UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM
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(Mark One)
For the quarterly period ended
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Commission file number:
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(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer |
☐ | Accelerated filer |
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Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
The number of shares outstanding of the registrant’s common stock, $0.001 par value, as of May 16, 2022 was .
PIONEER POWER SOLUTIONS, INC.
Form 10-Q
For the Quarterly Period Ended March 31, 2022
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
PIONEER POWER SOLUTIONS, INC.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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Revenues |
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$ |
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$ |
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Cost of goods sold |
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Gross profit |
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Operating expenses |
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Selling, general and administrative |
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Total operating expenses |
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Loss from continuing operations |
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Interest income |
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Other expense (income) |
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(Loss) income before taxes |
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Income tax expense (benefit) |
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Net (loss) income |
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$ |
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$ |
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(Loss) income per share: |
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Basic |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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Weighted average common shares outstanding: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these consolidated financial statements.
1
PIONEER POWER SOLUTIONS, INC.
Consolidated Balance Sheets
(In thousands, except share amounts)
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March 31, |
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December 31, |
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2022 |
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2021 |
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(Unaudited) |
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ASSETS |
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Current assets |
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Cash |
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$ |
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$ |
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Restricted cash |
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Notes receivable and accrued interest |
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Accounts receivable, net |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Right-of-use assets |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities |
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Accounts payable and accrued liabilities |
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$ |
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$ |
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Deferred revenue |
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Total current liabilities |
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Other long-term liabilities |
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Total liabilities |
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| Commitments | ||||||||
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Stockholders’ equity |
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Preferred stock, $ par value, shares authorized; issued |
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Common stock, $ par value, shares authorized; |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
2
PIONEER POWER SOLUTIONS, INC.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
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Three Months Ended |
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March 31, |
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2022 |
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2021 |
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Operating activities |
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Net (loss) income |
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$ |
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$ |
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Depreciation |
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Amortization of right-of-use finance leases |
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Amortization of imputed interest |
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Interest expense from PPP Loan |
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Gain on forgiveness of PPP Loan |
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Amortization of right-of-use operating leases |
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Change in receivable reserves |
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Proceeds from insurance receivable |
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Stock-based compensation |
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Changes in current operating assets and liabilities: |
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Accounts receivable |
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Inventories |
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Prepaid expenses and other assets |
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Income taxes |
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Accounts payable and accrued liabilities |
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Deferred revenue |
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Net cash provided by / (used in) operating activities |
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Investing activities |
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Additions to property and equipment |
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Net cash used in investing activities |
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Financing activities |
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Net proceeds from the exercise of options for common stock |
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Principal repayments of financing leases |
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Net cash used in financing activities |
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Increase / (decrease) in cash and restricted cash |
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Cash, and restricted cash, beginning of year |
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Cash, and restricted cash, end of period |
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$ |
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$ |
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Non-cash investing and financing activities: |
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Acquisition of right-of-use assets and lease liabilities |
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The accompanying notes are an integral part of these consolidated financial statements.
3
PIONEER POWER SOLUTIONS, INC.
Consolidated Statement of Stockholders’ Equity
(In thousands, except share amounts)
(Unaudited)
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Common Stock |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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capital |
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income |
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deficit |
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equity |
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Balance - January 1, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net income |
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— |
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Stock-based compensation |
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— |
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Balance - March 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Balance - January 1, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Net loss |
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— |
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Stock-based compensation |
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— |
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Exercise of stock options |
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Balance - March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these consolidated financial statements.
4
PIONEER POWER SOLUTIONS, INC.
Notes to Consolidated Financial Statements
March 31, 2022 (Unaudited)
1. BASIS OF PRESENTATION
Overview
Pioneer Power Solutions, Inc. and its wholly owned subsidiaries (referred to herein as the “Company,” “Pioneer,” “Pioneer Power,” “we,” “our” and “us”) design, manufacture, integrate, refurbish, service, distribute and sell electric power systems, distributed energy resources, power generation equipment and mobile electric vehicle (“EV”) charging solutions. Our products and services are sold to a broad range of customers in the utility, industrial and commercial markets. Our customers include, but are not limited to, electric, gas and water utilities, data center developers and owners, EV charging infrastructure developers and owners, and distributed energy developers. The Company is headquartered in Fort Lee, New Jersey and operates from three (
We have two reportable segments as defined in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2022: Transmission and Distribution Solutions (“T&D Solutions”) and Critical Power Solutions (“Critical Power”).
Presentation
The accompanying unaudited interim consolidated financial statements of the Company have been prepared pursuant to the rules of the SEC and reflect the accounts of the Company as of March 31, 2022. 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 to the reader. 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.
All dollar amounts (except share and per share data) presented in the notes
to our unaudited interim consolidated financial statements are stated in thousands of dollars, unless otherwise noted. Amounts may not
foot due to rounding. ASC 740-270 requires the use of an estimated annual effective tax rate to compute the tax provision during an interim
period unless certain exceptions are met. We have used a discrete-period computation method to calculate taxes for the fiscal three-month
period ended March 31, 2022. Due to projected operating losses for the year, the Company anticipates that its annual effective tax rate
will be
These unaudited interim consolidated financial statements include the accounts of Pioneer and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
These unaudited interim consolidated financial statements should be read in conjunction with the risk factors under the heading “Part II - Item 1A. Risk Factors” and 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, 2021.
Liquidity
The accompanying financial statements have been prepared on a basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements as of the three months ended March 31, 2022, the Company had $
We have met our cash needs through a combination of cash flows from operating activities and bank borrowings, the completion of the Equity Transaction (as defined herein), proceeds from the sale of the CleanSpark Common Stock and warrants to purchase CleanSpark Common Stock, proceeds from insurance and funding from the Payroll Protection Program. Our cash requirements historically were generally for operating activities, debt repayment, capital improvements and acquisitions. We expect to meet our cash needs with our working capital and cash flows from our operating activities. We expect our cash requirements to be generally for operating activities, product development and capital improvements. The Company expects that its current cash balance is sufficient to fund operations for the next twelve months.
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On
During the first quarter of 2021, the Company executed a cash collateral security agreement with a commercial bank, which agreement required us to pledge cash collateral as security for all unpaid reimbursement obligations owing to the commercial bank for an irrevocable standby letter of credit in the amount of $
In November 2016, the FASB issued amended guidance to ASU No. 2016-18, Statement of Cash Flows - Restricted Cash (Topic 230), which requires the statement of cash flows to explain the change during the period in the total of cash, cash equivalents, and restricted cash and that restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.
The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows:
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March 31, |
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December 31, |
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2022 |
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2021 |
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Cash |
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$ |
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$ |
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Restricted cash |
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Total cash and restricted cash as shown in the statement of cash flows |
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$ |
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$ |
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COVID-19
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic (the “COVID-19 pandemic”), based on the rapid increase in exposure globally.
The full impact of the COVID-19 pandemic continues to evolve as the date of this report. As such, it continues to be uncertain as to the full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations. The Company has been able to operate substantially at capacity during the COVID-19 pandemic. Notwithstanding, the Company has been able to operate substantially at capacity during the COVID-19 pandemic. Management is actively monitoring the global situation on its financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 pandemic and the global responses to contain its spread, the Company is not able to estimate the full effects of the COVID-19 pandemic at this time, however, if the pandemic continues, it may continue to have an adverse effect on the Company’s results of operations, financial condition, or liquidity.
On March 27, 2020, then President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security (CARES) Act” (the “CARES Act”). The CARES Act, among other things, appropriates funds for the SBA Paycheck Protection Program loans that are forgivable in certain situations to promote continued employment. On April 13, 2020, after having determined that it met the qualifications for this loan program due to the impact that COVID-19 would have on our financial condition, results of operations, and/or liquidity and applying for relief, the Company received a loan under the SBA Paycheck Protection Program (the “PPP Loan”) in the amount of $
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Under the terms of the PPP Loan, the Company was eligible for full or partial loan forgiveness. During the first quarter of 2021, the Company received full forgiveness of the PPP Loan and recognized a $
Reclassification
The following items have been reclassified in the 2021 financial statements:
The unaudited consolidated statements of cash flows contain a reclassification of the gain on the extinguishment and forgiveness of the PPP Loan from financing activities to operating activities for the three months ended March 31, 2021. Additionally, principal repayments of financing leases and the reduction in operating leases have been reclassified and presented in the applicable cash flow activity for the three months ended March 31, 2022 and 2021. The inventories footnote contains a reclassification of the provision for excess and obsolete inventory and reductions to net realizable value to the applicable inventory classification at December 31, 2021.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant accounting policies are described in Note 2 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes in the Company’s accounting policies during the first quarter of 2022.
Recent Accounting Pronouncements
There have been no recent accounting pronouncements not yet adopted by the Company which would have a material impact on the Company’s financial statements.
Measurement of Credit Losses on Financial Instrument. In June 2016, the FASB issued amended guidance to ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments that changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that will replace today’s “incurred loss” model and generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except that the losses will be recognized as an allowance. This amended guidance for small reporting companies is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. The Company does not expect that the amended guidance will have a material effect on our consolidated financial statements and related disclosures.
3. REVENUES
Nature of our products and services
Our principal products and services include electric power systems, distributed energy resources, power generation equipment and mobile EV charging solutions.
Products
Our T&D Solutions business provides electric power systems and distributed energy resources that help customers effectively and efficiently protect, control, transfer, monitor and manage their electric energy requirements.
Our Critical Power business provides customers with our suite of mobile E-BOOST electric vehicle charging solutions and power generation equipment.
Services
Power generation systems represent considerable investments that require proper maintenance and service in order to operate reliably during a time of emergency. Our power maintenance programs provide preventative maintenance, repair and support service for our customers’ power generation systems.
Our principal source of revenue is derived from sales of products and fees for services. We measure revenue based upon the consideration specified in the customer arrangement, and revenue is recognized when the performance obligations in the customer arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as, the customer receives the benefit of the performance obligation. Customers typically receive the benefit of our products when the risk of loss or control for the product transfers to the customer and for services as they are performed. Under ASC 606, revenue is recognized when a customer obtains control of promised products or services in an amount that reflects the consideration we expect to receive in exchange for those products or services. To achieve this core principal, the Company applies the following five steps:
7
1) Identify the contract with a customer
A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the products or services to be transferred and identifies the payment terms related to these products or services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for products or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
2) Identify the performance obligations in the contract
Performance obligations promised in a contract are identified based on the products or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the product or service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the products or services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised products or services, the Company must apply judgment to determine whether promised products or services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised products or services are accounted for as a combined performance obligation.
3) Determine the transaction price
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products or services to the customer. The customer payments are generally due in 30 days.
4) Allocate the transaction price to performance obligations in the contract
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis or cost of the product or service. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
5) Recognize revenue when or as the Company satisfies a performance obligation
The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised product or service to a customer.
Revenue from the sale of our products is predominantly recognized at a point in time. Revenues are recognized at the point in time that the customer obtains control of the good, which is when it has taken title to the products and has assumed the risks and rewards of ownership specified in the purchase order or sales agreement. Certain sales of highly customized large equipment are recognized over time when such equipment has no alternative use and the Company has an enforceable right to payment for performance completed to date. Revenue for such agreements is recognized under the input method based on cost incurred relative to the estimated cost expected to be consumed to complete the project.
