10-Q

 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

ý           Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2015

o           Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ___________ to __________

Commission File No. 001-32526

Perseon Corporation

(Exact Name of Registrant as Specified in Its Charter)

Delaware	75-1590407
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2188 West 2200 South
Salt Lake City, Utah 84119
(Address of principal executive offices, including zip code)
(801) 972-5555
(Registrant’s telephone number, including area code)

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 ý  No o

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).  Yes ý  No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	Smaller reporting company ý

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes o  No ý

As of July 15, 2015, there were 4,016,323 shares of the Registrant’s common stock, $0.001 par value per share, outstanding.

PERSEON CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2015

PART I - Financial Information

Item 1.  Financial Statements
	Condensed Balance Sheets (Unaudited)	3
	Condensed Statements of Comprehensive Loss (Unaudited)	4
	Condensed Statements of Cash Flows (Unaudited)	5
	Notes to Condensed Financial Statements (Unaudited)	6
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3.  Quantitative and Qualitative Disclosures About Market Risk		22
Item 4.  Controls and Procedures		22
PART II - Other Information
Item 1.  Legal Proceedings		23
Item 1A.  Risk Factors		23
Item 5.  Other Information		23
Item 6.  Exhibits		24
Signatures		25

2

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

PERSEON CORPORATION
(Formerly BSD Medical Corporation)
Condensed Balance Sheets
(Unaudited)
ASSETS	June 30, 2015			December 31, 2014
Current assets:
Cash and cash equivalents	$	865,516		$	5,594,578
Accounts receivable, net of allowance for doubtful accounts of $66,480 and $140,000, respectively		643,733			275,072
Related party trade accounts receivable		-			13,471
Inventories, net		1,079,765			1,775,648
Other current assets		344,451			86,583
Total current assets		2,933,465			7,745,352
Property and equipment, net		1,254,287			1,140,871
	$	4,187,752		$	8,886,223
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	874,678		$	598,466
Accrued liabilities		690,456			1,105,152
Notes payable, net of discount		820,924			-
Customer deposits		19,777			41,667
Deferred revenue		-			54,218
Total current liabilities		2,405,835			1,799,503
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $.001 par value; 10,000,000 shares authorized, no shares issued and outstanding		-			-
Common stock, $.001 par value, 80,000,000 shares authorized, 4,018,756 and 3,971,366 shares issued, respectively		4,019			3,971
Additional paid-in capital		64,053,412			63,623,143
Treasury stock, 2,433 shares at cost		(234	)		(234	)
Accumulated deficit		(62,275,280	)		(56,540,160	)
Total stockholders’ equity		1,781,917			7,086,720
	$	4,187,752		$	8,886,223

See accompanying notes to condensed financial statements

3

PERSEON CORPORATION
(Formerly BSD Medical Corporation)
Condensed Statements of Comprehensive Loss
(Unaudited)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014
Revenues:
Sales	$	880,433		$	723,708		$	1,944,527		$	2,166,850
Sales to related parties		-			368,548			11,232			381,040
Equipment rental		72,000			112,400			153,300			192,300
Total revenues		952,433			1,204,656			2,109,059			2,740,190
Cost of revenues:
Cost of sales		325,706			430,256			1,113,811			1,277,903
Cost of related party sales		-			277,811			6,668			285,775
Cost of equipment rental		-			2,947			1,965			5,894
Total cost of revenues		325,706			711,014			1,122,444			1,569,572
Gross margin		626,727			493,642			986,615			1,170,618
Operating costs and expenses:
Research and development		567,930			614,395			1,064,565			1,135,659
Selling, general and administrative		2,889,795			2,027,133			5,611,659			3,742,414
Total operating costs and expenses		3,457,725			2,641,528			6,676,224			4,878,073
Loss from operations		(2,830,998	)		(2,147,886	)		(5,689,609	)		(3,707,455	)
Other income (expense):
Interest income (expense), net		(24,636	)		2,844			(28,492	)		7,718
Other expense, net		(7,900	)		(4,248	)		(17,020	)		(6,947	)
Total other income (expense)		(32,536	)		(1,404	)		(45,512	)		771
Loss before income taxes		(2,863,534	)		(2,149,290	)		(5,735,121	)		(3,706,684	)
Income tax benefit		-			-			-			-
Net loss and comprehensive loss	$	(2,863,534	)	$	(2,149,290	)	$	(5,735,121	)	$	(3,706,684	)
Net loss per common share:
Basic	$	(0.72	)	$	(0.63	)	$	(1.44	)	$	(1.09	)
Diluted	$	(0.72	)	$	(0.63	)	$	(1.44	)	$	(1.09	)
Weighted average number of shares outstanding:
Basic		3,997,000			3,405,000			3,983,000			3,405,000
Diluted		3,997,000			3,405,000			3,983,000			3,405,000

See accompanying notes to condensed financial statements

4

PERSEON CORPORATION

(Formerly BSD Medical Corporation)

Condensed Statements of Cash Flows

(Unaudited)

	Six Months Ended June 30,
	2015			2014
Cash flows from operating activities:
Net loss	$	(5,735,121	)	$	(3,706,684	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		54,049			63,804
Stock issued for services		165,864			180,000
Stock-based compensation		264,453			420,676
(Gain) loss on disposition of property and equipment		2,590			(30	)
Amortization of debt discount		8,837			-
Decrease (increase) in:
Receivables		(355,190	)		463,482
Inventories		695,883			244,702
Other current assets		(257,869	)		(35,744	)
Increase (decrease) in:
Accounts payable		276,212			336,748
Accrued liabilities		(414,694	)		25,677
Customer deposits		(21,890	)		(305,639	)
Deferred revenue		(54,218	)		(299,452	)
Net cash used in operating activities		(5,371,094	)		(2,612,460	)
Cash flows from investing activities:
Proceeds from disposition of property and equipment		-			2,025
Purchase of property and equipment		(170,055	)		(49,763	)
Net cash used in investing activities		(170,055	)		(47,738	)
Cash flows from financing activities:
Proceeds from sale of common stock		-			50,067
Payment of stock offering costs		-			(127,548	)
Proceeds from notes payable, net		844,581			82,465
Payments on notes payable		(32,494	)		(32,768	)
Net cash provided by (used in) financing activities		812,087			(27,784	)
Net decrease in cash and cash equivalents		(4,729,062	)		(2,687,982	)
Cash and cash equivalents, beginning of period		5,594,578			7,423,091
Cash and cash equivalents, end of period	$	865,516		$	4,735,109

See accompanying notes to condensed financial statements

5

PERSEON CORPORATION

(Formerly BSD Medical Corporation)

Notes to Condensed Financial Statements

(Unaudited)

Note 1.   Basis of Presentation

The interim financial information of Perseon Corporation, formerly BSD Medical Corporation, (the “Company”) as of June 30, 2015 and for the three months and six months ended June 30, 2015 and 2014 is unaudited, and the condensed balance sheet as of December 31, 2014 is derived from our audited financial statements.  The accompanying unaudited condensed balance sheets as of June 30, 2015 and December 31, 2014 and the related unaudited condensed statements of operations and of cash flows for the three months and six months ended June 30, 2015 and 2014 have been prepared in accordance with U.S. generally accepted accounting principles for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).  The condensed financial statements do not include all of the information and notes required by U.S. generally accepted accounting principles for complete financial statements.  These condensed financial statements should be read in conjunction with the notes thereto, and the financial statements and notes thereto included in our annual report on Form 10-K for the period ended December 31, 2014.

All adjustments (consisting only of normal recurring adjustments) necessary for the fair presentation of our financial position as of June 30, 2015 and December 31, 2014 and our results of operations and our cash flows for the three months and six months ended June 30, 2015 and 2014 have been included.  The results of operations for the three months and six months ended June 30, 2015 may not be indicative of the results for our fiscal year ending December 31, 2015.

Certain amounts in the prior periods have been reclassified to conform to the current period presentation.

Effective February 17, 2015, Perseon Corporation amended its certificate of incorporation to change its legal corporate name to “Perseon Corporation” from “BSD Medical Corporation.”

Effective June 23, 2015, the Board of Directors (the “Board”) and stockholders of the Company approved an amendment to the Company’s certificate of incorporation to effectuate a reverse stock split of the Company’s common stock at a ratio of 1-for-10.  The reverse stock split has been given retroactive effect in the accompanying condensed financial statements.  See Note 7.  Stockholders’ Equity – Reverse Stock Split.

Note 2.   Liquidity

As of June 30, 2015, we had cash and cash equivalents of $865,516, and total current assets of $2,933,465.   We do not believe these resources will be sufficient to fully execute our current strategy through at least December 31, 2015.  Our current strategy involves significant efforts to expand sales of our MicroThermX products.  To become profitable we will need to significantly increase the revenues we receive from sales of our MicroThermX products.  We do not expect that sales of MicroThermX products will increase sufficiently to cover our total costs of operations in 2015.  We believe additional funding will be required during 2015.

On April 23, 2015 we filed a registration statement on Form S-1 with the SEC, as amended on May 13, 2015, to raise additional capital.  No assurance can be given that such offering will be consummated, or if consummated, will raise the maximum amount contemplated thereunder.

If we are unable to raise sufficient additional funds in 2015, we will need to significantly reduce our expenses, and evaluate other business arrangements, including collaborative arrangements, partnerships, or sale of assets, to allow continued operations.  Significantly reducing our expenses would negatively affect our efforts to expand our marketing and sales presence, our research and development programs, and our ability to hire and retain qualified personnel.

6

Note 3.   Sale of Hyperthermia Assets

On April 1, 2015, the Company sold the assets associated with its hyperthermia cancer treatment systems, including among other assets, certain contracts, inventory, intellectual property, and permits (the “Acquired Assets”) pursuant to an Asset Purchase Agreement (the “Purchase Agreement”) with Pyrexar Medical Inc., a Nevada corporation (the “Buyer”).  As consideration for the Acquired Assets, the Company received (i) 19.9% of the Series A Preferred Stock of Buyer (the “Preferred Stock”) and (ii) a percentage of the gross revenues the Buyer receives from its future sales of hyperthermia cancer treatment systems.  The Buyer also assumed certain liabilities associated with the Acquired Assets.

The Purchase Agreement contains customary representations, warranties and covenants of the Company and the Buyer. Subject to certain limitations, the Company has agreed to indemnify the Buyer for breaches of representations, warranties, covenants and retained liabilities.  The Purchase Agreement provided that the parties enter into a short term lease agreement, pursuant to which the Company leased to the Buyer a portion of the Company’s facility at 2188 West 2200 South, Salt Lake City.  Base Rent under the lease agreement is set at approximately $8,055 per month.  Following the sale of the facility, this rent will discontinue.  See Note 5, Property and Equipment for a description of the sale of the facility.

Each share of Preferred Stock the Company received is convertible into one share of common stock of Buyer subject to adjustment in the event of stock splits, stock dividends and other similar events, and the Company received voting rights equal to those of holders of Buyer’s common stock. The Company is also entitled to cumulative annual dividends of $0.015 per share commencing April 1, 2016. In the event of certain liquidation events, we are entitled to receive, prior to any distribution to holders of other shares of capital stock of Buyer, a liquidation preference of approximately $2 million. Buyer is prohibited without the Company’s consent from authorizing, creating or issuing any other equity security having priority over the Preferred Stock.

Two former directors of the Company, Dr. Gerhard W. Sennewald and Douglas P. Boyd have a financial interest in Buyer and both are also members of Buyer’s board of directors.  In light of the Company’s relationship with Buyer, the Company received a fairness opinion from Houlihan Valuation Advisors that the consideration it received for the Acquired Assets is fair to the Company from a financial perspective.   See “Shareholder Claim” below.

Note 4.   Inventories

Inventories consisted of the following:

	June 30, 2015			December 31, 2014
Parts and supplies	$	368,768		$	1,004,164
Work-in-process		477,393			951,519
Finished goods		279,075			569,965
Reserve for obsolete inventory		(45,471	)		(750,000	)
Inventories, net	$	1,079,765		$	1,775,648

7

Note 5.   Property and Equipment

Property and equipment consisted of the following:

	June 30, 2015			December 31, 2014
Equipment	$	801,883		$	1,503,845
Furniture and fixtures		62,832			303,226
Building (held for sale)		956,000			956,000
Land (held for sale)		244,000			244,000
Rental equipment		-			58,940
		2,064,715			3,066,011
Less equipment impairment		-			(85,000	)
Less accumulated depreciation		(810,428	)		(1,840,140	)
Property and equipment, net	$	1,254,287		$	1,140,871

On May 15, 2015 the Company entered into a commercial real estate purchase contract wherein it agreed to sell its primary headquarters and manufacturing facilities located in Salt Lake City, Utah.  Per the terms of the contract the closing date of the sale will take place in early August 2015.  The sale will result in proceeds to the Company of approximately $975,000 after commissions and closing costs.  The Company will be required to pay off the $750,000 principal balance plus accrued interest and early payment penalty on the promissory note from the sale proceeds.  After paying off the promissory note, the net proceeds from the sale of the facilities will be approximately $200,000.

Following the closing date, the purchaser of the facilities will lease the building back to the Company rent free through October 23, 2015.  The Company has also entered into a sub-lease agreement to rent new facilities in Salt Lake City and plans to take occupancy of the leased facilities in October 2015.  This sub-lease agreement provides for the Company to lease approximately 10,057 square feet of space that will house our office, production and research operations.  The term of this sub-lease is through December 31, 2019, and requires monthly payments for base rent in the first year of $16,762, with a provision for escalation of 3% per year for subsequent years.

Note 6.   Notes Payable

Included in notes payable at June 30, 2015 is a promissory note with an asset lender dated February 24, 2015 with a principal balance of $750,000.  The note is secured by the Company’s headquarters and manufacturing facility.  During the one-year term of the note, monthly payments of interest only at Prime Rate plus 6% are required, with the principal due on February 24, 2016.  The note is recorded net of discount of $17,675 at June 30, 2015, which consists of debt issuance costs deferred and amortized over the life of the loan.

Also included in notes payable at June 30, 2015 is an unsecured finance agreement note with a principal balance of $88,599, payable in monthly installments of $11,277, including interest at 4.85%, through February 2016.

Note 7.   Stockholders’ Equity

The Company has 10,000,000 authorized shares of $.001 par value preferred stock.  As of June 30, 2015 and December 31, 2014, there were no shares of preferred stock outstanding.  The Company also has 80,000,000 authorized shares of $.001 par value common stock.   At June 30, 2015, the Company had 4,016,323 shares outstanding.

8

Reverse Stock Split

We held a special meeting of stockholders on May 12, 2015 to approve an amendment to the Company’s Amended and Restated Certificate of Incorporation to effectuate a reverse split of its issued and outstanding shares of common stock at a ratio of between 1-for-6 and 1-for-12, inclusive, which ratio was to be selected at the sole discretion of the Board of Directors of the Company at any whole number in the above range, with any fractional shares that would otherwise be issued as a result of the reverse split being rounded up to the nearest whole share (the “Reverse Stock Split”); provided, that the Board of Directors could abandon the Reverse Stock Split in its sole discretion.

