UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2021~~2022

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 001-16501

Williams Industrial Services Group Inc.

(Exact name of registrant as specified in its charter)



Delaware		73-1541378
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~100 Crescent Centre Parkway~~200 Ashford Center North, Suite ~~1240~~425

~~Tucker~~Atlanta, GA ~~30084~~30338

(Address of principal executive offices) (Zip code)

(770) 879-4400

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	WLMS	NYSE American

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	◻	Accelerated filer	☒
Non-accelerated filer	◻
~~Non-accelerated filer~~	⌧	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

As of November ~~5, 2021,~~7, 2022, there were ~~25,915,502~~26,422,761 shares of common stock of Williams Industrial Services Group Inc. outstanding.

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

Table of Contents


Part I—FINANCIAL INFORMATION	32

Item 1. Financial Statements	32

Condensed Consolidated Balance Sheets as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 (unaudited)	32

Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	43

Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	54

Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	65

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	76

Notes to Condensed Consolidated Financial Statements (unaudited)	87

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	2325

Item 3. Quantitative and Qualitative Disclosures about Market Risk	3134

Item 4. Controls and Procedures	3135

Part II—OTHER INFORMATION

Item 1. Legal Proceedings	3136

Item 1A. Risk Factors	3236

~~Item 5. Other Information~~	32

Item 6. Exhibits	3337

SIGNATURES	3438

Table of Contents

Part I—FINANCIAL INFORMATION

Item 1. Financial Statements.

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)



(in thousands, except share data)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	2,556	$	8,716	$	1,013	$	2,482
Restricted cash		468	��	468		468		468
Accounts receivable, net of allowance of $228 and $351, respectively		39,489		27,549
Accounts receivable, net of allowance of $318 and $427, respectively						37,339		35,204
Contract assets		12,811		7,969		10,076		12,683
Other current assets		11,526		6,457		10,675		11,049
Total current assets		66,850		51,159		59,571		61,886

Property, plant and equipment, net		709		309
Property, plant, and equipment, net						1,016		653
Goodwill		35,400		35,400		35,400		35,400
Intangible assets		12,500		12,500		12,500		12,500
Other long-term assets		5,687		5,712		7,732		5,712
Total assets	$	121,146	$	105,080	$	116,219	$	116,151

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	8,439	$	6,210	$	11,732	$	12,168
Accrued compensation and benefits		19,856		15,800		14,312		12,388
Contract liabilities		2,494		2,529		3,440		3,412
Short-term borrowings		4,672		352		14,525		676
Current portion of long-term debt		1,050		1,050		1,050		1,050
Other current liabilities		10,711		7,170		4,630		11,017
Current liabilities of discontinued operations		188		342		106		316
Total current liabilities		47,410		33,453		49,795		41,027
Long-term debt, net		30,428		30,728
Long-term debt, net (Note 9)						21,809		30,328
Deferred tax liabilities		2,136		2,440		2,263		2,442
Other long-term liabilities		1,828		2,098		4,440		1,647
Long-term liabilities of discontinued operations		4,201		4,466		3,513		4,250
Total liabilities		86,003		73,185		81,820		79,694
Commitments and contingencies (Note 10)
Commitments and contingencies (Note 11)
Stockholders’ equity:
Common stock, $0.01 par value, 170,000,000 shares authorized and 26,384,670 and 25,926,333 shares issued, respectively, and 25,915,502 and 25,336,442 shares outstanding, respectively		260		256
Common stock, $0.01 par value, 170,000,000 shares authorized and 26,865,064 and 26,408,789 shares issued, respectively, and 26,422,761 and 25,939,621 shares outstanding, respectively						264		261
Paid-in capital		91,670		90,292		93,705		92,227
Accumulated other comprehensive income (loss)		(36)		28
Accumulated other comprehensive loss						(440)		(95)
Accumulated deficit		(56,745)		(58,673)		(59,124)		(55,930)
Treasury stock, at par (469,168 and 589,891 common shares, respectively)		(6)		(8)
Treasury stock, at par (442,303 and 469,168 common shares, respectively)						(6)		(6)
Total stockholders’ equity		35,143		31,895		34,399		36,457
Total liabilities and stockholders’ equity	$	121,146	$	105,080	$	116,219	$	116,151

See accompanying notes to condensed consolidated financial statements.

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

Three Months Ended September 30,

Nine Months Ended September 30,
(in thousands, except per share data)

2021

2020

2021

2020
Revenue

$
73,351

$
66,240

$
225,773

$
204,936
Cost of revenue

66,590

57,582

203,561

180,014

Gross profit

6,761

8,658

22,212

24,922

Selling and marketing expenses

267

123

709

401
General and administrative expenses

4,248

5,827

16,931

17,413
Depreciation and amortization expense

50

46

137

144
Total operating expenses

4,565

5,996

17,777

17,958

Operating income

2,196

2,662

4,435

6,964

Interest expense, net

1,227

1,541

3,733

4,640
Other (income) expense, net

181

(316)

(1,411)

(937)
Total other expense, net

1,408

1,225

2,322

3,703

Income from continuing operations before income tax

788

1,437

2,113

3,261
Income tax (benefit) expense

(6)

321

256

565
Income from continuing operations

794

1,116

1,857

2,696

Income (loss) from discontinued operations before income tax

(34)

(66)

130

(222)
Income tax (benefit) expense

22

24

59

(56)
Income (loss) from discontinued operations

(56)

(90)

71

(166)

Net income

$
738

$
1,026

$
1,928

$
2,530

Basic earnings per common share

Income from continuing operations

$
0.03

$
0.04

$
0.07

$
0.12
Income (loss) from discontinued operations

0.00

0.00

0.00

(0.01)
Basic earnings per common share

$
0.03

$
0.04

$
0.07

$
0.11

Diluted earnings per common share

Income from continuing operations

$
0.03

$
0.04

$
0.07

$
0.11
Income (loss) from discontinued operations

0.00

0.00

0.00

0.00
Diluted earnings per common share

$
0.03

$
0.04

$
0.07

$
0.11


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2022		2021		2022		2021
Revenue	$	56,685	$	73,351	$	182,303	$	225,773
Cost of revenue		55,936		66,590		173,564		203,561

Gross profit		749		6,761		8,739		22,212

Selling and marketing expenses		322		267		1,054		709
General and administrative expenses		6,657		4,248		19,022		16,931
Depreciation and amortization expense		61		50		173		137
Total operating expenses		7,040		4,565		20,249		17,777

Operating income (loss)		(6,291)		2,196		(11,510)		4,435

Interest expense, net		1,485		1,227		3,965		3,733
Other (income) expense, net		(11,114)		181		(11,533)		(1,411)
Total other (income) expense, net		(9,629)		1,408		(7,568)		2,322

Income (loss) from continuing operations before income tax		3,338		788		(3,942)		2,113
Income tax expense (benefit)		(272)		(6)		(214)		256
Income (loss) from continuing operations		3,610		794		(3,728)		1,857

Income (loss) from discontinued operations before income tax		(45)		(34)		(92)		130
Income tax expense (benefit)		(3)		22		(626)		59
Income (loss) from discontinued operations		(42)		(56)		534		71

Net income (loss)	$	3,568	$	738	$	(3,194)	$	1,928

Basic income (loss) per common share
Income (loss) from continuing operations	$	0.14	$	0.03	$	(0.14)	$	0.07
Income (loss) from discontinued operations		—		(0.00)		0.02		0.00
Basic income (loss) per common share	$	0.14	$	0.03	$	(0.12)	$	0.07

Diluted income (loss) per common share
Income (loss) from continuing operations	$	0.14	$	0.03	$	(0.14)	$	0.07
Income (loss) from discontinued operations		(0.01)		(0.00)		0.02		0.00
Diluted income (loss) per common share	$	0.13	$	0.03	$	(0.12)	$	0.07

See accompanying notes to condensed consolidated financial statements.

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021
Net income	$	738	$	1,026	$	1,928	$	2,530
Net income (loss)									$	3,568	$	738	$	(3,194)	$	1,928
Foreign currency translation adjustment		(98)		(34)		(64)		(288)		(318)		(98)		(345)		(64)
Comprehensive income	$	640	$	992	$	1,864	$	2,242
Comprehensive income (loss)									$	3,250	$	640	$	(3,539)	$	1,864

See accompanying notes to condensed consolidated financial statements.

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)


							Accumulated														Accumulated
	Common Shares						Other								Common Shares						Other
	$0.01 Per Share				Paid-in		Comprehensive		Accumulated	Treasury Shares					$0.01 Per Share				Paid-in		Comprehensive		Accumulated	Treasury Shares
(in thousands, except share data)	Shares		Amount		Capital		Income (Loss)		Deficit	Shares		Amount		Total	Shares		Amount		Capital		Income (Loss)		Deficit	Shares		Amount		Total
Balance, December 31, 2019	19,794,270	$	198	$	81,964	$	222	$	(60,211)	(737,075)	$	(9)	$	22,164
Issuance of common stock	5,384,615		54		6,478		—		—	—		—		6,532
Issuance of restricted stock units	423,341		—		—		—		—	80,207		1		1
Balance, December 31, 2020															25,926,333	$	256	$	90,292	$	28	$	(58,673)	(589,891)	$	(8)	$	31,895
Restricted stock awards granted															164,388		—		—		—		—	—		—
Restricted stock units vested															274,448		4		—		—		—	120,723		2		6
Tax withholding on restricted stock units	—		—		(65)		—		—	(41,445)		—		(65)	—		—		(545)		—		—	—		—		(545)
Stock-based compensation	—		—		376		—		—	—		—		376	—		—		625		—		—	—		—		625
Foreign currency translation	—		—		—		(258)		—	—		—		(258)	—		—		—		4		—	—		—		4
Net loss	—		—		—		—		(1,001)	—		—		(1,001)	—		—		—		—		(1,681)	—		—		(1,681)
Balance, March 31, 2020	25,602,226	$	252	$	88,753	$	(36)	$	(61,212)	(698,313)	$	(8)	$	27,749
Issuance of common stock	—		4		(48)		—		—	—		—		(44)
Issuance of restricted stock units	407,315		—		—		—		—	138,221		1		1
Balance, March 31, 2021															26,365,169	$	260	$	90,372	$	32	$	(60,354)	(469,168)	$	(6)	$	30,304
Restricted stock units vested															19,501		—		—		—		—	—		—		—
Tax withholding on restricted stock units	(93,234)		—		(153)		—		—	(31,570)		(1)		(154)	—		—		40		—		—	—		—		40
Stock-based compensation	—		—		650		—		—	—		—		650	—		—		424		—		—	—		—		424
Foreign currency translation	—		—		—		4		—	—		—		4	—		—		—		30		—	—		—		30
Net income	—		—		—		—		2,505	—		—		2,505	—		—		—		—		2,871	—		—		2,871
Balance, June 30, 2020	25,916,307	$	256	$	89,202	$	(32)	$	(58,707)	(591,662)	$	(8)	$	30,711
Issuance of restricted stock units	10,026		—		—		—		—	4,788		—		—
Tax withholding on restricted stock units	—		—		(9)		—		—	(3,017)		—		(9)
Share-based compensation	—		—		389		—		—	—		—		389
Balance, June 30, 2021															26,384,670	$	260	$	90,836	$	62	$	(57,483)	(469,168)	$	(6)	$	33,669
Stock-based compensation															—		—		834		—		—	—		—		834
Foreign currency translation	—		—		—		(34)		—	—		—		(34)	—		—		—		(98)		—	—		—		(98)
Net income	—		—		—		—		1,026	—		—		1,026	—		—		—		—		738	—		—		738
Balance, September 30, 2020	25,926,333	$	256	$	89,582	$	(66)	$	(57,681)	(589,891)	$	(8)	$	32,083
Balance, September 30, 2021															26,384,670	$	260	$	91,670	$	(36)	$	(56,745)	(469,168)	$	(6)	$	35,143

Accumulated

Common Shares

Other

$0.01 Per Share

Paid-in

Comprehensive

Accumulated

Treasury Shares

(in thousands, except share data)

Shares


Amount


Capital


Income (Loss)


Deficit

Shares


Amount


Total
Balance, December 31, 2020

25,926,333

$
256

$
90,292

$
28

$
(58,673)

(589,891)

$
(8)

$
31,895
Issuance of restricted stock units

438,836

4

—

—

—

120,723

2

6
Tax withholding on restricted stock units

—

—

(545)

—

—

—

—

(545)
Stock-based compensation

—

—

625

—

—

—

—

625
Foreign currency translation

—

—

—

4

—

—

—

4
Net loss

—

—

—

—

(1,681)

—

—

(1,681)
Balance, March 31, 2021

26,365,169

$
260

$
90,372

$
32

$
(60,354)

(469,168)

$
(6)

$
30,304
Issuance of restricted stock units

19,501

—

—

—

—

—

—

—
Tax withholding on restricted stock units

—

—

40

—

—

—

—

40
Stock-based compensation

—

—

424

—

—

—

—

424
Foreign currency translation

—

—

—

30

—

—

—

30
Net income

—

—

—

—

2,871

—

—

2,871
Balance, June 30, 2021

26,384,670

$
260

$
90,836

$
62

$
(57,483)

(469,168)

$
(6)

$
33,669
Share-based compensation

—

—

834

—

—

—

—

834
Foreign currency translation

—

—

—

(98)

—

—

—

(98)
Net income

—

—

—

—

738

—

—

738
Balance, September 30, 2021

26,384,670

$
260

$
91,670

$
(36)

$
(56,745)

(469,168)

$
(6)

$
35,143


							Accumulated
	Common Shares						Other
	$0.01 Per Share				Paid-in		Comprehensive		Accumulated	Treasury Shares
(in thousands, except share data)	Shares		Amount		Capital		Income (Loss)		Deficit	Shares		Amount		Total
Balance, December 31, 2021	26,408,789	$	261	$	92,227	$	(95)	$	(55,930)	(469,168)	$	(6)	$	36,457
Restricted stock awards granted	291,894		—		—		—		—	—		—		—
Stock-based compensation	—		—		(147)		—		—	—		—		(147)
Foreign currency translation	—		—		—		142		—	—		—		142
Net loss	—		—		—		—		(2,044)	—		—		(2,044)
Balance, March 31, 2022	26,700,683	$	261	$	92,080	$	47	$	(57,974)	(469,168)	$	(6)	$	34,408
Restricted stock units vested	169,255		—		—		—		—	26,865		—		—
Tax withholding on restricted stock units	—		2		(165)		—		—	—		—		(163)
Stock-based compensation	—		—		1,293		—		—	—		—		1,293
Foreign currency translation	—		—		—		(169)		—	—		—		(169)
Net loss	—		—		—		—		(4,718)	—		—		(4,718)
Balance, June 30, 2022	26,869,938	$	263	$	93,208	$	(122)	$	(62,692)	(442,303)	$	(6)	$	30,651
Restricted stock units forfeited	(4,874)		—		—		—		—	—		—		—
Tax withholding on restricted stock units	—		1		3		—		—	—		—		4
Stock-based compensation	—		—		494		—		—	—		—		494
Foreign currency translation	—		—		—		(318)		—	—		—		(318)
Net income	—		—		—		—		3,568	—		—		3,568
Balance, September 30, 2022	26,865,064	$	264	$	93,705	$	(440)	$	(59,124)	(442,303)	$	(6)	$	34,399

See accompanying notes to condensed consolidated financial statements.

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Nine Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2022		2021
Operating activities:
Net income	$	1,928	$	2,530
Adjustments to reconcile net income to net cash used in operating activities:
Net (income) loss from discontinued operations		(71)		166
Deferred income tax provision (benefit)		(304)		55
Depreciation and amortization on plant, property and equipment		137		144
Net income (loss)					$	(3,194)	$	1,928
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Net income from discontinued operations						(534)		(71)
Deferred income tax benefit						(178)		(304)
Depreciation and amortization on plant, property, and equipment						173		137
Amortization of deferred financing costs		623		546		636		623
Amortization of debt discount		150		—		150		150
Gain on disposals of property, plant and equipment		—		(136)
Bad debt expense		(123)		19		(26)		(123)
Stock-based compensation		2,579		1,703		1,120		2,579
Changes in operating assets and liabilities, net of businesses sold:
Changes in operating assets and liabilities:
Accounts receivable		(11,896)		(6,530)		(2,551)		(11,896)
Contract assets		(4,824)		(1,553)		2,547		(4,824)
Other current assets		(5,113)		(3,684)		2		(5,113)
Other assets		(214)		1,619		(2,202)		(214)
Accounts payable		2,121		(8,914)		(331)		2,121
Accrued and other liabilities		6,628		7,290		(692)		6,628
Contract liabilities		(39)		706		29		(39)
Net cash used in operating activities, continuing operations		(8,418)		(6,039)		(5,051)		(8,418)
Net cash used in operating activities, discontinued operations		(348)		(189)		(413)		(348)
Net cash used in operating activities		(8,766)		(6,228)		(5,464)		(8,766)
Investing activities:
Purchase of property, plant and equipment		(537)		(88)
Purchase of property, plant, and equipment						(536)		(537)
Net cash used in investing activities		(537)		(88)		(536)		(537)
Financing activities:
Repurchase of stock-based awards for payment of statutory taxes due on stock-based compensation		(501)		(227)		(159)		(501)
Proceeds from issuance of common stock		—		6,488
Debt issuance costs		—		(325)		(175)		—
Proceeds from short-term borrowings		208,421		172,616		211,875		208,421
Repayments of short-term borrowings		(204,101)		(175,158)		(198,026)		(204,101)
Repayments of long-term debt		(788)		(350)		(8,844)		(788)
Net cash provided by financing activities		3,031		3,044		4,671		3,031
Effect of exchange rate change on cash		112		(80)		(140)		112
Net change in cash, cash equivalents and restricted cash		(6,160)		(3,352)		(1,469)		(6,160)
Cash, cash equivalents and restricted cash, beginning of period		9,184		7,818		2,950		9,184
Cash, cash equivalents and restricted cash, end of period	$	3,024	$	4,466	$	1,481	$	3,024

Supplemental Disclosures:
Cash paid for interest	$	2,781	$	2,900	$	2,778	$	2,781
Cash paid for income taxes, net of refunds	$	1,841	$	—	$	—	$	1,841
Noncash amendment fee related to revolving credit facility	$	—	$	150

See accompanying notes to condensed consolidated financial statements.

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1—BUSINESS AND BASIS OF PRESENTATION

Business

Williams Industrial Services Group Inc. (together with its wholly owned subsidiaries, “Williams,” the “Company,” “we,” “us” or “our,” unless the context indicates otherwise) was initially formed in 1998 as GEEG ~~Holdings, LLC,~~Inc., a Delaware ~~limited liability company,~~corporation, and in 2001 changed its name to “Global Power Equipment Group Inc.,” and, as part of a ~~Delaware corporation and~~reorganization, became the successor to GEEG Holdings, ~~LLC.~~L.L.C., a Delaware limited liability company. Effective June 29, 2018, the Company changed its name to Williams Industrial Services Group Inc. to better align its name with the Williams business, and the Company’s stock ~~now~~ trades on the NYSE American LLC under the ticker symbol “WLMS.” Williams has been safely helping power plant owners and operators enhance asset value for more than 50 years. It provides a broad range of construction, maintenance, and support services to infrastructure customers in energy, power, and industrial end markets. The Company’s mission is to be the preferred provider of construction, maintenance, and specialty services through commitment to superior safety performance, focus on innovation, and dedication to delivering unsurpassed value to its customers.

Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) on a basis consistent with that used in the Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, filed by the Company with the U.S. Securities and Exchange Commission (“SEC”) on March ~~31, 2021~~16, 2022 (the ~~“2020~~“2021 Report”). In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, including all normal recurring adjustments, necessary to present fairly the unaudited condensed consolidated balance sheets and statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the periods indicated. All significant intercompany transactions have been eliminated. The December 31, ~~2020 unaudited~~2021 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. These unaudited condensed consolidated interim financial statements and accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the ~~2020~~2021 Report. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for any interim period are not necessarily indicative of operations to be expected for the full year.

The Company reports on a fiscal quarter basis utilizing a “modified” ~~4-4-5~~5-4-4 calendar (modified in that the fiscal year always begins on January 1 and ends on December 31). However, the Company has continued to label its quarterly information using a calendar convention. The effects of this practice are modest and only exist when comparing interim period results. The reporting periods and corresponding fiscal interim periods are as follows:



Reporting Interim Period	Fiscal Interim Period		Fiscal Interim Period
	2021	2020	2022	2021
Three Months Ended March 31	January 1, 2021 to April 4, 2021	January 1, 2020 to March 29, 2020	January 1, 2022 to April 3, 2022	January 1, 2021 to April 4, 2021
Three Months Ended June 30	April 5, 2021 to July 4, 2021	March 30, 2020 to June 28, 2020	April 4, 2022 to July 3, 2022	April 5, 2021 to July 4, 2021
Three Months Ended September 30	July 5, 2021 to October 3, 2021	June 29, 2020 to September 27, 2020	July 4, 2022 to October 2, 2022	July 5, 2021 to October 3, 2021

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NOTE 2—LIQUIDITY

As noted above, the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and on a basis consistent with the 2021 Report, which contemplates that the Company will continue to operate as a going concern, which means that it will be able to meet its obligations and continue its operations during the twelve-month period following the issuance of this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2022 (this “Form 10-Q”). Therefore, these financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern.

The Company had negative cash flows from operations during the nine months ended September 30, 2022. These negative cash flows were primarily a consequence of the four factors described in the paragraph below.

In connection with the preparation of the accompanying unaudited condensed consolidated financial statements, management assessed the Company’s financial condition and concluded that the following primary factors, taken in the aggregate, raised substantial doubt regarding the Company’s ability to continue as a going concern for the twelve-month period following the issuance of this Form 10-Q.

•

Significant losses incurred on a number of fixed price contracts in our Florida water business, which have been the subject of prior disclosures.

•

Start-up costs related to the Company’s entry into the transmission and distribution market, which have utilized cash resources and, while ultimately anticipated to benefit the Company’s business, have negatively impacted liquidity.

•

Failure to convert pipeline opportunities into revenue, which have had the effect of delaying the Company’s receipt of cash from such opportunities.

•

Delays in collecting cash receipts from customers.

To address the negative cash flows in the Company’s business, the Company has developed a liquidity plan, the implementation of which management believes will alleviate the substantial doubt about the Company’s ability to continue as a going concern during the twelve-month period following the issuance of this Form 10-Q. The liquidity plan, which will continue to be refined as circumstances dictate, contemplates the following key elements, in which the Company will:

•

Take steps to enhance profitability of non-performing businesses;

•

Lower the cost of services by removing nonbillable expenses that cannot be recovered;

•

Aggressively reduce operating expenses; and

•

Shorten the collection cycle time on the Company’s accounts receivable and lengthen the payment cycle time on its accounts payable.

On August 3, 2022, as a result of the Company being unable to comply with its debt covenants as of June 30, 2022, the Company amended its existing Revolving Credit Agreement and the Term Loan Agreement (as defined below), which among other things, amended the calculation of EBITDA (as defined in the Revolving Credit Agreement), and Consolidated EBITDA (as defined in the Term Loan Agreement) to include (or “add back”) certain non-recurring losses and expenses relating to projects executed in Jacksonville, Florida, one-time costs and expenses incurred in connection with the Company’s transmission and distribution business unit start-up, and costs and expenses arising out of the Company’s litigation with a former executive and his employer (in each case, subject to certain specified dollar limits), as well as to amend and increase the Total Leverage Ratio (as defined in the Term Loan Agreement) applicable to the Company for certain periods. For additional information regarding the amendments, see “Note 9—Debt.”

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While the above-mentioned factors have negatively affected the Company’s liquidity, there were two developments in the third and fourth quarter of 2022 that resulted in material cash receipts by the Company. Specifically, the Company settled two legal claims. The first such settlement involved a cash collection in the third quarter of 2022 of approximately $8.1 million related to an arbitration proceeding initiated by the Company against a third party in connection with the restatement of the Company’s financial statements in 2017 for the 2012 to 2014 period. The second matter, settled in the fourth quarter of 2022, involved litigation against a former executive and his employer that resulted in the employer of the former executive agreeing to pay a cash settlement of $2.7 million. The Company recognized both settlements as other income during the third quarter of 2022. The $8.1 million settlement proceeds were used to prepay part of the Company’s Term Loan and the $2.7 million settlement, which was collected on October 13, 2022, was used to repay a portion of the Revolving Credit Facility. As a result, the full amount of these settlement receipts could not be used for general working capital purposes and did not materially affect the Company’s liquidity. For additional information about the arbitration and legal settlements, please refer to “Note 9—Debt” and “Note 14—Subsequent Events” to the unaudited condensed consolidated financial statements included in this Form 10-Q.

In the first nine months of 2022, the Company’s principal sources of liquidity were borrowings under the Revolving Credit Facility and efforts to effectively manage its working capital. The Company anticipates that this will continue to be the case in the fourth quarter of 2022, subject to the anticipated benefits of the liquidity plan outlined above. The Company continues to monitor its liquidity and capital resources closely. If market conditions were to change, and revenue is reduced or operating costs either increased or could not be reduced as contemplated by the Company’s liquidity plan, cash flows and liquidity could be materially negatively impacted.

While management believes its liquidity plan alleviates the substantial doubt regarding the Company’s ability to continue as a going concern during the ensuing twelve-month period, the Company cannot provide any assurance that it will be able to implement its liquidity plan successfully or, even if successfully implemented, that the plan will ultimately result in the Company continuing as a going concern. In addition, the Company could be unable to meet its obligations under its existing indebtedness, including failing to comply with any of its covenants. If any such failures are not waived by the Company’s lenders, it would result in an event of default under such indebtedness and the potential acceleration of outstanding indebtedness thereunder and the potential foreclosure on the collateral securing such debt, and would likely cause a cross-default under the Company’s other outstanding indebtedness. If the liquidity plan does not have the intended effect, the Company may need to seek relief from the Company’s lenders or take steps to raise additional capital, such as selling equity or debt securities or entering into additional borrowing arrangements, to sustain operations, which may not be available on favorable terms, or at all, in which case the Company will be required to pursue other alternatives, which may include selling assets, selling or merging its business, ceasing operations or filing a petition for bankruptcy (either liquidation or reorganization) under applicable bankruptcy laws.

NOTE 2—3—RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2019-12, “Income Taxes”, which simplifies the accounting for income taxes by removing certain exceptions for investments, intraperiod allocations and interim calculations, and adding guidance to reduce complexity in accounting for income taxes. The update is effective for annual periods beginning after December 15, 2020, and interim periods within those fiscal years. Early adoption is permitted. The Company ~~historically~~ did not ~~rely on~~implement any new accounting pronouncements during the ~~exceptions in computing~~first nine months of 2022. However, the ~~tax provision. The~~ Company ~~adopted~~is currently evaluating the ~~guidance as~~impact of ~~January 1, 2021. The adoption of ASU 2019-12 did not have a material impact on the Company's financial statements.~~future disclosures that may arise under recent SEC proposals.

NOTE 3—4—LEASES

The Company primarily leases office space and related equipment, as well as equipment, modular units and vehicles directly used in providing services to its customers. The Company’s leases have remaining lease terms of one to ten years. Most leases contain renewal options for varying periods, which are at the Company’s sole discretion and included in the expected lease term if they are reasonably certain of being exercised. In accordance with ASU 2016-02, the Company accounts for lease components, such as fixed payments including rent, real estate taxes, and insurance costs, separately from the non-lease components, such as common area maintenance costs.

In accordance with ASU 2016-02, for leases with terms greater than twelve months, the Company records the related right-of-use assets and lease liabilities at the present value of the fixed lease payments over the lease term at the lease commencement date. The Company uses its incremental borrowing rate to determine the present value of the lease as the rate implicit in the lease is typically not readily determinable.

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Short-term leases (leases with an initial term of twelve months or less or leases that are cancelable by the lessee and lessor without significant penalties) are expensed on a straight-line basis over the lease term. The majority of the Company’s short-term leases relate to equipment used in delivering services to its customers. These leases are entered into at agreed upon hourly, daily, weekly, or monthly rental rates for an unspecified duration and typically have a termination for convenience provision. Such equipment leases are considered short-term in nature unless it is reasonably certain that the equipment will be leased for a term greater than twelve months.

On September 2, 2021, the Company made the decision to relocate its corporate headquarters to Atlanta, Georgia and entered into a ten-year lease agreement. The Company completed its relocation in March 2022. The lease is ~~not~~ presented as a right-of-use asset and lease liability ~~because~~and the ~~commencement date of the lease is not expected to occur until early 2022 after substantial completion of the leasehold improvements as defined in the lease agreement. The~~ lease liability amounts to ~~$3.5~~$3.3 million with a present value of ~~$2.3~~$2.2 million over a ten-year term. If the Company defaults, the landlord has the right to use the security deposit for rent or other payments due to other damages, injury, expense or liability as defined in the lease agreement. Although the security deposit shall be deemed the property of the landlord, any remaining balance of the security deposit shall be returned by the landlord to the Company after termination of the lease as the Company’s obligations under the lease have been fulfilled. The Company subleased a portion of its former office space and collected $44,000 of sublease income during the nine months ended September 30, 2022.

The components of lease expense were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
Lease Cost (in thousands)	2021		2020		2021		2020
Lease Cost/(Sublease Income) (in thousands)									2022		2021		2022		2021
Operating lease cost	$	619	$	850	$	1,711	$	2,950	$	549	$	619	$	1,668	$	1,711
Short-term lease cost		1,051		505		2,484		1,972		2,125		1,051		5,353		2,484
Sublease income		(5)		—		(5)		—		(14)		(5)		(44)		(5)
Total lease cost	$	1,665	$	1,355	$	4,190	$	4,922	$	2,660	$	1,665	$	6,977	$	4,190

Lease cost related to finance leases was not significant for the three and nine months ended September 30, ~~2021~~2022 and ~~2020.~~2021.

Information related to the Company’s right-of-use assets and lease liabilities were as follows:


Lease Assets/Liabilities (in thousands)	Balance Sheet Classification	September 30, 2022		December 31, 2021
Lease Assets
Right-of-use assets	Other long-term assets	$	3,738	$	1,527

Lease Liabilities
Short-term lease liabilities	Other current liabilities	$	1,572	$	1,606
Long-term lease liabilities	Other long-term liabilities		2,582		511
Total lease liabilities		$	4,154	$	2,117

Supplemental information related to the Company’s leases were as follows:


	Nine Months Ended September 30,
(dollars in thousands)	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash used by operating leases	$	1,810	$	1,810
Right-of-use assets obtained in exchange for new operating lease liabilities		3,669		1,549
Weighted-average remaining lease term - operating leases		5.34 years		1.47 years
Weighted-average remaining lease term - finance leases		1.48 years		2.48 years
Weighted-average discount rate - operating leases		9%		9%
Weighted-average discount rate - finance leases		9%		9%

910

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~~Information related to the Company’s right-of-use assets and lease liabilities was as follows:~~

Lease Assets/Liabilities (in thousands)

Balance Sheet Classification

September 30, 2021

December 31, 2020
Lease Assets

Right-of-use assets

Other long-term assets

$
1,583

$
2,029

Lease Liabilities

Short-term lease liabilities

Other current liabilities

$
1,603

$
1,362
Long-term lease liabilities

Other long-term liabilities

673

1,011
Total lease liabilities

$
2,276

$
2,373

~~Supplemental information related to the Company’s leases was as follows:~~

Nine Months Ended September 30,
(dollars in thousands)

2021

2020
Cash paid for amounts included in the measurement of lease liabilities:

Operating cash used by operating leases

$
1,810

$
3,388
Right-of-use assets obtained in exchange for new operating lease liabilities

1,549

2,226
Weighted-average remaining lease term - operating leases

1.47 years

1.71 years
Weighted-average remaining lease term - finance leases

2.48 years

3.48 years
Weighted-average discount rate - operating leases

9%

9%
Weighted-average discount rate - finance leases

9%

9%

Total remaining lease payments under the Company’s operating and finance leases were as follows:


	Operating Leases		Finance Leases		Operating Leases		Finance Leases

Nine Months Ended September 30,	(in thousands)				(in thousands)
Remainder of 2021	$	582	$	2
2022		1,372		6
Remainder of 2022					$	557	$	1
2023		360		6		1,490		6
2024		103		1		653		1
2025		3		—		375		-
2026						381		-
Thereafter						1,873		-
Total lease payments	$	2,420	$	15	$	5,329	$	8
Less: interest		(159)		—		(1,183)		-
Present value of lease liabilities	$	2,261	$	15	$	4,146	$	8

NOTE 4—5—CHANGES IN BUSINESS

Discontinued Operations

Electrical Solutions

During the fourth quarter of 2017, the Company made the decision to exit and sell its Electrical Solutions segment (which was comprised solely of Koontz-Wagner Custom Controls Holdings LLC (“Koontz-Wagner”), a wholly owned subsidiary of the Company) in an effort to reduce the Company’s outstanding term debt. The Company determined that the decision to exit this segment met the definition of a discontinued operation. As a result, this segment has been presented as a discontinued operation for all periods presented.

~~Table of Contents~~

On July 11, 2018, Koontz-Wagner filed a voluntary petition for relief under Chapter 7 of Title 11 of the Bankruptcy Code with the U.S. Bankruptcy Court for the Southern District of Texas. The filing was for Koontz-Wagner only, not for the Company as a whole, and was completely separate and distinct from the Williams business and operations. As a result of the July 11, 2018 bankruptcy of Koontz-Wagner, the Company recorded a pension withdrawal liability of $2.9 million related to Koontz-Wagner’s International Brotherhood of Electrical Workers Local Union 1392 (“IBEW”) multi-employer pension plan.

After an arbitration process, on May 12, 2021, an arbitrator concluded that the IBEW used an incorrect per hour contribution rate in calculating the Company’s pension withdrawal liability, which resulted in the Company overpaying. The arbitrator directed IBEW to refund all overpayments, with interest, to the Company and to redetermine the Company’s payments going forward using the proper contribution rate. Accordingly, the Company’s overall pension withdrawal liability decreased by approximately ~~$0.2~~$0.3 million. The pension liability is expected to be satisfied by annual cash payments of $0.3 million each, paid in quarterly installments, through 2038. The Company recorded a gain on disposal of approximately $0.2 million induring the first nine months ~~ended September 30,~~of 2021 to reduce its previously recorded estimated withdrawal ~~liability to the new amount.~~liability.

Mechanical Solutions

During the third quarter of 2017, the Company made the decision to exit and sell substantially all of the operating assets and liabilities of its Mechanical Solutions segment and determined that the decision to exit this segment met the definition of a discontinued operation. As a result, this segment has been presented as a discontinued operation for all periods presented.

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As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company did not have any assets related to its Electrical Solutions’ and Mechanical Solutions’ discontinued operations. The following table presents a reconciliation of the carrying amounts of major classes of liabilities of Electrical Solutions’ and Mechanical Solutions’ discontinued operations:



(in thousands)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Liabilities:
Current liabilities of discontinued operations	$	188	$	342	$	106	$	316
Liability for pension obligation		2,347		2,670		2,307		2,368
Liability for uncertain tax positions		1,854		1,796		1,206		1,882
Long-term liabilities of discontinued operations		4,201		4,466		3,513		4,250
Total liabilities of discontinued operations	$	4,389	$	4,808	$	3,619	$	4,566

The following table presents a reconciliation of the major classes of line items constituting the net income (loss) from discontinued operations. In accordance with GAAP, the amounts in the table below do not include an allocation of corporate overhead.

Three Months Ended September 30,

Nine Months Ended September 30,
(in thousands)

2021

2020

2021

2020
General and administrative expenses

$
5

$
14

$
39

$
20
Loss (gain) on disposal - Electrical Solutions

(17)

—

(245)

45
Interest expense

46

52

76

157
Income (loss) from discontinued operations before income tax

(34)

(66)

130

(222)
Income tax expense (benefit)

22

24

59

(56)
Income (loss) from discontinued operations

$
(56)

$
(90)

$
71

$
(166)

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	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
General and administrative expenses	$	—	$	5	$	—	$	39
Loss (gain) on disposal - Electrical Solutions		—		(17)		17		(245)
Interest expense		45		46		75		76
Income (loss) from discontinued operations before income tax		(45)		(34)		(92)		130
Income tax expense (benefit)		(3)		22		(626)		59
Income (loss) from discontinued operations	$	(42)	$	(56)	$	534	$	71

NOTE 5—6—REVENUE

Disaggregation of Revenue

The Company’s contracts generally include a single performance obligation for which revenue is recognized over time, as performance obligations are satisfied, due to the continuous transfer of control to the customer. For cost-plus contracts, the Company recognizes revenue when services are performed and contractually billable based upon the hours incurred and agreed-upon hourly rates. Revenue on fixed-price contracts is recognized and invoiced over time using the cost-to-cost percentage-of-completion method. To the extent a contract is deemed to have multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation using its best estimate of the standalone selling price of each distinct good or service in the contract. The Company does not adjust the price of the contract for the effects of a significant financing component. Change orders are generally not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as a modification of the existing contract and performance obligation. The Company believes these methods of revenue recognition most accurately reflect the economics of the transactions with its customers.