During the three
months ended March 31, 2022, the Company recognized $
During the three months ended March 31, 2021, the Company recognized $
8
During the three months ended March 31, 2022, the Company recognized approximately $
The Company manages its accounts receivable credit risk by performing credit evaluations and monitoring amounts due from the Company’s customers. The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable.
At March 31, 2022, three customers represented approximately
For the three months ended March 31, 2022, three customers represented
approximately
Return of a product requires that the buyer obtain permission in writing from the Company. When the buyer requests authorization to return material for reasons of their own, the buyer will be charged for placing the returned goods in saleable condition, restocking charges and for any outgoing and incoming transportation paid by the Company. The Company warrants title to the products, and also warrants the products on date of shipment to the buyer, to be of the kind and quality described in the contract, merchantable, and free of defects in workmanship and material. Returns and warranties during three months ended March 31, 2022 and 2021 were insignificant.
The following table presents our revenues disaggregated by revenue discipline:
|
|
|
Three Months Ended |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Products |
|
$ |
|
|
|
$ |
|
|
|
Services |
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
|
|
|
$ |
|
|
See “Note 11 - Business Segment and Geographic Information in Notes to Consolidated Financial Statements” in Part I of this Quarterly Report on Form 10-Q.
4. OTHER EXPENSE (INCOME)
Other expense (income) in the unaudited interim consolidated statements
of operations reports certain gains and losses associated with activities not directly related to our core operations. For the three months
ended March 31, 2022, other expense was $
5. INVENTORIES
The components of inventories are summarized below:
|
|
|
March 31, |
|
|
December 31, |
|
||
|
|
|
2022 |
|
|
2021 |
|
||
|
Raw materials |
|
$ |
|
|
|
$ |
|
|
|
Work in process |
|
|
|
|
|
|
|
|
|
Total inventories |
|
$ |
|
|
|
$ |
|
|
Inventories are stated at the lower of cost or a net realizable value determined on a weighted average method.
9
6. PROPERTY AND EQUIPMENT
Property and equipment are summarized below:
|
|
|
|
March 31, |
|
|
|
December 31, |
|
|
|
|
2022 |
|
|
2021 |
|
||
|
Machinery, vehicles and equipment |
|
$ |
|
|
|
$ |
|
|
|
Furniture and fixtures |
|
|
|
|
|
|
|
|
|
Computer hardware and software |
|
|
|
|
|
|
|
|
|
Leasehold improvements |
|
|
|
|
|
|
|
|
|
Construction in progress |
|
|
|
|
|
|
|
|
Property and equipment |
|
|
|
|
|
|
|
|
|
Less: accumulated depreciation |
|
|
( |
) |
|
|
( |
) |
|
Total property and equipment, net |
|
$ |
|
|
|
$ |
|
|
Depreciation expense was $
7. NOTES RECEIVABLE
In connection with the
sale of the transformer business units in August 2019 (the “Equity Transaction”), amongst other consideration, we received two subordinated promissory notes
in the aggregate principal amount of $
8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The components of accounts payable and accrued liabilities are summarized below:
|
|
|
March 31, |
|
|
December 31, |
|
||
|
|
|
2022 |
|
|
2021 |
|
||
|
Accounts payable |
|
$ |
|
|
|
$ |
|
|
|
Accrued liabilities |
|
|
|
|
|
|
|
|
|
Current portion of lease liabilities |
|
|
|
|
|
|
|
|
|
Total accounts payable and accrued liabilities |
|
$ |
|
|
|
$ |
|
|
Accrued liabilities
primarily consist of accrued insurance, accrued sales commissions and accrued compensation and benefits. At March 31, 2022 and
December 31, 2021, accrued insurance was $
10
9. STOCKHOLDERS’ EQUITY
Common Stock
The Company had and shares of common stock, $ par value per share, outstanding as of March 31, 2022 and December 31, 2021, respectively.
Stock-Based Compensation
|
|
|
Stock |
|
|
Weighted average |
|
|
Weighted |
|
|
Aggregate |
|
||||
|
Outstanding as of January 1, 2022 |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|||
|
Exercised |
|
|
) |
|
|
|
|
|
|
|
|
|
|
|
||
|
Outstanding as of March 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|||
|
Exercisable as of March 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|
|
$ |
|
|||
As of March 31, 2022, there were shares available for future grants under the Company’s 2021 Long-Term Incentive Plan.
Stock-based compensation expense recorded for the three months ended March 31, 2022 and 2021 was approximately $ and $, respectively. All of the stock-based compensation expense is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. At March 31, 2022, the Company had total stock-based compensation expense remaining to be recognized in the consolidated statements of operations of approximately $.
|
|
|
Three Months Ended |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Numerator: |
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator: |
|
|
|
|
|
|
|
|
|
Weighted average basic shares outstanding |
|
|
|
|
|
|
|
|
|
Effect of dilutive securities - equity based compensation plans |
|
|
|
|
|
|
|
|
|
Denominator for diluted net (loss) income per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per common share: |
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
( |
) |
|
$ |
|
|
|
Diluted |
|
$ |
( |
) |
|
$ |
|
|
As of March 31, 2022 and 2021, diluted (loss) income per share excludes and potentially dilutive common shares related to option awards, as their effect was anti-dilutive.
11
11. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION
The Company follows ASC 280 - Segment Reporting in determining its reportable segments. The Company considered the way its management team, most notably its chief operating decision maker, makes operating decisions and assesses performance and considered which components of the Company’s enterprise have discrete financial information available. As the Company makes decisions using a manufactured products vs. distributed products and services group focus, its analysis resulted in
The T&D Solutions segment is involved in the design, manufacture and distribution of switchgear used primarily by large industrial and commercial operations to manage their electrical power distribution needs. The Critical Power segment provides power generation equipment and aftermarket field-services primarily to help customers ensure smooth, uninterrupted power to operations during times of emergency.
The following tables present information about segment income and loss:
|
|
|
Three Months Ended |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Revenues |
|
|
|
|
|
|
|
|
|
T&D Solutions |
|
|
|
|
|
|
|
|
|
Switchgear |
|
$ |
|
|
|
$ |
|
|
|
Service |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Critical Power Solutions |
|
|
|
|
|
|
|
|
|
Equipment |
|
|
|
|
|
|
|
|
|
Service |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
|
|
|
$ |
|
|
|
|
|
Three Months Ended |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
T&D Solutions |
|
$ |
|
|
|
$ |
|
|
|
Critical Power Solutions |
|
|
|
|
|
|
|
|
|
Unallocated corporate overhead expenses |
|
|
|
|
|
|
|
|
|
Consolidated |
|
$ |
|
|
|
$ |
|
|
|
|
|
Three Months Ended |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Operating income (loss) |
|
|
|
|
|
|
|
|
|
T&D Solutions |
|
$ |
|
|
|
$ |
( |
) |
|
Critical Power Solutions |
|
|
( |
) |
|
|
( |
) |
|
Unallocated corporate overhead expenses |
|
|
( |
) |
|
|
( |
) |
|
Consolidated |
|
$ |
( |
) |
|
$ |
( |
) |
Revenues are attributable to countries based on the location of the Company’s customers:
|
|
|
Three Months Ended |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Revenues |
|
|
|
|
|
|
|
|
|
United States |
|
$ |
|
|
|
$ |
|
|
12
12. LEASES
The Company leases certain offices, facilities and equipment under operating and financing leases. Our leases have remaining terms ranging from less than
The components of the lease expense were as follows:
|
|
|
Three Months Ended |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Operating lease cost |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance lease cost |
|
|
|
|
|
|
|
|
|
Amortization of right-of-use asset |
|
$ |
|
|
|
$ |
|
|
|
Interest on lease liabilities |
|
|
|
|
|
|
|
|
|
Total finance lease cost |
|
$ |
|
|
|
$ |
|
|
Other information related to leases was as follows:
Supplemental Cash Flows Information
|
|
March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
| Cash paid for amounts included in the measurement of lease liabilities |
|
|
|
|
|
|
|
|
| Operating cash flow payments for operating leases |
|
$ |
|
|
|
$ |
|
|
| Operating cash flow payments for finance leases |
|
|
|
|
|
|
|
|
| Financing cash flow payments for finance leases |
|
|
|
|
|
|
|
|
| Right-of-use assets obtained in exchange for lease obligations |
|
|
|
|
|
|
|
|
| Operating lease liabilities arising from obtaining right of use assets |
|
|
|
|
|
|
|
|
Weighted Average Remaining Lease Term
|
|
March 31, |
||
|
|
2022 |
|
2021 |
|
Operating leases |
|
|
|
|
Finance leases |
|
|
|
Weighted Average Discount Rate
|
|
March 31, |
||
|
|
2022 |
|
2021 |
|
Operating leases |
|
|
|
|
Finance leases |
|
|
|
13
Future minimum lease payments under non-cancellable leases as of March 31, 2022 were as follows:
|
|
|
Operating |
|
|
Finance |
|
||
|
|
|
Leases |
|
|
Leases |
|
||
|
2022 |
|
$ |
|
|
|
$ |
|
|
|
2023 |
|
|
|
|
|
|
|
|
|
2024 |
|
|
|
|
|
|
|
|
|
2025 |
|
|
|
|
|
|
|
|
|
Thereafter |
|
|
|
|
|
|
|
|
|
Total future minmum lease payments |
|
|
|
|
|
|
|
|
|
Less imputed interest |
|
|
( |
) |
|
|
( |
) |
|
Total future minmum lease payments |
|
$ |
|
|
|
$ |
|
|
Reported as of March 31, 2022:
|
|
|
Operating |
|
|
Finance |
|
||
|
|
|
Leases |
|
|
Leases |
|
||
|
Right-of-use assets |
|
$ |
|
|
|
$ |
|
|
|
|
|
Operating |
|
|
Finance |
|
||
|
|
|
Leases |
|
|
Leases |
|
||
|
Accounts payable and accrued liabilities |
|
$ |
|
|
|
$ |
|
|
|
Other long-term liabilities |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
13. SUBSEQUENT EVENTS
Equity Issuances.
On April 25, 2022, the Company awarded shares of restricted stock units to an employee with the following vesting terms: (i) units on May 1, 2022, (ii) an additional units on May 1, 2023, and (iii) the remaining units on May 1, 2024, provided that the employee is employed by the Company or a subsidiary of the Company on each such vesting date. The vested RSUs will be converted into shares of the Company's common stock no later than March 15 of the calendar year following the calendar year in which such RSUs vested.
Restricted Cash.
On May 6, 2022, the Company received notice that the
cash collateral security agreement it had executed with a commercial bank to pledge cash collateral as security for all unpaid reimbursement
obligations it owed to the commercial bank for an irrevocable standby letter of credit was cancelled. On May 11, 2022, the commercial
bank released and transferred the remaining cash collateral of $
Employment Agreements.