Over 76% of the outstanding shares voted, and the stockholders voted to approve the amendment, with the results of the voting as follows:

FOR	AGAINST	ABSTAIN	BROKER NON-VOTES
24,026,870	6,006,589	151,847	—

Effective June 23, 2015, the Board of Directors determined to set the reverse stock split ratio at 1-for-10.  The Reverse Stock Split has been given retroactive effect in the accompanying condensed financial statements.

Shelf Registration Statement

On September 28, 2012, we filed a universal shelf registration statement with the SEC for the issuance of common stock, preferred stock, warrants, senior debt, subordinated debt and units up to an aggregate amount of $50.0 million. On October 11, 2012, the universal shelf registration statement was declared effective by the SEC.    We may periodically offer one or more of these securities in amounts, prices and terms to be announced when and if the securities are offered.  At the time any of the securities covered by the registration statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering.  Since the effective date of the shelf registration, we have successfully sold securities in two separate registered direct offerings utilizing this shelf registration statement.

Warrants

A summary of the outstanding warrants issued in prior stock offerings as of June 30, 2015, and changes during the six months then ended, is as follows:

	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contract Term (Years)
Outstanding at December 31, 2014		985,736	$	21.14
Issued		-		-
Exercised		-		-
Forfeited or expired		-		-
Outstanding as of June 30, 2015		985,736	$	21.14		3.19
Exercisable as of June 30, 2015		985,736	$	21.14		3.19

Note 8.   Net Loss Per Common Share

The computation of basic earnings per common share is based on the weighted average number of shares outstanding during each period.  The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the weighted average common stock equivalents which would arise from the exercise of stock options and warrants outstanding using the treasury stock method and the average market price per share during the period.  Common stock equivalents are not included in the diluted loss per share calculation when their effect is anti-dilutive.

9

No stock options or warrants are included in the computation of diluted weighted average number of shares for the three months and six months ended June 30, 2015 and 2014 because the effect would be anti-dilutive.  As of June 30, 2015, we had outstanding options and warrants to purchase a total of 1,545,562 shares of our common stock that could have a future dilutive effect on the calculation of earnings per share.

Note 9.   Related Party Transactions

At times, we have derived a portion of our revenues from sales of hyperthermia products.  A significant portion of those sales of hyperthermia products have been to a related party.  As described in Note 3, Sales of Hyperthermia Assets, we sold all assets related to hyperthermia on April 1, 2015.  As a result, we will not recognize revenue from hyperthermia products subsequent to April 1, 2015.  During the three months ended June 30, 2015 and 2014, we had sales of $0 and $368,548, respectively, to entities controlled by a significant stockholder and former member of the Board of Directors, representing 0 and 31% of total revenues for each respective three-month period.  During the six months ended June 30, 2015 and 2014, we had sales of $11,232 and $381,040, respectively, to these related parties, representing approximately 1% and 14% of total revenues, respectively.

As of June 30, 2015 and December 31, 2014, receivables included $0 and $13,471, respectively, from these related parties.

Note 10.  Stock-Based Compensation

Our Third Amended and Restated 1998 Stock Incentive Plan (“Plan”) authorizes the granting of incentive stock options to certain key employees and non-employees who provide services to the Company.  The Plan, as amended, provides for the granting of options for an aggregate 633,730 shares.  The options vest subject to management’s discretion.

Effective February 4, 2009, our Fourth Amended and Restated 1998 Directors Stock Plan (the “Director Plan”) provides an annual retainer of $60,000 to each non-employee director with the exception of the Audit Committee Chairman who is to receive $65,000.  The cash portion of the compensation of $30,000 ($35,000 for the Audit Committee Chairman) is paid 50% twice each year, with $30,000 of compensation paid in common stock of the Company once each year.  Prior to February 4, 2009, the Director Plan granted each non-employee outside director 3,000 options each year at an exercise price equal to the fair market value of the common stock at the date the option was granted.  The options vest according to a set schedule over a five-year period and expire upon the director’s termination, or after ten years from the date of grant.  The Director Plan, as amended, allows for an aggregate of 175,000 shares to be granted.

As of June 30, 2015, we had approximately 102,890 shares of common stock reserved for future issuance under these stock incentive plans.  Also, in connection with our appointment of a Chief Executive Officer in November 2014, we issued an inducement equity award in the form of a non-statutory stock option to purchase 140,000 shares of the Company’s stock.  This grant was outside the Company’s stock incentive plans, and was in accordance with the NASDAQ inducement grant exception found in NASDAQ Listing Rule 5635(c)(4).

Stock-based compensation cost is measured at the grant date based on the estimated value of the award granted, using the Black-Scholes option pricing model, and recognized over the period in which the award vests.  For stock awards no longer expected to vest, any previously recognized stock compensation expense is reversed in the period of termination.

10

The stock-based compensation expense has been allocated to the various categories of operating costs and expenses in a manner similar to the allocation of payroll expense as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Cost of sales	$	6,856	$	15,312	$	13,713	$	30,624
Research and development		12,711		45,641		27,454		91,282
Selling, general and administrative		109,183		153,210		223,286		298,770
Total	$	128,750	$	214,163	$	264,453	$	420,676

During the six months ended June 30, 2015, we granted employees a total of 108,500 stock options at a weighted average exercise price of $3.41 per share, with one third vesting each year for the next three years.  The estimated weighted average grant date fair value per share of these stock options was $1.62, and our weighted average assumptions used in the Black-Scholes valuation model to determine this estimated fair value were as follows:

Expected volatility		62.08	%
Expected dividends		0	%
Expected term	7.24 years
Risk-free interest rate		1.87	%

Unrecognized stock-based compensation expense expected to be recognized over the estimated weighted-average amortization period of 2.02 years is approximately $883,000 as of June 30, 2015.

A summary of the time-based stock option awards as of June 30, 2015, and changes during the six months then ended, is as follows:

	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contract Term (Years)		Aggregate Intrinsic Value
Outstanding at December 31, 2014		513,193		$	22.46		7.03
Granted		108,500			3.41
Exercised		-			-
Forfeited or expired		(61,867	)		29.99
Outstanding at June 30, 2015		559,826		$	17.94		6.69	$	-
Exercisable at June 30, 2015		267,726		$	31.57		3.78	$	-

The aggregate intrinsic value in the preceding table represents the total pre-tax intrinsic value, based on our closing stock price of $1.85 as of June 30, 2015, which would have been received by the holders of in-the-money options had the option holders exercised their options as of that date.

Note 11.  Supplemental Cash Flow Information

We paid no amounts for income taxes during the six months ended June 30, 2015 and 2014.

We paid $23,113 and $882 for interest during the six months ended June 30, 2015 and 2014, respectively.

11

During the six months ended June 30, 2015 and 2014, we had no non-cash financing and investing activities.

Note 12.  Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs.  Under this new standard, debt issuance costs reported on our balance sheet are shown as a direct deduction from the related debt liability rather than as an asset.  This ASU is effective January 1, 2016, with early adoption permitted.  Retrospective application to prior periods is required.   We adopted the ASU effective January 1, 2015, with the only impact being the classification of certain amounts within our balance sheet and no impact on our results of operations.  Prior periods were not impacted by the adoption of the ASU.

Note 13.  Legal Matters

As previously disclosed, legal counsel for Perseon received a demand letter dated October 3, 2014 and a draft complaint from a single shareholder.  The draft complaint alleged that the Company (and certain current and former officers and directors) had issued false or misleading press releases, and that the Company had improperly raised capital in ways that diluted existing shareholders.

The Company’s Board of Directors engaged special legal counsel experienced in securities matters and litigation to assist the Board of Directors in conducting an independent investigation of these allegations. The independent investigation has been completed.  Based on the investigation, the Board of Directors determined that there has been no misconduct by the Company or the named defendants.

On April 27, 2015 this shareholder filed a formal complaint in the U.S. District Court for the District of Delaware. The complaint alleges that from November 2010 through October 2014, Perseon issued various press releases and public statements, which omitted certain material facts related to Perseon’s revenue and sales, thereby misrepresenting the true financial condition of Perseon.  In particular, the complaint alleges that Perseon’s press releases “tout[ed] impressive revenue figures and purported sales” when “in reality Perseon was floundering and unable to cover its operating costs, including significant executive compensation.”  The complaint also alleges that Perseon “chose to issue additional securities at below-market prices in an effort to fund operating expenses,” rather than “raise capital through debt transactions or other methods,” and that three offerings cited in the complaint resulted in “the dilution of existing shareholder positions.”

On June 30, 2015, we filed in the U.S. District Court for the District of Delaware, a formal motion to dismiss all claims in the Complaint.

Perseon believes that the claims in this lawsuit are without merit and will continue to vigorously defend this action.

Note 14.  Subsequent Events

We have previously disclosed that we are out of compliance with NASDAQ Listing Rule 5550(a)(2), a failure to maintain a minimum bid price of $1.00 over the previous 30 consecutive business days. On July 8, 2015, NASDAQ notified the Company that it has regained compliance with the Listing Rules of The Nasdaq Stock Market, and that this matter is now closed.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations and other parts of this quarterly report on Form 10-Q contain forward-looking statements that involve risks and uncertainties.  Forward-looking statements can also be identified by words such as “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms.  Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements.  Factors that might cause such differences include, but are not limited to, those discussed in the subsection entitled “Forward-Looking Statements” below.  The following discussion should be read in conjunction with our financial statements and notes thereto included in this report.  We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Overview

Perseon Corporation, formerly BSD Medical Corporation, (the “Company”), was incorporated in the State of Delaware on July 3, 1986.  In February 2015, we changed the name of the Company to Perseon Corporation.  We develop, manufacture, market and service systems to treat cancer and benign diseases using heat therapy delivered using focused microwave energy.  Our business objectives are to continue to commercialize our products for the treatment of cancer and to further expand our products to treat other diseases and medical conditions.  Our product line for cancer therapy has been created to offer hospitals and clinics a solution for thermal treatment of cancer.  We have developed extensive intellectual property and distribute our products in the United States, Europe and Asia.

As part of our previously announced corporate realignment and re-branding which included our new corporate name, Perseon, we plan to focus our efforts on our flagship product, MicroThermX®, (“MicroThermX”) ablation system that employs precision-guided energy to ablate soft tissue.  Other actions taken during the first six months of 2015 included replacing a majority of our senior management team and approximately half of our board of directors to provide proven leadership in similar situations.

Historically, our product offerings have included hyperthermia cancer treatment systems. On April 1, 2015, we sold the assets associated with our hyperthermia cancer treatment systems, including among other assets, certain contracts, inventory, intellectual property, and permits (the “Hyperthermia Assets”) pursuant to an Asset Purchase Agreement (the “Hyperthermia Purchase Agreement”) with Pyrexar Medical Inc. (“Pyrexar”). As consideration for the Hyperthermia Assets, we received (i) 19.9% of the Series A Preferred Stock of Pyrexar and (ii) a percentage of the gross revenues Pyrexar receives from its future sales of hyperthermia cancer treatment systems. Pyrexar also assumed certain liabilities associated with the Hyperthermia Assets.  With the sale of the Hyperthermia Assets we will focus our resources on expanding and commercializing our ablation product line.

Our thermal ablation product line includes systems that have been strategically designed to offer minimally invasive thermal energy therapy for treating tumors, particularly cancerous tumors.  Studies have shown that ablation therapy effectively addresses and even kills certain cancerous tumors on a minimally invasive basis. Thermal ablation usually refers to heat treatments delivered at temperatures above 55°C for short periods of time.  Thermal ablation is used to destroy local tumors using a short intense focus of heat on a specific area.

Current and future cancer treatment sites for our systems may include cancers of the prostate, breast, head, neck, bladder, uterus, ovaries, esophagus, liver, kidney, brain, bone, stomach and lung.  In addition to these market opportunities, we believe that our technology has application for a number of other medical purposes in addition to treating cancer.

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We recognize revenues from the sale of our ablation cancer treatment systems and related parts and accessories (collectively, product sales).  We also recognize revenues from equipment rental, including fee-per-use rental income from our MicroThermX systems.  Information regarding our revenues, assets, and results of our operations is contained in our financial statements and notes thereto.

Our current corporate strategy includes the possibility of entering into additional collaborative arrangements with third parties to expand and improve the commercialization of all our products.  There can be no assurance that the exploration of strategic alternatives will result in any agreements or transactions, or that, if completed, any agreements or transactions will be successful or on attractive terms.

We also changed our fiscal year end for financial reporting from August 31, to December 31, effective for the four months ended December 31, 2014.

Reverse Stock Split

Effective June 23, 2015, our Board of Directors and the stockholders of the Company approved an amendment to our certificate of incorporation to effectuate a reverse stock split of the Company’s common stock at a ratio of 1-for-10.  The reverse stock split has been given retroactive effect in the accompanying condensed financial statements.  See Note 7 to our condensed financial statements.

Results of Operations

Fluctuation in Operating Results

Our results of operations have fluctuated in the past and may fluctuate in the future from year to year as well as from quarter to quarter.  Revenue may fluctuate as a result of factors relating to the demand and market acceptance for our ablation systems and related component parts and services, world-wide economic conditions, availability of financing for our customers, changes in the medical capital equipment market, changes in order mix and product order configurations, competition, regulatory developments, insurance reimbursement and other matters.  In addition, our revenues in the future will not be comparable to prior periods as a result of our sale of the hyperthermia product line. Since May 2013, a significant part of our MicroThermX product’s revenue has come from sales into Europe, to our distribution partner, Terumo.  Because Terumo has expressed an interest in modifying the terms of their exclusive distribution agreement for our MicroThermX products, we are currently negotiating with Terumo to modify the agreement.  Both Terumo and the Company are interested in extending the duration and purchase requirements of the contract.  We cannot yet determine the total impact this may have on our future sales.  Operating expenses may fluctuate as a result of the timing of sales and marketing activities, research and development, and selling, general and administrative expenses associated with our potential growth.  For these and other reasons described elsewhere, our results of operations for a particular period may not be indicative of operating results for any other period.

Revenues

We recognize revenue from the sale of our ablation treatment systems and related parts and accessories (collectively, system sales), the sale of disposable devices used with our systems, training, service support contracts and other miscellaneous revenues.  We also recognize revenues from equipment rental, including fee-per-use rental income from our MicroThermX systems.

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The table below summarizes the sources of our revenues, with the top section “MicroThermX products” showing revenue for the product line currently offered by the Company.  Following the April 1, 2015 sale of all assets related to hyperthermia products, we will no longer recognize revenue from hyperthermia products.  Our revenues consisted of the following:

	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
MicroThermX products
Systems - MicroThermX	$	70,875	$	-	$	289,000	$	257,625
Disposable devices - MicroThermX		807,775		335,085		1,225,296		758,717
Equipment rental - MicroThermX		72,000		102,500		143,400		172,500
Other – MicroThermX		1,783		582		3,303		3,704
Total MicroThermX revenue	$	952,433	$	438,167	$	1,660,999	$	1,192,546
Hyperthermia revenue		-		766,489		448,060		1,547,644
Total revenue	$	952,433	$	1,204,656	$	2,109,059	$	2,740,190

Total revenues from MicroThermX products were $952,433 for the second quarter ended June 30, 2015, compared to $438,167 for the three months ended June 30, 2014, an increase of 117%.  Total revenues from MicroThermX products were $1,660,999 for the six month period ended June 30, 2015, compared to $1,192,546 for the six months ended June 30, 2014, an increase of 39%.  Growth in revenue for both comparative periods resulted from higher sales of both MicroThermX systems and disposable devices.

