Commitments and Contingencies
|3 Months Ended|
Mar. 31, 2021
|Commitments And Contingencies Disclosure [Abstract]|
|Commitments and Contingencies||
NOTE 9 – COMMITMENTS AND CONTINGENCIES
We are subject to litigation, claims, investigations, and audits arising from time to time in the ordinary course of our business.
On September 29, 2020, the Company’s former Chief Executive Officer, Stephen D. Cooper, commenced an action entitled Stephen D. Cooper v. One Stop Systems, Inc. et al, in San Diego County Superior Court, Case No. 37-2020-00034492-CU-BC-CTL. Mr. Cooper alleges claims for (1) breach of written contract and (2) violation of California Labor Code Sections 201 and 203 in connection with the Company’s alleged failure to pay unpaid wages and an earned bonus following the Company’s termination of Mr. Cooper’s employment with the Company in February 2020. Mr. Cooper seeks unspecified compensatory damages and statutory penalties.
The Company has denied Mr. Cooper’s allegations. On December 8, 2020, the Company filed a cross-complaint (“Cross Complaint”) against Mr. Cooper for (1) breach of contract (in connection with a binding commitment letter and Mr. Cooper’s employment agreement), (2) intentional misrepresentation, (3) negligent misrepresentation, and (4) breach of fiduciary duty. The Company is seeking compensatory damages, punitive damages, pre-judgment interest, attorneys’ fees, and the cost of suit incurred in connection with Mr. Cooper’s complaint and the Cross Complaint. The Company intends to vigorously defend all allegations.
Guarantees and Indemnities
The Company has made certain indemnities, under which it may be required to make payments to an indemnified party, in relation to certain transactions. The Company indemnifies its directors, officers, employees, and agents to the maximum extent permitted under the laws of the State of Delaware. In connection with its facility lease, the Company has indemnified its lessor for certain claims arising from the use of the facilities. Also, in connection with its Credit Agreement, the Company has agreed to indemnify its lender and others related to the use of the proceeds and other matters. The duration of the indemnities varies, and in many cases is indefinite. These indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated to make any payments for these obligations and no liabilities have been recorded for these indemnities in the accompanying consolidated balance sheets.
The Company leases its offices, manufacturing, and warehouse facility in San Diego County under a non-cancelable operating lease. Our corporate headquarters are in a leased space comprising of approximately 29,342 square feet in Escondido, California under a lease that was modified in February 2019 and expires in August 2024. The Company also leases a 3,208 square foot facility in Salt Lake City, Utah that houses our Ion software development team. The Company is the lessee of a leased space comprising approximately 12,880 square feet located in Irvine, California with the lease expiring in June 2021. Bressner Technology GmbH, leases space comprising of 8,073 square feet on a month-to-month basis.
For the three month periods ended March 31, 2021 and 2020, rent expense was $251,130 and $189,417, respectively.
In the normal course of business, the Company enters into purchase commitments for inventory components to be delivered based upon pre-established delivery schedules over a period that may exceed one year.
During the three month periods ended March 31, 2021 and 2020, the Company had two customers and in 2020, one customer that had approximately 38%, and 27%, respectively of revenue for which each represented greater than 10% of our consolidated annual revenue.
During the three month periods ended March 31, 2021 and 2020, the Company had approximately 22%, and 18%, respectively of purchases from vendors/suppliers for which each represents greater than 10% of our consolidated purchases.
The entire disclosure for commitments and contingencies.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef