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UNITED STATES

SECURITIES AND EXCHANGE

COMMISSION

WASHINGTON, D.C. 20549


FORM 10-K


ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 20192022

Commission File No. 001‑16501001-16501

Picture 1Graphic


Williams Industrial Services Group Inc.

(Exact name of registrant as specified in its charter)


Delaware

(State or other jurisdiction of

incorporation or organization)

73‑1541378
73-1541378
(I.R.S. Employer

Identification No.)

100 Crescent Centre Parkway, 200 Ashford Center North, Suite 1240425

Tucker, Atlanta, GA 3008430338

(Address of registrant’s principal executive offices and zip code)

Registrant’s telephone number, including area code: (770) 879‑4400(770879-4400

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

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

NoneCommon Stock, par value $0.01 per share

N/AWLMS

N/ANYSE American

Securities registered pursuant to Section 12(g) of the Act: None.


Indicate by check mark if the registrant is a well‑knownwell-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐  No 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐  No 

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‑TS-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‑acceleratednon-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‑212b-2 of the Exchange Act:

Large accelerated filer

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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. 

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b).

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑212b-2 of the Act). Yes  No 

As of June 28, 2019,July 1, 2022, the last business day of our most recently completed second fiscal quarter, the aggregate market value of the registrant’s common stock held by non-affiliates was approximately $21,071,055.48$23,197,687 (based upon the closing price on June 28, 2019July 1, 2022 of $2.28$1.34 per share).

As of March 20, 2020,27, 2023, there were 24,538,05827,058,317 shares of common stock of Williams Industrial Services Group Inc. outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement for the 20202023 Annual Meeting of Stockholders are incorporated by reference into Part III of the Form 10‑K to the extent stated herein. The Proxy Statement or an amended report on Form 10‑K will be filed within 120 days of the registrant’s year ended December 31, 2019.2022.

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Cautionary Note Regarding Forward-Looking Statements

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Part I

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Item 1.Business.

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Item 1A. Risk Factors.

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Item 1B. Unresolved Staff Comments.

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Item 2. Properties.

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Item 3. Legal Proceedings.

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Item 4. Mine Safety Disclosures.

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Part II

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Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

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Item 6. Selected Financial Data[Reserved].

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

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Item 8. Financial Statements and Supplementary Data.

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Item 9. Changes in and Disagreements Withwith Accountants on Accounting and Financial Disclosure.

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Item 9A. Controls and Procedures.

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Item 9B. Other Information.

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Part IIIItem 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Part III

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Item 10. Directors, Executive Officers and Corporate Governance.

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Item 11. Executive Compensation.

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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

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Item 13. Certain Relationships and Related Transactions, and Director Independence.

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Item 14. Principal Accountant Fees and Services.

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Part IV

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Item 15. Exhibits and Financial Statement Schedules.

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Item 16. Form 10-K Summary.

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Statements we make in this Annual Report on Form 10-K where we express a belief, expectation or intention or otherwise are not limited to recounting historical facts are forward‑lookingforward-looking statements. These forward‑lookingforward-looking statements are subject to various risks, uncertainties and assumptions, including those noted under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Part I—Item 1A. Risk Factors” in this Annual Report on Form 10-K.

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Cautionary Note Regarding Forward‑LookingForward-Looking Statements

This Annual Report on Form 10-K for the year ended December 31, 20192022 (this “Form 10-K”) 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 “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 filing do not constitute guarantees or promises of future performance. The following important factors could cause actual outcomes and results to differ materially from those expressed in our forward-looking statements:

·

our ability to continue to implement our liquidity improvement plan and to continue as a going concern;

our level of indebtedness;

·

indebtedness and our ability to make interest and principal payments on our debt and satisfy the amended financial and other covenants contained in the New Centre Lane Facility (as defined below) and the MidCap Facility (as defined below);

·

our amended debt facilities, as well as our ability to engage in certain transactions and activities due to limitations and covenants contained in the New Centre Lane Facility and the MidCap Facility;

such facilities;

·

our ability to enter into new lending facilities, if needed, and to obtain adequate surety bonding and letters of credit;

·

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 continuemay be unable to obtain any additional funding as needed or incur further losses from operations in the future;

·

the possibility thatresults of our independent registered public accounting firm fails to stand for reappointment;

ongoing strategic alternatives review process;

·

exposureour ability to market risks from changes in interest rates, including changes to or replacementobtain adequate surety bonding and letters of the London Interbank Offered Rate (“LIBOR”);  

credit;

·

the possibility we may be required to write-down additional amounts of goodwill and other indefinite-lived assets;

·

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

·

changes in our senior management and financial reporting and accounting teams, the ability of such persons to successfully perform their roles, and our ability to attract and retain qualified personnel, skilled workers, and key officers;

·

a failure to successfully implement or realize our business strategies, plans and objectives of management, and liquidity, operating and growth initiatives and opportunities;

opportunities, including any expansion into new markets, and our ability to identify potential candidates for, and consummate, acquisition, disposition, or investment transactions (including any that may result from our review of strategic alternatives);

·

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;

plants and declines in public infrastructure construction and reductions in government funding, including funding by state and local agencies;

·

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 performancesperformance 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;

record, the risks of potential liability and adequacy of insurance;

·

adverse changes in our credit profile and market conditions affecting our relationships with suppliers, vendors, and subcontractors;

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, geopolitical conditions and other economic factors;

·

compliance with environmental, health, safety and other related laws and regulations;

regulations, including those related to climate change;

·

expirationlimitations or modifications to indemnification regulations of the Price-Anderson Act’s indemnification authority;

U.S.;

·

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

·

the impact of generalunstable market and economic conditions;

·

conditions on our business, financial condition and stock price, including inflationary cost pressures, supply chain disruptions and constraints, labor shortages, the potentialeffects of the Ukraine-Russia conflict and ongoing impact of the recent global health emergency stemming from the outbreak ofCOVID-19, and a novel coronavirus emanating from Wuhan, China known as COVID-19, which may delay project completionpossible recession;

our ability to meet publicly announced guidance or other expectations about our business, key metrics and increase the possibility of work stoppage;

future operating results;

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information technology vulnerabilities and cyberattacks on our networks;

·

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

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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;

·

availability of raw materials and inventories;

·

the impact of natural disasters, which may be exacerbated as a result of climate change, and other severe catastrophic events;

·

the 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 (“NOL”) and foreign tax credit carryforwards, including any impact relating to the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) or other tax changes;

carryforwards;

·

future compliance with orders of and agreements with regulatory agencies;

·

volatility of the market price for our common stock and our stockholders’ ability to resell their shares of common stock;

·

our ability to pay cash dividendsmaintain our stock exchange listing;

the effects of anti-takeover provisions in the future;

our organizational documents and Delaware law;

·

the impact of activist shareholder actions;

·

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 expectedanticipated effects on our results of operations, including future liabilities, feesoperations; and expenses resulting from the Koontz-Wagner Custom Controls Holdings LLC (“Koontz-Wagner”) bankruptcy filing; 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-K. 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 below under “Part I—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.

Some of the market and industry data contained in this Form 10-K is based on independent industry publications or other publicly available information. Although we believe that these independent sources are relevant and reliable, we have not independently verified and cannot assure you as to the accuracy or completeness of this information. As a result, you should be aware that the market and industry data contained herein, and our beliefs and estimates based on such data, may not be reliable.

Part I

Item 1.  Business.Business.

Overview

Williams Industrial Services Group Inc. was incorporated in 2001 under the name “Global Power Equipment Group Inc.” under the laws of the State of Delaware and became the successor to GEEG Holdings, LLC, which was formed as a Delaware limited liability company in 1998. Effective June 29, 2018, Global Power Equipment Group Inc. changed its name to Williams Industrial Services Group Inc. (together with its wholly owned subsidiaries, “Williams,” the “Company,” “we,” “us” or “our,”“our”, unless the context indicates otherwise) was initially formed in 1998 as GEEG Inc., a Delaware corporation, and in 2001 changed its name to “Global Power Equipment Group Inc.,” and, as part of a reorganization, became the successor to GEEG Holdings, 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, (as defined below), and ourthe Company’s stock now trades on the OTCQX® Best MarketNYSE American LLC (the “OTCQX”“NYSE American”) under the ticker symbol “WLMS.” Williams has been safely helping plant owners and operators enhance asset value for more than 50 years. We provideIt provides a broad range of infrastructure services including construction, maintenance, and support, services to customers in energy, power, and industrial end markets. OurThe 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 ourits customers.

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Our RestructuringStrategy

We completed the restructuring of our Company in 2018. Beginning in 2016, we shifted our strategy to become a preferred provider of construction, maintenance, and specialty infrastructure services, to exit all product manufacturing businesses and to use the proceeds from the sales to reduce and restructure our term debt. To effect this change, indebt, and during 2018, we completed the third quarter of 2017, we made the decision to exit and divest substantially all of the operating assets and liabilitiesrestructuring of our Mechanical Solutions segment, which we completedCompany and began expanding our services. This resulted in the fourth quarter of 2017, as described below. Additionally, we made the decision to exit and sell our Electrical Solutions segment (which was comprised solely of Koontz-Wagner, a wholly owned subsidiary of the Company) in the fourth quarter of 2017. We determined that these two segments met the definition of discontinued operations, and, as a

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result, they (including TOG Manufacturing Company, Inc. and TOG Holdings, Inc., which were sold in July 2016) have been presented as discontinued operations for all periods presented. Additionally, in January 2017, we sold the stock ofus selling our wholly owned subsidiaries, Hetsco Holdings, Inc. and Hetsco, Inc. (collectively, “Hetsco”). However,in January 2017 and our Mechanical Solutions segment and liquidating, in a Chapter 7 bankruptcy process, the entity comprising the Electrical Solutions segment in 2017 and 2018, respectively. The Mechanical Solutions and Electrical Solutions segments were the only components of the business that qualified as discontinued operations for all periods presented. This allowed us to review financial information presented on a company-wide basis as a single reporting segment which is comprised of Williams Industrial Services Group, LLC and related subsidiaries (collectively, the “Williams business”). Unless otherwise specified, the financial information and discussion in this Form 10-K are based on our continuing operations (previously referred to as our Services segment); they exclude any results of our discontinued operations. PleasePlease refer to “Note 5—Changes in Business” to the consolidated financial statements included in this Form 10-K for additional information.

In spite of our efforts, which included retaining financial advisors to sell all or part of Koontz-Wagner’s operations, inside or outside of a federal bankruptcy or state court proceeding (including Chapter 11 of Title 11 of the U.S. Bankruptcy Code (the “Bankruptcy Code”)), the proposed disposition did not progress as planned due, primarily, to the absence of viable bids in the sale process, the inability of Koontz-Wagner to fund its ongoing operations or obtain financing to do so, and Koontz-Wagner’s deteriorating financial performance. As a result, 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.

On October 11, 2017, we sold substantially all of the operating assets and liabilities of our Mechanical Solutions segment and used a portion of the $40.9 million net proceeds to pay down $34.0 million of our outstanding debt and related fees, including full repayment of the first-out loan, provided for by the first amendment to the Initial Centre Lane Facility (as defined below) for an additional aggregate principal amount of $10.0 million (the “First-Out Loan”) and the upfront fee on the 4.5-year senior secured term loan facility, entered into June 16, 2017, with an affiliate of Centre Lane Partners, LLC (“Centre Lane”) as Administrative Agent and Collateral Agent, and the other lenders from time to time party thereto (as amended, the “Initial Centre Lane Facility”). Additionally, on October 31, 2017, we completed the sale of our manufacturing facility in Mexico and auctioned the remaining production equipment and other assets for net proceeds of $3.6 million, of which $1.9 million was used to reduce the principal amount of the Initial Centre Lane Facility. The remaining proceeds from such sales were used to fund working capital requirements.

As a result of the sale of our Mechanical Solutions segment and the bankruptcy of Koontz-Wagner, we review financial information presented on a company-wide basis. Therefore, as of December 31, 2019, we concluded that we continue to have a single reporting segment which is comprised of Williams Industrial Services Group, LLC (collectively with Williams Plant Services, LLC, Williams Specialty Services, LLC and Williams Industrial Services, LLC, the “Williams business”), as we did as of December 31, 2018.

In 2018, we implemented major cost reduction initiatives to reduce our overhead costs, including restructuring and consolidating our corporate functions, and began working on a comprehensive strategic plan to grow and improve our business, which was finalized in early 2019. Our strategy has been focused on developing a comprehensive strategic plan to grow and improve our operations, strengthen our core competencies, aggressively manage working capital, and reduce costs in order to improve liquidity and reduce debt. In order to improve our efforts to satisfy our future working capital requirements,Our common stock now trades on the NYSE American under the ticker symbol “WLMS”.

On December 16, 2020, we refinanced our existingentered into new credit facilities which included 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 and up to $15.0 million of borrowing under a delayed draw term loan facility with EICF Agent LLC (“EICF”), an affiliate of Energy Impact Partners, as agent, and CION Investment Corporation as lender and co-lead arranger, and the other lenders party thereto, and 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"), which refinanced and replaced our previous credit facilities. The original delayed draw term loan facility expired in June 2022. The Term Loan and the Revolving Credit Facility mature on January 13, 2020December 16, 2025. In connection with the refinancing, the Company repaid the outstanding balance of the prior facilities and we successfully completed our Rights Offering, the offer period for which expired March 2, 2020, pursuant to which we issued 5,384,615 shares of our common stock and received net proceeds of $6.6 million.all interest in full. For additional information, please refer to “Note 19—11—Debt” to the consolidated financial statements included in this Form 10-K.

During November 2021, we changed our corporate management structure in an effort to reinforce our customer focus and strengthen operations, and, among other changes, added a Chief Operating Officer and a Vice President of Safety. Our Chief Financial Officer was appointed Chief Operating Officer and our Corporate Controller was appointed Chief Financial Officer. Additionally, in 2022, the Company promoted its Senior Vice President of Energy and Industrial to Executive Vice President of Business Development. We are enhancing our management methods to provide additional process capabilities and focus on customer relations and sales.

In early 2022, we lost a major contract with a customer in Canada, and as a result, we exited the Canadian market. This customer contributed 12% of our revenue and approximately 15% of our gross margin in 2021. In addition, in February 2022, we lost a major multi-year contract with a customer within the nuclear decommissioning market contributing to a loss of approximately $374.6 million in backlog for the years 2022 through 2029. We continue to target other growth opportunities within our end markets with greater customer focus and strengthened operational effectiveness. This loss was not a result of performance and does not diminish the Company’s ability to serve its customers.  Please refer to Item 1. Business under “Backlog” included in this Form 10-K for additional information.

In the third quarter of 2022, management assessed the Company’s financial condition, resulting in the Company developing a liquidity plan to alleviate the substantial doubt about the Company’s ability to continue as a going concern during 2023. Further, as a result of the Company being unable to comply with its debt covenants and in an effort to address its liquidity constraints, the Company amended its Term Loan and Revolving Credit Facility and entered into two unsecured promissory notes (the “Wynnefield Notes”) in favor of Wynnefield Partners Small Cap Value, LP and Wynnefield Partners Small Cap Value, LP I (collectively, the “Wynnefield Lenders”) during the first quarter of 2023.  

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In addition, we have engaged an investment banking firm to explore a range of strategic alternatives for the Company to maximize shareholder value, which could include a potential sale. We have not set a timetable for the conclusion of this review, nor made decisions related to further actions or possible strategic alternatives. There can be no assurance that the exploration of strategic alternatives will result in the identification or consummation of any transaction, or that any strategic alternative identified, evaluated and consummated will provide the anticipated benefits or otherwise preserve or enhance stockholder value. If the Company’s liquidity improvement plan and the January 9, 2023 and February 24, 2023 amendments to the Term Loan and the Revolving Credit Facility do not have the intended effect of addressing the Company’s liquidity problems through its review of strategic alternatives, including if the Company is unable to obtain future advances under the discretionary delayed draw term loans, the Company will continue to consider all strategic alternatives, including restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or delaying the Company’s business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including obtaining relief under the U.S. Bankruptcy Code. The Company’s continuation as a going concern is dependent upon its ability to successfully implement its liquidity improvement plan and obtain necessary debt or equity financing to address the Company’s liquidity challenges and continue operations until the Company returns to generating positive cash flow or is otherwise able to execute on a transaction pursuant to its review of strategic alternatives, including a potential sale of the Company. For additional information, please refer to “Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Note 2—Liquidity”, “Note 11—Debt” and “Note 18—Subsequent Events” to the consolidated financial statements included in this Form 10-K.

Our operations are based on our effectiveness in using estimating and planning technologies, deploying rigorous project management techniques, initiating various process improvement projects and employing experienced industry-recognized sales professionals. We expect to leverage the strength of the Williams brand, capitalize on our industry knowledge and customer relationships and safely provide timely, reliable services for our customers to grow revenue. We believe we are well positioned to grow our business, and to realize the operating leverage our restructuring has created.

Our Business

We provide a comprehensive range of infrastructure services, including construction, maintenance, and support, services to customers in energy, power, and industrial end markets. We provide these services both on a constant presence basis and for discrete projects. The services we provide are designed to improve or sustain operating efficiencies and extend the useful lives of process equipment.

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these plants and facilities.

Our services include the following:

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Plant Maintenance, Modification and Construction.  We perform a full range of critical services, including maintenance, modification, repair and other capital project services designed to the extend the life cycles of nuclear, paper, chemical, fossil fuel, industrial gas, hydro power, natural gas municipal water and wastewater and other facilities for customers in energy, power and industrial end markets.

The Company is in the process of exiting the chemical end market based on its underperforming chemical projects.

·

Water/Wastewater System New Installation, Expansions and Modifications.  We install, maintain, and modify water and wastewater systems, including piping, pumping, storage tank and other related facilities.

Due to a $6 million write-down in revenue in the fourth quarter of 2022 relating to our two largest Florida water contracts, the Company is no longer pursuing any fixed price water projects. These two projects will generate revenue without any gross margin until completion in the second and fourth quarter of 2023.

·

Painting and Coatings.  We perform cleaning, surface preparation, coatings application, quality control and inspection testing on major coating projects for nuclear and fossil fuel power plants, industrial facilities, and petrochemical plants.

·

Insulation.  We provide a variety of industrial insulation services, primarily in power generation installations.

·

Asbestos and Lead Abatement.  We provide abatement services for the removal of asbestos and heavy metal basedmetal-based coatings such as lead paint. We do not take ownership of hazardous materials and do not assume responsibility for the liability associated with the materials other than for our actions meeting applicable statutory and regulatory requirements.

·

Roofing Systems.  We replace, repair and upgrade industrial facility roofing systems, primarily at pulp and paper manufacturing facilities and nuclear power plant locations.

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·

Oil/Gas Construction and Maintenance.  We perform capital construction and maintenance services for midstream and downstream oil, gas and chemical facilities, predominately in the Texas gulf coast. Services include civil structural installation, piping installation and maintenance, and electrical system installation, as well as other work at storage terminals, refineries and chemical plants.

·

Analog to Digital Conversions. We provide services to convert analog control systems to digital control systems to enhance reliability and accuracy, and increase output of operating plants. Utilities will continue to make significant capital investments in these upgrades throughout the industry. We have extensive experience in performing these upgrades, based on our successful history of completing several projects across our fleet of customers. Moreover, we see substantial opportunity to leverage our experience with performing these projects in the future as the industry continues to invest in these upgrades.

·

Canada Nuclear.Transmission and Distribution and Substation Construction and Maintenance. We currently only perform professional services for power companies in Canada but are beginning to bid forprovide quality maintenance modification and construction services in order to expandsupport the Electric Distribution and Substation Industry by offering a full range of capabilities that provided continuous, cost-effective solutions for overhead and underground distribution lines and substations. Due to our geographic market reach throughout North America. Two power companies in Canada are performing major plant refurbishments and upgrades to extend the lives of several operating units.  Our experience working on nuclear plantsunderperformance in the U.S.transmission and distribution business in Florida and Connecticut, the Company is directly translatable to work being performed onno longer pursuing any new projects in these markets. We have exited the plantsFlorida transmission and distribution market during the first quarter of 2023 and we are in Canada.  Further, additional vendors from outsidethe process of Canada are needed to provideexiting the experienceConnecticut transmission and capacity required to perform this work.  Therefore, we developed a strategic growth initiative to pursue nuclear plant maintenance, modifications, and construction in Canada.

distribution market.

·

Nuclear Decommissioning.  We providehave provided decommissioning services to U.S. nuclear stations that have been retired. Several U.S. nuclear stations have already been shut down, and several more shutdowns are planned. After shutdown, the plants must be decommissioned. This process takes many years. We are workinghave worked with the ownerowners and prime contractorcontractors for decommissioning work on two sites and are targeting the decommissioning market as it grows.

We are also exploring opportunities related to the decommissioning of fossil power plants.

·

Nuclear Power Plant Services and New Nuclear Power Plant Construction.  We are one of a limited number of companies qualified to perform comprehensive services anywhere in U.S. nuclear power facilities under the rules issued by the U.SU.S. Nuclear Regulatory Commission (the “NRC”). Additionally, we are one of only a small number of contractors with a qualified and audited Nuclear Quality Assurance (“NQA-1”) Program, which is required to perform construction of “Safety” related systems in new nuclear power plants. Through our Appendix B Program and other programs, we provide training, certifications, and ongoing safety monitoring to all of our employees working at nuclear sites and have been one of the leading providers of coatings at U.S. nuclear facilities for almost

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over 40 years. Under the rules issued by the NRC, owners of nuclear facilities must qualify contractors by requiring the contractors to demonstrate that they will comply with NRC regulations on quality assurance, reporting of safety issues, security and control of personnel access and conduct. For the majority of our maintenance and project work, we directly hire the labor and provide the management and supervision to perform the work directly for the owner. In some cases, we act as a general contractor and subcontract portions of the work or, alternatively, subcontract our services to full scope engineering, procurement, and construction (“EPC”) firms or general contractor firms. We maintain good relationships with the utilities, the EPC firms, the general contractor firms, and relevant engineering firms.

The Biden administration’s key focus is to reduce fossil fuel emissions in the United States power sector and to drive the development of zero-carbon technologies and domestic clean energy supply chains. This led to the establishment of subsidies at the federal level for the nation’s nuclear generating fleet. The Infrastructure Investment and Jobs Act established a $6 billion Nuclear Credit Program, which when fully implemented, will provide credits to subsidize the operation of qualifying units. Additionally, the Inflation Reduction Act was signed into law containing nearly $369 billion in climate and clean energy investments and a ten year extension and modification of key tax Credits which includes, among other credits, the Nuclear Power Production Credit which is estimated to be worth approximately $30 billion.

We provide these services throughout the U.S. with plans of expanding to Canada,, primarily on a direct hire basis, with experienced craft laborers who are directed and managed by an experienced team of supervisors and project managers across our network. We also act as a general contractor where we manage multiple subcontractors and, in other cases, we are retained as a subcontractor on a project. Our flexible staffing model enables us to meet seasonal and outage demand without being restricted by internal capacity limitations, thereby minimizing our fixed costs.

We bid against other contractors based on customer specifications. Fixed-price contracts present certain inherent risks, including the possibility of ambiguities in the specifications received, problems with new technologies and economic and other changes that may occur over the contract period. Alternatively, because of efficiencies that may be realized during the contract term, fixed-price contracts may offer greater profit potential than cost-plus contracts.

In 2019, we contracted for 86%2022, 78.5% of our revenue onwas generated from cost-plus contracts that provide for reimbursement of costs incurred plus an amount of profit. The remaining 14%21.5% of our revenue was generated from fixed-price contracts.

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Safety

For over 1315 years, we have maintained a safety record in the top quartile of the industry, benefiting both us and our customers. We also maintain a broad range of professional certifications and memberships in national organizations relevant to the performance of many of the specialized services we provide. We use the Total Recordable Incident Rate (“TRIR”) to measure safety, which is calculated by multiplying the number of recordable incidents by 200,000 and dividing that number by the total hours worked each year. This metric is also used by others in our industry, which allows for a more objective comparison of our performance. Our TRIR was 0.43 and 0.61 during fiscal years 2022 and 2021, respectively. We continue to maintain safety measures necessary to preserve the health and wellbeing of our workforce.

Market Overview

Power Generation Market and the Industrial Services Industry.  The U.S.  and Canadian industrial services industry is a multi-billion dollar industry, broadly defined as routine modification, maintenance and technical services provided to industrial facilities ranging from manufacturing facilities to power generation plants. The industry continues to benefit from a shift towards outsourcing as plant operators seek to alleviate financial constraints, reduce labor costs, increase labor utilization and productivity, and eliminate operational redundancies.

We expect that power industry demand for these services will be driven by the following factors in the future:

·

Aging Power Generation Infrastructure Increases Demand for Plant Maintenance and Decommissioning Services.  According to the U.S. Energy Information Administration (the “EIA”), more than half of the electrical generating capacity in the U.S. was placed in service before 1990. Coupled with the relatively limited number of large-scale power generation facilities being constructed in the U.S., the efforts to maintain older plants of all types and to take advantage of newer and more efficient technologies at existing sites result in opportunities for companies providing services to plant operators. The low price ofAlthough natural gas is driving demand for new, upgraded and replacement electric generation capacity toward combined cycle gas powered plants, whichprices are more economical to run. With natural gas pricing expected to remain elevated, driving higher electricity prices, the outlook for natural gas generation is expected to remain steady over the near term, due to continuing constrains on coal-fired power from rapid plant retirements and low this is also driving the conversions of simple cycle plantsinventories, according to combined cycle technology.

Fitch research.

Additionally, at the U.S.end of December 2021, the United States had 93 operating commercial nuclear industry has 96 operating reactors with anat 55 nuclear power plants in 28 states. The average age of 38 years.these nuclear reactors is about 40 years old. Although 8in 2022 there were fewer operating nuclear reactors than in 2012, from 2013 through 2019, annual nuclear generation capacity and electricity generation increased each year (except in 2017) even as the number of operating reactors declined according to the EIA. Power plant uprates—modifications to increase capacity—at nuclear power plants have made it possible for the entire operating nuclear reactor fleet to maintain a relatively consistent total electricity generation capacity. These uprates, combined with high-capacity utilization rates (or capacity factors), have helped nuclear power plants maintain a consistent share of about 20% of total annual U.S. electricity generation since 1990. Some reactors have shut down since 2013, and an additional 10also increased annual electricity generation by shortening the length of time reactors are projected to shut down by 2025,offline for refueling.

While the remainder of the operating plants are planned to operate 60 to 80 years with a stable amount of required generating capacity. As the plants age,capacity, utilities plan to invest in maintenance, modification, and upgrades to enable continued operations. Furthermore, as of September 2019, the NRC had extended the licenses of approximately 89 reactors. These olderOlder nuclear reactors require extensive ongoing engineering and maintenance services to support operations and improve performance. Nuclear power plants in the U.S. are subject to a rigorous program of NRC oversight, inspection, preventive and corrective maintenance, equipment replacement and equipment testing. Nuclear power plants are required to go offline to refuel at intervals of no more than 24 months and to perform

5

condition monitoring and preventive maintenance during every refueling outage. While decommissioning work on retired nuclear reactors provides opportunities for growth, the focus is on extending the life of plants through capital improvements.

·

North America Infrastructure Growth. RecordOil and natural gas production remains at historically high levels, and is expected to continue until 2050, according to the EIA. The United States continues to be an integral part of the global oil and natural gas markets and a significant source of global supply. Increased levels of crude oil, natural gas, and natural gas liquid production haveand accelerated new build and expansion of pipeline and related infrastructure to reduce transportation bottlenecks and bring morehave combined to supply additional petroleum products to key markets. The value proposition of low cost shale resources is altering the landscape for pipelines, terminals, refineries, chemical facilities and power generation assets. Infrastructure growth and modifications provide opportunities for us to assist in the construction and maintenance of these facilities.

6

·

Standby and Distributed Power Generation. Unlike central station generation, standby and distributed power generation equipment can sit on either side of the utility meter and may be owned by a utility, a customer or a third party. Peak energy demand requirements and higher costs, as well as transmission and distribution infrastructure limits, are driving investment into this space. The growth in industries with high power demand and sensitivity to power supply instability, such as datacenters, medical centers, universities and remotely located industrial loads, are straining the traditional power infrastructure. The electric power needs for these markets have historically been served by small-scale utility-owned diesel or gas engine generators strategically located to support distributed system operations. The power supply is trending toward larger (greater than 1,000 kilowatts) diesel engine generator systems and expanding into alternative energy assets.

·

Oil and Gas Production. The fundamental transformation of the U.S. from a net importer to a net exporter of petroleum products and the increase in capacity required for domestic production, has created an opportunity to serve this industry.  Production of oil and gas grew to record levels in 2019, with natural gas production exceeding 92.8 billion cubic feet per day and crude oil exceeding 12 million barrels per day. The growing demand for specialized workers and labor offers us the opportunity to leverage our experience to support midstream terminals, refinery and process facilities to provide maintenance services and capital improvement projects.

·

Water and Wastewater Treatment Infrastructure Maintenance and Capital Improvements Demand. Population growthIn the fourth quarter of 2022, we decided to exit our Florida water business. This was largely based on a $6 million write-down in revenue on our two largest water projects in Florida. The Company is no longer pursuing water projects. These two projects are scheduled to be completed in the second and the percentagefourth quarter of the population served by public systems has accelerated our expansion in water and waste water infrastructure maintenance and capital improvements. The growing demand for water and waste water treatment facilities provide us the opportunity to deliver services for capital upgrades and maintenance on booster pump stations, well buildouts, treatment expansions, lift stations, and pipe installation, along with other services that we can provide to enhance our brand.

2023, respectively.

We also provide similar services to industrial waste water treatment customers in the pulp and paper and other sectors that require waste water treatment.

Customers, Marketing and Seasonality

Our customers include major private and government-owned utilities throughout the U.S. and in Ontario, Canada,, as well as leaders in the U.S. pulp and paper and industrial sectors. We market our services using dedicated sales and marketing personnel as well as our experienced on-site operations personnel. We use our safety and service track record with long-term renewable contracts to expand our services and supplement existing contracts with small- to medium-sized capital projects. Our sales initiatives directly seek to apply operational strengths to specific facilities within our targeted industries and customers throughout the U.S. and in Ontario, Canada. We are impacted by seasonality, resulting in fluctuations in revenue and gross profit during our fiscal year. Generally, this is driven by our customers’ schedule of planned outages which are typically scheduled for every other year (on odd numbered years).year.

We depend on a relatively small number of customers for a significant portion of our revenue, and the loss of any of those customers wouldcould have a material adverse effect on our business. For a listing of our major customers, please refer to “Note 16—Major Customers and Concentration of Credit Risk” to the consolidated financial statements included in this Form 10-K.

The recent widespread outbreak of respiratory illness caused by COVID-19,In early 2022, we lost a novel coronavirus, as well as efforts to control the spread of the virus, could materially impact the foregoing factorsmajor contract with a customer in Canada, and our business as a whole. However,result, we are not yet able to determineexited the nature or severityCanadian market. This customer contributed 12% of such impacts at this time. For additional information see “Item 1A. Risk Factors- We operate our business in regions subject to natural disasters, including hurricanes, and other severe catastrophic events, such

6

as acts of war and terrorism, and any disruption to our business resulting from such events will adversely affect our revenue and resultsapproximately 15% of operations.”our gross margin in 2021. In addition, the Company lost a multi-year contract within the nuclear decommissioning market in February 2022 that contributed to a loss of approximately $374.6 million of backlog for the years 2022 through 2029. This contract did not represent a material amount of gross profit. Please refer to Item 1. Business under “Backlog” in this Form 10-K for additional information.

Materials and Suppliers

The markets for most of the materials we use are served by a large number of suppliers, and we believe that we can obtain required materials from more than one supplier. Although we are not dependent on any single supplier, vendor or subcontractor, our ability to obtain necessary supplies to complete our projects is contingent on our ability to successfully implement our liquidity plan. For additional information, please refer to “Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Note 2—Liquidity” to the consolidated financial statements included in this Form 10-K.

Competition

Our competitors vary depending on geography and the scope of services to be rendered. Several national service providers, which are significantly larger and have significantly greater financial resources than we do, will often compete for larger maintenance and capital project opportunities that become available. These service providers include, among others, Allied Power, APTIM Corp., BHI Energy and Day & Zimmermann. Additionally, smaller contractors that operate on a regional basis often compete for smaller opportunities associated with open shop labor sources. We compete based on reputation, safety, price, service, quality, and our breadth of service capabilities. We believe our strong reputation, longevity in the industry, project management capabilities, including service diversity, long-term customer relationships, safety record and performance, and our success at identifying and retaining qualified personnel differentiate us from our competitors. We also believe that the fact that we maintain a presence at several of our customers’ sites is a competitive advantage because it provides us with an intimate understanding of these facilities, which allows us to better identify our customers’ service needs. Specific to our customers that operate nuclear power plants, barriers to entry include the requirement to hold and maintain the rigorous NRC qualifications and safety standards.

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Insurance

We maintain insurance coverage for various aspects of our operations; however, we remain exposed to potential losses because we are subject to deductibles, coverage limits and retention requirements.

Typically, our contracts require us to indemnify our customers for third party injury, damage or loss arising from the performance of our services and provide for warranties for materials and workmanship. We may also be required to name the customer as an additional insured up to the limits of insurance available, or we may be required to purchase special insurance policies for specific customers. We maintain performance and payment bonding lines to support our business. In rare cases we may provide a letter of credit in lieu of a bond to satisfy performance and financial guarantees on a project.

We generally require all subcontractors working with us at a customer’s location to indemnify us and our customers and name us as an additional insured for activities arising out of such subcontractors’ work. We also require certain subcontractors to provide additional insurance policies, including surety bonds in favor of us, to secure such subcontractors’ work or as required by contract. It is possible that our insurance and the additional insurance coverage provided by our subcontractors will not fully protect us against a valid claim or loss under the contracts with our customers.

Intellectual Property

As of December 31, 2019,2022, we used the Williams trade name and its logo. We have registered federal trademarks related to certain company logos.Company logos as well as registered trademarks related to certain Company logos in Canada. We presently have no U.S. patents in force. We rely on trade secret laws and employee and third-party nondisclosure agreements to protect our intellectual property rights. This Form 10-K may refer to brand names, trademarks, service marks and trade names of other companies and organizations, and those brand names, trademarks, service marks and trade names are the property of their respective owners.

Compliance with Government Regulations

We are subject to certain federal, state, and local environmental, occupational health and nuclear regulatory laws applicable in the U.S. and Canada. We also purchase materials and equipment from third parties and engage subcontractors who are also subject to these laws and regulations. Below is a summary of certain laws and regulations applicable to our business.

·

Environmental.  We are subject to extensive and changing environmental laws and regulations in the U.S. and Canada. These laws and regulations relate primarily to air and water pollutants and the management and disposal

7

of hazardous materials. We are exposed to potential liability for personal injury or property damage caused by any release, spill, exposure, or other accident involving such pollutants, substances, or hazardous materials.

·

Health and Safety Regulations.  We are subject to the requirements of the U.S. Occupational Safety and Health Act and comparable state and international laws. Regulations promulgated by these agencies require employers and independent contractors who perform construction services, including electrical and repair and maintenance, to implement work practices, medical surveillance systems and personnel protection programs to protect employees from workplace hazards and exposure to hazardous chemicals and materials. In recognition of the potential for accidents within various scopes of work, these agencies have enacted very strict and comprehensive safety regulations.

·

NRC.  Owners of nuclear power plants in the U.S. are licensed to build, operate, and maintain those plants by the NRC. Their license requires that they qualify their suppliers and contractors to ensure that the suppliers and contractors comply with NRC regulations. We must demonstrate to our customers that we comply with NRC regulations related to quality assurance, reporting of safety issues, security and control of personnel access and conduct.

·

International Regulations.  As a result of our expansion into Canada, we are subject to a variety of legal requirements pertaining to such activities. Our activities may be subject to oversight by the Canadian Nuclear Safety Commission, and we may be subject to additional rules and regulations, including Canada’s Nuclear Liability and Compensation Act, which generally conforms to international conventions and is conceptually similar to the Price-Anderson Act in the U.S. In addition, we may be subject to rules and regulations applying to cross border business, such as international trade and tariff policies, license requirements and requirements relating to toxic substances. Violations of any applicable licensing, tariff and tax reporting requirements or failure to provide certifications relating to toxic substances could result in the imposition of significant administrative, civil and criminal penalties. Furthermore, the failure to comply with U.S. federal, state and local tax requirements, as well as Canadian federal and provincial tax requirements, could lead to the imposition of additional taxes, interest and penalties. Our expansion into Canada, and into any international market, is dependent upon our ability to comply with the regulatory regimes adopted by such jurisdictions.

·

Department of the Treasury.  The Office of Foreign Assets Control of the U.S. Department of the Treasury administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against targeted foreign countries and regimes, terrorists, international narcotics traffickers, those engaged in activities related to the proliferation of weapons of mass destruction, and other threats to the national security, foreign policy or economy of the United States. A failure to comply with these laws and regulations could result in civil or criminal sanctions, including the imposition of fines and suspension or debarment from participation in U.S. government contracts.

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While we believe that we operate safely and prudently and in material compliance with all environmental, occupational health, nuclear regulatory and other applicable laws, there can be no assurance that accidents will not occur or that we will not incur substantial liability in connection with the operation of our business. We do not anticipate any material capital expenditures or material adverse effect on earnings or cash flows as a result of complying with these laws.

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. Prior to 2017, we reported backlog as orders from fixed-price contracts plus the amount of revenue we expected to receive in the next twelve-month period from cost-plus contracts, regardless of the remaining life of the cost-plus contract. However, we believe that reporting the total revenue expected under awarded contracts is more representative of our expected future revenue.

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 accounting principles generally accepted in the U.S. (“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.