The Company’s contracts may include several types of variable consideration, including change orders, rate true-up provisions, retainage, claims, incentives, penalties, and liquidated damages. The Company estimates the amount of revenue to be recognized on variable consideration using estimation methods that best predict the amount of consideration to which the Company expects to be entitled. The Company includes variable consideration in the estimated transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur or when the uncertainty associated with the variable consideration is resolved. The Company’s estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based on an assessment of its anticipated performance and all information (historical, current, and forecasted) that is reasonably available. The Company updates its estimate of the transaction price each reporting period and the effect of variable consideration on the transaction price is recognized as an adjustment to revenue on a cumulative catch-up basis. In circumstances where the Company cannot reasonably determine the outcome of a contract, it recognizes revenue over time as the work is performed, but only to the extent of recoverable costs incurred (i.e. zero margin). A loss provision is recorded for the amount of any estimated unrecoverable costs in excess of total estimated revenue on a contract as soon as the Company becomes aware. The Company generally provides a limited warranty for a term of two years or less following completion of services performed under its contracts. Historically, warranty claims have not resulted in material costs incurred.

~~Disaggregated revenue by type of contract was as follows:~~

Three Months Ended September 30,

Nine Months Ended September 30,
(in thousands)

2021

2020

2021

2020
Cost-plus reimbursement contracts

$
63,363

$
57,123

$
201,027

$
182,689
Fixed-price contracts

9,988

9,117

24,746

22,247
Total

$
73,351

$
66,240

$
225,773

$
204,936

~~Disaggregated revenue by the geographic area where the work was performed was as follows:~~

Three Months Ended September 30,

Nine Months Ended September 30,
(in thousands)

2021

2020

2021

2020
United States

$
64,379

$
57,984

$
197,287

$
178,447
Canada

8,972

8,256

28,486

26,489
Total

$
73,351

$
66,240

$
225,773

$
204,936

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Disaggregated revenue by type of contract was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
Cost-plus reimbursement contracts	$	44,237	$	63,363	$	138,263	$	201,027
Fixed-price contracts		12,448		9,988		44,040		24,746
Total	$	56,685	$	73,351	$	182,303	$	225,773

Disaggregated revenue by the geographic area where the work was performed was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2022		2021		2022		2021
United States	$	56,685	$	64,379	$	176,801	$	197,287
Canada		-		8,972		5,502		28,486
Total	$	56,685	$	73,351	$	182,303	$	225,773

Contract Balances

The Company enters into contracts that allow for periodic billings over the contract term that are dependent upon specific advance billing terms, as services are provided, or as milestone billings based on completion of certain phases of work. Projects with performance obligations recognized over time that have costs and estimated earnings recognized to date in excess of cumulative billings are reported in the Company’s unaudited condensed consolidated balance sheets as contract assets. Projects with performance obligations recognized over time that have cumulative billings in excess of costs and estimated earnings recognized to date are reported in the Company’s unaudited condensed consolidated balance sheets as contract liabilities. At any point in time, each project in process could have either contract assets or contract liabilities.

The following table provides information about contract assets and contract liabilities from contracts with customers:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021
Costs incurred on uncompleted contracts	$	66,590	$	57,582	$	203,561	$	180,014	$	55,936	$	66,590	$	173,564	$	203,561
Earnings recognized on uncompleted contracts		6,761		8,658		22,212		24,922		749		6,761		8,739		22,212
Total		73,351		66,240		225,773		204,936		56,685		73,351		182,303		225,773
Less—billings to date		(63,034)		(60,850)		(215,456)		(199,546)		(50,049)		(63,034)		(175,667)		(215,456)
Net	$	10,317	$	5,390	$	10,317	$	5,390	$	6,636	$	10,317	$	6,636	$	10,317
Contract assets	$	12,811	$	8,795	$	12,811	$	8,795	$	10,076	$	12,811	$	10,076	$	12,811
Contract liabilities		(2,494)		(3,405)		(2,494)		(3,405)		(3,440)		(2,494)		(3,440)		(2,494)
Net	$	10,317	$	5,390	$	10,317	$	5,390	$	6,636	$	10,317	$	6,636	$	10,317

For the three and nine months ended September 30, ~~2021,~~2022, the Company recognized revenue of approximately ~~$1.1~~$0.1 million and $2.2 million, respectively, on approximately ~~$2.5~~$3.4 million that was included in the corresponding contract liability balance on December 31, ~~2020.~~2021.

Remaining Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that were unsatisfied (or partially unsatisfied) as of September 30, ~~2021:~~2022:


(in thousands)	Remainder of 2021		2022		2023		Thereafter		Total		Remainder of 2022		2023		2024		Thereafter		Total
Remaining performance obligations	$	73,416	$	133,826	$	95,098	$	370,166	$	672,506	$	64,529	$	122,093	$	61,135	$	104,966	$	352,723

NOTE 6—7—EARNINGS (LOSS) PER SHARE

As of September 30, 2022, the Company’s 26,422,761 shares outstanding included 321,142 shares of contingently issued but unvested restricted stock. As of September 30, 2021, the Company’s 25,915,502 shares outstanding included 215,956 shares

Table of ~~contingently issued but unvested restricted stock. As of September 30, 2020, the Company’s 25,336,442 shares outstanding included 550,857 shares~~ Contents

of contingently issued but unvested restricted stock. Restricted stock is excluded from the calculation of basic weighted average shares outstanding, but its impact, if dilutive, is included in the calculation of diluted weighted average shares outstanding.

Basic earnings per common share are calculated by dividing net income by the weighted average common shares outstanding during the period. Diluted earnings per common share are based on the weighted average common shares outstanding during the period, adjusted for the potential dilutive effect of common shares that would be issued upon the vesting and release of restricted stock awards and units and stock options, if any.

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Basic and diluted earnings per common share from continuing operations were calculated as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except share and per share data)	2021		2020		2021		2020
Income from continuing operations	$	794	$	1,116	$	1,857	$	2,696
(in thousands, except share data)									2022		2021		2022		2021
Income (loss) from continuing operations									$	3,610	$	794	$	(3,728)	$	1,857

Basic earnings per common share:
Basic income (loss) per common share:
Weighted average common shares outstanding		25,699,545		24,689,337		25,306,130		23,304,059		26,102,308		25,699,545		26,009,465		25,306,130

Basic earnings per common share	$	0.03	$	0.04	$	0.07	$	0.12
Basic income (loss) per common share									$	0.14	$	0.03	$	(0.14)	$	0.07

Diluted earnings per common share:
Diluted income (loss) per common share:
Weighted average common shares outstanding		25,699,545		24,689,337		25,306,130		23,304,059		26,102,308		25,699,545		26,009,465		25,306,130

Dilutive effect:
Diluted effect:
Unvested portion of restricted stock units and awards		807,030		494,969		791,570		532,739		335,373		807,030		—		791,570
Weighted average diluted common shares outstanding		26,506,575		25,184,306		26,097,700		23,836,798		26,437,681		26,506,575		26,009,465		26,097,700

Diluted earnings per common share	$	0.03	$	0.04	$	0.07	$	0.11
Diluted income (loss) per common share									$	0.14	$	0.03	$	(0.14)	$	0.07

The weighted average number of shares outstanding used in the computation of basic and diluted earnings per common share does not include the effect of the following potential outstanding common stock. The effects of the potentially outstanding service-based restricted stock and restricted stock unit awards were not included in the calculation of diluted earnings per common share because the effect would have been anti-dilutive. The effects of the potentially outstanding performance- and market-based restricted stock unit awards were not included in the calculation of diluted earnings per common share because the performance and/or market conditions had not been satisfied as of September 30, ~~2021~~2022 and ~~2020.~~2021.


	Three Months Ended September 30,		Nine Months Ended September 30,		Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020	2022	2021	2022	2021
Unvested service-based restricted stock and restricted stock unit awards	16,666	391,601	—	262,705	573,517	16,666	229,102	—
Unvested performance- and market-based restricted stock unit awards	833,111	1,585,703	833,111	1,585,703	887,559	833,111	887,559	833,111

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NOTE 7—8—INCOME TAXES

The effective income tax expense rate for continuing operations for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 was as follows:


	Three Months Ended September 30,		Nine Months Ended September 30,		Three Months Ended September 30,		Nine Months Ended September 30,
(in thousands)	2021	2020	2021	2020
Income tax (benefit) expenses	($6)	$321	$256	$565
					2022	2021	2022	2021
Effective income tax rate for continuing operations	-0.8%	22.3%	12.1%	17.3%	(8.2)%	(0.8)%	5.4%	12.1%

The effective income tax rate differs from the statutory federal income tax rate of 21% primarily because of the partial valuation allowances recorded on the Company’s deferred tax assets and the Canadian income tax provision.

For the three months ended September 30, ~~2021,~~2022, the Company recorded income tax benefit from continuing operations of $0.3 million, or (8.2)% of pretax income from continuing operations, compared with income tax benefit from continuing operations of $0.01 million, or (0.8)% of pretax income from continuing operations, ~~compared with income tax expense from continuing operations of $0.3 million, or 22.3% of pretax income from continuing operations,~~ in the corresponding period of ~~2020.~~2021. For the nine months ended September 30, ~~2021,~~2022, the Company recorded income tax benefit from continuing operations of $0.2 million, or 5.4% of pretax loss from continuing operations, compared with income tax expense from continuing operations of $0.3 million, or 12.1% of pretax income from continuing operations, ~~compared with income tax expense from continuing operations of $0.6 million, or 17.3% of pretax income from continuing operations,~~ in the corresponding period of ~~2020.~~

2021. The $0.3 million decrease in income tax provision from continuing operations for the three months ended September 30, ~~2021,~~2022, compared with the corresponding period in ~~2020~~2021, was primarily ~~the result of the $0.3 million increase in U.S. deferred tax assets net of~~related to a ~~partial valuation allowance, and the $0.05~~$0.6 million decrease in the Canadian income tax provision, aspartially offset by a ~~result of the year-over-year fluctuation in Canadian pre-tax book income. The~~ $0.3 million decrease in the U.S. ~~deferred~~income tax ~~asset increase is attributable to the increase in~~

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~~indefinite lived assets, both the net operating loss and the Section 163(j) interest addback. The increase was primarily driven by a $0.8 million favorable tax adjustment~~benefit related to the ~~Koontz-Wagner bankruptcy estate distribution~~indefinite lived deferred tax assets. The $0.5 million decrease in income tax provision from continuing operations for the nine months ended September 30, 2022, compared with the corresponding period in 2021, was primarily related to a $0.7 million decrease in the ~~third quarter of 2021, and~~Canadian income tax provision, partially offset by a ~~$0.6~~$0.2 million ~~favorable~~decrease in the U.S. income tax ~~adjustment as~~benefit related to the ~~Company is expecting to pay off half of the payroll~~indefinite lived deferred tax ~~deferred, under the CARES Act (as defined below), by the end of December 31, 2021.~~assets.

The Company’s net deferred balance was primarily composed of indefinite lived deferred tax liabilities attributable to goodwill and trade names, and the indefinite lived deferred tax assets related to the post 2017 net operating losses and ~~the~~ Section 163(j) interest addback. A full valuation allowance was applied to most of the remaining deferred balances. The indefinite lived deferred tax assets enabled the release of the valuation allowance to the extent that it can offset the indefinite lived deferred tax liabilities. Because all indefinite lived deferred tax liabilities are part of continued operations, and the release of valuation allowance is attributable to the future taxable income related to these deferred tax liabilities, the entire valuation allowance released was recorded in continuing operations according to ASC 740-20-45-3. As ~~a result, the favorable tax adjustment related to the Koontz-Wagner bankruptcy estate distribution (arising from the discontinued operation), has been reported as continuing operations. As~~ of September 30, ~~2021,~~2022, the Company had ~~$2.1~~$2.3 million net deferred tax liabilities, mainly composed of ~~$12.3~~$12.4 million indefinite lived deferred tax liabilities attributable to goodwill and trade names, partially offset by ~~$6.9~~$6.8 million indefinite lived deferred tax assets attributable to post 2017 net operating losses, ~~and $3.1~~$3.4 million indefinite lived deferred tax assets attributable to Section 163(j) interest ~~addback.~~

~~The decrease in income tax provision from continuing operations for the nine months ended September 30, 2021 compared with the corresponding period in 2020 was primarily the result of a $0.4~~addback, $0.2 million ~~increase in the U.S.~~ deferred tax assets accrued for the current period as a result of the Canadian net ~~of partial valuation allowance, as~~operating loss, plus $0.3 million deferred tax liability accrued with respect to the Company’s ~~indefinite lived intangible assets have been fully amortized for tax purposes as of year-end 2020, partially offset by a $0.1 million increase~~outside basis difference in ~~the Canadian tax provision.~~its investment in Canada.

As of September 30, ~~2021~~2022, and ~~2020,~~2021, the Company would have needed to generate approximately ~~$270.4~~$287.2 million and ~~$268.5~~$270.4 million, respectively, of future taxable income in order to realize its deferred tax assets.

The Company’s foreign subsidiaries may generate earnings that are not subject to U.S. income taxes so long as they are permanently reinvested in its operations outside of the U.S. ~~pursuant~~Pursuant to ASC ~~740-30. Undistributed~~740-30, undistributed earnings of foreign subsidiaries that are no longer permanently reinvested would become subject to deferred income taxes.

As of September 30, ~~2021,~~2022, the ~~Company’s~~Company projects that its Canadian subsidiary ~~had~~will have generated approximately ~~$8.3~~$5.1 million ~~in Canadian currency in~~ undistributed ~~earnings.~~earnings by the end of 2022. The Company’s management ~~asserts~~expects that all of the undistributed earnings will be ~~reinvested in~~repatriated back to the United States within the next 12 months. The Company formed the Canadian subsidiary ~~based on~~in 2018 without significant capital investment, and the ~~following facts presented~~majority of the undistributed earnings was expected to be repatriated as dividends to the United States at the ~~time~~United States-Canada treaty rate of ~~preparing~~5%. As a result, the financial statements: (1) the Company’s domestic operations are not in need of working capital from the foreign subsidiary, and any temporary intercompany payable with the Canadian subsidiary will be repaid within one year from the end of the corporation’s tax year in which the indebtedness arises; (2) the Canadian subsidiary has not declared dividends since its inception in 2018, and management is not expecting the Canadian subsidiary to declare dividends in the foreseeable future; and (3) the Company’s management has developedCompany accrued a ~~strategic growth initiative to pursue nuclear plant maintenance, modifications, and construction in Canada for the long-term. Therefore, the accrual of~~ deferred tax liability ~~with respect~~of $0.3 million related to ~~the Company’s outside basis difference in~~ its investment in Canada ~~is not needed pursuant to the APB 23 exception.~~for its outside basis difference as of September 30, 2022.

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As of September 30, ~~2021~~2022 and ~~2020,~~2021, the Company provided for a total liability of $2.3 million and $3.0 million, ~~and $2.8 million,~~ respectively, offor uncertain income tax positions, which ~~$1.9 million for~~include the ~~period ended September 30, 2021, compared to $1.7 million for the corresponding period in 2020, related to discontinued operations, for~~ unrecognized tax benefits related to various federal, foreign and state income tax matters, ~~which were~~and the accrual of interest, penalties, and foreign currency adjustments that can potentially arise from these positions. For the period ended September 30, 2022, the $2.3 million reserved for uncertain income tax positions was included in long-term liabilities of discontinued operations and other long-term ~~liabilities.~~liabilities, of which $1.2 million was related to discontinued operations, compared to $1.9 million for the corresponding period in 2021. If the unrecognized tax benefit is recognized, the ~~entire amount of~~reduction in the liability would ~~affect~~be recorded as a tax benefit and reduce the effective tax rate. AsOf the $2.3 million reserved for uncertain income tax positions as of September 30, ~~2021, the Company~~2022, approximately $1.1 million was accrued ~~approximately $1.4 million, of which $0.8 million related to discontinued operations, in both other long-term liabilities of discontinued operations and other long-term liabilities~~ for potential payment of interest and penalties, of which, $0.5 million was related to ~~uncertain income tax positions.~~discontinued operations.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was enacted and signed into U.S. law to provide economic relief to individuals and businesses facing economic hardship as a result of the COVID-19 pandemic. The Company has incorporated the impact of the CARES Act to the tax provision. In addition, the Company deferred payments of federal employer payroll taxes of approximately $4.9 million, ~~(recorded within accrued compensation and benefits on the consolidated balance sheet),~~ as permitted by the CARES Act. The first half of the deferred amounts ~~will be~~were paid byin December 2021, and the second half will be paid by December 2022.

~~Table~~On August 16, 2022, President Biden signed the Inflation Reduction Act of ~~Contents~~2022 (“IRA”) into law. The IRA contains a number of revisions to the Internal Revenue Code, including a 15% corporate minimum income tax and a 1% excise tax on corporate stock repurchases in tax years beginning after December 31, 2022. While these tax law changes have no immediate effect and are not expected to have a material adverse effect on the Company’s results of operations going forward, the Company will continue to evaluate the IRA’s impact as further information becomes available.

NOTE 8—9—DEBT

As of September 30, 2021, the Company was in compliance with all debt covenants. Due to the continued volatility caused by the COVID-19 pandemic, the Company cannot provide any assurance that the assumptions used to estimate its liquidity requirements will remain accurate. As a consequence, the Company’s estimates of the effects of the pandemic and their impact on the Company’s future earnings and cash flows could change and have a material impact on its results of operations and financial condition, including negatively affecting the Company’s ability to remain in compliance with its debt covenants.