On April 25, 2022, the Company and Nathan J. Mazurek, the Company’s
Chief Executive Officer, entered into a fourth amendment to the employment agreement between the Company and Mr. Mazurek, dated as of
March 30, 2012, as amended on each of November 11, 2014, June 30, 2016 and March 30, 2020 (as amended, the “Mazurek Agreement”),
in order to (i) extend the termination date of the Mazurek Agreement from March 31, 2023, to December 31, 2024, and (ii) adjust Mr. Mazurek's
annual base salary at $
On April 25, 2022, the Company entered into a new
employment agreement, effective as of April 25, 2022, with Wojciech (Walter) Michalec (the “Michalec Employment Agreement”),
under which the Company agreed to employ Mr. Michalec as its Chief Financial Officer, Secretary and Treasurer for a term of three (
14
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying consolidated interim financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission on March 31, 2022.
Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to the “Company,” “Pioneer,” “we,” “our” and “us” refer to Pioneer Power Solutions, Inc. and its subsidiaries.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements,” which include information relating to future events, future financial performance, financial projections, strategies, expectations, competitive environment and regulation. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” and similar expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information we have when those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:
|
|
● |
General economic conditions and their effect on demand for electrical equipment, particularly in the commercial construction market, but also in the power generation, industrial production, data center, oil and gas, marine and infrastructure industries. |
|
|
● |
The effects of fluctuations in sales on our business, revenues, expenses, net income (loss), income (loss) per share, margins and profitability. |
|
|
● |
Many of our competitors are better established and have significantly greater resources and may subsidize their competitive offerings with other products and services, which may make it difficult for us to attract and retain customers. |
|
|
● |
The potential loss or departure of key personnel, including Nathan J. Mazurek, our chairman, president and chief executive officer. |
|
|
● |
Our ability to generate internal growth, maintain market acceptance of our existing products and gain acceptance for our new products. |
|
|
● |
Unanticipated increases in raw material prices or disruptions in supply could increase production costs and adversely affect our profitability. |
|
|
● |
Our ability to realize revenue reported in our backlog. |
|
|
● |
Operating margin risk due to competitive pricing and operating efficiencies, supply chain risk, material, labor or overhead cost increases, interest rate risk and commodity risk. |
|
|
● |
Strikes or labor disputes with our employees may adversely affect our ability to conduct our business. |
|
|
● |
The impact of geopolitical activity on the economy, changes in government regulations such as income taxes, climate control initiatives, the timing or strength of an economic recovery in our markets and our ability to access capital markets. |
|
|
● |
Future sales of large blocks of our common stock may adversely impact our stock price. |
|
|
● |
The liquidity and trading volume of our common stock. |
|
|
● |
Our business could be adversely affected by an outbreak of disease, epidemic or pandemic, such as the global coronavirus pandemic, or similar public threat, or fear of such an event. |
The foregoing does not represent an exhaustive list of matters that may be covered by the forward-looking statements contained herein or risk factors that we are faced with that may cause our actual results to differ from those anticipated in our forward-looking statements. Moreover, new risks regularly emerge, and it is not possible for us to predict or articulate all risks we face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause actual results to differ from those contained in any forward-looking statements. Except to the extent required by applicable laws or rules, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. You should review carefully the risks and uncertainties described under the heading “Part II - Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q and “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 for a discussion of the foregoing and other risks that relate to our business and investing in shares of our common stock.
15
Business Overview
We design, manufacture, integrate, refurbish, service, distribute and sell electric power systems, distributed energy resources, power generation equipment and mobile electric vehicle (“EV”) charging solutions. Our products and services are sold to a broad range of customers in the utility, industrial and commercial markets. Our customers include, but are not limited to, electric, gas and water utilities, data center developers and owners, EV charging infrastructure developers and owners, and distributed energy developers. We are headquartered in Fort Lee, New Jersey and operate from three (3) additional locations in the U.S. for manufacturing, service and maintenance, engineering, and sales and administration.
Description of Business Segments
We have two reportable segments: Transmission & Distribution Solutions (“T&D Solutions”) and Critical Power Solutions (“Critical Power”).
|
|
● |
Our T&D Solutions business provides equipment solutions that help customers effectively and efficiently protect, control, transfer, monitor and manage their electric energy requirements. These solutions are marketed principally through our Pioneer Custom Electrical Products Corp. (“PCEP”) brand name. |
|
|
● |
Our Critical Power business provides customers with our suite of mobile E-BOOST© EV charging solutions, power generation equipment and all forms of service and maintenance on our customers’ power generation equipment. These products and services are marketed by our operations headquartered in Minnesota, currently doing business under both the Titan Energy Systems Inc. (“Titan”) and Pioneer Critical Power brand names. |
Critical Accounting Policies and Estimates
Our financial statements have been prepared in accordance with U.S. GAAP. The preparation of our financial statements requires us to make estimates and assumptions that affect the amounts and disclosures in the financial statements. Our estimates are based on our historical experience, knowledge of current events and actions we may undertake in the future, and on various other factors that we believe are reasonable under the circumstances. Our critical accounting policies and estimates are described in “Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies” in our Annual Report on Form 10-K filed with the SEC on March 31, 2022. There were no material changes to our accounting policies during the three months ended March 31, 2022.
16
RESULTS OF OPERATIONS
Overview of the Three-Month Results
Selected financial and operating data for our reportable business segments for the most recent reporting period is summarized below. This information, as well as the selected financial data provided in “Note 11 - Business Segment and Geographic Information” and in our unaudited Consolidated Financial Statements and related notes included in this Quarterly Report on Form 10-Q, should be referred to when reading our discussion and analysis of results of operations below.
Our summary of operating results during the three months ended March 31, 2022 and 2021 are as follows:
|
|
|
Three Months Ended |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Revenues |
|
|
|
|
|
|
|
|
|
T&D Solutions |
|
$ |
3,397 |
|
|
$ |
1,387 |
|
|
Critical Power Solutions |
|
|
2,639 |
|
|
|
2,115 |
|
|
Consolidated |
|
|
6,036 |
|
|
|
3,502 |
|
|
Cost of goods sold |
|
|
|
|
|
|
|
|
|
T&D Solutions |
|
|
3,021 |
|
|
|
1,556 |
|
|
Critical Power Solutions |
|
|
2,140 |
|
|
|
1,787 |
|
|
Consolidated |
|
|
5,161 |
|
|
|
3,343 |
|
|
Gross profit |
|
|
875 |
|
|
|
159 |
|
|
Selling, general and administrative expenses |
|
|
1,719 |
|
|
|
1,240 |
|
|
Depreciation and amortization expense |
|
|
27 |
|
|
|
25 |
|
|
Total operating expenses |
|
|
1,746 |
|
|
|
1,265 |
|
|
Operating loss from continuing operations |
|
|
(871 |
) |
|
|
(1,106 |
) |
|
Interest income |
|
|
(101 |
) |
|
|
(93 |
) |
|
Other expense (income) |
|
|
11 |
|
|
|
(1,343 |
) |
|
(Loss) income before taxes |
|
|
(781 |
) |
|
|
330 |
|
|
Income tax expense (benefit) |
|
|
7 |
|
|
|
(21 |
) |
|
Net (loss) income |
|
$ |
(788 |
) |
|
$ |
351 |
|
Backlog
Our backlog is based on firm orders from our customers expected to be delivered in the future, most of which is expected to occur during the next twelve months. Backlog may vary significantly from reporting period to reporting period due to the timing of customer commitments. Backlog reflects the amount of revenue we expect to realize upon the shipment of customer orders for our products that are not yet complete or for which work has not yet begun.
The following table represents the progression of our backlog, by reporting segment, as of the end of the last five quarters:
|
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
|
2021 |
|
|
2021 |
|
|
2021 |
|
|||||
|
T&D Solutions |
|
$ |
18,732 |
|
|
$ |
17,499 |
|
|
$ |
5,032 |
|
|
$ |
6,501 |
|
|
$ |
10,210 |
|
|
Critical Power Solutions |
|
|
5,222 |
|
|
|
5,349 |
|
|
|
5,823 |
|
|
|
6,225 |
|
|
|
6,934 |
|
|
Total order backlog |
|
$ |
23,954 |
|
|
$ |
22,848 |
|
|
$ |
10,855 |
|
|
$ |
12,726 |
|
|
$ |
17,144 |
|
17
Revenue
The following table represents our revenues by reporting segment and major product category for the periods indicated (in thousands, except percentages):
|
|
|
Three Months Ended |
|
|||||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
Variance |
|
|
% |
|
||||
|
T&D Solutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Switchgear and e-Bloc power system |
|
$ |
3,387 |
|
|
$ |
1,387 |
|
|
$ |
2,000 |
|
|
|
144.2 |
|
|
Service |
|
|
10 |
|
|
|
— |
|
|
|
10 |
|
|
|
— |
|
|
|
|
|
3,397 |
|
|
|
1,387 |
|
|
|
2,010 |
|
|
|
144.9 |
|
|
Critical Power Solutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment |
|
|
1,115 |
|
|
|
526 |
|
|
|
589 |
|
|
|
112.0 |
|
|
Service |
|
|
1,524 |
|
|
|
1,589 |
|
|
|
(65 |
) |
|
|
(4.1 |
) |
|
|
|
|
2,639 |
|
|
|
2,115 |
|
|
|
524 |
|
|
|
24.8 |
|
|
Total revenue |
|
$ |
6,036 |
|
|
$ |
3,502 |
|
|
$ |
2,534 |
|
|
|
72.4 |
|
For the three months ended March 31, 2022, our consolidated revenue increased by $2.5 million, or 72.4%, to $6.0 million, up from $3.5 million during the three months ended March 31, 2021, mainly due to an increase in sales of our power systems and switchgear from our T&D Solutions segment.
T&D Solutions. During the three months ended March 31, 2022, revenue from our power systems and switchgear product lines increased by $2.0 million, or 144.2%, as compared to the three months ended March 31, 2021, as a result of increased sales of our e-Bloc power systems, automatic transfer switches and medium voltage switchgear.
Critical Power. For the three months ended March 31, 2022, revenue for our equipment sales increased by $589, or 112.0%, as compared to the three months ended March 31, 2021, mainly due to the recognition of $788 of revenue from our first E-BOOST shipment during the three months ended March 31, 2022.
For the three months ended March 31, 2022, our service revenue decreased by $65, or 4.1%, as compared to the same period in the three months ended March 31, 2021, primarily due to the cyclicality of our preventative maintenance schedules.
Gross Profit (Loss) and Gross Margin
The following table represents our gross profit (loss) by reporting segment for the periods indicated (in thousands, except percentages):
|
|
|
Three Months Ended |
|
|||||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
Variance |
|
|
% |
|
||||
|
T&D Solutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss) |
|
$ |
376 |
|
|
$ |
(169 |
) |
|
$ |
545 |
|
|
|
322.5 |
|
|
Gross margin% |
|
|
11.1 |
|
|
|
(12.2 |
) |
|
|
23.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Critical Power Solutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
499 |
|
|
|
328 |
|
|
|
171 |
|
|
|
52.1 |
|
|
Gross margin% |
|
|
18.9 |
|
|
|
15.5 |
|
|
|
3.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated gross profit |
|
$ |
875 |
|
|
$ |
159 |
|
|
$ |
716 |
|
|
|
450.3 |
|
|
Consolidated gross margin% |
|
|
14.5 |
|
|
|
4.5 |
|
|
|
10.0 |
|
|
|
|
|
For the three months ended March 31, 2022, our consolidated gross margin was 14.5% of revenues, as compared to 4.5% during the three months ended March 31, 2021.