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The following table summarizes our backlog:backlog on December 31, 2022 and 2021:

 

 

 

 

 

December 31,

December 31,

(in thousands)

 

2019

  

2018

2022

  

2021

Cost plus

 

$

463,481

 

$

487,033

$

291,894

$

559,417

Lump sum

 

 

31,423

 

 

14,571

41,309

72,276

Total

 

$

494,904

 

$

501,604

$

333,203

$

631,693

Backlog as of December 31, 20192022 decreased $6.7$298.5 million, or 1.3%47.3%, from December 31, 2018, due2021, which was primarily todriven by the completionloss of a long-termmulti-year contract for maintenance services duringwithin the nuclear decommissioning market in February 2022, contributing to a customer’s nuclear outages, which are scheduled for every other year (on odd numbered years). The decreaseloss of approximately $374.6 million in backlog from 2018 was also attributed tofor the completion of several other projects during 2019.years 2022 through 2029.  As of December 31, 2019,2022, approximately $155.0$130.1 million, or 31.3%39.1%, of the total backlog iswas related to nuclear projects, $128.1 million, or 38.5%, was related to fossil projects, $27.4 million, or 8.2%, was related to energy delivery projects,$24.0 million, or 7.2%, was related to water and wastewater projects, $19.1 million, or 5.7%, was related to decommissioning projects and the constructionremaining $4.5 million was related to pulp and paper and chemical projects.

As of Plant Vogtle Units 3December 31, 2021, approximately $122.8 million, or 19.4%, of the total backlog was related to nuclear projects, $14.2 million, or 2.2%, was related to fossil projects, $27.2 million, or 4.3%, was related to energy delivery projects, $40.4 million, or 6.4%, was related to water and 4.wastewater projects and $424.8 million, or 67.2%, was related to decommissioning projects and the remaining $2.3 million was related to pulp and paper and chemical projects.

The following table summarizes our estimated backlog conversion period:

 

 

 

 

 

 

 

 

 

 

Estimated Conversion Period

 

 

 

Estimated Conversion Period

(in thousands)

 

2020

 

Thereafter

 

Total

2023

Thereafter

Total

Cost plus

 

$

166,445

 

$

297,036

 

$

463,481

$

137,527

$

154,367

$

291,894

Lump sum

 

 

24,837

 

 

6,586

 

 

31,423

41,061

248

41,309

Total

 

$

191,282

 

$

303,622

 

$

494,904

$

178,588

$

154,615

$

333,203

                                                                                                                                                                                                   

For additional discussion of our backlog, see “Item 1A. Risk Factors—Risk Factors Related to Our Operations.”

Employees

We believe our employees are our greatest asset. Our business success is dependent upon our ability to attract, develop, and retain high performing talent by providing a culture that is built on our core values of safety, integrity, excellence, and results.

Along with our core values, we act in accordance with our Code of Business Conduct and Ethics. Our Code of Business Conduct and Ethics requires a commitment from employees, officers and directors at the Company and its subsidiaries to conduct business honestly and ethically. Among other things, our Code of Business Conduct and Ethics encourages employees to talk to supervisors, managers, or other appropriate personnel, including the Chief Executive Officer, the Chief Financial Officer, or the General Counsel, about observed illegal or unethical behavior and the best course of action in a particular situation. The Company has a confidential hotline administered by an outside firm that an employee can call or visit on the internet to anonymously submit a report in the event he or she has ethical concerns or suspects instances of misconduct.

For over 15 years, we have maintained a safety record in the top quartile of the industry, benefiting both us and our customers. We also maintain a broad range of professional certifications and memberships in national organizations relevant to the performance of many of the services we provide.

We have implemented a robust human performance strategy that focuses on organizational factors, job-site conditions, individual behavior, and results. This strategy has contributed to a highly reliable organizational culture that has produced and consistently sustained positive results.

As of December 31, 2019,2022, we had 420506 full-time employees (excluding temporary staff and craft labor), and nowe did not have any part-time employees. The number of our employees, including temporary staff and craft labor, fluctuates greatly, depending on the timing and requirements for craft labor. Many of the craft labor employees are employed through various union agreements. As of December 31, 2019,2022, there were 609758 craft labor employees, of which 480644 were under collective bargainingcollective-bargaining agreements. We believe that our relationships with our employees, both full-time and temporary, are satisfactory. We are not aware

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Information about our Executive Officers

The following information is being furnished with respect to the Company’s executive officers as of DecemberMarch 31, 2019:2023:

Name

Position

Tracy D. Pagliara

President and Chief Executive Officer and Director

Randall R. Lay

SeniorExecutive Vice President and Chief FinancialOperating Officer

Charles E. Wheelock

Senior Vice President, Chief Administrative Officer, General Counsel and Secretary

Michael K. PowersDamien A. Vassall

Vice President Powerand Chief Financial Officer

Matthew J. PetrizzoDawn A. Jenkins

Vice President, Energy and IndustrialHuman Resources

Michael J. Bruno

Executive Vice President, Business Development

Tracy D. Pagliara, 57, has served as a member of our Board of Directors since July 2017. Mr. Pagliara60, has served as our President and CEO starting in April 2018, having previously served as Co-President and Co-CEO along with Craig E. Holmes,from July 2017 through April 2018. Mr. Pagliara has also served as a member of our Board of Directors since July 2017. Prior to July 2017, he served as our Chief Administrative Officer, General Counsel and Secretary from January 2014, and also as Senior Vice President from November 2015. He previously served as our General Counsel, Secretary and Vice President of Business Development from April 2010 through December 2013. Prior to joining the Company in April 2010, Mr. Pagliara served as the Chief Legal Officer of Gardner Denver, Inc., a leading global manufacturer of highly engineered compressors, blowers, pumps and other fluid transfer equipment, from August 2000 through August 2008. He also had responsibility for other roles during his tenure with Gardner Denver, including Vice President of Administration, Chief

9

Compliance Officer and Corporate Secretary. Prior to joining Gardner Denver, Mr. Pagliara held positions of increasing responsibility in the legal departments of Verizon Communications/GTE Corporation from August 1996 to August 2000 and Kellwood Company from May 1993 to August 1996, ultimately serving in the role of Assistant General Counsel for each company. Mr. Pagliara currently serves on the board of directors and audit, compensation and nominating and corporate governance committees of Westwater Resources, Inc. (formerly Uranium Resources, Inc.) (Nasdaq:(NYSE American: WWR), a diversified energy materials developer, where he has served since July 2017. He is a member of the Missouri and Illinois State Bars and a Certified Public Accountant. In addition, in accordance with customary practice, Mr. Pagliara and other officers of the Company have served as officers of the Company’s various subsidiaries, although not acting in an executive role for the relevant subsidiary. As previously disclosed, such subsidiaries included Koontz-Wagner Custom Controls Holdings LLC, which filed a voluntary petition for relief under Chapter 7 of the U.S. Bankruptcy Code in July 2018 and ceased operations at such time.

Randall R. Lay, 65,68, was appointed to serve as our Executive Vice President, Chief Operating Officer in November 2021. He previously served as our Senior Vice President, Chief Financial Officer and our principal financial and accounting officer infrom September 2019.2019 until November 2021. Prior to joining the Company, Mr. Lay served as Executive Vice President, Chief Financial Officer, Secretary and Treasurer of GEO Specialty Chemicals, Inc., a supplier of specialty chemicals and materials to the coatings, adhesives, medical, water treatment and construction markets, from December 2017 to August 2019, when it was acquired by CPS Performance Materials. From 2007 to June 2017, Mr. Lay served as Vice President and Chief Financial Officer of Lazy Days'Days’ R.V. Center, Inc. (now a subsidiary of Lazydays Holdings, Inc.), which operates RV dealerships. From 2006 through 2007, Mr. Lay served as Senior Vice President of Buccino & Associates, Inc., a financial advisory and turnaround firm. Prior to that, Mr. Lay served at Universal Access Global Holdings Inc., a communications network integrator, from 2002 to 2006, including as Chief Financial Officer from June 2002 to July 2003; director and Chief Executive Officer from July 2003; and additionally, as President from November 2003 until June 2006. From October 2001 to April 2002, Mr. Lay served as Senior Vice President and Chief Financial Officer of Metromedia Fiber Networks, Inc., a telecommunications company. From September 1993 to September 2001, Mr. Lay was employed by International Specialty Products Inc., a global supplier of specialty chemicals, most recently as Executive Vice President and Chief Financial Officer.

Charles E. Wheelock, 51,54, has served as our Senior Vice President, Chief Administrative Officer, General Counsel and Secretary since August 2019. He previously served as our Vice President, Administration, General Counsel and Secretary beginning July 2017. He joined the Company in September 2011 as Associate General Counsel and thereafter assumed roles of increasing responsibility, including Vice President, Deputy General Counsel and Chief Compliance Officer. He led the human resources, recruiting and labor relations groups in our Tucker, Georgia office prior to his July 2017 appointment. Prior to joining the Company, Mr. Wheelock spent 10 years at General Electric Company, serving in a variety of roles in its Energy Services and Power Generation businesses. Mr. Wheelock is a member of the State Bar of Georgia.

Michael K. (“Kelly”) Powers11

Damien A. Vassall, 4846, was appointed President, Power, in August 2019. Prior to his appointment, Mr. Powers served as the Company's Senior Vice President, Operations—Power, since July 2017.Chief Financial Officer and principal financial and accounting officer in November 2021. He previously served in a variety of financial roles for the Company, including our Vice President and Controller from February 2020 until November 2021, a consultant for the Company from June 2019 to February 2020, Chief Financial Officer of our Services division from October 2015 until November 2018, and our Controller of the Services division from October 2010 to October 2015. Prior to joining the Company, Mr. Vassall served at Delta Apparel, Inc., an apparel company, as a division controller from June 2008 until October 2010 and as manager of accounting and financial reporting from November 2006 through May 2008. Previously, he also served as senior associate at both Grant Thornton LLP and KPMG LLP.

Dawn A. Jenkins, 51, has served as our Vice President, Human Resources since August 2021. She has served in a variety of roles at the Company in rolesand its subsidiaries since January 2007, including as our Vice President, Treasurer from December 2020 to August 2021, as Treasurer from January 2019 until December 2020, as Director, Transactional Accounting from August 2018 to January 2019, as Director ERP, Operations Support and Trade Compliance from November 2013 to August 2018, and as Assistant Director Supply Chain of Projects,a former subsidiary from January 2007 to November 2013.

Michael J. Bruno, 56, has served as our Executive Vice President of Project Services, and Senior Vice President of Nuclear Services, from September 2011 through January 2016. Before rejoining the Company, Mr. PowersBusiness Development since May 2022. He previously served as Vice President, Nuclear STG and Services at Toshiba America Energy Services from January 2016 through July 2016 and as Vice President—Capital Projects at Entergy Corporation from July 2016 through July 2017. Before joining the Company in 2011, Mr. Powers served as Manager, Strategic Projects and Asset Management at Entergy Nuclear, a business unit of Entergy Corporation, from August 2008 through October 2011. Prior to that, he served as a program manager for the Naval Nuclear Propulsion Program (a joint U.S. Department of Energy and U.S. Department of Defense program) from May 1997 to August 2008.

Matthew J. Petrizzo, 58 was appointed President, Energy and Industrial, in August 2019. Mr. Petrizzo joined the Company in November 2018 as Senior Vice President, Energy and Industrial with over 35 years of progressive leadership roles in engineering, construction, maintenance and repair servicesVice President, Business Development from December 2020 to May 2022. Mr. Bruno previously worked for the energy,Company, from 2009 to 2015, holding several roles of increasing responsibility including Operations Manager, Operations Director, General Manager, and Vice President in our Williams Industrial Services division, including five years within the nuclear power and industrial markets.market. Prior to joiningreturning to the Company he founded CNM Energy Solutions, a consulting company, where he served from September 2015 through November 2018. From November 2014 to September 2015, Mr. Petrizzo served as Executive Vice President, Northeast Operations, at Regency Energy Partners (now Energy Transfer Partners). Before that, from November 2007 to June 2014, Mr. Petrizzo worked at Matrix SME, a principal operating subsidiary of Matrix Service Company, wherein 2020, he served as President from June 2008 through June 2014Fleet Director of Maintenance Services at Day & Zimmermann, a family-owned company specializing in construction and Vice President from November 2007 to June 2008. Prior to joining Matrix SME,engineering, operations and maintenance, staffing, security and defense, with overall responsibility for nuclear project services at multiple facilities, as well as Director of Projects. Additionally, Mr. PetrizzoBruno served asin a Project Director for Washington Group International (now a subsidiaryvariety of AECOM), from 2006 to 2007, where he also workedroles at General Electric in various capacities from 2001 to 2006,combustion turbines and for Washington Group legacy companies, Raytheon Engineersplant management, domestically and Constructors and Ebasco Services Inc., from 1984 to 2001.internationally.

Available Information

We file reports with the U.S. Securities and Exchange Commission (the “SEC”), including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished to the

10

SEC pursuant to the requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The SEC maintains an Internet site, www.sec.gov, which contains the Company’s reports, proxy and information statements and other information we have filed electronically with the SEC.

We make available on our website, www.wisgrp.com, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to these reports as soon as reasonably practicable after we electronically file the reports with, or furnish them to the SEC. The information disclosed on our website is not incorporated by this reference and is not a part of this Form 10-K. The following corporate governance related documents are also available free on our website:

Code of Business Conduct and Ethics;

Corporate Governance Guidelines;

Related Party Transactions Policy;

Charter of the Audit Committee;

Charter of the Compensation Committee;

Charter of the Nominating and Corporate Governance Committee; and

Procedures for Reporting Complaints Regarding Accounting or Auditing Matters of Williams Industrial Group Inc.

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Code of Business Conduct and Ethics;

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Corporate Governance Guidelines;

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Related Party Transactions Policy;

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Charter of the Audit Committee;

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Charter of the Compensation Committee;

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Charter of the Nominating and Corporate Governance Committee; and

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Procedures for Reporting Complaints Regarding Accounting or Auditing Matters of Williams Industrial Group Inc.

Item 1A.  Risk Factors

Our business, financial condition and results of operations may be impacted by one or more of the following factors, any of which could cause actual results to vary materially from historical and current results or anticipated future results. The disclosure of any risk factor should not be interpreted to imply that the risk has not already materialized. There may be additional risks that are not presently material or known.

Risk Factors Related to Our Liquidity and Capital Resources

We may not generate sufficient cash resourcesOur ability to continue to operate as a going concern depends on our ability to successfully implement our liquidity plan and, if necessary, raise additional capital in the future to continue funding our operations.

In orderOur ability to have sufficientcontinue as a going concern is dependent on our ability to successfully implement our liquidity plan, which includes taking steps to address profitability of non-performing businesses, aggressively reducing operating expenses, shortening the collection cycle time on the Company’s accounts receivable, and lengthening the payment cycle time on its accounts payable. The Company has continued to experience material intra-week liquidity pressure as it has attempted to manage the short-term negative cash flows that result from, among other things, having to fund oursignificant weekly craft labor payrolls on large outage projects before those payrolls can be billed to the Company’s customers and collected. Although the Company has utilized the Revolving Credit Facility to address such time period negative cash flows, contract terms restricting customer invoicing frequency, delays in customer payments, and underlying surety bonds have negatively impacted the Company’s borrowing base and the availability of funds, and the Company has been required to amend its credit facilities to amend the covenants and to obtain additional capital.

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 operations, weas a going concern.

While the recent amendments to the Company’s existing credit facilities and additional debt incurred may permit the Company to operate while it continues to engage in its process to explore strategic alternatives to maximize value for the Company and its shareholders or other stakeholders, additional liquidity support may be necessary. If the Company is unable to address any potential liquidity shortfalls that may arise in the future, it will need to successfully stabilizeseek additional funding from third party sources, which may not be available on reasonable terms, if at all, and sustain our reductions in corporate headquarters expensesthe Company’s inability to properly align withobtain this capital or execute an alternative solution to its liquidity needs could have a material adverse effect on the Company’s shareholders and support our business.creditors. In addition, we require substantial working capitalany such additional funding could only be obtained in ordercompliance with the restrictions contained in the agreements governing the Company’s existing indebtedness. If the Company is unable to comply with its covenants applicable to its indebtedness, or otherwise is unable to meet its obligations under such indebtedness,  the demandsCompany’s liquidity would be further adversely affected. In addition, such occurrences could result in an event of our growing business. 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 or obligations.

If ourthe liquidity generating initiativesplan and recent amendments to agreements governing the Company’s indebtedness do not producehave the expected results, orintended effect of addressing the Company’s liquidity problems through its review of strategic alternatives, including if we are otherwisethe Company is unable to obtain sufficient cash resourcesfuture advances under the discretionary delayed draw term loans, the Company will continue to operate our business, we may need to raiseconsider all strategic alternatives, including restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or selldelaying the Company’s business activities and strategic initiatives, or selling assets, outsideother strategic transactions and/or other measures, including obtaining relief under the normal courseU.S. Bankruptcy Code. The Company’s continuation as a going concern is dependent upon its ability to successfully implement its liquidity plan and obtain necessary debt or equity financing to address the Company’s liquidity challenges and continue operations until the Company returns to generating positive cash flow or is otherwise able to execute on a transaction pursuant to its review of business. Otherwise, we may be forced to significantly curtail or cease our operations or seek bankruptcy protection.strategic alternatives, including a potential sale of the Company. For additional information, please refer to “Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Note 11—Debt”2—Liquidity” to the consolidated financial statements included in this Form 10-K.

We have incurred losses from operations in recent fiscal years, and may incur further losses in the future.13

If we do not timely pay amounts due and comply with the covenants under the New Centre Lane Facility and the MidCap Facility,our debt facilities, our business, financial condition, and ability to continue as a going concern would be materially and adversely impacted.

Our consolidated financial statements have been prepared assuming that we will continue ason a going concern basis, which contemplates the realization of assets and satisfactionsettlement of liabilities and commitments in the normal course of business. The terms of the four-year, $35.0 million senior secured credit agreement entered into by the Company on September 18, 2018 with an affiliate of Centre Lane Partners, LLC as Administrative Agent and Collateral Agent,Term Loan and the other lenders from time to time party thereto, to

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refinance and replace the Initial Centre Lane Facility (as amended the “New Centre Lane Facility”),Wynnefield Notes, among other things, require high interest payments, and both the New Centre Lane FacilityTerm Loan and the four-year, $25.0 millionRevolving Credit and Security Agreement entered into on October 11, 2018 with MidCap Financial Trust as Agent and as a lender, and other lenders from time to time party thereto (as amended the “MidCap Facility”),Facility place encumbrances on our assets, and subject us to restrictive covenants that significantly limit our operating flexibility. Additionally, under the terms of the New Centre Lane Facility, the Company was required to make quarterly loan amortization payments of $0.1 million per quarter through June 30, 2019Any increase in  applicable interest rates may negatively affect our cash flow and must make quarterly loan amortization payments of $0.2 million per quarter thereafter.financial condition.

The terms of the New Centre Lane FacilityTerm Loan and the MidCapRevolving Credit Facility have been structured in such a way that, if we default under one, we will also default under the other.other; any default under such facilities will also result in a default under the Wynnefield Notes. In the event of a continuing default, our senior secured lenders would have the right to accelerate the then-outstanding amounts under each such facility to become immediately due and payable and to exercise their respective rights and remedies to collect such amounts, which, for the senior secured lenders, would include foreclosing on collateral constituting substantially all of our assets and those of our subsidiaries. Any continuing defaultOur obligations under the Term Loan are secured by first-priority security interests in substantially all of our assets and those of our subsidiaries guaranteeing our obligations, as well as a second-priority security interest on such entities’ accounts receivable and inventory, while our obligations under the New Centre LaneRevolving Credit Facility orare secured by first-priority security interests on substantially all of our and certain subsidiaries’ accounts and a second-priority security interest in substantially all other assets of such entities, in each case subject to the MidCap Facility could result in the outstanding principal balance under each such facility becoming immediately due and payable. terms of an intercreditor agreement.

We do not currently have sufficient cash on hand to repay the outstanding balances, so if our lenders under the New Centre Lane Facility and the MidCap Facility exercised their rights and remedies, as permitted by each such facility and applicable law, we would likely be forced to seek bankruptcy protection and our investors could lose the full value of their investment in our common stock. Accordingly, a default couldwould likely have a material adverse effect on our business.

For additional information, please refer to “Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Note 2—Liquidity”, “Note 11—Debt” and “Note 18—Subsequent Events” to the consolidated financial statements included in this Form 10-K.

IfOur strategic review may not result in an executed or consummated transaction or other strategic alternative, and the process of reviewing strategic alternatives or its conclusion could adversely affect our independent registered public accountingbusiness and our stockholders.

In January 2023, we announced that we engaged an investment banking firm fails to standexplore a range of strategic alternatives for reappointment,us to maximize shareholder value, which could include a potential sale. We are actively working with financial advisors and legal counsel in connection with this strategic review process. Any potential transaction or other strategic alternative would be dependent on a number of factors that may be beyond our control, including, among other things, market conditions, industry trends, regulatory approvals, and the availability of financing for a potential transaction on reasonable terms, as well as our ability to continue to fund our operations throughout the review process. The process of reviewing potential strategic alternatives may be time consuming, distracting and disruptive to our business operations, which may cause concern to our current or potential employees, investors, strategic partners and other constituencies and may have a material impact on our business and operating results and/or result in increased volatility in our stock price. It could  also expose us to potential litigation in connection with this process or any resulting needtransaction. We have and will continue to engage a new auditor could significantly delayincur substantial expenses associated with identifying, evaluating and negotiating potential strategic alternatives. Further, the filingprocess may affect our ability to recruit and retain qualified personnel, business partners, and other stakeholders important to our success. No decision has been made with respect to any transaction, and there can be no assurance that the exploration of strategic alternatives will result in the identification or consummation of any transaction, or that any strategic alternative identified, evaluated and consummated will provide the anticipated benefits or otherwise preserve or enhance stockholder value. Until the review process is concluded, perceived uncertainties related to our future may result in the loss of potential business opportunities and volatility in the market price of our future annual and quarterly reports with the SEC and adversely impact our business.

Our independent registered public accounting firm goes through client reacceptance procedures annually to determine if it is willing to stand for reappointment. These procedures include, among other items, a risk assessment. Due to our risk profile, there is a chance we will not meet the minimum criteria for reacceptance.common stock. If we are unable to satisfy the requirementsconsummate a transaction or other strategic alternative, and our liquidity challenges remain unresolved by growth in our business or new sources of such client reacceptance criteria,debt or equity capital, we may file to obtain relief under the U.S. Bankruptcy Code, following which other strategic transactions could be required to change auditors, which might delay the filing of our 2020 annual and quarterly reports on Form 10-K or 10-Q, as applicable, and subsequent reports with the SEC. Any such delay could result in a breach of the covenants of the New Centre Lane Facility and the MidCap Facility, reduce our trade credit based on our inability to deliver recent financial statements to our key vendors and cause us to become delinquent in our SEC filings.pursued.

The limitations and covenants contained in the New Centre Lane Facilityour debt facilities constrain our ability to borrow additional money, sell assets and make acquisitions, which may impair our ability to fully implement elements of our business strategy and otherwise adversely affect our liquidity and financial condition.

The New Centre LaneBoth the Term Loan and the Revolving Credit Facility contains a number ofcontain certain limitations and covenants that limit our ability, and that of our subsidiaries, to, among other things:

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borrow money or make capital expenditures;

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incur liens;

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things, incur additional debt, make capital expenditures, incur liens, pay dividends or make other restricted payments;

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merge or sell assets;

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enter into transactions with affiliates;

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fund our growth initiatives in Canada; and

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make acquisitions or investments.

The New Centre Lane Facility provides for variable rates of interest. We will be liable for the greatest amount of interest permitted under such rates. Any increase in LIBOR or the cessation of LIBOR as a viable reference rate may result in an increase in our interest rates on our outstanding principal debt under the New Centre Lane Facilitymake other restricted payments, merge or sell assets, make acquisitions, and therefore negatively affect our cash flow and financial condition. Our obligations under the New Centre Lane Facility are guaranteed by all of our wholly owned subsidiaries, subject to customary exceptions, and such guarantees are secured by substantially all of the assetsenter into transactions with affiliates.

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of such subsidiaries. Our obligations are secured by first priority security interests in substantially all of our assetsThe Term Loan and those of our wholly owned subsidiaries. This includes 100% of the voting equity interests of our domestic subsidiaries and certain specified foreign subsidiaries.

The New Centre LaneRevolving Credit Facility also includes additionalinclude restrictive covenants, including covenants that require us to maintain a total net leverage ratio, minimum consolidated adjusted EBITDA and minimum liquidity. These restrictions could adversely affect our business because they include, among other things, limitations on our ability to take advantage of financings, mergers, acquisitions and other corporate opportunities that may be beneficial for our business. These restrictions also could have a material adverse effect on our ability to make capital expenditures and business acquisitions, restructure or refinance our indebtedness, accept certain business opportunities from customers or seek additional capital.

financial covenants. If we do not comply with the restrictive covenants, including failing to satisfy the required financial covenants, or obtain waivers as needed, our lenders could accelerate our debt and foreclose on our assets, and our stockholders may lose the full value of an investment in our common stock. Our ability to comply with the restrictive covenants in the New Centre Lane Facilitydebt facilities depends upon our ability to generate adequate earnings and operating cash flows or sell assets, which will be subject to our ability to successfully implement our business strategy and liquidity plan, as well as other general economic and competitive conditions and financial, business and other factors, many of which are beyond our control. Our business mayhas not generategenerated sufficient cash flow from operations to fund our cash requirements and debt service obligations, which has required us to obtain additional debt and amend our outstanding debt, and we may continue to face significant liquidity constraints. For additional information, please refer to “Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Note 2—Liquidity”, “Note 11—Debt” and “Note 18—Subsequent Events” to the consolidated financial statements included in this Form 10-K.

The limitations and covenants contained in the MidCap Facility constrain our ability to borrow additional money, sell assets and make acquisitions, which may impair our ability to fully implement elements of our business strategy and otherwise adversely affect our liquidity and financial condition.

The MidCap Facility contains a number of limitations and covenants that limit our ability and that of our subsidiaries to, among other things:

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create, incur, assume or guarantee any debt, except for the amount outstanding under the New Centre Lane Facility;

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incur liens;

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merge or sell assets;

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purchase assets or engage in joint ventures or partnerships, except as permitted by the MidCap Facility, or make investments;

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enter into transactions with affiliates;

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change normal billing and reimbursement policies;

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make sales or extend credit terms outside the normal course of business; and

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pay dividends or make other restricted payments.

The MidCap Facility provides for a per annum rate of interest equal to the sum of LIBOR (with a floor of 1%) plus 6%. Any increase in LIBOR or the cessation of LIBOR as a viable reference rate may result in an increase in our interest rates on our outstanding principal debt under the MidCap Facility and therefore negatively affect our cash flow and financial condition. Our obligations under the MidCap Facility are secured by security interests in substantially all of our assets and those of our wholly owned subsidiaries. Our obligations under the MidCap Facility are also guaranteed by our Canadian subsidiaries.

The MidCap Facility also includes additional restrictive covenants, including covenants that require us to maintain a total net leverage ratio, minimum consolidated adjusted EBITDA and minimum liquidity. If we do not comply with the restrictive covenants, including failing to satisfy the required financial covenants, or obtain waivers as needed, our lenders could accelerate our debt and foreclose on our assets, and our stockholders may lose the full value of an investment in our common stock. Our ability to comply with the restrictive covenants in the MidCap Facility depends upon our ability to successfully implement our business strategy, as well as other general economic and competition conditions and financial, business and other factors, many of which are beyond our control. Our business may not generate a sufficient borrowing base, as defined in the MidCap Facility, necessary to fund our cash requirements and debt service obligations, and we may continue

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to face significant liquidity constraints. For additional information, please refer to “Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Note 11—Debt” to the consolidated financial statements included in this Form 10-K.

Any inability to finance our business or repay the New Centre Lane Facility and the MidCap Facility,our outstanding indebtedness, including due to deterioration of the credit markets, could adversely affect our business.

We intend to finance our existing operations and initiatives with existing cash and cash equivalents, cash flows from operations, the New Centre LaneTerm Loan, the Revolving Credit Facility and the MidCap Facility.Wynnefield Notes. The New Centre Lane Facility contains high interest rate payments and both the New Centre Lane FacilityTerm Loan and the MidCapRevolving Credit Facility contain a number of restrictive covenants and other terms that limit our operating flexibility, including our ability to make other investments or pursue new lines of business.flexibility. Any deterioration in the credit markets could adversely affect the ability of many of our customers to pay us on time and the ability of many of our suppliers to meet our needs on a competitive basis. Any inability to pay amounts due under the New Centre Lane Facility and the MidCap Facilityour indebtedness or access necessary additional funds on acceptable terms or at all may negatively impact our business or operations. In addition, we have required, and may require in the future, additional sources of funds in order to meet theour working capital requirements ofand fund our growing business.ongoing operations. If we are unable to access sufficient capital from our existing lenders or otherwise, our business and operations would be adversely impacted. For additional information, please refer to “Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Note 2—Liquidity”, “Note 11—Debt” and “Note 18—Subsequent Events” to the consolidated financial statements included in this Form 10-K.

We are exposed to market risks from changes in interest rates.

We are subject to market risk exposure related to changes in interest rates. The New Centre Lane Facility and the MidCap Facility provide for variable rates of interest based on LIBOR. We will be liable for the greatest amount of interest permitted under such rates. On July 27, 2017, the United Kingdom’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021. It is unclear whether or not, at that time, LIBOR will cease to exist and a satisfactory replacement rate developed or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. The U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of, among other entities, large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a new index that measures the cost of borrowing cash overnight, backed by U.S. Treasury securities (“SOFR”). SOFR is observed and backward looking, which stands in contrast with LIBOR under the current methodology, which is an estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members. Whether or not SOFR attains market traction as a LIBOR replacement rate remains in question. As such, the future of LIBOR at this time is uncertain. If LIBOR ceases to exist, we may need to renegotiate the applicable interest rates under the New Centre Lane Facility and the MidCap Facility, as they use LIBOR as a factor in determining the applicable interest rate.

If we become unable to obtain adequate surety bonding, it could reduceor letters of credit, our ability to bid on new work could be reduced, which could, in turn, have a material adverse effect on our future revenue and business prospects.

Consistent with industry practice, we are at times required to provide performance and payment surety bonds to customers. These bonds provide credit support for the customer if we fail to perform our obligations under the contract. If security is required for a particular project and we are unable to obtain a bond on terms commercially acceptable to us, we may not be able to pursue that project. In addition, bonding may be more difficult to obtain in the future or may only be available at significant additional cost.

If we become unable to obtain adequate letters of credit, our ability to bid on new work could be reduced, which could have a material adverse effect on our future revenue and business prospects.

In addition, in line with industry practice, we are at times required to provide letters of credit. These letters of credit provide credit support for the client if we fail to perform our obligations under the contract. Each of the New Centre Lane FacilityTerm Loan and the MidCapRevolving Credit Facility contains restrictions on the maximum amount that may be drawn against letters of credit. The Revolving Credit Facility provides for a letter of credit sublimit in an amount up to $2.0 million. As of March 20, 2020,December 31, 2022, we had $1.2$0.5 million of non-cash collateralized letters of credit outstanding.outstanding under the Revolving Credit Facility letter of credit sublimit and had $0.4 million outstanding cash collateralized standby letters of credit pursuant to our prior revolving credit facility with Wells Fargo Bank, National Association, which we refinanced and replaced in June 2017. If security is required for a particular project and we are unable to obtain a letter of credit on terms commercially acceptable to us, we may not be able to pursue that project. Any inability to obtain letters of credit on commercially reasonable terms could have a material adverse effect on our revenue and business prospects.

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We have recorded write-downs of our goodwill and other indefinite-lived assets in the past. If we were required to write-down additional amounts, our results of operations and stockholders’ equity could be materially adversely affected.

We are required to review goodwill and indefinite-lived intangible assets for potential impairment at least annually in accordance with GAAP. As a result of our annual goodwill impairment analysis as of October 1, 2019 and 2018, we determined that the fair value exceeded its book value, and, accordingly, no impairment charge was necessary for the years ended December 31, 2019 and 2018. We had $47.9 million of goodwill and trade names remaining on our consolidated balance sheet as of December 31, 2019. If we experience declines in revenue and gross profit or do not meet our current and forecasted operating budget, we may be subject to goodwill and/or other intangible asset impairments in the future. Because of the significance of our goodwill and intangible assets, and based on the magnitude of historical impairment charges, any future impairment of these assets could have a material adverse effect on our financial results. For additional information, please refer to “Note 7—Goodwill and Other Intangible Assets” to the consolidated financial statements included in this Form 10-K.

Liabilities, fees, and expenses related to the Koontz-Wagner bankruptcy filing could have a material adverse effect on our results of operations, cash flows and financial position.

We may incur future liabilities as a result of the July 11, 2018 bankruptcy filing of our Koontz-Wagner subsidiary, and defending any claims relating to the Koontz-Wagner bankruptcy could require us to incur substantial legal fees and other expenses. Any such liabilities could have a material adverse effect on our results of operations, cash flows and financial position. For additional information, please refer to “Note 5—Changes in Business” to the consolidated financial statements included in this Form 10-K.

Changes to tax regulations, laws, accounting principles, future business operations or examinations by tax authorities may adversely impact our provision for income taxes and ability to use deferred tax assets.assets, increase our tax burden or otherwise adversely affect our financial condition, results of operations and cash flows.

OurChanges in tax laws or exposures to additional tax liabilities could negatively impact our effective tax rate and results of operations. The evolving and at times overlapping regulatory regimes to which the Company is subject may change at any time, including as a result of changes in the U.S. political environment; for instance, various levels of government are increasingly focused on tax reform and other legislative actions to increase tax revenue, including the adoption of the Inflation Reduction Act of 2022, which includes a new corporate alternative minimum tax of 15% for certain large companies, and the reduction in the corporate income tax rate resulting from the Tax Cuts and Jobs Act (the “Tax Act”) enacted into U.S. law in December 2017 could be reduced or rescinded by future tax law changes. In addition it is possible in the future that net operating loss (“NOL”) and/or interest deductibility limitations implemented under the Tax Act could have the effect of causing us to incur income tax liability sooner than we otherwise would have incurred such liability or, in certain cases, could cause us to incur income tax liability that we might otherwise not have incurred, in the absence of these tax law changes.

In addition, our ability to use our deferred tax assets is subject to volatility and could be adversely affected by earnings differing materially from our projections, changes in the valuation of our deferred tax assets and liabilities, expiration of or lapses in tax credits, changes in ownership as defined by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”), and outcomes as a result of tax examinations or changes in tax laws, regulations and accounting principles. As a result, our income tax provisions are also subject to volatility from these changes, as well as changes in accounting for uncertain tax positions, or interpretations thereof.

The Tax Act (i) reduced the U.S. corporate income tax rate from 35% to 21% beginning in 2018, (ii) generally limited our annual deductions for interest expense to no more than 30% of our “adjusted taxable income” (plus 100% of our business interest income) for the year and (iii) permitted us to offset only 80% (rather than 100%) of our taxable income with any NOLs we generate after 2017. The disallowed interest and NOLs generated after 2017 can be carried to future periods indefinitely. It is possible in the future that the NOL and/or interest deductibility limitations could have the effect of causing us to incur income tax liability sooner than we otherwise would have incurred such liability or, in certain cases, could cause us to incur income tax liability that we might otherwise not have incurred, in the absence of these tax law changes.

Significant judgment is required in determining the recognition and measurement attributes prescribed in GAAP related to accounting for income taxes. In addition, GAAP applies to all income tax positions, including the potential recovery of previously paid taxes, which, if settled unfavorably, could adversely impact our provision for income taxes or additional paid-in capital. We could also be subject to examinations of our income tax returns by the Internal Revenue Service and other tax authorities. We assess the likelihood of adverse outcomes resulting from these examinations in determining the adequacy of our provision for income taxes. There may be exposure that the outcomes from these examinations will have an adverse effect on our operating results and financial condition.

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Our ability to use NOL carryforwards or other tax attributes may be subject to limitations under Sections 382 and 383 of the Code.

As of December 31, 2019,2022, we had U.S. federal tax NOL, foreign tax credits and general business tax credit carryforwards of $218.6$242.8 million, $3.3$3.7 million, and $0.4 million, respectively. Generally, NOL, foreign tax credit and general business credit carryforwards may be used to offset future taxable income and thereby reduce or eliminate U.S. federal income tax liabilities. Section 382 of the Code limits a corporation’s ability to utilize NOL carryforwards to reduce tax liabilities if the corporation undergoes an “ownership change.” For these purposes, an ownership change is deemed to occur if there has been a change of more than 50% in the ownership of shareholders owning 5% or greater of the value of a corporation’s stock over a three yearthree-year period. Code Section 383 applies the same limitations to foreign tax credit, general business credit and capital loss carryforwards after an ownership change.

Based upon our review, we had not experienced an ownership change as defined under Code Section 382 as of December 31, 2019. As of the date of this filing, based on our preliminary review, our recently completed Rights Offering did not contribute to an ownership change under Code Section 382.2022. If we issue additional equity is issued in the future, an ownership change pursuant to Code Section 382 may occur. In addition, an ownership change under Code Section 382 could be caused by circumstances beyond the Company’s control, such as market purchases or sales by certain 5% or greater shareholders of our stock. There is also a risk that, due to regulatory changes, such as suspensions on the use of NOLs or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. In addition, under the Tax Act, the amount of NOLs incurred after the end of the 2017 fiscal year that we are permitted to deduct in any taxable year is limited to 80% of our taxable income in such year, where taxable income is determined without regard to the NOL deduction itself. The Tax Act also generally eliminates the ability to carry back any NOLs to prior taxable years, while allowing post-2017 unused NOLs to be carried forward indefinitely. There is a risk that, due to changes under the Tax Act,in tax laws, regulatory changes, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. Thus, there can be no assurance that the Company will not experience an ownership change which would significantly limit the utilization of the Company’s NOL, foreign tax credit or general business credit carryforwards in calculating future federal tax liabilities.

Risk Factors Related to the Restatement of Prior Period Financial Statements, delayed SEC Reporting and Our Internal Control over Financial Reporting

Audit, investigation, legal and expert services regarding the restatement and audit of our historical financial results, as well as recent legal proceedings, have required substantial attention from the Board of Directors, have diverted financial resources away from the Company and management’s attention away from our usual business operations and may continue to adversely affect customer relationships and overall business, results of operations and financial condition.

