notice”).
(b)
After Acceptance. If Tenant delivers the ROFO Acceptance Notice to Landlord within such ten  (10)
business day period, then Landlord and Tenant will promptly amend this Lease to include the elected ROFO Space on the
following terms:
(1)
If Tenant delivers the ROFO Acceptance Notice to Landlord during the first twenty-four (24)
months of the Term, Tenant will lease the ROFO Space on the same economic terms as the Premises under this Lease,
including Base Rent, based on the per-rentable-square-foot rate, and a proportionate Construction Allowance, based on the
relative rentable square feet of the ROFO Space to the initial Premises and the relative amount of the Term remaining at the
time Tenant delivers the ROFO Acceptance Notice to Landlord, or
(2)
If Tenant delivers the ROFO Acceptance Notice to Landlord after the first twenty-four  (24)
months of the Term, Tenant will lease the ROFO Space on the terms stated in the Offer Notice.
(c)
Rejection or Deemed Rejection. If Tenant fails to deliver the ROFO Acceptance Notice within such
ten (10) business day period, Tenant will be deemed to have rejected the Offer Notice. Subject to the remainder of this
Paragraph ‎62‎(c), if Tenant rejects or is deemed to have

61
rejected the Offer Notice, Tenant’s right of first offer with respect to the ROFO Space will terminate and be of no further
force or effect, and Landlord will be free to lease any or all of the ROFO Space to any prospective tenant any time after the
earlier of the date Tenant rejects the Offer Notice or the expiration of such ten (10) business day period. Notwithstanding
anything contained herein to the contrary, Landlord shall re-offer previously rejected (or deemed rejected) ROFO Space
that has been subject to an Offer Notice to Tenant if (i) no lease for such ROFO Space has been executed with a third party
within six  (6) months after Tenant’s rejection or deemed rejection of the Offer Notice, or (ii)  Landlord changes the
economic terms upon which it is willing to lease such ROFO Space to prospective tenants to an extent that either the per
square foot average effective rental rate is less than ninety-five present (95%) of the per square foot average effective rental
rate contained in the original Offer Notice; provided, however, that once the applicable ROFO Space has been leased to a
third party, Tenant’s right of first offer under this Paragraph ‎62 with respect to such ROFO Space will terminate and be of
no further force or effect.
(d)
Limitations on Tenant’s Rights. Tenant will have no right to lease any ROFO Space and its ROFO
Acceptance Notice will be ineffective if a Default exists at the time such notice is given or at the time the amendment to
this Lease is scheduled to be executed by Landlord and Tenant. Any termination of this Lease terminates all rights under
this Paragraph  ‎62. Except for an assignment or subletting permitted without Landlord’s consent, any assignment or
subletting by Tenant of this Lease or of all or a portion of the Premises terminates Tenant’s rights with respect to the ROFO
Space, unless Landlord consents to the contrary in writing at the time of such subletting or assignment.
63.
RENEWAL OPTION
(a)
Exercise of Renewal Option. Tenant shall have the option (the “Renewal Option”) to renew this Lease
for one (1) additional five (5) year period (the “Renewal Term”) commencing on the date following the Expiration Date
upon the terms and conditions contained in this Paragraph ‎63. Except for an assignment or subletting permitted without
Landlord’s consent, the Renewal Option is personal to the original Tenant named herein. The Renewal Option shall be
effective only if Tenant is not in Default under this Lease, either at the time of exercise of the Renewal Option or, at
Landlord’s option, at the time of commencement of the Renewal Term. To exercise the Renewal Option, Tenant shall give
Landlord written notice (the “Renewal Notice”) of intent to exercise said Renewal Option not less than twelve (12) full
months prior to the Expiration Date. In the event Tenant exercises the Renewal Option, this Lease will terminate in its
entirety at the end of the Renewal Term, and Tenant will have no further option to renew or extend the Term of this Lease.
Tenant’s failure to timely deliver the Renewal Notice, time being of the essence, shall conclusively be deemed to be
Tenant’s waiver of its rights under this Paragraph ‎63. The Renewal Term, if validly exercised, shall be included within the
“Term”.
(b)
Procedures for Determining Prevailing Market Rate.
(1)
If Tenant timely exercises the Renewal Option, then not later than eleven (11) months prior to
the commencement of the Renewal Term, Landlord shall deliver to Tenant a written proposal of the Prevailing Market Rate
(as defined below) for the Premises for the Renewal Term. Within thirty (30) days after receipt of Landlord’s proposal,
Tenant shall notify

62
Landlord in writing that (A) Tenant accepts Landlord’s proposal; (B) Tenant rejects Landlord’s proposal; or (C) rescinds its
election to exercise the Renewal Option (it being acknowledged that, regardless of when Tenant delivers its notice
exercising a Renewal Option, Landlord will not be obligated to deliver such proposal prior to the date that is eleven (11)
months prior to the commencement of the Renewal Term). If Tenant does not give Landlord a timely notice in response to
Landlord’s proposal, Landlord’s proposal of Prevailing Market Rate for the Renewal Term shall be deemed rejected by
Tenant in accordance with clause (B). If Tenant notifies Landlord of Tenant’s election to rescind its election to exercise the
Renewal Option under clause (C), then Tenant’s rights under this Paragraph ‎63 will automatically terminate, and this Lease
will expire at the end of Term, without extension.
(2)
If Tenant timely rejects or is deemed to have rejected Landlord’s proposal, Landlord and Tenant
shall first negotiate in an attempt to agree upon the Prevailing Market Rate for the Renewal Term. If Landlord and Tenant
agree in writing within thirty (30) days following either Landlord’s receipt of Tenant’s notice rejecting Landlord’s proposal
or Tenant’s deemed rejection of Landlord’s proposal (the “Negotiation Period”), such agreement shall constitute a
determination of Prevailing Market Rate for purposes of this Paragraph ‎63. If Landlord and Tenant are unable to agree
upon the Prevailing Market Rate during the Negotiation Period for any reason or no reason, then within forty (40) days
after expiration of the Negotiation Period, the parties shall meet and concurrently deliver to each other their respective
written estimates of the Prevailing Market Rate for the Renewal Term, supported by the reason therefor (respectively,
“Landlord’s Determination” and “Tenant’s Determination” and each, a “Determination”). Landlord’s Determination
may be more or less than its initial proposal of Prevailing Market Rate. If either party fails to deliver its Determination in a
timely manner, then the Prevailing Market Rate shall be the amount specified by the other party. If the higher of such
Determinations is not more than one hundred five percent (105%) of the lower of such Determinations, then the Prevailing
Market Rate shall be the average of the two Determinations. For purposes of the preceding sentence, if either of the
Determinations includes economic terms other than Base Rent, the net effective rent of the Determinations shall be
calculated (net effective rent means the arithmetic average over the term of the Base Rent less any concessions such as
tenant improvement allowances and free rent) and used to determine if the Determinations are within five percent (5%) of
each other as specified above. If the Prevailing Market Rate is not resolved by exchange of the Determinations, the
Prevailing Market Rate shall be determined as follows, each party being bound to its Determination and such
Determinations constituting the only two (2) choices available to the “Appraisal Panel” (as hereinafter defined).
(3)
Within thirty (30) days after the parties exchange Landlord’s and Tenant’s Determinations, the
parties shall each appoint a neutral and impartial appraiser who shall be certified as an MAI or ASA appraiser and shall
have at least ten (10) years’ experience, immediately prior to his or her appointment, as a real estate appraiser of office
properties in the Denver metropolitan area, including significant experience appraising suburban office space. For purposes
hereof, an “MAI” appraiser means an individual who holds an MAI designation conferred by, and is an independent
member of, the American Institute of Real Estate Appraisers (or its successor organization), or, if there is no successor
organization, the organization and designation most similar). If either Landlord or Tenant fails to appoint an appraiser
within said thirty (30) day period, the Prevailing Market Rate for the Renewal Term shall be the Determination