Including sales of ‘hyperthermia products’ that are no longer offered by the Company, total revenues were $952,433 for the three months ended June 30, 2015, compared to total revenues of $1,204,656 for the three months ended June 30, 2014.Total revenues for the six months ended June 30, 2015 were $2,109,059, compared to $2,740,190 for the six months ended June 30, 2014. The decreases in revenue were directly attributable to lower, or no, hyperthermia sales in the 2015 periods, following the April 1, 2015 sale of the assets related to that product.

At times, we have derived a significant portion of our revenues from hyperthermia sales to related parties.  With the sale of our hyperthermia product line, these related party sales are expected to terminate.  All of our related party revenue resulted from the sale of hyperthermia systems and related component parts and services to Dr. Sennewald Medizintechnik GmbH or its affiliate BSD BioSystems Design, S.A. (“Medizintechnik”).  Dr. Sennewald, one of our significant stockholders and a former director, is a stockholder, executive officer and a director of Medizintechnik.  We derived $0 and $368,548 in the three months ended June 30, 2015 and 2014, respectively, from hyperthermia sales to related parties.  We derived $11,232 and $381,040 in the six months ended June 30, 2015 and 2014, respectively, from hyperthermia sales to related parties, or approximately 1% and 14% of total revenues, respectively.

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The following tables summarize the sources of our revenues from non-related and related parties for the three months and six months ended June 30, 2015 and 2014:

	Three Months Ended June 30,				Six Months Ended June 30,
Non-Related Parties	2015		2014		2015		2014
MicroThermX products
Systems – MicroThermX	$	70,875	$	-	$	289,000	$	257,625
Disposable devices – MicroThermX		797,825		335,085		1,225,296		758,717
Equipment rental – MicroThermX		72,000		102,500		143,400		172,500
Other – MicroThermX		11,733		582		3,303		3,704
Total MicroThermX revenue	$	952,433	$	438,167	$	1,660,999	$	1,192,546
Hyperthermia revenue		-		397,941		436,828		1,166,604
Total revenue from non-related parties	$	952,433	$	836,108	$	2,097,827	$	2,359,150

	Three Months Ended June 30,				Six Months Ended June 30,
Related Parties	2015		2014		2015		2014
Hyperthermia revenue	$	-	$	368,548	$	11,232	$	381,040

Cost of Revenues

Cost of sales includes raw materials, labor and allocated overhead costs.  We calculate and report cost of sales separately for both non-related and related party sales, which are sales to Medizintechnik.  Cost of sales as a percentage of sales in the past has fluctuated widely from period to period depending on the mix of sales for the period and the type and configuration of hyperthermia systems sold, if any, during the period.  Total cost of revenues for the three months ended June 30, 2015 was $325,706 compared to $711,014 for the three months ended June 30, 2014, a decrease of $385,308, or approximately 54%.  Total cost of revenues for the six months ended June 30, 2015 was $1,122,444 compared to $1,569,572 for the six months ended June 30, 2014, a decrease of $447,128, or approximately 28%.  These decreases resulted primarily from the decrease in system sales, but included higher than expected costs of production on hyperthermia systems completed and sold in the three month period ended March 31, 2015.

Gross Margin

Our gross margin and gross margin percentage has fluctuated from period to period depending on the mix of revenues reported for the period and the type and configuration of the hyperthermia systems sold, if any, during the period.  Our total gross margin was $626,727, or approximately 66% of total revenues, for the three months ended June 30, 2015, and $493,642, or approximately 41%, for the three months ended June 30, 2014.  Our total gross margin was $986,615, or approximately 47% of total revenues, for the six months ended June 30, 2015, and $1,170,618, or approximately 43%, for the six months ended June 30, 2014.  The increase in gross margin percentage in the three months and six months ended June 30, 2015 compared to the three months and six months ended June 30, 2014 resulted primarily from the discontinuance of hyperthermia sales as of April 1, 2015.  Hyperthermia products have historically had lower margins than our MicroThermX products, and with their declining sales, we have been able to generate higher gross margins.  With costs on these hyperthermia systems sometimes being higher than the selling prices, a negative gross margin on sales of hyperthermia systems resulted in the quarter ended March 31, 2015.  Also, at lower production volumes, we are less able to fully absorb certain fixed operating costs that are included in cost of sales, thus decreasing our gross profit percentage.  Higher gross margins are expected in the future, following our April 1, 2015 sale of all assets related to the hyperthermia product line, and if sales volume of MicroThermX product increases.  This is evidenced in our 66% total gross margin for the three months ended June 30, 2015, our first quarter that did not include sales of hyperthermia products.

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Operating Costs and Expenses

Research and Development Expenses – Research and development expenses include expenditures for new product development and development of enhancements to existing products.  Research and development expenses for the three months ended June 30, 2015 were $567,930 compared to $614,395 for the three months ended June 30, 2014, a decrease of $46,465 or approximately 8%.  Research and development expenses for the six months ended June 30, 2015 were $1,064,565 compared to $1,135,659 for the six months ended June 30, 2014, a decrease of $71,094 or approximately 6%.

Selling, General and Administrative Expenses – In the current three months and six months ended June 30, 2015, the Company incurred significant non-recurring expenses related to restructuring, reorganization, rebranding, shareholder litigation (see note 13), and pursuing potential merger and acquisition opportunities.   These non-recurring expenses totaled approximately $375,000 and $835,000 for the three and six month periods ended June 30, 2015.  Including these non-recurring expenses, total selling, general and administrative expenses were $2,889,795 for the three months ended June 30, 2015 compared to $2,027,133 for the three months ended June 30, 2014, an increase of $862,662, or approximately 43%.  Total selling, general and administrative expenses were $5,611,659 for the six months ended June 30, 2015 compared to $3,742,414 for the six months ended June 30, 2014, an increase of $1,869,245, or approximately 50%.   Excluding non-recurring expenses, we increased spending over prior periods as we execute on critical strategic initiatives including, but not limited to, clinical studies, new sales and marketing programs, and business development efforts reflecting a higher level of activity to drive higher sales of MicroThermX products.

Other Income (Expense)

During the three months and six months ended June 30, 2015 and 2014, other income (expense) was not material to our operations.

Liquidity and Capital Resources

From inception through June 30, 2015, we have generated an accumulated deficit of $62,275,280 where our operating revenues have been insufficient to cover our operating expenses.  We have financed our operations primarily through the sale of our common stock.  As of June 30, 2015, we had cash and cash equivalents of $865,516, comprised primarily of money market funds and savings accounts.  We will require additional capital to fund our operations.

As of June 30, 2015, we had current liabilities totaling $2,405,835, comprised of accounts payable, accrued liabilities, short-term notes payable, and customer deposits.  As of June 30, 2015, we had no long-term liabilities.

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As of June 30, 2015, our total stockholders’ equity was $1,781,917.  This is below the $2,500,000 standard required by NASDAQ for continued listing on the NASDAQ Capital Market. Although we have not received a notification from NASDAQ of non-compliance, we have filed a registration statement (see “S-1 Registration Statement”, below) to raise additional capital to fund future operations.

On May 15, 2015 the Company entered into a commercial real estate purchase contract wherein it agreed to sell its primary headquarters and manufacturing facilities located in Salt Lake City, Utah.  Per the terms of the contract the closing date of the sale will take place in early August, 2015.  The sale will result in proceeds to the Company of approximately $975,000 after commissions and closing costs.  The Company will be required to pay off the $750,000 principal balance plus accrued interest and early payment penalty on the promissory note from the sale proceeds.  After paying off the promissory note the net proceeds from the sale of the facilities will be approximately $200,000.

Following the closing date, the purchaser of the facilities will lease the building back to the Company rent free through October 23, 2015.  The Company has entered into a lease agreement to rent new facilities in Salt Lake City and plans to take occupancy of the leased facilities in October 2015.

Short-Term Notes Payable

Included in notes payable at March 31, 2015 is a promissory note with an asset lender dated February 24, 2015 with a principal balance of $750,000.  The note is secured by the Company’s headquarters and manufacturing facility.  During the one-year term of the note, monthly payments of interest only at Prime Rate plus 6% are required, with the principal due on February 24, 2016.  The note is recorded net of discount of $17,675 at June 30, 2015, which consists of debt issuance costs deferred and amortized over the life of the loan.

Also included in notes payable at June 30, 2015 is an unsecured finance agreement note with a principal balance of $88,599, payable in monthly installments of $11,277, including interest at 4.85%, through February 2016.

Shelf Registration Statement

On September 28, 2012, we filed a universal shelf registration statement with the SEC for the issuance of common stock, preferred stock, warrants, senior debt, subordinated debt and units up to an aggregate amount of $50.0 million (the “2012 Shelf Registration Statement”).  On October 11, 2012, the universal shelf registration statement was declared effective by the SEC.  We have completed two stock offerings utilizing the 2012 Shelf Registration Statement, from April 2013 through March 31, 2015, and we received total net proceeds of approximately $9 million from these offerings.  In the future, we may periodically offer one or more of these securities in amounts, prices and terms to be announced when and if the securities are offered.  At the time any of the securities covered by the registration statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering.

S-1 Registration Statement

On April 23, 2015 we filed a registration statement on Form S-1 with the SEC, as amended on May 13, 2015, to raise additional capital.  No assurance can be given that such offering will be consummated, or if consummated, will raise the maximum amount contemplated thereunder.

Cash Flows from Operating, Investing and Financing Activities

During the six months ended June 30, 2015, we used net cash of $5,371,094 in operating activities, as a result of our net loss of $5,735,121, increases in receivables of $355,190 and other current assets of $257,869, and decreases in accrued liabilities of $414,694, customer deposits of $21,890 and deferred revenue of $54,218, partially offset by non-cash expenses totaling $495,793, decrease in inventories of $695,883 and increase in accounts payable of $276,212.

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During the six months ended June 30, 2014, we used net cash of $2,612,460 in operating activities, as a result of our net loss of $3,706,684, non-cash gain of $30, increase in other assets of $35,744, and decreases in customer deposits of $305,639 and deferred revenue of $299,452, partially offset by non-cash expenses totaling $664,480, decreases in receivables of $463,482 and inventories of $244,702, and increases in accounts payable of $336,748 and accrued liabilities of $25,677.

Net cash used in investing activities for the six months ended June 30, 2015 was $170,055, resulting from the purchase of property and equipment.  Net cash used in investing activities for the six months ended June 30, 2014 was $47,738, comprised of the purchase of property and equipment of $49,763, partially offset by proceeds from the disposition of property and equipment of $2,025.

Net cash provided by financing activities for the six months ended June 30, 2015 was $812,087, comprised of net proceeds from notes payable of $844,581, partially offset by payment of notes payable of $32,494.  Net cash used in financing activities for the six months ended June 30, 2014 was $27,784, comprised of payment of stock offering costs of $127,548 and payments on notes payable of $32,768, partially offset by proceeds from the sale of common stock of $50,067 and net proceeds from notes payable of $82,465.

We do not believe that our current cash and cash equivalents will be sufficient to fund our operations for the next twelve months and that we will be required to raise additional capital. In April 2015, we filed a registration statement on Form S-1, as amended on May 13, 2015, for review by the SEC, in anticipation of offering company securities for sale.

We cannot be certain that any financing will be available when needed or will be available on terms acceptable to us.  If we raise equity capital, our stockholders will be diluted.  Insufficient funds may require us to delay, scale back or eliminate some or all of our programs designed to facilitate the commercial introduction of our systems or entry into new markets.

As of June 30, 2015, we had no significant commitments for the purchase of property and equipment.

We had no material off balance sheet arrangements as of June 30, 2015.

Critical Accounting Policies

The following is a discussion of our critical accounting policies and estimates that management believes are material to an understanding of our results of operations and which involve the exercise of judgment or estimates by management.

Revenue Recognition:  Revenue from the sale of cancer treatment systems is recognized when a purchase order has been received, the system has been shipped, the selling price is fixed or determinable, and collection is reasonably assured.  Most system sales are F.O.B. shipping point; therefore, shipment is deemed to have occurred when the product is delivered to the transportation carrier.  Most system sales do not include installation.  If installation is included as part of the contract, revenue is not recognized until installation has occurred, or until any remaining installation obligation is deemed to be perfunctory.  Some sales of systems may include training as part of the sale.  In such cases, the portion of the revenue related to the training, calculated based on the amount charged for training on a stand-alone basis, is deferred and recognized when the training has been provided.  The sales of our cancer treatment systems do not require specific customer acceptance provisions and do not include the right of return except in cases where the product does not function as warranted by us.  To date, returns have not been significant.

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Revenue from the sale of disposable devices is recognized when a purchase order has been received, the devices have been shipped, the selling price is fixed or determinable, and collection is reasonably assured.  Currently, our customers are not required to purchase a minimum number of disposable devices in connection with the purchase of our systems.

Revenue from training services is recorded when an agreement with the customer exists for such training, the training services have been provided, and collection is reasonably assured.

Revenue from equipment rental under an operating lease is recognized when billed in accordance with the lease agreement.

Our revenue recognition policy is the same for sales to both related parties and non-related parties.  We provide the same products and services under the same terms for non-related parties as with related parties.

Sales to distributors are recognized in the same manner as sales to end-user customers.

Deferred revenue and customer deposits include amounts from service contracts as well as cash received for the sales of products, which have not been shipped.

Inventory Reserves:  We maintain a reserve for obsolete inventories to reduce excess and obsolete inventories to their estimated net realizable value.  This reserve is a significant estimate and we periodically review our inventory levels and usage, paying particular attention to slower-moving items. If projected sales do not materialize or if our systems do not receive increased market acceptance, we may be required to increase the reserve for obsolete inventories in future periods.

Product Warranty:  We provide limited product warranties on our systems.  These warranties vary from contract to contract, but generally consist of parts and labor warranties for one year from the date of installation.  To date, expenses resulting from such warranties have not been material.  We record a warranty expense at the time of each sale.  This reserve is estimated based on prior history of service expense associated with similar units sold in the past.

Allowance for Doubtful Accounts:  We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments.  This allowance is a significant estimate and is regularly evaluated by us for adequacy by taking into consideration factors such as past experience, credit quality of the customer base, age of the receivable balances, both individually and in the aggregate, and current economic conditions that may affect a customer’s ability to pay.  If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

Debt Issuance Costs:  We defer debt issuance costs and amortize them to expense over the term of the related notes payable.  Notes payable are recorded net of unamortized debt issuance costs in our condensed balance sheets.