From mid-2015 until the filing of our Annual Report on Form 10-K for the year ended December 31, 2015 (the “2015 Report”) in March 2017, which included the restatement of certain prior period financial results, our Board, Audit Committee and members of management devoted substantial internal and external resources to legal matters resulting from the restatement and remediation efforts and the preparation and filing of the 2015 Report. Due to the delays caused by the restatement, additional attention and resources were required during 2017 for the preparation and filing of our Annual Report on Form 10-K for our 2016 fiscal year, as well as our 2017 quarterly reports. As a result of these efforts, we incurred significant incremental fees and expenses for additional audit services, financial and other consulting services and legal services. These expenses, as well as the substantial time devoted by our Board and management toward identifying, addressing and remediating internal weaknesses and legal costs related to our internal investigation and the SEC investigation, litigation and other actions related to the restatement, had a material adverse effect on our business, results of operations and financial condition. Although our internal investigation, the SEC investigation and the putative class action have concluded, the remediation of weaknesses in our internal controls continues to require management’s attention. In addition, any future inquiries from legal proceedings or other actions by the SEC as a result of the restatement of our historical financial statements will, regardless of the outcome, likely consume a significant amount of our resources in addition to those resources already consumed in connection with the restatement itself and related litigation matters. In addition, the restatement of our historical financial statements, the fact that our stock is not listed on a national securities exchange (such as the New York Stock Exchange), and our significantly constrained liquidity have hindered our ability to attract new customers and strained relationships with certain existing customers, making it challenging to increase the volume and scope of our work. 

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Our failure to maintain effective internal control over financial reporting and disclosure controls and procedures could continue to have a material adverse effect on our business.

We are required to maintain internal control over financial reporting and disclosure controls and procedures in order to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with GAAP. In connection with our internal investigation and the restatement, we determined that we had material weaknesses in our internal control environment and internal control activities. During 2019, we designed a remediation plan to strengthen our financial reporting and accounting functions and have taken remediation steps to address these material weaknesses. We also continue to take meaningful steps to enhance our disclosure controls and procedures and our internal control over financial reporting by strengthening our financial reporting and accounting functions. We believe that we have remediated these material weaknesses and management has concluded that our disclosure controls and procedures were effective as of December 31, 2019; however, we cannot assure that we will be able to maintain adequate controls over our financial processes and reporting in the future. See “Part II—Item 9A. Controls and Procedures.”

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur undetected, and it is possible that additional significant deficiencies or material weaknesses in our internal control over financial reporting may be identified in the future. Any failure of our internal controls could result in additional material misstatements in our consolidated financial statements, significant deficiencies, material weaknesses, costs, failure to timely meet our periodic reporting obligations and further erosion of investor confidence. It would also adversely affect the results of periodic management evaluations and could have a material adverse effect on our business, financial condition, results of operations or cash flow. If our internal controls continue to be deemed inadequate in the future, our current external auditors could resign, and the process of retaining new auditors could limit our access to capital for an extended period of time.

Our business operations depend upon our senior management team and the ability of our other employees to successfully perform their roles.

We have made significant changes to our business in a short interval of time, which can be disruptive to our employees and business, and may add to the risk of control failures, including a failure in the effective operation of our internal control over financial reporting or our disclosure controls and procedures. Changes to company strategy can create uncertainty, may negatively impact our ability to execute quickly and effectively, and may ultimately be unsuccessful.

If key employees do not meet the expectations of their roles, we could experience inefficiencies or a lack of business continuity due to loss of historical knowledge and a lack of familiarity of those employees with business processes, operating requirements, policies and procedures (some of which are new) and key information technologies and related infrastructure used in our day-to-day operations and financial reporting. It is important to our success that these key employees quickly adapt to, and excel in, their new roles. Their failure to do so could result in operational and administrative inefficiencies and added costs that could adversely impact our results of operations, our stock price and our customer relationships and may make recruiting for future management positions more difficult. In addition, if we were to lose the services of any one or more key employees, whether due to death, disability or termination of employment, our ability to successfully implement our business strategy, financial plans and other objectives could be significantly impaired. Any of the above factors could also impede our ability to maintain effective internal controls over financial reporting on an ongoing basis. See “Part II—Item 9A. Controls and Procedures.” If we do not effectively manage our business through our management transitions, our business and results of operations could be adversely affected.

Risk Factors Related to Our Operations

A substantial portion of our revenue is related to services performed at nuclear power plants, and reduced investment in, or increased regulation related to, nuclear power plants wouldcould have a material adverse effect on our business and prospects.

The demand for the services we provide at nuclear power plants is directly tied to the number of nuclear power facilities that utilize our services. Additionally, the demand for U.S. nuclear capacity and electricity generation areis expected to decline due to continuing lowan increase in domestic energy production supporting natural gas pricesexports and the rapid expansion of low costlow-cost renewable energy and new technologies in the U.S., displacing more traditional sources of power, including nuclear power. Declining demand for U.S. nuclear power generation and related construction and maintenance budgets wouldcould have a material adverse effect on our business, operations, and cash flow.

There are two new nuclear reactorspower plants at one U.S. site under construction, and several nuclear reactors are undergoing decommissioning. Pricing pressure has resulted in a decrease in the maintenance budgets for existing nuclear plants. Other new

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construction projects were reevaluated and discontinued in 2017. For example, during 2017, the owners of V.C. Summer Units 2 and 3 abandoned the project.

In addition, decreases in state and federal government subsidies and increased regulation would also negatively impact the demand for nuclear power and the services we provide. For instance, the NRC has broad authority under federal law to impose safety-related and other licensing requirements for the operation of nuclear generation facilities, and events at nuclear facilities or other events impacting the industry generally could lead to additional requirements and regulations on all nuclear generation facilities and could negatively impact the demand forfinancial viability of merchant nuclear power andplants, decreasing the demand for the services we provide.

If our costs exceed the estimates we use to set the fixed-pricesfixed prices on certain of our contracts, our earnings will be reduced.

Fixed-price contracts present certain inherent risks, including the possibility of ambiguities in the specifications received, erroneous or incomplete cost estimates, problems with new technologies and economic and other changes that may occur over the contract period.

In addition, we have a limited ability to recover any cost overruns.overruns, such as those experienced during 2022 related to our fixed cost projects in Florida, which negatively impacted our gross profit for the year ended December 31, 2022. Contract prices are established based in part on our projected costs, which are subject to a number of assumptions. The costs that we incur in connection with each contract can vary, sometimes substantially, from our original projections. Because of the large scale and complexity of our contracts, unanticipated changes may occur, such as customer budget decisions, design changes, delays in receiving permits and cost increases. Unanticipated cost increases or delays may occur as a result of several factors, including:

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increases in the cost of commodities, labor or freight;

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unanticipated technical problems;

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problems related to successfully managing contract performance;

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suppliers’ or subcontractors’ failure to perform, requiring modified execution plans or re-work; and

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increases in the cost of commodities, labor or freight; unanticipated technical problems; problems related to successfully managing contract performance; suppliers’ or subcontractors’ failure to perform, requiring modified execution plans or re-work; and decreases in labor efficiency realized.

We often are contractually subject to liquidated damages in the event that we fail to perform our obligations in a timely manner. Such damages can be significant and may have a negative impact on our profit margins and financial results.

Cost increases or overruns that we cannot pass on to our customers or our payment of liquidated damages or other penalties under our contracts will lower our earnings. In addition, increases in commodity prices may adversely affect our gross margins.

If we are unable to control the delivery of services provided because of internal operational issues or poor subcontractor performances, our reputation could be adversely affected, and we could lose customers. In the event of subcontractor insolvency, if we are unable to recover any advance progress payments made to subcontractors, our profitability could be adversely affected.

We rely on subcontractors to perform services on various projects for scopes of work that are outside of our current service offerings. Our subcontractors do not account for a significant percentage of our service costs. The quality and performance of our subcontractors are not entirely under our control. Our subcontractors may not always meet the requisite level of quality control or our delivery schedules. The failure of our subcontractors to perform quality services in a timely manner could adversely affect our reputation and result in the cancellation of orders for our services, significant warranty and repair costs and the loss of customers. In addition, our contracts with customers may contain liquidated damages, and triggering such provisions could result in significant financial penalties, or, even if not triggered, could affect our ability to recognize revenue in a given period.

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Other potential consequences of the failure of our subcontractors to meet our standards include a potential need to change subcontractors, resulting in increased costs. At times, we make advance progress payments to subcontractors in anticipation of completion of services, and we may be unable to recover those advances if a subcontractor fails to complete the scope of work. In addition, we generally provide warranties for terms of two years or less on our services; defects with respect to services previously provided, whether caused by our actions or a subcontractor’s, could require us to incur costs fixing such issues. The occurrence of any of the above may adversely affect our financial condition, profitability, and cash flow.

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We operate our business in regions subject to natural disasters, including hurricanes, and other severe catastrophic events, such as public health emergencies, acts of war and terrorism, and any disruption to our business resulting from such events will adversely affect our revenue and results of operations.

We operate our business in regions subject to natural disasters and other extreme weather events, the nature, frequency and severity of which may be negatively impacted by climate change, and other severe catastrophic events. Any disaster could adversely affect our ability to conduct business and provide services to our customers, including damage to work sites, and the insurance we maintain may not be adequate to cover our losses resulting from any business interruption resulting fromdue to a natural disaster or other catastrophic events. Such events could also reduce the availability or increase the cost of insurance. These and any future disruptions to our operations, including outbreak of contagious diseases and other adverse public health developments, epidemics or pandemics, such as the COVID-19 pandemic, civil unrest, geopolitical instability, acts of war, terrorism or other force majeure, could have a material adverse impact on our liquidity, financial condition and results of operations. Although preventative measures may help to mitigate damage, we cannot provide any assurance that any measures we may take will be successful, and delays in recovery may be significant.

Our business could be adverselyhas been affected by the effectsnumerous economic factors, including inflation, volatile financial markets, supply chain disruptions and shortages of widespread outbreak of contagious disease,materials and labor.

Economic conditions, including the recent outbreak of respiratory illness caused by COVID-19, novel coronavirus first identified in Wuhan, Hubei Province, China. Any outbreak of contagious diseasesinflation, supply chain disruptions and other adverse public health developments couldlabor and materials shortages, have a material and adverse effect on our business operations. These could include disruptions or restrictions onnegatively impacted us, and our employees’ abilitymay continue to travel or to distribute services and materials, as well as temporary closures of the facilities of our suppliers or customers. Any disruption of our suppliers or customers would likely impact our sales and operating results. In addition, a significant outbreak of contagious diseasesdo so in the human population could result in a widespread health crisis that could adversely affect bothfuture. Following the U.S. and global economy and financial markets, resulting in an economic downturn that could impact our operating results. For instance, COVID-19 has caused volatility in the U.S. and global financial markets and threatened a slowdown in the U.S. and global economy. While it is not possible at this time to estimate the impact that COVID-19 could have on our operations, the continued spread of COVID-19, the measures taken by local, state, and federal governments of the United States and other countries affected, actions taken to protect employees, and the impactonset of the pandemic on various business activitiesand with the ongoing conflict between Ukraine and Russia in affected statesEurope, there has been a high degree of volatility in commodity and countries couldenergy markets that affects our customers’ businesses. In addition, inflationary factors, such as increases in the labor costs, material costs, and overhead costs, may also adversely affect our financial condition, resultsposition and operating results. Inflation in the United States has reached multi-decade highs and has been increasing since 2021. In some cases, we have had to bid more competitively than before to win work, which has compressed margins given the higher inflation. Additionally, in March 2023, the FDIC took control and was appointed receiver of Silicon Valley Bank and New York Signature Bank. While the Company does not have any direct exposure to these banks, if other banks and financial institutions enter receivership or become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our operations may be negatively impacted, including any inability on our part, or on our customers’ parts, to access cash, cash equivalents or investments. Inflation, increases in interest rates and cash flows.energy costs, bank failures, and other economic factors may have the effect of further increasing economic uncertainty and heightening the risks caused by volatility in financial markets, which may result in economic downturn or recession.

We may not be able to compete successfully against current and future competitors.

The industry in which we operate is highly competitive. Some of our competitors and potential competitors are less leveraged than we are, have greater financial or other resources than we have and may be better able to withstand adverse market conditions within the industry. Our competitors typically compete aggressively on the basis of pricing, and such competition may continue to impact our ability to attract and retain customers or maintain the rates we charge. To the extent that we choose to match our competitors’ prices, it may result in lower margins and, as a result, could harm our results of operations. Should we choose not to match, or remain within a reasonable competitive distance from, our competitors’ pricing, our sales volume would likely decrease, which could harm our results of operations. In addition, our future growth will depend on our ability to gauge the direction of the commercial and technological progress in our markets that may be adopted by our competitors. However, any such developments would likely require additional financing, and we may not be able to obtain the necessary financing on acceptable terms, if at all. A failure to keep pace with our competitors or the technological innovations in the markets we serve could have a material adverse impact on our business.

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Our future revenue and operating results may vary significantly from reporting period to reporting period.

Our quarterly and annual revenue and earnings have varied in the past and are likely to vary in the future. Our service contracts contain customer-specific commercial terms that, coupled with other factors beyond our control, may result in uneven recognition of revenue and earnings over time. Customer-imposed delays can significantly impact the timing of revenue recognition and lengthen our cash conversion cycle.cycle, which can negatively impact our ability to fund our operations. Due to our relatively large average contract size, our volume during any given period may be concentrated to relatively few contracts, intensifying the magnitude of these fluctuations. Furthermore, some of our operating costs are fixed. As a result, we may have limited ability to reduce our operating costs in response to unanticipated decreases in our revenue or the demand for our services in any given reporting period. Therefore, our operating results in any reporting period may not be indicative of our future performance. Because we must make significant estimates related to potential costs when we recognize revenue on a percentage-of-completion basis, these costs may change significantly from reporting period to reporting period based on new project information.

A small number of major customers account for a significant portion of our revenue, and the loss of any of these customers could negatively impact our business.

We depend on a relatively small number of customers for a significant portion of our revenue. In 2019,2022, our top two customers accounted for 57%, and in 2021, our top four customers accounted for 72%, and in 2018, three customers accounted for 69%,50% of our consolidated revenue. For a listing of our major customers, please refer to “Note 16—Major Customers and Concentration of Credit Risk” to the consolidated financial statements included in this Form 10-K. We expect to continue to depend upon a relatively small number of customers for a significant percentage of our revenue. Because our major customers represent a large part of our business, the loss of any of

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our major customers could negatively impact our business and results of operations. Our business volume with each of our largest customers is highly dependent on operations and maintenance budgets for U.S. utilities. Fluctuations in any of these factors could materially adversely impact our financial results.

In early 2022, we lost a contract with a customer in Canada, and as a result, we exited the Canadian market. This former customer contributed 12% of total revenue in 2021. In addition, in early 2022, we lost a major multi-year contract with a customer within the nuclear decommissioning market. This former customer accounted for 10% of our revenue in 2021 and contributed to a loss of approximately $374.6 million in backlog for the years 2022 through 2029. Please refer to Item 1. Business under “Backlog” included in this Form 10-K for additional information.

We are subject to potential insolvency or financial distress of third parties, including our customers and suppliers.

We are exposed to the risk that third parties to various arrangements who owe us money or goods, or who purchase services from us, will be unable to perform their obligations or continue to place orders due to insolvency or financial distress. If such third parties fail to perform their obligations under arrangements with us, we may be forced to replace the underlying commitment at current or above market prices or on other terms that are less favorable to us, or we may have to write off receivables in the case of a customer failing to pay.

If a customer becomes insolvent or files for bankruptcy, our ability to recover accounts receivable from that customer would be adversely affected and any payment we received during the preference period prior to a bankruptcy filing may be potentially recoverable by the bankruptcy estate. Any of the foregoing could adversely impact our results of operations, financial position, and liquidity.

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The dollar amount of our backlog, as stated at any time, is not necessarily indicative of our future revenue.

Our backlog consists of firm orders or blanket authorizations from our customers. Backlog may vary significantly from reporting period to reporting period due to the timing of customer commitments. The time between receipt of an order and actual completion of services can vary. However, backlog may not be indicative of future operating results, and projects in our backlog may be cancelled, modified, or otherwise altered by our customers. To the extent projects are delayed, the timing of our revenue could be affected. If a customer cancels an order, we may be reimbursed for the costs we have incurred. Typically, however, we have no contractual right to the full amount of the revenue reflected in our backlog contracts in the event of cancellation. In addition, projects may remain in our backlog for extended periods of time. Furthermore, a portion of our backlog for multi-year service maintenance contracts is based on what we expect to realize in the future and is therefore not necessarily supported by a firm purchase order. If that work does not materialize, then our backlog would be negatively impacted, as that work would be considered a “cancellation.” For example, our backlog was negatively affected by the loss of a multi-year contract in the nuclear decommissioning market in early 2022, as described further in Item 1. Business under “Backlog”. Revenue recognition occurs over extended periods of time and is subject to unanticipated delays. Fluctuations in our reported backlog levels also result from the fact that we may receive a small number of relatively large orders in any given reporting period that may be included in our backlog. Because of these large orders, our backlog in that reporting period may reach levels that may not be sustained in subsequent reporting periods. Our backlog, therefore, is not necessarily indicative of our future revenue or of long-term industry trends.

Our success is partially dependent upon maintaining our safety record, and an injury to or death of any of our employees, customers or vendors could result in material liabilities to our Company.

The activities we conduct at our customers’ facilities present a risk of injury or death to our employees, customers, or visitors, notwithstanding our efforts to comply with safety regulations. We may be unable to avoid material liabilities for an injury or death, and our workers’ compensation and other insurance policies may not be adequate or may not continue to be available on terms acceptable to us, or at all, which could result in material liabilities to us. In addition, our ability to obtain new business and retain our current business is partially dependent on our continuing ability to maintain a safety record that exceeds the industry average. If we fail to maintain superior safety performance, or if serious accidents occur in spite of our safety procedures, our revenue and results of operations could be materially adversely affected.

ChangesAdverse changes in our credit profile and market conditions can affect our relationships with suppliers, vendors, and subcontractors which could have a material adverse effect on our liquidity and our business, reputation, and results of operations.

We rely significantly on third-party suppliers and vendors to obtain necessary materials, and on subcontractors to perform certain services. Although we are not dependent on any single supplier, vendor or subcontractor, any substantial limitation on the availability of or deterioration in our relationship with required suppliers or subcontractors would negatively impact our operations.

Changes in our credit profile can affect the way such third parties view our ability to make payments and may induce them to shorten the payment terms of their invoices or require credit enhancement. For instance, as a result of delays in our payments, certain suppliers and subcontractors have imposed less favorable payment terms on us, including requirements to provide them with additional security in the form of prepayments, surety bonds or letters of credit. The imposition of burdensome payment terms or collateral requirements could have a material adverse impact on our liquidity and our ability to make payments to other parties. This in turn could cause us to be unable to operate our business at the desired service levels,

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which might adversely affect our profitability and cash flow. In other cases, our relationships with certain third parties have been terminated, requiring us to rely on new firms for certain services, which may cost more and be of inferior quality.

In addition, changes in market and economic conditions, such as the ongoing supply chain disruptions, product shortages and inflationary cost pressure, could increase the risk of a lack of available suppliers or subcontractors. If any supplier or subcontractor upon which we rely is unable or unwilling to meet its obligations under present or future agreements with us, we may be forced to pay higher prices to obtain necessary services and may suffer an interruption in our ability to provide our services to customers.

To the extent we cannot engage quality subcontractors or acquire equipment or materials on acceptable terms, we would not be able to meet the full demands of our customers, which would have a material adverse effect on our business, reputation and results of operations.

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Legal matters could divert management’s focus, result in substantial expenses, and have an adverse impact on our reputation, financial condition, and results of operations.

Lawsuits and investigations involving us, or our current or former officers and directors, could result in significant expenses and divert attention and resources of our management and other key employees. We could be required to pay damages or other penalties or have injunctions or other equitable remedies imposed against us or our current or former directors and officers. In addition, we are generally obligated to indemnify our current and former directors and officers in connection with lawsuits, governmental investigations and related litigation or settlement amounts. Such amounts could exceed the coverage provided under our insurance policies. Any of these factors could harm our reputation, business, financial condition, results of operations or cash flows.

Compliance with environmental, health, safety and other related laws and regulations is costly, and our ongoing operations may expose us to related liabilities.

Our operations are subject to laws and regulations governing the discharge of materials into the environment or otherwise related to the protection of the environment or human health and safety. We are subject to various U.S. federal statutes and the regulations implementing them, as well as similar laws and regulations at the state and local levels. Environmental laws and regulations are complex and subject to frequent change, and the current U.S. presidential administration is expected to revise existing environmental regulations and to pursue new initiatives. There continues to be a lack of consistent climate legislation, which creates economic and regulatory uncertainty; however, there has been an increasing amount of legislative and regulatory activity, and a number of legal and regulatory measures and social initiatives have been introduced in an effort to reduce greenhouse gas and other carbon emissions. Any such initiatives, restrictions and requirements could restrict or reduce, or require us to make changes to, our operating activities, which could increase our operating costs, increase our energy, supply and transportation costs or limit their availability, or otherwise adversely affect our results of operations, liquidity or capital resources, and these effects could be material to us. If we fail to comply with existing or future environmental laws or regulations, we may be subject to significant liabilities for fines, penalties, or damages, or lose or be denied significant operating permits. Changes in environmental laws and regulations could also increase our environmental compliance expenditures.    

In addition, we have been, and may be in the future, subject to liability allegations involving claims of personal injury or property damage. The operation of complex, large-scale equipment used in a variety of locations and climates and integration of a variety of purchased components entails an inherent risk of disputes and liabilities related to the operation of the equipment and the health and safety of the workers who operate and come into contact with the machinery. Because our services are primarily provided in power plants, claims could arise in different contexts, including fires, explosions and power surges, which can result in significant property damage or personal injury, and equipment failure, which can result in personal injury or damage to other equipment in the power plant.

The insurance policies we maintain to cover claims of this nature are subject to deductibles and recovery limitations, as well as limitations on contingencies covered, and we may, therefore, suffer losses from these claims for which no insurance recovery is available. Such losses could have a material adverse effect on our business.

We began to expand our operations outside the U.S. during 2019 and aremay become subject to risks associated with doing business outside the U.S.

We are seekingpreviously provided services in Canada, and we may seek to expand our services outside the U.S., and we currently provide services in Canada. We face risks doingthe future. Doing business internationally creates risk that could materially and adversely affect our business, including: the imposition of trade barriers, currency exchange rate fluctuations and currency controls, longer payment cycles, greater difficulties in accounts receivables collection, difficulties in complying with a variety of foreign laws, changes in legal or regulatory requirements, the potential for shortages of trained labor, complex and uncertain employment environments, exposure to local economic and political conditions, the impact of social unrest, such as risks of terrorism or other hostilities, and potentially adverse tax consequences. To the extent we experience these risks, our business and results of operations could be adversely affected, and, as a result, we may determine to scale back or terminate our international operations.

Our cross border activities also subject us During 2021, we provided services in Canada; however, in early 2022, we lost a major contract with a customer in Canada, and, as a result, we exited the Canadian market. Although there are no current plans to certain regulatory matters, including import and export licenses, tariffs, Canadian anddo so, the Company may again expand outside the U.S. customs and tax issues and toxic substance certifications. Violations of these requirements could result in the impositionfuture, although there can be no assurance that we will be successful in such endeavors, if undertaken, outside of significant administrative, civil and criminal penalties. In addition, the new United States-Mexico-CanadaU.S.

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Agreement (“USMCA”) (in Canada, known as the Canada-United States-Mexico Agreement (“CUSMA”)) supersedes the North American Free Trade Agreement (“NAFTA”). USMCA/CUSMA has been ratified by the legislature of each of the United States, Canada and Mexico. NAFTA provided protection against tariffs, duties and other charges or fees and assures access by the signatories. The impact of USMCA/CUSMA on energy markets is uncertain. Any of the foregoing factors may adversely impact our business and results of operations.

Our future business prospects in Canada are, in part, dependent upon the continued operation of Canadian nuclear plants and refurbishment of the majority of the plants in Ontario to extend their operating lives. Unfavorable economic conditions, competition from other forms of power generation, increased competition for refurbishment contracts, changes in government policy or operational or project execution issues may lead nuclear plant operators in Canada to cease operations or delay, curtail or cancel proposed or existing life-extension projects, which may decrease the overall demand for our services in Canada and adversely affect our financial condition, results of operations and cash flows.

We may be unable to effectively manage our growth, including ourany expansion into international markets.

We are subject to the risk that we may be unable to effectively manage our growth, which requires us to develop and improve our existing administrative and operational systems and our financial and management controls and further expand, train and manage our work force. As we continue this effort, we may incur substantial costs and expend substantial resources in connection with any such expansion due to different technology standards, legal considerations, and cultural differences. We may not be able to efficiently or effectively manage our current orany future international operations and growth of such operations, compete effectively in such markets, or recruit top talent and train our personnel. Any failure to successfully manage our expansion may materially and adversely affect our business and future growth and may cause us to scale back or terminate such expansion efforts.efforts; for instance, we exited the Canadian market in 2022 and are no longer accepting large, fixed price water projects. In addition, acquisitions and other business transactions may disrupt or otherwise have a negative impact on our business, financial condition and results of operations, and any acquisitions of businesses and their respective assets also involve the risks that the businesses and assets acquired may prove to be less valuable than we expect, and we may assume unknown or unexpected liabilities, costs and problems.

ExpirationLimitations or modifications to indemnification regulations of the Price-Anderson Act’s indemnification authorityU.S. could have adverse consequences for us.adversely affect our business.

We provide services to the nuclear industry. The Price-Anderson Act promotes the nuclear industry by offering broad indemnification to commercial nuclear power plant operators and the U.S. Department of Energy (“DOE”) contractors for liabilities arising out of nuclear incidents at power plants licensed by the NRC and at DOE nuclear facilities. That indemnification protects not only the NRC licensee or DOE prime contractor, but also others like us who may be doing work under contract or subcontract for a licensed power plant or under a DOE prime contract. The Energy Policy Act of 2005 extended the period of coverage to include all nuclear power reactors issued construction permits through December 31, 2025. The Price-Anderson Act indemnification provisions may not apply to all liabilities that we might incur while performing services as a contractor for the DOE and the nuclear power industry. If an incident or evacuation is not covered under the Price-Anderson Act’s indemnification provisions, we could be held liable for damages, regardless of fault, which could have an adverse effect on our results of operations and financial condition. In addition, if such indemnification authority expires, a problem relatedis not applicable in the future, for instance, our business could be adversely affected if the owners and operators of nuclear power plants fail to retain our provisionservices in the absence of services at a nuclear facility could lead to a damage claim against us for which we might not be entitled tocommercially adequate insurance and indemnification. In addition, any well-publicized problem with thoseour nuclear industry services, whether actual or perceived, could adversely affect our reputation and reduce demand for our services.

Our failure to attract and retain qualified personnel, skilled workers and key officers could have an adverse effect on us.

Our ability to attract and retain qualified professional and/or skilled personnel in accordance with our needs, either through direct hiring, subcontracting or acquisition of other firms employing such professionals, is an important factor in determining our future success. The market for these professionals is competitive, and there can be no assurance that we will be successful in our efforts to attract and retain needed personnel. Our ability to successfully execute our business strategy depends, in part, on our ability to attract and retain highly qualified, experienced mechanical, design, structural and software engineers, service technicians and marketing and sales personnel.personnel who share our values and are able to operate effectively consistent with our culture. Demand for these workers can, at times, be high and the supply extremely limited.limited, particularly for employees who can work remotely, as the impact of the COVID-19 pandemic has increased remote opportunities. In addition, we may be constrained in hiring and retaining sufficient qualified employees to support our strategy due to general labor shortages in our industry. A lack of qualified personnel or increased turnover rates within our employee base could lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain qualified employees. Our success is also highly dependent upon the continued services of our key officers, and we do not maintain key employee insurance on any of our executive officers.

We have experienced significant turnover in our senior management team and reductions in our workforce over the past few years and have promoted or hired new employees to fill certain key roles. If we are unable to retain qualified personnel, the roles and responsibilities of those employees will need to be filled, which may require that we devote time and resources to identifying, hiring, and integrating new employees. In addition, the failure to attract and retain key employees, including officers, could impair our ability to successfully implement our business strategy, sustain or expand our operations, provide services to our customers, and conduct our business effectively.

Furthermore, if key employees do not meet the expectations of their roles, we could experience operational and administrative inefficiencies and added costs that could adversely impact our results of operations, our stock price and our customer relationships and may make recruiting for future management positions more difficult.

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Demand for our services is cyclical and vulnerable to economic slowdowns and reductions in private industry and government spending. In times of general economic contraction, our revenue, profits, and financial condition may be adversely affected and will not necessarily rise in tandem with general economic expansion.

The industries we serve historically have been, and will likely continue to be, cyclical in nature and vulnerable to general slowdowns in the U.S. and Canadian economies.economy. Consequently, our results of operations have fluctuated and may continue to fluctuate depending on the level of demand for services from these industries.

Our bookings and revenue may rise or fall sharply as total industry orders tend to follow pronounced cycles of general expansion and contraction. During a contraction phase, limited investment in new projects, deferrals of planned projects and project cancellations may significantly reduce our potential recognition of revenue and profits. At the end of an expansion phase, any existence of excess capacity will negatively affect power prices, which will result in a reduction in new orders. In addition to being cyclical in nature, our revenue does not correlate precisely with changes in actual or forecasted new capacity due to timing differences in revenue recognition.

During periods of declining demand for power, many of our customers may face budget shortfalls or may delay capital expenditures, which could result in a decrease in the overall demand for our services. Our customers may find it more difficult to obtain project financing due to limitations on the availability of credit and other uncertainties in the global credit markets. In addition, our customers may demand better pricing terms and their ability to timely pay our invoices may be affected in times of economic slowdown. Any such reduction in private industry or government spending could have a material adverse effect on our revenue, net income, or overall financial condition.

The Company continues to monitor several factors that may cause our revenue, profits, and financial condition to differ from our historical results, including the impacts of inflation and increased interest rates.

Information technology vulnerabilities and cyberattacks on our networks could have a material adverse impact on our business.

We rely upon information technology to manage and conduct business, both internally and with our customers, suppliers and other third parties. Internet transactions involve the transmission and storage of data, including, in certain instances, customer and supplier business information. Accordingly, maintaining the security of our computers and other electronic devices, computer networks and data storage resources is a critical issue for us and our customers and suppliers because security breaches could result in reduced or lost ability to carry on our business and loss of and/or unauthorized access to confidential information. From time to time, we experience cyberattacks on our information technology systems, and those of our distributors, manufacturers, suppliers and other partners, whose systems we do not control. We have limited personnel and other resources to address information technology reliability and security of our computer networks and respond to known security incidents to minimize potential adverse impacts. Information security risks have generally increased in recent years because of the proliferation of new technologies and the increased sophistication and activities of perpetrators of cyberattacks. Experienced hackers, cybercriminals and perpetrators of threats may be able to penetrate our network security and misappropriate or compromise our confidential information or that of third parties, create system disruptions or cause shutdowns. These perpetrators of cyberattacks also may be able to develop and deploy viruses, worms, malware, and other malicious software programs that attack our information and networks or otherwise exploit any security vulnerabilities of our information and networks. Techniques used to obtain unauthorized access to or sabotage systems change frequently and often are not recognized until long after being launched against a target, so we may be unable to anticipate these techniques, implement adequate preventative measures or remediate any intrusion on a timely or effective basis. Moreover, the development and maintenance of these preventative and detective measures is costly and requires ongoing monitoring and updating as technologies change and efforts to overcome security measures become more sophisticated. We, therefore, remain potentially vulnerable to additional known or as yet unknown threats, as in some instances, we, our distributors, manufacturers, suppliers, and other partners may be unaware of an incident or its magnitude and effects. We also face the risk that we may expose our customers or partners to cyberattacks.

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A breach of our information technology systems and security measures as a result of third party action, malware, employee error, malfeasance or otherwise could materially adversely impact our business and results of operations and expose us to customer, supplier and other third party liabilities, as well as result in disruptions to critical systems, theft of funds, data or intellectual property, corruption or loss of data and unauthorized release of proprietary, confidential or sensitive information of ours or our customers. Any damage, security breach, delay or loss of critical data associated with our systems may delay or prevent certain operations and may have a material adverse effect on our financial condition, results of operations and cash flows; in addition, such events could expose us to data and funds loss, disrupt our operations, allow others to unfairly compete with us and subject us to litigation, government enforcement actions, regulatory penalties and costly response measures.measures, and we may not have adequate insurance coverage to compensate us for any losses relating to such events. Any resulting negative publicity could also significantly harm our reputation. As cyber threats continue to evolve,advance, we may be required to expend additional significant resources to continue to enhance our information security measures and/or to investigate and remediate any information security vulnerabilities. In addition, cybersecurity and data protection laws and regulations continue to evolve, and are increasingly demanding, which adds compliance complexity and may increase our costs of compliance and expose us to litigation, monetary damages, regulatory enforcement actions or fines in one or more jurisdictions.

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Our failure to comply with applicable governmental privacy laws and regulations in the U.S. and Canada could substantially impact our business, operations, financial position, and cash flows.

We are subject to extensive and evolving federal state and internationalstate privacy laws and regulations. Changes in privacy and data security laws or regulations or new interpretations of existing laws or regulations could have a negative effect on our operating methods and costs. Failure to comply with such regulations could result in the termination or loss of contracts, the imposition of contractual damages, private and government civil litigation, civil sanctions, damage to our reputation or, in certain circumstances, criminal penalties, any of which could have a material adverse effect on our results of operations, financial position, cash flows, business and prospects. Determining compliance with such regulations is complicated by the fact that many of these laws and regulations have not been fully interpreted by governing regulatory authorities or the courts, and many of the provisions of such laws and regulations are open to a range of interpretations. There can be no assurance that we are, or have been, in compliance with all applicable existing laws and regulations or that we will be able to comply with new laws or regulations, such as the California Consumer Privacy Act which became effective on January 1, 2020 and imposes additional obligations on businesses to make new disclosures about data collection, use, and sharing practices and affords consumers new rights with respect to their data. It also provides a new private right of action for data breaches.the California Privacy Rights Act.

Our participation in multiemployer pension plans could adversely impact our liquidity and results of operations.

During 2019,2022, we contributed to approximately 7079 multiemployer pension plans throughout the U.S. and, historically, we have contributed to over 150200 multiemployer pension plans in which we stillmay have withdrawal liabilities. We believe that our responsibility for potential withdrawal liabilities associated with participating in multiemployer pension plans is limited because the building and construction trades exemption pursuant to the Employee Retirement Income Security Act of 1974 should apply to the substantial majority of our plan contributions. However, pursuant to the Pension Protection Act of 2006 and other applicable laws, we are exposed to other potential liabilities associated with plans that are underfunded. As of December 31, 2019,2022, we had been notified that certain pension plans were in critical funding status. Currently, certain plans are developing, or have developed, a rehabilitation plan that may call for a reduction in participant benefits or an increase in future employer contributions. Therefore, in the future, we could be responsible for potential surcharges, excise taxes and/or additional contributions related to these plans, which could impact our liquidity and results of operations. While we continue to actively monitor, assess and take steps to limit our potential exposure to any surcharges, excise taxes, additional contributions and/or withdrawal liabilities, any market conditions or the number of participating employers remaining in each plan may result in a reorganization, insolvency or mass withdrawal that could have a material adverse effect on the funded status of the multiemployer plans and our potential withdrawal liability.

We are subject to anti-bribery laws, in the U.S. and Canada, and failure to comply with these laws could result in our becoming subject to penalties and the disruption of our business activities.

TheWe are subject to laws in the U.S. and Canada have laws that restrict the offer or payment of anything of value to government officials or other persons with the intent of gaining business or favorable government action, and we are subject to such laws.action. In addition to prohibiting certain bribery-related activity with U.S. and Canadian officials and other persons, these laws provide for recordkeeping and reporting obligations. Any failure by us, our subcontractors, agents or others who work for us on our behalf to comply with these legal and regulatory obligations could impact us in a variety of ways that include, but are not limited to, significant criminal, civil and administrative penalties. The failure to comply with these legal and regulatory obligations could also result in the disruption of our business activities and have a material adverse effect on our business and results of operations.

The Tax Act, or other changes in U.S. and Canadian tax laws or regulations, or their interpretation, could increase our tax burden and otherwise adversely affect our financial condition, results of operations and cash flows.

Changes in tax laws or exposures to additional tax liabilities could negatively impact our effective tax rate and results of operations. As a result of enactment of the Tax Act, we were required to re-evaluate our 2017 U.S.-related deferred tax assets and liabilities and to account for a one-time transition tax on certain un-repatriated earnings of foreign subsidiaries. The Tax Act introduced significant changes to the U.S. corporate income tax law that have had a meaningful impact on our provision for income taxes. Accounting for the income tax effects of the Tax Act required significant judgments to be made in interpreting its provisions. Due to the timing of the enactment and the complexity involved in applying the provisions of the Tax Act, we made reasonable estimates of the effects and recorded provisional amounts in the financial statements for fiscal year 2017.

In addition, as we expand our operations outside of the U.S., our future effective tax rates could also be adversely affected, including limitations on the ability to defer U.S. taxation on earnings outside the U.S. until those earnings are repatriated to the U.S.

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Work disruptions resulting from the expiration of our collective bargaining agreements or otherwise could result in increased operating costs and adversely affect our operating performance.

The majority of our temporary craft employees are represented by labor unions with which we have collective bargaining agreements. There can be no assurance that we will not experience labor disruptions associated with a lengthy strike or the expiration or renegotiation of collective bargaining agreements or other work stoppage at our facilities or customer locations, which could adversely affect our operating performance and may result in additional expenses and possible loss of revenue.

The increasing focus by stakeholders on environmental, social and governance policies and practices could result in additional costs and could adversely impact our reputation, consumer perception, employee retention and willingness of third parties to do business with us.