63
of the other party who timely appointed an appraiser. Landlord’s and Tenant’s appraisers shall work together in good faith
to appoint a third (3rd) neutral or impartial third party appraiser within thirty  (30) days, and notify both Landlord and
Tenant of such selection.
(4)
Within five (5) days following notification of the identity of the third (3rd) appraiser, Landlord
and Tenant shall submit copies of Landlord’s Determination and Tenant’s Determination to the third (3rd) appraiser. The
three (3) appraisers are referred to herein as the “Appraisal Panel.” The Appraisal Panel, if it so elects, may conduct a
hearing at which Landlord and Tenant may each make supplemental oral and/or written presentations, with an opportunity
for rebuttal by the other party and for questioning by the members of the Appraisal Panel. Within forty-five (45) days
following the appointment of the third (3rd) appraiser, the Appraisal Panel, by majority vote, shall select either Landlord’s
Determination or Tenant’s Determination as the Prevailing Market Rate of the Premises for the Renewal Term, and shall
have no right to propose a middle ground or to modify either of the two (2) proposals or the provisions of this Lease. The
decision of the Appraisal Panel shall be final and binding upon the parties, and may be enforced in accordance with the
provisions of Colorado law. In the event of the failure, refusal or inability of any member of the Appraisal Panel to act, a
successor shall be appointed in the manner that applied to the selection of the member being replaced.
(5)
Each party shall pay the fees and expenses of the appraiser appointed by such party, and one-
half (1/2) of the fees and expenses of the third (3rd) appraiser and the expenses incident to the proceedings of the Appraisal
Panel (excluding attorneys’ fees and similar expenses of the parties which shall be borne separately by each of the parties).
(c)
Prevailing Market Rate. As used in this Lease, the phrase “Prevailing Market Rate” means one hundred
percent  (100%) of the amounts that a landlord under no compulsion to lease the Premises, and a tenant under no
compulsion to lease the Premises, would agree upon at arm’s length as Base Rent and all other economic terms for the
Premises for the Renewal Term, as of the commencement of the Renewal Term. The Prevailing Market Rate shall be based
upon non-sublease, non-encumbered, non-equity lease transactions for renewing tenants recently entered into for space in
the Building and in “Comparison Renewal Buildings” (as hereinafter defined) (“Comparison Leases”) and may include
periodic increases. Rental rates payable under Comparison Leases shall be adjusted to account for variations between this
Lease and the Comparison Leases with respect to: (i) the length of the Renewal Term compared to the lease term of the
Comparison Leases; (ii)  rental structure, including additional rent, and taking into consideration any “base year” or
“expense stops;” (iii)  the size of the Premises compared to the size of the premises under the Comparison Leases;
(iv) utility, location, floor levels, views and efficiencies of the floor(s) of the Premises compared to the premises under the
Comparison Leases; (v)  the age and quality of construction of the Building; (vi)  the value of existing leasehold
improvements to Tenant; (vii)  the financial condition and credit history of Tenant compared to the tenants under the
Comparison Leases; and (viii)  tenant improvement or refurbishment allowances granted in Comparison Leases. In
determining the Prevailing Market Rate, consideration shall also be given to (A) any rental abatement period granted to
tenants in Comparison Leases and all other concessions such as the design and construction of tenant improvements and
allowances, (B) whether Landlord or the landlords under Comparison Leases are paying real estate brokerage commissions
in connection with Tenant’s

64
exercise of the Extension Renewal Option or in connection with the Comparison Leases, (C) moving allowances paid, and
(D)  brokerage commissions. For purposes of this Paragraph  ‎63, “Comparison Renewal Buildings” means buildings
located in the Meridian Office Park.

65
IN WITNESS WHEREOF, Landlord and Tenant have executed and delivered this Lease as of the Lease Date
specified in the Basic Lease Information.
LANDLORD:
TWO MAROON CIRCLE INVESTORS, LLC, 
a Delaware limited liability company
By:
   UBS Realty Investors, LLC,
a Massachusetts limited liability company,
its Investment Advisor and Agent
By:
/s/Carl Pierce
Name:Carl Pierce
Its:
Executive Director
By:
/s/Tim Cahill
Name:Tim Cahill
Its:
Executive Director
[Continued]

66
TENANT:
ZYNEX, INC.
a Nevada corporation
By:
/s/Dan Moorhead
Print Name: Dan Moorhead
Its:
Chief Financial Officer

67
EXHIBIT A
DIAGRAM OF THE PREMISES

68
EXHIBIT B
TENANT IMPROVEMENTS
1.
Conflicts; Terms. If there is any conflict or inconsistency between the provisions of the Lease and those
of this Work Letter, the provisions of this Work Letter will control. Tenant is conducting the Tenant Improvements (as
defined below) prior to the Commencement Date as “Alterations” under Section 10 of the Original CSG Lease; if there is
any conflict or inconsistency between the provisions of the CSG Lease and those of this Work Letter, then prior to the
Commencement Date, the provisions of the CSG Lease will control, and after the Commencement Date, the provisions of
this Work Letter will control. Except for those terms expressly defined in this Work Letter, all initially capitalized terms
will have the meanings stated for such terms in the Lease. The following terms, which are not defined in the Lease, have
the meanings indicated:
(a)
“Landlord’s Representative” means Bonnie Keyes (720-531-3335; Bonnie.Keyes@cbre.com).
(b)
“Tenant’s Representative” means Matt Thomas, Director of Production, Zynex (800-495-6670,
Ext: 3025 and mthomas@zynex.com), and JT Hammett, Savills (720-839-4857 and jthammett@savills.us).
(c)
“Maximum Allowance Amount” means $1,449,945.00 (which represents an allowance of
$35.00 per rentable square foot of the Premises) which Maximum Allowance Amount may be used in the Premises for the
Tenant Improvements and may be used to cover any costs associated with or related to the Tenant Improvements.
(d)
“Discretionary Allowance Amount” means $414,270.00 of the Maximum Allowance (which
represents $10.00 per rentable square foot of the Premises).
(e)
“Space Planning Allowance” means $6,214.05, over and above the Maximum Allowance
Amount.
(f)
“Tenant Improvements” means all alterations, leasehold improvements and installations to be
constructed or installed by Tenant in the Premises according to this Work Letter.
(g)
“Preliminary Plans” means that space plan prepared by TreanorHL, dated as of December 22,
2022, for the Tenant Improvements.
(h)
“Construction Documents” means complete construction plans and specifications for the
Tenant Improvements.
(i)
“Substantially Completed” means completion of the Tenant Improvements to the extent that
only minor construction details, which

69
would not unreasonably interfere with Tenant’s use and enjoyment of the Premises, require completion or correction.
(j)
“Total Cost” means the total cost of preparing the Preliminary Plans and Construction
Documents, constructing and installing the Tenant Improvements in the Premises, providing any Building services required
during construction (such as electricity and other utilities, refuse removal and housekeeping). As part of the Total Cost,
Landlord will have the right to charge a three percent (3%) construction management fee calculated on the Construction
Allowance (as defined below), which will be payable to Landlord’s third party construction manager. Further, Tenant will
have the right, but not the obligation, to install new Mecho-shades as window coverings in the Premises and re-lamp all
fixtures in the Premises with LED standard fixtures, and to the extent Tenant installs such items, they will be included in
the Total Cost.
2.
Landlord’s Obligations. From and after the Lease Date, Landlord will (a) paint and install carpeting in
the lobby and stairwell areas of the first  (1st) floor of the Building, and (b)  enclose the area containing the stairwell
connecting the second (2nd) and third (3rd) floors of the Building (collectively, the “Landlord Work ”). Tenant grants
Landlord a license to enter the Premises after the Lease Date to perform the Landlord Work in accordance with this
Paragraph ‎2, with the Landlord Work being conducted simultaneously with the Leasehold Improvements. Landlord will use
reasonable efforts to avoid unreasonable interference with Tenant’s construction activities and operations during the
performance of the Landlord Work. Tenant acknowledges that, despite Landlord’s efforts, Tenant may experience
interference with and/or interruption of Tenant’s use of the Premises and/or business operations, including from the
presence of dirt, dust and odors. Except to the extent caused by the negligence or intentional misconduct of Landlord or the
Landlord’s Agents, Tenant will hold Landlord harmless from any and all claims, damages and liability against Landlord,
either by Tenant or Tenant’s employees, customers, contractors, agents or invitees resulting from the Landlord Work.
Except to the extent caused by the negligence or intentional misconduct of Landlord or the Landlord’s Agents, Tenant
releases Landlord from, and waives, any claims Tenant may have relating to any reasonable disruption to Tenant’s
operations and/or annoyances caused by the Landlord Work, including, without limitation, disruption or annoyances caused
by dirt, dust and/or odors. Landlord and Tenant agree that all alterations, improvements and additions made to the Premises
according to this Paragraph ‎2 will, without compensation to Tenant, become Landlord’s property upon installation and will
remain Landlord’s property at the expiration or earlier termination of the Term. Except as expressly set forth in this Work
Letter and except as provided in the Lease, Landlord will deliver, and Tenant will accept, the Premises in its current “AS-
IS, WHERE-IS, and WITH ALL FAULTS” condition, and Tenant acknowledges that Landlord has made no promises to
modify or remodel the Premises, or provide an allowance or further contribution for the same, and no representations
concerning the condition of the Premises or Building have been made by Landlord to Tenant other than as may be
expressly stated in the Lease.
3.
Access to Premises after Lease Date. At all times while Tenant is in occupation of the Premises prior to
the Commencement Date, Tenant will be subject to and will comply with all of the terms and provisions of the CSG Lease.