18
T&D Solutions. For the three months ended March 31, 2022, our gross margin percentage increased by 23.3%, from (12.2)% to 11.1%, as compared to the three months ended March 31, 2021. This increase was primarily due to increased sales of our power systems and switchgear equipment, favorable sales mix and improved productivity from our manufacturing facility.
Critical Power. For the three months ended March 31, 2022, our gross margin increased by 3.4% to 18.9%, from 15.5% for the three months ended March 31, 2021, predominately due to a reduction in overhead costs, the acceptance of price increases from our customers and the shipment of our first E-BOOST order, which generated a higher gross margin as compared to shipments of our power generation equipment.
Operating Expenses
The following table represents our operating expenses by reportable segment for the periods indicated (in thousands, except percentages):
|
|
|
Three Months Ended |
|
|||||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
Variance |
|
|
% |
|
||||
|
T&D Solutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense |
|
$ |
333 |
|
|
$ |
265 |
|
|
$ |
68 |
|
|
|
25.7 |
|
|
Depreciation and amortization expense |
|
|
1 |
|
|
|
5 |
|
|
|
(4 |
) |
|
|
(80.0 |
) |
|
Segment operating expense |
|
$ |
334 |
|
|
$ |
270 |
|
|
$ |
64 |
|
|
|
23.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Critical Power Solutions |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense |
|
$ |
635 |
|
|
$ |
399 |
|
|
$ |
236 |
|
|
|
59.1 |
|
|
Depreciation and amortization expense |
|
|
19 |
|
|
|
13 |
|
|
|
6 |
|
|
|
46.2 |
|
|
Segment operating expense |
|
$ |
654 |
|
|
$ |
412 |
|
|
$ |
242 |
|
|
|
58.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated Corporate Overhead Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense |
|
$ |
751 |
|
|
$ |
576 |
|
|
$ |
175 |
|
|
|
30.4 |
|
|
Depreciation and amortization expense |
|
|
7 |
|
|
|
7 |
|
|
|
— |
|
|
|
— |
|
|
Segment operating expense |
|
$ |
758 |
|
|
$ |
583 |
|
|
$ |
175 |
|
|
|
30.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense |
|
$ |
1,719 |
|
|
$ |
1,240 |
|
|
$ |
479 |
|
|
|
38.6 |
|
|
Depreciation and amortization expense |
|
|
27 |
|
|
|
25 |
|
|
|
2 |
|
|
|
8.0 |
|
|
Consolidated operating expense |
|
$ |
1,746 |
|
|
$ |
1,265 |
|
|
$ |
481 |
|
|
|
38.0 |
|
Selling, General and Administrative Expense. For the three months ended March 31, 2022, consolidated selling, general and administrative expense, before depreciation and amortization, increased by approximately $479, or 38.6%, to $1.7 million, as compared to $1.2 million during the three months ended March 31, 2021. As a percentage of our consolidated revenue, selling, general and administrative expense decreased to 28.5% during the three months ended March 31, 2022, as compared to 35.4% in the three months ended March 31, 2021.
The selling, general and administrative expense in our T&D Solutions segment increased by $68, or 25.7%, during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, primarily due to an increase in payroll related expenses, product development fees and third-party commissions.
The selling, general and administrative expense in our Critical Power segment increased by $236, or 59.1%, during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, primarily due to product development and promotion fees recorded during the three months ended March 31, 2022, as compared to no product development or promotion fees recognized during the three months ended March 31, 2021.
The selling, general and administrative expense in our unallocated corporate overhead expenses increased by $175, or 30.4%, during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, primarily due to an increase in stock-based compensation and payroll related expenses, professional fees and business travel related costs.
19
Depreciation and Amortization Expense. Depreciation and amortization expense consists primarily of depreciation of fixed assets and amortization of right-of-use assets related to our finance leases and excludes amounts included in cost of sales. For the three months ended March 31, 2022, consolidated depreciation and amortization expense increased by $2, or 8.0%, as compared to the three months ended March 31, 2021.
Operating Income (Loss)
The following table represents our operating income (loss) by reportable segment for the periods indicated (in thousands, except percentages):
|
|
|
Three Months Ended |
|
|||||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
Variance |
|
|
% |
|
||||
|
T&D Solutions |
|
$ |
42 |
|
|
$ |
(439 |
) |
|
$ |
481 |
|
|
|
109.6 |
|
|
Critical Power Solutions |
|
|
(155 |
) |
|
|
(84 |
) |
|
|
(71 |
) |
|
|
(84.5 |
) |
|
Unallocated corporate overhead expenses |
|
|
(758 |
) |
|
|
(583 |
) |
|
|
(175 |
) |
|
|
(30.0 |
) |
|
Total operating loss |
|
$ |
(871 |
) |
|
$ |
(1,106 |
) |
|
$ |
235 |
|
|
|
21.2 |
|
T&D Solutions. Operating income from our T&D Solutions segment increased by $481, or 109.6%, during the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, primarily due an increase in sales of our e-Bloc power systems and switchgear, favorable sales mix and improved productivity from our manufacturing facility.
Critical Power. Operating loss for the Critical Power segment increased by $71, or 84.5% during the three months ended March 31, 2022, primarily due to product development and promotion fees recording during the three months ended March 31, 2022, as compared to no product development or promotion fees recognized during the three months ended March 31, 2021.
General Corporate Expense. Our general corporate expenses consist primarily of executive management, corporate accounting and human resources personnel, corporate office expenses, financing and corporate development activities, payroll and benefits administration, treasury, tax compliance, legal, stock-based compensation, public reporting costs and costs not specifically allocated to reportable business segments.
During the three months ended March 31, 2022, our unallocated corporate overhead expense increased by $175, or 30.0%, as compared to the three months ended March 31, 2021, primarily due to an increase in stock-based compensation and payroll related expenses, professional fees and business travel related costs.
Non-Operating (Income) Expense
Interest Income. For the three months ended March 31, 2022 and 2021, we had interest income of $101 and $93, respectively. We generate the majority of our interest income from the Seller Notes received from the sale of the transformer business units in August 2019 and our cash on hand.
Other Expense (Income). Other expense (income) in the unaudited interim consolidated statements of operations reports certain gains and losses associated with activities not directly related to our core operations. For the three months ended March 31, 2022, other expense was $11, as compared to other income of $1.3 million during the three months ended March 31, 2021.
On March 27, 2020, then President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security (CARES) Act.” The CARES Act, among other things, appropriates funds for the SBA Paycheck Protection Program loans that are forgivable in certain situations to promote continued employment. On April 13, 2020 after having determined that it met the qualifications for this loan program due to the impact that COVID-19 would have on our financial condition, results of operations, and/or liquidity and applying for relief, the Company received a loan under the SBA Paycheck Protection Program in the amount of $1.4 million. The Company made this assertion in good faith based upon all available guidance and accounted for the PPP Loan as a debt instrument in accordance with FASB ASC 470, Debt. The Company used the proceeds from the PPP Loan to retain employees, maintain payroll and make lease, rent and utility payments.
Under the terms of the PPP Loan, the Company was eligible for full or partial loan forgiveness. The Company received full forgiveness of the PPP Loan during the three months ended March 31, 2021 and recognized a $1.4 million gain on extinguishment and forgiveness of debt in other income.
20
Income Tax Expense (Benefit). Our effective income tax rate was (0.9)% for the three months ended March 31, 2022, compared to (6.4)% during the three months ended March 31, 2021, as set forth below:
|
|
|
Three Months Ended |
|
|||||||||
|
|
|
2022 |
|
|
2021 |
|
|
Variance |
|
|||
|
(Loss) income before income taxes |
|
$ |
(781 |
) |
|
$ |
330 |
|
|
$ |
(1,111 |
) |
|
Income tax expense (benefit) |
|
|
7 |
|
|
|
(21 |
) |
|
|
28 |
|
|
Effective income tax rate % |
|
|
(0.9 |
) |
|
|
(6.4 |
) |
|
|
5.5 |
|
Net (Loss) Income per Share
We generated a net loss of $788 during the three months ended March 31, 2022, as compared to net income of $351 during the three months ended March 31, 2021.
Our net loss per basic and diluted share for the three months ended March 31, 2022 was $0.08, as compared to net income per basic and diluted share of $0.04 for the three months ended March 31, 2021.
LIQUIDITY AND CAPITAL RESOURCES
General. At March 31, 2022, we had $13.1 million of cash on hand generated primarily from the sale of common stock under the At The Market Sale Agreement (the “ATM Program”) and cash flows from operating activities. We have met our cash needs through a combination of cash flows from operating activities and bank borrowings, the completion of the Equity Transaction, proceeds from the sale of the CleanSpark Common Stock and warrants to purchase CleanSpark Common Stock, proceeds from insurance and funding from the Payroll Protection Program. Our cash requirements historically were generally for operating activities, debt repayment, capital improvements and acquisitions.
The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the unaudited interim consolidated statement of cash flows:
|
|
|
March 31, |
|
|
December 31, |
|
||
|
|
|
2022 |
|
|
2021 |
|
||
|
Cash |
|
$ |
13,138 |
|
|
$ |
9,924 |
|
|
Restricted cash |
|
|
505 |
|
|
|
1,775 |
|
|
Total cash and restricted cash as shown in the statement of cash flows |
|
$ |
13,643 |
|
|
$ |
11,699 |
|
During the first quarter of 2021, the Company executed a cash collateral security agreement with a commercial bank, which agreement required us to pledge cash collateral as security for all unpaid reimbursement obligations owing to the commercial bank for an irrevocable standby letter of credit in the amount of $1.8 million. During the three months ended March 31, 2022, we amended our agreement with the commercial bank to decrease the required amount of cash collateral by $1.3 million. As a result of executing the cash collateral security agreement and amendment, we recognized approximately $505 of restricted cash within the consolidated balance sheet at March 31, 2022.
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic (the “COVID-19 pandemic”), based on the rapid increase in exposure globally.
The full impact of the COVID-19 pandemic continues to evolve as the date of this report. As such, it continues to be uncertain as to the full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations. The Company has been able to operate substantially at capacity during the COVID-19 pandemic. Notwithstanding, the Company has been able to operate substantially at capacity during the COVID-19 pandemic. Management is actively monitoring the global situation on its financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 pandemic and the global responses to contain its spread, the Company is not able to estimate the full effects of the COVID-19 pandemic at this time, however, if the pandemic continues, it may continue to have an adverse effect on the Company’s results of operations, financial condition, or liquidity.