There has been increased focus from stakeholders, including investors, consumers and employees, on our environmental, social, or governance (“ESG”) policies and practices, including corporate citizenship and sustainability. Additionally, public interest and legislative pressure related to public companies’ ESG practices continues to grow. If our ESG policies and practices fail to meet regulatory requirements or stakeholders’ evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, employee health and safety practices, Board and employee diversity, human capital management, corporate governance and transparency and employing ESG strategies in our operations, our brand, reputation and employee retention may be negatively impacted, and customers and suppliers may be unwilling to do business with us. We could also incur additional costs and require additional resources to monitor, report and comply with various ESG practices, as well as any initiatives or goals we may establish or announce, including those related to climate change. If we do establish such initiatives or goals, there can be no assurance that our stakeholders will agree with our strategy or that we will be successful in achieving such initiatives or goals, and we will remain subject to climate change risks regardless. As a result, the effects of climate change and increased focus by stakeholders on ESG matters could have short- and long-term impacts on our business and operations. Inconsistency of legislation and regulations among jurisdictions and expected additional regulations may also affect the costs of compliance with such laws and regulations. Any assessment of the potential impact of future climate change legislation, regulations or industry standards, as well as any international treaties and accords, is uncertain given the wide scope of potential regulatory change where we operate. If we fail to adopt ESG standards or practices as quickly as stakeholders desire, fail, or are perceived to fail, in our achievement of any initiatives or goals, or fail in fully and accurately reporting our progress on any such initiatives and goals, our reputation, business, financial performance and growth may be adversely impacted. Furthermore, there exists certain “anti-ESG” sentiment among some individuals and governments, and several states have enacted or proposed “anti-ESG” policies or legislation. As we establish ESG-related initiatives, we could face a negative reaction or legislation that impedes our activities or reflects poorly upon the Company, and our business and financial condition could be negatively impacted by such matters. Any such matters, or related corporate citizenship and sustainability matters, could have a material adverse effect on our business.

Risk Factors Related to Our Common Stock

We may not be able to maintain our NYSE American listing and may incur additional costs as a result of our NYSE American listing.

Our common stock commenced trading on the NYSE American on February 22, 2021, and we are subject to certain NYSE American continued listing requirements and standards. We cannot provide any assurance that we will be able to continue to satisfy the requirements of the NYSE American’s continued listing standards. A delisting of our common stock could negatively affect the price and liquidity of our common stock and could impair our ability to raise capital in the future. In addition, we may incur costs that we have not previously incurred relating to compliance with the rules and requirements of the NYSE American.

The market price for our common stock ishas historically been volatile, and our stockholders may not be able to resell their shares of common stock at or above the purchase price paid.

The market price of our common stock fluctuateshas historically fluctuated significantly and may be affected by numerous factors (some of which are beyond our control), including:

·

The risk factors described in this Item 1A;

·

Actual or anticipated fluctuations in our operating results and financial condition;

·

Changes in laws or regulations and court rulings and trends in our industry;

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·

The significant concentration of ownership of our common stock in the hands of a small number of investors;

·

Changes in supply and demand of components and materials;

·

Changes in tax or accounting standards affecting our industry;

·

A shortfall in operating revenue or net income from that expected by securities analysts and investors;

·

Changes in securities analysts’ estimates of our financial performance or the financial performance of our competitors or companies in our industry;

·

Increase in inflation and higher commodity prices;

General conditions in our customers’ industries; and

·

The degree of trading liquidity in our common stock, including our ability to remain listed on the NYSE American, and general market conditions.

From December 31, 2012 to March 20, 2020, the closing price of our common stock ranged from $20.86 to $1.00 per share. Continued declinesDeclines in the price of our common stock could impede our ability to obtain additional capital and attract and retain qualified employees and could reduce the liquidity of our common stock. In addition, the reduceda reduction in our stock price also increases the cost to us, in terms of dilution, of using our equity for employee compensation.

The stock markets have experienced extreme volatility that has often been unrelated to the operating performance of similarly situated companies, including most recently, fluctuations relating to the impact of the COVID-19 coronavirus.geopolitical instability. These broad market fluctuations may adversely affect the market price of our common stock.

Our common stock is not currently listed on a national securities exchange, and is quoted on the OTCQX, which may continue to decrease the value of our common stock and prevent certain investors from investing or achieving a meaningful degree of liquidity.

In 2016, our common stock was delisted from the New York Stock Exchange (the “NYSE”). As a result, our common stock was quoted on the OTC Pink® Marketplace (“OTC Pink”) from 2016 to March 19, 2019, at which time our stock began being quoted on the OTCQX. We cannot assure investors that our common stock will be listed on a national exchange such as the Nasdaq Stock Market, the NYSE or another securities exchange in the future.

Based upon the fact that our common stock is no longer registered for trading on a national exchange and that the value of our issued and outstanding common stock has decreased in value in recent years, there may be investment loss for stockholders, and certain stockholders may no longer be permitted to invest in our common stock. Bid quotations on the OTCQX can be sporadic and may not provide meaningful liquidity to investors. An investor may find it difficult to dispose of shares or obtain accurate quotations as to the market value of our common stock. As a result of these limitations, our common

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stock has fewer market makers, lower trading volumes and larger spreads between bid and asked prices than securities listed on a national stock exchange or automated quotation system would typically have.

Because there may be a limited market and generally low volume of trading in our common stock, the share price of our common stock is more likely to be affected by broad market fluctuations, general market conditions, fluctuations in our operating results, changes in the market’s perception of our business and announcements made by us, our competitors or parties with whom we have business relationships. There may also be fewer institutional investors willing to hold or acquire our common stock. The lack of liquidity in our common stock may make it difficult for us to issue additional securities for financing or other purposes or to otherwise arrange for any financing that we may need in the future.

Because we are not listed on a national exchange, we are not subject to certain rules, such as certain corporate governance requirements. Without required compliance with such standards, investor interest in our common stock may decrease. The delisting of our common stock from the NYSE may have also resulted in other negative implications, including potential loss of confidence of customers, strategic partners and employees and the loss of investor and media interest in us and our common stock.

There is no assurance that an active public trading market in our common stock will be available.

There can be no assurance that an active public trading market for our common stock will be available or sustained. If, for any reason, an active public trading market does not exist, purchasers of the shares of our common stock may have difficulty in selling their shares should they desire to do so, and the price of our common stock may decline.

We do not currently expect to pay any cash dividends on our common stock; as such, appreciation in the price of our common stock somay be the only method for investors may not receive anyto realize a return on investment unless investors sell their shares of common stock for a price greater than that which investors paid for them.investment.

On May 30, 2012, our Board adopted a dividend policy pursuant to which we would pay quarterly dividends on our common stock; however, weWe have not paid any dividends since March 2015. The costs associated with the restatement of our historical financial results, as well as related matters, has presented a significant financial burden on our Company,2015 and the continued operation of our business has required substantial funding. In addition, each of the New Centre Lane FacilityTerm Loan and the MidCapRevolving Credit Facility prohibits us from paying cash dividends. Therefore,Accordingly, we do not anticipate paying dividends on our common stock in the foreseeable future.

Any future determination with respect to the payment of dividends will be at the discretion of the Board and will depend upon our financial condition, results of operations, capital requirements, general business conditions, terms of financing arrangements and other factors that our Board may deem relevant. Future dividends, their timing and amount will be subject to capital availability and periodic determinations by our Board that cash dividends are in the best interest of our stockholders and are in compliance with all of our respective laws and agreements applicable to the declaration and payment of cash dividends and may be affected by, among other factors: our views on potential future capital requirements for organic initiatives and strategic transactions; debt service requirements; our credit rating; changes to applicable tax laws or corporate laws; limitations in our debt facilities; and changes to our business model. Our dividend payments may change from time to time, and weWe cannot provide any assurance that we will declare dividends of any particular amounts or at all. If we do not pay dividends, then our common stock may be less valuable because a return on investment will occur only if our stock price increases, and such appreciation may not occur.

Actions of activist stockholders could be disruptive and potentially costly, and the possibility that activist stockholders may seek changes that conflict with our strategic direction could cause uncertainty about the strategic direction of our business.

Activist investors may attempt to effect changes in our strategic direction and how our business is governed, or to acquire control over us to increase short-term stockholder value by advocating corporate actions such as financial restructuring, increased borrowing, special dividends, stock repurchases or even sales of assets or the entire company. In fact, in June 2016, we entered into an election and nomination agreement with certain of our significant stockholders that had filed a Schedule 13D with the SEC with respect to the Company. Pursuant to that agreement, we agreed to appoint two additional directors to our Board, one of whom would serve as a representative of those investors. Among other things, we also agreed to various standstill provisions and to include the investors’ designees in our slate of nominees for election as directors at our next two annual meetings of stockholders. The agreement also provides that, because the Company did not hold its 2016 Annual Meeting of Stockholders, the significant stockholders had the right to terminate the agreement at any time after January 1, 2017.

While we welcome varying opinions from all stockholders, activist campaigns that contest or conflict with our strategic direction could have an adverse effect on our results of operations and financial condition, as responding to proxy

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contests and other actions by activist shareholders can disrupt our operations, be costly and time consuming and divert the attention of our Board and senior management from the pursuit of business strategies. In addition, perceived uncertainties as to our future direction as a result of changes to the composition of our Board may lead to the perception of a change in the direction of our business, instability or lack of continuity which may be exploited by our competitors, may cause concern to our current or potential customers, may result in the loss of potential business opportunities and may make it more difficult to attract and retain qualified personnel and business partners. These types of actions could cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

We are subject to anti-takeover effects of certain charter and bylaw provisions and Delaware law, as well as of our substantial insider ownership.

Provisions of our Second Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), Fourth Amended and Restated By-Laws (the “By-Laws”) and Delaware law may discourage, delay or prevent a merger or acquisition that stockholders may consider favorable, including transactions in which youinvestors might otherwise receive a premium for yourtheir shares. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our management and Board. These provisions include providing our Board the ability to set the number of directors and to fill vacancies on the Board occurring between stockholder meetings.

We are also subject to provisions of the Delaware corporation law that, in general, prohibit any business combination with a beneficial owner of 15% or more of our common stock for three years following the date the beneficial owner acquired at least 15% of our stock, unless various conditions are met, such as approval of the transaction by our Board. Together, these charter and statutory provisions could make the removal of management more difficult and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our common stock.

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The existence of the foregoing provisions and anti-takeover measures, as well as the significant amount of common stock beneficially owned by Wynnefield Capital, Inc., and its affiliates, the Company’s largest equity investor (“Wynnefield”),investors, could limit the price that investors might be willing to pay in the future for shares of our common stock. They could also deter potential acquirers of us, thereby reducing the likelihood that you could receive a premium for your common stock in an acquisition.

We may issue a substantial number of shares of our common stock in the future, and stockholders may be adversely affected by the issuance of those shares.

We may raise additional capital or refinance or restructure our debt by issuing shares of common stock, or other securities convertible into common stock, which willwould increase the number of shares of common stock outstanding and will result in potentially substantial dilution in the equity interest of our current stockholders and may adversely affect the market price of our common stock. For instance, in March 2020, we issued 5,384,615 shares of our common stock in connection with the closing of our registered offering of subscription rights to purchase shares of our common stock to existing holders of our common stock (the “Rights Offering”). We could seek to issue new debt, equity and hybrid securities in the future. In addition, we have previously issued shares of our common stock pursuant to private placement exemptions from Securities Act registration requirements and may do so in the future in connection with financings, acquisitions, the settlement of litigation and other strategic transactions. We may also issue equity securities (including, but not limited to, warrants to purchase shares of our common stock) in connection with future financing transactions. The issuance, and the resale or potential resale, of shares of our common stock could adversely affect the market price of our common stock and could be dilutive to our stockholders.

Actions of activist shareholders could be disruptive and potentially costly, and the possibility that activist shareholders may seek changes that conflict with our strategic direction could cause uncertainty about the strategic direction of our business.

Activist investors may attempt to effect changes in our strategic direction, including our pending review of strategic alternatives, and how our business is governed, or to acquire control over us. While we welcome varying opinions from all shareholders, activist campaigns that contest or conflict with our strategic direction could have an adverse effect on our results of operations and financial condition, as responding to proxy contests and other actions by activist shareholders can disrupt our operations, be costly and time consuming and divert the attention of our Board and senior management from the pursuit of business strategies, including the current review of strategic alternatives. In addition, perceived uncertainties as to our future direction as a result of changes to the composition of our Board may lead to the perception of a change in the direction of our business, instability or lack of continuity, which may be exploited by our competitors, may cause concern to our current or potential customers, may result in the loss of potential business opportunities and may make it more difficult to attract and retain qualified personnel and business partners. These types of actions could cause significant fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals and prospects of our business.

Future sales of our common stock and any of our other efforts to raise additional capital may depress our stock price.

Sales of a substantial number of shares of our common stock in the public market or otherwise, either by us, a member of management or a major stockholder, or the perception that such sales could occur, could depress the market price of our common stock and have a material adverse effect on our ability to raise capital through the sale of additional equity securities. We may seek additional capital through a combination of private and public equity and debt offerings. To the extent that we raise additional capital through the sale of equity or convertible debt securities, investor ownership interest may be diluted, and the terms may include liquidation or other preferences that adversely affect investor rights as a stockholder. Additional debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring additional debt, making capital expenditures, or declaring dividends. Any of the above could cause a decline in our stock price.

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Item 1B.  Unresolved Staff Comments.Comments.

None.Not applicable.

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Item 2. Properties.Properties.

Our corporate office is located in Tucker,Atlanta, Georgia. We do not own any properties.real property. Below is a summary of properties leased by our continuing operations as of December 31, 2019.2022.

Lease

Approximate

Location

LeaseExpiration Date

ApproximateSq. Footage

Location

Expiration Date

Sq. Footage

Principal Uses

Tucker, Georgia

 

March 31, 2023

 

24,00023,726

 

Administrative office (subleased out)

Atlanta, Georgia (1)

July 31, 2031

13,870

Administrative office (corporate headquarters)

Astoria, New York (1)Jacksonville, Florida

March 31, 2020September 30, 2023

7,000

10,708

Administrative office/warehouse

Deer Park, Texas (2)Norwalk, Connecticut

April 30, 2020

900

Administrative office

Dothan, Alabama

Month to Month

1,100

Administrative office

Jacksonville, Florida

August 30, 202231, 2024

10,7089,681

Administrative office/warehouse

Port Elgin, OntarioKemah, Texas

April 30, 2022January 31, 2024

8,005

Administrative office

Seymour, Indiana (3)6,000

April 30, 2020

1,406

Administrative office/warehouse

(1)

The Company does not expect that it will renew its lease of office and warehouse space in Astoria, New York and is in the process of locating an alternate facility.

May 31, 2026

4,500

Administrative office/warehouse

Tampa, Florida

March 31, 2023

4,400

Administrative office/warehouse

Dothan, Alabama

November 30, 2023

1,100

Administrative office

(2)

(1)

The Company intendsmoved its corporate headquarters from Tucker, Georgia to renew its lease of office spaceAtlanta, Georgia in Deer Park, Texas.

March 2022.

(3)

The Company does not expect that it will renew its lease of office and warehouse space in Seymour, Indiana.

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Item 3.  Legal Proceedings.Proceedings.

Litigation and Claims

We are from time to timetime-to-time party to various lawsuits, claims and other proceedings that arise in the ordinary course of our business. With respect to all such lawsuits, claims and proceedings, we record a reserve when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We do 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 our financial position, results of operations or liquidity. However, the outcomes of any currently pending lawsuits, claims and proceedings cannot be predicted, and therefore, there can be no assurance that this will be the case.

The Company prevailed in a putative shareholder class action, which was captioned Budde v. Global Power Equipment Group Inc. and filed in the U.S. District Court for the Northern District of Texas naming the Company and certain former officers as defendants. This action and another action were filed on May 13, 2015 and June 23, 2015, respectively and, on July 29, 2015, the court consolidated the two actions and appointed a lead plaintiff. Following the District Court’s dismissal with prejudice on September 11, 2018, Plaintiffs appealed the decision to the United States Court of Appeals for the Fifth Circuit. The Fifth Circuit held oral arguments on August 5, 2019. On August 23, 2019, the Fifth Circuit issued a per curiam decision affirming the District Court’s dismissal. Plaintiffs had until November 21, 2019, to petition for certiorari review by the Supreme Court of the United States, but did not do so. The matter is now concluded.

Koontz-Wagner Bankruptcy

On July 11, 2018, Koontz-Wagner filed a voluntary petition for relief under Chapter 7 of Title 11 of the U.S. 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.Please refer to “Note 5—Changes in Business—Discontinued Operations—Electrical Solutions” to the consolidated financial statements included in this Form 10-K for additional information.

For a description of our material pending legal and regulatory proceedings and settlements, please refer to “Note 15—Commitments and Contingencies”Contingencies—Litigation and Claims” to the consolidated financial statements included in this Form 10-K.

Item 4.  Mine Safety Disclosures.Disclosures.

Not applicable.

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Part II

Item 5.  Market for Registrant’s Common Equity,Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock is quotedtrades on the OTCQXNYSE American under the symbol “WLMS”. Any OTCQX quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions. Such quotes are not necessarily representative of actual transactions or of the value of our securities.“WLMS.”

The trading volume for our common stock is relatively limited. An active trading market may not continue to provide adequate liquidity for our existing stockholders or for persons who may acquire our common stock in the future.

Holders

As of March 20, 2020,27, 2023, there were 24,538,05827,058,317 shares of our common stock outstanding and 120116 holders of record of our common stock. We believe that the number of beneficial holders of our common stock is substantially greater than the number of holders of record.

Dividends

We have not paid dividends to holders of our common stock since March 2015, and the terms of the New Centre Lane FacilityTerm Loan and the MidCapRevolving Credit Facility currently prohibit us from paying cash dividends. In addition, declaration and payment of future dividends would depend on many factors, including, but not limited to, our earnings, financial condition, business development needs, regulatory considerations and the terms of the New Centre LaneTerm Loan Facility and MidCapRevolving Credit Facility, and is at the discretion of our Board of Directors. We currently have no plan in place to pay cash dividends. See “Part I—Item 1A. Risk Factors—We do not currently expect to pay any cash dividends on our common stock; as such, appreciation in the price of our common stock somay be the only method for investors may not receive anyto realize a return on investment unless investors sell their shares of common stock for a price greater than that which investors paid for them.investment.

Recent Sales of Unregistered Securities

During the fiscal year ended December 31, 2019,2022, we did not sell any of our equity securities in transactions that were not registered under the Securities Act of 1933, as amended.amended, not previously disclosed in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.

Purchases of Equity Securities by the Company and Affiliated Purchasers

Neither we, nor any “affiliated purchaser,” as defined in SEC Rule 10b-18(a)(3), purchased any of our equity securities during the three months ended December 31, 2019.2022.

Item 6.  Selected Financial Data.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

[Reserved]

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Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion provides an analysis of the results of our continuing operations, an overview of our liquidity and capital resources and other items related to our business. It contains forward-looking statements about our future revenue, operating results, and expectations. See “Cautionary Note Regarding Forward-Looking Statements” and “Part I—Item 1A. Risk Factors” for a discussion of the risks, assumptions and uncertainties affecting these statements. This discussion and analysis should be read in conjunction with Part I of this Form 10-K as well as our consolidated financial statements and notes thereto included in this Form 10-K.

Our RestructuringOverview

During 2018, we completed the restructuring of our Company and also began expanding our service. Beginning in 2016, we shifted our strategy to become a preferred provider of construction, maintenance and specialty services, to exit all product manufacturing businesses and to use the proceeds from the sales to reduce and restructure our term debt. To effect this change, in the third quarter of 2017, we made the decision to exit and sell substantially all of the operating assets and liabilities of our Mechanical Solutions segment, which we completed in the fourth quarter of 2017, as described below. Additionally, during the fourth quarter of 2017, we made the decision to exit our Electrical Solutions segment (which was comprised solely of Koontz-Wagner). We determined that these two segments met the definition of discontinued operations and, as a result, they have been presented as discontinued operations for all periods presented. In October 2017, we sold substantially all of the operating assets and liabilities of our Mechanical Solutions segment, including our manufacturing facility in Mexico. 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. Unless otherwise specified, the financial information and discussion in this Form 10-K are as of December 31, 20192022 and are based on our continuing operations; they exclude any results of our discontinued operations. Please refer to “Note 5—Changes in Business” to the consolidated financial statements included in this Form 10-K for additional information on our discontinued operations.

In 2018, we implemented major cost reduction initiatives to reduce our overhead costs, including restructuring and consolidating our corporate functions, and began working on a comprehensive strategic plan to grow and improve our business, which was finalized in early 2019. Our strategy has been focused on a comprehensive plan to grow and improve our operations, strengthen our core competencies, aggressively manage working capital, and reduce costs in order to improve liquidity and reduce debt.

In 2020, we refinanced our new credit facilities which included senior secured term loan facilities in an aggregate amount of up to $50.0 million (collectively, the “Term Loan”) and a senior secured asset-based revolving line of credit of up to $30.0 million (the “Revolving Credit Facility”). The Term Loan and Revolving Credit Facility mature on December 16, 2025. In connection with the refinancing, the Company repaid the outstanding balance of the prior facilities and all interest in full. For additional information, please refer to “Note 11—Debt” to the consolidated financial statements included in this Form 10-K.

During 2021, we changed our corporate management structure to reinforce our customer focus and strengthen operations, and among other changes, added a Chief Operating Officer, an Executive Vice President of Business Development, and a Vice President of Safety and our Corporate Controller was appointed Chief Financial Officer. Additionally, in 2022, the Company promoted its Senior Vice President of Energy and Industrial to Executive Vice President of Business Development. We are enhancing our management methods to provide additional process capabilities and focus on customer relations and sales.

In early 2022, we lost a major contract with a customer in Canada, and as a result, we exited the Canadian market. This customer contributed 12% of our revenue in 2021. In addition, in early 2022, we lost a major multi-year contract with a customer within the nuclear decommissioning market contributing to a loss of approximately $374.6 million in backlog in the years 2022 through 2029. We continue to target other growth opportunities within our end markets with greater customer focus and strengthened operational effectiveness. Please refer to Item 1. Business under “Backlog” included in this Form 10-K for additional information.

In the third quarter of 2022, management assessed the Company’s financial condition, resulting in the Company developing a liquidity plan to alleviate the substantial doubt about the Company’s ability to continue as a going concern during 2023. As a result of the Company being unable to comply with its debt covenants, the Company amended its Term Loan and Revolving Credit Facility and entered into the Wynnefield Notes during the third and fourth quarter of 2022 and the first quarter of 2023.

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In addition, we have engaged an investment banking firm to explore a range of strategic alternatives for the Company to maximize shareholder value, which could include a potential sale. We have not set a timetable for the conclusion of this review, nor made decisions for further actions or possible strategic alternatives. There can be no assurance that the exploration of strategic alternatives will result in the identification or consummation of any transaction, or that any strategic alternative identified, evaluated and consummated will provide the anticipated benefits or otherwise preserve or enhance stockholder value. If the Company’s liquidity improvement plan and the January 9, 2023 and February 24, 2023 amendments to the Term Loan and the Revolving Credit Facility do not have the intended effect of addressing the Company’s liquidity problems through its review of strategic alternatives, including if the Company is unable to obtain future advances under the discretionary delayed draw term loans, the Company will continue to consider all strategic alternatives, including restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or delaying the Company’s business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including obtaining relief under the U.S. Bankruptcy Code. The Company’s continuation as a going concern is dependent upon its ability to successfully implement its liquidity improvement plan and obtain necessary debt or equity financing to address the Company’s liquidity challenges and continue operations until the Company returns to generating positive cash flow or is otherwise able to execute on a transaction pursuant to its review of strategic alternatives, including a potential sale of the Company. We remain dedicated to pursuing the best course of action to provide the highest returns for our shareholders. For additional information, please refer to “Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and “Note 2—Liquidity”, “Note 11—Debt” and “Note 18—Subsequent Events” to the consolidated financial statements included in this Form 10-K.

Industry Trends and Outlook

Electric Power Generation – We are primarily focused on nuclear and fossil power generation. We are involved in new build power generation facilities, maintenance of existing facilities and the decommissioning of retired facilities. Net electricity generation in the U.S. was relatively unchangedincreased approximately 3.3% in 20192022 compared to 2018.2021 according to the EIA. The EIA projects that electricity consumptiongeneration will remain flatdecrease by 2.0% in the U.S. for 2020.2023, then rise by 2.0% in 2024.

Nuclear New Builds – In nuclear power generation, we are heavily involved in the construction of the only new nuclear reactors being built in the U.S. They are, Plant Vogtle Units 3 and 4. In 2017, we formed a limited liability company with Bechtel Power Corporation, a global leader in engineering, procurement, construction,EPC and project management, Richmond County Constructors, LLC (“RCC”). RCC operates as construction subcontractor to Bechtel Power Corporation, which has been selected as the prime construction contractor for the Plant Vogtle Units 3 and 4. RCC provides construction craft labor and supervision for the project. Williams is a 25% member in RCC. We also have won additional scope of work outside RCC and are currently bidding on other opportunities for direct scope of work. Plant Vogtle Units 3 and 4 are expected to become operative in 20212023.

In the future, we believe the nuclear generation market will provide innovative developments and 2022, respectively.high growth opportunities.  According to Fitch research, the future of nuclear power capacity additions within the U.S. will come from the development of plants using small modular reactor (“SMR”) technologies. SMR technology has several benefits in comparison to traditional nuclear power facilities given their smaller size, including that they require a reduced footprint and lower capital investments and offer several safety benefits. While the DOE has already awarded significant funding for research and development towards the development of SMR technologies and pilot projects, there is the potential for additional funding over the coming years given that nuclear is expected to play a key role in the current administration’s efforts toward reaching carbon pollution-free power according to Fitch research.

Nuclear Decommissioning – Given the average age of nuclear facilities in the U.S., of 40 years old, nuclear decommissioning represents one of the fastest growing fieldfields within the nuclear industry. Since 2013 eightAccording to the U.S. nuclear reactors have been retired with 10 more planned toNRC, as of August 15, 2022, there were 25 shut down by 2025.commercial nuclear power reactors at 20 sites in various stages of decommissioning. We are currently working with a major contractor in the decommissioning field and believe there may be an opportunity for us to expand our capabilities and more broadly serve the decommissioning of nuclear power facilities. We are actively pursuing projects in the decommissioning market and see this as an opportunity for future growth.

Oil and Gas – Innovation of new technologies is enhancing oil and gas production. These advances are driven from growth in the consumption of natural gas, petroleum, and petrochemical products. The large swings in the price environment  are requiring the industry as a whole to be better equipped with upgraded facilities, new technologies, and better processes to reduce the risk of volatility. Despite the volatility in prices, oil and gas hit record levels in 2019, with natural gas production exceeding 92.8 billion cubic feet per day and crude oil exceeding 12 million barrels per day. We are expanding our services to larger capital and maintenance projects in the oil and gas industry focusing on refineries, process facilities, and midstream terminals.

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Water and Wastewater Treatment Landscape – Technological advances in order to keep up with population growth and industrial capacity, isare transforming the water and wastewater treatment industry. Nationally, the EPA estimates that the cost of replacing all 6.5 to 10 million lead service lines (LSLs) in the U.SU.S. could range from $16 billion to as much as $80 billion. We are expanding our services to target capital projects and maintenance on booster pump stations, well buildouts, treatment expansions, and lift stations within the water and wastewater treatment industry. A significant portion of the November 2021 Infrastructure Investment and Jobs Act has been allocated to improve water infrastructure ($55 billion). We are no longer pursuing water projects due to decreased gross profit related to our Florida water contracts.

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Table of Contents

Other Fossil Fuel Power Generation – The reduction of coal-fired electricity production has reduced demand for routine maintenance, plant upgrades, modification, and new construction at U.S. coal-fired power generation facilities.

The U.S. EIA reported that natural gas-fired generation surpassed coal-fired generation and was the most common electricity fuel starting in 2016. As a result, we have seen the demand for routine maintenance, plant upgrades, modification, and new construction in the gas-fired generation market increase. We have maintained a presence in that market, primarily in capital projects for efficiency improvements. However, because most of those plants are newer than their nuclear and coal counterparts, they require fewer upgrades, which means they also require less maintenance than either coal or nuclear plants.

Natural Gas Distribution Market – The U.S. accounts for a natural gas pipeline network of 305,000 miles of transmission pipelines and 2.2 million miles of distribution pipes within utility service areas. Natural gas usage remained broadly flat in 2021 with gas delivered to consumers rising only 0.1%. In early Marchthe long-term it is expected that natural gas will likely serve as a transition fuel with the expected growth in demand, driven mostly by the power sector, projected to average at 1.6% year-over-year from 2022 to 2030. Nationwide, about 40% of 2020,natural gas is used for energy production and the remainder is mostly used for commercial uses (heating and cooking) and industrial uses. In New York and the northeastern U.S., we are involved in projects forecasted to invest in a range of $500 million to $1.5 billion in infrastructure improvements related to natural gas distribution. The Company estimates that the market experiencedopportunity is worth $6.0 billion per year.

Storm Hardening and Transmission and Distribution – Following extensive damage from storms, such as Hurricane Irma in 2017 and Hurricane Michael in 2018, the Florida legislature passed Senate Bill 796 in 2019. Bill 796 requires investor-owned utilities to file 10-year storm protection plans in order to strengthen its grid as a precipitous declineprevention measure from future hurricane damage. In 2021, utilities operating in oil pricesFlorida included projects with a value of approximately $20 billion within their 10-year storm-hardening plans in responseFlorida with execution that began in 2020. Due to oil demand concerns due toour underperformance in the economic impactstransmission and distribution business in Florida and Connecticut, the Company is no longer pursuing any new projects in transmission and distribution. We have exited the Florida transmission and distribution market within the first quarter of 2023 and we are in the COVID-19 virusprocess of exiting the Connecticut transmission and anticipated increases in supply from Russia and OPEC, particularly Saudi Arabia. While the impactdistribution market.

33

Table of this oil price decline has yet to be felt in demand for our services, we expect that in response our customers will reduce activity during this period of commodity price weakness and will also seek price reductions for our services. This current uncertainty gives us limited visibility into near term demand for our services; Quarter-to-date through March 2020, the impact of the coronavirus outbreak on our financial performance has not been significant. However, the extent to which the coronavirus may impact our future results is uncertain and depends on future developments, including the duration and spread of the outbreak, as well as the impact on industrial production and manufacturing, consumer spending, customers’ inventory supply chains, and demand for our services.Contents

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. You should refer to this information, as well as the financial data provided in our consolidated financial statements and related notes included in this Form 10-K, when reading our discussion and analysis of results of operations below.

 

 

 

 

 

Year Ended December 31,

Year Ended December 31,

(in thousands)

 

2019

  

2018

2022

  

2021

Revenue

 

$

245,787

 

$

188,918

$

238,119

$

304,946

Cost of revenue

 

 

214,887

 

 

160,177

231,071

273,520

Gross profit

 

 

30,900

 

28,741

7,048

31,426

 

 

 

 

Selling and marketing expenses

 

587

 

1,649

1,365

950

General and administrative expenses

 

24,583

 

30,350

25,640

23,409

Restructuring charges

 

 —

 

5,689

Restatement expenses

 

 —

 

160

Depreciation and amortization expense

 

 

301

 

 

857

230

190

Total operating expenses

 

 

25,471

 

38,705

27,235

24,549

Operating income (loss)

 

 

5,429

 

(9,964)

(20,187)

6,877

 

 

 

 

 

Interest expense, net

 

6,032

 

8,990

5,509

5,001

Other (income) expense, net

 

 

(1,958)

 

 

(764)

Income (loss) from continuing operations before income tax expense (benefit)

 

 

1,355

 

(18,190)

Other income, net

(11,474)

(1,619)

Income (loss) from continuing operations before income tax expense

(14,222)

3,495

Income tax expense (benefit)

 

 

333

 

 

(4,400)

(49)

793

Income (loss) from continuing operations

 

$

1,022

 

$

(13,790)

$

(14,173)

$

2,702

Revenue for the year ended December 31, 2019 increased $56.92022 decreased $66.8 million, or 30.1%21.9%, compared with 2018.2021. The increasedecrease in revenue was due primarily to the volume of construction activities at Plant Vogtle Units 3 and 4, accounting for $19.3 million. Our recent entry into the nuclear industry in Canada contributed $17.0 million in new business revenue. A portion of the growth was driven by our lost nuclear decommissioning projects, resulting in a planned utility outage$41.0 million reduction, exiting the Canadian nuclear market, contributing to a $30.7 million reduction, and a $19.7 million reduction related to our long term maintenance and modification contract accounting for $15.5 million. We also experienced growth in the oil and gas industry-related revenue, which contributed $7.9 million of incremental revenue.United States nuclear market compared with 2021. These gainsdeclines were partially offset by an $11.0 million year-over-year increase in our water business, distribution businesses and a $3.4$7.2 million declineincrease in the decommissioning business.

33

our chemical business and a $6.2 million increase in our transmission and distribution businesses.

Gross profit for the year ended December 31, 2019 increased $2.22022 decreased $24.4 million, or 7.5%77.6%, compared with 2018. This2021. The decrease in gross profit was primarily duedriven by start-up costs relating to the expansion into the nuclear industry in Canadaour transmission and our growth in the oildistribution markets and gas industry.  The remaining increase can be attributed to variouscost overruns on uncompleted fixed price projects in the nuclear and fossilwater markets which included the early termination of a fixed price nuclear projectwe serve in Florida. We anticipate that contributed $1.7 million in revenuethese projects will continue to generate revenues with no additional costassociated profits until completion, with the final project scheduled for completion in the fourth quarter of 2019.  These gains were partially offset by2023. Excluding the recognition of a $1.3 million loss on a fixed-price fossil fuel project throughimpact relating to start-up costs in the third quarter of 2019,transmission and distribution markets and the lump sum projects in the water market for which we recovered approximately $0.3 millionlosses were incurred, the Company would have realized a gross margin of 11.3% rather than 3.0%.

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The following table reconciles our adjusted gross margin to our actual gross margin by deducting the transmission and distribution projects that are incurring start-up costs and lump sum projects in the fourth quarterwater 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 2019.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)

Year Ended December 31, 2022

Revenue

$

238,119

Cost of revenue

231,071

Gross profit

7,048

Gross profit margin

3.0%

Minus: revenue from transmission and distribution start-up business

(6,957)

Minus: revenue from Florida lump sum water projects

(18,541)

Minus: total revenue deducted

(25,498)

Minus: cost of revenue from transmission and distribution start-up business

(12,374)

Minus: cost of revenue from the Florida lump sum water projects

(30,108)

Minus: total cost of revenue deducted

(42,482)

Adjusted revenue

212,621

Adjusted cost of revenue

188,589

Adjusted gross profit

$

24,032

Adjusted gross profit margin

11.3%

OperatingChanges in estimated gross margins related to revenue recognized under the percentage of completion method are made in the period in which circumstances requiring the revisions become known. During the year ended December 31, 2022, we recognized increases in the estimated costs at completion and related gross profit margins related to several projects in Jacksonville, Florida. The Company increased its prior estimates related to the costs of executing the contracts to completion, which led to a decrease in the recognized revenues to date under the percentage of completion revenue recognition methodology. As a result of these changes, net income (loss) for the year ended December 31, 2019 increased $15.42022 decreased by $7.8 million compared with 2018. The increase in operating income was due to a $13.2 million decrease in operating expenses and the $2.2 million increase in gross profit discussed above. Forbasic and diluted earnings per share for the year ended December 31, 2019, general and administrative expenses and restructuring charges2022 decreased $5.8by $0.30 per share.

Operating income for the year ended December 31, 2022 decreased $27.1 million, or 393.5%, compared with 2021, due primarily to the decrease in gross profit of $24.4 million and $5.7an increase of $2.7 million respectively, due to the restructuring efforts undertaken and completed in 2018. Furthermore, selling and marketingtotal operating expenses decreased $1.1 million, as a result of our cost control efforts, and depreciation expense decreased $0.6 million. The Company also benefited from a $0.2 million decrease in costs related to restatement expenses recognized in 2018 due to the wind-down of restatement activities in conjunction with the March 15, 2017 filing of the 2015 Report, which included the restatement of certain prior period financial results.(see below).

General and Administrative Expenses

 

 

 

 

 

Year Ended December 31,

Year Ended December 31,

($ in thousands)

 

2019

  

2018

2022

  

2021

Employee-related expenses

 

$

13,447

 

$

15,611

$

11,697

$

12,518

Stock-based compensation expense

 

1,595

 

1,121

1,708

3,045

Professional fees

 

3,823

 

5,634

5,866

2,799

Other expenses

 

 

5,718

 

 

7,984

6,369

5,047

Total

 

$

24,583

 

$

30,350

$

25,640

$

23,409

Total general and administrative expenses for the year ended December 31, 2019 decreased $5.82022 increased $2.2 million, or 9.5%, compared with 2018. For the year ended December 31, 2019, total employee-related2021. The $3.1 million increase in professional fees was primarily driven by legal expenses. Other expenses decreased $2.2increased by $1.3 million due primarily related to our ongoing employeesoftware and employee-related expense management efforts and a reduction in headcount compared with 2018. The decrease in employee-related expenses wassubscription costs. These increases were partially offset by decreases of $1.3 million in stock-based compensation involving forfeitures and adjustments related to performance objectives and a $0.9 million reduction primarily contributed to employee-related costs recognized in connection with the retirementfor salaries.

35

Table of our former Chief Financial Officer in June 2019, pursuant to the terms of his employment agreement. Professional feesContents

Other (Income) Expense, Net

Year Ended December 31,

($ in thousands)

2022

  

2021

Interest expense, net

$

5,509

$

5,001

Other income, net

(11,474)

(1,619)

Total

$

(5,965)

$

3,382

Total other income, net, for the year ended December 31, 2019 decreased $1.82022 increased $9.3 million, or 276.4%, compared with 2018,2021. The increase was primarily becausedriven by an $8.1 million settlement of an arbitration proceeding related to the restatement of the completion of our restructuring initiatives and becoming current with our SEC reporting obligations. Additionally, other expensesCompany’s financial statements in 2017 for the year ended December 31, 2019 decreased $2.32012 to 2014 period, coupled with a $2.7 million compared with 2018.settlement related to a former executive and his employer. These decreases in general and administrative expenses for 2019awards were partially offset by a $0.5 million increase in stock-based compensationinterest expense compared with 2018.

