XML 32 R17.htm IDEA: XBRL DOCUMENT v3.22.1
COMMITMENTS AND CONTINGENCIES
 12 Months Ended
Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

11. COMMITMENTS AND CONTINGENCIES

 

Leases

 

The Company leases certain offices, facilities and equipment under operating and financing leases. Our leases have remaining terms ranging from less than 1 year to 5 years some of which contain options to extend up to 5 years. As of December 31, 2021 and 2020, assets recorded under finance leases were $1.6 million and $1.4 million, respectively, and accumulated amortization associated with finance leases were $1.1 million and $776, respectively.

 

As of December 31, 2021 and 2020, assets recorded under operating leases were $3.9 million and $2.5 million, respectively, and accumulated amortization associated with operating leases were $2.3 million and $1.7 million, respectively. During the third quarter of 2021, the Company executed an extension of its operating lease for the manufacturing facility in Santa Fe Springs, California. After adjusting for a weighted average discount rate, the Company recognized a right-of-use asset and lease liability of approximately $1.4 million within the consolidated balance sheets.

 

The components of the lease expense were as follows:

 

               
   For the Year Ended 
   December 31, 
   2021   2020 
Operating lease cost  $641   $669 
           
Finance lease cost          
Amortization of right-of-use asset  $285   $261 
Interest on lease liabilities   41    53 
Total finance lease cost  $326   $314 

 

Other information related to leases was as follows:

 

Supplemental Cash Flows Information

 

               
   December 31, 
   2021   2020 
Cash paid for amounts included in the measurement of lease liabilities        
Operating cash flow payments for operating leases  $632   $677 
Operating cash flow payments for finance leases   41    53 
Financing cash flow payments for finance leases   292    235 
Right-of-use assets obtained in exchange for lease obligations          
Operating lease liabilities arising from obtaining right of use assets   1,418    390 
Capitalized lease obligations   180    295 

 

Weighted Average Remaining Lease Term

 

   December 31, 
   2021   2020 
Operating leases   3 years    3 years 
Finance leases   2 years    2 years 

 

Weighted Average Discount Rate

 

   December 31, 
   2021   2020 
Operating leases   5.50%   5.50%
Finance leases   6.75%   6.72%

 

Future minimum lease payments under non-cancellable leases as of December 31, 2021 were as follows:

 

   Operating   Finance 
   Leases   Leases 
2022   684    236 
2023   610    298 
2024   446    61 
2025   95    77 
Thereafter   24    — 
Total future minmum lease payments   1,859    672 
Less imputed interest   (146)   (59)
Total future minmum lease payments  $1,713   $613 

 

Reported as of December 31, 2021:

 

   Operating   Finance 
   Leases   Leases 
Right-of-use assets  $565   $1,672 

 

 

   Operating   Finance 
   Leases   Leases 
Accounts payable and accrued liabilities  $605   $202 
Other long-term liabilities   1,108    411 
Total  $1,713   $613 

 

Litigation and Claims

 

From time to time, we may become involved in lawsuits, investigations and claims that arise in the ordinary course of business.

 

On January 11, 2016, Myers Power Products, Inc., a specialty electrical products manufacturer, filed suit with the Superior Court of the State of California, County of Los Angeles, against us, PCEP and two PCEP employees who are former employees of Myers Power Products, Inc., Geo Murickan, the president of PCEP (“Murickan”), and Brett DeChellis (“DeChellis”), alleging, among other things, that Murickan wrongly used and retained confidential business information of Myers Power Products, Inc. for the benefit of us and PCEP, in breach of their confidentiality agreement and/or employment agreement entered into with Myers Power Products, Inc., and that we and PCEP knowingly received and used such confidential business information. Myers Power Products, Inc. sought injunctive relief enjoining us, PCEP and our employees from using its confidential business information and compensatory damages of an unspecified unlimited amount; however, the Company recognized approximately $1.2 million for expected costs related to this litigation prior to fiscal 2020.

 

On October 4, 2019, the dividend that was payable by the Company was enjoined by court order of the Superior Court of California related to the foregoing case. On October 16, 2019, Myers Power Products, Inc. filed an ex parte application arguing the Company had violated, or intended to violate the modified preliminary injunction and sought an order from the court for the Company to post a bond in an amount of $30,000 or more (which was not granted). The Company cancelled the dividend as the result of this court order.

 

There were also two related appeals in the California Court of Appeal for the Second Appellate District (“Court of Appeal”). Case no. B301494 was an appeal of the October 4, 2019 order modifying a previously issued preliminary injunction. Case no. B302943 was an appeal of the November 26, 2019 order requiring Pioneer Power Solutions, Inc. and Pioneer Custom Electrical Products Corp. to obtain and post a $12 million bond. On April 10, 2020, the Court of Appeal granted our motion to combine the two appeals.

 

On November 20, 2020, the Company entered into a settlement and release agreement with Myers Power Products, Inc. As part of the settlement, all injunctions were dissolved, and all litigation and appeals related to the action were dismissed with prejudice. The parties executed full releases of all known and unknown claims, thereby eliminating all such restrictions on the Company. Terms of the settlement were not disclosed; however, the Company agreed to pay Myers Power Products, Inc. an amount that did not differ significantly from the $1.2 million of expected costs the Company recognized as a legal contingency during the year ended December 31, 2018. This payment was made during the fourth quarter of 2020.

 

We can give no assurance that any other lawsuits or claims brought in the future will not have an adverse effect on our financial condition, liquidity or operating results.

 

As of the date hereof, we are not aware of or a party to any legal proceedings to which we or any of our subsidiaries is a party or to which any of our property is subject, nor are we aware of any such threatened or pending litigation or any such proceedings known to be contemplated by governmental authorities that we believe could have a material adverse effect on our business, financial condition or operating results.

 

We are not aware of any material proceedings in which any of our directors, officers or affiliates or any registered or beneficial shareholder of more than 5% of our common stock is an adverse party or has a material interest adverse to our interest.