Note 6 – Commitments and Contingencies

Leases

During the third quarter of 2021, the Company expanded space at their Grand Prairie, Texas (“Grand Prairie”) distribution center by approximately 156,000 square feet. The lease term on the expansion is set to expire in December of 2027 and the Company is obligated to pay approximately $644 in annual base rent, which shall increase by approximately 3% each year beginning on the second year of the lease term. In accordance with ASU 842, the Company recorded $4,058 in Right-of-use assets – operating, non-current, and $3,567 in Right-of-use obligation – operating, non-current, with $491 recorded in Right-of-use obligation – operating, current, on the consolidated balance sheet.

Legal Matters

Asbestos. A wholly-owned subsidiary of the Company, Automotive Specialty Accessories and Parts, Inc. and its wholly-owned subsidiary Whitney Automotive Group, Inc. ("WAG"), are named defendants in several lawsuits involving claims for damages caused by installation of brakes during the late 1960’s and early 1970’s that contained asbestos. WAG marketed certain brakes, but did not manufacture any brakes. WAG maintains liability insurance coverage to protect its and the Company’s assets from losses arising from the litigation and coverage is provided on an occurrence rather than a claims made basis, and the Company is not expected to incur significant out-of-pocket costs in connection with this matter that would be material to its consolidated financial statements.

Ordinary course litigation. The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. As of the date hereof, the Company believes that the final disposition of such matters will not have a material adverse effect on the financial position, results of operations or cash flow of the Company. The Company maintains liability insurance coverage to protect the Company’s assets from losses arising out of or involving activities associated with ongoing and normal business operations.