Restructuring Charges

 

 

 

 

 

 

 

 

 

Year Ended December 31,

(in thousands)

  

2019

 

2018

Lease

 

$

 —

 

$

536

Severance

 

 

 —

 

 

5,153

Total

 

$

 —

 

$

5,689

During 2018, we enacted our planrelated to significantly reduce corporate overheadinterest rate increases and staff by consolidating all our administrative activitiesadditional borrowings, a $0.6 million  reduction in our Tucker, Georgia offices and, as a result, vacated our leased office space in Irving, Texas on September 30, 2018. In March 2019, we subleased the Irving, Texas office space until November 2019, when the lease expired.

Other (Income) Expense, Net

 

 

 

 

 

 

 

 

 

Year Ended December 31,

($ in thousands)

 

2019

  

2018

Interest expense, net

 

$

6,032

 

$

8,990

Other income, net

 

 

(1,958)

 

 

(764)

Total

 

$

4,074

 

$

8,226

Total other expense, net, for the year ended December 31, 2019 decreased $4.2 million compared with 2018. Interest expense, net decreased $3.0 millionjoint venture earnings due to a lower weighted average interest rate on our long-term borrowings, partially offset by higher outstanding debt obligations. The weighted average interest rate on borrowings under the New Centre Lane Facilityvolume as construction activities for the year ended December 31, 2019 was 12.5%.

34

In addition, other income, net increased $1.2 million for the year ended December 31, 2019 compared with 2018 as a result of an $0.5 million increase in income from the Company’s 25% interest in an equity method investmentPlant Vogtle move closer to completion and a $0.4 million net settlement on disputes related to the sale of our former Mechanical Solutions segment. These increases were partially offset by a decrease in loss on disposal of assetsdecreased settlement distribution related to our 2018 restructuring activities.a former segment.

Income Tax Expense (Benefit)

 

 

 

 

 

 

Year Ended December 31,

Year Ended December 31,

($ in thousands)

 

2019

  

2018

2022

  

2021

Income tax expense (benefit)

 

$

333

 

$

(4,400)

$

(49)

$

793

We recorded income tax benefit from continuing operations of less than $0.1 million and income tax expense from continuing operations of $0.3 million and income tax benefit from continuing operations of $4.4$0.8 million in 20192022 and 2018,2021, respectively. Our effective tax rates from continuing operations were 24.6%0.4% and 24.2%22.8% of income tax for the years ended December 31, 20192022 and 2018,2021, respectively.

The income tax expensebenefit in 20192022 was mainly comprised of a $0.3$0.1 million Canadian tax expense for a net increase inbenefit, partially offset by the indefinite lived deferred tax assets related to post 2017 NOLs and Section 163(j) interest addback carryover that are allowed to be applied against the deferred tax liabilities related to an increase in indefinite-livedthe indefinite lived intangible deferred tax liabilities, partially offset by indefinite-lived deferred tax assets created by the 2017 Tax Act.assets.

The Tax Act required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred. Therefore, we recorded a provisional liability of the transition tax of $2.6 million in 2017.

Discontinued Operations

Please refer to “Note 5—Changes in Business” to the consolidated financial statements included in this Form 10-K for information regarding discontinued operations.

Liquidity and Capital Resources

During 2019,2022, our principal sourcesources of liquidity waswere borrowings under the MidCap Facility.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 New Centre Lane FacilityTerm Loan and the MidCap FacilityRevolving Credit Facility. In 2023, we required additional funding to continue to conduct our business, and, exit costs resulting fromamong other things, we amended the Koontz-Wagner bankruptcy. Exit costs relatedTerm Loan to increase the Koontz-Wagner bankruptcyamount borrowed and issued the Wynnefield Notes. Such actions were included in loss from discontinued operations inintended to alleviate the Company’s consolidated statements of operationsliquidity constraints to an extent sufficient to permit the Company to continue to operate while it engages in its process to explore strategic alternatives for the years ended December 31, 2019Company, including a potential sale. For additional information regarding our liquidity outlook, including our ability to continue as a going concern and 2018.ongoing liquidity constraints, see below under “Liquidity Outlook.” See discussion in “Note 11—Debt” and “Note 5—Changes in Business” to the consolidated financial statements included in this Form 10-K.10-K for additional information regarding our outstanding debt.

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Net Cash Flows

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

 

 

 

 

 

 

 

Year Ended December 31,

Year Ended December 31,

(in thousands)

 

2019

  

2018

2022

  

2021

Cash flows provided by (used in):

 

 

 

 

 

 

Operating activities

 

$

(3,839)

 

$

(14,422)

$

(8,685)

$

(4,497)

Investing activities

 

 

(242)

 

 

182

 

(834)

 

(538)

Financing activities

 

 

6,896

 

 

3,026

 

7,653

 

(1,280)

Effect of exchange rate changes on cash

 

 

61

 

 

 —

 

(121)

 

81

Net change in cash, cash equivalents and restricted cash

 

$

2,876

 

$

(11,214)

$

(1,987)

$

(6,234)

Cash and Cash Equivalents

As of December 31, 2019,2022, our operating unrestricted cash and cash equivalents increased $2.9decreased $2.0 million to $7.4$0.5 million. As of  December 31, 2019, $4.42022, $0.3 million of itsour operating cash balance iswas held in U.S. bank accounts and $2.9$0.2 million in Canadian bank accounts.

At March 20, 2020, we had $4.6 million in Total liquidity (the sum of unrestricted cash and cash equivalents that could be used, along with normal cash flowsavailability under the Revolving Credit Facility) was $3.8 million as of December 31, 2022. Total liquidity was $3.5 million on March 5, 2023 after we received $0.8 million from operations,the Wynnefield Notes, $1.5 million from the Term Loan Amendment in the form of a delayed draw and a $1.0 million advance pursuant to fund certain unanticipated shortfallsthe then-existing terms of the Term Loan Agreement.

Cash Flows Used in future cash flows.

35

Operating Activities

Cash flows from operating activities resultare 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 year ended December 31, 2019,2022, cash used in operating activities increased by $4.2 million compared to the same period in 2021. Major components of cash flows used by operating activities decreased $10.6 million to $3.8 million. The decrease in our usage of cash during 2019 was partially attributed to an increased focus on our efforts to track and collect on receivables from our customers.

During 2019, our working capital decreased $1.8 million, or 16.6%, to $8.8 million from $10.6 million at December 31, 2018. The decrease in working capital was primarily due to a $13.7 million increase in accounts payable and a $7.6 million increase in short-term borrowings. These increases were partially offset by a $2.9 million increase in cash and cash equivalents, a $15.5 million increase in accounts receivable, net and a $1.8 million decrease in accrued compensation and benefits.

Investing Activities

Forfor the year ended December 31, 2019,2022 were as follows:

Year Ended December 31,

(in thousands)

2022

Cash flows provided by (used in):

Net income (loss)

$

(13,678)

Net income from discontinued operations

(495)

Deferred income tax provision (benefit)

(174)

Depreciation and amortization on plant, property and equipment

230

Amortization of deferred financing costs

831

Amortization of debt discount

200

Bad debt expense

19

Stock-based compensation

1,708

Paid-in-kind interest (1)

176

Cash effect of changes in operating assets and liabilities

2,979

Net cash used in operating activities, continuing operations

(8,204)

Net cash used in operating activities, discontinued operations

(481)

Net cash used in operating activities

$

(8,685)

(1) Paid-in-kind interest is added to the Term Loan principal and will be paid at maturity.                                          

Cash effect of changes in operating assets and liabilities for 2022 included the following (includes foreign currency translation conversion from Canadian dollar to United States dollar):

Accounts receivable, excluding credit losses recognized during the period, decreased $3.8 million during fiscal year 2022, which increased cash flows from operating activities. The variance is primarily attributable to the timing of billing and collections.

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Contract liabilities, which consisted of billings on uncompleted contracts in excess of costs and estimated earnings, increased $2.8 million, which increased cash flows from operating activities. Contract assets, which consisted of costs and estimated earnings in excess of billings on uncompleted contracts, increased $0.2 million, which decreased cash flows from operating activities. These balances can experience significant fluctuations based on business volume and the timing of when job costs are incurred and the timing of customer billings and payments.

Other current assets decreased $4.5 million during fiscal year 2022, which increased cash flows from operating activities. The variance was primarily due to the reversal of receivables related to the remittance of Canadian harmonized sales tax (“HST”).

Accrued and other liabilities and accounts payable decreased $5.1 million during fiscal year 2022, which decreased cash flows from operating activities. The payable was an offset from the HST receivables, and a deferred payroll tax liability associated with the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

Other long-term assets increased $2.9 million during fiscal year 2022, which decreased cash flows from operating activities. The variance was primarily due to increases in right-of-use lease assets, joint venture earnings and debt issuance costs.

Cash Used in Investing Activities

For the years ended December 31, 2022 and 2021, our investing activities did not have a significant impact on our net cash flows.

Cash Provided by (Used in) Financing Activities

For the year ended December 31, 2019,2022, net cash provided by financing activities increased $3.9 million. The MidCap Facility grants the lender dominion over our depository bank accounts. As such, our weekly borrowings under the MidCap Facility are our primary source of liquidity. During the year ended December 31, 2019,was $7.7 million primarily due to our borrowings under the MidCapRevolving Credit Facility exceededexceeding our repayments from customer cash receipts by $7.6 million.$16.7 million, which was partially offset by $8.8 million of cash used to pay down our Term Loan and $0.2 million cash used to pay statutory taxes related to our stock-based awards. At any point in time, the outstanding balance under the MidCapRevolving Credit Facility is a function of the timing of collections of our customer cash receiptsreceivables and the timing of our cash expenditure needs for the following week for payment of trade payable obligations, and payroll, and related tax obligations. For additional information about our outstanding debt, including our outstanding term loan,the Term Loan and the Revolving Credit Facility, please refer to “Note 11—Debt” to the consolidated financial statements included in this Form 10-K.

For the year ended December 31, 2021, net cash used in financing activities was $1.3 million primarily due to $1.1 million of cash used to pay down our Term Loan and $0.6 million cash used in connection with our stock-based awards for payments of statutory taxes, which was partially offset by cash provided by our borrowings under the Revolving Credit Facility exceeding our repayments from customer cash receipts by $0.3 million.

On January 9, 2023, the Company entered into a third amendment to the Term Loan which, among other things, capped the amount of quarterly interest payable in cash at 10% per annum, with the remainder being payable-in-kind, for each quarterly interest payment commencing January 1, 2023 through and including January 1, 2024, and deferred principal payments from the January 1, 2023 quarterly payment date until and including the January 1, 2024 quarterly payment date. The paid-in-kind interest will increase the principal amount of the Term Loan every month. In addition, the Company issued the Wynnefield Notes, which are two unsecured promissory notes in an aggregate amount equaling $0.8 million. On February 21, 2023, the Company received a $1.0 million advance pursuant to the existing terms of the Term Loan. Additionally, on February 24, 2023, the Company entered into a fourth amendment to the Term Loan, which among other things, provided for delayed draw term loans in an aggregate principal amount of $1.5 million, which were funded at the time the amendment was signed, and for discretionary delayed draw term loans in an aggregate principal amount of $3.5 million, which will be funded at the lenders’ discretion. If the Company is unable to obtain funding under the discretionary delayed draw term loans, its liquidity will be materially negatively impacted.

For additional information about our outstanding debt, please refer to “Note 11—Debt” and “Note 18—Subsequent Events” to the consolidated financial statements included in this Form 10-K.

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Effect of Exchange Rate Changes on Cash

For the yearyears ended December 31, 2019,2022 and 2021, the effect of Canadian foreign exchange rate changes on our cash balances was not material. For the year ended December 31, 2018, our cash flows were not impacted by fluctuations in foreign currency.

Dividends

We havedo not declared dividends since the first quarter of 2015 and do notcurrently anticipate declaring dividends in the near term.future. As of December 31, 2019,2022, the terms of the New Centre Lane FacilityTerm Loan and MidCapRevolving 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.

Amendments to Debt FacilitiesLiquidity Outlook

Amendment toThe accompanying financial statements have been prepared on a going concern basis, which contemplates the New Centre Lane Facility.  On January 13, 2020 (the “CL Closing Date”), we entered intorealization of assets and the Third Amendment to the New Centre Lane Facility (the “Centre Lane Amendment”), which, among other things, changed the leverage ratio requirement to a “net” leverage ratio, enabling the Company to net unrestricted cashsettlement of liabilities and cash equivalents in excess of $2.5 million against its Total Debt (as definedcommitments in the New Centre Lane Facility) when determining the total net leverage ratio; amended the calculationnormal course of Consolidated Adjusted EBITDA (as defined in the New Centre Lane Facility); revised the required levels of the total net leverage ratio and minimum Consolidated Adjusted EBITDA for certain future periods; decreased the minimum required liquidity to $1.5 million; increased the prepayment premium required when voluntarily prepaying amounts outstanding under the New Centre Lane Facility to 2% for the year following the CL Closing Date and 1% for the second year following the CL Closing Date; required the payment of a $175,000 amendment fee; and made certain other changes to the New Centre Lane Facility, in each case subject to the terms and conditions of the Centre Lane Amendment.

Amendment to the MidCap Facility.  On January 13, 2020 (the “MC Closing Date”),business. We anticipate we entered into the Third Amendment to the MidCap Facility (the “MidCap Amendment”), which, among other things, extended the maturity date of the revolving loan facility by one year to October 11, 2022 and increased the maximum available principal amount of revolving loans by $10.0 million to $25.0 million. The MidCap Amendment also changed the leverage ratio requirement to a “net” leverage ratio, enabling the Company to net unrestricted cash and cash equivalents in excess of $2.5 million against its Total

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Debt (as defined in the MidCap Facility) when determining the total net leverage ratio; amended the calculation of Consolidated Adjusted EBITDA (as defined in the MidCap Facility); revised the required levels of the total net leverage ratio and minimum Consolidated Adjusted EBITDA for certain future periods; required the payment of a $150,000 amendment fee; increased the monthly collateral management fee and a certain prepayment fee; and made certain other changes to the MidCap Facility, in each case subject to the terms and conditions of the MidCap Amendment.

In addition to the above modifications, both the Centre Lane Amendment and the MidCap Amendment required certain Canadian subsidiaries of the Company to become guarantors of the Company’s obligations under the respective credit agreement and to grant liens on substantially all of their assets to secure such guarantees, and the Company was required to complete the Rights Offering on or before March 13, 2020, which successfully occurred. We do not have any obligation to repay debt under the MidCap Facility with the proceeds of the Rights Offering and Centre Lane has agreed to exclude the proceeds of the Rights Offering from the applicable mandatory prepayment provisions of the New Centre Lane Facility. For additional information regarding the New Centre Lane Facility and the MidCap Facility, please refer to “Note 11—Debt” to the consolidated financial statements included in this Form 10-K.

Liquidity Outlook

Overall, we expect liquidity towill continue to improve through 2020 as a result of exiting our former loss-generating businesses and reducing our ongoing operating expenses. However, we may experience periodic short-term constraints on our liquidity as a result of the cash flow requirements of specific projects. A high percentageprojects through the fourth 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, we entered into two separate amendments to each of the Revolving Credit Facility and Term Loan in the third and fourth quarters of 2022, and an additional two separate amendments to such agreements during the first quarter of 2023. The first two amendments, among other things, revised certain terms contained in the Term Loan and the Revolving Credit Facility, respectively, and deferred principal payments on the Term Loan due on January 1, 2023 to January 9, 2023. The third and fourth amendments entered into during the first quarter of 2023, among other things, revised certain terms contained in the Term Loan and the Revolving Credit Facility and provided for delayed draw term loans under the Term Loan in an aggregate principal amount of $1.5 million, which were funded at the time the amendment was signed, and discretionary delayed draw term loans in an aggregate principal amount of $3.5 million, which will be funded at the lenders’ discretion. We also issued the Wynnefield Notes, in an aggregate principal amount of $400,000 and $350,000, respectively, during the first quarter of 2023. For additional information, please refer to “Note 2—Liquidity”, “Note 11—Debt” and “Note 18—Subsequent Events” to the consolidated financial statements included in this Form 10-K.

As future advances of delayed draw term loans are discretionary on the part of our costTerm Loan lenders, it is possible that the Term Loan lenders may require enhanced rights or additional fees or interest before funding future advances.  In certain circumstances, we may require the consent of service comesPNC before we can agree to such terms. Such a consent from PNC, and any proposed amendments to our intercreditor agreement that might be associated with such a consent, may involve the payment of further fees and expenses by the Company to PNC and any amendments to our intercreditor agreement may require negotiations between our Term Loan lenders, PNC and the Company.  A failure to procure any necessary consents or a failure to successfully negotiate such amendments to our intercreditor agreement could result in future delayed draw term loans not being available to the Company, which could have a material adverse effect on our liquidity position and result in certain of the negative outcomes described in this “Part II—Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in our Form 10-K and “Note 2—Liquidity”, “Note 11—Debt” and “Note 18—Subsequent Events” to our consolidated financial statements included in this Form 10-K. The Company anticipates that enhanced rights or additional fees or interest in relation to the funding of future advances of delayed draw term loans will be forthcoming and that consent fees and related amendments to the Company’s intercreditor agreement may be requested or required by our lenders and may be agreed to by the Company in order to secure necessary funding.  

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 statements 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 in 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 11—Debt” to the condensed consolidated financial statements included in this Form 10-K.

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. While continuing to operate its business in recent months, the Company is implementing various elements of its previously disclosed liquidity improvement plan, which include taking steps to address profitability of non-performing businesses,

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aggressively reducing operating expenses, shortening the collection cycle time on the Company’s accounts receivable, and lengthening the payment cycle time on its accounts payable. The Company has continued to experience material intra-week liquidity pressure as it has attempted to manage the short-term negative cash flows that result from, among other things, having to fund significant weekly craft labor payrolls and the lag between incurrence ofon large outage projects before those payrolls can be billed to the Company’s customers and collected. Although the subsequent collection ofCompany has utilized the resulting customer billings results in negative cash flows for that lag period. Although we utilize the MidCap FacilityRevolving Credit Agreement to address those lagsuch time period negative cash flows, contract terms restricting customer invoicing frequency, delays in customer payments, and underlying surety bonds have negatively impactimpacted the Company’s borrowing base and the availability of funds. Although these factors, among others, raise substantial doubt about our availability under the MidCap Facility. Additionally, we anticipate the remaining cash expenditures resulting from our 2018 restructuring plan will be relatedability to the pension liability recordedcontinue as a result of the Koontz-Wagner bankruptcy.The pension liability is expected to be satisfied by annual cash payments of $0.3 million each, paid in quarterly installments, over the next twenty years.

Wegoing concern, we believe that we have sufficient resources to satisfy our 2020 working capital requirements through the next 12 months and our long-term liquidity needs and foreseeable material cash requirements, as we amendedstrategically use our existing credit facilities with Centre Lane$30.0 million borrowing availability under our Revolving Credit Facility and MidCap on January 13, 2020, as described above. In addition, we successfully completed our Rights Offering, which expired March 2, 2020, pursuant to which we issued 5,384,615 shares of our common stock and received net proceeds of $6.6 million. Due to oversubscriptionsthe additional borrowings under the Rights Offering,Term Loan and the Wynnefield Capital, Inc., wasNotes obtained in the first quarter of 2023, and implement our liquidity plan.

A variety of factors can affect the Company’s short- and long-term liquidity, the impact of which could be material, including, but not limited to: the funding of certain of the Company’s previously disclosed loss-contracts; cash required for funding ongoing operations and projects; matters relating to backstop the Rights Offering. WeCompany’s contracts, including contracts billed based on milestones that may require the Company to incur significant expenditures prior to collections from its 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 deterioration of the Company’s customers; required payments of interest under the Term Loan Agreement and the Revolving Credit Agreement and on the Company’s operating and finance leases; pension obligations requiring annual contributions to multiemployer pension plans; insurance coverage for contracts that require the Company to indemnify third parties; and issuances of letters of credit.

The Company believes that the February 24, 2023 amendments to the Term Loan and the Revolving Credit Facility will, if the discretionary delayed draw term loans under the Term Loan are advanced, provide much needed support to the Company’s ongoing operations and may permit the Company to operate while it continues to engage in its process to explore strategic alternatives to maximize value for the Company and its shareholders or other stakeholders, but additional liquidity support may be necessary. The Company has not disclosed a timetable for the conclusion of its review of strategic alternatives, nor has it made any decisions related to any further actions or possible strategic alternatives at this time. The Company does not intend to usecomment on the net proceeds fromdetails of its review of strategic alternatives until it determines that further disclosure is appropriate or necessary.

If the Rights Offering, combined with the additional borrowing capacity provided by our amended MidCap Facility, for working capital and general corporate purposes to fund certain of our strategic growth initiatives. In the event that we areCompany is unable to address any potential liquidity shortfalls that may arise in the future, managementit will need to seek additional funding from third party sources, which may not be available on reasonable terms, if at all, and may result in management concluding that our liquidity position raises substantial doubt about our ability to continue as a going concern.

In addition, COVID-19 continues to spread globally and, as of March 2020, has spread to over 100 countries, including the United States. The full extent of the outbreak, related business and travel restrictions and changes to behavior intended to reduce its spread are uncertain and continue to evolve as of the date of this report. Therefore, the full extent to which coronavirus may impact the Company’s results of operationsinability to obtain this capital or execute an alternative solution to its liquidity is uncertain. Management continues to monitor the impact that the COVID-19 pandemic is having on the Company and our industry in general. The Company anticipates that its future results of operations, including the results for 2020, will be impacted by the coronavirus outbreak, but at this time does not currently expect that the impact from the coronavirus outbreak willneeds could have a material adverse effect on the Company’s liquidity or financial position. However, givenshareholders and creditors. Importantly, any such additional funding could only be obtained in compliance with the speed and frequency of continuously evolving developments with respect to this pandemic,restrictions contained in the agreements governing the Company’s existing indebtedness. If the Company cannot reasonably estimateis unable to comply with its covenants under its indebtedness, or otherwise is unable to meet its obligations under such indebtedness, or the magnitudelenders under the Term Loan do not exercise their discretion to fund the delayed draw term loans, the Company’s liquidity would be further adversely affected. In addition, such occurrences could result in an event of default under such indebtedness and the impactpotential 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 or obligations.

If the Company’s liquidity improvement plan and the first quarter 2023 amendments to the Term Loan and the Revolving Credit Facility do not have the intended effect of addressing the Company’s liquidity problems through its resultsreview of operations, and,strategic alternatives, including if the outbreak continues on its current trajectory, such impacts could grow and become materialCompany is unable to its liquidity or financial position. Toobtain future advances under the extent thatdiscretionary delayed draw term loans, the Company’s customers and suppliersCompany will continue to be materially and adversely impacted by the coronavirus outbreak, this could reduce the availability,consider all strategic alternatives, including restructuring or result in delays, of materialsrefinancing its debt, seeking additional debt or supplies toequity capital, reducing or from the Company, which in turn could materially interruptdelaying the Company’s business operations.activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including obtaining relief under the U.S. Bankruptcy Code.

Off‑BalanceThe Company’s continuation as a going concern is dependent upon its ability to successfully implement its liquidity improvement plan and obtain necessary debt or equity financing to address the Company’s liquidity challenges and continue operations until the Company returns to generating positive cash flow or is otherwise able to execute on a transaction pursuant to its review of strategic alternatives, including a potential sale of the Company.

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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

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for work performed in the ordinary course of contract execution. However, the total costs of a project could exceed our original cost 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 December 31, 2019,2022, we had a contingent liability for issued and outstanding standby letters of credit, generally issued to secure performance on customer contracts. As of December 31, 2019,2022, we had $1.8$0.5 million of 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 December 31, 2019,2022, we had outstanding payment and performance surety bonds on projects of $59.3$59.2 million.

Contractual Obligations

We are a smaller reporting company as defined by Rule 12b-2 Our subsidiaries also provide financial guarantees for certain contractual obligations in the ordinary course of the Exchange Act and are not required to provide this information.business.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements and related notes requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure of contingent assets and liabilities. We have based our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions and conditions.

An accounting policy is considered critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the consolidated financial statements. We believe that the following critical accounting policies reflect the significant estimates and assumptions used in the preparation of our consolidated financial statements. The following descriptions of critical accounting policies, judgments and estimates should be read in conjunction with our consolidated financial statements included in this Form 10-K.

Revenue Recognition.  We provide construction, maintenance, and support services to customers in energy, power, and industrial end markets. Our services, which are provided through long-term maintenance or discrete project agreements, are designed to improve or sustain our customers’ operating efficiencies and extend the useful lives of their process equipment. The contracts are awarded on a competitively bid and negotiated basis with the majority structured as cost-plus arrangements and the remainder as lump-sum.

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Our 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, we recognize 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, we allocate the transaction price of the contract to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. We do 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. We believe these methods of revenue recognition most accurately reflect the economics of the transactions with our customers.

Our contracts may include several types of variable consideration, including change orders, rate true-up provisions, retainage, claims, incentives, penalties, and liquidated damages. We estimate the amount of revenue to be recognized on variable consideration using estimation methods that best predict the amount of consideration to which we expect to be entitled. We include 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. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based on an assessment of our anticipated performance and all information (historical, current, and forecasted) that is reasonably available. We update our 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 we cannot reasonably determine the outcome of a contract, we recognize 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

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unrecoverable costs in excess of total estimated revenue on a contract as soon as we become aware. We generally provide a limited warranty for a term of two years or less following completion of services performed under our contracts. Historically, warranty claims have not resulted in material costs incurred.

During the fourth quarter of 2022, we recognized increases in estimated costs at completion and related gross profit margins related to several projects in Jacksonville, Florida. The Company increased its prior estimates related to the costs of executing the contracts to completion, which led to a decrease in the recognized revenues to date under the percentage of completion revenue recognition methodology. As a result of these changes, net income for the year ended December 31, 2022 decreased by $7.8 million and basic and diluted earnings per share for the year ended December 31, 2022 decreased by $0.30 per share.

Long-Lived Assets.  Long-lived assets, such as property, plant, and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If circumstances require a long-lived asset held for use to be tested for possible impairment, we first compare the undiscounted cash flows expected to be generated by the asset to the carrying value of the asset. If the carrying value of the asset exceeds expected future cash flows, the excess of the carrying value over the estimated fair value is charged to impairment expense in the consolidated statements of operations. Assets held for sale are reported at the lower of their carrying value, less estimated costs to sell. Fair value is determined through various valuation techniques, including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. We group long-lived assets by legal entity for purposes of recognition and measurement of an impairment loss, as this is the lowest level for which cash flows are independent.

Goodwill and Other Intangible Assets.  Goodwill and indefinite-lived intangible assets are tested for impairment annually as of October 1 and whenever events or circumstances indicate that the carrying value may not be recoverable. Our indefinite-lived intangible asset consists of the Williams trade name. Our testing of goodwill for potential impairment involves the comparison of each reporting unit’s carrying value to its estimated fair value, which is determined using a combination of income, market and marketcost approaches.

For purposes of the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. We use our internal forecasts to estimate future cash flows and include an estimate of long-term future growth rates based on our most recent views of the long-term outlook for our reporting unit. Under the market approach, the fair value is determined by utilizing comparative market multiples in the valuation estimates. The cost approach is based on the assumption that a prudent investor would pay no more for a security or asset than the amount at which it could be replaced or reproduced and is performed by estimating the replacement cost. The fair value of our Williams reporting unit exceeded book value aton December 31, 2019.2022.

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Similarly, the testing of our trade names for potential impairment involves the comparison of the carrying value for each trade name to its estimated fair value, which is determined using the relief from royalty method.

Impairment write-downs are charged to results of operations in the period in which the impairment is determined. We recorded no impairment write-downs in 2019.2022.

Income Taxes.  We account for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. We measure deferred tax assets and liabilities using enacted tax rates expected to be applied to taxable income in the years in which those differences are expected to be recovered or settled. We recognize income as a result of changes in tax rates on deferred tax assets and liabilities in the period that includes the enactment date.

Under Accounting Standards Codification (“ASC”) 740—Income Taxes, the Financial Accounting Standards Board (the “FASB”) requires companies to assess whether valuation allowances should be established against their deferred tax assets based on the consideration of all available positive and negative evidence and utilizing a “more likely than not” standard. In making such assessments, significant weight is given to evidence that can be objectively verified. A company’s current or previous operating history is given more weight than its future outlook, although we do consider future taxable income projections, ongoing tax planning strategies and the limitation on the use of carryforward losses in determining valuation allowance needs. We establish valuation allowances for our deferred tax assets if, based on the available evidence, it is more likely than not that some portion of or all of the deferred tax assets will not be realized.

During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. We recognize the tax benefit from uncertain tax positions only if it is more likely than not to be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. We believe that our benefits and accruals recognized are appropriate for all open audit years based on our assessment of many factors, including past experience and interpretation of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of these matters is determined to be different than the amounts recorded, those differences will impact income tax expense in the period in which the determination is made.

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Tax Cuts and Jobs Acts of 20172022

On December 22, 2017,August 16, 2022, the TaxInflation Reduction Act of 2022 was signed into law, making significant changes to the Internal Revenue Code. Such changes include, but are not limited to, a U.S. federal15% corporate minimum income tax rate decrease from 35% to 21% effective forand a 1% excise tax on corporate stock repurchases in tax years beginning after December 31, 2017, the transition of U.S. international taxation from2022. While these tax law changes have no immediate effect and are not expected to have a worldwide tax system to a territorial system, and a one-time transition taxmaterial adverse effect on the mandatory deemed repatriationCompany’s results of cumulative foreign earnings as of December 31, 2017.

Due to changes in interpretations and assumptions, and future guidance that may be issued and actions we may take in response tooperations going forward, the Tax Act, the ultimate impact of the Tax Act may change in future periods. The Tax Act is highly complex, and weCompany will continue to assessevaluate the Inflation Reduction Act’s impact of certain aspects of the Tax Act. For additionalas further information please refer to “Note 9—Income Taxes” to the consolidated financial statements included in this Form 10-K.becomes available.

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. We retain exposure to potential losses based on deductibles, coverage limits and retentions. For the year ended December 31, 20192022 and 2018,2021, insurance expense, including insurance premiums related to the excess claim coverage and claims incurred for continuing operations, was $2.8$6.4 million and $2.1$5.2 million, respectively.

The Company’s 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 December 31, 20192022 and 2018.2021. As of both December 31, 20192022 and 2018,2021, the Company provided $0.8$0.9 million and $1.1 million, respectively, in letters of credit and provided cash collateral of $0.2$1.5 million, and $0.3 million, respectively, as security for possible workers’ compensation claims.

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Recently IssuedAdopted Accounting Pronouncements

InThe Company did not implement any new accounting pronouncements during the year ended December 2019,31, 2022. However, the FASB 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 is currently evaluating the impact this ASU will have on its results of operations, financial position and cash flows.

In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other Internal-Use Software (Subtopic 350-40).” This update aligns the requirements for capitalizing costs incurred in a hosting arrangementfuture disclosures that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software, including hosting arrangements that are service contracts, over the term of the hosting arrangement. Further, this update requires the presentation of the expense in the statement of income, the presentation of the costs on the statement of financial position and the classification of payments in the statement of cash flows related to capitalized implementation costs to be treated the same as the fees of the associated hosting arrangement. The update is effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect that this ASU will have a material impact on its results of operations, financial position and cash flows.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820).” This amendment update modifies disclosure requirements related to fair value measurement and will be effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Implementation on a prospective or retrospective basis varies by specific disclosure requirement. Early adoption is permitted, and the standard allows for early adoption of any removed or modified disclosures upon issuance of the update, while delaying adoption of the additional disclosures until their effective date. The Company is currently evaluating this guidance to determine the impact it may have on its disclosures. The Company does not expect that this guidance will have a material impact on its disclosures.arise under recent SEC proposals.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

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Item 8.  Financial Statements and Supplementary Data.Data.

The financial statements and other information required by this Item are contained in the consolidated financial statements and related notes thereto contained elsewhere in this report.

Item 9.  Changes in and Disagreements Withwith Accountants on Accounting and Financial Disclosure.

None.

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Item 9A.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our PrincipalChief Executive Officer and PrincipalChief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based on the definition of “disclosure controls and procedures” in Rules 13a-15(e) or 15d-15(e) of the Exchange Act. In designing and evaluating disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. 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 December 31, 2022. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of that date, the Company’s disclosure controls and procedures were not effective due to the material weaknesses described below. However, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that, notwithstanding the identified material weakness in our internal control over financial reporting, the financial statements in this Form 10-K fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with GAAP.

Material Weakness in Internal Control Over Financial Reporting

We identified a material weakness in our internal control over financial reporting that existed as of December 31, 2022. 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 reviews of potential loss accruals 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 December 31, 2022.

Management’s Plan to Remediate the Material Weakness

Management has evaluated the material weakness described above and is in the process of updating its design and implementation of internal control over financial reporting to remediate the aforementioned 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 December 31, 2022. 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.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues within a company are detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2019,2022, utilizing the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in the Internal Control–Integrated Framework (2013). The COSO framework summarizes each of the components of a company’s internal control system, including (i) the control environment, (ii) risk assessment, (iii) control activities, (iv) information and communication and (v) monitoring. Based on this evaluation, our management concluded that we had effective internal controls over financial reporting as of December 31, 2019.

Remediation of Material Weaknesses in Internal Control over Financial Reporting Disclosed in our Annual Report for the Year Ended December 31, 2018

A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

We reported a number of material weaknesses in Item 9A of our Form 10-K for the year ended December 31, 2018 and, because of these material weaknesses, we concluded that we did not maintain effectiveCompany’s internal control over financial reporting as of December 31, 2018. We disclosed2022 was not effective due to the following material weaknesses in our control environment and monitoring listed in our Form 10-K for the year ended December 31, 2018:weakness that was identified by management:

·

We did not implement effective oversight of our finance and accounting processes (including organizational structure and reporting hierarchy), which impacted our ability to make appropriate accounting determinations.

41

·

We did not effectively design and implement appropriate oversight controls over our period-end financial closing and reporting processes, and our review controls were not sufficient to ensure that errors would be detected in both routine and non-routine financial information.

·

We did not maintain a sufficient complement of qualified personnel with the requisite level of technical expertise to effectively analyze, review and conclude upon technical accounting matters and, therefore, we were unable to successfully navigate such accounting matters and accurately report them in a timely manner.

·

We did not effectively monitor (review, evaluate assess) the risks associated with key internal control activities that provide the accounting information contained in our financial statements.

We had material weaknesses related to internal control monitoring and activities to support the financial reporting process:

·

We did not maintain effective controls over journal entries to ensure that journal entries were properly prepared with sufficient supporting documentation or were reviewed and approved in a manner that provided reasonable assurance over the accuracy and completeness of the journal entries.

·

We did not maintain effective controls over the monitoring and review of general ledger accounts, and as a result, account reconciliations and analysis were not performed at an appropriate level of detail and reconciling items were not resolved and adjusted on a timely basis.

·

We did not design and maintain effective user access controls to provide reasonable assurance overadequately restrict user access and the accuracyability to modify financial data within certain financial applications, including ensuring appropriate segregation of duties relating to the preparation and completeness relating to:

review of journal entries in these financial applications.

o

Tracking and completeness of work-in-process;

o

Matching cost of goods sold with related revenue;

o

Reviewing contract performance to estimate expected contract losses in a timely manner;

o

Properly reviewing, recognizing and recording the full scope of contracts and contract modifications with our customers;

o

Estimating accrued liabilities; and

o

Safeguarding of physical assets.

We had material weaknesses related to information technology general controls:

·

We did not maintain effectivehave controls over user access to key spreadsheets to prevent unauthorized modifications to formulas within key spreadsheet applicationsdesigned effectively for the secondary reviews for approval of potential loss accruals and to detect unauthorized changes or errors in key spreadsheet applications.

certain expenses.

·

We did not maintain effective controls over user roles within accounting systems to allow for proper segregation of duties.

·

We determined that review processes and activities that relied on electronic data generated from our systems were ineffectively designed and incorrectly operated because of material weakness in information technology general controls.

These material weaknesses impacted our accounting for revenue recognition, work-in-process costing, cost of goods sold recognition and accrued liabilities.

During 2019, we designedThe control deficiencies identified above did not result in a remediation plan to strengthen our financial reporting and accounting functions and have taken remediation steps to address these material weaknesses. We also continue to take meaningful steps to enhance our disclosure controls and procedures and our internal control over financial reporting by strengthening our financial reporting and accounting functions.

42

In order to remediate the material weaknesses in our control environment, we engaged an outside firm to assist with the design and implementation of a comprehensive risk-based internal controls plan, including detailed internal controls, updated procedures, forms, checklists, and process flows with roles and responsibilities defined. The firm also completed substantial testingmisstatement of the internal controlsCompany’s annual or interim consolidated financial statements. However, this control deficiency could have resulted in misstatements of interim or annual consolidated financial statements and has been retained to continue monitoring the effectiveness of the controls by performing periodic testing and walk-throughs. This firm will report deficiencies based on future monitoring directly to our Chief Compliance Officer and will evaluate remediation of any deficiencies within a defined period of time.

We restructured our finance and accounting department, upgraded key positions, and trained all employees on the new internal controls. We modified our reporting structure to more clearly define roles, responsibilities, and decisional authority, and to ensure appropriate segregation of duties.

Additional controls were added to ensure more complete and accurate reporting of revenue recognition. Procedures and processes were developed for both accounting and operations personnel relating to job and change order documentation, more rigorous and inclusive reporting process for job cost, estimates at completion, job status, and potential risksdisclosures that affect revenue recognition.

Our procedures relating to key accounting functions, including the documentation, review and approval of journal entries and account reconciliations and our financial statement close process, which includes monthly checklists with appropriate separation between preparer and approver,may have been completed along with training of all applicable employees. 

To enhance our information technology controls, we consolidated our data centers and implemented quarterly reviews of system permissions to restrict user access as appropriate and verify effective segregation of duties.

Finally, we have enhanced the level of communication and access to the internal controls and related policies, procedures, forms, checklists, and process flows for our accounting employees in an effort to remediate the material weakness in our monitoring efforts. These actions are subject to ongoing senior management review and Audit Committee oversight.

Changes in Internal Control over Financial Reporting

Except for the remediation measures described above, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the fourth quarter 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.material.

This Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this Form 10-K.

Changes in Internal Control over Financial Reporting

While we continue to implement design enhancements to our internal control procedures, we believe that, other than the changes described above regarding the ongoing remediation efforts, there were no changes to our internal control over financial reporting which were identified in connection with the evaluation required by Rules 13a-15(d) or 15d-15(d) under the Exchange Act during the fourth quarter of 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.  Other Information.Information.