70
4.
Representatives. Landlord appoints Landlord’s Representative to act for Landlord in all matters covered
by this Work Letter. Tenant appoints Tenant’s Representative to act for Tenant in all matters covered by this Work Letter.
All inquiries, requests, instructions, authorizations and other communications with respect to the matters covered by this
Work Letter will be made to Landlord’s Representative or Tenant’s Representative, as the case may be. Tenant will not
make any inquiries of or requests to, and will not give any instructions or authorizations to, any other employee or agent of
Landlord, including Landlord’s architect, engineers and contractors or any of their agents or employees, with regard to
matters covered by this Work Letter. Either party may change its Representative under this Work Letter at any time by
three (3) days’ prior written notice to the other party.
5.
Preliminary Plans; Construction Documents. Landlord has, prior to the Lease Date, reviewed and
approved the Preliminary Plans. Tenant, at its expense, will cause the Construction Documents to be prepared and
submitted to Landlord for its approval. The Construction Documents must materially conform to the Preliminary Plans
approved by Landlord and must be in all respects sufficient for the purpose of obtaining a building permit for Tenant
Improvements. If Landlord fails to notify Tenant within seven (7) days that the submitted materials are either acceptable to
Landlord or not approved by Landlord, and if such failure for continues for two (2) business days after Tenant delivers a
second notice that specifically states that Landlord’s failure to respond will be deemed to be Landlord’s approval, then such
submitted materials shall be deemed approved by Landlord. If required by Landlord, Tenant will cause the Construction
Documents to be resubmitted to Landlord for its approval within seven (7) days after Landlord notifies Tenant of any
required changes. Construction of the Tenant Improvements will not commence prior to Landlord’s approval of the
Construction Documents. Upon completion of Tenant Improvements, Tenant will provide Landlord a complete set of
reproducible field-marked plans of the Premises. If Tenant fails to provide such plans, Landlord may obtain them, directly
or by field verification, and charge Tenant for all costs incurred by Landlord in doing so. No approval by Landlord of the
Preliminary Plans, the Construction Documents or any revisions to them will constitute a representation or warranty by
Landlord or its architects or engineers as to the adequacy or sufficiency of such plans, or the improvements to which they
relate, for any use, purpose or condition, but such approval will merely be the consent of Landlord to the construction or
installation of improvements in the Premises according to such plans.
6.
Tenant’s Contractor. Landlord will have the right to approve Tenant’s general contractor
(“Contractor”), which approvals will not be unreasonably withheld or delayed. Landlord will provide Tenant with a list of
contractors that are acceptable to Landlord. Tenant may select its Contractor from such list or may request Landlord’s
approval of a Contractor not on such list. Tenant will not execute any contract for the performance of the Tenant
Improvements until Landlord’s approval of the Contractor has been obtained, and Tenant will cause its proposed Contractor
to submit such information, including financial information, as may be reasonably required by Landlord to determine
whether such Contractor and subcontractors should be approved.
7.
Construction of Tenant Improvements. Tenant, at its expense (subject to Paragraph ‎15 of this Work
Letter), will cause the Tenant Improvements to be constructed or installed in the Premises in a good and workmanlike
manner and according to the Construction Documents and all applicable Laws and free and clear of any liens or claims for
liens. Tenant, at

71
its expense, will obtain: (a) all permits (including, without limitation, building permits) required for construction of the
Tenant Improvements; (b) all contracts and insurance required under this Work Letter; and (c) all certificates required for
occupancy of the Premises from the appropriate governmental authorities. Landlord and Tenant agree that all alterations,
improvements and additions made to the Premises according to this Work Letter, whether paid for by Landlord or Tenant,
will, without compensation to Tenant, become Landlord’s property upon installation and will remain Landlord’s property at
the expiration or earlier termination of the Term. Notwithstanding the foregoing, all of Tenant’s furniture, fixtures and
equipment shall remain the property of Tenant; provided, however, that Tenant will be obligated to remove all such
furniture, fixtures and equipment at the end of the Term, at Tenant’s sole cost and expense.
8.
Construction Provisions. In the course of Tenant’s construction of the Tenant Improvements, Tenant, as
Contractor: (i) will not unreasonably interfere with Landlord’s or Landlord’s tenants’ activities in, or use or enjoyment of,
the Building; (ii)  will reasonably cooperate as necessary with other contractors in the Building to insure harmonious
working relationships, including, without limitation, coordinating with other contractors in the Building concerning use of
elevators, trash removal and water and utility usage; (iii) will leave all Common Areas in a neat, clean, orderly and safe
condition at the end of each day during construction of the Tenant Improvements; (iv) will procure and maintain, and will
cause its Major-Trade Subcontractors to procure and maintain the insurance and to execute such documents evidencing
such obligation to procure and maintain such insurance, as described in Paragraph ‎9 below; (v) upon completion of the
Tenant Improvements, will provide to Landlord and Tenant field-marked drawings together with mechanical balance
reports and any maintenance manuals on equipment installed in the Premises as part of the Tenant Improvements; and
(vi) will warrant all labor and material supplied in connection with the Tenant Improvements for a period of not less than
one year from substantial completion of the Tenant Improvements and such warranty will provide that it is for the benefit
of Landlord. The indemnification provisions in Tenant’s contract with Contractor will include Landlord and Landlord’s
Agents as parties benefitting from the indemnities provided by Contractor to the “Owner” thereunder, subject to any
reasonable qualifications applicable to the “Owner” set forth in such construction contract.
9.
Contractor’s Insurance. Contractor’s insurance or such insurance carried by Contractor’s
subcontractors or sub-subcontractors pursuant to this Work Letter will be primary and non-contributory insurance over any
insurance carried by Landlord. Prior to the commencement of the Tenant Improvements and thereafter until the Tenant
Improvements are complete (except for completed operations, as set forth below), Tenant will cause Contractor to provide,
pay for, and maintain in full force and effect, the insurance outlined herein, covering claims arising out of or in connection
with the work or service performed by or on behalf of Contractor for Tenant.
(a)
Commercial General Liability. Contractor will maintain commercial general liability insurance
covering all operations by or on behalf of Contractor on an occurrence basis against claims for bodily injury, property
damage, and personal injury. Such insurance will provide minimum limits and coverage as follows:
(i)
Minimum Limits.

72
(1)
$1,000,000 Each Occurrence (Combined Single Limit Bodily Injury and
Property Damage);
(2)
$2,000,000 General Aggregate per project site; and
(3)
$2,000,000 Products / Completed Operations Aggregate.
(ii)
Coverages.
(1)
[Intentionally Omitted];
(2)
[Intentionally Omitted];
(3)
[Intentionally Omitted];
(4)
Waiver of Subrogation in favor of Landlord and Property Manager; and
(5)
Subcontractor exception to their work exclusion.
(iii)
Unacceptable Exclusions.
(1)
Residential (if applicable)
(2)
Condominiums or condominium conversions (if applicable)
(3)
EIFS (if applicable)
(4)
Subsidence exclusion
(5)
Damage to work performed by subcontractors on Contractor’s behalf (e.g. CG
22 94 or CG 22 95)
(6)
Known loss
(7)
Design professionals
(b)
Automobile Liability. Contractor will maintain business auto liability covering liability arising
out of any auto (including owned, hired and non-owned autos).
(i)
Minimum Limits. $1,000,000 Combined Single Limit Each Accident.
(ii)
Coverages.
(1)
Additional Insured: Landlord, its partners, managers, members, officers and
directors, employees, agents, subsidiaries, affiliates and Property Manager; and

73
(2)
Waiver of Subrogation in favor of Landlord and Property Manager.
(c)
Workers Compensation. Contractor will maintain workers compensation and employers liability
insurance.
(i)
Minimum Limits.
(1)
Workers Compensation: Statutory Limits; and
(2)
Employers Liability:
(a)
Bodily Injury for Each Accident: $1,000,000;
(b)
Bodily Injury by Disease for Each Employee: $1,000,000; and
(c)
Bodily Injury Disease Aggregate: $1,000,000.
(ii)
Coverage.
(1)
Waiver of Subrogation in favor of Landlord and Property Manager.
(d)
Umbrella/Excess Liability. Contractor will maintain umbrella/excess liability insurance as
shown below. The insurance will be on an occurrence basis in excess of the underlying insurance described in
Paragraphs ‎9(a), ‎9(b), ‎9(c)(i)(2) and will be at least as broad as each and every one of the underlying policies.
(i)
Minimum Limits.
(1)
Greater of $5,000,000 or Total Hard Costs of Contract per Occurrence
(2)
Greater of $5,000,000 or Total Hard Costs of Contract Aggregate
a)
Property Insurance. Contractor and any Major-Trade Subcontractor will maintain property insurance covering all
personal property, materials and equipment that are used in connection to the Lease, as amended. If Contractor or
any of its Major-Trade Subcontractors elects not to carry this insurance, Landlord’s property insurance will not
cover Contractor’s or any Major-Trade Subcontractor’s personal property, materials or equipment including
scaffolding, and Contractor, for itself and its subcontractors and sub-subcontractors, hereby waives all claims
against Landlord and Property Manager on account of any loss or damage to personal property, materials,
equipment or scaffolding used or stored on the property.

