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Basis of Presentation | 9 Months Ended
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Sep. 30, 2015
Basis of Presentation [Abstract] |
Basis of Presentation | 1. BASIS OF PRESENTATION Overview Pioneer Power Solutions, Inc. and its wholly owned subsidiaries (referred to herein as the “Company,” “Pioneer,” “we,” “our” and “us”) manufacture, sell and service a broad range of specialty electrical transmission, distribution and on-site power generation equipment for applications in the utility, industrial, commercial and backup power markets. The Company is headquartered in Fort Lee, New Jersey and operates from fourteen additional locations in the U.S., Canada and Mexico for manufacturing, centralized distribution, engineering, sales and administration. We have two reportable segments as defined in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the Securities and Exchange Commission (the “SEC”) on April 2, 2015: Transmission and Distribution Solutions (“T&D Solutions”) and Critical Power Solutions. Presentation These unaudited consolidated financial statements include the accounts of the Pioneer Power Solutions, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to the current year presentation. The accompanying unaudited consolidated financial statements of the Company have been prepared pursuant to the rules of the SEC. Certain information and footnote disclosures, normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), have been condensed or omitted pursuant to those rules and regulations. We believe that the disclosures made are adequate to make the information presented not misleading. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to fairly state the financial position, results of operations and cash flows with respect to the interim consolidated financial statements have been included. The results of operations for the interim period are not necessarily indicative of the results for the entire fiscal year. The year-end balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP for a year-end balance sheet. These unaudited consolidated financial statements should be read in conjunction with the risk factors and the audited consolidated financial statements and notes thereto of the Company and its subsidiaries included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. Reclassification of Long-Term Debt The financial statements included in this quarterly report have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Significant assumptions underlie this belief, including, among other things, that there will be no material adverse developments in our business, liquidity, capital requirements and that our credit facilities with our lender will remain available to us and will not need to be replaced. The Company is subject to total leverage ratio and fixed charge coverage ratio covenants, as well as limitations on intercompany indebtedness under its credit facilities with its lender and in an event of default, the lender could declare all outstanding obligation s immediately due and payable. The Company determined that it did not meet the existing total leverage and fixed charge coverage ratio covenants under its U.S. credit agreement with the lender, nor the limitation on intercompany indebtedness under its Canadian letter loan agreement with the lender, each as measured for the period ending September 30, 2015. Furthermore, the financial covenant defaults under the U.S. credit agreement resulted in a cross-default under the terms of the Canadian letter loan agreement. In addition, the Company did not duly pay and discharge its payroll tax obligations in a manner compliant with the covenant requirements of its U.S. credit agreement (see Note 5 – Other Expense). Based on these determinations, the Company secured a waiver of these existing defaults dated November 18, 2015 with respect to its U.S. credit agreement and its Canadian letter loan agreement, to suspend testing of the existing defaults until January 31, 2016 and to permit the use by its U.S. operations of up to $3.0 million of the available and unused borrowing capacity under the Canadian letter loan agreement, subject to the satisfaction of additional financial reporting requirements and other conditions. As future compliance with the covenants is not expected before January 31, 2016, the Company intends to have further discussions with its lender to extend the waiver, or amend the existing agreements to reset covenant measures to correspond to current forecasts, and satisfy the covenant related to payroll taxes. Until such time that the Company is able to revise its financial covenants to a level that it believes is achievable, and resolve its federal payroll tax matter to the satisfaction of its lender, all outstanding long-term term debt with the lender will be reclassified as a current liability. There can be no assurance that the Company will be able to secure a resolution and, accordingly, its liquidity and ability to operate could be adversely affected and raise substantial doubt as to the Company’s ability to satisfy its liabilities as they fall due. The Company’s financial statements do not include any adjustments that might result from an adverse outcome relating to these uncertainties. All dollar amounts (except share and per share amounts) presented in the tables within the notes to our unaudited consolidated financial statements are stated in thousands of dollars, unless otherwise noted.

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