None.

Item 9C.  Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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Part IIIIII

Item 10.  Directors, Executive Officers and Corporate Governance.

The information required by Item 10 with respect to our executive officers is included in Part I of this Form 10-K under the caption “Information about our Executive Officers”. The other information required by this Item is incorporated herein by reference to the information included under the captions “Proposal No. 1 – Election of Directors,” “Delinquent Section 16(a) Reports,” and “The Board, its Committees and its Compensation – Board Leadership Structure and Committee Composition – Audit Committee”Composition” in our Proxy Statement for the 20202023 Annual Meeting of Stockholders or to an amendment to this Annual Report on Form 10-K (“Form 10-K/A”), which we plan to file within 120 days after December 31, 2019,2022, the end of our fiscal year.

The Board of Directors has adopted a Code of Business Conduct and Ethics, which outlines the principles of legal and ethical business conduct under which we do business. The Code of Business Conduct and Ethics is applicable to all of our directors, officers, and employees. The Code of Business Conduct and Ethics is available under the heading “Governance — Governance Documents” of the Investor Relations section of our website at http://www.wisgrp.com. Upon written request to our Corporate Secretary sent to our principal executive offices, we will provide a copy of the Code of Business Conduct and Ethics free of charge. Any substantive amendment of the Code of Business Conduct and Ethics, and any waiver of the Code of Business Conduct and Ethics for executive officers or directors, will be made only after approval by the Board or a committee of the Board, and will be disclosed on our website. In addition, any such waiver will be disclosed within four days on a Form 8-K filed with the SEC if then required by applicable rules and regulations.

Item 11. Executive Compensation.

The information required by Item 11 is incorporated by reference to the information included under the captions “Executive Compensation”Compensation,” “The Board, its Committees and its Compensation – Director Compensation” and “2019“The Board, its Committees and its Compensation – 2022 Director Compensation” in our Proxy Statement for the 20202023 Annual Meeting of Stockholders.Stockholders or to the Form 10-K/A.

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by Item 12 is incorporated by reference to the information included under the captions “Executive Compensation – Equity Compensation Plan Information” and “Security Ownership of Certain Beneficial Owners and Management” in our Proxy Statement for the 20202023 Annual Meeting of Stockholders.Stockholders or to the Form 10-K/A.

Item 13.  Certain Relationships and Related Transactions, and Director Independence.

The information required by Item 13 is incorporated by reference to the information included under the captions “Certain Relationships and Related Transactions” and “The Board, its Committees and its Compensation – Director Independence” in our Proxy Statement for the 20202023 Annual Meeting of Stockholders.Stockholders or to the Form 10-K/A.

Item 14.  Principal Accountant Fees and Services.

The information required by Item 14 is incorporated by reference to the information included under the caption “Proposal No. 2 – Ratification of Independent Registered Public Accounting Firm” in our Proxy Statement for the 20202023 Annual Meeting of Stockholders.Stockholders or to the Form 10-K/A.

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Part IV

Item 15.  Exhibits and Financial Statement Schedules.

Documents filed as part of this Report:

Financial Statements: The following reportreports of our independent accountants and our consolidated financial statements are set forth in the index beginning on page F-1:

·

Report of Independent Registered Public Accounting Firm

(Moss Adams LLP, Dallas, Texas, PCAOB ID: 659)

·

Consolidated Balance Sheets as of December 31, 20192022 and 2018

2021

·

Consolidated Statements of Operations for the years ended December 31, 20192022 and 2018

2021

·

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 20192022 and 2018

2021

·

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 20192022 and 2018

2021

·

Consolidated Statements of Cash Flows for the years ended December 31, 20192022 and 2018

2021

·

Notes to the Consolidated Financial Statements

All other schedules are omitted because they are not applicable, or the required information is shown in the consolidated financial statements or the notes thereto.

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List of Exhibits

We agree to furnish to the SEC, upon request, copies of any long-term debt instruments that authorize an amount of securities constituting 10% or less of the total assets of Williams on a consolidated basis.

45

Exhibit

Description

3.1

Second Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to our Form 10 (Commission File No. 001‑16501)001-16501) filed with the Commission on April 30, 2010 and incorporated herein by reference).

3.2

Certificate of Amendment, dated June 30, 2010, to the Second Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.2 to our Amendment No. 2 to Form 10 filed with the Commission on July 20, 2010 and incorporated herein by reference).

3.3

Second Certificate of Amendment, dated June 27, 2018, to the Second Amended and Restated Certificate of Incorporation of the Company (filed as Exhibit 3.1 to our Form 8-K filed with the Commission on June 29, 2018 and incorporated herein by reference).

3.4

Fourth Amended and Restated By-Laws of the Company (filed as Exhibit 3.2 to our Form 8-K filed with the Commission on June 29, 2018 and incorporated herein by reference).

4.1

Form of Common Stock Certificate (filed as Exhibit 4.1 to our Form 8-K filed with the Commission on June 29, 2018 and incorporated herein by reference).

4.2

Description of the Company’s Common Stock.Registered Securities (filed as Exhibit 4.2 to our Form 10-K filed with the Commission on March 31, 2021 and incorporated herein by reference).

10.1

Amended and Restated Incentive Compensation Plan (filed as Exhibit 10.1 to our Form 10‑Q filed with the Commission on May 16, 2011 and incorporated herein by reference).*

10.2

2011 Equity Incentive Plan (filed as Exhibit 10.1 to our Form 8‑K filed with the Commission on May 24, 2011 and incorporated herein by reference).*

10.3

Election and Nomination Agreement, dated as of June 1, 2016 and effective May 25, 2016, by and among (i) Wynnefield Partners Small Cap Value, L.P., Wynnefield Partners Small Cap Value, L.P. I, Wynnefield Small Cap Value Offshore Fund, Ltd., Wynnefield Capital, Inc. Profit Sharing & Money Purchase Plan, Wynnefield Capital Management, LLC, and Wynnefield Capital, Inc. and (ii) the Company (filed as Exhibit 10.1 to our Form 8‑K8-K filed with the Commission on June 1, 2016 and incorporated herein by reference).

10.410.2

Short‑TermShort-Term Incentive Plan (filed as Exhibit 10.1 to our Form 8‑K8-K filed with the Commission on February 26, 2013 and incorporated herein by reference).*

10.510.3

Form of Nonqualified Stock Option Agreement, dated as of March 23, 2015, by and between Terence Cryan and the Company (filed as Exhibit 10.3 to our Form 8‑K filed with the Commission on March 23, 2015 and incorporated herein by reference).*

10.6

2015 Equity Incentive Plan (as amended and restated as of June 10, 2019)March 15, 2022) (filed as Exhibit 10.1 to our Form 8-K filed with the Commission on June 11, 2019May 17, 2022 and incorporated herein by reference).*

10.710.4

Employment Agreement, dated as of June 26, 2015, by and between Terence J. Cryan and the Company (filed as Exhibit 10.2 to our Form 8‑K filed with the Commission on July 2, 2015 and incorporated herein by reference).*

10.8

Executive Severance Plan, as Amended and Restated on August 19, 2015 (filed as Exhibit 10.2 to our Form 8‑8 K filed with the Commission on September 25, 2015 and incorporated herein by reference).*

10.910.5

Stock Purchase Agreement, dated January 13, 2017, by and between the Company, as Seller, and Chart Lifecycle, Inc., as Buyer, relating to the sale of Hetsco Holdings, Inc., which is the sole stockholder of Hetsco, Inc. (filed as Exhibit 10.63 to our Form 10-K filed with the Commission on March 15, 2017 and incorporated herein by reference).

10.10

Securities Purchase Agreement, dated October 11, 2017, by and between the Company, Braden Holdings, LLC and GPEG C.V., as Sellers, and Innova Global Europe B.V., Innova Global Inc., Innova Global Operating Ltd. and 1938247 Alberta Ltd., as Buyers (filed as Exhibit 10.2 to our Form 10-Q for the quarter ended March 31, 2017, filed with the Commission on December 19, 2017 and incorporated herein by reference).

10.11

Form of Time‑Based Restricted Share Unit Agreement (filed as Exhibit 10.65 to our Form 10-K filed with the Commission on March 15, 2017 and incorporated herein by reference).*

10.12

Form of Performance‑Based Restricted Share Unit Agreement. (filed as Exhibit 10.66 to our Form 10-K filed with the Commission on March 15, 2017 and incorporated herein by reference).*

10.13

Form of Time-Based Restricted Share Unit Agreement (dated April 17, 2017) (filed as Exhibit 10.1 to our Form 10-Q for the quarter ended June 30, 2017, filed with the Commission on December 19, 2017 and incorporated herein by reference).*

10.14

Form of Performance-Based Restricted Share Unit Agreement (dated April 17, 2017) (filed as Exhibit 10.2 to our Form 10-Q for the quarter ended June 30, 2017, filed with the Commission on December 19, 2017 and incorporated herein by reference).*

10.15

Form of Cash-Based Award Agreement (dated April 17, 2017) (filed as Exhibit 10.3 to our Form 10-Q for the quarter ended June 30, 2017, filed with the Commission on December 19, 2017 and incorporated herein by reference).*

46

10.16

Senior Secured Credit Agreement, dated as of September 18, 2018, by and among the Company, as Borrower, the lenders from time to time party thereto and Centre Lane Partners Master Credit Fund II, L.P., as Administrative Agent and Collateral Agent (filed as Exhibit 10.3 to our Form 10-Q filed with the Commission on November 14, 2018 and incorporated herein by reference).

10.17

First Amendment to Senior Secured Credit Agreement, dated as of October 9, 2019, by and among the Company, as Borrower, the lenders from time to time party thereto and Centre Lane Partners Master Credit Fund II, L.P., as Administrative Agent and Collateral Agent.♦

10.18

Second Amendment to Senior Secured Credit Agreement, dated as of November 13, 2019, by and among the Company, as Borrower, the lenders from time to time party thereto and Centre Lane Partners Master Credit Fund II, L.P., as Administrative Agent and Collateral Agent.♦

10.19

Third Amendment to Senior Secured Credit Agreement, dated as of January 13, 2020, by and among the Company, as Borrower, the lenders from time to time party thereto and Centre Lane Partners Master Credit Fund II, L.P., as Administrative Agent and Collateral Agent.♦

10.20

Credit and Security Agreement, dated as of October 11, 2018, by and among the Company and the other borrowers from time to time party thereto, as Borrowers, MidCap Financial Trust, as Agent and as a Lender, and the additional lenders from time to time party thereto (filed as Exhibit 10.4 to our Form 10-Q filed with the Commission on November 14, 2018 and incorporated herein by reference).

10.21

Amendment No. 1 to Credit and Security Agreement, dated as of October 16, 2019, by and among the Company and the other borrowers from time to time party thereto, as Borrowers, MidCap Funding IV Trust, as Agent and as a Lender, and the additional lenders from time to time party thereto.♦

10.22

Amendment No. 2 to Credit and Security Agreement, dated as of November 14, 2019 and effective as of November 13, 2019, by and among the Company and the other borrowers from time to time party thereto, as Borrowers, MidCap Funding IV Trust, as Agent and as a Lender, and the additional lenders from time to time party thereto.♦

10.23

Amendment No. 3 to Credit and Security Agreement, dated as of January 13, 2020, by and among the Company and the other borrowers from time to time party thereto, as Borrowers, MidCap Funding IV Trust, as Agent and as a Lender, and the additional lenders from time to time party thereto.♦

10.24

Separation Agreement, dated as of July 26, 2017, by and between Terence J. Cryan and the Company (filed as Exhibit 10.1 to our Form 8-K filed with the Commission on July 27, 2017 and incorporated herein by reference).*

10.25

Employment Agreement, dated June 20, 2018, by and between the Company and Tracy D. Pagliara (filed as Exhibit 10.1 to our Form 8-K filed with the Commission on June 26, 2018 and incorporated herein by reference).*

10.2610.6

Employment Agreement, dated July 31, 2018, by and between the Company and Timothy M. Howsman (filed as Exhibit 10.6 to our Form 10-Q filed with the Commission on August 14, 2018 and incorporated herein by reference).*

10.27

Separation Agreement, dated June 24, 2019, between the Company and Timothy M. Howsman (filed as Exhibit 10.4 to our Form 10-Q filed with the Commission on August 14, 2019 and incorporated herein by reference).*

10.28

Employment Agreement, dated August 12, 2019, between the Company and Charles E. Wheelock (filed as Exhibit 10.5 to our Form 10-Q filed with the Commission on August 14, 2019 and incorporated herein by reference).*

10.2910.7

Form of Restricted Shares Award Agreement (dated January 22, 2019) (filed as Exhibit 10.42 to our Form 10-K filed with the Commission on April 1, 2019 and incorporated herein by reference).*

10.3010.8

Form of Time-Based Restricted Share Unit Agreement (2019) (filed as Exhibit 10.2 to our Form 10-Q filed with the Commission on August 14, 2019 and incorporated herein by reference).*

10.31

Form of Cash-Based Performance Award Agreement (2019) (filed as Exhibit 10.3 to our Form 10-Q filed with the Commission on August 14, 2019 and incorporated herein by reference).*

10.32

Employment Agreement, dated September 30, 2019, between the Company and Randall R. Lay.Lay (filed as Exhibit 10.2 to our Form 10-Q filed with the Commission on November 14, 2019 and incorporated herein by reference).*

10.3310.9

Form of Time-Based Restricted Share UnitAward Agreement (Inducement Grant)(March 31, 2020) (filed as Exhibit 10.4 to our Form 10-Q filed with the Commission on May 13, 2020 and incorporated herein by reference).*

10.10

Form of Performance-Based Award Agreement (March 31, 2020) (filed as Exhibit 10.20 to our Form 10-K filed with the Commission on March 31, 2021 and incorporated herein by reference).*

10.11

Term Loan, Guarantee and Security Agreement, dated December 16, 2020, among Williams Industrial Services Group Inc., as borrower, EICF Agent LLC, as agent, and the other credit parties party thereto (filed as Exhibit 10.24 to our Form 10-K filed with the Commission on March 31, 2021 and incorporated herein by reference).**

10.12

First Amendment to Term Loan, Guarantee and Security Agreement, dated Septemberas of June 30, 2019, between2022, 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 Companylenders party thereto (filed as Exhibit 10.2 to our Form 10-Q filed with the Commission on August 11, 2022 and Randall R. Layincorporated herein by reference).

49

10.13

Second Amendment to Term Loan, Guarantee and Security Agreement, dated as of December 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., WISG Electrical Ltd. and WISG Electrical, LLC, as guarantors, and EICF Agent LLC, as agent, and the lenders party thereto.♦**

10.14

Third Amendment to Term Loan, Guarantee and Security Agreement, dated as of January 9, 2023, 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., WISG Electrical Ltd. and WISG Electrical, LLC, as guarantors, and EICF Agent LLC, as agent, and the lenders party thereto.♦**

10.15

Fourth Amendment to Term Loan, Guarantee and Security Agreement, dated as of February 24, 2023, 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., WISG Electrical Ltd. and WISG Electrical, LLC, as guarantors, and EICF Agent LLC, as agent, and the lenders party thereto.♦**

10.16

Revolving Credit and Security Agreement, dated December 16, 2020, 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 10.25 to our Form 10-K filed with the Commission on March 31, 2021 and incorporated herein by reference).**

10.17

First Amendment to Revolving Credit and Security Agreement, dated 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 PNC Bank, National Association, as agent, and the lenders party thereto (filed as Exhibit 10.3 to our Form 10-Q filed with the Commission on August 11, 2022 and incorporated herein by reference).**

10.18

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 (filed as Exhibit 10.3 to our Form 10-Q filed with the Commission on November 14, 20192022 and incorporated herein by reference).**

10.3410.19

Performance-Based Restricted ShareThird Amendment to Revolving Credit and Security Agreement, dated as of January 9, 2023, 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.♦**

10.20

Consent and Fourth Amendment to Revolving Credit and Security Agreement, dated as of February 24, 2023, 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.♦**

10.21

Form of Time-Based Unit Agreement (Inducement Grant),(March 31, 2021) (filed as Exhibit 10.1 to our Form 10-Q filed with the Commission on May 19, 2021 and incorporated herein by reference).*

10.22

Form of Performance-Based Award Agreement (March 31, 2021) (filed as Exhibit 10.2 to our Form 10-Q filed with the Commission on May 19, 2021 and incorporated herein by reference).*

50

47

10.37

Form of Registration Rights Agreement between the Company and Wynnefield Capital, Inc. (filed as Exhibit A to Backstop Agreement, dated November 14, 2019) (filed as Exhibit 10.51 to our Registration Statement on Form S-1 (File No. 333-234702), filed with the Commission on November 14, 2019 and incorporated herein by reference).

10.38

Form of Restricted Shares Award Agreement (dated(Non-Employee Directors) (2022) (filed as Exhibit 10.23 to our Form 10-K filed with the Commission on March 13, 2019)16, 2022 and incorporated herein by reference).*

10.25

Form of Time-Based Restricted Share Unit Agreement (2022) (filed as Exhibit 10.2 to our Form 10-Q filed with the Commission on May 12, 2022 and incorporated herein by reference).*

10.26

Form of Performance-Based Restricted Share Unit Agreement (2022) (filed as Exhibit 10.3 to our Form 10-Q filed with the Commission on May 12, 2022 and incorporated herein by reference).*

10.27

Unsecured Promissory Note, dated January 9, 2023, by and among Williams Industrial Services Group Inc. and Wynnefield Partners Small Cap Value, LP.

10.28

Unsecured Promissory Note, dated January 9, 2023, by and among Williams Industrial Services Group Inc. and Wynnefield Partners Small Cap Value, LP I.♦

21.1

Subsidiaries of the Company.

23.1

Consent of Independent Registered Public Accounting Firm (Moss Adams LLP).♦

24.1

Powers of Attorney for our directors and certain executive officers (included on signature page).♦

31.1

Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes‑OxleySarbanes-Oxley Act of 2002.♦

31.2

Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes‑OxleySarbanes-Oxley Act of 2002.♦

32.1

Certification by the Chief Executive Officer Pursuant to Section 906 of the Sarbanes‑OxleySarbanes-Oxley Act of 2002 (furnished herewith).

32.2

Certification by the Chief Financial Officer Pursuant to Section 906 of the Sarbanes‑OxleySarbanes-Oxley Act of 2002 (furnished herewith).

101.INS101

XBRL Instance Document♦The following financial statements from the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Stockholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.♦

101.SCH104

Cover Page Interactive Data File (formatted as Inline XBRL Taxonomy Extension Schema Document♦

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document♦

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document♦

101.LAB

XBRL Taxonomy Extension Labels Linkbase Document♦

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document♦and contained in Exhibit 101).♦


*Indicates a management contract or compensatory plan or arrangement.

**

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 exhibit will be furnished supplementally to the SEC upon request.

Filed herewith.

Item 16. Form 10-K Summary.

None.

4851

SIGNATURES

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

Dated: March 27, 202031, 2023

WILLIAMS INDUSTRIAL SERVICES GROUP INC.

By:

/s/ Tracy D. Pagliara

Tracy D. Pagliara,

President and Chief Executive Officer

POWER OF ATTORNEY

Each individual whose signature appears below constitutes and appoints Tracy D. Pagliara, President and Chief Executive Officer, and Charles E. Wheelock, Senior Vice President, Chief Administrative Officer, General Counsel and Secretary, and each of them singly, his or her true and lawful attorneys‑in‑factattorneys-in-fact and agents with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10‑K filed10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys‑in‑factattorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorneys‑in‑factattorneys-in-fact and agents or any of them or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

r

NAME

TITLE

DATE

NAME

TITLE

DATE

/s/ Tracy D. Pagliara

Chief Executive Officer, President and Director (Principal Executive Officer)

March 27, 202031, 2023

Tracy D. Pagliara

/s/ Randall R.  layDamien A. Vassall

Vice President, Chief Financial Officer (Principal Financial and Accounting Officer)

March 27, 202031, 2023

Randall R. LayDamien A. Vassall

/s/ Charles MacalusoRobert B. Mills

Director and Chairman of the Board

March 27, 2020

Charles Macaluso

/s/ Robert B. Mills

Director

March 27, 202031, 2023

Robert B. Mills

/s/ Steven D. DavisDAVID A. B. BROWN

Director

March 27, 2020

Steven D. Davis

/s/ David A. B. Brown

Director

March 27, 202031, 2023

David A. B. Brown

/s/ Nelson ObusSTEVEN D. DAVIS

Director

March 27, 202031, 2023

Steven D. Davis

/s/ LINDAA. GOODSPEED

Director

March 31, 2023

Linda A. Goodspeed

/s/ NELSON OBUS

Director

March 31, 2023

Nelson Obus

/s/ Mitchell I. Quain

Director

March 31, 2023

Mitchell I. Quain

4952

F-1

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors and Stockholders

Williams Industrial Services Group Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Williams Industrial Services Group, Inc. and subsidiaries (the Company) as of December 31, 20192022 and 2018,2021, the related consolidated statements of operations, comprehensive income, (loss), stockholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 20192022 and 2018,2021, and the consolidated results of theirits operations and theirits cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Change in Accounting PrincipleGoing Concern Uncertainty

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 42 to the consolidated financial statements, the Company changedhas liquidity constraints that raise substantial doubt about its methodability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of accounting for leases due to the adoption of Accounting Standards Codification Topic No. 842.this uncertainty.

Basis for OpinionOpinions

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

F-2

Revenue Recognition Under Percentage of Completion Accounting

As described in Note 3 and 10, the Company has fixed-price contracts which 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. The Company recognizes revenues for fixed-price contracts over the contract term (over time) as construction work progresses. The accounting for these contracts involves judgement as it relates to determining total estimated revenue (transaction price) and estimating total costs to be incurred at contract completion. Costs of operations are typically recognized as incurred, and the Company’s revenues, including estimated profits, are recorded proportionately as costs are incurred based on the ratio of costs incurred to date to the total estimated costs at completion for the respective performance obligations. Assumptions as to the occurrence of future events and the likelihood and amount of variable consideration, including the impact of change orders, rate true-up provisions, retainage, penalties, and liquidated damages are made during the contract performance period (collectively referred to as variable consideration). The Company estimates variable consideration at the most likely amount it expects to receive and includes estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.

Given the significant judgement necessary to account for the Company’s fixed-price contracts including total costs to be incurred at contract completion and variable consideration, which are complex and subject to many variables, auditing the corresponding balances and related accounting estimates required extensive audit effort due to the complexity of these estimates, and a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures.

The primary procedures we performed to address this critical audit matter included:

Testing a selection of fixed-price contracts focusing on risk-based characteristics. We evaluated the assumptions and judgments underlying the accounting for these significant contracts as follows:Compared management’s estimated costs to complete to historical contract performance relative to overall contractual commitments and estimated gross margin at December 31, 2022.
oCompared management’s estimated costs to complete to historical contract performance relative to overall contractual commitments and estimated gross margin at December 31, 2022.
oCompared a sample of material and labor costs to underlying third party invoices and payroll records.
oPerformed an analysis at the contract level comparing actual gross profit to prior year estimated gross profit for the same contract to evaluate management’s ability to estimate costs and variable consideration.
oConfirmed contract terms and applicable balances with direct correspondence with the Company’s customers and performed alternative procedures for confirmations not replied to which included the review of contracts, purchase orders and cash receipts.

Valuation of Goodwill and Indefinite Lived Intangibles

As described in note 3 and 7, goodwill and indefinite lived intangibles are tested for impairment annually the Company at the reporting unit level unless an interim test is required due to the presence of indicators that goodwill and indefinite lived intangibles may be impaired. Significant judgment is required by management in determining if impairment is present and at what amount. The impairment test requires management to make significant assumptions to estimate the fair value of each reporting unit. Fair value is estimated by management based on a combination of income and market approaches.

F-3

Given these factors, auditing management’s quantitative impairment tests for goodwill and indefinite lived intangible assets required a high degree of auditor judgment and increased extent of effort, including the need to involve our valuation specialists.

The primary procedures we performed to address this critical audit matter included:

Evaluated management's ability to accurately forecast future cash flows by comparing actual results to management's historical forecasts;
Evaluated management’s projected revenues and cash flows by comparing the projections to the underlying business strategies and growth plans and performed a sensitivity analysis related to the key inputs to projected cash flows, including revenue growth rates, to evaluate the changes in the fair value of the reporting unit that would result from changes in assumptions; and
Involving our valuation specialists to assist in evaluating (i) the appropriateness of the Company’s discounted cash flow method (ii) the reasonableness of management’s significant assumption related to the discount rates and (iii) reasonableness by management in determining the comparability of comparable public company multiples and precedent transactions.

/s/ Moss Adams LLP

Dallas, Texas

March 27, 202031, 2023

We have served as the Company’s auditor since 2017.

F-2F-4

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETSSHEETS

 

 

 

 

 

 

 

 

 

December 31,

(in thousands, except share data)

 

2019

  

2018

ASSETS

  

 

 

  

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,350

 

$

4,475

Restricted cash

 

 

468

 

 

467

Accounts receivable, net of allowance of $377 and $140, respectively

 

 

38,218

 

 

22,724

Contract assets

 

 

7,225

 

 

8,218

Other current assets

 

 

2,483

 

 

1,735

Total current assets

 

 

55,744

 

 

37,619

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

273

 

 

335

Goodwill

 

 

35,400

 

 

35,400

Intangible assets

 

 

12,500

 

 

12,500

Other long-term assets

 

 

8,549

 

 

1,650

Total assets

 

$

112,466

 

$

87,504

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

16,618

 

$

2,953

Accrued compensation and benefits

 

 

9,318

 

 

10,859

Contract liabilities

 

 

2,699

 

 

3,278

Short-term borrowings

 

 

10,849

 

 

3,274

Current portion of long-term debt

 

 

700

 

 

525

Other current liabilities

 

 

6,408

 

 

5,518

Current liabilities of discontinued operations

 

 

340

 

 

640

Total current liabilities

 

 

46,932

 

 

27,047

Long-term debt, net

 

 

32,658

 

 

32,978

Deferred tax liabilities

 

 

2,198

 

 

2,682

Other long-term liabilities

 

 

4,028

 

 

1,396

Long-term liabilities of discontinued operations

 

 

4,486

 

 

5,188

Total liabilities

 

 

90,302

 

 

69,291

Commitments and contingencies (Note 11 and 15)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.01 par value, 170,000,000 shares authorized and 19,794,270 and 19,767,605 shares issued, respectively, and 19,057,195 and 18,660,218 shares outstanding, respectively

 

 

198

 

 

197

Paid-in capital

 

 

81,964

 

 

80,424

Accumulated other comprehensive income (loss)

 

 

222

 

 

 —

Accumulated deficit

 

 

(60,211)

 

 

(62,397)

Treasury stock, at par (737,075 and 1,107,387 common shares, respectively)

 

 

(9)

 

 

(11)

Total stockholders’ equity

 

 

22,164

 

 

18,213

Total liabilities and stockholders’ equity

 

$

112,466

 

$

87,504

December 31,

(in thousands, except share data)

2022

  

2021

ASSETS

  

  

Current assets:

Cash and cash equivalents

$

495

$

2,482

Restricted cash

 

468

 

468

Accounts receivable, net of allowance of $273 and $427, respectively

 

31,033

 

35,204

Contract assets

 

12,812

 

12,683

Other current assets

 

6,258

 

11,049

Total current assets

 

51,066

 

61,886

Property, plant and equipment, net

 

1,257

 

653

Goodwill

 

35,400

 

35,400

Intangible assets

 

12,500

 

12,500

Other long-term assets

 

8,275

 

5,712

Total assets

$

108,498

$

116,151

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

12,041

$

12,168

Accrued compensation and benefits

 

8,566

 

12,388

Contract liabilities

 

6,242

 

3,412

Short-term borrowings

17,399

676

Current portion of long-term debt

1,050

Other current liabilities

 

5,710

 

11,017

Current liabilities of discontinued operations

110

316

Total current liabilities

 

50,068

 

41,027

Long-term debt, net

 

23,360

 

30,328

Deferred tax liabilities

2,268

2,442

Other long-term liabilities

 

4,925

 

1,647

Long-term liabilities of discontinued operations

3,479

4,250

Total liabilities

 

84,100

 

79,694

Commitments and contingencies (Note 11, 14, and 15)

Stockholders’ equity:

Common stock, $0.01 par value, 170,000,000 shares authorized and 26,865,064 and 26,408,789 shares issued, respectively, and 26,543,391 and 25,939,621 shares outstanding, respectively

 

264

 

261

Paid-in capital

 

94,151

 

92,227

Accumulated other comprehensive loss

 

(404)

 

(95)

Accumulated deficit

 

(69,608)

 

(55,930)

Treasury stock, at par (321,673 and 469,168 common shares, respectively)

 

(5)

 

(6)

Total stockholders’ equity

 

24,398

 

36,457

Total liabilities and stockholders’ equity

$

108,498

$

116,151

The accompanying notes are an integral part of these consolidated financial statements.

F-3F-5

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONSOPERATIONS

 

 

 

 

 

 

 

 

 

Year Ended December 31,

(in thousands, except share and per share data)

  

2019

  

2018

Revenue

 

$

245,787

 

$

188,918

Cost of revenue

 

 

214,887

 

 

160,177

 

 

 

 

 

 

 

 Gross profit

 

 

30,900

 

 

28,741

 

 

 

 

 

 

 

Selling and marketing expenses

 

 

587

 

 

1,649

General and administrative expenses

 

 

24,583

 

 

30,510

Restructuring charges

 

 

 —

 

 

5,689

Depreciation and amortization expense

 

 

301

 

 

857

Total operating expenses

 

 

25,471

 

 

38,705

 

 

 

 

 

 

 

Operating income (loss)

 

 

5,429

 

 

(9,964)

 

 

 

 

 

 

 

Interest expense, net

 

 

6,032

 

 

8,990

Other (income) expense, net

 

 

(1,958)

 

 

(764)

Total other (income) expense, net

 

 

4,074

 

 

8,226

 

 

 

 

 

 

 

Income (loss) from continuing operations before income tax expense

 

 

1,355

 

 

(18,190)

Income tax expense (benefit)

 

 

333

 

 

(4,400)

Income (loss) from continuing operations

 

 

1,022

 

 

(13,790)

 

 

 

 

 

 

 

Income (loss) from discontinued operations before income tax expense (benefit)

 

 

(234)

 

 

(15,002)

Income tax expense (benefit)

 

 

(1,398)

 

 

(3,357)

Income (loss) from discontinued operations

 

 

1,164

 

 

(11,645)

 

 

 

 

 

 

 

Net income (loss)

 

$

2,186

 

$

(25,435)

 

 

 

 

 

 

 

Basic earnings (loss) per common share  

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.05

 

$

(0.76)

Income (loss) from discontinued operations

 

 

0.07

 

 

(0.64)

Basic earnings (loss) per common share  

 

$

0.12

 

$

(1.40)

 

 

 

 

 

 

 

Diluted earnings (loss) per common share

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

0.05

 

$

(0.76)

Income (loss) from discontinued operations

 

 

0.07

 

 

(0.64)

Diluted earnings (loss) per common share

 

$

0.12

 

$

(1.40)

Year Ended December 31,

(in thousands, except per share data)

  

2022

  

2021

Revenue

$

238,119

$

304,946

Cost of revenue

231,071

273,520

 Gross profit

7,048

31,426

Selling and marketing expenses

1,365

950

General and administrative expenses

25,640

23,409

Depreciation and amortization expense

230

190

Total operating expenses

27,235

24,549

Operating income (loss)

(20,187)

6,877

Interest expense, net

5,509

5,001

Other income, net

(11,474)

(1,619)

Total other (income) expense, net

(5,965)

3,382

Income (loss) from continuing operations before income tax expense

(14,222)

3,495

Income tax expense (benefit)

(49)

793

Income (loss) from continuing operations

(14,173)

2,702

Income (loss) from discontinued operations before income tax expense

(140)

172

Income tax expense (benefit)

(635)

131

Income from discontinued operations

495

41

Net income (loss)

$

(13,678)

$

2,743

Basic earnings (loss) per common share

Income (loss) from continuing operations

$

(0.54)

$

0.11

Income from discontinued operations

0.01

Basic earnings (loss) per common share

$

(0.53)

$

0.11

Diluted earnings (loss) per common share

Income (loss) from continuing operations

$

(0.54)

$

0.10

Income from discontinued operations

0.01

Diluted earnings (loss) per common share

$

(0.53)

$

0.10

The accompanying notes are an integral part of these consolidated financial statements.

F-4F-6

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 

 

 

 

 

 

 

 

 

Year Ended December 31,

(in thousands)

 

2019

  

2018

Net income (loss)

 

$

2,186

 

$

(25,435)

Foreign currency translation adjustment

 

 

222

 

 

 —

Comprehensive income (loss)

 

$

2,408

 

$

(25,435)

Year Ended December 31,

(in thousands)

2022

  

2021

Net income (loss)

$

(13,678)

$

2,743

Foreign currency translation adjustment

 

(309)

 

(123)

Comprehensive income

$

(13,987)

$

2,620

The accompanying notes are an integral part of these consolidated financial statements.

F-5F-7

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITYEQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2017

 

19,360,026

 

$

193

 

$

78,910

 

$

 —

 

$

(36,962)

 

(1,413,640)

 

$

(14)

 

$

42,127

Issuance of restricted stock units

 

407,579

 

 

 4

 

 

 —

 

 

 —

 

 

 —

 

505,049

 

 

 5

 

 

 9

Tax withholding on restricted stock units

 

 —

 

 

 —

 

 

(504)

 

 

 —

 

 

 —

 

(198,796)

 

 

(2)

 

 

(506)

Share-based compensation

 

 —

 

 

 —

 

 

2,018

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

2,018

Net income (loss)

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(25,435)

 

 —

 

 

 —

 

 

(25,435)

Balance, December 31, 2018

 

19,767,605

 

$

197

 

$

80,424

 

$

 

 

$

(62,397)

 

(1,107,387)

 

$

(11)

 

$

18,213

Issuance of restricted stock units

 

26,665

 

 

 1

 

 

 —

 

 

 —

 

 

 —

 

437,319

 

 

 4

 

 

 5

Tax withholding on restricted stock units

 

 —

 

 

 —

 

 

(157)

 

 

 —

 

 

 —

 

(67,007)

 

 

(2)

 

 

(159)

Share-based compensation

 

 —

 

 

 —

 

 

1,697

 

 

 —

 

 

 —

 

 —

 

 

 —

 

 

1,697

Foreign currency translation

 

 —

 

 

 —

 

 

 —

 

 

222

 

 

 —

 

 —

 

 

 —

 

 

222

Net income (loss)

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

2,186

 

 —

 

 

 —

 

 

2,186

Balance, December 31, 2019

 

19,794,270

 

$

198

 

$

81,964

 

$

222

 

$

(60,211)

 

(737,075)

 

$

(9)

 

$

22,164

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 awards

164,388

-

-

-

-

-

-

-

Issuance of restricted stock units

318,068

4

-

-

-

120,723

2

6

Tax withholding on restricted stock units

-

1

(559)

-

-

-

-

(558)

Share-based compensation

-

-

2,494

-

-

-

-

2,494

Foreign currency translation

-

-

-

(123)

-

-

-

(123)

Net income

-

-

-

-

2,743

-

-

2,743

Balance, December 31, 2021

26,408,789

$

261

$

92,227

$

(95)

$

(55,930)

(469,168)

$

(6)

$

36,457

Issuance of restricted stock awards

291,894

-

-

-

-

-

-

-

Issuance of restricted stock units

164,381

-

-

-

-

147,495

-

-

Tax withholding on restricted stock units

-

3

(229)

-

-

-

1

(225)

Share-based compensation

-

-

2,153

-

-

-

-

2,153

Foreign currency translation

-

-

-

(309)

-

-

-

(309)

Net loss

-

-

-

-

(13,678)

-

-

(13,678)

Balance, December 31, 2022

26,865,064

$

264

$

94,151

$

(404)

$

(69,608)

(321,673)

$

(5)

$

24,398

The accompanying notes are an integral part of these consolidated financial statements.