74
(e)
Proof of Insurance. On or before Contractor performs work at or on the Premises or delivers
supplies or materials to the Building, whichever comes first, Contractor will furnish, and will cause the applicable
subcontractors to furnish, Property Manager with certificates of insurance evidencing the types of coverage outlined above,
and with regard to such subcontractors, with the limits required by Landlord, and all in compliance with the Other
Insurance Provisions outlined below. Contractor will not have the right to enter the Premises or perform any of the Tenant
Improvements unless and until appropriate certificates of insurance and other related documentation, as requested by
Landlord and/or Property Manager, has been delivered to Property Manager. Insurance is to be placed with insurers with a
Best’s rating of no less than A-VIII. No such policy will be cancelable, non-renewed or modified except after the insured
endeavoring to provide thirty (30) days’ written notice to Property Manager. Except for the provisions of Paragraph ‎9(a)(ii)
(1) hereof, Contractor will maintain all of the foregoing insurance coverages in full force and effect until the work or
service is fully completed. The requirements for carrying the foregoing insurance will not release Contractor from the
provision for indemnification of Landlord by Contractor.
(f)
Other Insurance Provisions. Contractor will name, will cause Major-Trade Subcontractors to
name and will cause the applicable contracts with such subcontractors to provide that each such subcontractor will name,
Landlord, Landlord’s partners, managers, members, officers and directors, employees, agents, subsidiaries, affiliates and
the Property Manager as additional insureds with respect to liability arising out of the activities performed by or on behalf
of Contractor or the Major-Trade Subcontractors on all policies carried by Contractor and/or the Major-Trade
Subcontractors on all policies carried by Contractor, except Workers Compensation. All liability insurance policies carried
by Contractor will include provisions for contractual liability coverage insuring Contractor for the performance of its
indemnity obligations set forth herein. Contractor is solely responsible for causing its Major-Trade Subcontractors to obtain
the types of insurance and applicable coverages set forth herein. It is expressly understood and agreed that the coverages
required represent Landlord’s minimum requirements and such are not to be construed to void or limit Contractor’s
indemnity obligations contained in this Work Letter. Neither (i) the insolvency, bankruptcy or failure of any insurance
company covering Contractor or its subcontractors or sub-subcontractors, (ii) the failure of any insurance company to pay
claims occurring nor (iii) any exclusion from or insufficiency of coverage will be held to affect, negate or waive any of
Contractor’s indemnity obligations set forth herein or under any other provision of this Work Letter. The amount of liability
insurance under insurance policies maintained by Contractor or any of its Major-Trade Subcontractors will not be reduced
by the existence of insurance coverage under policies separately maintained by Landlord. Contractor and each of its Major-
Trade Subcontractors will be solely responsible for any premiums, assessments, penalties, deductible assumptions,
retentions, audits, retrospective adjustments or any other kind of payment due under their respective policies. The entry by
Contractor or any Major-Trade Subcontractor onto, or the performance of any work by Contractor or any Major-Trade
Subcontractor in, the Premises without delivering the required certificates and/or other evidence of insurance, will not
constitute a waiver of the obligations of Contractor or the applicable Major-Trade Subcontractor (as the case may be) to
provide the required coverages. If Contractor or any Major-Trade Subcontractors provides to Landlord or Property
Manager a certificate that does not evidence the coverages required herein, or that is faulty in any respect, acceptance of
such certificate by Landlord or Property Manager will not constitute a waiver of the obligations of Contractor or any
Major-Trade Subcontractor (as the case may be) to provide the proper insurance.

75
10.
Additional Requirements Concerning the Tenant Improvements. The following additional
requirements will apply to the Tenant Improvements:
(a)
All of the Landlord Work and Tenant Improvements will be: (i) of a quality at least equal to
other improvements of comparable spaces in the Building (“Building Standard”); (ii)  as to the Tenant Improvements,
completed only according to the Construction Documents approved by Landlord; (iii)  conducted in a manner so as to
maintain harmonious labor relations and not to interfere with or delay any other work or activities being carried on by
Landlord or Landlord’s contractors or other tenants, including Tenant; (iv)  designed, performed and completed in
substantial compliance with all applicable standards and regulations established by Landlord and provided to Tenant in
advance of the commencement of construction of the Tenant Improvements as well as all safety, fire, plumbing and
electrical and other codes and governmental and insurance requirements; (v) coordinated by the approved Contractor so as
to ensure timely completion; and (vi) performed and conducted in such a manner so as not to alter the structure or systems
of the Building.
(b)
Under no circumstances will Tenant, Contractor or any of their authorized representatives ever
alter or modify or in any manner disturb any “Central” (as defined below) system or installation of the Building, including,
without limitation, the Central plumbing system, Central electrical system, Central heating, ventilating and air conditioning
system, Central fire protection and fire alert system, Central Building maintenance systems, Central structural system,
elevators and anything located within the Central core of the Building. Only with Landlord’s express written permission
will Tenant, Contractor or their authorized representatives alter or modify or in any manner disturb any “Branch” (as
defined below) of any Central system or installation of the Building which serves or is located within the Premises.
“Central” means that portion of any Building system or component which is within the core of the Building or common to
or serves or exists for the benefit of other tenants in the Building, and “Branch” means that portion of any Building system
or component which serves to connect or extend Central systems to the Premises. Any and all interfacing with, or tie-ins to,
any Central Building systems or Branches will be scheduled with Landlord not later than five days prior to the
commencement of any such work. Any such interfacing with, or tie-ins to, any such Building systems, and any checks of
such interfacing or tie-ins, will be performed only after the same have been scheduled with, and approved by, Landlord.
(c)
All construction personnel engaged in the performance of the Tenant Improvements must use
the Building’s freight elevator and not the passenger elevators for access to the Premises. All deliveries of materials for use
in connection with the construction of the Tenant Improvements requiring the freight elevator of the Building must be
scheduled in advance with Landlord. In addition, any of the Tenant Improvements which is to be performed during hours
other than normal business hours must be scheduled in advance with Landlord.
(d)
Tenant agrees that if Contractor fails to leave all Common Areas in a neat, clean, orderly and
safe condition at the end of each day during construction of the Tenant Improvements, Landlord will have the right,
following notice to Tenant and Contractor, to immediately take such action as Landlord deems appropriate to render the
Common Areas neat, clean, orderly and safe and Tenant will, upon Landlord’s written demand, reimburse Landlord for all
Landlord’s costs of taking such action.

76
11.
Inspection; Stop Work; Noncomplying Work. Landlord reserves the right to inspect the Tenant
Improvements in the Premises at all reasonable times, provided that such inspection(s) will in no way make Landlord
responsible for any of the Tenant Improvements and will not constitute a representation or warranty by Landlord as to the
adequacy or sufficiency of the Tenant Improvements. Landlord reserves the right to stop any and all work performed (or to
be performed) if Landlord reasonably considers any such work, or its performance, to be dangerous or creating a nuisance,
or otherwise injurious to Tenant, Landlord or any other Building tenants. If any inspection by Landlord reveals any item of
the Tenant Improvements that does not comply with Tenant’s obligations under this Work Letter, Landlord may so notify
Tenant and require that the item be corrected to so comply. Within 10 days after the date of any such notice from Landlord,
Tenant will begin correction of any such noncomplying item and will then promptly and diligently pursue such correction
to completion. If any such item is not so corrected, Landlord may enter the Premises at any time and correct the item at
Tenant’s expense (to be paid by Tenant promptly upon demand).
12.
Mechanics’ Liens. In the conduct of the Tenant Improvements, Tenant will take all action necessary to
ensure that no mechanic’s or other liens attach to the Premises or Building. Landlord will have the right to post notices,
with form and content and in the manner as specified by Laws, notifying all persons or entities which may supply labor or
materials in connection with the Tenant Improvements that Landlord’s interest in the Premises and Building will not be
subject to any lien for the same. If any such lien should be filed, the provisions of Paragraph ‎19 of the Lease will apply.
13.
Change Orders. Tenant’s Representative may authorize changes in the Construction Documents during
construction. All changes to the structure or Central system will be subject to Landlord’s prior written approval according
to Paragraph ‎14 below. Prior to commencing any change requiring Landlord’s approval, Tenant will prepare and deliver to
Landlord, for Landlord’s approval, a change order (“Change Order”) identifying the total cost of such change, which will
include associated architectural, engineering and construction contractor’s fees. If Landlord fails to approve such Change
Order within ten (10) business days after delivery by Tenant, Landlord will be deemed to have approved the proposed
change and Tenant will proceed to perform the change. Upon Tenant’s receipt of Landlord’s approval, Tenant will proceed
to perform the change.
14.
Landlord’s Approval. All Construction Documents and Change Orders (as and to the extent required
above), and any drawings, space plans, plans and specifications for any additional work or any other improvements or
installations in the Premises to be performed by Tenant, are expressly subject to Landlord’s reasonable prior written
approval. Landlord may withhold its reasonable approval of any such items that require work which:
(a)
exceeds or adversely affects the capacity or integrity of the Building’s structure or any of its
heating, ventilating, air conditioning, plumbing, mechanical, electrical, communications or other systems;
(b)
is not approved by the holder of any deed of trust or mortgage on the Building;

