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COMMITMENTS AND CONTINGENCIES
 12 Months Ended
Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

9. COMMITMENTS AND CONTINGENCIES

 

Leases

 

The Company leases certain offices, facilities and equipment under operating and financing leases. The Company’s 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, 2023 and 2022, assets recorded under finance leases were $638 and $1,261, respectively, and accumulated amortization associated with finance leases were $235 and $534, respectively.

 

As of December 31, 2023 and 2022, assets recorded under operating leases were $2,248 and $2,248, respectively, and accumulated amortization associated with operating leases were $1,488 and $798, respectively. During the fourth quarter of 2022, the Company executed an extension of its operating lease for the corporate management and sales office in Fort Lee, New Jersey. After adjusting for a weighted average discount rate, the Company recognized a right-of-use asset and lease liability of approximately $275 within the consolidated balance sheets.

 

 

The components of the lease expense were as follows:

 

   2023   2022 
   Year Ended 
   December 31, 
   2023   2022 
Operating lease cost  $762   $752 
           
Financing lease cost          
Amortization of right-of-use asset  $324   $238 
Interest on lease liabilities   42    44 
Total financing lease cost  $366   $282 

 

Other information related to leases was as follows:

 

Supplemental cash flows information:

 

   2023   2022 
   Year Ended 
   December 31, 
   2023   2022 
Cash paid for amounts included in the measurement of lease liabilities        
Operating cash flow payments for operating leases  $774   $742 
Operating cash flow payments for financing leases   42    44 
Financing cash flow payments for financing leases   355    241 
Right-of-use assets obtained in exchange for lease obligations          
Operating lease liabilities arising from obtaining right of use assets   -    440 
Financing lease obligations   -    401 

 

Weighted average remaining lease term:

 

    December 31, 
    2023    2022 
Operating leases   1 years    2 years 
Financing leases   2 years    2 years 

  

Weighted average discount rate:

 

   December 31, 
   2023   2022 
Operating leases   5.50%   5.50%
Financing leases   6.80%   6.73%

 

Future minimum lease payments under non-cancellable leases as of December 31, 2023 were as follows:

 

   Operating   Financing 
   Leases   Leases 
2024   613    166 
2025   200    174 
2026   24    88 
Thereafter   -    41 
Total future minimum lease payments   837    469 
Less imputed interest   (40)   (52)
Total future minimum lease payments  $797   $417 

 

 

Reported as of December 31, 2023:

 

   Operating   Financing 
   Leases   Leases 
Right-of-use assets  $760   $403 

 

   Operating   Financing 
   Leases   Leases 
Current portion of lease liabilities  $582   $139 
Lease liabilities, non-current portion   215    278 
Total  $797   $417 

 

Litigation and Claims

 

From time to time, the Company is a defendant or plaintiff in various legal actions that arise in the normal course of business. Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount of the assessment can be reasonably estimated.

 

On June 15, 2023, Terrence and Kay Mimick (the “Plaintiffs”) filed a complaint in the U.S. District Court, District of Nebraska naming the Company, its wholly-owned subsidiary, Pioneer Critical Power, Inc., and an individual acting in his capacity as an employee of the Company, collectively as defendants. Plaintiffs filed an amended complaint on July 7, 2023, alleging negligent driving, negligent entrustment, and negligent hiring, training and supervision, as a result of a car accident that occurred on September 9, 2019, and seeking special damages related to the injuries allegedly sustained by Plaintiffs. The amended complaint also named Titan Energy Systems, Inc. as a defendant instead of Pioneer Critical Power, Inc. On July 27, 2023, the defendants filed an Answer to Plaintiff’s Amended Complaint. On October 6, 2023, a mediation was held, but the parties did not reach a settlement. In June 2024 another mediation was held and the parties reached a settlement for all of the Plaintiffs’ claims. As of December 31, 2023, the Company recognized a liability of $5,000 related to this matter, which was included within accounts payable and accrued liabilities, with a corresponding insurance receivable of $5,000 related to the loss recovery, which was deemed to be probable and included within prepaid expenses and other current assets on the consolidated balance sheet.

 

The Company is not aware of any material proceedings in which any of its directors, officers or affiliates or any registered or beneficial shareholder of more than 5% of the Company’s common stock is an adverse party or has a material interest adverse to the Company’s interest.