Stock-based Compensation:  Stock-based compensation cost  of stock options and other stock-based awards to employees and directors is measured at the grant date based on the estimated value of the award granted, using the Black-Scholes option pricing model, and recognized over the period in which the award vests.  For stock awards no longer expected to vest, any previously recognized stock compensation expense is reversed in the period of termination.  The stock-based compensation expense has been allocated to the various categories of operating costs and expenses in a manner similar to the allocation of payroll expense.  The Black-Scholes valuation model utilizes inputs that are subject to change over time, including the volatility of the market price of our common stock, risk free interest rates, requisite service periods and assumptions made by us regarding the assumed life and vesting of stock options and stock-based awards.  As new options or stock-based awards are granted, additional non-cash compensation expense will be recorded by us.

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Income Taxes:  We account for income taxes using the asset and liability method.  Under the asset and liability method, deferred tax assets and liabilities are recognized for the future consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

We maintain valuation allowances where it is more likely than not that all or a portion of a deferred tax asset will not be realized.  Changes in valuation allowances are included in our income tax provision in the period of change.  In determining whether a valuation allowance is warranted, we evaluate factors such as prior earnings history, expected future earnings and our ability to carry back reversing items within two years to offset income taxes previously paid.

To the extent that we have the ability to carry back current period taxable losses to offset income taxes previously paid, we record an income tax receivable and a current income tax benefit.

Recent Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs.  Under this new standard, debt issuance costs reported on our balance sheet are shown as a direct deduction from the related debt liability rather than as an asset.  This ASU is effective January 1, 2016, with early adoption permitted.  Retrospective application to prior periods is required.   We adopted the ASU effective January 1, 2015, with the only impact being the classification of certain amounts within our balance sheet and no impact on our results of operations.  Prior periods were not impacted by the adoption of the ASU.

FORWARD-LOOKING STATEMENTS

With the exception of historical facts, the statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other parts of this quarterly report on Form 10-Q are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which reflect our current expectations and beliefs regarding our future results of operations, performance and achievements.  These statements are subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not materialize.  These forward-looking statements include, but are not limited to, statements concerning:

· our belief about the market opportunities for our products;

· our anticipated financial performance and business plan;

· our expectations that we will reach agreements with additional international distribution firms;

· our belief that the level of our operating expenses, including selling, general and administrative expenses, will increase;

· our belief that we will have higher gross margins in the future;

· our belief that our operating results, revenue and operating expenses may fluctuate in the future from year to year as well as from quarter to quarter; and

· our belief that we will be able to raise additional capital to fund our operations.

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We wish to caution readers that the forward-looking statements and our operating results are subject to various risks and uncertainties that could cause our actual results and outcomes to differ materially from those discussed or anticipated, including the factors set forth in Item 1A – “Risk Factors” in our Transition Report on Form 10-K for the period ended December 31, 2014 and our other filings with the SEC.  We also wish to advise readers not to place any undue reliance on the forward-looking statements contained in this report, which reflect our beliefs and expectations only as of the date of this report.  We assume no obligation to update or revise these forward-looking statements to reflect new events or circumstances or any changes in our beliefs or expectations, other than as required by law.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

There are no material changes to our market risk as described in our Transition Report on Form 10-K for the period ended December 31, 2014.

Item 4.    Controls and Procedures

Evaluation of disclosure controls and procedures.

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our management including our principal executive officer and principal accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”).  Based on this evaluation, the principal executive officer and principal accounting officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal accounting officer, in a manner that allows timely decisions regarding required disclosure.

Changes in internal controls over financial reporting.

There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1.    Legal Proceedings

See Note 13 to the Company’s Notes to Condensed Financial Statements for a description of material pending legal proceedings to which the Company is subject.

Item 1A.   Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors reported in our Transition Report on Form 10-K for the period ended December 31, 2014.

If our stockholders’ equity continues to remain below $2.5 million, our common stock may be subject to delisting from the NASDAQ Stock Market.

Shares of our common stock are listed on the NASDAQ Capital Market (“Nasdaq”) under the symbol “PRSN”. We are required to comply with Nasdaq’s listing standards in order to maintain the listing of our common stock on the exchange. Nasdaq has the authority pursuant to Nasdaq Rule 5550(b)(1) to delist our common stock if our stockholders’ equity falls below $2.5 million. As of June 30, 2015, our stockholders’ equity is $1.8 million, which is below the minimum requirement. While we have not yet received notice from Nasdaq that we no longer meet the stockholders’ equity rule, we expect to receive such notice.

We are actively monitoring our stockholders’ equity and will consider any and all options available to us to achieve compliance. To the extent that we are unable to resolve the listing deficiency, there is a risk that our common stock may be delisted from Nasdaq and would likely trade only on the over-the-counter market (the “OTC”). If our common stock were to trade on the OTC, selling our common stock could be more difficult because smaller quantities of shares would likely be bought and sold, transactions could be delayed, and security analysts’ coverage may be reduced. In addition, in the event our common stock is delisted, broker-dealers transacting in our common stock would be subject to certain additional regulatory burdens, which may discourage them from effecting transactions in our common stock, thus further limiting the liquidity of our common stock and potentially resulting in lower prices and larger spreads in the bid and ask prices for our common stock.

Item 5.    Other Information

On May 15, 2015 the Company entered into a commercial real estate purchase contract with the World Mission Society Church of God, wherein it agreed to sell its primary headquarters and manufacturing facilities located at 2188 West 2200 South, in Salt Lake City, Utah.  Per the terms of the contract the closing date of the sale will take place in early August, 2015.  The sale will result in proceeds to the Company of approximately $975,000 after commissions and closing costs.  The Company will be required to pay off the $750,000 principal balance plus accrued interest and early payment penalty on the promissory note from the sale proceeds.  After paying off the promissory note the net proceeds from the sale of the facilities will be approximately $200,000.  Following the closing date, the purchaser of the facilities will lease the building back to the Company rent free through October 23, 2015.

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Item 6.    Exhibits

The following exhibits are filed as part of this report:

Exhibit No.	Description of Exhibit
3.1	Second Certificate of Amendment to Amended and Restated Certificate of Incorporation of BSD Medical Corporation.   Incorporated by reference to Exhibit 3.1 to the Perseon Corporation Form 8-K, filed February 24, 2015.
3.2	Third Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Perseon Corporation.   Incorporated by reference to Exhibit 3.1 of the Perseon Corporation Form 8-K, filed June 22, 2015.
10.22	Asset Purchase Agreement dated April 1, 2015 by and among Perseon Corporation and Pyrexar Medical, Inc.  Incorporated by reference to Exhibit 10.1 to the Perseon Corporation Form 8-K, filed April 1, 2015.
10.23	Short Term Lease between Perseon Corporation and Pyrexar Medical, Inc.  Incorporated by reference to Exhibit 10.2 to the Perseon Corporation Form 8-K, filed April 1, 2015.
10.24	Sublease Agreement dated May 14, 2015 between the Company and EnergySolutions, LLC.
10.25	Commercial Real Estate Purchase Contract dated May 15, 2015 between the Company and the World Mission Society Church of God.
32.1	Certification of Principal Executive Officer Required Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Principal Accounting Officer Required Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase

** The XBRL related information in Exhibit 101 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.

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SIGNATURES

Pursuant to the requirements 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.

		PERSEON CORPORATION
Date:	July 15, 2015	/s/ Clinton E. Carnell Jr.
		Clinton E. Carnell Jr.
		Chief Executive Officer (Principal Executive Officer)
Date:	July 15, 2015	/s/ William S. Barth
		William S. Barth
		Chief Financial Officer (Principal Accounting Officer)

25

EX-10.24

Exhibit 10.24

Sublease Agreement between the Company and EnergySolutions, LLC

SUBLEASE AGREEMENT

This Sublease Agreement (the “Sublease”) is executed this 14th day of May, 2015 (“Effective Date”), by and between EnergySolutions, LLC, a Utah limited liability company (“Sublessor”), and Perseon Corporation, a Delaware corporation (“Sublessee”)

WITNESSETH:

WHEREAS, Gateway Office 6, L.C., a Utah limited liability company (“Prior Landlord”) and Sublessor entered into a Lease Agreement dated January 3, 2012, a copy of which is attached hereto as Exhibit A, as amended by the certain First Amendment to Lease Agreement dated June 26, 2013 and that certain Agreement and Acknowledgment Regarding Commencement of Lease dated June 26, 2013 (as amended, the “Lease”), with respect to the entire first floor and the entire second floor of the building located at 460 West 50 North, Salt Lake City, Utah 84101 (the “Building”)

WHEREAS, Sublessor desires to sublease approximately 10,057 rentable square feet on the west side of the first floor of the Building, as shown on Exhibit B attached hereto (the “Subleased Premises”), under and subject to the terms of the Lease, and Sublessee desires to lease the Subleased Premises from Sublessor;

WHEREAS, any capitalized terms that are used, but not defined herein, shall have the meanings ascribed to such terms in the Lease.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto covenant and agree as follows:

1.Lease.  Effective upon the Sublease Commencement Date (defined below), Sublessor subleases to Sublessee, and Sublessee hereby expressly assumes and agrees to perform all obligations and covenants of Sublessor under the Lease with respect to the Subleased Premises, with the exception of those items specifically detailed in this Sublease.  This Sublease and Sublessee’s rights under this Sublease shall at all times be subject and subordinate to the Lease.

2.Term.  The term of this Sublease shall (i) commence on the earlier of (a) the date that Landlord, Sublessor and Sublessee substantially complete the Sublessee Improvements (as later defined herein); and (b) the date that is four months from the date of this Sublease (the “Sublease Commencement Date”), and (ii) continue through and expire on December 31, 2019 (the “Sublease Term”).

3.Sublease Term Rent.

a.Sublease Annual Rent.  Sublessee agrees to pay to Sublessor annual rent for occupancy and use of the Subleased Premises (the “Sublease Annual Rent”), at such place as Sublessor may designate, without prior demand therefore and without any deduction or set off whatsoever.  Sublease Annual Rent for the first twelve (12) months of the Sublease Term shall be $201,140.00.  Sublease Annual Rent shall be due and payable in twelve (12) equal monthly installments to be paid in advance on or before the first day of each calendar month during the Sublease Term.  Commencing on the first anniversary of the Sublease Commencement Date and on each anniversary of the Sublease Commencement Date thereafter during the Sublease Term, Sublease Annual Rent shall escalate by three percent (3%) of the prior year’s Sublease Annual Rent.

b.Pre-paid Rent.  On the Effective Date, Sublessee shall deliver to Sublessor the pre-paid Sublease Annual Rent for the first month of the Sublease Term in the amount of $16,761.67 (“Pre-Paid Rent”).  Absent a breach of the Sublease by Sublessor, including Sublessor’s failure to deliver the Sublease Premises to Sublessee on the Delivery Date (defined below), or Sublessor’s failure to approve the Sublessee’s Plans (defined below), the Pre-paid Rent shall be nonrefundable.  If the Sublessor breaches the Sublease, Sublessee shall be entitled to recover from Sublessor the Pre-paid Rent for that portion of the Sublease Term that had not elapsed at the time the breach occurred.

c.Assignment of Rent.  Sublessor unconditionally assigns to Landlord any and all payments due from Sublessee to Sublessor under the Sublease (the “Rents”).  Sublessor acknowledges that this assignment is present, absolute and unconditional and Landlord shall therefore have the right to collect the Rents and to apply them in payment of any sums payable by Sublessor under the Lease.  However, Sublessor shall have a license to collect the Rents until the occurrence of a default by Sublessor under the Lease.  If a default occurs, Sublessor’s right to collect the Rents shall be suspended until the default is cured.  During such period, Landlord shall have the right to collect the Rents and apply them toward Sublessor’s obligations under the Lease.  Landlord’s acceptance of any payment from Sublessee as a result of any default does not release Sublessor from liability under the terms, covenants, conditions, provisions or agreements under the Lease.  Upon receiving from Landlord a written notice of Sublessor’s default and a written demand for payment of Rents, Sublessee shall pay Rents to the Landlord until Landlord provides written notice that the Sublessor’s default has been cured.  Sublessee may conclusively rely upon Landlord’s representations of Sublessor’s default and need not conduct its own investigation.  All payments by Sublessee to Landlord in response to a demand from Landlord shall be deemed payments by Sublessee to Sublessor under this Sublease.

d.Payment of Rent.  Sublessee shall pay Rents to Sublessor at such place as Sublessor may designate from time to time in writing unless and until it is notified by Landlord in writing that Sublessee shall begin paying rents directly to Landlord, in which event Sublessee shall pay the Rents to Landlord at the following address:

West Salt Lake Acquisitions Partners, LLC

P.O. Box 396021

San Francisco, CA 94139-6021

e.Past Due Sums.  If Sublessee fails to pay, when the same is due and payable, any Rents, such unpaid amounts shall bear interest from the due date thereof to the date of payment at a fluctuating rate equal to two percent (2%) per annum above the Prime Rate.  For purposes of this Sublease, “Prime Rate” means the prime rate or base rate reported in the Money Rates column or section of The Wall Street Journal as being the prime rate or base rate on corporate loans at large U.S. money center commercial banks (whether or not such rate has actually been charged by any such bank).  If The Wall Street Journal ceases publication of the prime rate or the base rate, “Prime Rate” shall mean the rate of interest from time to time announced by the national bank in the United States doing business in Utah having the largest asset value as its prime rate or base rate.  In addition thereto, Sublessee shall pay a sum of five percent (5%) of such unpaid Rents as a service fee.  Only one service fee shall be charged for each instance of unpaid Rents.  Notwithstanding the foregoing, however, Sublessor’s right concerning such interest and service fee shall be limited by the maximum amount which may properly be charged by Sublessor for such purposes under applicable law.

4.Construction of Subleased Premises.

a.Sublessor represents to Sublessee that all of the work described in the Lease, including the Work Letter attached to the Lease as Exhibit C, as the “Landlord’s Construction Obligation-Shell” and the work described on the attached Exhibit C (“Landlord/Sublessor Work”) shall be completed by Landlord or Sublessor before the Sublease Commencement Date.  Sublessor and Sublessee shall collaborate in good faith in preparation of complete plans and specifications (the “Sublessee’s Plans”) for the construction of the improvements generally described on the attached Exhibit D (“Sublessee Improvements”).  Sublessee shall then proceed promptly to prepare Sublessee’s Plans and shall submit such plans to Sublessor for written approval (which approval shall not be unreasonably withheld, conditioned, or delayed).  The approval by Sublessor of Sublessee’s Plans shall in no way create any responsibility or liability on the part of Sublessor for their completeness, design sufficiency or compliance with any and all laws, rules and regulations of federal, state, county and municipal agencies or authorities.  Any objections by Sublessor and the reason thereof shall be given to Sublessee’s Plans as proposed.  If Sublessee fails within thirty (30) days after receiving the necessary information from Sublessor to furnish Sublessee’s Plans to Sublessor as proposed, Sublessor shall have the right to terminate the Sublease upon written notice to Sublessee (without prejudice to any right Sublessor may have against Sublessee for damages arising out of Sublessee’s failure).  If Sublessor fails to object to Sublessee’s Plans within ten (10) business days after receipt, Sublessor will be deemed to have approved Sublessee’s Plans.  If Sublessor provides written notice of any objection, incomplete or inadequate aspects of the Sublessee’s Plans, Sublessor and Sublessee will meet and attempt to resolve and agree on any final changes to be incorporated into the Sublessee’s Plans within 7 days of Sublessee’s receipt of Sublessor’s written notice.  If Sublessor and Sublessee are unable, in good faith, to agree on final changes within 30 days, Sublessee will have the right to terminate this Sublease and receive a refund of the Pre-paid Rent.  Sublessee agrees that by entering into possession of the Subleased Premises pursuant to the terms of this Sublease and the Lease, Sublessee will have thereby accepted all of the construction work performed by Landlord and/or Sublessor and will have thereby accepted the Subleased Premises in their then condition and hereby waives any claim against Landlord and Sublessor thereafter arising out of the condition of improvements to the Subleased Premises.

b.Sublessor will deliver the Sublease Premises to Sublessee on or before the seventh day following Landlord’s written consent to this Sublease (“Delivery Date”).  After the Delivery Date and once the Sublessee’s Plans are approved, Sublessee will enter into a construction contract to permit and complete the construction of the Sublessee Improvements.  Sublessee will request Sublessor’s approval of all material changes to the Sublessee’s Plans, which approval Sublessor will not unreasonably withhold, condition, or delay.  The Sublease Commencement Date will be extended on a day-for-day basis for each day after the Sublease Commencement Date that Sublessor actually completes the Landlord/Sublessor Work.  If Sublessor fails to obtain Landlord’s consent to this Sublease within thirty (30) days after the date of this Sublease, Sublessee will have the right to terminate this Sublease and receive a refund of the Pre-paid Rent.