77
(c)
would not be approved by a prudent owner of property similar to the Building;
(d)
violates any agreement which affects the Building or binds Landlord;
(e)
Landlord reasonably believes will increase the cost of operating or maintaining any of the
Building’s systems;
(f)
Landlord reasonably believes will reduce the market value of the Premises or the Building at the
end of the Term;
(g)
does not conform to applicable building code or is not approved by any governmental authority
having jurisdiction over the Premises;
(h)
does not meet or exceed Building Standard; or
(i)
Landlord reasonably believes will infringe on the architectural or historical integrity of the
Building.
15.
Construction Allowance.
(a)
Landlord agrees to pay Tenant the lesser of (1) the Total Cost of the Tenant Improvements, and
(2) the Maximum Allowance Amount (the “Construction Allowance”). Landlord will pay the amount of the Construction
Allowance to Tenant in no more than two (2) progress payments after the Lease Date. Such progress payments will be
made as follows:
(i)
The first such payment of the Construction Allowance will be made thirty (30) days
after Landlord’s receipt from Tenant of (A) copies of Tenant’s invoices from Contractor and copies of Contractor’s invoices
from all subcontractors, suppliers, materialmen and other parties who performed labor at, or supplied materials to, the
Premises in connection with the Tenant Improvements; (B) original conditional lien waivers for the work completed or
materials supplied as of the date of such lien waiver, including all subcontractors and suppliers providing work or supplies;
and (C) a certificate from Tenant’s architect (or other evidence reasonably satisfactory to Landlord) indicating that at least
fifty percent (50%) of the Tenant Improvements have been Substantially Completed.
(ii)
The remainder of the Construction Allowance will be paid no later than thirty (30) days
after the last of the following has occurred: Landlord has received from Tenant the following: (A) AIA Document G704,
Certificate of Substantial Completion; (B)  final and unconditional original lien waivers from Contractor and all
subcontractors, suppliers, materialmen and other parties who performed labor at, or supplied materials to, the Premises in
connection with the Tenant Improvements; and (C) a copy of the certificate of occupancy, or its substantive equivalent, for
the Premises issued by the appropriate governmental authorities.
(b)
Landlord will have no obligation to pay the Construction Allowance at any time that a Default
exists under the Lease and the total payment will in no event exceed the amount of the Maximum Allowance Amount.
Landlord will have no obligation to disburse any portion of

78
the Construction Allowance after the date that is twenty-four (24) months following the Lease Date. Tenant shall not be
entitled to any credit if the Total Cost of the Tenant Improvements is less than the Maximum Allowance Amount.
16.
Other Allowances.
(a)
If the Maximum Allowance Amount exceeds the Total Costs, then Tenant will not be entitled to
any refund, but Tenant shall have the right to use up to the lesser of (i) the difference between the Maximum Allowance
Amount and the Total Costs, and (ii) the Discretionary Allowance Amount towards Tenant’s costs of moving, cabling,
consultant fees, permits, furniture, fixtures, equipment, telephone and data equipment for the Premises.
(b)
Regardless of whether the Maximum Allowance Amount exceeds the Total Costs, Tenant may
use the Space Planning Allowance for Tenant’s costs in connection with a space planner of its choice for test fits and
pricing plans. To the extent that Tenant uses the Space Planning Allowance to pay such costs, then such costs will not be
included in the Total Costs.
17.
Offset Rights. In the event that Landlord shall fail to make a payment to Tenant within thirty (30) days
after such payment is due and payable pursuant to Paragraph  ‎15(a) or Paragraph  ‎16, Tenant may deliver a notice of
Landlord’s failure to pay (a “Potential Allowance Payment Default”). If such failure continues for thirty (30) days after
delivery of such notice to Landlord, Tenant may give Landlord a second written notice specifying the nature of the
Potential Allowance Payment Default and containing the following phrase on the first page of such notice in all capital
letters and bold face type (or such notice will not be deemed validly given): “LANDLORD’S FAILURE TO PAY THE
AMOUNT OF THE ALLOWANCE DESCRIBED IN THIS NOTICE WITHIN TEN (10) DAYS WILL ENTITLE
TENANT TO OFFSET SUCH AMOUNT AGAINST BASE RENT NEXT COMING DUE WITHOUT FURTHER
NOTICE.” At any time after Tenant delivers a notice with respect to a Potential Allowance Payment Default and before
Tenant actually offsets such amount against Base Rent after compliance with the terms of this Paragraph ‎17, Landlord will
have the right, by notice delivered to Tenant, to contest, in good faith, the applicable Potential Allowance Payment Default
(a “Landlord Allowance Contest”). If Landlord does not make such payment within ten (10) days after receipt of such
second notice from Tenant and does not deliver notice of a Landlord Allowance Contest, then Tenant shall have the right to
offset against Base Rent that portion of the Allowance that was remaining to be paid by Landlord, plus interest on the
outstanding amount thereof at lesser of (i) eight percent (8%) per annum or (ii) an annual rate equal to the maximum rate of
interest permitted by applicable Laws, from the date when such portion of the Allowance was due through and including
the date such portion of the Allowance is recovered by Tenant’s offset against the Base Rent then due and thereafter
coming due under the Lease. Notwithstanding the foregoing, if Landlord delivers a notice of a Landlord Allowance
Contest, then Tenant will not exercise the offset rights described above unless and until the Landlord Allowance Contest is
resolved and Landlord does not pay the unpaid portion of the Allowance within five (5) business days after such resolution
of the applicable Landlord Allowance Contest.
18.
General. No approval by Landlord or Landlord’s engineer of any drawings, plans or specifications which
are prepared in connection with construction of improvements in the

79
Premises will constitute a representation or warranty by Landlord as to the adequacy or sufficiency of such drawings, plans
or specifications, or the improvements to which they relate, for any use, purpose or condition, but such approval will
merely be the consent of Landlord to the construction or installation of improvements in the Premises according to such
drawings, plans or specifications. Failure by Tenant to pay any amounts due under this Work Letter will have the same
effect as failure to pay Rent under the Lease, and such failure or Tenant’s failure to perform any of its other obligations
under this Work Letter will, after any applicable notice and expiration of any applicable cure period set forth in the Lease,
constitute a Default under Paragraph ‎24 of the Lease, entitling Landlord to all of its remedies under the Lease as well as all
remedies otherwise available to Landlord.

80
EXHIBIT C
[INTENTIONALLY OMITTED]

81
EXHIBIT D
RULES AND REGULATIONS
This exhibit, entitled “Rules and Regulations,” is and shall constitute Exhibit D to the Lease Agreement, dated as
of the Lease Date, by and between landlord and Tenant for the Premises. The terms and conditions of this Exhibit D are
hereby incorporated into and are made a part of the Lease. Capitalized terms used, but not otherwise defined, in this
Exhibit D have the meanings ascribed to such terms in the Lease.
1.
Tenant shall not use any method of heating or air conditioning other than that supplied by Landlord
without the consent of Landlord.
2.
All window coverings installed by Tenant and visible from the outside of the building require the prior
written approval of Landlord. Notwithstanding the foregoing, the Mecho-shades contemplated by Exhibit B are permitted.
3.
Tenant shall not use, keep or permit to be used or kept any foul or noxious gas or substance or any
flammable or combustible materials on or around the Premises, except to the extent that Tenant is permitted to use the same
under the terms of Paragraph ‎32 of the Lease.
4.
Tenant shall not alter any lock or install any new locks or bolts on any door at the Premises without the
prior written consent of Landlord.
5.
Tenant shall not make any duplicate keys or key cards to the Premises or the Building without the prior
written consent of Landlord.
6.
Tenant shall park motor vehicles in parking areas designated by Landlord except for loading and
unloading. During those periods of loading and unloading, Tenant shall not unreasonably interfere with traffic flow around
the Building or the Project and loading and unloading areas of other tenants. Tenant shall not park motor vehicles in
designated parking areas after the conclusion of normal daily business activity.
7.
Tenant shall not disturb, solicit or canvas any tenant or other occupant of the Building or Project and
shall cooperate to prevent same.
8.
No person shall go on the roof without Landlord’s permission.
9.
Business machines and mechanical equipment belonging to Tenant which cause noise or vibration that
may be transmitted to the structure of the Building, to such a degree as to be objectionable to Landlord or other tenants,
shall be placed and maintained by Tenant, at Tenant’s expense, on vibration eliminators or in noise-dampening housing or
other devices sufficient to eliminate noise or vibration.
10.
All goods, including material used to store goods, delivered to the Premises of Tenant shall be
immediately moved into the Premises and shall not be left in parking or receiving areas overnight.