The following table provides information about the Company’s debt, net of unamortized deferred financing costs:


(in thousands)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Revolving credit facility	$	4,672	$	352
Short-term borrowings					$	14,525	$	676
Term loan, current portion of long-term debt		1,050		1,050		1,050		1,050
Current debt	$	5,722	$	1,402	$	15,575	$	1,726

Term loan, noncurrent portion of long-term debt	$	33,163	$	33,950	$	24,056	$	32,900
Unamortized debt discount from refinancing to new loan		(841)		(991)
Debt discount						(641)		(791)
Unamortized deferred financing costs		(1,894)		(2,231)		(1,606)		(1,781)
Long-term debt, net	$	30,428	$	30,728	$	21,809	$	30,328

Total debt, net	$	36,150	$	32,130	$	37,384	$	32,054

Debt Refinancing

On December 16, 2020 (the “Closing Date”), the Company and certain of its subsidiaries refinanced and replaced its prior revolving credit facility ~~with MidCap Financial Trust (the “Prior ABL”)~~ and ~~its four-year $35.0 million~~ term loan facility ~~with Centre Lane Partners, LLC~~ and entered into (i) the Term Loan Agreement (as defined below), which provided for senior secured term loan facilities in an aggregate principal amount of up to $50.0 million (collectively, the “Term Loan”), consisting of a $35.0 million closing date term loan facility (the “Closing Date Term Loan”) and up to $15.0 million of borrowings under a delayed draw facility (the “Delayed Draw Term Loan Facility”) with EICF Agent LLC, as agent, and CION Investment Corporation, as a lender and a co-lead arranger, and the other lenders party thereto; and (ii) a senior secured asset-based revolving line of credit of up to $30.0 million (the “Revolving Credit Facility”) with PNC Bank, National Association (“PNC”). In connection with the refinancing, the Company repaid the outstanding balance of the prior facilities and all interest in full.

As of September 30, ~~2021,~~2022, the Company had ~~$4.7~~$14.5 million outstanding debt under the Revolving Credit Facility and ~~$34.2~~$25.1 million outstanding (including both the noncurrent and current portion of the Term Loan) under the Term Loan. Total liquidity (the sum of unrestricted cash and availability under the Revolving Credit Facility) was $7.3 million at the end of the third quarter of 2022. As of September 30, 2022, the Company was in compliance with all debt covenants, as amended.

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Effective as of August 23, 2022, the Company entered into a confidential settlement agreement and general release (the “Settlement Agreement”), dated August 22, 2022, that resolved a pending arbitration proceeding initiated by the Company against a third-party respondent in May 2020. The claims made by the Company against the respondent relate to the restatement of the Company’s financial statements in 2017 for the 2012 to 2014 period. The Company received net proceeds (after payment of attorney’s fees and third-party funding costs) of approximately $8.1 million, which was recorded as other income on the income statement during the third quarter of 2022. In the third quarter of 2022, the Company used the $8.1 million of net proceeds received under the Settlement Agreement to repay part of the Term ~~Loan Agreement provides for an interest rate~~Loan. As of ~~9.0% (or 8.5% if~~September 30, 2022, the ~~Total Leverage Ratio (as defined in~~Company reduced the Term Loan ~~Agreement) is less than 2.50:1) plus~~to $25.1 million compared to $34.0 million on December 31, 2021 (including both the ~~London Interbank Offered Rate (“LIBOR”) (with a minimum rate~~noncurrent and current portion of ~~1.0%) per year.~~the Term Loan).

The Revolving Credit Facility

On the Closing Date, the Company and certain of its subsidiaries (the “Revolving Loan Borrowers”) entered into the Revolving Credit and Security Agreement with PNC, as agent for the lenders, and the lenders party thereto (the “Revolving Credit Agreement”), which provides for the Revolving Credit Facility. As part of the Revolving Credit Facility, the Company may access a letter of credit sublimit in an amount up to $2.0 million, a swing loan sublimit in an aggregate principal amount of up to $3.0 million, and a Canadian dollar sublimit in an aggregate principal amount of up to $5.0 million. The Revolving Credit ~~Facility~~Agreement matures on December 16, 2025.

~~Borrowings~~As of September 30, 2022, borrowings under the Revolving Credit Facility ~~bear~~bore interest, at the Company’s election, at either (1) the base commercial lending rate of PNC, as publicly announced, plus 1.25%, payable in cash on a monthly basis, (2) the ~~30, 60 or 90 day LIBOR~~Term SOFR Rate (as defined in the Revolving Credit Agreement, as amended,) based on the secured overnight financing rate (“SOFR”) rate, subject to a minimum ~~LIBOR~~SOFR floor of 1.00%, plus 2.25%, payable in cash on the last day of each interest period, or (3) with respect to Canadian dollar loans, the Canadian Dollar Offered Rate (“CDOR”), subject to a minimum CDOR rate of 1.00%, plus 2.25%, payable in cash on a monthly basis. In addition, upon the occurrence of an event of default, and for so long as such event of default continues, default interest equal to 2.00% per year in excess of the rate otherwise applicable will be payable. ~~The Revolving Credit Agreement also includes customary replacement provisions in the event of the discontinuation of LIBOR.~~

The Revolving Loan Borrowers’ Obligations (as defined in the Revolving Credit Agreement) are guaranteed by certain of the Company’s material, ~~wholly-owned~~wholly owned subsidiaries, subject to customary exceptions (the “Revolving Loan Guarantors” and, together with the Revolving Loan Borrowers, the “Revolving Loan Credit Parties”). The Revolving Loan Credit Parties’ obligations are secured by first-priority security interests on substantially all of the Revolving Loan Credit Parties’ accounts

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receivable and a second-priority security interest in substantially all other assets of the Revolving Loan Credit Parties, subject to the terms of the Intercreditor Agreement between PNC and EICF Agent LLC, as the Revolving Loan Agent and the Term Loan Agent, respectively (as each such term is defined in the Intercreditor Agreement), as described below (the “Intercreditor Agreement”).

The Revolving Loan Borrowers may from time to time voluntarily prepay outstanding amounts, plus any accrued but unpaid interest on the aggregate amount being prepaid, under the Revolving Credit Facility, in whole or in part. There is 0no required minimum prepayment amount. If at any time the amount outstanding under the Revolving Credit Agreement exceeds the borrowing base, or any sublimit, in effect at such time, the excess amount will be immediately due and payable. Subject to the Intercreditor Agreement, the Revolving Credit Agreement also requires mandatory prepayment of outstanding amounts in the event the Revolving Loan Borrowers receive proceeds from certain events and activities, including, among others, certain asset sales and casualty events, the issuance of indebtedness and equity interests, and the recovery of any proceeds from certain specified arbitration proceedings.

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The Revolving Credit Agreement provides for (1) a closing fee of $0.2 million, which was paid on the Closing Date, (2) a customary unused line fee equal to 0.25% per year on the unused portion of the Revolving Credit Facility, which is payable on a quarterly basis, and (3) a collateral monitoring fee of $2,500, which is payable on a monthly basis. The Revolving Credit Agreement also provides for an early termination fee (the “Early Termination Fee”), payable to the revolving lenders thereunder upon (1) any acceleration of the Obligations and termination of the Revolving Credit Agreement and the obligation of the revolving lenders to make advances thereunder following the occurrence of an Event of Default (as defined in the Revolving Credit Agreement), or (2) any other termination of the Revolving Credit Agreement and the obligation of revolving lenders to make advances thereunder for any reason (the “Early Termination Date”). The Early Termination Fee is calculated as follows: if the Early Termination Date ~~occurs~~occurred on or prior to the first anniversary of the Closing Date, the Early Termination Fee ~~will be~~would have been 2.00% of the Revolving Credit Facility; and if prepayment occurs after the first anniversary of the Closing Date and on or prior to the second anniversary of the Closing Date, the Early Termination Fee will be 1.00% of the Revolving Credit Facility. While any letter of credit is outstanding under the Revolving Credit Facility, the Revolving Loan Borrowers must pay a letter of credit fronting fee at a rate equal to 0.25% per year, payable quarterly, in addition to any other customary fees required by the issuer of the letter of credit.

The Revolving Credit Agreement contains customary representations and warranties, as well as customary affirmative and negative covenants, in each case, with certain exceptions, limitations and qualifications. The Revolving Credit Agreement also requires the Revolving Loan Borrowers to regularly provide certain financial information to the lenders thereunder, maintain a springing minimum fixed charge coverage ratio, and comply with certain limitations on capital expenditures.

Events of default under the Revolving Credit Agreement include, but are not limited to, a breach of certain covenants or any representations or warranties, failure to timely pay any amounts due and owing, the commencement of any bankruptcy or other insolvency proceeding, judgments in excess of certain acceptable amounts, the occurrence of a change in control, certain events related to ERISA matters, impairment of security interests in collateral or invalidity of guarantees or security documents, or a default or event of default under the Term Loan Agreement or the Intercreditor Agreement, in each case, with customary exceptions, limitations, grace periods and qualifications. If an event of default occurs, the revolving lenders may, among other things, declare all Obligations outstanding under the Revolving Credit Facility to be immediately due and payable, together with accrued interest and fees, and exercise remedies under the collateral documents relating to the Revolving Credit Agreement.

On August 3, 2022, the Company entered into an Amendment to the Revolving Credit Agreement (the “Revolving Credit Amendment”) that, among other things, (i) amended the calculation of EBITDA (as defined in the Revolving Credit Agreement), effective as of June 30, 2022, to include (or “add back”) certain non-recurring losses and expenses relating to projects executed in Jacksonville, Florida, one-time costs and expenses incurred in connection with the Company’s transmission and distribution business unit start-up, and costs and expenses arising out of the Company’s litigation with a designated former executive and his employer (in each case, subject to certain specified dollar limits), (ii) permitted advances against certain eligible receivables of one of the Company’s joint ventures (also subject to specified dollar limits), (iii) included provisions that replace the London Interbank Offered Rate (LIBOR) interest rate with customary provisions based on SOFR, and (iv) provided for the payment of a $25,000 amendment fee, plus applicable fees and expenses. The $25,000 amendment fee will be expensed as incurred.

EICF Agent LLC, as the Term Loan Agent, and PNC, as the Revolving Loan Agent, entered into an Intercreditor Agreement, dated as of the Closing Date, to which the Term Loan Credit Parties (as defined below) and Revolving Loan Credit Parties consented. The Intercreditor Agreement, among other things, specifies the relative lien priorities of the Term Loan Agent and Revolving Loan Agent in the relevant collateral, and contains customary provisions regarding, among other things, the rights of the Term Loan Agent and Revolving Loan Agent to take enforcement actions against the relevant collateral and certain limitations on amending the documentation governing each of the Term Loan and Revolving Credit Facility.

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The Term Loan

On the Closing Date, the Company and certain of its subsidiaries (the “Term Loan Borrowers”) entered into the Term Loan, Guarantee and Security Agreement with EICF Agent LLC, as agent for the lenders, CION Investment Corporation, as a lender and co-lead arranger, and the other lenders party thereto (the “Term Loan Agreement”), which provides for the Term Loan. The Closing Date Term Loan was fully drawn on the Closing Date, while the Delayed Draw Term Loan Facility iswas available upon the satisfaction of certain conditions precedent for up to 18 months following the Closing ~~Date.~~Date and expired in June 2022. The Term Loan Agreement matures on December 16, 2025.

Borrowings under the Term Loan Agreement bear interest at ~~LIBOR,~~SOFR, plus a margin of 8.50% (if the Total Leverage Ratio (as defined in the Term Loan Agreement) is less than 2.50:1) or 9.00% per year (if the Total Leverage Ratio is greater than or equal to 2.50:1), subject to a minimum ~~LIBOR~~SOFR floor of 1.00%, payable in cash on a quarterly basis. In addition, upon the occurrence of an event of default, and for so long as such event of default continues, default interest equal to 2.00% per year in excess of the rate otherwise applicable will be payable. ~~The Term Loan Agreement also includes customary replacement provisions in the event of the discontinuation of LIBOR.~~

The Term Loan Borrowers’ Obligations (as defined in the Term Loan Agreement) are guaranteed by certain of the Company’s material, ~~wholly-owned~~wholly owned subsidiaries, subject to customary exceptions (the “Term Loan Guarantors” and, together with the Term Loan Borrowers, the “Term Loan Credit Parties”). The Term Loan Credit Parties’ obligations are secured by first-priority security interests on substantially all of the Term Loan Credit Parties’ assets, as well as a second-priority security interest on the Term Loan Credit Parties’ accounts receivable and inventory, subject to the Intercreditor Agreement.

Subject to certain conditions, the Term Loan Borrowers may voluntarily prepay the Term Loan on any Payment Date (as defined in the Term Loan Agreement), in whole or in part, in a minimum amount of $1.0 million of the outstanding principal amount, plus a prepayment fee. The prepayment fee ~~(the “Prepayment Fee”), calculated~~was amended effective June 30, 2022, as follows: if prepayment occurs prior to the first anniversary of the Closing Date, the Prepayment Fee will be 3.00% of the principal amount being prepaid; if prepayment occurs on or after the first anniversary of the Closing Date and prior to the second anniversary of the Closing Date, the Prepayment Fee will be 2.00% of the principal amount being prepaid; and if prepayment occurs on or after the second anniversary of the Closing Date and prior to the third anniversary of the Closing Date, the Prepayment Fee will be 1.00% of the principal amount being prepaid.described below.

Subject to certain exceptions, within 120 days of the end of each calendar year, beginning with the year ~~ending~~ended December 31, 2021, the Term Loan Borrowers must prepay the Obligations in an amount equal to (1) (i) if the Total Leverage Ratio is greater than 3:00:1:00, 50.0% of Excess Cash Flow (as defined in the Term Loan Agreement) or (ii) if the Total Leverage Ratio is equal to or less than 3:00:1:00 and greater than 2:00:1:00, 25.0% of Excess Cash Flow, less (2) all voluntary prepayments made on the Term Loan during such calendar year; provided that, so long as no default or event of default has occurred and is continuing or would result therefrom, no such prepayment will be required unless Excess Cash Flow for such calendar year equals or exceeds $0.5 million. The Company was not required to prepay any Obligations for the year ended December 31, 2021. The Term Loan Agreement also requires mandatory prepayment of certain amounts in the event the Term Loan Borrowers receive proceeds from certain events and activities, including, among others, certain asset sales and casualty events, the issuance of indebtedness and equity interests, and the receipt of extraordinary receipts (with certain exclusions), plus, in certain instances, the applicable ~~Prepayment Fee, calculated as set forth above.~~prepayment fee.

The Term Loan Agreement contains customary representations and warranties, as well as customary affirmative and negative covenants, in each case, with certain exceptions, limitations and qualifications. The Term Loan Agreement also requires the Term Loan Borrowers to regularly provide certain financial information to the lenders thereunder, maintain a maximum total leverage ratio and a minimum fixed charge coverage ratio, and comply with certain limitations on capital expenditures.

Events of default under the Term Loan Agreement include, but are not limited to, a breach of certain covenants or any representations or warranties, failure to timely pay any amounts due and owing, the commencement of any bankruptcy or other insolvency proceeding, judgments in excess of certain acceptable amounts, the occurrence of a change in control, certain events related to ERISA matters, impairment of security interests in collateral or invalidity of guarantees or security documents, or a default or event of default under the Revolving Credit Agreement or the Intercreditor Agreement, in each case, with customary exceptions, limitations, grace periods and qualifications. If an event of default occurs, the Term Loan lenders may, among other things, declare all Obligations to be immediately due and payable, together with accrued interest and fees, and exercise remedies under the collateral documents relating to the Term Loan Agreement.

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On August 3, 2022 (the “Signing Date”), effective as of June 30, 2022, the Company entered into an Amendment to the Term Loan Agreement (the “Term Loan Amendment”) that, among other things, (i) amended and increased the Total Leverage Ratio (as defined in the Term Loan Agreement) applicable to the Company for certain periods, (ii) amended the calculation of Consolidated EBITDA (as defined in the Term Loan Agreement) to include (or “add back”) certain non-recurring losses and expenses relating to projects executed in Jacksonville, Florida, one-time costs and expenses incurred in connection with the Company’s transmission and distribution business unit start-up, and costs and expenses arising out of the Company’s litigation with a designated former executive and his employer (in each case, subject to certain specified dollar limits), (iii) provided for a fee of 1% of the then-outstanding principal balance due upon maturity of the term loan without duplication of fees paid in connection with the Company’s prepayment fee structure, (iv) extended the Company’s existing prepayment fee structure to require upon repayment (a) prior to the first anniversary of the Signing Date, a fee of 3% of the principal amount being repaid, (b) on or after the first anniversary of the Signing Date and prior to the second anniversary of the Signing Date, a fee of 2% of the principal amount being repaid, and (c) on or after the second anniversary of the Signing Date, a fee of 1% of the principal amount being repaid, and (v) provided for the payment of a $0.2 million amendment fee, plus applicable fees and expenses. The Company’s expense related to the Term Loan Amendment was $0.2 million and will be recognized as interest expense over the remaining term of the modified Term Loan Agreement.

Effective as of August 23, 2022, the Company entered into a Settlement Agreement, which resolved a pending arbitration proceeding related to the restatement of the Company’s financial statements in 2017 for the 2012 to 2014 period. The Company received net proceeds of $8.1 million (after payment of attorney’s fees and third-party funding costs), and used these net proceeds to prepay a substantial amount of the Term Loan. The $8.1 million net proceeds, coupled with $0.3 million scheduled principal payments, reduced the Term Loan by a total of $8.4 million to $25.1 million as of September 30, 2022 (including both the noncurrent and current portion of the Term Loan).

Letters of Credit and Bonds

In line with industry practice, the Company is often required to provide letters of credit and payment and performance surety bonds to customers. These letters of credit and bonds provide credit support and security for the customer if the Company fails to perform its obligations under the applicable contract with such customer.

The Revolving Credit Facility provides for a letter of credit sublimit in an amount up to $2.0 million. As of September 30, ~~2021,~~2022, the Company had $0.5 million letters of credit outstanding under this sublimit and $0.4 million cash collateralized standby letters of credit outstanding pursuant to its prior revolving credit facility with Wells Fargo Bank, National Association. There were 0no amounts drawn upon these letters of credit as of September 30, ~~2021.~~2022.

In addition, as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had outstanding payment and performance surety bonds of ~~$67.1~~$65.6 million and ~~$31.0~~$67.6 million, respectively.

Deferred Financing Costs and Debt Discount:

Deferred financing costs ~~are~~and debt discount is amortized over the terms of the related debt facilities using the straight-line method. The following table summarizes the amortization of deferred financing costs and debt discount related to the Company's debt facilities and recognized in interest expense on the unaudited condensed consolidated statements of operations:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021
Term loan	$	112	$	110	$	337	$	330	$	125	$	113	$	350	$	338
Debt discount on term loan										50		50		150		150
Revolving credit facility		96		72		286		217		96		96		286		286
Total	$	208	$	182	$	623	$	547	$	271	$	259	$	786	$	774

The following table summarizes unamortized deferred financing costs and debt discount included on the Company's unaudited condensed consolidated balance sheets:


(in thousands)	Location	September 30, 2021		December 31, 2020		Location	September 30, 2022		December 31, 2021
Term loan	Long-term debt, net	$	1,894	$	2,231	Long-term debt, net	$	1,606	$	1,781
Debt discount on term loan						Long-term debt, net		641		791
Revolving credit facility	Other long-term assets		1,604		1,890	Other long-term assets		1,223		1,509
Total		$	3,498	$	4,121		$	3,470	$	4,081

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NOTE 910—FINANCIAL INSTRUMENTS

Fair Value of Financial Instruments

ASC 820–Fair Value Measurement defines fair value as the exit price, which is the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a three-tier fair value hierarchy, which categorizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in the active markets for identical assets and liabilities and the lowest priority to unobservable inputs.

