10. LAWSUIT LIABILITY

Gordon v. Digital Power Corporation

On or about November 21, 2019, the plaintiff filed a complaint against defendant, DPC, alleging wrongful termination and disability discrimination. The arbitration was conducted during October 2022. Aside from the opening and responding trial briefs, the arbitrator requested additional briefing on two subjects, undisclosed principal liability, and disclosed principal liability, both of which were submitted. In May 2023 the arbitrator entered a final award against the Company and in favor of Mr. Gordon in the amount of $1.1 million inclusive of interest, legal fees, administrative fees and expenses. Interest on the net damages portion of the award of approximately $294,000 accrues at 10% per annum. 

The Company has recorded a lawsuit liability of $1.2 million and $1.1 million for this judgement as of June 30, 2026, and December 31, 2025, respectively, in the condensed consolidated balance sheets. Interest expense related to liability was $7,000 and $7,000 for the three months ended June 30, 2026, and 2025, respectively. Interest expense for the six months ended June 30, 2026, and 2025 was $14,000 and $14,000, respectively.