On March 27, 2020, then President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security (CARES) Act” (the “CARES Act”) The CARES Act, among other things, appropriates funds for the SBA Paycheck Protection Program loans that are forgivable in certain situations to promote continued employment. On April 13, 2020, after having determined that it met the qualifications for this loan program due to the impact that COVID-19 would have on our financial condition, results of operations, and/or liquidity and applying for relief, the Company received a loan under the SBA Paycheck Protection Program (the “PPP Loan”) in the amount of $1.4 million. The Company accounted for the PPP Loan as a debt instrument in accordance with FASB ASC 470, Debt.
21
Under the terms of the PPP Loan, the Company was eligible for full or partial loan forgiveness. During the three months ended March 31, 2021, the Company received full forgiveness of the PPP Loan and recognized a $1.4 million gain on extinguishment and forgiveness of debt as other income in the audited consolidated statements of operations.
Cash Provided by/ (Used in) Operating Activities. Cash provided by our operating activities was $2.1 million during the three months ended March 31, 2022, as compared to cash used in our operating activities of $941 during the three months ended March 31, 2021. The increase in cash provided by operating activities is primarily due to working capital fluctuations and a one-time $1.4 million gain on the extinguishment and forgiveness of the PPP Loan recognized during the three months ended March 31, 2021.
Cash Used in Investing Activities. Cash used in investing activities during the three months ended March 31, 2022 was $112, as compared to no cash used in investing activities during the three months ended March 31, 2021. Additions to property and equipment during the three months ended March 31, 2022 were $112, as compared to no additions during the three months ended March 31, 2021.
Cash Used in Financing Activities. Cash used in our financing activities was $31 during the three months ended March 31, 2022, as compared to $118 during the three months ended March 31, 2021. The primary use of cash in financing activities for the three months ended March 31, 2022 and 2021 was repayments of financing leases.
Working Capital. As of March 31, 2022, we had working capital of $17.4 million, including $13.1 million of cash and $505 of restricted cash, compared to working capital of $18.6 million, including $9.9 million of cash and $1.8 million of restricted cash at December 31, 2021.
Assessment of Liquidity. At March 31, 2022, we had $13.1 million of cash on hand generated primarily from cash flows from operating activities during the three months ended March 31, 2022 and the sale of common stock under the ATM Program during the year ended December 31, 2021. We have met our cash needs through a combination of cash flows from operating activities and bank borrowings, the completion of the Equity Transaction, proceeds from the sale of the CleanSpark Common Stock and warrants to purchase CleanSpark Common Stock, proceeds from insurance and funding from the Payroll Protection Program. Our cash requirements historically were generally for operating activities, debt repayment, capital improvements and acquisitions.
On June 1, 2021, our board of directors declared a special cash dividend of $0.12 per common share, payable to shareholders of record as of June 22, 2021, to be paid on July 7, 2021. The cash dividends were paid in July of 2021 and equaled $0.12 per share on the $0.001 par value common stock resulting in an aggregate distribution of approximately $1.0 million representing a capital repayment paid from APIC.
On November 8, 2021, we sold 888,500 shares of common stock under the ATM Program, for total gross proceeds of approximately $9.0 million, at an average price of $10.1288 per share. We incurred approximately $273 of costs related to the common shares issued (including a placement fee of 3.0%, or approximately $270, to H.C. Wainwright & Co., LLC), resulting in net proceeds of approximately $8.7 million.
We expect to meet our cash needs with our working capital and cash flows from our operating activities. We expect our cash requirements to be generally for operating activities, capital improvements and product development. We expect that our cash balance is sufficient to fund operations for the next twelve months.
As of March 31, 2022, we had no off-balance sheet transactions, arrangements, obligations (including contingent obligations), or other relationships with unconsolidated entities or other persons that had, or that may have, a material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Capital Expenditures
The Company had $112 of additions to property and equipment during the three months ended March 31, 2022, as compared to no additions to property and equipment during the three months ended March 31, 2021.
Known Trends, Events, Uncertainties and Factors That May Affect Future Operations
We believe that our future operating results will continue to be subject to quarterly variations based upon a wide variety of factors, including the cyclical nature of the electrical equipment industry and the markets for our products and services. Our operating results could also be impacted by changing customer requirements and exposure to fluctuations in prices of important raw supplies, such as copper, steel and aluminum. We have various insurance policies, including cybersecurity, covering risks in amounts that we consider adequate. In addition to these measures, we attempt to recover other cost increases through improvements to our manufacturing efficiency and through increases in prices where competitively feasible. Lastly, other economic conditions we cannot foresee may affect customer demand. The impact of the ongoing COVID-19 pandemic, including the Omicron variant of COVID-19, which appears to be the most transmissible variant to-date, and the subvariant, BA.2, is currently indeterminable and rapidly evolving, and has affected and may continue to affect our operations and the global economy. In addition, the consequences of the ongoing conflict between Russia and Ukraine, including related sanctions and countermeasures, are difficult to predict, and could adversely impact geopolitical and macroeconomic conditions, the global economy, and contribute to increased market volatility, which may in turn adversely affect our business and operations. We predominately sell to customers in the industrial production and commercial construction markets. Accordingly, changes in the condition of any of our customers may have a greater impact than if our sales were more evenly distributed between different end markets. For a further discussion of factors that may affect future operating results see the sections entitled “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q and “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
ITEM 4. CONTROLS AND PROCEDURES
Management’s Conclusions Regarding Effectiveness of Disclosure Controls and Procedures
We conducted an evaluation of the effectiveness of our “disclosure controls and procedures” (“Disclosure Controls”), as defined by Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of March 31, 2022 (the “Evaluation Date”), the end of the period covered by this Quarterly Report on Form 10-Q. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures. As of March 31, 2022, based on the evaluation of these disclosure controls and procedures, our chief executive officer and chief financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level.
22
Management believes that the condensed consolidated financial statements in this Quarterly Report on Form 10-Q fairly present, in all material respects, the Company’s financial condition as of the Evaluation Date, and results of its operations and cash flows for the Evaluation Date, in conformity with U.S. GAAP.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended March 31, 2022 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
23
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may become involved in lawsuits, investigations and claims that arise in the ordinary course of business.
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 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.
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.
ITEM 1A. RISK FACTORS
A description of the risks associated with our business, financial condition and results of operations is set forth in “Item 1A. Risk Factors” of our annual report on Form 10-K for the fiscal year ended December 31, 2021, as filed with the Securities and Exchange Commission on March 31, 2022. There have been no material changes to these risks during the three months ended March 31, 2022.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.
24
EXHIBIT INDEX
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Exhibit |
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Description |
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Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
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Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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101.INS* |
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Inline XBRL Instance Document. |
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101.SCH* |
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Inline XBRL Taxonomy Extension Schema Document. |
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101.CAL* |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
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101.DEF* |
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Inline XBRL Taxonomy Extension Definition Linkbase Document. |
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101.LAB* |
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Inline XBRL Taxonomy Extension Labels Linkbase Document. |
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101.PRE* |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
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104 |
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Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). |
* Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
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PIONEER POWER SOLUTIONS, INC. |
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Date: May 16, 2022 |
By: |
/s/ Nathan J. Mazurek |
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Name: Nathan J. Mazurek |
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Title: Chief Executive Officer |
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Date: May 16, 2022 |
/s/ Walter Michalec |
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Name: Walter Michalec |
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Title: Chief Financial Officer (Principal Financial Officer duly authorized to sign on behalf of Registrant) |
Pioneer Power Solutions, Inc. 10-Q
EXHIBIT 31.1
CERTIFICATION
I, Nathan J. Mazurek, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Pioneer Power Solutions, Inc.; |
| 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(s) 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(s) 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: May 16, 2022 | /s/ Nathan J. Mazurek |
| Nathan J. Mazurek | |
President, Chief Executive Officer and Chairman
of the Board of Directors (Principal Executive Officer duly |
Pioneer Power Solutions, Inc. 10-Q
EXHIBIT 31.2
CERTIFICATION
I, Walter Michalec, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Pioneer Power Solutions, Inc.; |
| 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(s) 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(s) 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: May 16, 2022 | /s/ Walter Michalec |
| Walter Michalec | |
Chief Financial Officer (Principal Financial Officer duly authorized to sign on behalf of Registrant)
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Pioneer Power Solutions, Inc. 10-Q
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
This certification is furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and accompanies the Quarterly Report on Form 10-Q (the “Form 10-Q”) for the fiscal quarter ended March 31, 2022 of Pioneer Power Solutions, Inc. (the “Company”). I, Nathan J. Mazurek, the Chief Executive Officer of the Company, certify that, based on my knowledge:
| (1) | The Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in this report. |
| Date: May 16, 2022 | By: | /s/ Nathan J. Mazurek |
| Name: | Nathan J. Mazurek | |
| Title: | Chief Executive Officer |
The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Pioneer Power Solutions, Inc. 10-Q
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
This certification is furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) and accompanies the Quarterly Report on Form 10-Q (the “Form 10-Q”) for the fiscal quarter ended March 31, 2022 of Pioneer Power Solutions, Inc. (the “Company”). I, Walter Michalec, the Chief Financial Officer of the Company, certify that, based on my knowledge:
| (1) | The Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and | |
| (2) | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in this report. |
| Date: May 16, 2022 | By: | /s/ Walter Michalec |
| Name: | Walter Michalec | |
| Title: | Chief Financial Officer |
The foregoing certification is being furnished as an exhibit to the Form 10-Q pursuant to Item 601(b)(32) of Regulation S-K and Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and, accordingly, is not being filed as part of the Form 10-Q for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Income Statement [Abstract] | ||
| Revenues | $ 6,036 | $ 3,502 |
| Cost of goods sold | 5,161 | 3,343 |
| Gross profit | 875 | 159 |
| Operating expenses | ||
| Selling, general and administrative | 1,746 | 1,265 |
| Total operating expenses | 1,746 | 1,265 |
| Loss from continuing operations | (871) | (1,106) |
| Interest income | (101) | (93) |
| Other expense (income) | 11 | (1,343) |
| (Loss) income before taxes | (781) | 330 |
| Income tax expense (benefit) | 7 | (21) |
| Net (loss) income | $ (788) | $ 351 |
| (Loss) income per share: | ||
| Basic | $ (0.08) | $ 0.04 |
| Diluted | $ (0.08) | $ 0.04 |
| Weighted average common shares outstanding: | ||
| Basic | 9,641 | 8,726 |
| Diluted | 9,641 | 8,789 |
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Preferred stock, authorized | 5,000,000 | 5,000,000 |
| Preferred stock, issued | 0 | 0 |
| Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
| Common stock, authorized | 30,000,000 | 30,000,000 |
| Common stock, outstanding | 9,644,545 | 9,640,545 |
| Common stock, issued | 9,644,545 | 9,640,545 |
Consolidated Statement of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands |
Common Stock [Member] |
Additional Paid-in Capital [Member] |
AOCI Attributable to Parent [Member] |
Retained Earnings [Member] |
Total |
|---|---|---|---|---|---|
| Balance Beginning at Dec. 31, 2020 | $ 9 | $ 23,981 | $ 14 | $ (10,145) | $ 13,859 |
| Balance Beginning (in shares) at Dec. 31, 2020 | 8,726,045 | ||||
| Net loss | 351 | 351 | |||
| Stock-based compensation | 33 | 33 | |||
| Balance Ending at Mar. 31, 2021 | $ 9 | 24,014 | 14 | (9,794) | 14,243 |
| Balance Ending (in shares) at Mar. 31, 2021 | 8,726,045 | ||||
| Balance Beginning at Dec. 31, 2021 | $ 10 | 31,840 | 14 | (12,312) | $ 19,552 |
| Balance Beginning (in shares) at Dec. 31, 2021 | 9,640,545 | 9,640,545 | |||
| Net loss | (788) | $ (788) | |||
| Stock-based compensation | 57 | 57 | |||
| Exercise of stock options | 17 | $ 17 | |||
| Exercise of stock options (in shares) | 4,000 | 4,000 | |||
| Balance Ending at Mar. 31, 2022 | $ 10 | $ 31,914 | $ 14 | $ (13,100) | $ 18,838 |
| Balance Ending (in shares) at Mar. 31, 2022 | 9,644,545 | 9,644,545 |
BASIS OF PRESENTATION |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [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,” “Pioneer Power,” “we,” “our” and “us”) design, manufacture, integrate, refurbish, service, distribute and sell electric power systems, distributed energy resources, power generation equipment and mobile electric vehicle (“EV”) charging solutions. Our products and services are sold to a broad range of customers in the utility, industrial and commercial markets. Our customers include, but are not limited to, electric, gas and water utilities, data center developers and owners, EV charging infrastructure developers and owners, and distributed energy developers. The Company is headquartered in Fort Lee, New Jersey and operates from three (3) additional locations in the U.S. for manufacturing, service and maintenance, 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, 2021, as filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2022: Transmission and Distribution Solutions (“T&D Solutions”) and Critical Power Solutions (“Critical Power”).