F-6F-8

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWSFLOWS

 

 

 

 

 

 

 

 

 

Year Ended December 31,

(in thousands)

 

2019

  

2018

Operating activities:

 

 

 

 

 

 

Net income (loss)

 

$

2,186

 

$

(25,435)

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

 

 

 

 

 

 

Net (income) loss from discontinued operations

 

 

(1,164)

 

 

11,645

Deferred income tax provision (benefit)

 

 

(484)

 

 

(7,239)

Depreciation and amortization on plant, property and equipment

 

 

301

 

 

857

Amortization of deferred financing costs

 

 

615

 

 

1,623

Loss on disposals of property, plant and equipment

 

 

 —

 

 

637

Bad debt expense

 

 

237

 

 

(90)

Stock-based compensation

 

 

1,698

 

 

1,179

Paid-in-kind interest

 

 

 —

 

 

1,964

Restructuring charges

 

 

 —

 

 

5,689

Changes in operating assets and liabilities, net of businesses acquired and sold:

 

 

 

 

 

 

Accounts receivable

 

 

(15,675)

 

 

3,426

Contract assets

 

 

1,001

 

 

3,269

Other current assets

 

 

(743)

 

 

2,271

Other assets

 

 

1,613

 

 

(1,038)

Accounts payable

 

 

13,697

 

 

(2,127)

Accrued and other liabilities

 

 

(6,704)

 

 

(1,157)

Contract liabilities

 

 

(579)

 

 

(3,771)

Net cash provided by (used in) operating activities, continuing operations

 

 

(4,001)

 

 

(8,297)

Net cash provided by (used in) operating activities, discontinued operations

 

 

162

 

 

(6,125)

Net cash provided by (used in) operating activities

 

 

(3,839)

 

 

(14,422)

Investing activities:

 

 

 

 

 

 

Purchase of property, plant and equipment

 

 

(242)

 

 

(137)

Net cash provided by (used in) investing activities, continuing operations

 

 

(242)

 

 

(137)

Net cash provided by (used in) investing activities, discontinued operations

 

 

 —

 

 

319

Net cash provided by (used in) investing activities

 

 

(242)

 

 

182

Financing activities:

 

 

 

 

 

 

Repurchase of stock-based awards for payment of statutory taxes due on stock-based compensation

 

 

(154)

 

 

(497)

Debt issuance costs

 

 

 —

 

 

(2,189)

Proceeds from short-term borrowings

 

 

223,958

 

 

46,688

Repayments of short-term borrowings

 

 

(216,383)

 

 

(43,414)

Proceeds from long-term debt

 

 

 —

 

 

33,679

Repayments of long-term debt

 

 

(525)

 

 

(31,241)

Net cash provided by (used in) financing activities, continuing operations

 

 

6,896

 

 

3,026

Net cash provided by (used in) financing activities, discontinued operations

 

 

 —

 

 

 —

Net cash provided by (used in) financing activities

 

 

6,896

 

 

3,026

Effect of exchange rate change on cash, continuing operations

 

 

61

 

 

 —

Effect of exchange rate change on cash

 

 

61

 

 

 —

Net change in cash, cash equivalents and restricted cash

 

 

2,876

 

 

(11,214)

Cash, cash equivalents and restricted cash, beginning of year

 

 

4,942

 

 

16,156

Cash, cash equivalents and restricted cash, end of year

 

$

7,818

 

$

4,942

 

 

 

 

 

 

 

Supplemental Disclosures:

 

 

 

 

 

 

Cash paid for interest

 

$

4,697

 

$

5,652

Cash paid for income taxes, net of refunds

 

$

 —

 

$

16

Noncash amendment fee related to term loan

 

$

 —

 

$

4,000

Noncash amendment fee related to MidCap Facility

 

$

100

 

$

 —

Year Ended December 31,

(in thousands)

2022

  

2021

Operating activities:

Net income (loss)

$

(13,678)

$

2,743

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

Net income from discontinued operations

(495)

(41)

Deferred income tax provision (benefit)

(174)

2

Depreciation and amortization on plant, property and equipment

230

190

Amortization of deferred financing costs

831

831

Amortization of debt discount

200

200

Bad debt expense

19

77

Stock-based compensation

1,708

3,045

Paid-in-kind interest

176

Changes in operating assets and liabilities:

Accounts receivable

3,818

(7,826)

Contract assets

(173)

(4,700)

Other current assets

4,514

(4,682)

Other assets

(2,889)

(337)

Accounts payable

(49)

5,860

Accrued and other liabilities

(5,073)

(538)

Contract liabilities

2,831

879

Net cash used in operating activities, continuing operations

(8,204)

(4,297)

Net cash used in operating activities, discontinued operations

(481)

(200)

Net cash used in operating activities

(8,685)

(4,497)

Investing activities:

Purchase of property, plant and equipment

(834)

(538)

Net cash used in investing activities

(834)

(538)

Financing activities:

Repurchase of stock-based awards for payment of statutory taxes due on stock-based compensation

(226)

(554)

Proceeds from short-term borrowings

282,030

289,379

Repayments of short-term borrowings

(265,307)

(289,055)

Repayments of long-term debt

(8,844)

(1,050)

Net cash (used in) provided by financing activities

7,653

(1,280)

Effect of exchange rate change on cash

(121)

81

Net change in cash, cash equivalents and restricted cash

(1,987)

(6,234)

Cash, cash equivalents and restricted cash, beginning of year

2,950

9,184

Cash, cash equivalents and restricted cash, end of year

$

963

$

2,950

Supplemental Disclosures:

Cash paid for interest

$

3,018

$

3,674

Cash paid for income taxes, net of refunds

$

$

2,128

The accompanying notes are an integral part of these consolidated financial statements.

F-7F-9

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—BUSINESS AND ORGANIZATION

Effective June 29, 2018, Global Power Equipment Group Inc. changed its name to Williams Industrial Services Group Inc. (together with its wholly owned subsidiaries, “Williams,” the “Company,” “we,” “us” or “our,” unless the context indicates otherwise) to better align its name with the Williams business, and its stock now trades on the OTCQX® Best MarketNYSE American LLC (the “NYSE American”) under the ticker symbol “WLMS.” Williams has been safely helping plant owners and operators enhance asset value for more than 50 years. It provides a broad range of construction, maintenance, and support services to customers in energy, power, and industrial end markets. Williams’ 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. The Company’s corporate headquarters are located in Tucker,Atlanta, Georgia.

The Company reports on a fiscal quarter basis utilizing a “modified” 4-4-55-4-4 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

 

  

2019

  

2018

Three Months Ended March 31

 

January 1, 2019 to March 31, 2019

 

January 1, 2018 to April 1, 2018

Three Months Ended June 30

 

April 1, 2019 to June 30, 2019

 

April 2, 2018 to July 1, 2018

Three Months Ended September 30

 

July 1, 2019 to September 29, 2019

 

July 2, 2018 to September 30, 2018

Reporting Interim Period

Fiscal Interim Period

  

2022

  

2021

Three Months Ended March 31

January 1, 2022 to April 3, 2022

January 1, 2021 to April 4, 2021

Three Months Ended June 30

April 4, 2022 to July 3, 2022

April 5, 2021 to July 4, 2021

Three Months Ended September 30

July 4, 2022 to October 2, 2022

July 5, 2021 to October 3, 2021

F-10

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 2—LIQUIDITY

The Company’s consolidated financial statements have been prepared on a going concern basis, which assumes that it will be able to meet its obligations and continue its operations during the twelve month period following the issuance of this Form 10-K. 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 20192022. These negative cash flows were primarily a consequence of the four factors described in the paragraph below. The Company anticipates that it will continue to experience periodic constraints on its liquidity as a result of the cash flow requirements of specific projects through the third quarter 2023, and 2018is taking steps (listed below) expected to strengthen operating results in order to improve its liquidity. Such constraints on liquidity have negatively affected the Company’s ability to remain in compliance with its debt covenants, and, has historically raised capital to fund its working capital and growth. Subsequent to year-end,accordingly, the Company amended its existing credit facilities with Centre Laneentered into two separate amendments to each of the Revolving Credit Facility (as defined below) and MidCapTerm Loan (as defined below) in the third and fourth quarters of 2022, and an additional two separate amendments to such agreements during the first quarter of 2023. The first two amendments, among other things, revised certain terms contained in the Term Loan and the Revolving Credit Facility, respectively, and deferred principal payments on the Term Loan due on January 13, 2020. In addition,1, 2023 to January 9, 2023. The third and fourth amendments entered into during the first quarter of 2023, among other things, revised certain terms contained in the Term Loan and the Revolving Credit Facility and provided for delayed draw term loans under the Term Loan in an aggregate principal amount of $1.5 million, which were funded at the time the amendment was signed, and discretionary delayed draw term loans in an aggregate principal amount of $3.5 million, which will be funded at the lenders’ discretion. During the first quarter of 2023, the Company successfully completed its Rights Offering,also issued two unsecured promissory notes (“Wynnefield Notes”)  in favor of the Wynnefield Lenders (as defined below) in an aggregate principal amount of $400,000 and $350,000, respectively.

In connection with the preparation of the 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-K.

Significant losses incurred on a number of fixed price contracts in the Company’s 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 expired March 2, 2020, pursuantmanagement 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-K.  The liquidity plan included the Company entering into four amendments to the Term Loan and the Revolving Credit Facility, and issuing two unsecured promissory notes. The liquidity plan will continue to be refined as circumstances dictate, contemplates the following key elements, in which the Company issued 5,384,615 shareswill:

Exit non-performing businesses, including those in the transmission and distribution market and water market;
Lower the cost of services by removing nonbillable expenses that cannot be recovered;
Aggressively reduce operating expenses; and

F-11

Table of its common stock and received net proceeds of $6.6 million. Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

The Company intendshas continued to useexperience material intra-week liquidity pressure as it has attempted to manage the net proceedsshort-term negative cash flows that result from, the Rights Offering, combined with the additional borrowing capacity provided by the amended MidCap Facility, for working capital and general corporate purposesamong other things, having to fund significant weekly craft labor payrolls on large outage projects before those payrolls can be billed to the Company’s customers and collected. Although the Company has utilized the Revolving Credit Agreement to address such time period negative cash flows, contract terms restricting customer invoicing frequency, delays in customer payments, and underlying surety bonds have negatively impacted the Company’s borrowing base and the availability of funds.

A variety of factors can affect the Company’s short- and long-term liquidity, the impact of which could be material, including, but not limited to: the funding of certain of the Company’s strategic growth initiatives. Aspreviously disclosed loss-contracts; cash required for funding ongoing operations and projects; matters relating to the Company’s contracts, including contracts billed based on milestones that may require the Company to incur significant expenditures prior to collections from its customers and others that allow for significant upfront billing at the beginning of a result, managementproject, 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 deterioration of the Company’s customers; required payments of interest under the Term Loan Agreement and the Revolving Credit Agreement and on the Company’s operating and finance leases; pension obligations requiring annual contributions to multiemployer pension plans; insurance coverage for contracts that require the Company to indemnify third parties; and issuances of letters of credit.

The Company believes that the Company has sufficient resourcesFebruary 24, 2023 amendments to satisfy its working capital requirements for at least 12 months following the issuance of these consolidated financial statements. However,Term Loan and the Revolving Credit Facility will, if the discretionary delayed draw term loans under the Term Loan are advanced, provide much needed support to the Company’s liquidity could be periodically,ongoing operations and for certain intervals, constrained duemay permit the Company to the working capital requirements that will be needed asoperate while it continues to executeengage in its plansprocess to growexplore strategic alternatives to maximize value for the business. InCompany and its shareholders or other stakeholders, but additional liquidity support may be necessary. The Company has not disclosed a timetable for the eventconclusion of its review of strategic alternatives, nor has it made any decisions related to any further actions or possible strategic alternatives at this time. The Company does not intend to comment on the details of its review of strategic alternatives until it determines that further disclosure is appropriate or necessary.

If the Company is unable to address any potential liquidity shortfalls that may arise in the future, managementit will need to seek additional funding from third party sources, which may not be available on reasonable terms, if at all, and may resultthe Company’s inability to obtain this capital or execute an alternative solution to its liquidity needs could have a material adverse effect on the Company’s shareholders and creditors. Importantly, any such additional funding could only be obtained in management concluding thatcompliance with the restrictions contained in the agreements governing the Company’s existing indebtedness. If the Company is unable to comply with its covenants under its indebtedness, or otherwise is unable to meet its obligations under such indebtedness, or the lenders under the Term Loan do not exercise their discretion to fund the delayed draw term loans, the Company’s liquidity position raises substantial doubt aboutwould be further adversely affected In addition, such occurrences could 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 or obligations.

If the Company’s liquidity improvement plan and the first quarter 2023 amendments to the Term Loan and the Revolving Credit Facility do not have the intended effect of addressing the Company’s liquidity problems through its review of strategic alternatives, including if the Company is unable to obtain future advances under the discretionary delayed draw term loans, the Company will continue to consider all strategic alternatives, including restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or delaying the Company’s business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including obtaining relief under the U.S. Bankruptcy Code.

In 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 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.

F-12

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s continuation as a going concern is dependent upon its ability to continue as a going concern. Please refersuccessfully implement its liquidity improvement plan and obtain necessary debt or equity financing to Note 19—Subsequent Events, for additional information regarding the amendments toaddress the Company’s credit facilitiesliquidity challenges and continue operations until the Company returns to generating positive cash flow or is otherwise able to execute on a transaction pursuant to its Rights Offering.review of strategic alternatives, including a potential sale of the Company.

NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Joint Ventures:  The consolidated financial statements include the accounts of Williams Industrial Services Group, Inc., and its wholly owned subsidiaries. At times, the Company may form joint ventures with unrelated third parties for the execution of a project. For investments in joint ventures not requiring full consolidation, the Company uses the equity method of accounting. The Company does not have any investment in a joint venture in which it is considered to be the primary beneficiary where full consolidation is required.

In 2017, the Company formed a limited liability company (“LLC”) with an unrelated third party for the execution of a nuclear plant construction project. The Company has a 25 percent participation interest in this LLC, with distribution of

F-8

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

expected gains and losses being proportionate to its participation interest. Although the LLC holds the construction contract with the client, the services required by the contract are performed by either the LLC, the Company, or the other member of the LLC, or by other subcontractors under subcontracting agreements with the LLC. The Company accounts for its investment in this LLC using the equity method. The Company’s investment in this LLC was $2.3$1.9 million and $0.8$2.5 million as of December 31, 20192022 and 2018,2021, respectively, and was included in other long-term assets on the consolidated balance sheets. Accounts receivable related to work performed for the Company’s unconsolidated investment in the LLC, included in accounts receivable, net, on the consolidated balance sheets, was $2.7$4.8 million and $2.1$4.6 million as of December 31, 20192022 and 2018,2021, respectively. The Company’s pro-rata share of net income from the LLC was $1.5$0.2 million and $1.0$0.7 million for the years ended December 31, 20192022 and 2018,2021, respectively, and was included in other (income) expense, net, on the consolidated statements of operations. In addition, the Company received a dividend in 2022 of $0.5$0.8 million in 2019 andfor the period ended December 31, 2021 but did not receive any dividends in 2018.a dividend for the period ended on December 31, 2022.

The Company reclassified its 2018 loss on disposal of assets from general and administrative expenses to other (income) expense, net, on its consolidated statements of operations in order to conform to the 2019 prestenation. All intercompany accounts and transactions have been eliminated in consolidation.

Discontinued Operations:  During the fourth quarter of 2017, the Company made the decision to exit and sell its Electrical Solutions segment. Additionally, 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, which the Company completed in the fourth quarter of 2017. These decisions were made in an effort to reduce the Company’s outstanding term debt. The Company determined that the decision to exit these segments met the definition of a discontinued operation. As a result, these segments, including TOG Manufacturing Company, Inc., which, along with TOG Holdings, Inc., was sold in July 2016, have been presented as discontinued operations for all periods presented.

In spite of the Company’s efforts, which included retaining financial advisors to sell all or part of Koontz-Wagner Custom Controls Holdings LLC’s (“Koontz-Wagner”) operations, inside or outside of a federal bankruptcy or state court proceeding (including Chapter 11 of Title 11 of the U.S. Bankruptcy Code (the “Bankruptcy Code”)), the proposed disposition did not progress as planned due, primarily, to the absence of viable bids in the sale process, the inability of Koontz-Wagner to fund its ongoing operations or obtain financing to do so, and Koontz-Wagner’s deteriorating financial performance. As a result, onOn 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.

Unless otherwise specified, the financial information presented in the accompanying financial statements and following notes relates to the Company’s continuing operations; it excludes any results of its discontinued operations. PleaseFor additional information, please refer to “Note 5—Changes in Business” for financial information on the Company’s discontinued operations.

Segment and Geographic Information:  The Company determines its reportable segments in accordance with Accounting Standards Codification (“ASC”) 280—Segment Reporting. The Company’s operating segments engage in business activities from which it may earn revenues and incur expenses and for which discrete information is available. Operating results for the operating segments are regularly reviewed by the Company’s chief operating decision maker to make decisions about resources to be allocated to the segment and to assess performance. Operating segments are aggregated for reporting purposes when the operating segments are identified as similar in accordance with the basic principles and aggregation criteria in the accounting standards. As a result of the Company’s decision to exit and sell its Mechanical Solutions and Electrical Solutions segments, the Company’s chief operating decision maker reviews financial information on a company-wide basis. Therefore, as of each of December 31, 20192022 and 2018,2021, the Company reports on a single reporting segment basis.

F-13

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company uses operating income (loss) to compare and evaluate its financial performance. For the year ended December 31, 2019,2022, the Company earned 93.1%97.7% and 7.9%2.3% of its revenue in the U.S. and Canada, respectively. For the year ended December 31, 2018,2021, the Company earned 100%88.1% and 11.9% of its revenue in the U.S. and Canada, respectively.

Use of Estimates:  The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could vary materially from those estimates.

F-9

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Revenue Recognition:  The Company provides construction, maintenance, and support services to customers in energy, power, and industrial end markets. The Company’s services, which are provided through long-term maintenance or discrete project agreements, are designed to improve or sustain its customers’ operating efficiencies and extend the useful lives of their process equipment. The contracts are awarded on a competitively bid and negotiated basis with the majority structured as cost-plus arrangements and the remainder as lump-sum.

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.

During the year ended December 31, 2022, the Company recognized increases in estimated costs at completion and related gross profit margins related to several projects in Jacksonville, Florida. The Company increased its prior estimates related to the costs of executing the contracts to completion, which led to a decrease in the recognized revenues to date under the percentage of completion revenue recognition methodology. As a result of these changes, net income for the year ended December 31, 2022 decreased by $7,781,220, and basic and diluted earnings per share for the year ended December 31, 2022 decreased by $0.30 per share.

Cash and Cash Equivalents:  Cash and cash equivalents include cash on hand and on deposit with initial maturities of three months or less. As of December 31, 2019,2022, the Company held $4.4$0.3 million of its operating cash balance in U.S. bank accounts and $2.9$0.2 million in Canadian bank accounts.

Restricted Cash:  Restricted cash as of each of December 31, 20192022 and 20182021 consisted of $0.5 million, respectively, held in escrow for certain indemnities as claims on a divested subsidiary.

F-14

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Accounts Receivable:  Accounts receivable is reported net of allowance for doubtful accounts and discounts. The allowance is based on numerous factors including but not limited to (i) current market conditions, (ii) review of specific customer economics and (iii) other estimates based on the judgment of management. Account balances are charged off against the allowance after all reasonable means of collection have been pursued and the potential for recovery is considered remote. The Company does not generally charge interest on outstanding amounts.

Property, Plant and Equipment:  Property, plant and equipment are stated at historical cost, less accumulated depreciation. For financial reporting purposes, depreciation is calculated using the straight‑linestraight-line method over the estimated useful life of the asset. Costs of significant additions, renewals and betterments are capitalized. Maintenance and repairs are expensed when incurred. When an asset is sold or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and the gain or loss on disposition is reflected in general and administrative expenses in the consolidated statements of operations. Depreciation expense related to capital equipment used in production is included in cost of revenue.

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Long‑LivedLong-Lived Assets:  Long‑lived  Long-lived assets, such as property, plant, and equipment, and purchased intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If circumstances require a long‑livedlong-lived asset held for use to be tested for possible impairment, the Company compares the undiscounted cash flows expected to be generated by the asset to the carrying value of the asset. If the carrying value of the asset exceeds expected future cash flows, the excess of the carrying value over the estimated fair value is charged to impairment expense in the consolidated statements of operations. Assets held for sale are reported at the lower of their carrying value, less estimated costs to sell. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third‑partythird-party independent appraisals, as considered necessary. The Company groups long‑livedlong-lived assets by legal entity for purposes of recognition and measurement of an impairment loss as this is the lowest level for which cash flows are independent.

Goodwill and Indefinite-Lived Intangible Assets: Goodwill and indefinite-lived intangible assets are tested for impairment on an annual basis, as of October 1, and when events or changes in circumstances indicate the fair value of a reporting unit with goodwill and/or indefinite-lived intangible assets has been reduced below the carrying value of the net assets of the reporting unit in accordance with ASC 350–Intangibles–Goodwill and Other. The Company’s indefinite-lived intangible asset consists of the Williams trade name.

The Company’s testing of goodwill for potential impairment involves the comparison of a reporting unit’s carrying value to its estimated fair value, which is determined using the income approach, the market approach and market approaches.the cost approach. Similarly, the testing of the Company’s trade name for potential impairment involves the comparison of the carrying value of the trade name to its estimated fair value, which is determined using the relief from royalty method. If the carrying value of goodwill or the trade name is deemed to be unrecoverable, the excess of the carrying value over the estimated fair value is charged to results of operations in the period in which the impairment is determined. The Company did not have any impairment write-downs in 2019.2022.

Cost of Revenue:  Cost of revenue primarily includes charges for materials, direct labor and related benefits, freight (inbound and outbound), direct supplies and tools, purchasing and receiving costs, inspection costs and internal transfer costs.

Warranty Costs:  Estimated costs related to warranties are accrued using the specific identification method. Estimated costs are based upon past warranty claims, sales history, the applicable contract terms, and the remaining warranty periods. Warranty terms vary by contract but generally provide for a term of two years or less. The Company manages its exposure to warranty claims by having its field service and quality assurance personnel regularly monitor projects and maintain ongoing and regular communications with its customers. Historically, warranty claims have not resulted in material costs incurred, and any estimated costs for warranties are included in the individual project cost estimates for purposes of accounting for long-term contracts.

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. The Company accrues for incurred but not reported claims by utilizing lag studies.

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Shipping and Handling Costs:  The Company accounts for shipping and handling costs in accordance with ASC 605‑45605-45Principal Agent Considerations. Amounts billed to customers in sale transactions related to shipping and handling costs are recorded as revenue. Shipping and handling costs incurred are included in cost of revenue in the consolidated statements of operations.

Advertising Costs:  The Company accounts for advertising costs in accordance with ASC 720‑35—720-35—Advertising Costs. Generally, advertising costs are immaterial and are expensed as incurred and are included in selling and marketing expense in the consolidated statements of operations.

Stock‑BasedStock-Based Compensation Expense:  The Company measures and recognizes stock‑basedstock-based compensation expense based on the estimated fair value of the stock award on the date of grant. Vesting of stock awards is based on certain service, performance, and market conditions (or service only conditions) over a one to four yearthree-year period. For all awards with graded vesting, other than awards with performance‑basedperformance-based vesting conditions, the Company records compensation expense for the entire award on a straight‑linestraight-line basis over the requisite service period. For graded‑vestinggraded-vesting awards with performance‑based

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

performance-based vesting conditions, total compensation expense is recognized over the requisite service period for each separately vesting tranche of the award as if the award is, in substance, multiple awards once performance criteria are set. For market-based awards that cliff vest, total compensation expense is recorded on a straight-line basis over the requisite performance period. The Company recognizes stock‑basedstock-based compensation expense related to performance-based and market-based awards based upon its determination of the potential likelihood of achievement of the specified performance conditions at each reporting date. Stock‑basedStock-based compensation expense is primarily included in general and administrative expenses in the consolidated statements of operations.

Income Taxes:  The Company accounts for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company measures deferred tax assets and liabilities using enacted tax rates expected to be applied to taxable income in the years in which those differences are expected to be recovered or settled. The Company recognizes income as a result of changes in tax rates on deferred tax assets and liabilities in the period that includes the enactment date.

Under ASC 740—Income Taxes, the Financial Accounting Standards Board (“FASB”) requires companies to assess whether valuation allowances should be established against their deferred tax assets based on the consideration of all available positive and negative evidence, using a “more likely than not” standard. In making such assessments, significant weight is given to evidence that can be objectively verified. A company’s current or previous operating history is given more weight than its future outlook, although the Company does consider future taxable income projections, ongoing tax planning strategies and the limitation on the use of carryforward losses in determining valuation allowance needs. The Company establishes valuation allowances for its deferred tax assets if, based on the available evidence, it is more likely than not that some portion of or all of the deferred tax assets will not be realized.

During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company recognizes the tax benefit from uncertain tax positions only if it is more likely than not to be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. The Company believes that its benefits and accruals recognized are appropriate for all open audit years based on its assessment of many factors including past experience and interpretation of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of these matters is determined to be different than the amounts recorded, those differences will impact income tax expense in the period in which the determination is made.

Other Comprehensive Income (Loss):  The Company reports cumulative foreign currency translation adjustments as a component of accumulated other comprehensive income (loss).

Adoption of New Accounting Pronouncements

In June 2018, the FASB issued ASU 2018-07, “Improvements to Nonemployee Share-Based Payment Accounting,” which expands the scope of Accounting Standards Codification (“ASC”) Topic 718, “Compensation–Stock Compensation” and applies to all share-based payment transactions to nonemployees in which a grantor acquires goods and services to be used or consumed in a grantor’s own operations by issuing share-based awards. Upon adoption of ASU 2018-07, an entity should only re-measure liability-classified awards that haveThe Company did not been settled by the date of adoption and equity-classified awards for which a measurement date has not been established through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. In the first quarter of 2019,implement any new accounting pronouncements during 2022. However, the Company adopted ASU 2018-07, which did not have a materialis currently evaluating the impact on its financial position, results of operations and cash flows.

In February 2018, the FASB issued ASU 2018-02, “Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,” which gives entities the option to reclassify the tax effects stranded in accumulated other comprehensive income as a result of the enactment of comprehensive tax legislation in December 2017, commonly referred to as the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), to retained earnings. The Company adopted ASU 2018-02 effective January 1, 2019 and elected not to reclassify the income tax effects stranded in accumulated other comprehensive income to retained earnings and, as a result, there was no impact on the Company’s financial position, results of operations or cash flows.

In February 2016, the FASB issued ASU 2016-02, “Leases” (ASC Topic 842), which, together with its relatedfuture disclosures that may arise under recent SEC proposals.

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

clarifying ASUs (collectively, “ASU 2016-02”), amended the previous guidance for lease accounting and related disclosure requirements. The new guidance requires

NOTE 4—LEASES

In accordance with ASU 2016-02, the recognition of right-of-use assets and lease liabilities on the balance sheet for leases with terms greater than twelve months or leases that contain a purchase option that is reasonably certain to be exercised. Lessees are required to classify leases as either finance or operating leases. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. For leases with a term of twelve months or less, a lessee can make an accounting policy election by class of underlying asset to not recognize an asset and corresponding liability. Lessees are also required to provide additional qualitative and quantitative disclosures regarding the amount, timing and uncertainty of cash flows arising from leases. These disclosures are intended to supplement the amounts recorded in the financial statements and provide additional information about the nature of an organization’s leasing activities. On January 1, 2019, the Company adopted ASU 2016-02 using the modified retrospective method, meaning it has been applied to leases that existed or have been entered into on or after January 1, 2019 without adjusting comparative periods in the financial statements. Please refer to “Note 4–Leases” for further discussion of the adoption and the impact on the Company’s financial statements.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued 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 is currently evaluating the impact this ASU will have on its results of operations, financial position and cash flows.

In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other Internal-Use Software (Subtopic 350-40).” This update aligns the requirements for capitalizing costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software, including hosting arrangements that are service contracts, over the term of the hosting arrangement. Further, this update requires the presentation of the expense in the statement of income, the presentation of the costs on the statement of financial position and the classification of payments in the statement of cash flows related to capitalized implementation costs to be treated the same as the fees of the associated hosting arrangement. The update is effective for annual periods beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect that this ASU will have a material impact on its results of operations, financial position and cash flows.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820).” This amendment update modifies disclosure requirements related to fair value measurement and will be effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Implementation on a prospective or retrospective basis varies by specific disclosure requirement. Early adoption is permitted, and the standard allows for early adoption of any removed or modified disclosures upon issuance of the update, while delaying adoption of the additional disclosures until their effective date. The Company is currently evaluating this guidance to determine the impact it may have on its disclosures. The Company does not expect that this guidance will have a material impact on its disclosures.

NOTE 4—LEASES

On January 1, 2019, the Company adopted ASU 2016-02, which amended the previous guidance for lease accounting and related disclosure requirements. The new guidance requires the recognition of right-of-use assets and lease liabilities on the balance sheet for leases with terms greater than twelve months or leases that contain a purchase option that is reasonably certain to be exercised. Lessees are requiredexercised, require lessees to classify leases as either finance or operating leases. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease.  

The Company elected to utilize the package of practical expedients in ASC 842-10-65-1(f) that, upon adoption of ASU 2016-02, allowed entities to (1) not reassess whether any expired or existing contracts are or contain leases, (2) retain the classification of leases (e.g., operating or finance lease) existing as of the date of adoption and (3) not reassess initial direct costs for any existing leases.

The Company adopted ASU 2016-02 using the modified retrospective method, and accordingly, the new guidance

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

was applied to leases that existed as of January 1, 2019. This resulted in the recognition of lease liabilities of $8.7 million and right-of-use-assets of $8.5 million on January 1, 2019, which included the impact of eliminating prior year deferred rent. The adoption of ASU 2016-02 did not have a material impact on the Company’s results of operations or cash flows.

The Company primarily leases office space and related equipment, as well as equipment, modular units and vehicles directly used in providing services to our 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. For leases beginning in 2019 and thereafter, 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.

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 term at the 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.

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 presented as a right-of-use asset and lease liability and the lease liability amounts to $3.3 million with a present value of $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 $59,000 of sublease income during 2022.

The components of lease expense for the yearyears ended December 31, 20192022 and 2021 were as follows:

 

 

 

 

Lease Cost/(Sublease Income) (in thousands)

 

Year Ended December 31, 2019

Operating lease cost

 

$

4,846

Short-term lease cost

 

 

2,429

Sublease income

 

 

(66)

Total lease cost

 

$

7,209

Lease Cost/(Sublease Income) (in thousands)

2022

2021

Operating lease cost

$

2,202

$

2,263

Short-term lease cost

7,140

3,813

Sublease income

(59)

(20)

Total lease cost

$

9,283

$

6,056

Lease cost related to finance leases was not significant for the year ended December 31, 2019.2022.

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Information related to the Company’s right-of-use assets and lease liabilities as offor the years ended December 31, 20192022 and 2021 was as follows:

 

 

 

 

 

 

Lease Assets/Liabilities (in thousands)

 

Balance Sheet Classification

 

December 31, 2019

Lease Assets 

 

 

 

 

 

Right-of-use assets

 

Other long-term assets

 

$

5,743

 

 

 

 

 

 

Lease Liabilities

 

 

 

 

 

Short-term lease liabilities

 

Other current liabilities

 

$

2,985

Long-term lease liabilities

 

Other long-term liabilities

 

 

2,939

Total lease liabilities

 

 

 

$

5,924

Lease Assets/Liabilities (in thousands)

Balance Sheet Classification

2022

2021

Lease Assets

Right-of-use assets

Other long-term assets

$

4,223

$

1,527

Lease Liabilities

Short-term lease liabilities

Other current liabilities

$

1,603

$

1,606

Long-term lease liabilities

Other long-term liabilities

3,010

511

Total lease liabilities

$

4,613

$

2,117

Supplemental information related to the Company’s leases for the yearyears ended December 31, 2019 was2022 and 2021 are as follows:

 

 

 

 

(dollars in thousands)

 

Year Ended December 31, 2019

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

 

 

 

Operating cash used by operating leases

 

$

4,884

Right-of-use assets obtained in exchange for new operating lease liabilities

 

 

10,255

Right-of-use assets obtained in exchange for new finance lease liabilities

 

 

27

Weighted-average remaining lease term - operating leases

 

 

2.09 years

Weighted-average remaining lease term - finance leases

 

 

4.23 years

Weighted-average discount rate - operating leases

 

 

9%

(dollars in thousands)

2022

2021

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

Operating cash used by operating leases

$

2,368

$

2,433

Right-of-use assets obtained in exchange for new operating lease liabilities

$

4,598

$

2,020

Weighted-average remaining lease term - operating leases

5.15 years

1.36 years

Weighted-average remaining lease term - finance leases

1.23 years

2.23 years

Weighted-average discount rate - operating leases

9%

9%

Weighted-average discount rate - finance leases

9%

9%

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Weighted-average discount rate - finance leases

9%

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

 

 

 

 

 

 

 

 

 

Operating Leases

 

Finance Leases

Year Ended December 31,

 

(in thousands)

2020

 

$

3,395

 

$

 6

2021

 

 

2,215

 

 

 6

2022

 

 

695

 

 

 6

2023

 

 

145

 

 

 6

2024

 

 

 2

 

 

 2

Thereafter

 

 

 —

 

 

 —

Total lease payments

 

$

6,452

 

$

26

Less: interest

 

 

(554)

 

 

 —

Present value of lease liabilities

 

$

5,898

 

$

26

NOTE 5—CHANGES IN BUSINESS

Restructuring Charges

In 2018, the Company made the decision to relocate its corporate headquarters to Tucker, Georgia and vacated its leased office space in Irving, Texas on September 30, 2018. In March 2019, the Company subleased the Irving, Texas office space until November 2019, when the lease expired. The Company recorded exit costs related to the leased office space and the termination of certain personnel, which were included in restructuring charges in the Company’s consolidated statement of operations for the year ended December 31, 2018.2022 are as follows:

The following table shows exit costs included in other current liabilities and accrued compensation and benefits on the Company’s consolidated balance sheet:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

Lease

 

 

Severance

 

 

Total

Balance, December 31, 2017

 

$

 —

 

$

 —

 

$

 —

Restructuring charges

 

 

536

 

 

5,153

 

 

5,689

Payments for restructuring

 

 

(169)

 

 

(2,264)

 

 

(2,433)

Balance, December 31, 2018

 

$

367

 

$

2,889

 

$

3,256

Payments for restructuring

 

 

(225)

 

 

(2,889)

 

 

(3,114)

Adjustments

 

 

(142)

 

 

 —

 

 

(142)

Balance, December 31, 2019

 

$

 —

 

$

 —

 

$

 —

Operating Leases

Finance Leases

Year Ended December 31,

(in thousands)

2023

$

1,913

$

6

2024

1,034

1

2025

562

2026

435

2027

391

Thereafter

1,483

Total lease payments

$

5,818

$

7

Less: interest

(1,212)

Present value of lease liabilities

$

4,606

$

7

The following table presents the major classes of items constituting restructuring expenses on the Company’s consolidated statement of operations:

 

 

 

 

 

 

 

 

 

Year Ended December 31,

(in thousands)

  

2019

 

2018

Lease

 

$

 —

 

$

536

Severance

 

 

 —

 

 

5,153

Total

 

$

 —

 

$

5,689

NOTE 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 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

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

periods presented. As a result of the Company’s decision to sell the Electrical Solutions segment, the Company performed an impairment analysis on this segment’s finite- and indefinite-lived intangible assets (customer relationships and trade names, respectively) and determined that their carrying value exceeded their fair value. As a result, in the fourth quarter of 2017, the Company recorded an impairment charge of $9.7 million related to these intangible assets. The impairment charge was included in loss from discontinued operations before income tax expense (benefit) in the consolidated statement of operations for the year ended December 31, 2017. After the impairment charge, the fair value of this segment’s intangible assets was zero at December 31, 2017. Determining fair value is judgmental in nature and requires the use of significant estimates and assumptions, considered to be Level 3 inputs. There were no other non-recurring fair value re-measurements related to the Electrical Solutions segment during the years ended December 31, 2019 or 2018.

In spite of the Company’s efforts, which included retaining financial advisors to sell all or part of Koontz-Wagner’s operations, inside or outside of a federal bankruptcy or state court proceeding (including Chapter 11 of Title 11 of the Bankruptcy Code), the proposed disposition did not progress as planned due, primarily, to the absence of viable bids in the sale process, the inability of Koontz-Wagner to fund its ongoing operations or obtain financing to do so, and Koontz-Wagner’s deteriorating financial performance. As a result, onOn 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 $11.4 million of exit costs, which were included in loss from discontinued operations in the Company’s consolidated statement of operations for the year ended December 31, 2018. These charges consisted of a $4.0 million fee related to a fifth amendment to the Initial Centre Lane Facility (as defined below), 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, a $1.8 million negotiated settlementplan.

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 guarantee of Koontz-Wagner’s Houston facility lease agreement and a $2.7 millionpension withdrawal liability, as a result ofwhich resulted in the Company providing affected Koontz-Wagner employeesoverpaying. The arbitrator directed IBEW to refund all overpayments, with 60 days of salary continuation, as well as the difference between each employee’s cost of health care at the time of their employment termination and the cost of continued benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA). The Company satisfied the liability relatedinterest, to the lease guarantee settlementCompany and substantially all ofto redetermine the salary and benefit continuationCompany’s payments going forward using the proper contribution rate. Accordingly, the Company’s overall pension withdrawal liability through cash payments as of December 31, 2018.decreased by approximately $0.3 million. The pension liability is expected to be satisfied by annual cash payments of $0.3 million each, paid in quarterly installments, over the next twenty years.

As a result of the bankruptcy of Koontz-Wagner, thethrough 2038. The Company wrote off the related assets and liabilities on the Company’s consolidated balance sheet and recorded a lossgain on disposal of $9.3approximately $0.3 million which was reflected in loss from discontinued operations in2021 to reduce its previously recorded estimated withdrawal liability to the consolidated statements of operations for the year ended December 31, 2018.new amount.

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 in an effort to reduce the Company’s outstanding term debt. The Companyand determined that the decision to exit this segment met the definition of a discontinued operation. As a result, this segment including TOG Manufacturing Company, Inc., which, along with TOG Holdings, Inc., was sold in July 2016, has been presented as a discontinued operation for all periods presented. The Mechanical Solutions and the Electrical Solutions segments were the only components of the business that qualified for discontinued operations for all periods presented.

On October 11, 2017, the Company sold substantially all of the operating assets and liabilities of its Mechanical Solutions segment for $43.0 million and used a portion of the $40.9 million net proceeds to pay down $34.0 million of the Company’s outstanding debt and related fees, including full repayment of the First-Out Loan (as defined below). Additionally, on October 31, 2017, the Company completed the sale of its manufacturing facility in Mexico and auctioned the remaining production equipment and other assets for net proceeds of $3.6 million, of which $1.9 million was used to reduce the principal amount of the Initial Centre Lane Facility. The remainder was used to fund working capital requirements. The Company recorded a total gain of $6.3 million related to these sales, which was included in loss from discontinued operations before income tax expense (benefit) in the consolidated statement of operations for the year ended December 31, 2017.

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The asset and liability excluded from the sale of the Mechanical Solutions segment included the Company’s office building located in Heerlen, Netherlands as well as its liability for uncertain tax positions. This asset and liability was included in current assets of discontinued operations and long-term liabilities of discontinued operations, respectively, in the December 31, 2017 consolidated balance sheet. At the time the Heerlen office building met the “asset held for sale” criteria, its carrying value was $0.5 million; however, the Company subsequently determined that the building’s carrying value exceeded its fair value and, consequently, it recorded an impairment charge of $0.2 million during the fourth quarter of 2017. The impairment charge was included in loss from discontinued operations before income tax expense (benefit) in the consolidated statement of operations for the year ended December 31, 2017. After the impairment charge, the fair value of the Heerlen building was $0.3 million at December 31, 2017. Determining fair value is judgmental in nature and requires the use of significant estimates and assumptions, considered to be Level 3 inputs. There were no other non-recurring fair value re-measurements related to the Mechanical Solutions segment during the year ended December 31, 2017.