The Company’s financial instruments as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021 consisted primarily of cash and cash equivalents, restricted cash, receivables, payables, and debt instruments. The carrying values of these financial instruments approximate their respective fair values, as they are either short-term in nature or carry interest rates that are periodically adjusted to market rates.

NOTE ~~10—~~11—COMMITMENTS AND CONTINGENCIES

Litigation and Claims

The Company is from time-to-time party to various lawsuits, including personal injury claims and other proceedings that arise in the ordinary course of its business. With respect to all such lawsuits, claims and proceedings, the Company records a reserve when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. The Company does not believe that the resolution of any currently pending lawsuits, claims and proceedings, either individually or in the aggregate, will have a material adverse effect on its financial position, results of operations or liquidity. However, the outcomes of any

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currently pending lawsuits, claims and proceedings cannot be predicted, and therefore, there can be no assurance that this will be the case.

The Company completed a bankruptcy filing of its Koontz-Wagner subsidiary on July 11, 2018. This could require the Company to incur legal fees and other expenses related to liabilities from this bankruptcy filing. While the Company does not anticipate these liabilities will have a material adverse effect on its results of operations, cash flows and financial position, and although the statute of limitations has run on certain claims that the Chapter 7 Trustee for the Koontz-Wagner estate might assert, there can be no assurance of the outcome. The filing was for Koontz-Wagner only, not for the Company as a whole, and was completely separate and distinct from the Williams business and operations. For additional information, please refer to “Note 4—5—Changes in Business” to the unaudited condensed consolidated financial statements.

The acquiror of certain assets from a former operating unit of the Company has been named as a defendant in an asbestos personal injury lawsuit and has submitted a claim for indemnification and tendered defense of the matter to the Company. The Company has assumed defense of the matter subject to a reservation of rights and objection to the claim for indemnification. Neither the Company nor its predecessors ever mined, manufactured, produced, or distributed asbestos fiber, the material that allegedly caused the injury underlying this action. The Company does not expect that this claim will have a material adverse effect on its financial position, results of operations or liquidity. Moreover, during 2012, the Company secured insurance coverage that will help to reimburse the defense costs and potential indemnity obligations of its former operating unit relating to these claims. The Company intends to vigorously defend all currently active actions, and it does not anticipate that this action will have a material adverse effect on its financial position, results of operations or liquidity. However, the outcomes of any legal action cannot be predicted and, therefore, there can be no assurance that this will be the case.

Insurance

The Company maintains insurance coverage for most insurable aspects of its business and operations. The Company’s insurance programs, including, but not limited to, health, general liability, and workers’ compensation, have varying coverage limits depending upon the type of insurance. For the three and nine months ended September 30, ~~2021,~~2022, insurance expense, including insurance premiums related to the excess claim coverage and claims incurred for continuing operations, was ~~$0.3~~$1.6 million and ~~$1.5~~$4.7 million, respectively.

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The Company’s unaudited condensed consolidated balance sheets include amounts representing its probable estimated liability related to insurance-related claims that are known and have been asserted against the Company, and for insurance-related claims that are believed to have been incurred but had not yet been reported as of September 30, ~~2021.~~2022. As of September 30, ~~2021,~~2022, the Company provided ~~$0.4~~$0.9 million ~~cash collateralized~~ in letters of credit and ~~$0.6~~$1.5 million of non-depleting cash collateral as security for possible general liability and workers’ compensation claims.

Executive Severance

OnAs of September 30, ~~2021,~~2022, the Company had outstanding severance arrangements with ~~officers and~~ senior ~~management.~~executives. The Company’s maximum commitment under all such arrangements, which would apply if the employees covered by these arrangements were each terminated without cause, was ~~$2.8~~$6.4 million on September 30, ~~2021.~~2022. The Company did not accrue executive severance expenses as of September 30, 2022.

NOTE ~~11—~~12—STOCK-BASED COMPENSATION PLANS

During the first nine months of ~~2021,~~2022, the Company granted ~~164,388~~291,894 service-based restricted stock awards under the 2015 Equity Incentive Plan as(as amended and restated, ~~on May 12, 2020 (the~~the “2015 Plan”), at a grant date fair value of ~~$3.29~~$1.85 per share, to its non-employee directors, which vest in full on February ~~4, 2022.~~ 3, 2023.

During the first nine months of 2022, the Company granted 362,356 service-based restricted stock units to its employees under the 2022 long-term incentive (“LTI”) program and the 2015 Plan at a grant date fair value of $1.99 per share. These service-based restricted stock units can be paid in cash or shares at the election of the Compensation Committee of the Board of Directors and shall vest in equal annual installments over a period of three years.

During the first nine months of 2022, the Company also granted 724,726 performance-based restricted stock units to its employees under the 2022 LTI program and the 2015 Plan at a grant date fair value of $1.99 per share. The 2022 performance-based restricted stock units have three annual performance periods (fiscal years 2022, 2023 and 2024), with operating income and free cash flow goals (equally weighted) for each year, and threshold performance resulting in awards earned at 50% of the target opportunity and maximum performance resulting in awards earned at 200% of the target. The annual achievement levels are accumulated over the three-year performance period and the earned amounts, if any, will vest on March 31, 2025. The three-year average payout level for each performance objective replaces the actual payout level for any fiscal year where the actual payout is less than the three-year average. These performance-based restricted stock units can be paid in cash or shares at the election of the Compensation Committee of the Board of Directors.

During the first nine months of 2021, the Company granted 307,616 service-based restricted stock units under the 2021 ~~long-term incentive (“LTI”)~~LTI program and the 2015 Plan at a grant date fair value of $3.48 per share. These service-based restricted stock units ~~could~~can be paid in cash or shares at the election of the Compensation Committee of the Board of Directors and shall vest in full on March 31, 2024.

Additionally on June 15, 2021, the Company granted an employee 41,666 service-based restricted stock units under the 2015 Plan at a grant date fair value of $6.27 per share. The service-based restricted stock units vested with respect to 25,000 shares of common stock on the date of grant (June 15, 2021), while 8,333 vested on March 31, 2022 and the remaining 8,333 will vest on March 31, 2023. These awards may be paid in cash or shares at the election of the Compensation Committee of the Board of Directors.

During the first nine months of 2021, the Company also granted performance-based ~~awards~~restricted stock units under the 2021 LTI program and the 2015 Plan with an aggregate cash value of approximately $2.2 million, which could be paid in cash or shares at the election of the Compensation Committee of the Board of Directors. The 2021 performance-based ~~awards have~~ ~~three~~ annual performance periods (fiscal years 2021, 2022 and 2023), with operating income and free cash flow goals (equally weighted) for each year, and threshold performance resulting in awards earned at 50% of the target opportunity and maximum performance resulting in

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awards earned at 200% of the target. The annual achievement levels are averaged over the three-year performance period and the earned amounts, if any, vest on March 31, 2024. The Company includes these cash-based awards in other current liabilities on the consolidated balance sheet, effective as of April 2021.

~~In addition, during the first nine months of 2021, the Company granted service-based~~ restricted stock units and performance-based restricted stock units to 2 employees. On May 17, 2021, the Company granted 37,500 service-based restricted stock units and performance-based restricted stock units covering a target number of 37,500, and a maximum number of 75,000, shares of common stock, as an inducement award outside of the 2015 Plan at a grant date fair value of $5.00 per share. The service-based restricted stock units vest in full on May 17, 2022 and the earned amounts of the performance-based restricted stock units, if any, vest on March 31, 2024. The performance-based awards have three annual performance periods (fiscal years 2021, 2022 and 2023), with operating income and free cash flow goals (equally weighted) for each year, and threshold performance resulting in awards earned at 50% of the target opportunity and maximum performance resulting in awards earned at 200% of the target. ~~On June 15,~~The annual achievement levels are accumulated over the three-year performance period and the earned amounts, if any, vest on March 31, 2024. The three-year average payout level for each performance objective replaces the actual payout level for any fiscal year where the actual payout is less than the three-year average. These are cash-based awards that were included in other current liabilities on the consolidated balance sheet beginning in April 2021.

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Additionally on May 17, 2021, the Company granted ~~41,666 service-based restricted stock units and~~an employee 37,500 performance-based restricted stock units ~~covering a target number~~as an inducement award outside of ~~33,334, and a maximum number of 66,668, shares of common stock under~~ the 2015 Plan at a grant date fair value of ~~$6.27~~$5.00 per share. ~~These awards may be paid in cash or shares at the election of the Compensation Committee of the Board of Directors.~~ The service-based restricted stock units vested with respect to 25,000 shares of common stock on the date of grant (June 15, 2021), while 8,333 will vest on March 31, 2022 and 8,333 will vest on March 31, 2023. The earned amounts of the performance-based restricted stock units, if any, ~~will~~ vest on March 31, ~~2023 and~~2024. The performance-based awards have ~~two~~three annual performance periods (fiscal years 2021, 2022 and ~~2022)~~2023), with operating income and free cash flow goals (equally weighted) for each year, and threshold performance resulting in awards earned at 50% of the target opportunity and maximum performance resulting in awards earned at 200% of the target. ~~The initial expense for the 25,000 units that vested at the grant date of June 15, 2021 was $0.2 million.~~

During the first nine months of 2020, the Company granted 580,312 service-based restricted stock units and 1,178,213 performance-based restricted stock units under the 2020 LTI program and the 2015 Plan, at a grant date fair value of $1.22 per share, which couldThese awards may be paid in cash or shares at the election of the Compensation Committee of the Board of Directors. ~~The service-based restricted stock units vest in equal annual installments over a period of three years. The 2020 performance-based awards have~~ ~~three~~ annual performance periods (fiscal years 2020, 2021 and 2022), with operating income and free cash flow goals (equally weighted) for each year, and threshold performance resulting in awards earned at 50% of the target opportunity and maximum performance resulting in awards earned at 200% of the target. The annual achievement levels are averaged over the three-year performance period and the earned amounts, if any, vest on March 31, 2023. The three-year average payout level for each performance objective replaces the actual payout level for any fiscal year where the actual payout is less than the three-year average.

The Company previously granted (i) performance-based restricted stock units under the 2016 LTI program, which were scheduled to vest if the Company achieved a per share stock price of $5.50 for 30 consecutive trading days prior to August 5, 2021, (ii) performance-based restricted stock units under the 2017 LTI program, which were scheduled to vest if the Company achieved a per share stock price of $6.00 for 30 consecutive trading days prior to March 31, 2021 (pursuant to an extension from the initial vesting date of March 31, 2020, which extension was approved by the Compensation Committee in February 2020), and (iii) performance-based restricted stock units under the 2018 LTI program, which were scheduled to vest if the Company achieved a per share stock price of at least $5.00 for any period of 30 consecutive trading days prior to June 30, 2021 (collectively, the “LTI Performance Awards”). On March 5, 2021, the Compensation Committee of the Board of Directors extended the performance period for each of the LTI Performance Awards to December 31, 2022. In accordance with ASC Topic 718, “Compensation—Stock Compensation” (“ASC 718”), the Company conducted a lattice valuation model in order to revalue the market price for the LTI Performance Awards at the March 5, 2021 modification date. The 2018 LTI program met the market objective by achieving a per share stock price of $5.00 for 30 consecutive days, and approximately ~~261,463~~189,640 shares will vest for recipients remaining employed through December 31, 2022. ~~The modification resulted in an approximately $0.8 million incremental cost, which will be expensed over a twenty-month period starting in April 2021.~~

During the first nine months of 2021, the Compensation Committee of the Board of Directors approved modifying the 2020 ~~performance-based awards granted in 2020. This modification resulted in the adjustment of the 2021~~ and 2022 performance goals; in addition, the three-year average payout level for each performance objective will replace the actual payout level for any fiscal year (including, without limitation, 2020) where the actual payout is less than the three-year average. As of September 30, 2021, the payout would be 549,181 at threshold, 1,098,362 at target, and 2,196,724 at maximum. The grant price was adjusted from $1.22 per share to $3.49 share per the modification date of March 5, 2021.

~~During the first nine months of 2021, the Compensation Committee approved modifying the~~ 2019 performance-based restricted stock ~~unit awards.~~units granted in 2020 and 2019. The 2020 and 2019 performance-based restricted stock units did not achieve the 2021 performance ~~goal for 2020~~objectives. The 2019 performance-based restricted stock units expired because their final performance period was ~~year-end backlog performance expressed in margin dollars. Because of~~2021.

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~~COVID-19,~~On April 13, 2022, the Company’s ~~ability to book backlog~~management analyzed the probability of achieving the 2022 performance objectives for the 2021 and 2020 performance-based restricted stock units granted in 2021 and 2020 and determined that, after comparing the ~~normal course was impaired during 2020, particularly in Florida, New York, and Canada and with respect to new customers. As a result, the Compensation Committee authorized an adjustment~~actual year-to-date results to the ~~2020~~forecasted results, it is unlikely the Company will achieve the minimum performance ~~results to add $51.9 million of orders to December 31, 2020 backlog that were booked in early 2021 but delayed due to~~metric for the ~~impact of the COVID-19 pandemic, which~~2022 performance period. This resulted in a ~~payout~~$0.3 million adjustment for the 2021 performance-based restricted stock units and an entire reversal of ~~156,014 shares under~~$0.5 million for the ~~2015 Plan.~~2020 performance-based restricted stock units within the first three months of 2022. The 2020 performance-based restricted stock units will expire after the 2022 performance period and the 2021 performance-based restricted stock units were adjusted to vest at 55% of their original cash value and as of September 30, 2022, will be expensed by approximately $0.5 million until the end of the service requisite period of March 31, 2024.

While the majority of restricted stock units and awards were granted as equity, in accordance with ASC 718, the Company has ~~two~~one cash-based ~~plans~~plan that ~~are~~is classified as a liability. Stock-based compensation expense for the three months ended September 30, 2022 and 2021 ~~and 2020~~ was ~~$1.1~~$0.5 million and ~~$0.6~~$1.1 million, respectively, and for the nine months ended September 30, 2022 and 2021 ~~and 2020~~ was ~~$2.6~~$1.1 million and ~~$1.7~~$2.6 million, respectively, and was included in general and administrative expenses on the Company’s unaudited condensed consolidated statements of operations.

NOTE ~~12—~~13—OTHER SUPPLEMENTARY INFORMATION

The following table summarizes other current assets included on the Company's unaudited condensed consolidated balance sheets:


(in thousands)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Unamortized commercial insurance premiums					$	3,674	$	2,389
Litigation settlement receivable						2,675		—
Security deposits - real estate						1,978		1,978
Prepaid expenses						1,826		1,136
Sales tax receivable - Canada	$	4,245	$	2,097		6		4,866
Unamortized commercial insurance premiums		3,321		1,903
Prepaid expenses		1,354		432
Letters of credit		883		474
Cash collateral on commercial insurance claims		595		585
Surety bond		500		45
Workers' compensation refund		-		265
Prepaid health insurance premiums		-		207
Other short-term assets		628		449
Other current assets						516		680
Total	$	11,526	$	6,457	$	10,675	$	11,049

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The following table summarizes other current liabilities included on the Company's unaudited condensed consolidated balance sheets:


(in thousands)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Short-term lease liability					$	1,572	$	1,606
Accrued job cost						1,318		2,433
Cloud computing software liability						692		-
Stock Compensation						418		938
Legal fees						245		113
Sales tax payable - Canada	$	4,601	$	2,372		-		5,135
Accrued job costs		2,985		1,081
Short-term lease liability		1,603		1,362
Accrued stock compensation - liability		1,082		387
Accrued workers' compensation and general liabilities		304		506
Other accrued expenses		136		1,462
Other current liabilities						385		792
Total	$	10,711	$	7,170	$	4,630	$	11,017

The following table summarizes other long-term assets included on the Company's unaudited condensed consolidated balance sheets:


(in thousands)	September 30, 2022		December 31, 2021
Right-of-use lease assets	$	3,738	$	1,527
Equity method investment in RCC		1,848		2,521
Unamortized Debt Issuance Cost		1,223		1,509
Unamortized cloud computing software		757		—
Other long-term assets		166		155
Total	$	7,732	$	5,712

The following table summarizes other long-term liabilities included on the Company's unaudited condensed consolidated balance sheets:


(in thousands)	September 30, 2022		December 31, 2021
Long-term lease liability	$	2,582	$	511
Liability for uncertain tax positions		1,102		1,136
Other long-term liabilities		756		-
Total	$	4,440	$	1,647

NOTE 14—SUBSEQUENT EVENTS

The Company settled a legal dispute related to the loss of a multi-year contract against a former Company executive and current competitor. The former Company executive was hired by the competitor and breached a non-compete agreement. The legal settlement resulted in $2.7 million and was included on the income statement as other income for the third quarter of 2022. The Company collected the $2.7 million in cash related to the settlement on October 13, 2022. The $2.7 million settlement was used to pay a portion of the Revolving Credit Facility in the fourth quarter of 2022.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statement Regarding Forward-Looking Statements

This Form 10-Q and its exhibits contain or incorporate by reference various forward-looking statements that express a belief, expectation or intention or are otherwise not statements of historical fact. Forward-looking statements generally use forward-looking words, such as “may,” “will,” “could,” “should,” “would,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “forecast” and other words that convey the uncertainty of future events or outcomes. These forward-looking statements are not guarantees of our future performance and involve risks, uncertainties, estimates and assumptions that are difficult to predict. Therefore, our actual outcomes and results may differ materially from those expressed in these forward-looking statements. Investors should not place undue reliance on any of these forward-looking statements. Except as required by law, we undertake no obligation to further update any such statements, or the risk factors described in our ~~2020~~2021 Report under the heading “Part I—Item 1A. Risk Factors,” to reflect new information, the occurrence of future events or circumstances or otherwise. The forward-looking statements in this Form 10-Q do not constitute guarantees or promises of future performance. Forward-looking statements may include information concerning the following, among other items:

●

implementation of our ~~level of indebtedness;~~liquidity plan and our ability to continue as a going concern;

●

our ability to make interest and principal payments on our debt and satisfy the amended financial and other covenants contained in our debt facilities, as well as our ability to engage in certain transactions and activities due to limitations and covenants contained in such facilities;

●

our ability to generate sufficient cash resources to continue funding operations, including investments in working capital required to support growth-related commitments that we make to our customers, and the possibility that we may be unable to obtain any additional funding as needed or incur losses from operations in the future;