Presentation
The accompanying unaudited interim consolidated financial statements of the Company have been prepared pursuant to the rules of the SEC and reflect the accounts of the Company as of March 31, 2022. 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 to the reader. 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.
All dollar amounts (except share and per share data) presented in the notes to our unaudited interim consolidated financial statements are stated in thousands of dollars, unless otherwise noted. Amounts may not foot due to rounding. ASC 740-270 requires the use of an estimated annual effective tax rate to compute the tax provision during an interim period unless certain exceptions are met. We have used a discrete-period computation method to calculate taxes for the fiscal three-month period ended March 31, 2022. Due to projected operating losses for the year, the Company anticipates that its annual effective tax rate will be 0%. As of March 31, 2022, the Company continues to provide a 100% valuation allowance against its net deferred tax assets since the Company believes it is more likely than not that its deferred tax assets will not be realized.
These unaudited interim consolidated financial statements include the accounts of Pioneer and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
These unaudited interim consolidated financial statements should be read in conjunction with the risk factors under the heading “Part II - Item 1A. Risk Factors” and 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, 2021.
Liquidity
The accompanying financial statements have been prepared on a basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying financial statements as of the three months ended March 31, 2022, the Company had $13.1 million of cash on hand and working capital of $17.4 million. The cash on hand was generated primarily from cash flows from operating activities and the sale of common stock under the At The Market Sale Agreement during the year ended December 31, 2021.
We have met our cash needs through a combination of cash flows from operating activities and bank borrowings, the completion of the Equity Transaction (as defined herein), proceeds from the sale of the CleanSpark Common Stock and warrants to purchase CleanSpark Common Stock, proceeds from insurance and funding from the Payroll Protection Program. Our cash requirements historically were generally for operating activities, debt repayment, capital improvements and acquisitions. We expect to meet our cash needs with our working capital and cash flows from our operating activities. We expect our cash requirements to be generally for operating activities, product development and capital improvements. The Company expects that its current cash balance is sufficient to fund operations for the next twelve months.
On June 1, 2021, the board of directors of the Company declared a special cash dividend of $ per common share, payable to shareholders of record as of June 22, 2021, to be paid on July 7, 2021. The cash dividends were paid in July of 2021 and equaled $ per share on the $ par value common stock resulting in an aggregate distribution of approximately $1.0 million representing a capital repayment paid from additional paid-in capital (“APIC”).
During the first quarter of 2021, the Company executed a cash collateral security agreement with a commercial bank, which agreement required us to pledge cash collateral as security for all unpaid reimbursement obligations owing to the commercial bank for an irrevocable standby letter of credit in the amount of $1.8 million. During the three months ended March 31, 2022, the Company amended its agreement with the commercial bank to decrease the required amount of cash collateral by $1.3 million. As a result of executing the cash collateral security agreement and amendment, the Company classified approximately $505 of restricted cash within the consolidated balance sheet at March 31, 2022.
In November 2016, the FASB issued amended guidance to ASU No. 2016-18, Statement of Cash Flows - Restricted Cash (Topic 230), which requires the statement of cash flows to explain the change during the period in the total of cash, cash equivalents, and restricted cash and that restricted cash be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.
The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows:
COVID-19
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic (the “COVID-19 pandemic”), based on the rapid increase in exposure globally.
The full impact of the COVID-19 pandemic continues to evolve as the date of this report. As such, it continues to be uncertain as to the full magnitude that the pandemic will have on the Company’s financial condition, liquidity, and future results of operations. The Company has been able to operate substantially at capacity during the COVID-19 pandemic. Notwithstanding, the Company has been able to operate substantially at capacity during the COVID-19 pandemic. Management is actively monitoring the global situation on its financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 pandemic and the global responses to contain its spread, the Company is not able to estimate the full effects of the COVID-19 pandemic at this time, however, if the pandemic continues, it may continue to have an adverse effect on the Company’s results of operations, financial condition, or liquidity.
On March 27, 2020, then President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security (CARES) Act” (the “CARES Act”). The CARES Act, among other things, appropriates funds for the SBA Paycheck Protection Program loans that are forgivable in certain situations to promote continued employment. On April 13, 2020, after having determined that it met the qualifications for this loan program due to the impact that COVID-19 would have on our financial condition, results of operations, and/or liquidity and applying for relief, the Company received a loan under the SBA Paycheck Protection Program (the “PPP Loan”) in the amount of $1.4 million. The Company accounted for the PPP Loan as a debt instrument in accordance with FASB ASC 470, Debt.
Under the terms of the PPP Loan, the Company was eligible for full or partial loan forgiveness. During the first quarter of 2021, the Company received full forgiveness of the PPP Loan and recognized a $1.4 million gain on extinguishment and forgiveness of debt as other income in the unaudited interim consolidated statements of operations.
Reclassification
The following items have been reclassified in the 2021 financial statements:
The unaudited consolidated statements of cash flows contain a reclassification of the gain on the extinguishment and forgiveness of the PPP Loan from financing activities to operating activities for the three months ended March 31, 2021. Additionally, principal repayments of financing leases and the reduction in operating leases have been reclassified and presented in the applicable cash flow activity for the three months ended March 31, 2022 and 2021. The inventories footnote contains a reclassification of the provision for excess and obsolete inventory and reductions to net realizable value to the applicable inventory classification at December 31, 2021.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended |
|---|---|
Mar. 31, 2022 | |
| Accounting Policies [Abstract] | |
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company’s significant accounting policies are described in Note 2 to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes in the Company’s accounting policies during the first quarter of 2022.
Recent Accounting Pronouncements
There have been no recent accounting pronouncements not yet adopted by the Company which would have a material impact on the Company’s financial statements.
Measurement of Credit Losses on Financial Instrument. In June 2016, the FASB issued amended guidance to ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments that changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that will replace today’s “incurred loss” model and generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except that the losses will be recognized as an allowance. This amended guidance for small reporting companies is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. The Company does not expect that the amended guidance will have a material effect on our consolidated financial statements and related disclosures.
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REVENUES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| REVENUES | 3. REVENUES
Nature of our products and services
Our principal products and services include electric power systems, distributed energy resources, power generation equipment and mobile EV charging solutions.
Products
Our T&D Solutions business provides electric power systems and distributed energy resources that help customers effectively and efficiently protect, control, transfer, monitor and manage their electric energy requirements.
Our Critical Power business provides customers with our suite of mobile E-BOOST electric vehicle charging solutions and power generation equipment.
Services
Power generation systems represent considerable investments that require proper maintenance and service in order to operate reliably during a time of emergency. Our power maintenance programs provide preventative maintenance, repair and support service for our customers’ power generation systems.
Our principal source of revenue is derived from sales of products and fees for services. We measure revenue based upon the consideration specified in the customer arrangement, and revenue is recognized when the performance obligations in the customer arrangement are satisfied. A performance obligation is a promise in a contract to transfer a distinct product or service to the customer. The transaction price of a contract is allocated to each distinct performance obligation and recognized as revenue when or as, the customer receives the benefit of the performance obligation. Customers typically receive the benefit of our products when the risk of loss or control for the product transfers to the customer and for services as they are performed. Under ASC 606, revenue is recognized when a customer obtains control of promised products or services in an amount that reflects the consideration we expect to receive in exchange for those products or services. To achieve this core principal, the Company applies the following five steps:
1) Identify the contract with a customer
A contract with a customer exists when (i) the Company enters into an enforceable contract with a customer that defines each party’s rights regarding the products or services to be transferred and identifies the payment terms related to these products or services, (ii) the contract has commercial substance and, (iii) the Company determines that collection of substantially all consideration for products or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration. The Company applies judgment in determining the customer’s ability and intention to pay, which is based on a variety of factors including the customer’s historical payment experience or, in the case of a new customer, published credit and financial information pertaining to the customer.
2) Identify the performance obligations in the contract
Performance obligations promised in a contract are identified based on the products or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the product or service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the products or services is separately identifiable from other promises in the contract. To the extent a contract includes multiple promised products or services, the Company must apply judgment to determine whether promised products or services are capable of being distinct and distinct in the context of the contract. If these criteria are not met the promised products or services are accounted for as a combined performance obligation.
3) Determine the transaction price
The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products or services to the customer. The customer payments are generally due in 30 days.
4) Allocate the transaction price to performance obligations in the contract
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis or cost of the product or service. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account available information such as market conditions and internally approved pricing guidelines related to the performance obligations.
5) Recognize revenue when or as the Company satisfies a performance obligation
The Company satisfies performance obligations either over time or at a point in time. Revenue is recognized at the time the related performance obligation is satisfied by transferring a promised product or service to a customer.
Revenue from the sale of our products is predominantly recognized at a point in time. Revenues are recognized at the point in time that the customer obtains control of the good, which is when it has taken title to the products and has assumed the risks and rewards of ownership specified in the purchase order or sales agreement. Certain sales of highly customized large equipment are recognized over time when such equipment has no alternative use and the Company has an enforceable right to payment for performance completed to date. Revenue for such agreements is recognized under the input method based on cost incurred relative to the estimated cost expected to be consumed to complete the project.
During the three months ended March 31, 2022, the Company recognized $4.5 million of revenue at a point in time from the sale of our products. Service revenues include maintenance contracts that are recognized over time based on the contract term and repair services, which are recognized as services are delivered. The Company recognized $ million of service revenue during the three months ended March 31, 2022.
