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Note 5 - Commitments and Contingencies
9 Months Ended
Sep. 30, 2021
Notes to Financial Statements  
Commitments and Contingencies Disclosure [Text Block]

5.         Commitments and Contingencies

 

From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. When the Company becomes aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. In accordance with authoritative guidance, the Company records loss contingencies in its financial statements only for matters in which losses are probable and can be reasonably estimated. The Company continuously assesses the potential liability related to the Company’s pending litigation and revises its estimates when additional information becomes available. Although it is difficult to predict the ultimate outcome of these cases, management believes, except as discussed below, that any ultimate liability would not have a material adverse effect on the consolidated statements of operations and comprehensive income/(loss). However, an unforeseen unfavorable development in any of these cases could have a material adverse effect on the statements of operations and comprehensive income/(loss) or cash flows in the period in which it is recorded.

 

Settlement Agreement and Related Costs

 

As the Company disclosed in a Current Report on Form 8-K filed on September 23, 2021, on September 23, 2021, the Company entered into a settlement agreement in connection with a contract dispute regarding the Company’s alleged contractual obligations to a customer involving litigation with certain of the customer’s former employees regarding their employment termination (the “Settlement Agreement”). The Settlement Agreement provided that the settlement amount of $2.1 million would be paid in three equal installments of $692 thousand each on September 30, October 29, and November 30, 2021. The parties agreed that following payment of the final installment they would file with the Court a Stipulation of Dismissal with Prejudice. The Company has recorded the settlement amount of $2.1 million as other expense in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2021.

 

Other Matters

 

A case is pending in California, in which the plaintiff has made claims involving the California Labor Code. The Company has removed the case to Federal court. The Company is unable to predict the outcome at this stage in the proceedings.