82
11.
Tenant shall not permit any animals, including but not limited to, any household pets (but excluding
service animals, which are permitted), to be brought or kept in or about the Premises, the Building, the Project or any of the
common areas.
12.
Tenant shall cooperate with Landlord’s efforts to implement and comply with the Required Sustainability
Practices.
13.
Tenant shall report maintenance problems involving water and moist conditions to the Property Manager
promptly and conduct its business in a manner to prevent unusual moisture conditions or mold growth.
14.
Tenant shall not block or inhibit the flow of return or make up air into the HVAC system and shall
maintain the Premises at a consistent temperature and humidity level in accordance with the Property Manager’s
instructions.
15.
Tenant shall maintain water in all drain traps in the Premises at all times.
16.
No smoking (including use of e-cigarettes and smokeless cigarettes) is permitted in the Building or
within 25 feet of any entrance to the Building, public walkways or the Building’s outdoor air intakes.
INITIALS:
TENANT:
LANDLORD:

83
EXHIBIT E
FORM OF ESTOPPEL CERTIFICATE
____________________ (herein “Tenant”) hereby certifies to ____________________ and its successors and
assigns that Tenant leases from ____________________ (“Landlord”) approximately __________ square feet of space (the
“Premises”) in __________ pursuant to that certain Lease Agreement dated __________ by and between Landlord and
Tenant, as amended by ________________ (collectively, the “Lease”), a true and correct copy of which is attached hereto
as Exhibit A. Tenant hereby certifies to _____________, that as of the date hereof:
1.
The Lease is in full force and effect and has not been modified, supplemented or amended, except as set
forth in the introductory paragraph hereof.
2.
Tenant is in actual occupancy of the Premises under the Lease and Tenant has accepted the same.
Landlord has performed all obligations under the Lease to be performed by Landlord, including, without limitation,
completion of all tenant work required under the Lease and the making of any required payments or contributions therefor.
Tenant is not entitled to any further payment or credit for tenant work.
3.
The initial term of the Lease commenced _________________ and shall expire ______________. Tenant
has the following rights to renew or extend the term of the Lease or to expand the Premises:
____________________________________.
4.
Tenant has not paid any rentals or other payments more than one (1) month in advance except as follows:
_________________________.
5.
Base Rent payable under the Lease is ____________. Base Rent and Additional Rent have been paid
through _______________ _____. There currently exists no claims, defenses, rights of set-off or abatement to or against
the obligations of Tenant to pay Base Rent or Additional Rent or relating to any other term, covenant or condition under the
Lease.
6.
There are no concessions, bonuses, free Rent, rebates or other matters affecting the Rent except as
follows: ______________________________.
7.
No security or other deposit has been paid with respect to the Lease except as follows:
__________________________________________
8.
To Tenant’s current actual knowledge, Landlord is not currently in default under the Lease and there are
no events or conditions existing which, with or without notice or the lapse of time, or both, could constitute a default of the
Landlord under the Lease or entitle Tenant to offsets or defenses against the prompt payment of Rent except as follows:
___________________________________. To Tenant’s current actual knowledge, Tenant is not in default under any of the
terms and conditions of the Lease nor is there now any fact or condition which, with notice or lapse of time or both, will
become such a default.

84
9.
Tenant has not assigned, transferred, mortgaged or otherwise encumbered its interest under the Lease, nor
subleased any of the Premises nor permitted any person or entity to use the Premises except as follows:
_______________________________________________.
10.
Tenant has no rights of first refusal or options to purchase the property of which the Premises is a part.
11.
The Lease represents the entire agreement between the parties with respect to Tenant’s right to use and
occupy the Premises.
Tenant acknowledges that the parties to whom this certificate is addressed will be relying upon the accuracy of
this certificate in connection with their acquisition and/or financing of the Premises. Terms defined in the Lease have the
same meaning here.
IN WITNESS WHEREOF, Tenant has caused this certificate to be executed this __________ day of
_______________, ______.
“TENANT”
By:
Name:
Title:

Exhibit 19.1
9655 Maroon Circle, Englewood, CO 80112 | Phone: (800) 495-6670 | Fax: (800) 495-6695 | Zynex.com
ZYNEX INSIDER TRADING POLICY
This Insider Trading Policy (the “Policy”) provides guidelines to all employees, officers, and affiliates of Zynex, Inc., and its subsidiaries
(the “Company”), as well as members of the Company’s Board of Directors (the “Directors”), with respect to transactions in the
Company’s securities and codifies the Company’s standards on trading and enabling, or causing the trading of securities of the Company
or other publicly-traded companies while in possession of material, non-public information.
Scope of Policy
The Policy applies to Directors, officers, employees, independent contractors and special consultants of the Company, and their
respective immediate family members (“Insiders”), and is divided into two parts:
Part I applies to all Insiders, and prohibits trading in the Company’s and other companies’ securities in certain circumstances; and
Part II applies to Directors, certain officers and employees of the Company who typically have access to financial and other highly
sensitive information regarding the Company’s business, and imposes additional restrictions on those individuals with
respect to trading in the Company’s securities. Part II may also apply to certain other employees that the Company may
from time to time designate as “covered persons” or “Insiders” under this policy, because of their position, responsibilities,
or their actual or potential access to material information.
Purpose of the Policy
One of the principal purposes of the federal securities laws is to prohibit insider trading. Insider trading occurs when a person uses
material nonpublic information obtained through involvement with the Company to make decisions to purchase, sell, give away or
otherwise trade the Company’s securities or the securities of certain other companies or to provide that information to others outside the
Company. The prohibitions against insider trading apply to trades, tips and recommendations by virtually any person, including all
persons associated with the Company, if the information involved is “material” and “non-public information” (defined below in this
Policy.) The prohibitions would apply to any Insider who buys or sells securities on the basis of material nonpublic information that he or
she obtained about the Company, its customers, suppliers, partners, competitors or other companies with which the Company has
contractual relationships or may be negotiating transactions.
Exceptions for Certain Transactions
This Policy does not apply to all transactions involving the Company’s securities. The following exceptions are intended to facilitate
several common types of transactions.
Stock Option Exercises. This Policy does not apply to the mere exercise of a stock option for cash under the Company’s stock option
plans. This Policy does apply, however, to:
·
Any sale of stock as part of a broker-assisted “cashless” exercise of an option (i.e., any market sale for the purpose of
generating the cash needed to pay the exercise price of an option); and
·
Any sale of shares of Company stock received upon exercise of an option.
Net Settlement upon Vesting of Restricted Stock. This Policy does not apply to a surrender of shares to the Company or the retention
and withholding from delivery to the applicable officer, director, or employee of shares by the Company (i.e., a so-called
“net settlement”) upon vesting of restricted stock in satisfaction of any tax withholding obligations in a manner permitted
by the applicable equity award agreement or the Company plan pursuant to which the restricted stock was granted. The
Policy does apply, however, to any market sale of restricted stock or to the sale of common stock received by you as a result
of the vesting.
Employee Stock Purchase Plan. This Policy will not apply to (i) an employee’s election to participate in, or increase his or her
participation in, any employee stock purchase plan, that the Company may adopt, (ii) purchases of Company stock in the
plan resulting from periodic contributions of money to the plan pursuant to the elections made at the time of enrollment in
the plan, or (iii) purchases of Company stock resulting from lump-sum contributions to the plan, provided that the
participant elected to participate by lump-sum payment at the beginning of the applicable enrollment period. However, this
Policy does apply to a participant’s sale of Company stock purchased under such plan.