During the three months ended March 31, 2021, the Company recognized $1.2 million of revenue over time and incurred costs of $1.1 million related to a single contract. The Company did not recognize revenue over time or incur costs related to any contracts during the three months ended March 31, 2022.
During the three months ended March 31, 2022, the Company recognized approximately $1.9 million of revenue that was recognized as deferred revenue at December 31, 2021, as compared to $2 during the three months ended March 31, 2021 that was recognized as deferred revenue at December 31, 2020.
The Company manages its accounts receivable credit risk by performing credit evaluations and monitoring amounts due from the Company’s customers. The Company had certain customers whose revenue individually represented 10% or more of the Company’s total revenue, or whose accounts receivable balances individually represented 10% or more of the Company’s total accounts receivable.
At March 31, 2022, three customers represented approximately 68% of the Company’s accounts receivable. At December 31, 2021, two customers represented approximately 43% of the Company’s accounts receivable.
For the three months ended March 31, 2022, three customers represented approximately 54% of revenue. For the three months ended March 31, 2021, two customer represented approximately 45% of revenue.
Return of a product requires that the buyer obtain permission in writing from the Company. When the buyer requests authorization to return material for reasons of their own, the buyer will be charged for placing the returned goods in saleable condition, restocking charges and for any outgoing and incoming transportation paid by the Company. The Company warrants title to the products, and also warrants the products on date of shipment to the buyer, to be of the kind and quality described in the contract, merchantable, and free of defects in workmanship and material. Returns and warranties during three months ended March 31, 2022 and 2021 were insignificant.
The following table presents our revenues disaggregated by revenue discipline:
See “Note 11 - Business Segment and Geographic Information in Notes to Consolidated Financial Statements” in Part I of this Quarterly Report on Form 10-Q. |
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OTHER EXPENSE (INCOME) |
3 Months Ended |
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Mar. 31, 2022 | |
| Other Income and Expenses [Abstract] | |
| OTHER EXPENSE (INCOME) | 4. OTHER EXPENSE (INCOME)
Other expense (income) in the unaudited interim consolidated statements of operations reports certain gains and losses associated with activities not directly related to our core operations. For the three months ended March 31, 2022, other expense was $11, as compared to other income of $1.3 million during the three months ended March 31, 2021. See “Note 1 – Basis of Presentation in Notes to Consolidated Financial Statements” in Part I of this Quarterly Report on Form 10-Q for reference to the PPP Loan.
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INVENTORIES |
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| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| INVENTORIES | 5. INVENTORIES
The components of inventories are summarized below:
Inventories are stated at the lower of cost or a net realizable value determined on a weighted average method. |
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PROPERTY AND EQUIPMENT |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT | 6. PROPERTY AND EQUIPMENT
Property and equipment are summarized below:
Depreciation expense was $36 and $37 for the periods ended March 31, 2022 and 2021, respectively. |
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NOTES RECEIVABLE |
3 Months Ended |
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Mar. 31, 2022 | |
| Receivables [Abstract] | |
| NOTES RECEIVABLE | 7. NOTES RECEIVABLE
In connection with the sale of the transformer business units in August 2019 (the “Equity Transaction”), amongst other consideration, we received two subordinated promissory notes in the aggregate principal amount of $5.0 million and $2.5 million, for a total aggregate principal amount of $7.5 million (the “Seller Notes”), subject to certain adjustments. The Seller Notes accrue interest at a rate of 4.0% per annum, with a final payment of all unpaid principal and interest becoming fully due and payable at December 31, 2022. The Company determined the fair value of the Seller Notes based on market conditions and prevailing interest rates. During the fourth quarter of 2019, the Company and the Buyer, pursuant to the Stock Purchase Agreement, completed the net working capital adjustment, which resulted in the Company paying the Buyer $1.8 million in cash and reducing the principal amount of the $5.0 million Seller Note to $3.2 million. During the second quarter of 2020, the Company recognized an additional reduction to the principal amount of the Seller Note of $194 for a valid claim paid by the Buyer on behalf of the Company. The Company has revalued the Seller Notes for an appropriate imputed interest rate, resulting in a net change to the value of the Seller Notes at March 31, 2022 of $107 for a carrying value of $5.9 million. |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
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| ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | 8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The components of accounts payable and accrued liabilities are summarized below:
Accrued liabilities primarily consist of accrued insurance, accrued sales commissions and accrued compensation and benefits. At March 31, 2022 and December 31, 2021, accrued insurance was $328 and $481, respectively. Accrued sales commissions at March 31, 2022 and December 31, 2021 were $72 and $247, respectively. At March 31, 2022, accrued compensation and benefits were $379 compared to $270 at December 31, 2021. The remainder of accrued liabilities are comprised of several insignificant accruals in connection with normal business operations. |
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STOCKHOLDERS’ EQUITY |
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| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STOCKHOLDERS’ EQUITY | 9. STOCKHOLDERS’ EQUITY
Common Stock
The Company had and shares of common stock, $ par value per share, outstanding as of March 31, 2022 and December 31, 2021, respectively.
Stock-Based Compensation
As of March 31, 2022, there were shares available for future grants under the Company’s 2021 Long-Term Incentive Plan.
Stock-based compensation expense recorded for the three months ended March 31, 2022 and 2021 was approximately $ and $, respectively. All of the stock-based compensation expense is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. At March 31, 2022, the Company had total stock-based compensation expense remaining to be recognized in the consolidated statements of operations of approximately $. |
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BASIC AND DILUTED (LOSS) INCOME PER COMMON SHARE |
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| BASIC AND DILUTED (LOSS) INCOME PER COMMON SHARE |
As of March 31, 2022 and 2021, diluted (loss) income per share excludes and potentially dilutive common shares related to option awards, as their effect was anti-dilutive. |
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BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION |
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION | 11. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION
The Company follows ASC 280 - Segment Reporting in determining its reportable segments. The Company considered the way its management team, most notably its chief operating decision maker, makes operating decisions and assesses performance and considered which components of the Company’s enterprise have discrete financial information available. As the Company makes decisions using a manufactured products vs. distributed products and services group focus, its analysis resulted in two reportable segments: T&D Solutions and Critical Power. The Critical Power reportable segment is the Company’s Titan Energy Systems, Inc. business unit. The T&D Solutions reportable segment is the Company’s Pioneer Custom Electrical Products Corp. business unit.
The T&D Solutions segment is involved in the design, manufacture and distribution of switchgear used primarily by large industrial and commercial operations to manage their electrical power distribution needs. The Critical Power segment provides power generation equipment and aftermarket field-services primarily to help customers ensure smooth, uninterrupted power to operations during times of emergency.
The following tables present information about segment income and loss:
Revenues are attributable to countries based on the location of the Company’s customers:
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LEASES |
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| Leases | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LEASES | 12. 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 March 31, 2022 and 2021, assets recorded under finance leases were $952 and $921, respectively, and accumulated amortization associated with finance leases were $447 and $358, respectively. As of March 31, 2022 and 2021, assets recorded under operating leases were $2.5 million and $2.1 million, respectively, and accumulated amortization associated with operating leases were $845 and $1.4 million, respectively. During the three months ended March 31, 2022, the Company executed an extension of its operating lease for the manufacturing facility in Miami, Florida. After adjusting for a weighted average discount rate, the Company recognized a right-of-use asset and lease liability of approximately $156 within the consolidated balance sheets.
The components of the lease expense were as follows:
Other information related to leases was as follows:
Supplemental Cash Flows Information
Weighted Average Remaining Lease Term
Weighted Average Discount Rate
Future minimum lease payments under non-cancellable leases as of March 31, 2022 were as follows:
Reported as of March 31, 2022:
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SUBSEQUENT EVENTS |
3 Months Ended |
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Mar. 31, 2022 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | 13. SUBSEQUENT EVENTS
Equity Issuances.
On April 25, 2022, the Company awarded shares of restricted stock units to an employee with the following vesting terms: (i) units on May 1, 2022, (ii) an additional units on May 1, 2023, and (iii) the remaining units on May 1, 2024, provided that the employee is employed by the Company or a subsidiary of the Company on each such vesting date. The vested RSUs will be converted into shares of the Company's common stock no later than March 15 of the calendar year following the calendar year in which such RSUs vested.
Restricted Cash.
On May 6, 2022, the Company received notice that the cash collateral security agreement it had executed with a commercial bank to pledge cash collateral as security for all unpaid reimbursement obligations it owed to the commercial bank for an irrevocable standby letter of credit was cancelled. On May 11, 2022, the commercial bank released and transferred the remaining cash collateral of $505 to the Company.
Employment Agreements.
On April 25, 2022, the Company and Nathan J. Mazurek, the Company’s Chief Executive Officer, entered into a fourth amendment to the employment agreement between the Company and Mr. Mazurek, dated as of March 30, 2012, as amended on each of November 11, 2014, June 30, 2016 and March 30, 2020 (as amended, the “Mazurek Agreement”), in order to (i) extend the termination date of the Mazurek Agreement from March 31, 2023, to December 31, 2024, and (ii) adjust Mr. Mazurek's annual base salary at $535,500, for the period beginning on January 1, 2022 and ending on December 31, 2022, $562,500, for the period beginning on January 1, 2023 and ending on December 31, 2023, and $590,500, for the period beginning on January 1, 2024 and ending on December 31, 2024.
On April 25, 2022, the Company entered into a new employment agreement, effective as of April 25, 2022, with Wojciech (Walter) Michalec (the “Michalec Employment Agreement”), under which the Company agreed to employ Mr. Michalec as its Chief Financial Officer, Secretary and Treasurer for a term of three (3) years, commencing on January 1, 2022 and ending on December 31, 2024, unless such employment is terminated earlier in accordance with the Michalec Employment Agreement. Pursuant to the Michalec Employment Agreement, Mr. Michalec is entitled to an annualized base salary at a rate of $200,000 per annum for the period of January 1, 2022 through December 31, 2022, $220,000 per annum for the period of January 1, 2023 through December 31, 2023, and $240,000 per annum for the period of January 1, 2023 through December 31, 2024, payable less all applicable withholdings and deductions in accordance with the Company’s customary payroll practices for its executive employees.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
3 Months Ended |
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Mar. 31, 2022 | |
| Accounting Policies [Abstract] | |
| Recent Accounting Pronouncements | Recent Accounting Pronouncements
There have been no recent accounting pronouncements not yet adopted by the Company which would have a material impact on the Company’s financial statements.
