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Commitments, Contingencies, and Related Party Transactions | 12 Months Ended
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Dec. 31, 2020
Commitments and Contingencies Disclosure [Abstract] |
Commitments, Contingencies, and Related Party Transactions | 9. COMMITMENTS, CONTINGENCIES, AND RELATED PARTY TRANSACTIONS Litigation In July 2020, the Company received a request for arbitration from its former Chief Executive Officer, David Veltri claiming that it breached his employment agreement. The Company intends to vigorously contest this matter and believe these claims are without merit. The employment agreement requires that any disputes be submitted to binding arbitration. The Company has insurance for these types of claims and has reported the request for arbitration to its insurance carrier. The Company believes it is probable that it will incur future defense costs in this matter and has accrued $100 thousand at December 31, 2020, representing the amount of the Company’s responsibility for costs under the insurance policy. APEG II Litigation and Litigation with Former Chief Executive Officer From February 2019 until August 2020, the Company was involved in litigation with its former Chief Executive Officer, David Veltri and its largest shareholder, APEG Energy II, L.P. (“APEG II”) and APEG II’s general partner, APEG Energy II, GP (together with APEG II, “APEG”). APEG owns approximately 18% of the Company’s outstanding common stock at December 31, 2020. In addition, Patrick E. Duke, a former director of the Company, had shared voting and shared investment power over APEG. The litigation arose as a result of a vote at the February 25, 2019 board of directors meeting to terminate Mr. Veltri for using Company funds outside of his authority and for other reasons (the “Texas Litigation”). In a separate lawsuit, APEG initiated a shareholder derivative action in Colorado against Mr. Veltri due to his refusal to recognize the Board’s decision to terminate him (the “Colorado Litigation”). The Company was named as a nominal defendant in the Colorado Litigation. Through December 31, 2020, the Company has incurred legal costs of approximately $1.3 million related to the litigation. The Colorado litigation was dismissed in May 2020 and the Texas Litigation was dismissed in August 2020. The Company has accrued $383 thousand for reimbursement of APEG’s legal costs in the Colorado and Texas Litigation, which was paid on March 4, 2021 through the issuance of 90,846 shares of our restricted common stock (see also Note 16 - Subsequent Events). In the Texas Litigation the Audit Committee intervened by filing a motion to remove Mr. Veltri’s signature authority over the Company’s bank accounts and engaging an independent accounting firm to conduct a forensic accounting investigation. The forensic accounting investigation and the Company’s internal investigation, identified numerous items on Mr. Veltri’s expense reports that appeared to be personal in nature, or lacked adequate documentation showing that such expense was for legitimate business purposes. These expense items totaled at least $81,014, of which $14,617 was incurred during 2019, prior to Mr. Veltri’s termination. The Company reclassified the entire $81,014 reimbursed to Mr. Veltri as additional compensation and taxable income in 2019. In the Colorado Litigation, the United States District Court for the District of Colorado (“the Colorado Federal Court”) granted injunctive relief to APEG II against Mr. Veltri and issued an order appointing C. Randel Lewis as the Company’s custodian to serve as its Interim Chief Executive Officer and to serve on the Board as Chairman. Mr. Lewis, as custodian, was ordered to act in place of the Board to appoint one independent director to replace a director who had resigned. Mr. Lewis appointed Catherine J. Boggs to serve as an independent director until the Company’s 2019 annual meeting of shareholders, which was held on December 10, 2019. Following such annual meeting, the Board appointed Ryan L. Smith, the Company’s Chief Financial Officer to serve as its Chief Executive Officer, replacing Mr. Lewis in that role.

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