5.Finish Allowance.  Sublessor shall provide a tenant finish allowance (the “Sublessee Finish Allowance”) to Sublessee to partially reimburse Sublessee for Sublessee’s performance of the Sublessee Improvements in accordance with the requirements of this Sublease.  The Sublessee Finish Allowance shall be an amount equal to $321,824.00.  In no event shall the Sublessee Finish Allowance be used to reimburse Sublessee for equipment, furniture, furnishings, or any special decorator items beyond the Building Standard Finishes set forth on Exhibit F to the Lease.  The Sublessor shall use commercially reasonable efforts to have Landlord pay the Sublessee Finish Allowance directly to Sublessee, otherwise the Sublessee Finish Allowance shall be paid by Sublessor to Sublessee within five business days after its receipt of the Sublessee Finish Allowance from Landlord, subject to and in accordance with the provisions of Exhibit C of the Lease applicable to the Tenant Finish Allowance.  In the event the amount of the Sublessee Finish Allowance is insufficient to cover the actual costs of Sublessee Improvements, Sublessee shall be responsible to pay such additional costs.

6.Security Deposit.  Simultaneous with execution of this Sublease, Sublessee shall deposit with Sublessor cash in the amount of $18,865.40 (the “Security Deposit”).  If Sublessee has faithfully performed all of its obligations under the Sublease, Sublessor shall return the Security Deposit to Sublessee within thirty (30) days after expiration of the Sublease Term.  If Sublessee fails to timely pay or perform any obligation under this Sublease, Sublessor may, upon providing Sublessee with five (5) business days prior written notice, but otherwise prior to, concurrently with or subsequent to, exercising any other right or remedy, draw on the Security Deposit, in full or partial amounts, for the payment of any monetary obligation due under this Sublease, or to compensate Sublessor for any other expense, loss or damage which Sublessor may incur by reason of Sublessee’s failure including any damage or deficiency in the resubletting of the Subleased Premises.  If all or any portion of the Security Deposit is so used, applied or retained during the Sublease Term, Sublessee shall, within five (5) business day of receiving written notice, deposit with Sublessor cash an amount sufficient to restore the Security Deposit to the original amount.  The Security Deposit is not a limitation on Sublessor’s damages or other rights under this Sublease, a payment of liquidated damages or prepaid rent and shall not be applied by Sublessee to the rent for the last (or any) month of the term of this Sublease, or to any other amount due under this Sublease.  If this Sublease is terminated due to any default of Sublessee, any portion of the Security Deposit remaining at the time of such termination shall immediately inure to the benefit of Sublessor as partial compensation for the costs and expenses incurred by Sublessor in connection with this Sublease, and shall be in addition to any other damages, if any, to which Sublessor is otherwise entitled.

7.Right of First Refusal.

a.Subject to the right of first refusal rights previously granted by Sublessor to Woodside Group, LLC (which rights shall be senior in priority to the right of first refusal granted to Sublessee herein), if, but only if, Sublessee is not in default after notice and expiration of any applicable grace period, Sublessee shall have a one-time right of first refusal (the “ROFR”) on any remaining space that is or becomes available for lease on the first floor of the Building during the Sublease Term (“ROFR Space”).  If Sublessor receives a bona fide offer on terms acceptable to Sublessor to lease any ROFR Space from any third party, Sublessor shall notify Sublessee in writing of its receipt of such offer, including a copy of such offer (“Sublessor’s ROFR Notice”).  Sublessee shall have fifteen (15) days from receipt of Sublessor’s ROFR Notice to exercise its right to lease all of such ROFR Space on the same material economic terms as those set forth in such third-party offer.  To the extent that Sublessee fails to notify Sublessor, or elects not to exercise such ROFR in writing within such 15-day period, Sublessor may then proceed to enter into a lease with such third party on the terms set forth in Sublessor’s ROFR Notice.  If Sublessor enters into a lease based on the terms of the ROFR, Sublessee shall have no further ROFR rights with respect to any future ROFR Space that may become available in the Building, from time to time during the Sublease Term.  If Sublessor does not enter into a lease based on the terms of the ROFR, Sublessee’s ROFR rights will continue.  If Sublessee exercises its right to lease ROFR Space in accordance with this Section 7, then the following terms shall apply:

i.Sublessor shall deliver the ROFR Space in the condition described in, and on the terms of, the Sublessor’s ROFR Notice and on the availability date set forth in Sublessor’s ROFR Notice (the “ROFR Commencement Date”).

ii.The term of the lease of ROFR Space shall commence upon the ROFR Commencement Date and the term shall end on the expiration of the Sublease Term.

iii.All rent and all other sums and charges imposed under the lease with respect to the ROFR Space shall commence on the date set forth in the Sublessor’s ROFR Notice.

b.Sublessor and Sublessee shall cause a lease to be executed pursuant to the rights granted by this Section to be a new and separate lease agreement between Sublessor and Sublessee, together with any additional prepaid rent and/or Security Deposit, as Sublessor shall determine in its reasonable discretion at that time based upon the terms specified in the ROFR.

c.Sublessee’s right under this Section shall be suspended during periods that Sublessee is in default under this Lease, after notice and expiration of any applicable grace period.

8.Termination.

a.If at any time prior to the expiration of the term of the Sublease, the Lease shall terminate for any reason (or Sublessor’s right to possession shall terminate without termination of the Lease), Sublessee agrees, at the election and upon written demand of Landlord prior to the termination of the Lease, and not otherwise, to attorn to Landlord for the remainder of the term of the Sublease, such attornment to be upon all of the terms and conditions of the Lease, amended by this Sublease, as to the Sublease Premises.  Upon demand of Landlord, however, Sublessee agrees to execute, from time to time, documents in confirmation of the foregoing provisions satisfactory to Landlord in which Sublessee shall acknowledge such attornment and shall set forth the terms and conditions of its tenancy.  Nothing contained in this paragraph shall be construed to impair or modify any right otherwise exercisable by Landlord, whether under the Lease, any other agreement or by law.

b.Landlord shall not (i) be liable to Sublessee for any act, omission or breach of the Sublease by Sublessor, (ii) be subject to any offsets or defenses which Sublessee might have against Sublessor, (iii) be bound by any rent or additional rent which Sublessee might have paid in advance to Sublessor, or (iv) be bound to honor any rights of Sublessee in any security deposit or prepaid rent made with Sublessor, except to the extent Sublessor has turned over such security deposit or prepaid rent to Landlord.  Sublessor hereby agrees that in the event of the termination of the Lease, Sublessor shall immediately pay or transfer to Landlord any security deposit, prepaid rent or other sums then held by Sublessor.

9.Additional Services.  Should Landlord furnish additional services to Sublessee in addition to those provided under the Lease, Sublessor consents to Landlord billing Sublessee directly, without notice to Sublessor, Should Sublessee fail to pay said amounts as additional rent under the Lease, Sublessor agrees to pay such amounts to Landlord upon written demand.  A failure by Sublessor to pay upon demand shall constitute a payment default under the Lease.

10.Use.  Sublessee shall use and occupy the Subleased Premises for general office purposes and for light assembly, including related shipping and receiving, only and for no other purpose whatsoever without the prior written consent of Sublessor and Landlord.

11.Parking.  Sublessee shall have the use of and be obligated to pay for the unreserved parking spaces as follows:

a.10 stalls in the Gateway Phase H Parking Structure below the Old Navy store at an initial cost of $65.00 per stall per month.

b.30 stalls in the North Surface Lot at an initial cost of $55.00 per stall per month.

During the Sublease Term, the price per parking stall may be escalated pursuant to the provisions of Section 1.1(d) of the Lease.

12.Signage.  Sublessee may install, operate and maintain, all at its own cost and expense (including the expense of the removal of such signage at the end of the Sublease Term), non-exclusive “eye-brow” signage between the first and second floors on the western side of the building above the Subleased Premises, provided such signage shall in all events comply with applicable laws and ordinances.  Subject to approval of Landlord, Sublessee may also install, at its own cost and expense, its logo signs on the entry doors providing entrance to the Subleased Premises.

13.Certificate Recognizing the Sublease Commencement Date.  Within thirty (30) days after the occurrence of the Sublease Commencement Date, Sublessor and Sublessee shall execute and deliver to each other the Certificate attached hereto as Exhibit E to confirm the date on which the Sublease Commencement Date occurred, and the receipt of such Certificate shall execute and return the same within ten (10) days after receiving it.

14.Notice.  Notices given hereunder shall be given as required under the Lease.  However, notices may also be provided by email so long the notice requirements under the Lease are also satisfied no later than the following business day.  Notices shall be given to the parties at the following addresses:

SUBLESSOR:	EnergySolutions, LLC
	423 West 300 South, Suite 200
	Salt Lake City, UT 84101
	Attention:  General Counsel
	Email:  rgworkman@energysoiutions.com
SUBLESSEE:	Prior to commencement of the term of Sublease:
	Perseon Corporation
	2188 West 2200 South
	Salt Lake City, Utah 84119
	Attention:  William S. Barth
	Email:  bbarth@perseonmedical.com
	Following commence of the term of Sublease:
	Perseon Corporation
	460 West 50 North
	Salt Lake City, Utah 84101
	Attention:  William S. Barth
	Email:  bbarth@perseonmedical.com

15.Indemnification.  Sublessor and Sublessee agree to indemnify and hold Landlord harmless from and against any loss, cost, expense, damage or liability, including reasonable attorneys’ fees, incurred as a result of a claim by any person or entity (i) that it is entitled to a commission, finder’s fee or the like payment in connection with the Sublease or (ii) relating to or arising out of the Sublease or any related agreements or dealings.

16.Assignment and Subletting.  Sublessee shall have no right to assign the Sublease or further sublet the Subleased Premises without the prior written consent of Sublessor and Landlord which consent may not be unreasonably withheld.  If for any proposed assignment or sublease Sublessee receives rent or other consideration, either initially or over the term of the assignment or sublease, in excess of the rent called for hereunder, or, in case of the sublease of a portion of the Subleased Premises, in excess of such rent fairly allocable to such portion, after deduction for Sublessee’s reasonable assignment or subletting cost (to include brokerage commissions, legal expenses and marketing expenses), Sublessee shall pay to Sublessor as additional rent hereunder fifty percent (50%) of each such payment of rent or other consideration received by Sublessee promptly within 10 days after its receipt.

17.Brokers.  Each party warrants to the other that it has had no dealings with any broker or agent in connection with this Sublease other than International Commercial Properties on behalf of the Sublessee and CBRE, Inc. on behalf of the Sublessor, whose commissions shall be paid by Sublessor by a separate agreement.  Each party covenants to pay, hold harmless and indemnify the other party from and against any and all costs (including reasonable attorneys’ fees), expense or liability for any compensation, commissions and charges claimed by any other broker or other agent with respect to this Sublease or the negotiation thereof on behalf of such party.

18.Representations.  Sublessor represents and covenants to Sublessee as to the following matters:

a.Sublessor is not in default under the Lease and no event has occurred that, with the passage of time or providing of notice, would be deemed a default under the Lease.

b.The gross square floor area of the Leased Premises is approximately 34,494 square feet and the Commencement Date of the Lease is January 1, 2013.

c.Sublessor has paid Landlord the Management Fee in full and no portion of the Management Fee is due from the Sublessee Finish Allowance.

d.Sublessee has no obligation to compete the Sublessee Improvements in accordance with LEED standards.

19.Lease.  This Sublease is subject and subordinate to the Lease.  Except as specifically provided in this Sublease or as may be inconsistent with the terms of this Sublease, all the terms, covenants, and conditions in the Lease are applicable to this Sublease with the same force and effect as if Sublessor were the landlord under the Lease and Sublessee were the tenant under the Lease.  In the event of any conflict or inconsistency between the Lease and this Sublease as to the rights and obligations between Sublessor and Sublessee, this Sublease controls.

20.Miscellaneous.

a.This Sublease may not be amended without the prior written consent of Landlord and Sublessor.

b.If any provision of this Sublease shall be invalid or unenforceable, such provision shall be severable and such invalidity or unenforceability shall not impair the validity of any other provision of this Sublease.

c.The terms and provisions of this Sublease shall be construed in accordance with and governed by the laws of the State of Utah.

d.This Sublease may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

e.This Sublease shall be binding upon and inure to the benefit of the parties’ respective successors and assigns, subject to all agreements and restrictions contained in the Lease and this Sublease with respect to sublease, assignment or other transfer.  The agreements contained herein and the Lease constitute the entire understanding between the parties with respect to the subject matter hereof and supersede all prior agreements except for the Lease, written or oral, inconsistent herewith,

(Intentionally blank)

IN WITNESS WHEREOF, the parties hereto have executed this Sublease Agreement as of the date set forth above.

SUBLESSOR:

ENERGYSOLUTIONS, LLC

By:  _/s/ David Nilsson­ ________________

Name:  _David Nilsson_________________

Title:  _Treasurer______________________

SUBLESSEE:

PERSEON CORPORATION

By:  /s/William S. Barth

Name:  William S. Barth________________

Title:  _Chief Financial Officer___________

Exhibit A

LEASE

(See attached)

Exhibit B

Exhibit C

LANDLORD/SUBLESSOR WORK

(See attached)

Exhibit D

SUBLESSEE IMPROVEMENTS

(See attached)

Exhibit E

CERTIFICATE OF SUBLEASE COMMENCEMENT DATE

(See attached)

CERTIFICATE OF SUBLEASE COMMENCEMENT DATE

This Certificate of Sublease Commencement Date (this “Certificate”) is made and entered into as of this [___] day of [____________], 2015, by and between EnergySolutions, LLC, a Utah limited liability company (the “Sublessor”), and Perseon Corporation, a Delaware corporation (the “Sublessee”).