9655 Maroon Circle, Englewood, CO 80112 | Phone: (800) 495-6670 | Fax: (800) 495-6695 | Zynex.com
PART I
Insider Trading Prohibition (Applies to All Insiders)
Insider trading occurs when a person in possession of material and non-public information obtained through involvement with the
Company (1) uses that information to make decisions to purchase, sell, or otherwise trade in securities of the Company or another
company, or (2) provides that information to others outside the Company to enable such trading.
U.S federal law, and the laws of any other countries in which the Company operates or may operate, prohibit insider trading, and a
violation of these laws may cause reputational and financial damage to the Company.
Scope
Part I of this Policy applies to all Insiders, and all transactions in the Company’s securities, including common or preferred stock,
options, and warrants to purchase common stock, notes, bonds, convertible securities, and any other debt or equity securities that the
Company may issue, as well as to derivative securities relating to any of the Company’s securities, whether or not issued by the
Company.
General Policy: No Trading or Causing Trading While in Possession of Material Non-public Information
(a)
No Insider may purchase or sell any Company security while in possession of material non-public information about
the Company, its customers, suppliers, consultants, or other companies with which the Company has contractual
relationships or may be negotiating transactions (the terms “material” and “non-public information” are defined in Part
I, Section 4(a) and (b) below).
(b)
No Insider who knows of any material non-public information about the Company may communicate that information
to any other person, including family and friends.
(c)
In addition, no Insider may purchase or sell any security of any other company, whether or not issued by the Company,
while in possession of material non-public information about that company that was obtained in the course of their
involvement with the Company. No Insider who knows of any such material non-public information may communicate
that information to any other person, including family and friends.
(d)
For compliance purposes, no Insider should ever trade, tip, or recommend securities (or otherwise cause the purchase
or sale of securities) while in possession of information that the Insider has reason to believe is material and non-public
unless the Insider first consults with, and obtains the advance approval of, the Compliance Officer (which is defined in
Part I, Section 4(c) below).
(e)
From time to time, the Company may engage in transactions in its own securities. It is the Company’s policy that any
transactions in securities by the Company will comply with applicable laws with respect to insider trading.
Other Prohibited Transactions
The Company considers it improper and inappropriate for Insiders to engage in short-term or speculative transactions in the Company’s
securities or in other transactions that may lead to inadvertent violations of the insider trading laws. Accordingly, trading in the
Company’s securities by Insiders is subject to the following additional restrictions:
(a)
Short sales. No Insider may sell the Company’s securities short (sale of stock that the seller does not own or a sale that
is completed by delivery of borrowed stock). Note that in addition to this Policy, Section 16(c) of the Exchange Act
prohibits Section 16 Officers and Directors of the Company from engaging in short sales.
(b)
Options trading. No Insider may buy or sell puts or calls or other derivative securities on the Company’s securities.
(c)
Trading on margin; Pledging. No Insider may hold Company securities in a margin account or pledge Company
securities as collateral for a loan.
(d)
Hedging. No Insider may enter into hedging, monetization transactions, or similar arrangements with respect to
Company securities.

9655 Maroon Circle, Englewood, CO 80112 | Phone: (800) 495-6670 | Fax: (800) 495-6695 | Zynex.com
Gifts made by Insiders
A disposition of the Company’s securities by bona fide gift (including charitable donations and transfers for estate planning purposes)
could create insider trading concerns under some circumstances if the donor is aware of or in possession of material nonpublic
information. Therefore, unless approved by the Compliance Officer, Insiders are not permitted to gift Company securities when aware of
or in possession of material nonpublic information about the Company or its securities or otherwise subject to a closed trading window
(as described in Part II). This approval requirement applies even if you are not otherwise subject to the pre-approval requirements set
forth below.
The existence of the foregoing approval procedures does not in any way obligate the Compliance Officer to approve any trades or gifts
requested by the Insider, including hardship applicants. The Compliance Officer may reject any trading or gift requests in his or her sole
and reasonable discretion. Additionally, if any approved trade or gift is not executed within two trading days following the date of receipt
of approval, then the Insider shall not be permitted to engage in a trade, until new approval is obtained from the Compliance Officer in
accordance with the requirements of this Policy.
Definitions
(a)
Material. Insider trading restrictions come into play only if the information that a director, officer, or employee of the
Company possess is “material.” Materiality, however, involves a relatively low threshold. Information is generally
regarded as “material” if it has market significance, that is, if its public dissemination is likely to affect the market price
of securities, or if it otherwise were information that a reasonable investor would want to know before making an
investment decision. Information dealing with the following subjects is reasonably likely to be found material in
particular situations, including, but not limited to:
o
Significant changes in the Company’s prospects;
o
financial results, projections of future earnings or losses;
o
significant write-downs in assets;
o
the timelines or the results of preclinical studies or clinical trials;
o
scientific, medical, or financial data relating to the Company’s products or products under development;
o
developments regarding significant litigation or government agency investigations;
o
impending bankruptcy or liquidity problems;
o
changes in earnings estimates or unusual gains or losses in major operations;
o
major changes in management;
o
a determination to declare a dividend;
o
extraordinary borrowings;
o
changes in debt ratings;
o
entry into or modification or termination of a significant contract;
o
proposals, plans, or agreements, even if preliminary in nature, involving mergers, acquisitions or tender offers,
divestitures, recapitalizations, strategic alliances, licensing arrangements, or purchases or sales of substantial
assets;
o
public offerings; and
o
actions of regulatory and health agencies, particularly the U.S. Food and Drug Administration.
Material information is not limited to historical facts but may also include projections and forecasts. With respect to a
future event, such as a merger or acquisition, or the development of a new product, the point at which negotiations or
new product development plans are determined to be material is determined by balancing the probability that the event
will occur against the magnitude of the effect the event would have on a company’s operations or stock price should it
occur. Thus, information concerning an event that may have a large effect on stock prices, such as a merger, may be
material even if the possibility that the event will occur is relatively small. When in doubt about whether non-public
information is material, presume it is material.
Keep in mind that materiality is judged in hindsight, and while a development may not seem material at the time, if
following its announcement to the public, the Company’s stock price increases or decreases, a plaintiff’s lawyer or the
United States Securities and Exchange Commission (“SEC”) will use this fact to demonstrate materiality. If you are
unsure whether the information is material, you should consult with the Compliance Officer before making any
decision to disclose such information (other than to persons who need to know it) or to trade in or recommend
securities to which that information relates.

9655 Maroon Circle, Englewood, CO 80112 | Phone: (800) 495-6670 | Fax: (800) 495-6695 | Zynex.com
(b)
Non-public Information. Insider trading prohibitions come into play only when you possess information that is
material and “non-public.” The fact that information has been disclosed to a few members of the public does not make
it public for insider trading purposes. To be “public” the information must have been disseminated in a manner
designed to reach investors generally, and the investors must be given the opportunity to absorb the information. Even
after the public disclosure of information about the Company, you must wait until the close of business on the second
trading day (two full trading days) after the information was publicly disclosed before you can treat the information as
public.
As with questions of materiality, if you are not sure whether the information is considered public, you should either
consult with the Compliance Officer or assume that the information is “non-public” and treat it as confidential.
(c)
Compliance Officer. The Company has appointed its Chief Financial Officer as the Compliance Officer for this Policy.
The duties of the Compliance Officer include, but are not limited to, the following:
(i)
assisting with the implementation of this Policy;
(ii)
circulating this Policy to all Directors, officers, and employees of the Company and ensuring that this Policy
is amended as necessary to remain up-to-date with insider trading laws;
(iii)
notifying Covered Persons (as defined in Part II below) and, if appropriate, other employees of the Company
of the Company’s imposition of a trading “blackout” period as described in Part II, Section 3 below;
(iv)
reviewing and approving Approved 10b5-1 Plans (as defined below) or revisions or amendments to such
Plans, and referring such plans or revisions to such Plans to the Board or a duly appointed committee thereof
for approval if required or otherwise appropriate, as described in Part II, Section 3(d) below;
(v)
pre-clearing all trading in securities of the Company by all Covered Persons in accordance with the
procedures set forth in Part II, Section 4 below: and
In the event that the Compliance Officer is not available or desires to effect a transaction in Company securities for
which pre-clearance or approval is required under this Policy, the Controller of the Company shall serve as the
Compliance Officer. In the event that the Compliance Officer is unavailable and such information is cleared by the
Controller, the Compliance Officer must be informed of such clearance as soon as possible.
(vi) providing a reporting system with an effective whistleblower protection mechanism.
Violations of Insider Trading Laws
Penalties for trading on or communicating material non-public information can be severe, both for individuals involved in such unlawful
conduct and their employers and supervisors. Penalties may include jail terms, criminal fines, civil penalties, and civil enforcement
injunctions. Given the severity of the potential penalties, compliance with this Policy is absolutely mandatory.
A person who tips others may also be liable for transactions by the tippees to whom he or she has disclosed material non-public
information. Tippers can be subject to the same penalties and sanctions as the tippees. The SEC has imposed large penalties even when
the tipper did not profit from the transaction.
Individuals who violate this Policy may be subject to disciplinary action by the Company, up to and including dismissal for cause. Any
exceptions to the Policy, if permitted, may only be granted by the Compliance Officer in writing and must be provided before any
activity contrary to the above requirements takes place.