●

exposure to market risks from changes in interest rates, including changes to or replacement of the LIBOR;

●

~~failure~~our ability to obtain adequate surety bonding and letters of credit;

●

our ability to maintain effective internal control over financial reporting and disclosure controls and ~~procedures in the future;~~procedures;

●

our ability to attract and retain qualified personnel, skilled workers, and key ~~officers, including the potential impact of the federal COVID-19 vaccination mandate, or any mandates imposed by our customers, on our ability to recruit and retain employees;~~officers;

●

failure to successfully implement or realize our business strategies, plans and objectives of management, and liquidity, operating and growth initiatives and opportunities, including ~~our~~any expansion into ~~international~~new markets, and our ability to identify potential candidates for, and consummate, acquisition, disposition, or investment transactions;

●

the loss of one or more of our significant customers;

●

our competitive position;

●

market outlook and trends in our industry, including the possibility of reduced investment in, or increased regulation of, nuclear power plants and declines in public infrastructure construction and reductions in government funding, including funding by state and local agencies;

●

~~the failure of the U.S. Congress to pass infrastructure-related legislation benefiting our end markets;~~

●

costs exceeding estimates we use to set fixed-price contracts;

●

harm to our reputation or profitability due to, among other things, internal operational issues, poor subcontractor performances or subcontractor insolvency;

●

potential insolvency or financial distress of third parties, including our customers and suppliers;

●

our contract backlog and related amounts to be recognized as revenue;

●

our ability to maintain our safety record, the risks of potential liability and adequacy of insurance;

●

adverse changes in our relationships with suppliers, vendors, and subcontractors, including increases in cost, disruption of supply or shortage of labor, freight, equipment or supplies, including as a result of the COVID-19 ~~pandemic;~~pandemic, geopolitical conditions and other economic factors;

●

compliance with environmental, health, safety and other related laws and regulations, including those related to climate change;

●

limitations or modifications to indemnification regulations of the U.S. ~~or Canada;~~;

●

our expected financial condition, future cash flows, results of operations and future capital and other expenditures;

●

the impact of ~~general~~unstable market and economic conditions on our business, financial condition and stock price, including ~~inflation,~~inflationary cost pressures, supply chain disruptions and constraints, labor shortages, the ~~current economic disruption~~effects of the Ukraine-Russia conflict and ~~any recession resulting from the COVID-19 pandemic;~~a possible recession;

●

our ability to meet publicly announced guidance or other expectations about our business, key metrics and future operating results;

●

the impact of the COVID-19 pandemic on our business, results of operations, financial condition, and cash flows, including global supply chain disruptions and the potential for additional COVID-19 cases to occur at our active or future job sites, ~~as previously occurred at our Plant Vogtle site in Georgia,~~ which potentially could impact cost and labor availability;

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●

information technology vulnerabilities and cyberattacks on our networks;

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●

our failure to comply with applicable laws and regulations, including, but not limited to, those relating to privacy and anti-bribery;

●

our ability to successfully implement our new enterprise resource planning (ERP) system;

●

our participation in multiemployer pension plans;

●

the impact of any disruptions resulting from the expiration of collective bargaining agreements;

●

the impact of natural disasters, which may worsen or increase due to the effects of climate change and other severe catastrophic ~~events (such as~~ events;

●

the ~~ongoing COVID-19 pandemic);~~impact of corporate citizenship and environmental, social and governance matters;

●

the impact of changes in tax regulations and laws, including future income tax payments and utilization of net operating loss and foreign tax credit carryforwards;

●

volatility of the market price for our common stock;

●

our ability to maintain our stock exchange listing;

●

the effects of anti-takeover provisions in our organizational documents and Delaware law;

●

the impact of future offerings or sales of our common stock on the market price of such stock;

●

the potential impact of activist stockholder actions;

●

expected outcomes of legal or regulatory proceedings (whether claims made by or against us) and their anticipated effects on our results of operations; and

●

any other statements regarding future growth, future cash needs, future operations, business plans and future financial results.

These forward-looking statements represent our intentions, plans, expectations, assumptions, and beliefs about future events and are subject to risks, uncertainties, and other factors, including unpredictable or unanticipated factors that we have not discussed in this Form 10-Q. ~~In addition, some of these risks, uncertainties and other factors have been, and may further be, exacerbated by the COVID-19 pandemic.~~ Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by the forward-looking statements.

In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. Investors should consider the areas of risk and uncertainty described above, as well as those discussed in the ~~2020~~2021 Report under the heading “Part I—~~Item 1A. Risk Factors” and in this Form 10-Q under the heading “Part II—~~Item 1A. Risk Factors.” Except as may be required by applicable law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, and we caution investors not to rely upon them unduly.

The following discussion provides an analysis of the results of continuing operations, an overview of our liquidity and capital resources and other items related to our business. Unless otherwise specified, the financial information and discussion in this Form 10-Q are as of and for the three and nine months ended September 30, ~~2021~~2022 and are based on our continuing operations; they exclude any results of our discontinued operations. Please refer to “Note 4—5—Changes in Business” to the unaudited condensed consolidated financial statements included in this Form 10-Q for additional information on our discontinued operations.

This discussion and analysis should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in this Form 10-Q and our audited consolidated financial statements and notes thereto included in the ~~2020~~2021 Report.

Backlog

The services we provide are typically carried out under construction contracts, long-term maintenance contracts and master service agreements. Total backlog represents the dollar amount of revenue expected to be recorded in the future for work performed under awarded contracts.

Revenue estimates included in our backlog can be subject to change as a result of project accelerations, cancellations or delays due to various factors, including, but not limited to, the customer’s budgetary constraints and adverse weather. These factors can also cause revenue amounts to be recognized in different periods and at levels other than those originally projected. Additional work that is not identified under the original contract is added to our estimated backlog when we reach an agreement with the customer as to the scope and pricing of that additional work. Backlog is reduced as work is performed and revenue is recognized, or upon cancellation.

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Backlog is not a measure defined by GAAP, and our methodology for determining backlog may vary from the methodology used by other companies in determining their backlog amounts. Backlog may not be indicative of future operating results and projects in our backlog may be cancelled, modified, or otherwise altered by our customers. We utilize our calculation of backlog to assist in measuring aggregate awards under existing contractual relationships with our customers. We believe our backlog disclosures will assist investors in better understanding this estimate of the services to be performed pursuant to awards by our customers under existing contractual relationships.

The following tables summarize our backlog:


(in thousands)	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Cost plus	$	604,323	$	430,694	$	313,022	$	559,417
Lump sum		68,183		13,156		39,701		72,276
Total	$	672,506	$	443,850	$	352,723	$	631,693


(in thousands)	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021		Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Backlog - beginning of period	$	664,357	$	443,850	$	234,303	$	631,693
New awards		76,774		376,228		158,960		214,480
Adjustments and cancellations, net		4,726		78,201		16,145		(311,147)
Revenue recognized		(73,351)		(225,773)		(56,685)		(182,303)
Backlog - end of period	$	672,506	$	672,506	$	352,723	$	352,723

Total backlog as of September 30, ~~2021~~2022 was ~~$672.5~~$352.7 million, compared with ~~$443.9~~$631.7 million on December 31, ~~2020, an increase~~2021, a decrease of ~~$228.7~~$279.0 million, which was primarily driven by ~~our~~the loss of a multi-year contract within the nuclear decommissioning ~~work, which accounted for $224.6 million of the increase. Our fossil and wastewater markets also contributed~~market in February 2022, contributing to a ~~$28.3~~loss of approximately $374.6 million ~~increase~~ in ~~backlog. These increases were partially offset by a reduction in our nuclear market~~ backlog ~~of $29.4 million.~~for the years 2022 through 2029. We estimate that ~~approximately $207.4~~$168.2 million, or ~~30.8%~~47.7% of total backlog on September 30, ~~2021,~~2022, will be converted to revenue within the next twelve months and ~~$73.4~~$64.5 million, or ~~10.9%~~18.3% of total backlog, will be converted to revenue within the remainder of the fiscal year. As of December 31, ~~2020,~~2021, we estimated that approximately ~~$165.3~~$157.2 million ~~or 37.2%~~ of ~~total~~our year-end backlog, as adjusted for the loss of the multi-year contract in February 2022, would ~~convert~~be converted to revenue during 2022. Please refer to Item 1, Business under “Backlog” and “Note 17—Subsequent Events” included in ~~2021.~~the 2021 Report for additional information.

~~Results of Operations~~

The Company continues to monitor several factors that may cause actual results of operations and financial results to differ from our historical results or current expectations. These factors include: inflationary pressures, the political environment, work delays on projects and supplies, labor shortages and rising labor costs, new laws, regulations and guidelines, new project requirements, and the impact of the COVID-19 pandemic, including the consequences of governmental and other measures designed to prevent the spread of the virus, including the potential impact of applicable vaccine mandates on our labor supply and future results of operations, as well as any impact of such mandates on our customers, the continued sporadic outbreaks of COVID-19 cases and the ongoing spread of the new COVID-19 variants, the impact of COVID-19 vaccines, including the speed at which they, or related “boosters,” are approved, disseminated and widely adopted, and their effectiveness against COVID-19 and its evolving strains, and the ultimate duration and scope of the pandemic. These and other factors could affect the Company’s operational results and cause them to not be comparable to those of the same period in previous years. For instance, the effects of the COVID-19 pandemic led the Company to implement enhanced safety standards and processes on a project in Georgia that experienced COVID-19 cases on site and caused work delays on projects in New York due to specific state, local, municipal and customer mandated stay-at-home orders and new project requirements that were established to protect workers and the general public. Additionally, during the third quarter of 2020, we experienced a delay in a nuclear project and an outage cycle in Louisiana and have experienced a slow-down in business development activities and bid opportunities, particularly on the eastern shore of the Lake Huron area in Ontario, Canada due to COVID-19. Although the majority of stay-at-home orders were phased-out by the end of the second quarter of 2020, we are still experiencing impacts associated with the COVID-19 project specific protocols. While the Company has not yet experienced a material negative impact on its operational results, these project specific requirements are expected to remain in place for the foreseeable future, which will continue to impact project schedules and workflow going forward.

In addition, federal and state governments have increased spending as part of efforts to mitigate the impact of COVID-19 on the economy. The amount and timing of such spending will be directly impacted by the duration of required efforts to contain COVID-19 and the severity of the negative impacts created by the virus and its effect on the economy. Any recovery from the COVID-19 pandemic and related economic impact may also be slowed or reversed by a number of factors, including any widespread resurgence in COVID-19 infections. The results presented in this Form 10-Q are not necessarily indicative of future operating results.

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Results of Operations

The following summary and discussion of our results of operations is based on our continuing operations and excludes any results of our discontinued operations:


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021
Revenue	$	73,351	$	66,240	$	225,773	$	204,936	$	56,685	$	73,351	$	182,303	$	225,773
Cost of revenue		66,590		57,582		203,561		180,014		55,936		66,590		173,564		203,561
Gross profit		6,761		8,658		22,212		24,922		749		6,761		8,739		22,212

Selling and marketing expenses		267		123		709		401		322		267		1,054		709
General and administrative expenses		4,248		5,827		16,931		17,413		6,657		4,248		19,022		16,931
Depreciation and amortization expense		50		46		137		144		61		50		173		137
Total operating expenses		4,565		5,996		17,777		17,958		7,040		4,565		20,249		17,777

Operating income		2,196		2,662		4,435		6,964
Operating income (loss)										(6,291)		2,196		(11,510)		4,435

Interest expense, net		1,227		1,541		3,733		4,640		1,485		1,227		3,965		3,733
Other expense (income), net		181		(316)		(1,411)		(937)
Income from continuing operations before income tax		788		1,437		2,113		3,261
Income tax expense		(6)		321		256		565
Income from continuing operations	$	794	$	1,116	$	1,857	$	2,696
Other (income) expense, net										(11,114)		181		(11,533)		(1,411)
Income (loss) from continuing operations before income tax										3,338		788		(3,942)		2,113
Income tax expense (benefit)										(272)		(6)		(214)		256
Income (loss) from continuing operations									$	3,610	$	794	$	(3,728)	$	1,857

Revenue for the three months ended September 30, ~~2021 increased $7.1~~2022 decreased $16.7 million, or ~~10.7%~~22.7%, compared with the corresponding period in ~~2020. The increase~~2021. This decrease was ~~driven~~ primarily byrelated to lost nuclear decommissioning projects, resulting in a $13.5 million reduction in revenue, the Company exiting the Canadian nuclear market, contributing to a $9.0 million reduction in revenue and a reduction in volume related to our ~~growth in the decommissioning~~United States nuclear market of ~~$8.6 million. In addition, our volume increased~~$4.0 million compared to the corresponding period in ~~the fossil fuel markets by $3.7 million.~~2021. These ~~increases~~declines were partially offset by ~~reduced~~increased volume in the ~~nuclear~~Company’s transmission and ~~industrial markets of $2.5~~distribution businesses by $4.1 million, water business by $2.1 million, chemical business by $2.1 million and ~~$2.6 million, respectively.~~fossil business by $1.2 million.

Revenue for the nine months ended September 30, ~~2021 increased $20.8~~2022 decreased $43.5 million, or ~~10.2%~~19.3%, compared with the corresponding period in ~~2020. The increase~~2021. This decrease was primarily related to lost nuclear decommissioning projects, resulting in a $29.0 million reduction, the Company exiting the Canadian nuclear market, contributing to a $23.0 million reduction and a $22.7 million reduction largely driven by ~~our growth in the decommissioning market of $19.1 million, and~~ the timing of a ~~planned utility~~nuclear outage ~~related~~compared to ~~our long-term maintenance and modification contract of $18.3 million. In addition, our volume increased~~the corresponding period in ~~the fossil fuel market by $10.8 million.~~2021. These ~~increases~~declines were partially offset by ~~reduced volume~~a $5.1 million year-over-year increase with several key customers in ~~the~~our nuclear market, ~~of $27.4~~a $4.8 million increase in our chemical market, a $13.0 million increase in our water business and growth in our transmission and distribution businesses contributing to $5.3 million.

Gross profit for the three months ended September 30, ~~2021~~2022 decreased ~~$1.9~~by $6.0 million, or ~~21.9%~~88.9%, compared with the corresponding period in ~~2020.~~2021, while gross margin declined to 1.3% from 9.2%. The decrease ~~was primarily driven by cost overruns~~in gross profit reflects start-up costs relating to our transmission and distribution markets and the impact of additional losses on ~~uncompleted fixed price~~certain lump sum projects in our Florida water markets. We anticipate that these projects will continue to generate revenues with no associated profits until completion in the third quarter of 2023. Excluding the impact relating to start-up costs in the transmission and distribution markets and the lump sum projects in the ~~industrial markets we serve in Florida. We also~~water market for which losses were incurred, ~~start-up costs associated with our expansion in~~ the ~~northeast transportation and distribution~~Company would have realized a gross margin of ~~natural gas during~~9.7% rather than 1.3%.

Gross profit for the ~~three~~nine months ended September ~~31, 2021. The decrease was partially offset~~30, 2022 decreased by ~~growth in the decommissioning market accounting for a greater portion of revenue~~$13.5 million, or 60.7%, compared towith the corresponding period in ~~2020. Our decommissioning projects have a lower~~2021, while gross margin ~~profile compared~~declined to ~~other services we provide.~~4.8% from 9.8%. The decrease in gross profit reflects start-up costs relating to our entry into the transmission and distribution markets and the impact of additional losses on certain lump sum projects in our Florida water markets. We anticipate that these projects will continue to generate revenues with no associated profits until completion in the third quarter of 2023. Excluding the impact relating to start-up costs in the transmission and distribution markets and the lump sum projects in the water market for which losses were incurred, the Company would have realized a gross margin of 10.9% rather than 4.8%.

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~~Gross profit~~The following table reconciles our adjusted gross margin to our actual gross margin by deducting the energy transmission and distribution projects that are incurring start-up costs and lump sum projects in the water markets that are generating a loss. We believe this information is meaningful as it isolates the impact that our start-up costs and the non-profitable lump sum projects have on our gross margin. Because adjusted gross margin is not calculated in accordance with GAAP, it may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as substitute for, or superior to, financial measures prepared in accordance with GAAP.


(in thousands)	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Revenue	$	56,685	$	182,303
Cost of revenue		55,936		173,564

Gross profit		749		8,739
Gross margin		1.3%		4.8%

Minus: revenue from transmission and distribution start-up business		(2,900)		(5,440)
Minus: revenue from Florida lump sum water projects		(3,322)		(16,995)
Minus: total revenue deducted		(6,222)		(22,435)

Minus: cost of revenue from transmission and distribution start-up business		(3,622)		(8,947)
Minus: cost of revenue from the Florida lump sum water projects		(6,759)		(22,178)
Minus: total cost of revenue deducted		(10,381)		(31,125)

Adjusted revenue		50,463		159,868
Adjusted cost of revenue		45,555		142,439
Adjusted gross profit	$	4,908	$	17,429
Adjusted gross profit margin		9.7%		10.9%

The Company recorded an operating loss for the three months ended September 30, 2022 of $6.3 million compared to operating income of $2.2 million for the corresponding period in 2021. This operating loss was primarily related to the decrease of gross profits due to the start-up costs in the energy transmission and distribution markets and the non-profitable lump sum projects in our water market. These losses were coupled with operating costs related to general and administrative expenses (see below).

The Company recorded an operating loss for the nine months ended September 30, ~~2021 decreased $2.7~~2022 of $11.5 million ~~or 10.9%,~~ compared ~~with~~to operating income of $4.4 million for the corresponding period in ~~2020. The decrease~~2021. This operating loss was primarily driven by cost overruns on uncompleted fixed price projects in the industrial markets we serve in Florida. The decrease was partially offset by growth in the decommissioning market and the timing of a planned utility outage related to our long-term maintenance and modification contract, each of which has a lower gross margin profile compared to other services we perform and accounted for a greater portion of revenue compared to the corresponding period in 2020.

~~Operating income for the three months ended September 30, 2021 decreased $0.5 million compared with the corresponding period in 2020,~~ due ~~primarily~~ to the decrease in gross ~~profit of $1.9 million. This was partially offset by a decrease of $1.4 million~~profits due to the start-up costs in the energy transmission and distribution markets and the non-profitable lump sum projects in our water market. These losses were coupled with operating ~~expenses, driven by lower~~costs related to general and administrative ~~costs.~~

Operating income for the nine months ended September 30, 2021 decreased $2.5 million compared with the corresponding period in 2020, due primarily to the decrease in gross profit of $2.7 million. This was partially offset by a decrease of $0.2 million in operating expenses ~~driven by lower general and administrative costs.~~(see below).