RECITALS

WHERAS, on May __, 2015, Sublessor and Sublessee entered into that certain Sublease Agreement (the “Sublease”) pursuant to which Sublessor agreed to sublease to Sublessee, and Sublessee agreed to sublease from Sublessee, the Subleased Premises (as defined in the Sublease).  Capitalized terms used but not defined herein shall have their respective meanings set forth in the Sublease.

WHEREAS, in accordance with Section 13 of the Sublease, Sublessor and Sublessee agreed to enter into this Certificate.

NOW THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Sublessor and Sublessee hereby agrees as follows:

1.           Sublease Commencement Date.  Under Section 13 of the Sublease, the parties hereby agree that the “Sublease Commencement Date” occurred on__________________, 2015 .

2.           This Certificate contains the entire understanding of Sublessee and Sublessor and supersedes all prior oral or written understandings relating to the subject matter set forth herein.

3.           This Certificate may be executed in counterparts each of which shall be deemed an original.  An executed counterpart of this Certificate transmitted by facsimile shall be equally as effective as a manually executed counterpart.

4.           This Certificate shall inure for the benefit of and shall be binding on each of the parties hereto and their respective successors and/or assigns.

5.           Each individual executing this Certificate does thereby represent and warrant to each other person so signing (and to each other entity for which such other person may be signing) that he or she has been duly authorized to deliver this Certificate in the capacity and for the entity set forth where she or he signs.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, Sublessor and Sublessee have entered into this Certificate as of the date first set forth above.

SUBLESSOR:

ENERGYSOLUTIONS, LLC

By:  ________________________________

Name:  _____________________________

Title:  ______________________________

SUBLESSEE:

PERSEON CORPORATION

By:  ________________________________

Name: ______________________________

Title:  ______________________________

EX-10.25

Exhibit 10.25

This is a legally binding contract.  It has been prepared by the Utah Association of REALTORS® for the use of its members only, in their transactions with clients and customers.  Parties to this Commercial Real Estate Contract (“Contract”) may agree, in writing, to alter or delete provisions of this Contract.  Seek advice from your attorney or tax advisor before entering into a binding contract.

EARNEST MONEY RECEIPT

On this 5/1/15 (“Offer Reference Date”) World Mission Society Church of God (“Buyer”) offers to purchase from BSD Medical Corporation (“Seller”) the Property described below and hereby delivers to the Brokerage or Title/Escrow Company, as Earnest Money, the amount of $5,000.00 in the form of Check which, upon Acceptance of this offer by all parties (as defined in Section 23), shall be deposited in accordance with state law.

Brokerage or Title/Escrow Company Windermere Real Estate-Utah (Salt Lake Branch) Address 1240 East 2100 South 600

Received by:		on
	(Signature above acknowledges receipt of Earnest Money)		(Date)

OFFER TO PURCHASE

1.PROPERTY (General Description):  Freestanding 20,154 SF Office Building situated on 1.24 Acres

Address 2188 W 2200 S City West Valley

County Salt Lake State of Utah, ZIP 84119

County Tax I.D. # 15-22-102-017 (the “Property”)

For a legal description (Check Applicable Box):  [ ] SEE ADDENDUM # _____________ [X] COMMITMENT FOR TITLE INSURANCE as provided in Section 7(b).

1.1INCLUDED ITEMS:  Unless excluded herein, this sale includes all fixtures presently attached to the Property.  The following personal property shall also be included in this sale and conveyed under separate Bill of Sale with warranties as to title:

1.2Excluded Items.  These items are excluded from this sale:

2.PURCHASE PRICE.  The Purchase Price for the Property is $1,000,000.00

The Purchase Price will be paid as follows:

$5,000.00	(a) Earnest Money Deposit.
$700,000.00	(b) New Loan.  Buyer will apply for one or more of the following loans:  [X] Conventional [  ] SBA [ ] Other (specify) ____________________________ Buyer shall have the right to approve the terms and conditions of the new loan as provided in Section 8(f).
$	(c) Loan Assumption Addendum (see attached Assumption Addendum if applicable)
$	(d) Seller Financing (see attached Seller Financing Addendum if applicable)
$	(e) Other (specify) ____________________________________________________________
$295,000.00	(f) Balance of Purchase Price in Cash at Settlement
$1.000,000.00	PURCHASE PRICE.  Total of lines (a) through (f)

3.SETTLEMENT AND CLOSING.  Settlement shall take place on the Settlement Deadline referenced in Section 24(c), or on a date upon which Buyer and Seller agree in writing.  “Settlement” shall occur only when all of the following have been completed:  (a) Buyer and Seller have signed and delivered to each other or to the escrow/closing office all documents required by this Contract, by the lender, by written escrow instructions or by applicable law; (b) any monies required to be paid by Buyer under these documents (except for the proceeds of any new loan) have been delivered by Buyer to Seller or to the escrow/closing office in the form of collected or cleared funds; and (c) any monies required to be paid by Seller under these documents have been delivered by Seller to Buyer or to the escrow/closing office in the form of collected or cleared funds.  Seller and Buyer shall each pay one-half (1/2) of the fee charged by the escrow/closing office for its services in the settlement/closing process.  Taxes and assessments for the current year, rents, and interest on assumed obligations shall be prorated at Settlement as set forth in this Section.  Tenant deposits (including, but not limited to, security deposits and prepaid rents) shall be paid or credited by Seller to Buyer at Settlement, Prorations set forth in this Section shall be made as of the Settlement Deadline date referenced in Section 24(c), unless otherwise agreed to in writing by the parties.  Such writing could include the settlement statement.  For purposes of this Contract, “Closing” means that (i) Settlement has been completed; (ii) the proceeds of any new loan have been delivered by the lender to Seller or to the escrow/closing office; and (iii) the applicable Closing documents have been recorded in the office of the county recorder.

Page 1 of 6 Buyer’s Initials __JAE__ Date 5/14/2015 Seller’s Initials __WSB_ Date_5/5/2015

4.POSSESSION.  Seller shall deliver physical possession to Buyer within:  [  ] _______ HOURS AFTER CLOSING; [  ] _______________ DAYS AFTER CLOSING; [X] OTHER (SPECIFY) See Addendum 1

Any rental of the Property prior to or after Closing, between Buyer and Seller, shall be by separate written agreement.

5.CONFIRMATION OF BROKERAGE FEES & AGENCY DISCLOSURE.  Buyer and Seller acknowledge prior receipt of written agency disclosure provided by their respective Buyer’s Agent or Seller’s Agent that has disclosed the agency relationships that are confirmed below.  Buyer and Seller further acknowledge that Brokerage Fees due as a result of this transaction are being paid based upon the terms of a separate written agreement.  At the signing of this Contract:

Seller’s Agent, Brett Curtis represents [X] Seller [  ] Buyer [  ] both Buyer and Seller as a Limited Agent;

Seller’s Brokerage, International Commercial Properties represents [X] Seller [  ] Buyer [  ] both Buyer and Seller as a Limited Agent;

Buyer’s Agent, Jonah Hornsby represents [  ] Seller [X] Buyer [  ] both Buyer and Seller as a Limited Agent;

Buyer’s Brokerage, Windermere Real Estate-Utah (Salt Lake Branch) represents [  ] Seller [X] Buyer [  ] both Buyer and Seller as a Limited Agent;

6.TITLE TO PROPERTY & TITLE INSURANCE

(a)   Seller represents that Seller has fee simple title to the Property and will convey good and marketable title to Buyer at Closing by:  [X] GENERAL WARRANTY DEED [  ] SPECIAL WARRANTY DEED, free of financial encumbrances except as provided under Section 10.1.

(b)   At Settlement, Seller agrees to pay for a standard-coverage owner’s policy of title insurance insuring Buyer in the amount of the Purchase Price.  The title policy shall conform with Seller’s obligations under Section 10.1 and with the Commitment for Title Insurance as agreed to by Buyer under Section 8.

(c)   [  ] BUYER ELECTS TO OBTAIN A FULL-COVERAGE EXTENDED ALTA POLICY OF TITLE INSURANCE.  The cost of this coverage (including the ALTA survey), above that of the standard-coverage Owners policy, shall be paid for at Settlement by:  [  ] BUYER [  ] SELLER [  ] OTHER .

7.SELLER DISCLOSURES.  No later than the Seller Disclosure Deadline referenced in Section 24(a), Seller shall provide to Buyer the following documents which are collectively referred to as the “Seller Disclosures”:

(a)   a Seller property condition disclosure for the Property, signed and dated by Seller;

(b)   a Commitment for Title Insurance on the Property,

(c)   a copy of all leases and rental agreements now in effect with regard to the Property together with a current rent roll;

(d)   operating statements of the Property for its last 2 full fiscal years of operation plus the current fiscal year through 04/30/2015 certified by the Seller or by an independent auditor;

(e)   copies in Seller’s possession, if any, of any studies and/or reports which have previously been done on the Property, including without limitation, environmental reports, soils studies, site plans and surveys;

(f)   written notice of any claims and/or conditions known to Seller relating to environmental problems and building or zoning code violations; and

(g)   Other (specify)                                                      

8.BUYER’S RIGHT TO CANCEL BASED ON BUYER’S DUE DILIGENCE.  Buyer’s obligation to purchase under this Contract (check applicable boxes):

(a)   [X] IS [  ] IS NOTconditioned upon Buyers approval of the content of all the Seller Disclosures referenced in Section 7;

(b)   [X] IS [  ] IS NOTconditioned upon Buyer’s approval of a physical condition inspection of the Property;

(c)   [X] IS [  ] IS NOTconditioned upon Buyers approval of a survey of the Property by a licensed surveyor (“Survey”);

(d)   [X] IS [  ] IS NOTconditioned upon Buyer’s approval of applicable federal, state and local governmental laws, ordinances and regulations affecting the Property, and any applicable deed restrictions and/or CC&R’s (covenants, conditions and restrictions) affecting the Property;

(e)   [X] IS [  ] IS NOTconditioned upon the Property appraising for not less than the Purchase Price.

Page 2 of 6 Buyer’s Initials __JAE__ Date 5/14/2015 Seller’s Initials __WSB_ Date_5/5/2015

(f)   [X] IS [  ] IS NOTconditioned upon Buyer’s approval of the terms and conditions of any mortgage financing referenced in Section 2.

(g)   [  ] IS [  ] IS NOTconditioned upon Buyers approval of the following tests and evaluations of the Property.  (specify)

If any of the items 8(a) through 8(g) are checked in the affirmative, then Sections 8.1, 8.2, 8.3 and 8.4 apply; otherwise, they do not apply.  The items checked in the affirmative above are collectively referred to as “Buyers Due Diligence.”  Unless otherwise provided in this Contract, the Buyer’s Due Diligence shall be paid for by Buyer and shall be conducted by individuals or entities of Buyers choice.  Buyer shall conduct Buyer’s Due Diligence in such manner as not to unreasonably disrupt the activities and business of Seller, and shall indemnify Seller and hold Seller harmless from and against any and all liability, claim, or damages which arise from, is caused by, or is in any manner connected with Buyer’s Due Diligence, including without limitation, claims for payment for inspection services, claims for mechanics liens, and physical damage to the Property.  Seller agrees to cooperate with Buyer’s Due Diligence and with a site inspection under Section 11.

8.1Due Diligence Deadline.  No later than the Due Diligence Deadline referenced in Section 24(b) Buyer shall:  (a) complete all of Buyer’s Due Diligence; and (b) determine if the results of the Buyer’s Due Diligence are acceptable to Buyer.

8.2Right to Cancel or Object.  If Buyer, in Buyers sole discretion, determines that the results of the Buyers Due Diligence are unacceptable, Buyer may, no later than the Due Diligence Deadline, either:  (a) cancel this Contract by providing written notice to Seller, whereupon the Earnest Money Deposit shall be released to Buyer; or (b) provide Seller with written notice of objections.

8.3Failure to Respond.  If by the expiration of the Due Diligence Deadline, Buyer does not:  (a) cancel this Contract as provided in Section 8.2; or (b) deliver a written objection to Seller regarding the Buyer’s Due Diligence, the results of the Buyers Due Diligence shall be deemed approved by Buyer; and the contingencies referenced in Sections 8(a) through 8(g), including but not limited to, any financing contingency, shall be deemed waived by Buyer.

8.4Response by Seller.  If Buyer provides written objections to Seller, Buyer and Seller shall have 7 CALENDAR DAYS after Seller’s receipt of Buyer’s objections (the “Response Period”) in which to agree in writing upon the manner of resolving Buyer’s objections.  Except as provided in Section 10, Seller may, but shall not be required to, resolve Buyer’s objections.  If Buyer and Seller have not agreed in writing upon the manner of resolving Buyers objections, Buyer may cancel this Contract by providing written notice to Seller no later than THREE CALENDAR DAYS after expiration of the Response Period; whereupon the Earnest Money Deposit shall be released to Buyer.  If this Contract is not canceled by Buyer under this Section 8.4, Buyers objections shall be deemed waived by Buyer.  This waiver shall not affect those items warranted in Section 10.

9.ADDITIONAL TERMS.  There [X] ARE [  ] ARE NOT addenda to this Contract containing additional terms.  If there are, the terms of the following addenda are incorporated into this Contract by this reference:

[X] Addendum No. 1 [ Seller Financing Addendum [ ] Assumption Addendum [  ] Lead-Based Paint Disclosure & Acknowledgement

[ ] Other (specify):                                                                                                                                                     

10.SELLER’S WARRANTIES & REPRESENTATIONS.

10.1Condition of Title.  Buyer agrees to accept title to the Property subject to the contents of the Commitment for Title Insurance as agreed to by Buyer under Section 8.  Buyer also agrees to take the Property subject to existing leases affecting the Property and not expiring prior to Closing.  Buyer agrees to be responsible for taxes, assessments, association fees and dues, utilities, and other services provided to the Property after Closing.  Except for any loan(s) specifically assumed by Buyer under Section 2, Seller will cause to be paid off by Closing all mortgages, trust deeds, judgments, mechanic’s liens, tax liens and warrants.  Seller will cause all assessments to be paid current by Closing.

10.2Condition of Property.  Seller warrants that ON THE DATE SELLER DELIVERS PHYSICAL POSSESSION TO BUYER, the Property and improvements will be broom-clean and free of debris and personal belongings, and in the same general condition as they were on the date of Acceptance.