9655 Maroon Circle, Englewood, CO 80112 | Phone: (800) 495-6670 | Fax: (800) 495-6695 | Zynex.com
PART II
Additional Trading Restrictions for Covered Persons
Covered Persons
Covered Persons are the individuals described below (collectively, “Covered Persons”):
·
Current Directors of the Company and its affiliates;
·
“Executive officers” of the Company as described in Rule 3b-7 under the Securities Exchange Act of 1934, as amended
(“Exchange Act”), and all individuals designated as “officers” of the Company for purposes of Section 16 under the
Exchange Act (“Section 16 Officers”);
·
All employees in the accounting, finance, investor relations, and law departments of the Company (or other departments,
groups or individual specifically requested to acknowledge receipt of this policy) and its affiliates;
·
Immediate family members (parents, siblings, spouses, children) and household members of each of the foregoing groups.
The Company’s Compliance Officer may designate additional “Covered Persons” from time to time as described in Part II, Section 3.
Scope
Because Covered Persons are exposed to a wider range of material non-public information than their colleagues (e.g., information
regarding quarterly results, strategic transactions, or the like), this Policy includes additional restrictions on transactions by such persons.
Blackout Periods
(a)
Persons Covered. All Covered Persons are prohibited from trading the Company’s securities during blackout periods,
except in certain events, or with permission from the Compliance Officer. In addition, the Compliance Officer may
notify other employees of the Company that they are prohibited from trading in the Company’s securities during
blackout periods, in which event such notified persons shall also be considered “Covered Persons.”
(b)
Quarterly Blackout Periods. Announcement of quarterly financial results almost always has the potential to have a
material effect on the market for its securities. Therefore, to avoid even the appearance of trading on the basis of
material, non-public information, and to assist in compliance with insider trading laws, the Company has created the
following blackout periods during which Covered Persons must not trade, or receive prior approval of all trades with
the Compliance Officer or the full Board of Directors, as appropriate:
(i)
From December 15 until the end of the second trading day following the public announcement of fourth-
quarter and year-end financial results;
(ii)
From March 15 until the end of the second trading day following the public announcement of first-quarter
financial results;
(iii)
From June 15 until the end of the second trading day following the public announcement of second-quarter
financial results; and
(iv)
From September 15 until the end of the second trading day following the public announcement of third-
quarter financial results.
(c)
Other Blackout Periods. From time to time, other types of material non-public information regarding the Company
(such as negotiation of mergers, acquisitions or dispositions, new product developments, clinical trials, or other
material events) may be pending and not be publicly disclosed. While such material non-public information is pending,
the Company may impose special blackout periods during which Covered Persons are prohibited from trading in the
Company’s securities.

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(d)
Approved Rule 10b5-1 Plan. These trading restrictions do not apply to transactions by Covered Persons under a pre-
existing written plan, contract, instruction, or arrangement under Exchange Act Rule 10b5-1 (“Approved 10b5-1 Plan”)
that:
(i)
has been reviewed and approved at least thirty days in advance of any trades thereunder by the Compliance
Officer (or, if an Approved 10b5-1 plan is to be revised or amended, such revision or amendment has been
reviewed and approved by the Compliance Officer at least thirty days in advance of any subsequent trades);
(ii)
was entered into in good faith by the Covered Person outside a Blackout Period and at a time when he or she
was not in possession of material non-public information about the Company; and
(iii)
gives a third party the authority to execute such purchases and sales, outside the control of the applicable
officer, Director, or employee, providing such third party does not possess any material non-public
information about the Company, or explicitly specifies the security or securities to be purchased or sold, the
number of shares, the prices and/or dates of transactions, or other formula(s) describing such transactions.
Rule 10b5-1 provides an affirmative defense from insider trading liability under the federal securities laws for trading plans that meet
certain requirements. In general, a 10b5-1 plan must be entered into before the person is aware of material non-public information. Once
the plan is adopted, the person must not exercise any influence over the amount of securities to be traded, the price at which they are to
be traded or the date of the trade. As a practical matter, this means that the Insider may set up 10b5-1 plans, or delegate trading
discretion, only outside of a Blackout Period (as discussed above). The plan must either specify (including by formula) the amount,
pricing and timing of transactions in advance or delegate discretion on those matters to a broker or an independent third party, but you
must not exercise any subsequent discretion affecting the transactions, and if your broker, independent third party or any other person
exercises discretion in implementing the trades, you must not influence his or her actions and he or she must not be aware of any
Material Nonpublic Information at the time of the trades.
Pre-clearance of Securities Transactions
(a)
Because Covered Persons are likely to obtain material non-public information on a regular basis, the Company requires
all Covered Persons to obtain a pre-clearance, even outside a Blackout Period, from the Compliance Officer for all
transactions in the Company’s securities. In addition, transactions made by a Section 16 Officer or Director require a
supplemental pre-clearance by the Company’s Chief Financial Officer (or, for trades by the Chief Financial Officer, by
the Company’s Controller).
(b)
These procedures also apply to transactions by such person’s spouse, other persons living in such person’s household,
and minor children, and to transactions by entities over which such person exercises control.
(c)
Unless revoked, a grant of permission will normally remain valid until the close of trading five days following the day
on which it was granted. If the transaction does not occur during the five-day period, pre-clearance of the transaction
must be re-requested.
(d)
Pre-clearance is not required for purchases and sales of securities under an Approved 10b5-1 Plan. With respect to any
purchase or sale under an Approved 10b5-1 Plan, the third-party effecting transactions on behalf of the applicable
Covered Person should be instructed to send duplicate confirmations of all such transactions to the Compliance Officer.
In addition, pre-clearance is not required for stock option exercises and net issuances of restricted stock under the
limited circumstances described in the introduction to this Policy.
Short-Term Trading by Covered Persons
Section 16 Officers and Directors who purchase Company securities may not sell any Company securities of the same class for at least
six months after the purchase. This prohibition does not apply to stock option exercises and employee stock purchase plan, if any,
purchases.

9655 Maroon Circle, Englewood, CO 80112 | Phone: (800) 495-6670 | Fax: (800) 495-6695 | Zynex.com
Note that in addition to this Policy, under Section 16(b) of the Exchange Act, any “short-swing profits” realized by a Section 16 Officer
or Director of the Company from a “matching” purchase and sale or “matching” sale and purchase of Company stock occurring within a
six-month period would be subject to disgorgement to the Company. Note that under Section 16(b), the highest sale price is matched with
the lowest purchase price in determining profit, and purchases and sales that result in a loss are ignored— meaning that under these rules,
you could be deemed to have a profit to be disgorged even though you actually lose money on your trades in the aggregate. There is an
active group of lawyers that track purchases and sales by Section 16 Officers and Directors for violation of these rules. There is no
defense against a violation of these rules.
I, the undersigned employee, acknowledge that I have read, understood, and agree to abide by the terms and conditions outlined
in this policy document.
By:

Exhibit 21
SUBSIDIARIES OF ZYNEX, INC.
Name
    Jurisdiction
Zynex Medical, Inc.
Colorado
Zynex Monitoring Solutions, Inc.
Colorado
Zynex NeuroDiagnostics, Inc.
Colorado
Kestrel Labs, Inc.
Colorado

Exhibit 23.1
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM’S CONSENT
We consent to the incorporation by reference in the Registration Statement of Zynex, Inc. on Forms S-3 (file Nos. 333-230128 and 333-
232367) and Form S-8 (File No. 333-220366) of our report dated March 11, 2025, with respect to our audits of the consolidated financial
statements of Zynex, Inc. as of December 31, 2024 and 2023 and for the years ended December 31, 2024 and 2023 and our report dated
March 11, 2025 with respect to our audit of internal control over financial reporting of Zynex, Inc. as of December 31, 2024, which
reports are included in this Annual Report on Form 10-K of Zynex, Inc. for the year ended December 31, 2024.
/s/ Marcum llp
Marcum llp
New York, NY
March 11, 2025

Exhibit 31.1
CERTIFICATION
I, Thomas Sandgaard, certify that:
1. I have reviewed this annual report on Form 10-K of Zynex, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared;
b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;
c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Dated: March 11, 2025
/s/ THOMAS SANDGAARD
Thomas Sandgaard
Chairman, President, Chief Executive Officer and Principal
Executive Officer

Exhibit 31.2
CERTIFICATION
I, Daniel Moorhead, certify that:
1. I have reviewed this annual report on Form 10-K of Zynex, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the
period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
a)     Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared;
b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles;
c)     Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent
functions):
a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting.
Dated: March 11, 2025
/s/ DANIEL MOORHEAD
Daniel Moorhead
Chief Financial Officer and Principal Financial and Accounting
Officer

Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
Each of the undersigned hereby certifies, for the purposes of Section 1350 of Chapter 63 of Title 18 of the United States Code, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Zynex, Inc. (“Zynex”), that to his
knowledge:
1.
This Annual Report on Form 10-K for the year ended December 31, 2024 (the “Report”) fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of
Zynex for the period covered by this Report.
This Certification is executed as of March 11, 2025
/s/ THOMAS SANDGAARD
Thomas Sandgaard
Chairman, President, Chief Executive Officer and Principal
Executive Officer

Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
Each of the undersigned hereby certifies, for the purposes of Section 1350 of Chapter 63 of Title 18 of the United States Code, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Zynex, Inc. (“Zynex”), that to his
knowledge:
1.
This Annual Report on Form 10-K for the year ended December 31, 2024 (the “Report”) fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in such Report fairly presents, in all material respects, the financial condition and results of operations of
Zynex for the period covered by this Report.
This Certification is executed as of March 11, 2025
/s/ DANIEL MOORHEAD
Daniel Moorhead
Chief Financial Officer and Principal Financial and Accounting
Officer