PIONEER POWER SOLUTIONS, INC. Commitments Disclosure

7. COMMITMENTS AND CONTINGENCIES

 

Leases

 

The Company leases certain offices, facilities and equipment under operating and financing leases. The Company’s leases have remaining terms ranging from less than 1 year to 5 years, some of which contain options to extend up to 3 years. As of December 31, 2025, and 2024, assets recorded under finance leases were $643 and $455, respectively, and accumulated amortization associated with finance leases were $311 and $234, respectively.

 

As of December 31, 2025, and 2024, assets recorded under operating leases were $1,273 and $995, respectively, and accumulated amortization associated with operating leases were $129 and $465, respectively.

 

 

During the year ended December 31, 2025, the Company executed a third amendment to its operating lease for its corporate offices in Fort Lee, New Jersey, extending the lease term through January 2029. The Company accounted for the lease extension as a modification in which the modified lease classification remained an operating lease. The related right-of-use asset and lease liability were remeasured as a result of the lease modification, for which the Company recorded an increase of approximately $265 in right-of-use assets and $265 in lease liabilities.

 

Additionally, during the year ended December 31, 2025, the Company executed a first amendment to its operating lease for its facility in Champlin, Minnesota, extending the lease term through March 2031. The Company accounted for the lease extension as a modification in which the modified lease classification remained an operating lease. The related right-of-use asset and lease liability were remeasured as a result of the lease modification, for which the Company recorded an increase of approximately $577 in right-of-use assets and $577 in lease liabilities. The components of the lease expense were as follows:

 SCHEDULE OF LEASE EXPENSES

		For the Year Ended
		December 31,
		2025				2024
Operating lease cost		$	270			$	247
Financing lease cost
Amortization of right-of-use asset		$	137			$	129
Interest on lease liabilities			31				25
Total financing lease cost		$	168			$	154

 

Other information related to leases was as follows:

 

Supplemental cash flows information:

 SCHEDULE OF CASH FLOWS INFORMATION

		For the Year Ended
		December 31,
		2025				2024
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flow payments for operating leases		$	270			$	260
Operating cash flow payments for financing leases			31				25
Financing cash flow payments for financing leases			136				129
Right-of-use assets obtained in exchange for lease obligations
Finance lease ROU assets obtained in exchange for finance lease liabilities			248				-
Operating lease ROU assets obtained in exchange for operating lease liabilities			842				330

 

Weighted average remaining lease term:

 SCHEDULE OF WEIGHTED AVERAGE REMAINING LEASE TERM AND DISCOUNT RATE

			December 31,
			2025				2024
Operating leases			4 years				3 years
Financing leases			3 years				2 years

 

Weighted average discount rate:

 

		December 31,
		2025				2024
Operating leases			5.97	%			5.50	%
Financing leases			9.15	%			6.94	%

 

 

Future minimum lease payments under non-cancellable leases as of December 31, 2025, were as follows:

 SCHEDULE OF FUTURE MINIMUM LEASE PAYMENTS

		Operating Leases				Financing Leases
		Operating				Financing
		Leases				Leases
2026		$	287			$	150
2027			310				104
2028			317				63
2029			233				83
Thereafter			184				-
Total future minimum lease payments			1,331				400
Less imputed interest			(172	)			(58	)
Total future minimum lease payments		$	1,159			$	342

 

Reported as of December 31, 2025:

 SCHEDULE OF LEASE REPORTED

		Operating				Financing
		Leases				Leases
Right-of-use assets		$	1,144			$	332

 

		Operating				Financing
		Leases				Leases
Current portion of lease liabilities		$	223			$	123
Lease liabilities, non-current portion			936				219
Total		$	1,159			$	342

 

Litigation and Claims

 

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 our subsidiary 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 lawsuits or claims brought in the future will not have an adverse effect on our financial condition, liquidity or operating results.