10.3Other Seller Warranties.  Seller further warrants that, to the best of Seller’s knowledge, each of the following statements is true:  (a) the consummation of the transactions contemplated by this Contract will not constitute a default or result in the breach of any term or provision of any contract or agreement to which Seller is a party so as to adversely affect the consummation of such transactions; (b) there is no action, suit, legal proceeding or other proceeding pending or threatened against Seller and/or the Property which may adversely affect the transactions contemplated by this Contract, in any court or before any arbitrator of any kind or before or by any governmental body which may adversely affect the transactions contemplated by this Contract (c) all work which will be performed in, on or about the Property or materials furnished thereto which might in any circumstances give rise to a mechanic’s or materialman’s lien, will be paid and all necessary waivers of rights to a mechanic’s or materialman’s lien for such work will be obtained; (d) Seller has not received any written notice indicating that the Property is in violation of any Federal, State or local Environmental Law; (e) there are no Hazardous Substances on, under, or about the Property, nor has Seller undertaken, permitted, authorized or suffered, and will not undertake, permit, authorize or suffer the presence, use, manufacture, handling, generation, storage, treatment, discharge, release, burial or disposal on, under or about the Property, of any Hazardous Substances, or the transportation to or from the Property, of any Hazardous Substances.  As used herein, “Hazardous Substance” shall mean any substance, material or matter that may give rise to liability under any Federal, Slate, or local Environmental Laws; and (f) Seller is not a “foreign person” as that term is defined in Section 1445 of the U.S. Internal Revenue Code of 1986, as amended.  (In that regard, Seller shall deposit into Escrow, at or prior to Closing, an affidavit in such form as may be required by the U.S. Internal Revenue Service, setting forth Sellers full name, address and taxpayer identification number and stating under penalty of perjury that Seller is not a “foreign person” as so defined).

Page 3 of 6 Buyer’s Initials __JAE__ Date 5/14/2015 Seller’s Initials __WSB_ Date_5/5/2015

11.FINAL PRE-CLOSING INSPECTION.  Before Settlement, Buyer may, upon reasonable notice and at a reasonable time, conduct a final pre-closing inspection of the Property to determine only that the Property is “as represented,” meaning that the items referenced In Sections 1.1, 8.4 and 10.2 and 10.3 (“the items”) are respectively present, repaired/changed as agreed, and in the warranted condition.  If the items are not as represented, Seller will, prior to Settlement, replace, correct or repair the items or, with the consent of Buyer (and Lender if applicable), escrow an amount at Settlement to provide for the same.  The failure to conduct a final pre-closing inspection or to claim that an item is not as represented, shall not constitute a waiver by Buyer of the right to receive, on the date of possession, the items as represented.

12.CHANGES DURING TRANSACTION.  Seller agrees that from the date of Acceptance until the date of Closing, Seller shall not, without the prior written consent of Buyer:  (a) make any changes in any existing leases; (b) enter into any new leases; (c) make any substantial alterations or improvements to the Property, or (d) incur any further financial encumbrances against the Property.

13.AUTHORITY OF SIGNERS.  If Buyer or Seller is a corporation, partnership, trust, estate, limited liability company or other entity, the person executing this Contract on its behalf warrants his or her authority to do so and to bind Buyer and Seller.  Seller further warrants that the execution and delivery of this Contract by Seller have been duly and validly authorized, and all requisite action has been taken to make this Contract binding upon Seller.

14.COMPLETE CONTRACTIASSIGNMENT.  This Contract together with its addenda, any attached exhibits, and Seller Disclosures, constitutes the entire Contract between the parties and supersedes and replaces any and all prior negotiations, representations, warranties, understandings or contracts between the parties.  This Contract cannot be changed except by written agreement of the parties.  This Contract [  ] SHALL [X] SHALL NOT be assignable by Buyer.  Except as so restricted, this Contract shall inure to the benefit of and be binding upon the heirs, personal representatives, successors and assigns of the parties.

15.MEDIATION.  Any dispute relating to this Contract that arises prior to or after Closing:

[X] SHALL

[  ]MAY AT THE OPTION OF THE PARTIES

first be submitted to mediation.  Mediation is a process in which the parties meet with an impartial person who helps to resolve the dispute informally and confidentially.  Mediators cannot impose binding decisions.  The parties to the dispute must agree before any settlement is binding.  The parties will jointly appoint an acceptable mediator and will share equally in the cost of such mediation.  The mediation, unless otherwise agreed, shall terminate in the event the entire dispute is not resolved THIRTY (30) CALENDAR DAYS from the date written notice requesting mediation is sent by one party to the other(s).  If mediation fails, the other procedures and remedies available under this Contract shall apply.  Nothing in this Section 15 shall prohibit any party from seeking emergency equitable relief pending mediation.

16.DEFAULT.  If Buyer defaults, Seller may elect either to retain the Earnest Money Deposit as liquidated damages, or to return it and sue Buyer to specifically enforce this Contract or pursue other remedies available at law.  If Seller defaults, in addition to return of the Earnest Money Deposit, Buyer may elect either to accept from Seller a sum equal to the Earnest Money Deposit as liquidated damages, or may sue Seller to specifically enforce this Contract or pursue other remedies available at law.

17.ATTORNEY FEES AND COSTS.  In the event of litigation or binding arbitration to enforce this Contract, the prevailing party shall be entitled to costs and reasonable attorney fees.  However, attorney fees shall not be awarded for participation in mediation under Section 15.

18.NOTICES.  Except as provided in Section 23, all notices required under this Contract must be:  (a) in writing; (b) signed by the party giving notice; and (c) received by the other party or the other party’s agent no later than the applicable date referenced in this Contract.

Page 4 of 6 Buyer’s Initials __JAE__ Date 5/14/2015 Seller’s Initials __WSB_ Date_5/5/2015

19.ABROGATION.  Except for the provisions of Sections 8.4, 10.1, 10.3, 15 and 17 and any other express warranties made in this Contract, the provisions of this Contract shall not apply after Closing.

20.RISK OF LOSS.  All risk of loss to the Property, including physical damage or destruction to the Property or its improvements due to any cause except ordinary wear and tear and loss caused by a taking in eminent domain, shall be borne by Seller until Closing.

21.TIME IS OF THE ESSENCE.  Time is of the essence regarding the dates set forth in this Contract, Extensions must be agreed to in writing by all parties.  Unless otherwise explicitly stated in this Contract:  (a) performance under each Section of this Contract which references a date shall absolutely be required by 5:00 PM Mountain Time on the stated date; and (b) the term “days” shall mean calendar days and shall be counted beginning on the day following the event which triggers the timing requirement (i.e., Acceptance, etc.).  If the performance date falls on a Saturday, Sunday, State or Federal legal holiday, performance shall be required on the next business day.  Performance dates and times referenced herein shall not be binding upon title companies, lenders, appraisers and others not parties to this Contract, except as otherwise agreed to in writing by such non-party.

22.FAX TRANSMISSION AND COUNTERPARTS.  Facsimile (fax) transmission of a signed copy of this Contract, any addenda and counteroffers, and the retransmission of any signed fax shall be the same as delivery of an original.  This Contract and any addenda and counteroffers may be executed in counterparts.

23.ACCEPTANCE.  “Acceptance’ occurs when Seller or Buyer, responding to an offer or counteroffer of the other:  (a) signs the offer or counteroffer where noted to indicate acceptance; and (b) communicates to the other party or to the other party’s agent that the offer or counteroffer has been signed as required.

24.CONTRACT DEADLINES.  Buyer and Seller agree that the following deadlines shall apply to this Contract:

(a)   Seller Disclosure Deadline                                                      20Days After Acceptance (Date)

(b)   Due Diligence Deadline                                                      60Days After Acceptance  (Date)

(c)   Settlement Deadline                                                      70Days After Acceptance  (Date)

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25.OFFER AND TIME FOR ACCEPTANCE.  Buyer offers to purchase the Property on the above terms and conditions.  If Seller does not accept this offer by:  6 : 00 [  ] AM [X] PM Mountain Time on 05/05/2015 (Date), this offer shah lapse; and the Brokerage or Title/Escrow Company shall return the Earnest Money Deposit to Buyer.

/s/Jae Ho Lee			5/4/2015
(Buyer’s Signature)	(Title, if any)		(Date)	(Buyer’s Signature)		(Title, if any)	(Date)
JAE HO LEE		19400 Valerio Street, Reseda, CA			91335
(Buyers’ Names) (PLEASE PRINT)		(Address)			(Zip Code)	(Phone)	(Fax)
						510-213-5490
(Buyers’ Names) (PLEASE PRINT)		(Address)			(Zip Code)	(Phone)	(Fax)

ACCEPTANCE/COUNTEROFFERIREJECTION

CHECK ONE:

[  ] ACCEPTANCE OF OFFER TO PURCHASE:  Seller Accepts the foregoing offer on the terms and conditions specified above.

[X] COUNTEROFFER:  Seller presents for Buyer’s Acceptance the terms of Buyer’s offer subject to the exceptions or modifications as specified in the attached ADDENDUM NO. 2 (Two)

/s/William S. Barth	5/6/15	3:42 pm
(Seller’s Signature)	(Date)	(Time)	(Seller’s Signature)		(Date)	(Time)
PERSEON CORPORATION		2188 W 2200 S]		84119	801-972-5555
(Sellers’ Names) (PLEASE PRINT)		(Address)		(Zip Code)	(Phone)	(Fax)
(Sellers’ Names) (PLEASE PRINT)		(Address)		(Zip Code)	(Phone)	(Fax)

[  ] REJECTION:  Seller Rejects the foregoing offer.

(Seller’s Signature)	(Date)	(Time)	(Seller’s Signature)	(Date)	(Time)
******************************************************

DOCUMENT RECEIPT

State law requires Broker to furnish Buyer and Seller with copies of this Contract bearing all signatures (Fill in applicable section below.)

A.  I acknowledge receipt of a final copy of the foregoing Contract bearing all signatures

(Buyer’s Signature)	(Date)	(Buyer’s Signature)	(Date)
(Seller’s Signature)	(Date)	(Seller’s Signature)	(Date)

B.  I personally caused a final copy of the foregoing Contract bearing all signatures to be [  ] faxed [  ] mailed [  ] hand delivered onpostage prepaid, to the [  ] Seller [  ] Buyer.

Sent/Delivered by (specify)                                                                                                                                                     

This form is COPYRIGHTED by the UTAH ASSOCIATION OF REALTORS for use solely by its members.  Any unauthorized use, modification, copying or distribution without written consent is prohibited.  NO REPRESENTATION IS MADE AS TO THE LEGAL VALIDITY OR ADEQUACY OF ANY PROVISION OF THIS FORM IN ANY SPECIFIC TRANSACTION.  IF YOU DESIRE SPECIFIC LEGAL OR TAX ADVICE, CONSULT AN APPROPRIATE PROFESSIONAL.

COPYRIGHT(C) UTAH ASSOCIATION OF REALTORS® 1994 -- REVISED 10 13,04 ALL RIGHTS RESERVED UAR FORM 3

Page 6 of 6 Buyer’s Initials __JAE__ Date 5/14/2015 Seller’s Initials __WSB_ Date_5/5/2015

THIS IS AN [X] ADDENDUM [  ] COUNTEROFFER to that REAL ESTATE PURCHASE CONTRACT (the "REPC") with an Offer Reference Date of 1st day of May, 2015 including all prior addenda and counteroffers, between World Mission Society Church of God as Buyer, and BSD Medical Corp as Seller, regarding the Property located at 2188 W 2200 W, West Valley City, UT.  The following terms are hereby incorporated as part of the REPC:

1)Buyer shall have full possession and occupancy upon recording.  The Seller to be responsible for terminating the lease agreement and/or relocating tenant prior to possession.

BUYER AND SELLER AGREE THAT THE CONTRACT DEADLINES REFERENCED IN SECTION 24 OF THE REPC (CHECK APPLICABLE BOX): [X] REMAIN UNCHANGED [ ] ARE CHANGED AS FOLLOWS:

To the extent the terms of this ADDENDUM modify or conflict with any provisions of the REPC, including all prior addenda and counteroffers, these terms shall control.  All other terms of the REPC, including all prior addenda and counteroffers, not modified by this ADDENDUM shall remain the same.  [X] Seller [  ] Buyer shall have until 6 : 00 [  ] AM [X] PM Mountain Time on May 05, 2015 (Date), to accept the terms of this ADDENDUM in accordance with the provisions of Section 23 of  the REPC.  Unless so accepted, the offer as set forth in this ADDENDUM shall lapse.

/s/ Jae Ho Lee	5/4/2015	1:26pm
[  ] Buyer [ ] Seller Signature	(Date)	(Time)	[  ] Buyer	[  ] Seller Signature	(Date)	(Time)

ACCEPTANCE/COUNTEROFFER/REJECTION

CHECK ONE:

[  ] ACCEPTANCE:  [  ] Seller [  ] Buyer hereby accepts the terms of this ADDENDUM.

[X] COUNTEROFFER: [X] Seller [  ] Buyer presents as a counteroffer the terms of attached ADDENDUM NO. 2 (Two)

/s/William S. Barth	5-5-15	3:42pm
(Signature)	(Date)	(Time)	(Signature)	(Date)	(Time)

[  ] REJECTION: [ ] Seller [ ] Buyer rejects the foregoing ADDENDUM.

(Signature) (Date) (Time) (Signature) (Date) (Time)

THIS FORM APPROVED BY THE UTAH REAL ESTATE COMMISSION AND THE OFFICE OF THE UTAH ATTORNEY GENERAL, EFFECTIVE AUGUST 5, 2003.  IT REPLACES AND SUPERSEDES ALL PREVIOUSLY APPROVED VERSIONS OF THIS FORM.

Page 1 of 1 Buyer’s Initials __JAE__ Seller’s Initials ___WSM_ Addendum No. 1 REPC

THIS IS AN [  ] ADDENDUM [X] COUNTEROFFER to that REAL ESTATE PURCHASE CONTRACT (the “REPC”) with an Offer Reference Date of 1st day of May, 2015 including all prior addenda and counteroffers, between World Mission Society Church of God as Buyer, and BSD Medical Corporation as Seller, regarding the Property located at 2188 W 220 S, West Valley UT 84119.  The following terms are hereby incorporated as part of the REPC:

-Purchase price to be $1,097,000

-Seller and current tenant may lease back building at a rate of $12,000 per month full service after closing

-Possession to occur after Seller and Tenant have relocated to new offices

-Proof of funds for Buyer’s down payment to be furnished within 21 days of acceptance

-Proof of loan commitment to be furnished within 45 days of acceptance

-Per section 8 of purchase contract, Buyer’s obligation to purchase is not conditioned upon the Property  appraising for not less than the Purchase Price, recent appraisal will be furnished to Buyer

-Per section 5 of purchase contract, Seller’s Agent is Dave Curtis

BUYER AND SELLER AGREE THAT THE CONTRACT DEADLINES REFERENCED IN SECTION 24 OF THE REPC (CHECK APPLICABLE BOX):  [X] REMAIN UNCHANGED [  ] ARE CHANGED AS FOLLOWS:

To the extent the terms of this ADDENDUM modify or conflict with any provisions of the REPC, including all prior addenda and counteroffers, these terms shall control.  All other terms of the REPC, including all prior addenda and counteroffers, not modified by this ADDENDUM shall remain the same.  [  ] Seller [X] Buyer shall have until 5 : 00 [  ] AM [X] PM Mountain Time on May 06, 2015 (Date), to accept the terms of this ADDENDUM in accordance with the provisions of Section 23 of the REPC.  Unless so accepted, the offer as set forth in this ADDENDUM shall lapse.