General and Administrative Expenses


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2021		2020		2021		2020
(in thousands)									2022		2021		2022		2021
Employee-related expenses	$	1,946	$	3,111	$	8,916	$	8,835	$	2,740	$	1,946	$	8,469	$	8,916
Stock-based compensation expense		1,119		614		2,579		1,702		543		1,119		1,120		2,579
Professional fees		(10)		843		1,876		3,088		1,499		(10)		4,443		1,876
Other expenses		1,193		1,259		3,560		3,788		1,875		1,193		4,990		3,560
Total	$	4,248	$	5,827	$	16,931	$	17,413	$	6,657	$	4,248	$	19,022	$	16,931

Total general and administrative expenses for the three months ended September 30, ~~2021 decreased by $1.6~~2022 increased $2.4 million, or ~~27.1%~~56.7%, compared with the corresponding period in ~~2020. Employee~~2021. The increase was largely driven by a $1.4 million increase in professional fees involving legal expenses, a $1.0 million increase largely driven by the reversal of short-term incentives not achieving targets in 2021 and a $0.6 million increase in other expenses related ~~costs decreased by $1.2 million due~~ to cost reductions in a short term incentive program, which was partially offset by growth in headcount. Professional fees decreased by $0.9 million resulting from a claim recovery on previously incurred expenses.computer software and subscription costs. These ~~decreases~~increased costs were partially offset by ~~an increase~~a $0.6 million decrease in stock-based compensation ~~expense~~involving forfeitures of ~~$0.5 million, driven by additional restricted stock units granted in 2021.~~previously-granted equity awards and adjustments related to performance objectives.

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Total general and administrative expenses for the nine months ended September 30, ~~2021 decreased by $0.5~~2022 increased $2.1 million, or ~~2.8%,~~12.4% compared with the corresponding period in ~~2020.~~2021. The ~~decrease~~increase was ~~primarily~~largely driven by ~~decreases of $1.2~~a $2.6 million ~~and $0.2 million, respectively,~~increase in professional fees involving legal expenses and a $1.4 million increase in other expenses ~~resulting from a claim recovery on previously incurred expenses~~related to software and ~~cost reduction initiatives.~~subscriptions costs. These ~~decreases~~increased costs were partially offset by ~~increases of $0.1~~a $1.5 million ~~in employee related costs and $0.9 million~~decrease in stock-based compensation ~~expenses due~~involving forfeitures and adjustments related to ~~accelerated vesting of a restricted stock award~~performance objectives and a ~~new grant of restricted stock units.~~$0.4 million reduction in employee-related costs for salaries.

Total Other (Income) Expense, Net


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2021		2020		2021		2020
(in thousands)									2022		2021		2022		2021
Interest expense, net	$	1,227	$	1,541	$	3,733	$	4,640	$	1,485	$	1,227	$	3,965	$	3,733
Other (income) expense, net		181		(316)		(1,411)		(937)		(11,114)		181		(11,533)		(1,411)
Total	$	1,408	$	1,225	$	2,322	$	3,703	$	(9,629)	$	1,408	$	(7,568)	$	2,322

Total other ~~expense,~~income, net, for the three months ended September 30, ~~2021~~2022 increased ~~$0.2~~$11.0 million ~~or 14.9%,~~ compared with the corresponding period in ~~2020.~~2021. The increase was primarily ~~due~~driven by an $8.1 million settlement of an arbitration proceeding related to the ~~recognition~~restatement of the Company’s financial statements in 2017 for the 2012 to 2014 period, coupled with a ~~$0.4~~$2.7 million ~~impairment charge~~settlement related to a ~~sublease, partially offset by $0.2~~former executive and his employer. Additionally, the Company had $0.7 million ~~reduction~~decrease in ~~interest expense due~~other expenses related to ~~refinancing our debt in December 2020,~~a lease impairment and other small miscellaneous expenses compared with the corresponding period in ~~2020.~~

~~Total other expense, net, for the nine months ended September 30, 2021 decreased $1.4 million, or 37.3%, compared with the corresponding period in 2020.~~2021. The ~~decrease~~increase was primarily due to receipt of a $1.0 million distribution from the assets of a former subsidiary related to a previous intercompany receivable that we recognized as a loss in 2018, coupled with a $1.0 million decrease in interest expense and fees related to the refinancing of our debt in 2020. These decreases were partially offset by a $0.3 million increase in interest expense related to interest rate increases on our borrowings and a $0.2 million reduction in joint venture earnings due to lower volume as construction activities for Plant Vogtle ~~Units 3 and 4~~ move closer to ~~completion, and a $0.4~~completion.

Total other income, net, for the nine months ended September 30, 2022 increased $9.9 million ~~impairment charge related to a sublease,~~ compared with the corresponding period in ~~2020.~~2021. The increase was primarily driven by an $8.1 million settlement of an arbitration proceeding related to the restatement of the Company’s financial statements in 2017 for the 2012 to 2014 period, coupled with a $2.7 million settlement related to a former executive and his employer. These awards were partially offset by a $0.2 million increase in interest expense related to interest rate increases on our borrowings and a $0.6 million reduction in joint venture earnings due to lower volume as construction activities for Plant Vogtle move closer to completion.

For additional information about the arbitration and legal settlements, please refer to “Note 9—Debt” and “Note 14—Subsequent Events” to the unaudited condensed consolidated financial statements included in this Form 10-Q.

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Income Tax Expense


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2021		2020		2021		2020
Income tax (benefit) expense	$	(6)	$	321	$	256	$	565
(in thousands)									2022		2021		2022		2021
Income tax expense (benefit)									$	(272)	$	(6)	$	(214)	$	256

Income tax expense for the interim periods is based on estimates of the effective tax rate for the entire fiscal year. The effective income tax rate is based upon the estimated income during the calendar year, the estimated composition of the income in different jurisdictions and discrete adjustments, if any, in the applicable quarterly periods for settlements of tax audits or assessments and the resolution or identification of tax position uncertainties.

For the three months ended September 30, ~~2021, we~~2022, the Company recorded income tax benefit from continuing operations of $0.3 million, or (8.2)% of pretax income from continuing operations, compared with income tax benefit from continuing operations of $0.01 million, or (0.8)% of pretax income from continuing operations, ~~compared with income tax expense from continuing operations of $0.3 million, or 22.3% of pretax income from continuing operations,~~ in the corresponding period of ~~2020.~~2021. For the nine months ended September 30, ~~2021, we~~2022, the Company recorded income tax benefit from continuing operations of $0.2 million, or 5.4% of pretax loss from continuing operations, compared with income tax expense from continuing operations of $0.3 million, or 12.1% of pretax income from continuing operations, ~~compared with income tax expense from continuing operations of $0.6 million, or 17.3% of pretax income from continuing operations,~~ in the corresponding period of ~~2020.~~2021.

The difference between our effective tax rate and the federal statutory tax rate for the three and nine months ended September 30, 2021 and 2020 is primarily related to the Canadian income tax provision and the partial valuation allowance recorded on our U.S. deferred tax assets.

~~The~~$0.3 million decrease in income tax provision from continuing operations for the three months ended September 30, ~~2021~~2022 compared with the corresponding period in ~~2020,~~2021 was primarily ~~the result of the $0.3 million increase in the U.S. deferred tax assets net of~~related to a ~~partial valuation allowance, and the $0.05~~$0.6 million decrease in the Canadian income tax provision, ~~due~~partially offset by a $0.3 million decrease in the U.S. income tax benefit related to the ~~year-over-year fluctuation in the pre-tax Canadian book income.~~

indefinite lived deferred tax assets. The $0.5 million decrease in income tax provision from continuing operations for the nine months ended September 30, ~~2021~~2022, compared with the corresponding period in ~~2020~~2021, was primarily ~~the result of the $0.4~~related to a $0.7 million increase in the U.S. deferred tax assets net of the partial valuation allowance as the Company’s indefinite lived intangible assets have been fully amortized for tax purposes as of year-end 2020, partially offset by the $0.1 million increasedecrease in the Canadian income tax ~~provision.~~

~~Tax Cuts and Jobs Acts of 2017~~

~~On December 22, 2017,~~provision, partially offset by a $0.2 million decrease in the ~~Tax Cuts and Jobs Act was signed into law, making significant changes~~U.S. income tax benefit related to the ~~Internal Revenue Code. Such changes include, but are not limited to, a U.S. federal corporate~~indefinite lived deferred tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017.assets.

Due to changes in interpretations and assumptions, and future guidance that may be issued and actions we may take in response to the Tax Cuts and Jobs Act, the ultimate impact of the Tax Cuts and Jobs Act may change in future periods. The Tax Cuts and Jobs Act is highly complex, and we will continue to assess the impact of certain aspects of the Tax Cuts and Jobs Act. For additional information, please refer to “Note 7—Income Taxes” to the consolidated financial statements included in this Form 10-Q.

Discontinued Operations

See “Note 4—5—Changes in Business” to the unaudited condensed consolidated financial statements included in this Form 10-Q for information regarding discontinued operations.

Liquidity and Capital Resources

During the nine months ended September 30, ~~2021,~~2022, our principal sources of liquidity were borrowings under the Revolving Credit Facility and effective management of our working capital. Our principal uses of cash were to pay for customer contract-related material, labor and subcontract labor, operating expenses, principal payments on the Term Loan and interest expense on the Term Loan and the Revolving Credit Facility. See discussion in “Note 8—9—Debt” to the unaudited condensed consolidated financial statements included in this Form 10-Q for additional information about the Term Loan and the Revolving Credit Facility.

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Net Cash Flows

Our net consolidated cash flows, including cash flows related to discontinued operations, consisted of the following:


	Nine Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2021		2020		2022		2021
Cash flows provided by (used in):
Operating activities	$	(8,765)	$	(6,228)	$	(5,464)	$	(8,766)
Investing activities		(537)		(88)		(536)		(537)
Financing activities		3,031		3,044		4,671		3,031
Effect of exchange rate changes on cash		111		(80)		(140)		112
Net change in cash, cash equivalents and restricted cash	$	(6,160)	$	(3,352)	$	(1,469)	$	(6,160)

Cash and Cash Equivalents

As of September 30, ~~2021,~~2022, our operating unrestricted cash and cash equivalents decreased ~~by $6.2~~$1.5 million to ~~$2.6~~$1.0 million from ~~$8.7~~$2.5 million as of December 31, ~~2020.~~2021. As of September 30, ~~2021, $1.0~~2022, $0.4 million of operating cash was held in U.S. bank accounts and ~~$1.6~~$0.6 million was held in ~~Canadian bank accounts.~~Canada. Total liquidity (the sum of unrestricted cash and availability under the Revolving Credit Facility) was ~~$21.7~~$7.3 million asat the end of ~~September 30, 2021. The decreased liquidity is primarily driven by more cash used towards cost~~the third quarter of ~~sales resulting in greater revenue and an increase in accounts receivable and contract assets. This is part~~2022.

Table of ~~normal operations as our accounts receivable and contract assets will convert to customer receipts and is expected to be a temporary reduction in liquidity.~~Contents

Operating Activities

Cash flows from operating activities result primarily from earnings sources and are affected by changes in operating assets and liabilities, which consist primarily of working capital balances related to our projects. For the nine months ended September 30, ~~2021,~~2022, cash used in operating activities totaled ~~$8.8~~$5.5 million, ~~an increase~~a decrease in cash used of ~~$2.6~~$3.4 million compared to the corresponding period in ~~2020,~~2021. The cash used in operating activities was primarily due to ana $3.2 million net loss, $2.6 million increase into accounts receivable, ~~of $5.4~~a $1.0 million ~~an increase in contract assets of $3.3 million, an increase in other current assets and other assets of $3.3 million, a~~ decrease ~~in contract liabilities of $0.7 million~~to accounts payable and a ~~decrease in net income of $0.6 million. This~~$2.2 million increase ~~in cash used was~~to other assets, partially offset by ana $2.6 million decrease to contract assets and a $1.1 million increase ~~in accounts payable and accrued liabilities of $10.4 million and an increase in non-cash stock-based compensation of $0.9 million.~~to stock-compensation costs for the nine months ended September 30, 2022.

Investing Activities

Cash flows from investing activities were insignificant for the nine months ended September 30, 2022, consistent with the corresponding period in 2021.

Financing Activities

For the nine months ended September 30, ~~2021,~~2022, net cash ~~used for investing~~provided by financing activities ~~increased $0.4~~of $4.7 million ~~compared~~was primarily composed of cash provided by our borrowings exceeding our repayments under the Revolving Credit Facility by $13.9 million, partially offset by an $8.8 million payment on our Term Loan, a $0.2 million payment related to the ~~nine months ended September 30, 2020, primarily due to an increase in investment in operating equipment primarily~~amendment of our Term Loan and Revolving Credit Facility and approximately $0.2 million for payment of statutory taxes related to ~~our water and wastewater projects.~~stock-based compensation. The $8.8 million principal payment included an $8.1 million prepayment related to cash awarded to the Company from settlement of an arbitration proceeding.

~~Financing Activities~~

~~For~~During the first nine months ended September 30, 2021, net cash provided by financing activities of $3.0 million was primarily ~~composed of~~due to cash provided by our borrowings under the Revolving Credit Facility exceeding our repayments from customer cash receipts by $4.3 million, which was partially offset by cash used in connection with our stock-based awards for payments of statutory taxes of $0.5 million and a $0.8 million principal payment we made on the Term Loan.

~~During~~For additional information about the ~~nine months ended September 30, 2020, net cash provided by financing activities of $3.0 million was primarily composed~~settlement of the ~~proceeds from~~arbitration and amendment fee, please refer to “Note 9—Debt” to the ~~successful completion of our subscription rights offering~~unaudited condensed consolidated financial statements included in the first quarter of 2020, pursuant to which we received net proceeds of $6.5 million and issued 5,384,615 shares of our common stock. This was partially offset by net cash used by repayments of customer cash receipts under our Prior ABL exceeding our borrowings by $2.5 million, and a $0.4 million principal payment coupled with $0.3 million debt issuance costs related to our prior term loan facility with Centre Lane Partners, LLC.this Form 10-Q

Effect of Exchange Rate Changes on Cash

For both the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, the effect of Canadian foreign exchange rate changes on our cash balances was not material.

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Dividends

We ~~have~~do not ~~declared dividends since the first quarter of 2015 and do not~~currently anticipate declaring dividends in the near ~~term.~~future. As of September 30, ~~2021,~~2022, the terms of the Term Loan and Revolving Credit Facility restricted our ability to pay dividends. In addition, the timing and amounts of any dividends would be subject to determination and approval by our Board of Directors.

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Liquidity Outlook

~~Overall,~~The accompanying financial statement have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. We anticipate we ~~expect liquidity to~~will continue to ~~improve through the remainder of 2021 as a result of refinancing our debt with terms that reflect improving operational performance and expected increased net profits. However, we may~~ experience periodic ~~short-term~~ constraints on our liquidity as a result of the cash flow requirements of specific ~~projects.~~projects through the third quarter 2023, and we are taking steps expected to strengthen operating results in order to improve our liquidity. Such constraints on our liquidity negatively affected our ability to remain in compliance with our debt covenants, and, accordingly, in August 2022, we entered the Term Loan Amendment and the Revolving Credit Amendment to revise certain terms contained in the Term Loan Agreement and the Revolving Credit Agreement, respectively, including, among other things, certain relevant financial covenants. Effective as of June 30, 2022, the Term Loan Amendment, among other things, amended and increased the Total Leverage Ratio (as defined in the Term Loan Agreement) for certain periods and amended the calculation of Consolidated EBITDA (as defined in the Term Loan Agreement) to include (or “add back”) certain non-recurring losses and expenses relating to projects executed in Jacksonville, Florida, one-time costs and expenses incurred in connection with the Company’s transmission and distribution business unit start-up, and costs and expenses arising out of the Company’s litigation with a designated former executive and his employer (in each case, subject to certain specified dollar limits). The Revolving Credit Amendment, among other things, amended the calculation of EBITDA (as defined in the Revolving Credit Agreement), effective as of June 30, 2022, to include (or “add back”) certain non-recurring losses and expenses relating to projects executed in Jacksonville, Florida, one-time costs and expenses incurred in connection with the Company’s transmission and distribution business unit start-up, and costs and expenses arising out of the Company’s litigation with a designated former executive and his employer (in each case, subject to certain specified dollar limits) and permitted advances against certain eligible receivables of one of the Company’s joint ventures (also subject to specified dollar limits). We expect to maintain sufficient liquidity by managing our expenses and borrowing and repayments of our Revolving Credit Facility, as well as through implementing our liquidity plan. For additional information about our liquidity plan, please refer to “Note 2—Liquidity” to the unaudited condensed consolidated financial statements included in this Form 10-Q.

During the third and fourth quarter of 2022, the Company settled two legal claims that impacted liquidity. The first involved a cash collection in the third quarter of 2022 of an approximately $8.1 million settlement related to an arbitration proceeding against a third party in connection with the restatement of our financial statement in 2017 for the 2012 to 2014 period, which was used to partially prepay our Term Loan. The second, settled in the fourth quarter of 2022, involved litigation against a former executive and his employer that resulted with the former executive and his employer agreeing to a cash settlement of $2.7 million. The Company recognized the settlement as other income during the third quarter of 2022 and collected the $2.7 million cash settlement on October 13, 2022. The $2.7 million settlement was used to pay a portion of the Revolving Credit Facility in the fourth quarter of 2022. For additional information about the arbitration and legal settlements, please refer to “Note 9—Debt” and “Note 14—Subsequent Events” to the unaudited condensed consolidated financial statements included in this Form 10-Q.

Our continuation as a going concern is dependent upon the Company’s ability to successfully implement its liquidity plan and obtain necessary debt or equity financing to continue operations until we return to generating positive cash flow. A high percentage of our cost of service comes from weekly craft labor payrolls, and the lag between incurrence of those payrolls and the subsequent collection of ~~the resulting~~ customer billings results in negative cash flows for that time period. Although we utilize the Revolving Credit Facility to address those time period negative cash flows, contract terms restricting customer invoicing frequency, delays in customer payments, and underlying surety bonds negatively impact our available borrowing base.