Measurement of Credit Losses on Financial Instrument. In June 2016, the FASB issued amended guidance to ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments that changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other instruments, entities will be required to use a new forward-looking “expected loss” model that will replace today’s “incurred loss” model and generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, entities will measure credit losses in a manner similar to current practice, except that the losses will be recognized as an allowance. This amended guidance for small reporting companies is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Entities will apply the standard’s provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first effective reporting period. The Company does not expect that the amended guidance will have a material effect on our consolidated financial statements and related disclosures. |
BASIS OF PRESENTATION (Tables) |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows: | The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows:
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REVENUES (Tables) |
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| Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The following table presents our revenues disaggregated by revenue discipline: | The following table presents our revenues disaggregated by revenue discipline:
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INVENTORIES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| The components of inventories are summarized below: | The components of inventories are summarized below:
|
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PROPERTY AND EQUIPMENT (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and equipment are summarized below: | Property and equipment are summarized below:
|
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ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The components of accounts payable and accrued liabilities are summarized below: | The components of accounts payable and accrued liabilities are summarized below:
|
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STOCKHOLDERS’ EQUITY (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A summary of stock option activity as of March 31, 2022, and changes during the three months ended March 31, 2022, are presented below: |
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BASIC AND DILUTED (LOSS) INCOME PER COMMON SHARE (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The following table sets forth the computation of basic and diluted (loss) income per share (in thousands, except per share data): |
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BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The following tables present information about segment income and loss: | The following tables present information about segment income and loss:
|
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| Revenues are attributable to countries based on the location of the Company’s customers: | Revenues are attributable to countries based on the location of the Company’s customers:
|
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LEASES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The components of the lease expense were as follows: | The components of the lease expense were as follows:
|
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| Other information related to leases was as follows: | Other information related to leases was as follows:
Supplemental Cash Flows Information
Weighted Average Remaining Lease Term
Weighted Average Discount Rate
|
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| Future minimum lease payments under non-cancellable leases as of March 31, 2022 were as follows: | Future minimum lease payments under non-cancellable leases as of March 31, 2022 were as follows:
|
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| Reported as of March 31, 2022: | Reported as of March 31, 2022:
|
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The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows: (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
Mar. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
| Cash | $ 13,138 | $ 9,924 | ||
| Restricted cash | 505 | 1,775 | ||
| Total cash and restricted cash as shown in the statement of cash flows | $ 13,643 | $ 11,699 | $ 6,508 | $ 7,567 |
The following table presents our revenues disaggregated by revenue discipline: (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Disaggregation of Revenue [Line Items] | ||
| Total revenue | $ 6,036 | $ 3,502 |
| Product [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Total revenue | 4,502 | 1,913 |
| Service [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Total revenue | $ 1,534 | $ 1,589 |
OTHER EXPENSE (INCOME) (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Other Income and Expenses [Abstract] | ||
| Other expense | $ 11 | |
| Other income | $ 1,300 | |
The components of inventories are summarized below: (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Raw materials | $ 2,595 | $ 993 |
| Work in process | 4,370 | 3,167 |
| Total inventories | $ 6,965 | $ 4,160 |
Property and equipment are summarized below: (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Property and equipment | ||
| Property and equipment | $ 2,576 | $ 2,464 |
| Less: accumulated depreciation | (1,984) | (1,948) |
| Total property and equipment, net | 592 | 516 |
| Machinery, Vehicles and Equipment [Member] | ||
| Property and equipment | ||
| Property and equipment | 1,400 | 1,396 |
| Furniture and Fixtures [Member] | ||
| Property and equipment | ||
| Property and equipment | 205 | 205 |
| Computer Hardware and Software [Member] | ||
| Property and equipment | ||
| Property and equipment | 541 | 541 |
| Leasehold Improvements [Member] | ||
| Property and equipment | ||
| Property and equipment | 329 | 322 |
| Construction in Progress [Member] | ||
| Property and equipment | ||
| Property and equipment | $ 101 |
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Property, Plant and Equipment [Abstract] | ||
| Depreciation expense | $ 36 | $ 37 |
NOTES RECEIVABLE (Details Narrative) - Transformer Business Units [Member] - Subordinated Debt [Member] - USD ($) |
3 Months Ended | |||
|---|---|---|---|---|
Mar. 31, 2022 |
Jun. 30, 2020 |
Dec. 31, 2019 |
Aug. 16, 2019 |
|
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
| Principal amount | $ 7,500,000 | |||
| Interest rate | 4.00% | |||
| Maturity date | Dec. 31, 2022 | |||
| Cash payment for promissory note | $ 1,800,000 | |||
| Change in note receivable | $ 194,000 | |||
| Revaluation of note | $ 107,000 | |||
| Carrying value | $ 5,900,000 | |||
| First Seller Note [Member] | ||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
| Principal amount | $ 3,200,000 | 5,000,000 | ||
| Second Seller Note [Member] | ||||
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
| Principal amount | $ 2,500,000 | |||
The components of accounts payable and accrued liabilities are summarized below: (Details) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accounts payable | $ 5,094 | $ 2,089 |
| Accrued liabilities | 1,460 | 1,263 |
| Current portion of lease liabilities | 847 | 807 |
| Total accounts payable and accrued liabilities | $ 7,401 | $ 4,159 |
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details Narrative) - USD ($) $ in Thousands |
Mar. 31, 2022 |
Dec. 31, 2021 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accrued insurance | $ 328 | $ 481 |
| Accrued sales commission | 72 | 247 |
| Employee compensation and benefits | $ 379 | $ 270 |
STOCKHOLDERS’ EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
Dec. 31, 2021 |
|
| Class of Stock [Line Items] | |||
| Common stock, outstanding | 9,644,545 | 9,640,545 | |
| Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
| Stock-based compensation | $ 57 | $ 33 | |
| Stock-based compensation not yet recognized | $ 19 | ||
| Long-Term Incentive Plan [Member] | |||
| Class of Stock [Line Items] | |||
| Number of shares available for future grants | 900,000 | ||
A summary of stock option activity as of March 31, 2022, and changes during the three months ended March 31, 2022, are presented below: (Details) $ / shares in Units, $ in Thousands |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
USD ($)
$ / shares
shares
| |
| Equity [Abstract] | |
| Outstanding at beginning of period | shares | 647,667 |
| Outstanding at beginning of period | $ / shares | $ 5.53 |
| Outstanding at beginning of period | 6 years 4 months 24 days |
| Outstanding at beginning of period | $ | $ 1,442 |
| Exercised | shares | (4,000) |
| Exercised | $ / shares | $ 0.29 |
| Outstanding at end of period | shares | 643,667 |
| Outstanding at end of period | $ / shares | $ 5.54 |
| Outstanding at end of period | 6 years 2 months 12 days |
| Outstanding at end of period | $ | $ 768 |
| Exercisable at end of period | shares | 407,000 |
| Exercisable at end of period | $ / shares | $ 6.84 |
| Exercisable at end of period | 4 years 7 months 6 days |
| Exercisable at end of period | $ | $ 211 |
The following table sets forth the computation of basic and diluted (loss) income per share (in thousands, except per share data): (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Numerator: | ||
| Net (loss) income | $ (788) | $ 351 |
| Denominator: | ||
| Weighted average basic shares outstanding | 9,641 | 8,726 |
| Effect of dilutive securities - equity based compensation plans | 63 | |
| Denominator for diluted net (loss) income per common share | 9,641 | 8,789 |
| Net (loss) income per common share: | ||
| Basic | $ (0.08) | $ 0.04 |
| Diluted | $ (0.08) | $ 0.04 |
BASIC AND DILUTED (LOSS) INCOME PER COMMON SHARE (Details Narrative) - shares shares in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Earnings Per Share [Abstract] | ||
| Anti-dilutive shares | 644 | 437 |
Revenues are attributable to countries based on the location of the Company’s customers: (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||
| Revenues | $ 6,036 | $ 3,502 |
| UNITED STATES | ||
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||
| Revenues | $ 6,036 | $ 3,502 |
BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION (Details Narrative) |
3 Months Ended |
|---|---|
|
Mar. 31, 2022
N
| |
| Segment Reporting [Abstract] | |
| Number of reportable segments | 2 |
LEASES (Details Narrative) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Lessee, Lease, Description [Line Items] | ||
| Lease extended term (in years) | 5 years | |
| Assets under finance leases | $ 952 | $ 921 |
| Accumulated amortization associated with finance leases | 447 | 358 |
| Assets under operating leases | 2,500 | 2,100 |
| Accumulated amortization associated with operating leases | 845 | 1,400 |
| Operating lease right-of-use assets and lease liability recognized | $ 156 | |
| Minimum [Member] | ||
| Lessee, Lease, Description [Line Items] | ||
| Remaining lease term (in years) | 1 year | |
| Maximum [Member] | ||
| Lessee, Lease, Description [Line Items] | ||
| Remaining lease term (in years) | 5 years | |
The components of the lease expense were as follows: (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Leases | ||
| Operating lease cost | $ 188 | $ 142 |
| Finance lease cost | ||
| Amortization of right-of-use asset | 51 | 107 |
| Interest on lease liabilities | 10 | 11 |
| Total finance lease cost | $ 61 | $ 118 |
Other information related to leases was as follows: (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2022 |
Mar. 31, 2021 |
|
| Cash paid for amounts included in the measurement of lease liabilities | ||
| Operating cash flow payments for operating leases | $ 186 | $ 125 |
| Operating cash flow payments for finance leases | 10 | 11 |
| Financing cash flow payments for finance leases | 48 | 118 |
| Right-of-use assets obtained in exchange for lease obligations | ||
| Operating lease liabilities arising from obtaining right of use assets | $ 156 | |
| Operating Lease, Weighted Average Remaining Lease Term | 3 years | 4 years |
| Finance Lease, Weighted Average Remaining Lease Term | 2 years | 2 years |
| Operating Lease, Weighted Average Discount Rate, Percent | 5.50% | 5.50% |
| Finance Lease, Weighted Average Discount Rate, Percent | 6.65% | 6.80% |
Future minimum lease payments under non-cancellable leases as of March 31, 2022 were as follows: (Details) $ in Thousands |
Mar. 31, 2022
USD ($)
|
|---|---|
| Leases | |
| Operating Leases, 2022 | $ 555 |
| Finance Leases, 2022 | 176 |
| Operating Leases, 2023 | 670 |
| Finance Leases, 2023 | 291 |
| Operating Leases, 2024 | 508 |
| Finance Leases, 2024 | 61 |
| Operating Leases, 2025 | 95 |
| Finance Leases, 2025 | 77 |
| Operating Leases, Thereafter | 24 |
| Finance Leases, Thereafter | |
| Operating Leases, Total future minmum lease payments | 1,852 |
| Finance Leases, Total future minmum lease payments | 605 |
| Operating Leases, Less imputed interest | (136) |
| Finance Leases, Less imputed interest | (49) |
| Operating Leases, Total future minmum lease payments | 1,716 |
| Finance Leases, Total future minmum lease payments | $ 556 |
Reported as of March 31, 2022: (Details) $ in Thousands |
Mar. 31, 2022
USD ($)
|
|---|---|
| Operating Lease, Liability | $ 1,716 |
| Finance Lease, Liability | 556 |
| Right of Use Assets [Member] | |
| Operating Lease, Right-of-use assets | 1,675 |
| Finance Lease, Right-of-use assets | 505 |
| Accounts Payable and Accrued Liabilities [Member] | |
| Operating Lease, Liability | 643 |
| Finance Lease, Liability | 204 |
| Other Noncurrent Liabilities [Member] | |
| Operating Lease, Liability | 1,073 |
| Finance Lease, Liability | $ 352 |