/s/William S. Barth	5/5/15	3:43 pm
[  ] Buyer [X] Seller Signature	(Date)	(Time)	[  ] Buyer	[  ] Seller Signature	(Date)	(Time)

ACCEPTANCEICOUNTEROFFER/REJECTION

CHECK ONE:

[  ] ACCEPTANCE:  [  ] Seller [  ] Buyer hereby accepts the terms of this ADDENDUM.

[  ] COUNTEROFFER:  [  ] Seller [  ] Buyer presents as a counteroffer the terms of attached ADDENDUM NO. ___

(Signature) (Date) (Time) (Signature) (Date) (Time)

[  ] REJECTION:  [  ] Seller [  ] Buyer rejects the foregoing ADDENDUM.

(Signature) (Date) (Time) (Signature) (Date) (Time)

THIS FORM APPROVED BY THE UTAH REAL ESTATE COMMISSION AND THE OFFICE OF THE UTAH ATTORNEY GENERAL, EFFECTIVE AUGUST 5, 2003.  IT REPLACES AND SUPERSEDES ALL PREVIOUSLY APPROVED VERSIONS OF THIS FORM.

Page 1 of 1 Buyer’s Initials __JAE__ Seller’s Initials ___WSB_ Addendum No. 2 REPC

THIS IS AN [  ] ADDENDUM [X] COUNTEROFFER to that REAL ESTATE PURCHASE CONTRACT (the “REPC”) with an Offer Reference Date of 1st day of May, 2015 including all prior addenda and counteroffers, between World Mission Society Church of God as Buyer, and BSD Medical Corporation as Seller, regarding the Property located at 2188 W 220 S, West Valley UT 84119.  The following terms are hereby incorporated as part of the REPC:

-Purchase price to be $1,097,000

-Seller and current tenant may lease back building at a rate of $12,000 per month full service after closing

-Possession to occur after Seller and Tenant have relocated to new offices

-Proof of funds for Buyer’s down payment to be furnished within 21 days of acceptance

-Proof of loan commitment to be furnished within 45 days of acceptance

-Per section 8 of purchase contract, Buyer’s obligation to purchase is not conditioned upon the Property  appraising for not less than the Purchase Price, recent appraisal will be furnished to Buyer

-Per section 5 of purchase contract, Seller’s Agent is Dave Curtis

BUYER AND SELLER AGREE THAT THE CONTRACT DEADLINES REFERENCED IN SECTION 24 OF THE REPC (CHECK APPLICABLE BOX):  [X] REMAIN UNCHANGED [  ] ARE CHANGED AS FOLLOWS:

To the extent the terms of this ADDENDUM modify or conflict with any provisions of the REPC, including all prior addenda and counteroffers, these terms shall control.  All other terms of the REPC, including all prior addenda and counteroffers, not modified by this ADDENDUM shall remain the same.  [  ] Seller [X] Buyer shall have until 5 : 00 [  ] AM [X] PM Mountain Time on May 06, 2015 (Date), to accept the terms of this ADDENDUM in accordance with the provisions of Section 23 of the REPC.  Unless so accepted, the offer as set forth in this ADDENDUM shall lapse.

/s/William S. Barth	5/5/15	3:43 pm
[  ] Buyer [X] Seller Signature	(Date)	(Time)	[  ] Buyer	[  ] Seller Signature	(Date)	(Time)

ACCEPTANCEICOUNTEROFFER/REJECTION

CHECK ONE:

[  ] ACCEPTANCE:  [  ] Seller [  ] Buyer hereby accepts the terms of this ADDENDUM.

[X] COUNTEROFFER:  [  ] Seller [X] Buyer presents as a counteroffer the terms of attached ADDENDUM NO. 3

/s/ Jae Ho Lee	5/14/2015	5:10PM
(Signature)	(Date)	(Time)	(Signature)	(Date)	(Time)

[  ] REJECTION:  [  ] Seller [  ] Buyer rejects the foregoing ADDENDUM.

(Signature) (Date) (Time) (Signature) (Date) (Time)

THIS FORM APPROVED BY THE UTAH REAL ESTATE COMMISSION AND THE OFFICE OF THE UTAH ATTORNEY GENERAL, EFFECTIVE AUGUST 5, 2003.  IT REPLACES AND SUPERSEDES ALL PREVIOUSLY APPROVED VERSIONS OF THIS FORM.

Page 1 of 1 Buyer’s Initials __JAE__ Seller’s Initials ___WSB_ Addendum No. 2 REPC

THIS IS AN [X] ADDENDUM [  ] COUNTEROFFER to that REAL ESTATE PURCHASE CONTRACT (the "REPC") with an Offer Reference Date of 1st day of May, 2015 including all prior addenda and counteroffers, between World Mission Society Church of God as Buyer, and BSD Medical Corp as Seller, regarding the Property located at 2188 W 2200 W, West Valley City, UT.  The following terms are hereby incorporated as part of the REPC:

1)Purchase Price to be $1,061,000

2)The Seller shall Lease back the building FREE of base rent for a period of time not to exceed 90 days  after closing. The Seller shall be responsible for all aspects of the building (with the exception of Property  Taxes) including payment of insurance, utilities, maintenance of all HVAC, plumbing, electrical systems as  well as exterior maintenance and landscaping during the Lease back period.

3)Upon closing, the Buyer and Seller shall enter into a lease agreement outlining the terms of the Lease back.  Upon vacating the building, the Seller shall deliver the space in the same general condition as of the date of the Final Pre-Closing Inspection.  Seller will be responsible for any damages that occur as a result of vacating.

4)Buyer's obligation to purchase the property, in addition to the items listed in section 8 of the REPC, is conditioned upon obtaining written approval from West Valley City to use the property as a Church Facility.

5)The Seller shall modify the restrooms on the main floor to be ADA compliant install a hi/lo ADA compliant water fountain, install exit lights, panic bars emergency egress lighting and stripe the parking lot prior to the expiration of the due diligence.  Buyer will provide the specifications for the work to be completed.  Buyer to reimburse Seller 50% of the cost for the improvements at closing not to exceed $5,000.00.

6)Per section 8(e) of the REPC, Buyers obligation to purchase the property shall be conditioned upon the  property appraising for not less than the Purchase Price.

7)Buyer's response time to be extended to May 14th, 2015.

BUYER AND SELLER AGREE THAT THE CONTRACT DEADLINES REFERENCED IN SECTION 24 OF THE REPC (CHECK APPLICABLE BOX): [X] REMAIN UNCHANGED [ ] ARE CHANGED AS FOLLOWS:

To the extent the terms of this ADDENDUM modify or conflict with any provisions of the REPC, including all prior addenda and counteroffers, these terms shall control.  All other terms of the REPC, including all prior addenda and counteroffers, not modified by this ADDENDUM shall remain the same.  [X] Seller [  ] Buyer shall have until 6 : 00 [  ] AM [X] PM Mountain Time on May 15, 2015 (Date), to accept the terms of this ADDENDUM in accordance with the provisions of Section 23 of the REPC.  Unless so accepted, the offer as set forth in this ADDENDUM shall lapse.

/s/ Jae Ho Lee	5/14/2015	5:20PM
[X] Buyer [  ] Seller Signature	(Date)	(Time)	[  ] Buyer	[  ] Seller Signature	(Date)	(Time)

ACCEPTANCE/COUNTEROFFER/REJECTION

CHECK ONE:

[X] ACCEPTANCE:  [X] Seller [  ] Buyer hereby accepts the terms of this ADDENDUM.

[  ] COUNTER OFFER:  [  ] Seller [  ] Buyer presents as a counteroffer the terms of attached ADDENDUM NO. ___

/s/William S. Barth	5/15/15	12:40pm
(Signature)	(Date)	(Time)	(Signature)	(Date)	(Time)

[  ] REJECTION:  [  ] Seller [  ] Buyer rejects the foregoing ADDENDUM.

(Signature) (Date) (Time) (Signature) (Date) (Time)

THIS FORM APPROVED BY THE UTAH REAL ESTATE COMMISSION AND THE OFFICE OF THE UTAH ATTORNEY GENERAL, EFFECTIVE AUGUST 5, 2003.  IT REPLACES AND SUPERSEDES ALL PREVIOUSLY APPROVED VERSIONS OF THIS FORM.

Page 1 of 2 Buyer’s Initials __JAE__ Seller’s Initials __WSB__ Addendum No. 3 REPC

THIS IS AN [X] ADDENDUM [  ] COUNTEROFFER to that REAL ESTATE PURCHASE CONTRACT (the “REPC”) with an Offer Reference Date of 1st day of May, 2015 including all prior addenda and counteroffers, between World Mission Society Church of God as Buyer, and BSD Medical Corp as Seller, regarding the Property located at 2188 W 2200 W, West Valley City, UT.  The following terms are hereby incorporated as part of the REPC:

1)Seller shall place in escrow $15,000.00 at closing for Buyer to use, at Buyer’s sole discretion, for improving the property and its systems.

2)The Owner of the property is Perseon Corporation; formally known as BSD Medical Corporation.

BUYER AND SELLER AGREE THAT THE CONTRACT DEADLINES REFERENCED IN SECTION 24 OF THE REPC (CHECK APPLICABLE BOX):  [X] REMAIN UNCHANGED [  ] ARE CHANGED AS FOLLOWS:

To the extent the terms of this ADDENDUM modify or conflict with any provisions of the REPC, including all prior addenda and counteroffers, these terms shall control.  All other terms of the REPC, including all prior addenda and counteroffers, not modified by this ADDENDUM shall remain the same.  [X] Seller [  ] Buyer shall have until 6 : 00 [  ] AM [X] PM Mountain Time on June 29, 2015 (Date), to accept the terms of this ADDENDUM in accordance with the provisions of Section 23 of the REPC.  Unless so accepted, the offer as set forth in this ADDENDUM shall lapse.

/s/ Jae Ho Lee	6/25/2015	9:20AM
[X] Buyer [  ] Seller Signature	(Date)	(Time)	[  ] Buyer	[  ] Seller Signature	(Date)	(Time)

ACCEPTANCE/COUNTEROFFER/REJECTION

CHECK ONE:

[X] ACCEPTANCE:  [X] Seller [  ] Buyer hereby accepts the terms of this ADDENDUM.

[  ] COUNTEROFFER:  [  ] Seller [  ] Buyer presents as a counteroffer the terms of attached ADDENDUM NO. ___

/s/William S. Barth	6/29/15	4:30PM
(Signature)	(Date)	(Time)	(Signature)	(Date)	(Time)

[  ] REJECTION:  [  ] Seller [  ] Buyer rejects the foregoing ADDENDUM.

(Signature) (Date) (Time) (Signature) (Date) (Time)

THIS FORM APPROVED BY THE UTAH REAL ESTATE COMMISSION AND THE OFFICE OF THE UTAH ATTORNEY GENERAL, EFFECTIVE AUGUST 5, 2003.  IT REPLACES AND SUPERSEDES ALL PREVIOUSLY APPROVED VERSIONS OF THIS FORM.

Page 1 Buyer’s Initials __JAE Seller’s Initials __WSB_ Addendum No. 4 REPC

THIS IS AN [X] ADDENDUM [  ] COUNTEROFFER to that REAL ESTATE PURCHASE CONTRACT (the "REPC") with an Offer Reference Date of 1st day of May, 2015 including all prior addenda and counteroffers, between World Mission Society Church of God as Buyer, and Perseon Corporation as Seller, regarding the Property located at 2188 W 2200 W. West Valley City, UT.  The following terms are hereby incorporated as part of the REPC:

1)Due Diligence to be July 31st, 2015.

2)Settlement to be August 5th, 2015.

3)The Buyer shall have possession and the Seller Lease-back period to expire on or before October 23rd, 2015.

BUYER AND SELLER AGREE THAT THE CONTRACT DEADLINES REFERENCED IN SECTION 24 OF THE REPC (CHECK APPLICABLE BOX): [X] REMAIN UNCHANGED [  ] ARE CHANGED AS FOLLOWS:  See above

To the extent the terms of this ADDENDUM modify or conflict with any provisions of the REPC, including all prior addenda and counteroffers, these terms shall control.  All other terms of the REPC, including all prior addenda and counteroffers, not modified by this ADDENDUM shall remain the same.  [X] Seller [  ] Buyer shall have until 6 : 00 [  ] AM [X] PM Mountain Time on July 08, 2015 (Date), to accept the terms of this ADDENDUM in accordance with the provisions of Section 23 of the REPC.  Unless so accepted, the offer as set forth in this ADDENDUM shall lapse.

/s/ Jae Ho Lee	7/07/2015	02:10PM
[X] Buyer [  ] Seller Signature	(Date)	(Time)	[  ] Buyer	[  ] Seller Signature	(Date)	(Time)

ACCEPTANCE/COUNTEROFFER/REJECTION

CHECK ONE:

[X] ACCEPTANCE:  [X] Seller [  ] Buyer hereby accepts the terms of this ADDENDUM.

[  ] COUNTEROFFER:  [  ] Seller [  ] Buyer presents as a counteroffer the terms of attached ADDENDUM NO. ___

/s/William S. Barth	12:17pm	7/9/15
(Signature)	(Date)	(Time)	(Signature)	(Date)	(Time)

[  ] REJECTION: [  ] Seller [  ] Buyer rejects the foregoing ADDENDUM.

(Signature) (Date) (Time) (Signature) (Date) (Time)

THIS FORM APPROVED BY THE UTAH REAL ESTATE COMMISSION AND THE OFFICE OF THE UTAH ATTORNEY GENERAL, EFFECTIVE AUGUST 5, 2003.  IT REPLACES AND SUPERSEDES ALL PREVIOUSLY APPROVED VERSIONS OF THIS FORM.

Page Buyer’s Initials __JAE__ Seller’s Initials __WSB__ Addendum No. 5 REPC

EX-31.1

Exhibit 31.1

Certification of the Principal Executive Officer

Pursuant to Section 302 of the Sarbanes – Oxley Act of 2002

I, Clinton E. Carnell Jr., certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Perseon Corporation;  

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 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 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.

Date:	July 15, 2015
By:	/s/ Clinton E. Carnell Jr.
	Clinton E. Carnell Jr.
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification of the Principal Accounting Officer

Pursuant to Section 302 of the Sarbanes – Oxley Act of 2002

I, William S. Barth, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Perseon Corporation;  

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 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 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.

Date:	July 15, 2015
By:	/s/ William S. Barth
	William S. Barth
	Chief Financial Officer
	(Principal Accounting Officer)

EX-32.1

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

In connection with the Quarterly Report of Perseon Corporation (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Clinton E. Carnell Jr., Chief Executive Officer (Principal Executive Officer) of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) 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 the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Clinton E. Carnell Jr.

Clinton E. Carnell Jr.

Chief Executive Officer (Principal Executive Officer)

July 15, 2015

EX-32.2

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

In connection with the Quarterly Report of Perseon Corporation (the “Company”) on Form 10-Q for the quarterly period ended June 30, 2015, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, William S. Barth, Chief Financial Officer (Principal Accounting Officer) of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) 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 the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ William S. Barth

William S. Barth

Chief Financial Officer

(Principal Accounting Officer)

July 15, 2015