We Although these factors, among others, raise substantial doubt about our ability to continue as a going concern, we believe that we have sufficient resources to satisfy ~~the remainder of~~ our ~~2021~~ working capital requirements through the next 12 months and our long-term liquidity needs and foreseeable material cash requirements, as we ~~successfully refinanced~~strategically use our $30.0 million borrowing availability under our Revolving Credit Facility and ~~replaced~~implement our liquidity plan. A variety of factors can affect our short- and long-term liquidity, which impact could be material, including, but not limited to: cash for operations; matters relating to our contracts, including contracts billed based on milestones that may require us to incur significant expenditures prior to collections from our customers and others that allow for significant upfront billing at the beginning of a project, which temporarily increases liquidity in the near term; the outcome of potential contract disputes, which may be significant; payment collection issues, including those caused by economic slowdowns or other factors which can lead to credit ~~facilities~~deterioration of our customers; required payments on the Term Loan and the Revolving Credit Facility and on our operating and finance leases; pension obligations requiring annual contributions to multiemployer pension plans; insurance coverage for contracts that require us to indemnify third parties; and issuances of letters of credit. We believe that, in conjunction with executing our liquidity plan, we have adequate sources of liquidity to meet our long-term liquidity needs of developing key management and craft personnel, enhancing our services to meet new ~~credit facilities~~opportunities and obtaining the amount of capital needed to ~~better accommodate~~drive our long-term growth initiatives of attracting new customers and expanding our market reach. In the event that we are unable to address any potential liquidity shortfalls that may arise in the future, management will need to seek additional funding, which may not be available on reasonable terms, if at all.

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While management believes its liquidity plan alleviates the substantial doubt regarding the Company’s ability to continue as ~~we pass our restructuring phase and move~~a going concern during the ensuing twelve-month period, the Company cannot provide any assurance that it will be able to implement ~~our future growth initiatives.~~its liquidity plan successfully or, even if successfully implemented, that the plan will ultimately result in the Company continuing as a going concern. In addition, the Company could be unable to meet its obligations under its existing indebtedness, including failing to comply with any of its covenants. If any such failures are not waived by the Company’s lenders, it would result in an event of default under such indebtedness and the potential acceleration of outstanding indebtedness thereunder and the potential foreclosure on the collateral securing such debt, and would likely cause a cross-default under the Company’s other outstanding indebtedness. If the liquidity plan does not have the intended effect, the Company may need to seek relief from the Company’s lenders or take steps to raise additional capital, such as selling equity or debt securities or entering into additional borrowing arrangements, to sustain operations, which may not be available on favorable terms, or at all, in which case the Company will be required to pursue other alternatives, which may include selling assets, selling or merging its business, ceasing operations or filing a petition for bankruptcy (either liquidation or reorganization) under applicable bankruptcy laws.

While we ~~have been adversely affected by~~do not expect the COVID-19 pandemic to materially adversely affect us, we currently cannot predict the ultimate impact of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows, or on our customers, as such impact is dependent on future developments, including the duration and severity of the pandemic and the related length of its impact on the global ~~economy, which remain uncertain~~economy. Management will continue to closely monitor conditions using the data available and cannot be predicted at this time. In April 2020, the Company experienced a temporary suspension of projects in New York which required a phased reopening that resulted in the job sites being fully functional by the beginning of June 2020. In addition, there was an increase in COVID-19 cases at Plant Vogtle in July 2020, which resulted in the Company working with customers, clients, and job site leadership to provide more strategic focus and resources towards implementing enhanced safety protocols to fight the spread of the COVID-19 virus. During the third quarter of 2020, the Company was informed of delays in a nuclear project and outage cycle in Louisiana and experienced a slow-down in business development activities and bid opportunities, particularlywill draw on the ~~eastern shore~~expertise of the Lake Huron area in Ontario, Canada, due to COVID-19, these developments did not materially impact our cash and the deployment of our capital resources during 2020. We have seen a decrease in new business development based on restrictions on travel and in-person meetings, and stricter safety guidelines, coupled with decreased spending related to market uncertainty due to COVID-19.health officials. Any recovery from the COVID-19 pandemic and related economic impact may ~~also~~ be slowed or reversed by a number of factors, including the continued sporadic outbreaks of COVID-19 cases, the ongoing spread of new COVID-19 variants and the impact of COVID-19 vaccines ~~including the speed at which they are approved, disseminated~~ and ~~widely adopted~~treatments, and their effectiveness against COVID-19 and its evolving strains, as well as the potential impact of the federal vaccination mandate, on our labor supply and future results of operations, as well as any impact of applicable vaccine mandates on our customers. Management will continue to closely monitor conditions using the data available and will draw on the expertise of health officials, including the latest recommendations from the Centers for Disease Control and Prevention and the on-site medical professionals. Our liquidity, as well as our ability to satisfy our working capital requirements, may be adversely affected to some degree by the COVID-19 pandemic. We currently believe that the impact of COVID-19 will not negatively impact our ability to comply with the covenants under our existing credit facilities. However, we cannot provide any assurance that the assumptions used to estimate our liquidity requirements will remain accurate due to the unprecedented nature and the unpredictability of the COVID-19 global pandemic and its potential impact on us and our customer base. As a consequence, our estimates of the duration and severity of the pandemic and its impact on our future earnings and cash flows could change and have a material impact on our results of operations and financial condition. In addition, even after the COVID-19 pandemic has subsided, we may continue to experience an adverse impact to our business as a result of the pandemic’s global economic impact, including any recession that has occurred or may occur in the future. In the event that we are unable to address potential liquidity shortfalls in the future, management will need to seek additional funding, which may not be available on reasonable terms, if at all.impact.

Off-Balance Sheet Transactions

Our liquidity is currently not dependent on the use of off-balance sheet transactions but, in line with industry practice, we are often required to provide payment and performance surety bonds to customers and may be required to provide letters of credit. If performance assurances are extended to customers, generally our maximum potential exposure is limited in the contract with our customers. We frequently obtain similar performance assurances from third-party vendors and subcontractors for work performed in the ordinary course of contract execution. However, the total costs of a project could exceed our original cost

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estimates, and we could experience reduced gross profit or possibly a loss for a given project. In some cases, if we fail to meet certain performance standards, we may be subject to contractual liquidated damages.

As of September 30, ~~2021,~~2022, we had a contingent liability for issued and outstanding standby letters of credit, generally issued to secure performance on customer contracts. As of September 30, ~~2021,~~2022, we had $0.5 million outstanding letters of credit under the Revolving Credit Facility sublimit and $0.4 million of outstanding cash collateralized standby letters of credit pursuant to a prior revolving credit facility with Wells Fargo Bank, National Association, and there were no amounts drawn upon these letters of credit. In addition, as of September 30, ~~2021,~~2022, we had outstanding surety bonds of ~~$67.1~~$65.6 million. Our subsidiaries also provide financial guarantees for certain contractual obligations in the ordinary course of business.

Critical Accounting Policies and Use of Estimates

There have been no material changes to our critical accounting policies as set forth in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our ~~2020~~2021 Report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are not required to provide the information required under this item.

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Item 4. Controls and Procedures.

Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. The Company’s management, under the supervision of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Form 10-Q. ~~Based on that evaluation,~~Solely as a result of the material weaknesses described below, our Chief Executive Officer and Chief Financial Officer concluded that, as of ~~that date, the Company’s~~September 30, 2022, our disclosure controls and procedures were not effective. However, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that, notwithstanding the identified material weaknesses in our internal control over financial reporting, the financial statements in this Form 10-Q fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.

Material Weakness in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, we identified a material weakness in our internal control over financial reporting. We have determined that we did not design and maintain effective user access controls to adequately restrict user access and the ability to modify financial data within certain financial applications, including ensuring appropriate segregation of duties relating to the preparation and review of journal entries in these financial applications. As part of closing our books for the second quarter of 2022, we identified immaterial errors that indicated an additional deficiency existed in the Company’s internal control over financial reporting. Specifically, we did not have controls designed effectively for the secondary review and approval of certain expenses. The foregoing control deficiencies did not result in a misstatement of the Company’s annual or interim consolidated financial statements. However, these control deficiencies could have resulted in misstatements of interim or annual consolidated financial statements and disclosures that may have been material. Therefore, management has concluded that: (1) each of the above control deficiencies constitutes a material weakness; and (2) in turn, the Company did not maintain effective internal control over financial reporting as of September 30, 2022.

Management’s Plan to Remediate the Material Weakness

Management has evaluated the user access controls material weakness described above and is in the process of updating its design and implementation of internal control over financial reporting to remediate that material weakness and enhance the Company’s internal control environment. However, the implemented and enhanced controls have not operated for a sufficient period of time to demonstrate that the material weakness was remediated as of September 30, 2022. Having identified the material weakness relating to the secondary review and approval of certain expenses described above, we will promptly be initiating a review and process to remediate such deficiency. We are committed to continuing to improve our internal control processes and will continue to diligently and vigorously review our financial reporting controls and procedures.

Changes in Internal Control over Financial Reporting

Under the applicable SEC rules, management is required to evaluate any changes in internal control over financial reporting that occurred during each fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~While we continue to implement design~~Other than the changes described above regarding enhancements ~~to our internal control procedures,~~associated with ongoing remediation efforts, there were no changes toin our internal control over financial reporting ~~which were identified in connection with the evaluation required by Rule 13a-15(d) under the Exchange Act~~ during the ~~third quarter of 2021~~period covered by this Quarterly Report on Form 10-Q that ~~have~~ materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In addition, aswe are engaged in a ~~smaller reporting company~~transformation project to upgrade our ERP system to a cloud-based platform to increase efficiency, provide additional process capabilities and ~~non-accelerated filer, the Company currently is not subject to the auditor attestation requirements under Section 404~~enhance information security.

Table of the Sarbanes-Oxley Act. However, as a result of our public float as of the last business day of the second quarter of 2021, the Company met the requirements to become an accelerated filer for the fiscal year ending December 31, 2022 and will become subject to the auditor attestation requirements under Section 404 of the Sarbanes-Oxley Act when filing the Annual Report on Form 10-K for the year ending December 31, 2021.Contents

Part II—OTHER INFORMATION

Item 1. Legal Proceedings.

The information included under “Litigation and Claims” in “Note ~~10—~~11—Commitments and Contingencies” to the unaudited condensed consolidated financial statements in this Form 10-Q is incorporated by reference into this Item.

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Item 1A.

Risk Factors.

Our business faces significant risks and uncertainties. Certain important factors may have a material adverse effect on our business prospects, financial condition, and results of operations, and you should carefully consider them. There have not been any material changes to our risk factors from those reported in our ~~2020~~2021 Report, except as set forth ~~below, although some of those risk factors have been,~~below.

Our ability to continue to operate as a going concern depends on our ability to successfully implement our liquidity plan and, ~~may~~if necessary, raise additional capital in the future.

Our ability to continue as a going concern is dependent on our ability to successfully implement our liquidity plan, as further described in “Note 2—Liquidity” to the unaudited condensed consolidated financial statements included in this Form 10-Q. While management believes its liquidity plan alleviates the substantial doubt regarding the Company’s ability to continue as a going concern during the ensuing twelve-month period, the Company cannot provide any assurance that it will be ~~exacerbated by the impact of the COVID-19 pandemic. The disclosure of any risk factor should not be interpreted~~able to ~~imply~~implement its liquidity plan successfully or, even if successfully implemented, that the ~~risk has not already materialized.~~

~~The new rules concerning mandatory COVID-19 vaccinations~~plan will ultimately result in the Company continuing as a going concern. In addition, the Company could ~~have a material adverse impact on our business and results of operations.~~

~~On September 9, 2021, President Biden announced a proposed new rule that would require all employers with at least 100 employees~~be unable to ensure that their employees are fully vaccinated or require unvaccinated workers to get a negative test at least once a week. On November 4, 2021, the U.S. Department of Labor’s Occupational Safety and Health Administration (“OSHA”) issued an emergency regulation to carry out this mandate, which requires covered employersmeet its obligations under its existing indebtedness, including failing to comply with any of its covenants. If any such failures are not waived by the vaccine mandate beginning with January 4, 2022 or face substantial penalties for non-compliance. As a company with more than 100 employees, we are subject to the OSHA regulation concerning COVID-19 vaccination. We may also be impacted by President Biden’s September 9, 2021 executive order requiring certain COVID-19 precautions for government contractors and their subcontractors, including mandatory employee vaccination (subject to medical and religious exemptions). At this time,Company’s lenders, it is not possible to predict with certainty the exact impact that the new OSHA regulation or the requirements for government contractors and their subcontractors will have on us or on our workforce, but they couldwould result in ~~increased costs, labor disruptions or employee attrition. If we lose employees, it may be difficult in the current competitive labor market to find replacement employees, which could have~~ an ~~adverse effect on future revenues and costs. In addition, additional uncertainty could be caused by ongoing legal challenges to the OSHA standard~~event of default under such indebtedness and the ~~vaccine mandate for federal contractors, which leads to uncertainty about~~potential acceleration of outstanding indebtedness thereunder and the potential ~~timing of when or if these mandates might actually take effect, as well as uncertainty regarding competing~~foreclosure on the collateral securing such debt, and ~~potentially conflicting laws and regulations, such as~~would likely cause a cross-default under the ~~recent executive order issued by the governor of Texas prohibiting vaccine mandates. Accordingly, the new OSHA regulation, or any~~Company’s other ~~vaccine mandate applicable to us, could have a material adverse effect on our business and results of operations.~~

~~Item 5.~~ ~~Other Information~~

The Company entered into an employment agreement with Damien Vassall on November 15, 2021, in connection with his appointment as Vice President, Chief Financial Officer. The employment agreement provides for an initial term of one year with automatic one-year renewals unless written notice of non-renewal is delivered by either party at least 90 days prior to the expiration of the then-current term. The agreement provides Mr. Vassall with an annual base salary of $275,000 and a short-term incentive (“STI”) opportunity of 50% of his annual salary.outstanding indebtedness.

If the Company terminates Mr. Vassall’s employment other than for disability or cause (including by reason of not renewing the term), or if he resigns for good reason (as those terms are defined in the agreement), then, provided that he signs andliquidity plan does not ~~revoke~~have the intended effect, the Company may need to seek relief from the Company’s lenders or take steps to raise additional capital, such as selling equity or debt securities or entering into additional borrowing arrangements, to sustain operations, which may not be available on favorable terms, or at all, in which case the Company will be required to pursue other alternatives, which may include selling assets, selling or merging its business, ceasing operations or filing a ~~release~~petition for bankruptcy (either liquidation or reorganization) under applicable bankruptcy laws.

To the extent we cannot alleviate the substantial doubt about our ability to continue as a going concern, it may also have the effect of claims, he would be entitled to (i) continued base salary for one year, (ii) subsidized health insurance premiums for one year, (iii) the STI earned for the prior year, if not paid, and (iv) if terminated on or after April 1, a pro-rated STI based on actual results. If, however, the termination occurs within 90 days before, or two years after, a change in controlheightening many of the ~~Company, then the Company would pay or provide to Mr. Vassall the following additional benefits: (i) his target STI for the year~~other risks set forth in which the termination occurs (in lieu of the pro-rated bonus described above), and (ii) his then-outstanding equity incentive awards would become vested in full (without pro-ration), with any specified performance objectives deemed to be satisfied at the “target” level. The Company would pay lower amounts of severance benefits if Mr. Vassall’s employment were terminated due to death or disability. The employment agreement contains standard restrictive covenants in favor of the Company.Item 1A “Risk Factors” 2021 Report.

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Item 6.

Exhibits.

Exhibit		Description
10.1*10.1		~~Employment~~First Amendment to Term Loan, Guarantee and Security Agreement, dated ~~November 15, 2021 between~~as of June 30, 2022, by and among Williams Industrial Services Group Inc., Williams Industrial Services Group, L.L.C., Williams Industrial Services, LLC, Williams Specialty Services, LLC, Williams Plant Services, LLC, Williams Global Services, Inc., and Construction & Maintenance Professionals, LLC, as borrowers, Global Power Professional Services Inc., GPEG, LLC, Steam Enterprises LLC, WISG Canada Ltd., WISG Nuclear Ltd., and WISG Electrical Ltd., as guarantors, and EICF Agent LLC, as agent, and the ~~Company~~lenders party thereto (filed as Exhibit 10.2 to our Form 10-Q filed with the SEC on August 11, 2022 and ~~Damien Vassall.~~incorporated herein by reference).
10.2*		First Amendment to Revolving Credit and Security Agreement, dated as of August 3, 2022, by and among Williams Industrial Services Group Inc., Williams Industrial Services Group, L.L.C., Williams Industrial Services, LLC, Williams Specialty Services, LLC, Williams Plant Services, LLC, Williams Global Services, Inc., and Construction & Maintenance Professionals, LLC, as borrowers, Global Power Professional Services Inc., GPEG, LLC, Steam Enterprises LLC, WISG Canada Ltd., WISG Nuclear Ltd. and WISG Electrical Ltd., as guarantors, and PNC Bank, National Association, as agent, and the lenders party thereto (filed as Exhibit 10.3 to our Form 10-Q filed with the SEC on August 11, 2022 and incorporated herein by reference).
10.3*		Second Amendment, Joinder and Waiver to Revolving Credit and Security Agreement, dated as of October 7, 2022, by and among Williams Industrial Services Group Inc., Williams Industrial Services Group, L.L.C., Williams Industrial Services, LLC, Williams Specialty Services, LLC, Williams Plant Services, LLC, Williams Global Services, Inc., Construction & Maintenance Professionals, LLC, and WISG Electrical, LLC, as borrowers, Global Power Professional Services Inc., GPEG, LLC, Steam Enterprises LLC, WISG Canada Ltd., WISG Nuclear Ltd. and WISG Electrical Ltd., as guarantors, and PNC Bank, National Association, as agent, and the lenders party thereto.♦
31.1		Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.♦
31.2		Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.♦
32.1		Certification by the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.2		Certification by the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101		The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, ~~2021,~~2022, formatted in Inline XBRL: (i) Condensed Consolidated Balance ~~Sheets,~~Sheets; (ii) Condensed Consolidated Statements of ~~Operations,~~Operations; (iii) Condensed Consolidated Statements of Comprehensive Income (Loss); (iv) Condensed Consolidated Statements of Stockholders’ ~~Equity,~~Equity; (v) Condensed Consolidated Statements of Cash ~~Flows,~~Flows; and (vi) Notes to Condensed Consolidated Financial Statements.♦
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).♦

♦ Filed herewith.

* ~~Indicates a management contract~~ Certain schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Registration S-K. A copy of any omitted schedule and/or ~~compensatory plan or arrangement.~~exhibit will be furnished supplementally to the SEC upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	WILLIAMS INDUSTRIAL SERVICES GROUP INC.

Date: November ~~17, 2021~~14, 2022	By:	/s/ Damien aA. Vassall
		Damien A. Vassall
		Vice President, Chief Financial Officer (Duly authorized officer and principal financial and accounting officer of the registrant)

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