NOTE 13 — COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS:

Employment Contracts:

The Company has multi-year contracts with two key employees. The contracts call for salaries presently aggregating $770,000 per year, and they expire in March 2019 and March 2020. The following table is a schedule of future minimum salary commitments:

2019		$	485,493
2020			85,000

Pension Plan:

The Company has a 401(k) plan established for its employees whereby it matches 40% of the first 5% (or 2% of salary) that an employee contributes to the plan. Matching contribution expenses totaled $94,544 and $91,150 for the years ended December 31, 2018 and 2017, respectively.

Obligations Under Operating Leases:

The Company leases industrial space used for office, R&D and manufacturing facilities, currently with a monthly rent of $30,140. The current lease expires on April 30, 2019. The lease provides for annual increases of 2.5% percent each year starting May 1, 2016. In February of 2014, the Company entered into a lease for office and warehouse space, effective March 1, 2014, a short distance from its current facility currently with a monthly rent of $16,709. The space is used primarily for warehousing and provides for additional office space. The lease expires on April 30, 2020. The lease provides for annual increases of 3.0% percent each year starting March 1, 2016. The Company also leases office, warehouse, and manufacturing space in a single building in Kuala Lumpur, Malaysia persuant to two separate leases that each expire on April 30, 2020 and have an additional three year renewal option with combined monthly rent of approximately $5,400. The Company also leases space in Germany for offices, manufacturing, and center of excellence for optical technology. The lease will automatically renew annually on May 31. The monthly cost is estimated at $13,445 with yearly increases of 2%.

The following is a schedule of future minimum rental commitments for the years ending December 31,

2019	$	384,308
2020		88,576
2021		-
	$	472,884

Rent expense was $653,155 and $586,730 for the years ended December 31, 2018 and 2017, respectively.

Economic Dependency:

Customers are considered major customers when net sales exceed 10% of the Company's total net sales for period or outstanding trade receivables exceed 10% of accounts receivable. The Company had the following major customers for the respective periods:

	For the years ended										Accounts Receivable
	December 31, 2018					December 31, 2017					December 31, 2018		December 31, 2017
	Sales		% of Sales			Sales		% of Sales
Customer 1	$	11,171,174		42	%	$	8,065,217		42	%	$	3,499,340	$	-
Customer 2		4,346,640		16	%		-		-	%		1,033,824		-

The following table delineates purchases the Company had with vendors in excess of 10% of total purchases for the periods indicated:

For the years ended

Accounts Payable

December 31, 2018

December 31, 2017

December 31, 2018

December 31, 2017

Purchases

% of Purc.

Purchases

% of Purc.

Vendor 1

Vendor 2

746,868

Vendor 3

849,966

164,312

Vendor 4

1,646,614

884,698

In the tables above, an asterisk (*) indicates that purchases from the vendor did not exceed 10% for the period indicated.

The Company purchases materials pursuant to intellectual property rights agreements that are important components in its products. Management believes that other suppliers could provide similar materials on comparable terms. A change in suppliers, however, could cause a delay in manufacturing and a possible loss of sales, which could adversely affect operating results.

Litigation:

From time to time, the Company is involved in certain legal actions arising in the ordinary course of business. The outcomes of such actions, either individually or in the aggregate, are not expected to have a material adverse effect on the Company’s future financial position or results of operations.