On March 21, 2018, the Company closed on the sale of its office building in Heerlen, Netherlands for $0.3 million, resulting in an immaterial gain on sale, which was reflected in loss from discontinued operations before income tax expense (benefit) in the Company’s consolidated statement of operations for the year ended December 31, 2018. As discussed above, the Heerlen office was previously included in the Mechanical Solutions segment and, therefore, the carrying value of the building was included in current assets of discontinued operations in the December 31, 2017 consolidated balance sheet.

In connection with the sale of its Mechanical Solutions segment, the Company entered into a transition services agreement with the purchaser to provide certain accounting and administrative services for an initial period of nine months. During the year ended December 31, 2019, the Company did not provide services for the purchaser. As of December 31, 2018, the Company provided $0.3 million in services for the purchaser, which was included in general and administrative expenses from continuing operations in the consolidated statement of operations.

In April 2019, the purchaser of the Company’s former Mechanical Solutions segment went into receivership. In connection with this event, in March 2019, the Company recognized a write down to the estimated fair value of amounts due under the transition services agreement of $0.2 million. At the time the purchaser went into receivership, the Company also had remaining balances of $0.2 million and $0.8 million included in other current assets and other current liabilities, respectively, on its consolidated balance sheet. In November 2019, the Company executed, and the U.S. Bankruptcy Court for the Northern District of Oklahoma approved, an agreement with the purchaser to settle the disputes related to the remaining asset and liability. As a result, the Company recorded a net gain of $0.4 million, which was included in other (income) expense, net on its consolidated statement of operations for the year ended December 31, 2019.

F-17

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of each of December 31, 20192022 and 2018,2021, the Company did not have any assets related to its Electrical and Mechanical Solutions’ discontinued operations. The following table presents a reconciliation of the carrying amounts of major classes of liabilities of Electrical and Mechanical Solutions’ discontinued operations:

 

 

 

 

 

 

 

 

 

December 31,

(in thousands)

  

2019

 

2018

Liabilities:

 

 

 

 

 

 

Accrued compensation and benefits 

 

$

 —

 

$

259

Other current liabilities

 

 

340

 

 

381

Current liabilities of discontinued operations

 

 

340

 

 

640

Liability for pension obligation

 

 

2,708

 

 

2,781

Liability for uncertain tax positions

 

 

1,778

 

 

2,407

Long-term liabilities of discontinued operations

 

 

4,486

 

 

5,188

Total liabilities of discontinued operations

 

$

4,826

 

$

5,828

December 31,

(in thousands)

  

2022

2021

Liabilities:

Current liabilities of discontinued operations

$

110

$

316

Liability for pension obligation

2,244

2,368

Liability for uncertain tax positions

1,235

1,882

Long-term liabilities of discontinued operations

3,479

4,250

Total liabilities of discontinued operations

$

3,589

$

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.

 

 

 

 

 

 

 

 

 

Year Ended December 31,

(in thousands)

  

2019

  

2018

Revenue

 

 

 

 

 

 

Electrical Solutions

 

$

 —

 

$

22,259

Total revenue

 

 

 —

 

 

22,259

Cost of revenue

 

 

 

 

 

 

Electrical Solutions

 

 

 —

 

 

24,613

Total cost of revenue

 

 

 —

 

 

24,613

 

 

 

 

 

 

 

Selling and marketing expenses

 

 

 —

 

 

207

General and administrative expenses

 

 

21

 

 

2,634

Other

 

 

213

 

 

(38)

Income (loss) from discontinued operations before income taxes

 

 

(234)

 

 

(5,157)

Loss (gain) on disposal - Electrical Solutions

 

 

 —

 

 

9,623

Loss (gain) on disposal - Mechanical Solutions

 

 

 —

 

 

222

Income (loss) from discontinued operations before income tax expense (benefit)

 

 

(234)

 

 

(15,002)

Income tax expense (benefit)

 

 

(1,398)

 

 

(3,357)

Income (loss) from discontinued operations

 

$

1,164

 

$

(11,645)

Year Ended December 31,

(in thousands)

  

2022

  

2021

General and administrative expenses

$

3

$

40

Loss (gain) on disposal - Electrical Solutions

17

(288)

Interest expense

120

76

Income (loss) from discontinued operations before income taxes

(140)

172

Income tax expense (benefit)

(635)

131

Income from discontinued operations

$

495

$

41

F-19

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 6—PROPERTY, PLANT AND EQUIPMENT

The Company’s property, plant, and equipment balances, by significant asset category, were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated

 

December 31,

($ in thousands)

 

Useful Lives

  

2019

  

2018

Buildings and improvements

 

5 - 39 years

 

$

474

 

$

474

Machinery and equipment

 

3 - 12 years

 

 

4,227

 

 

4,078

Furniture and fixtures

 

2 - 10 years

 

 

8,668

 

 

8,668

Construction-in-progress

 

 —

 

 

283

 

 

259

 

 

 

 

 

13,652

 

 

13,479

Less accumulated depreciation

 

 

 

 

(13,379)

 

 

(13,144)

Property, plant and equipment, net

 

 

 

$

273

 

$

335

Estimated

December 31,

($ in thousands)

Useful Lives

  

2022

  

2021

Buildings and improvements

5 - 39 years

$

669

$

495

Machinery and equipment

3 - 12 years

 

5,154

 

4,663

Furniture and fixtures

2 - 10 years

 

8,818

 

8,695

Capital lease assets

5 years

16

21

 

14,657

 

13,874

Less accumulated depreciation

(13,400)

 

(13,221)

Property, plant and equipment, net

$

1,257

$

653

F-18

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Construction‑in‑progress primarily included building improvements and machinery and equipment as of December 31, 2019 and 2018. Depreciation expense was $0.3approximately $0.2 million and $0.9 million for each of the years ended December 31, 20192022 and 2018, respectively.2021. No impairment charges on property, plant and equipment were recognized for the years ended December 31, 20192022 and 2018.2021.

NOTE 7—GOODWILL AND OTHER INTANGIBLE ASSETS

The Company determines the fair value of its reporting unit using thea combination of income, approach.market and cost approaches. For purposes of the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The Company uses its internal forecasts to estimate future cash flows and includes an estimate of long-term future growth rates based on its most recent views of the long-term outlook for the reporting unit, which falls within Level 3 of the fair value hierarchy. Under the market approach, the fair value is determined by utilizing comparative market multiples in the valuation estimates. The cost approach is based on the assumption that a prudent investor would pay no more for a security or asset than the amount at which it could be replaced or reproduced and is performed by estimating the replacement cost.

As of each of December 31, 20192022 and 2018,2021, the Company had $12.5 million of unamortizable indefinite-lived intangible assets related to its Williams Industrial Services Group trade name. The Company did not incur any amortization expense for each of the years ended December 31, 20192022 and 2018,2021, respectively. The Company determines the fair value of its trade name using the relief from royalty method. Under that method, the fair value of the trade name is determined by calculating the present value of the after taxafter-tax cost savings associated with owning the asset and therefore not having to pay royalties for its use for the remainder of its estimated useful life. As a result of the Company’s annual indefinite-lived intangible asset impairment analysis as of October 1, 20192022 and 2018,2021, the Company determined the fair value of its trade name exceeded its book value; therefore, no impairment charge was recorded for the years ended December 31, 20192022 and 2018.2021.

Goodwill and indefinite-lived intangible assets are tested for impairment annually as of October 1 and whenever events or circumstances indicate that the carrying value may not be recoverable. In accordance with ASC 350—Intangibles—Goodwill and Other, the Company observed certain qualitative circumstances related to performance and current market conditions that indicated the potential for impairment in 2022. As a result of the Company’sCompany engaged an independent consulting firm to perform its annual goodwill impairment analysis as of October 1, 20192022, and 2018, the Company determined that the fair value of its reporting unit exceeded its book value, and accordingly, no impairment charge was necessary for the years ended December 31, 20192022 and 2018.

As of December 31, 2019, the Company’s accumulated impairment charges on its goodwill and indefinite-lived intangible assets were $4.2 million, all of which were recognized in the statement of operations for the year ended December 31, 2015. The Company did not incur any impairment charges related to its goodwill and indefinite-lived intangible assets prior to 2015.2021.

Estimating the fair value of reporting units and trade names requires the use of estimates and significant judgments that are based on a number of factors including current and historical actual operating results, balance sheet carrying values, the Company’s most recent forecasts, and other relevant quantitative and qualitative information.information, including an estimated rate of return and discount rate. If current or expected conditions deteriorate, it is reasonably possible that the judgments and estimates described above could change in future periods and result in impairment charges.

F-20

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 8—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.inputs (see below).

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company’s financial instruments as of December 31, 20192022 and 20182021 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.

F-19

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 9—INCOME TAXES

Income (loss) before income taxes was as follows:

 

 

 

 

 

 

 

 

 

Year Ended December 31,

(in thousands)

 

2019

  

2018

Domestic

 

$

2,075

 

$

(18,190)

Foreign

 

 

(720)

 

 

 —

Income (loss) from continuing operations

 

 

1,355

 

 

(18,190)

Loss from discontinued operations

 

 

(234)

 

 

(15,002)

Income (loss) before income tax expense (benefit)

 

$

1,121

 

$

(33,192)

Year Ended December 31,

(in thousands)

2022

  

2021

Domestic

$

(13,741)

$

(19)

Foreign

(481)

 

3,514

Income (loss) from continuing operations

 

(14,222)

 

3,495

Income (loss) from discontinued operations

(140)

 

172

Income (loss) before income tax expense

$

(14,362)

$

3,667

The following table summarizes the income tax expense (benefit) by jurisdiction:

 

 

 

 

 

 

 

 

 

Year Ended December 31,

(in thousands)

 

2019

  

2018

Current:

 

 

 

 

 

 

State

 

$

61

 

$

(3)

Foreign

 

 

(642)

 

 

(522)

Total current

 

 

(581)

 

 

(525)

Deferred:

 

 

 

 

 

 

Federal

 

 

(88)

 

 

(7,044)

State

 

 

(396)

 

 

(194)

Foreign

 

 

 —

 

 

 6

Total deferred

 

 

(484)

 

 

(7,232)

Income tax expense (benefit)

 

$

(1,065)

 

$

(7,757)

Year Ended December 31,

(in thousands)

2022

  

2021

Current:

Foreign

$

(379)

$

922

Total current

 

(379)

 

922

Deferred:

Federal

 

 

(69)

State

 

89

 

(192)

Foreign

(394)

263

Total deferred

 

(305)

 

2

Income tax expense (benefit)

$

(684)

$

924

Income tax expense (benefit) was allocated between continuing operations and discontinued operations as follows:

Year Ended December 31,

(in thousands)

2022

  

2021

Continuing operations

$

(49)

$

793

Discontinued operations

(635)

131

Income tax expense (benefit)

$

(684)

$

924

 

 

 

 

 

 

 

 

 

Year Ended December 31,

(in thousands)

 

2019

  

2018

Continuing operations

 

$

333

 

$

(4,400)

Discontinued operations

 

 

(1,398)

 

 

(3,357)

Income tax expense (benefit)

 

$

(1,065)

 

$

(7,757)

F-21

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Effective Tax Rate Reconciliation

The amount of the income tax expense (benefit) for continuing operations during the years ended December 31, 20192022 and 20182021 differs from the statutory federal income tax rate of 21% was as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended December 31,

 

 

2019

 

2018

(in thousands)

 

Amount

  

Percent

 

Amount

  

Percent

Tax expense (benefit) computed at the maximum U.S. statutory rate

 

$

284

 

21.0

%

 

$

(3,820)

 

21.0

%

Difference resulting from state income taxes, net of federal income tax benefits

 

 

(348)

 

(25.7)

%

 

 

(483)

 

2.7

%

State tax rate difference

 

 

43

 

3.2

%

 

 

 —

 

 —

%

Non-deductible expenses, other

 

 

130

 

9.6

%

 

 

136

 

(0.7)

%

Change in net operating loss carryforward

 

 

2,705

 

199.6

%

 

 

(581)

 

3.2

%

Change in valuation allowance

 

 

(1,534)

 

(113.2)

%

 

 

(2,136)

 

11.7

%

Change in foreign tax credits

 

 

2,288

 

168.9

%

 

 

1,811

 

(10.0)

%

Bankruptcy reorg costs

 

 

(2,533)

 

(187.0)

%

 

 

 —

 

 —

%

Other, net

 

 

(702)

 

(51.8)

%

 

 

673

 

(3.7)

%

Total tax expense (benefit)

 

$

333

 

24.6

%

 

 

(4,400)

 

24.2

%

Year Ended December 31,

2022

2021

(in thousands)

Amount

  

Percent

Amount

  

Percent

Tax expense computed at the maximum U.S. statutory rate

$

(2,987)

21.0

%

$

734

21.0

%

Difference resulting from state income taxes, net of federal income tax benefits

34

(0.2)

%

 

151

4.3

%

State tax rate difference

29

(0.2)

%

(211)

(6.0)

%

Non-deductible expenses, other

271

(1.9)

%

 

125

3.6

%

APB 23 DTL

(264)

1.9

%

264

7.6

%

Change in net operating loss carryforward

(429)

3.0

%

(42)

(1.2)

%

Change in valuation allowance

2,532

(17.8)

%

(660)

(18.9)

%

Change in foreign tax credits

463

(3.3)

%

 

359

10.3

%

Other, net

302

(2.1)

%

73

2.1

%

Total tax expense (benefit)

$

(49)

0.4

%

$

793

22.8

%

F-20

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Deferred Taxes

The significant components of deferred income tax assets and liabilities for continuing operations consisted of the following:

 

 

 

 

 

 

 

 

 

December 31,

(in thousands)

 

2019

  

2018

Assets:

 

 

 

 

 

 

Cost in excess of identifiable net assets of business acquired

 

$

5,904

 

$

6,633

Reserves and other accruals

 

 

4,058

 

 

4,328

Tax credit carryforwards

 

 

5,289

 

 

7,819

Accrued compensation and benefits

 

 

1,940

 

 

1,946

State net operating loss carryforwards

 

 

12,815

 

 

10,843

Federal net operating loss carryforwards

 

 

47,679

 

 

47,382

Gain/loss on assets held for sale

 

 

1,434

 

 

1,393

Other

 

 

4,978

 

 

782

 

 

 

84,097

 

 

81,126

Liabilities:

 

 

 

 

 

 

Indefinite life intangibles

 

 

(12,026)

 

 

(10,876)

Property and equipment

 

 

(319)

 

 

(248)

Net deferred tax assets

 

 

71,752

 

 

70,002

Valuation allowance for net deferred tax assets

 

 

(73,950)

 

 

(72,684)

Net deferred tax liability after valuation allowance

 

$

(2,198)

 

$

(2,682)

December 31,

(in thousands)

2022

  

2021

Assets:

Cost in excess of identifiable net assets of business acquired

$

3,684

$

4,437

Reserves and other accruals

3,553

 

3,822

Tax credit carryforwards

5,241

 

5,754

Accrued compensation and benefits

1,635

 

2,077

State net operating loss carryforwards

14,496

 

13,493

Federal net operating loss carryforwards

51,337

 

47,653

Gain/loss on assets held for sale

1,457

1,457

Other

7,175

 

6,438

88,578

 

85,131

Liabilities:

Indefinite life intangibles

(12,445)

 

(12,445)

Property and equipment

(599)

 

(473)

Net deferred tax assets

75,534

72,213

Valuation allowance for net deferred tax assets

(77,802)

 

(74,655)

Net deferred tax liability after valuation allowance

$

(2,268)

$

(2,442)

Tax Cuts and Jobs Acts of 2017

On December 22, 2017, the Tax Act was signed into law, making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a U.S. federal corporate 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. For the year ended December 31, 2019, the Company recognized income tax expense of $0.3 million for a net increase in deferred tax liabilities related to an increase in indefinite-lived intangible deferred tax liabilities, partially offset by indefinite-lived deferred tax assets created by the 2017 Tax Act.

The Tax Act reduced the federal statutory corporate tax rate for the Company’s tax years beginning in 2018, which resulted in the re-measurement of the federal portion of the Company’s deferred tax assets and liabilities and related valuation allowances as of December 31, 2017. As of December 31, 20192022 and 2018,2021, the Company hashad a net deferred tax liability related to its continuing operations of $2.2$2.3 million and $2.7$2.4 million, respectively. The net deferred tax liabilities for the years ended December 31, 20192022 and 20182021 predominantly related to indefinite-lived intangiblesintangible deferred tax liabilities that cannotcan be used to offset deferred tax assets subject towithout valuation allowances. A net increase in valuation allowances related to continuing operations of $1.3$3.1 million as of December 31, 20192022 was recorded against the gross deferred tax asset balances as of December 31, 2019.

The Company recorded a provisional liability of the transition tax of $2.6 million based on analysis of the amount of post-1986 earnings and profits of its foreign subsidiaries.2022.

As of December 31, 2019,2022, the Company would need to generate $287.1$306.6 million of future U.S. pre-tax income to realize its deferred tax assets.

F-22

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Inflation Reduction Act of 2022

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law, making significant changes to the Internal Revenue Code. Such changes include, but are not limited to, 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.

Net Operating Losses and Tax Credit Carryforwards

As of December 31, 2019,2022, the Company hashad $242.8 million of federal net operating loss carryforwards expiring between 2026 and 2037 and state operating loss carryforwards of $277.7$291.0 million expiring between 20202023 and 2039.2042. The Company has $5.9$5.2 million of foreign operating loss carryforwards that will expire in 2039.2027. The Company has $3.3$4.1 million in foreign tax credit carryforwards expiring between 20202023 and 2027.  

F-21

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2027.

Under the Internal Revenue Code, the amount of and the benefits from NOLnet operating loss (“NOL”) and tax credit carryforwards may be limited or permanently impaired in certain circumstances. In addition, under the Tax Cuts and Jobs Act of 2017 (the “Tax Act”), the amount of post 2017 NOLs that the Company is permitted to deduct in any taxable year is limited to 80% of its taxable income in such year, where taxable income is determined without regard to the NOL deduction itself. The Tax Act also generally eliminates the ability to carry back any NOL to prior taxable years, while allowing post 2017 unused NOLs to be carried forward indefinitely.

Valuation Allowances

The Company reviews, at least annually, the components of its deferred tax assets. This review is to ascertain that, based upon all of the information available at the time of the preparation of the financial statements, it is more likely than not, that the Company expects to utilize these deferred tax assets in the future. If the Company determines that it is more likely than not that these deferred tax assets will not be utilized, a valuation allowance is recorded, reducing the deferred tax asset to the amount expected to be realized. Many factors are considered in the determination that the deferred tax assets are more likely than not will be realized, including recent cumulative earnings, expectations regarding future taxable income, length of carryforward periods, and other relevant quantitative and qualitative factors. The recoverability of the deferred tax assets is determined by assessing the adequacy of future expected taxable income from all sources, including reversal of taxable temporary differences, forecasted operating earnings, and tax planning strategies.

As of December 31, 2019,2022, the Company carries $12.0carried $12.4 million of deferred income tax liabilities related to indefinite-lived intangibles. Because NOLs generated in taxable years beginning after December 31, 2017 can be carried forward indefinitely under the Tax Act, based upon all of the information available at the time of the preparation of the financial statements, the Company concluded that it is more likely than not that the reversal of taxable temporary differences related to indefinite-lived intangible assets can be used as a source of future taxable income when assessing the realizability of these loss carryforwards that do not expire when they are in the same jurisdiction and of the same character. The Company also determined that it is more likely than not that the reversal of taxable temporary differences related to indefinite-lived intangible assets can be used as a source of future taxable income when assessing the realizability of deferred tax assets that upon reversal would give rise to NOLs that do not expire. As a result, the

The Company recorded income tax expensebenefit from continuing operations of $0.3less than $0.1 million for the year ended December 31, 2019,2022, mainly attributablecomprised of a $0.1 million Canadian deferred tax benefit, partially offset by the indefinite lived deferred tax assets related to the $1.2 million increase inpost 2017 NOLs and Section 163(j) interest addback carryover that are allowed to be applied against the deferred tax liabilities related to the indefinite-lived intangibles, partially offset by $0.9 million additional indefinite-lived deferredindefinite lived intangible assets. The Company was eligible for the High Tax Exception and did not incur Global Intangible Low-Taxed Income (“GILTI”) tax assets generatedliability in 2019. Among the $0.9 million, $0.1 million was related to the pre-tax losses generated by the Company’s U.S. business operations, specifically the indefinite-lived pre-tax losses generated after 2017, and $0.8 million was related to the interest expense disallowed after 2017 that can be carried forward indefinitely.2022. The Company continues to have a full valuation allowance against its foreign deferred tax assets.assets except for the Canadian subsidiary.

As of December 31, 20192022, and 2018,2021, the Company had valuation allowances for deferred tax assets related to its continuing operations in the amount of $74.0$77.8 million and $72.7$74.7 million, respectively.

F-23

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Unremitted Earnings

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 to ASC Topic No. 740-30, undistributed earnings of foreign subsidiaries that are no longer permanently reinvested would become subject to deferred income taxes.

F-22

TableDue to the termination of Contentsthe Canadian contract in early 2022, the Company’s management made the decision to repatriate all of the undistributed earnings from the Canadian subsidiary back to the United States. In 2022, the Company’s Canadian subsidiary distributed $4.1 million to the Company. As of December 31, 2022, the Canadian subsidiary had $1.0 million in undistributed earnings that is expected to be distributed within 12 months.

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIESWilliams formed the Canadian subsidiary in 2018 without significant capital and the majority of the undistributed earnings was expected to be repatriated as dividends to the United States at the United States-Canada treaty rate of 5%. As a result, a $0.3 million income tax liability was accrued as of December 31, 2022 and will be paid in early 2023.  

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Uncertain Tax Positions

A reconciliation of the beginning and ending amount of total unrecognized tax benefits is as follows (in thousands):

 

 

 

 

 

 

 

 

 

Year Ended December 31,

(in thousands)

  

2019

  

2018

Unrecognized tax benefits at January 1

 

$

3,095

 

$

3,328

Reductions to unrecognized tax benefits from lapse of statutes of limitations

 

 

(197)

 

 

(233)

Unrecognized tax benefits at December 31

 

$

2,898

 

$

3,095

 

 

 

 

 

 

 

Unrecognized tax benefits from discontinued operations at December 31

 

$

998

 

$

1,194

Unrecognized tax benefits from continuing operations at December 31

 

 

1,900

 

 

1,901

 

 

$

2,898

 

$

3,095

Year Ended December 31,

(in thousands)

  

2022

  

2021

Unrecognized tax benefits on January 1

$

2,847

$

2,861

Reductions to unrecognized tax benefits from lapse of statutes of limitations

(298)

 

(14)

Unrecognized tax benefits on December 31

$

2,549

$

2,847

Unrecognized tax benefits from discontinued operations on December 31

$

699

$

964

Unrecognized tax benefits from continuing operations on December 31

1,850

1,883

$

2,549

$

2,847

As of December 31, 2019,2022 and 2021, the Company provided for a liability of $2.9approximately $2.5 million and $2.8 million, respectively for unrecognized tax benefits related to various federal, foreign, and state income tax matters compared with a liability of $3.1 million for unrecognized tax benefits as of December 31, 2018.matters. The Company has elected to classify interest and penalties related to uncertain income tax positions in income tax expense. As of December 31, 2019,2022, the Company accrued $1.2$1.1 million for potential payment of interest and penalties, compared with $1.7$1.5 million accrued as of December 31, 2018.2021.

As of each of December 31, 20192022 and 2018,2021, the total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate was $0.4$0.1 million. In 2020,2022, the Company anticipates it will release less than $0.7released approximately $0.3 million of accruals of uncertain tax positions as the statute of limitations related to these liabilities will lapse in 2020.2022.

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, as permitted by the CARES Act. The first half of the deferred amounts were paid in December 2021, and the second half were paid in December 2022.

The Company files a consolidated U.S. federal income tax return. Currently, the Company is not under examination for income tax purposes by any taxing jurisdiction. A presentation of open tax years by jurisdiction is as follows:

Tax Jurisdiction

Examination in Progress

Open Tax Years for Examination

United States

 

None

 

2006 to Present

Mexico

 

None

 

20142017 to Present

China

 

None

 

20112014 to 2017

The NetherlandsCanada

 

None

 

20162020 to 2018Present

F-24

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 10—REVENUE

Disaggregation of Revenue

Disaggregated revenue by type of contract was as follows.

 

 

 

 

 

Year Ended December 31,

Year Ended December 31,

(in thousands)

 

2019

 

2018

2022

2021

Cost-plus reimbursement contracts

 

$

210,538

 

$

158,278

$

186,919

$

258,823

Fixed-price contracts

 

 

35,249

 

 

30,640

51,200

46,123

Total

 

$

245,787

 

$

188,918

$

238,119

$

304,946

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

 

 

 

 

 

 

Year Ended December 31,

Year Ended December 31,

(in thousands)

 

2019

 

2018

2022

2021

United States

 

$

228,820

 

$

188,918

$

232,605

$

268,726

Canada

 

 

16,967

 

 

 —

5,514

36,220

Total

 

$

245,787

 

$

188,918

$

238,119

$

304,946

F-23

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 consolidated balance sheet 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 consolidated balance sheet 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.

 

 

 

 

 

 

 

 

 

December 31,

(in thousands)

 

2019

  

2018

Costs incurred on uncompleted contracts

 

$

214,887

 

$

160,368

Earnings recognized on uncompleted contracts

 

 

30,902

 

 

28,581

Total

 

 

245,789

 

 

188,949

Less—billings to date

 

 

(241,263)

 

 

(184,009)

Net

 

$

4,526

 

$

4,940

Contract assets

 

$

7,225

 

$

8,218

Contract liabilities

 

 

(2,699)

 

 

(3,278)

Net

 

$

4,526

 

$

4,940

December 31,

(in thousands)

2022

  

2021

Costs incurred on uncompleted contracts

$

231,071

$

273,520

Earnings recognized on uncompleted contracts

 

7,049

 

31,426

Total

238,120

 

304,946

Less—billings to date

(231,550)

 

(295,675)

Net

$

6,570

$

9,271

Contract assets

$

12,812

$

12,683

Contract liabilities

(6,242)

 

(3,412)

Net

$

6,570

$

9,271

For the year ended December 31, 2019,2022, the Company recognized revenue of approximately $2.9$3.3 million that was includedon approximately $3.4 million in the corresponding contract liability balance aton December 31, 2018.2021.

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Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Remaining Performance Obligations

The following table includes estimated revenue expected to be recognized in the future related to performance obligations that arewere unsatisfied (or partially unsatisfied) as of December 31, 2019.

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

2020

 

2021

 

Thereafter

 

Total

Remaining performance obligations

 

$

191,282

 

$

116,900

 

$

186,722

 

$

494,904

2022. The Company’s total backlog as of December 31, 2022, was $333.2 million.

(in thousands)

2023

2024

Thereafter

Total

Cost plus

$

137,527

$

52,898

$

101,469

$

291,894

Lump sum

41,061

248

-

41,309

Total

$

178,588

$

53,146

$

101,469

$

333,203

F-24F-26

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 11—DEBT

As of December 31, 20192022, and 2018,2021, the Company had the following debt, net of unamortized deferred financing costs:

 

 

 

 

 

 

 

 

 

December 31,

(in thousands)

  

2019

 

2018

MidCap Facility

 

$

10,849

 

$

3,274

Current portion of New Centre Lane Facility

 

 

700

 

 

525

Current debt

 

$

11,549

 

$

3,799

 

 

 

 

 

 

 

New Centre Lane Facility

 

 

33,687

 

 

34,387

Unamortized deferred financing costs

 

 

(1,029)

 

 

(1,409)

Long-term debt, net

 

$

32,658

 

$

32,978

 

 

 

 

 

 

 

Total debt, net

 

$

44,207

 

$

36,777

costs and unamortized debt discount:

MidCap Facility

December 31,

(in thousands)

  

2022

2021

Revolving Credit Facility

$

17,399

$

676

Current portion of Term Loan

-

1,050

Current debt

$

17,399

$

1,726

Term Loan

$

25,282

$

32,900

Unamortized debt discount from refinancing

(591)

(791)

Unamortized deferred financing costs

(1,331)

(1,781)

Long-term debt, net

$

23,360

$

30,328

Total debt, net

$

40,759

$

32,054

Debt Refinancing

On October 11, 2018,December 16, 2020 (the “Closing Date”), the Company and certain of its subsidiaries refinanced and replaced its prior revolving credit facility and term loan facility 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 three-year,$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 December 31, 2022, the Company had $17.4 million outstanding under the Revolving Credit Facility and $25.3 million outstanding under the Term Loan. The Company had $0.2 million of interest added to the Term Loan balance related to the Third Term Loan Amendment (as defined below). Total liquidity (the sum of unrestricted cash and availability under the Revolving Credit Facility) was $3.8 million on December 31, 2022. As of December 31, 2022, the Company was in compliance with all debt covenants, as amended.

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 MidCap Financial Trust (“MidCap”),PNC, as agent for the lenders, and as a lender, and otherthe lenders that may be added as a party thereto (as amended,(the “Revolving Credit Agreement”), which provides for the “MidCap Facility”). The MidCapRevolving Credit Facility. As part of the Revolving Credit Facility, isthe Company may access a secured asset-based revolvingletter of credit facility that provides borrowing availability against 85% of eligible accounts receivable and the lesser of 80% of eligible contract assets and $1.0 million, after certain customary exclusions and reserves, and allows forsublimit in an amount up to $6.0$2.0 million, a swing loan sublimit in an aggregate principal amount of non-cash collateralized lettersup to $3.0 million, and a Canadian dollar sublimit in an aggregate principal amount of credit.up to $5.0 million. The Company can, if necessary, make daily borrowings under the MidCap Facility with same day funding. The outstanding loan balance under the MidCap Facility is reduced through the daily automated sweeping of the Company’s depository accounts to the lender’s account under the terms of deposit account control agreements. Revolving Credit Agreement matures on December 16, 2025.

As of December 31, 2019 and 2018, the Company had $10.8 million and $3.3 million, respectively, outstanding2022, borrowings under the MidCapRevolving Credit Facility which was included in short-term borrowings on the consolidated balance sheets. At December 31, 2019 and 2018, the Company had $0.7 million and $4.7 million, respectively, in available borrowing under the MidCap facility.

Borrowings under the MidCap Facility bearbore interest, at the London Interbank Offered Rate (“LIBOR”) plus 6.0% per year, subject to a minimum LIBORCompany’s election, at either (1) the base commercial lending rate of 1.0%PNC, as publicly announced, plus 1.25%, and are payable in cash on a monthly basis, (2) the Term SOFR Rate (as defined in the Revolving Credit Agreement, as amended) based on the secured overnight financing rate (“SOFR”), subject to a minimum 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.

F-27

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company must payRevolving Loan Borrowers’ Obligations (as defined in the Revolving Credit Agreement) are guaranteed by certain of the Company’s material, 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 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 no 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.

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 0.5%0.25% per annum ofyear on the average unused portion of the commitments underRevolving 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 MidCap Facility, certainrevolving 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 customary administration feestermination of the Revolving Credit Agreement and a minimum balance fee. In addition, whilethe obligation of revolving lenders to make advances thereunder for any lettersreason (the “Early Termination Date”). The Early Termination Fee is calculated as follows: if the Early Termination Date occurred on or prior to the first anniversary of the Closing Date, the Early Termination Fee 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 areis outstanding under the MidCapRevolving Credit Facility, the CompanyRevolving Loan Borrowers must pay a letter of credit fronting fee at a rate equal to 6.0%0.25% per annum,year, payable quarterly, in addition to any other customary fees required by the issuer of the letter of credit.

The Company’s obligations under the MidCap Facility are secured by first priority liens on substantially all of its assets, other than the Excluded Collateral (as defined in the MidCap Facility), subject to the terms of an intercreditor agreement, dated as of October 11, 2018 (as amended, the “Intercreditor Agreement”), entered into by an affiliate of Centre Lane Partners, LLC (“Centre Lane”), as a lender under the New Centre Lane Facility (as defined below), and MidCap, as agent, and to which the Company consented. The IntercreditorRevolving Credit Agreement was entered into as required by the MidCap Facility and the New Centre Lane Facility. The first priority liens previously granted by the Company and certain of its wholly owned subsidiaries in favor of the Centre Lane affiliate in connection with the New Centre Lane Facility are also subject to the Intercreditor Agreement, which, among other things, specifies the relative lien priorities of the secured parties under each of the MidCap Facility and the New Centre Lane Facility in the relevant collateral. It contains customary provisions regarding, among other things, the rights of the respective secured parties to take enforcement actions against the collateral and certain limitations on amending the documentation governing each of the MidCap Facility and the New Centre Lane Facility. It additionally provides secured parties under each of the MidCap Facility and the New Centre Lane Facility the option, in certain instances, to purchase all outstanding obligations of the Company under the other respective loan.

F-25

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company may from time to time voluntarily prepay outstanding amounts under the MidCap Facility, in whole or in part, in a minimum amount of $0.1 million. If at any time the amount outstanding under the MidCap Facility exceeds the borrowing base in effect at such time, the Company must repay the excess amount in cash, cash collateralize liabilities under letters of credit, or cause the cancellation of outstanding letters of credit (or any combination of the foregoing), in an aggregate amount equal to such excess. The Company is also required to repay certain amounts outstanding under the MidCap Facility upon the occurrence of certain events involving the assets upon which the borrowing base is calculated, including receipt of payments or proceeds from the Company’s accounts receivable, certain casualty proceeds in excess of $25,000, and receipt of proceeds following certain asset dispositions. The Company also has certain reimbursement obligations in the event of payments by the agent or a lender against draws under outstanding letters of credit.

In the event the MidCap Facility is terminated (by reason of an event of default or otherwise) 90 days or more prior to the maturity date, the Company will be required to pay a prepayment fee in an amount equal to the aggregate commitment under the MidCap Facility at the time of termination, multiplied by 2.0% in the first two years following October 11, 2018, 1.5% in the third year, and 1.0% thereafter.

The MidCap Facility requires the Company to regularly provide financial information to the lenders, and, beginning on December 31, 2018, to maintain certain total leverage and fixed charge coverage ratios and meet minimum consolidated adjusted EBITDA and minimum liquidity requirements (each of which as defined in the MidCap Facility). The Company determined that it was not in compliance with these covenants (other than the minimum liquidity requirement) as of the last day of its third quarter, and accordingly, effective as of  November 13, 2019, the Company entered into an amendment to the MidCap Facility that changed the required levels of both financial covenants so that the Company was in compliance with the MidCap Facility as amended as of September 29, 2019. The Company’s expense related to this amendment was $0.1 million, which is included in general and administrative expenses on the consolidated statement of operations for the year ended December 31, 2019. As of December 31, 2019, the Company was in compliance with  all three covenants.

The MidCap Facility also contains customary representations and warranties, as well as customary affirmative and negative covenants.covenants, in each case, with certain exceptions, limitations and qualifications. The MidCap Facility contains covenants that may, among other things, limitRevolving Credit Agreement also requires the Company’s abilityRevolving Loan Borrowers to incur additional debt, incur liens, make investments, engage in mergers, dispositions or sale-leasebacks, engage in new lines of business orregularly provide certain transactionsfinancial information to the lenders thereunder, maintain a springing minimum fixed charge coverage ratio, and comply with affiliates and change accounting policies or fiscal year.certain limitations on capital expenditures.

Events of default under the MidCap Facility include, but are not limited to, failure to timely pay any amounts due and owing, a breach of certain covenants or any representations or warranties, the commencement of any bankruptcy or other insolvency proceeding, judgments in excess of certain acceptable amounts, certain events related to ERISA matters, impairment of security interests in collateral or invalidity of guarantees or security documents, and a default or event of default under the New Centre Lane Facility or the Intercreditor Agreement.

Upon default, MidCap would have the right to declare all borrowings under the MidCap Facility to be immediately due and payable, together with accrued interest and fees, and exercise remedies under the other Financing Documents (as defined in the MidCap Facility).

Centre Lane Facilities

In June 2017, the Company refinanced and replaced its then-existing debt with a 4.5-year senior secured term loan facility with an affiliate of Centre Lane as Administrative Agent and Collateral Agent, and the other lenders from time to time party thereto (as amended, the “Initial Centre Lane Facility”). The Initial Centre Lane Facility did not provide for working capital borrowings or access to additional letters of credit. These restrictions were addressed when the Company refinanced and replaced the Initial Centre Lane Facility with a new Centre Lane Facility and when it entered into the MidCap Facility discussed above.

On September 18, 2018, the Company refinanced and replaced its Initial Centre Lane Facility with a four-year $35.0 million senior secured credit agreement with an affiliate of Centre Lane as Administrative Agent and Collateral Agent, and the other lenders from time to time party thereto (the “New Centre Lane Facility”). The Company recorded a loss on extinguishment of debt of $1.1 million, which is included in interest expense on the consolidated statement of operations for the year ended December 31, 2018. After payment of the amounts outstanding under the Initial Centre Lane Facility and fees associated with the New Centre Lane Facility, net cash proceeds were $1.0 million.

F-26

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The New Centre Lane Facility requires payment of an annual administration fee of $25,000. Borrowings under the New Centre Lane Facility bear interest at LIBOR (with a minimum rate of 2.5%) plus 10.0% per year, payable monthly in cash. The Company must repay an amount equal to 0.25% of the original aggregate principal amount of the New Centre Lane Facility in consecutive quarterly installments, beginning on December 31, 2018 through June 30, 2019. The Company must repay an amount equal to 0.50% of the original aggregate principal amount of the New Centre Lane Facility in consecutive quarterly installments, beginning on September 30, 2019.

The Company’s obligations under the New Centre Lane Facility are guaranteed by all of its wholly owned domestic subsidiaries, subject to customary exceptions. The Company’s obligations are secured by first priority security interests on substantially all of its assets and those of its wholly owned domestic subsidiaries. This includes 100% of the voting equity interests of the Company’s domestic subsidiaries and 65% of the voting equity interests of other directly owned foreign subsidiaries, subject to customary exceptions.

Beginning on September 19, 2019, the Company may voluntarily prepay the New Centre Lane Facility at any time or from time to time, in whole or in part, in a minimum amount of $1.0 million of the outstanding principal amount, plus any accrued but unpaid interest on the aggregate principal amount being prepaid, plus a prepayment premium, to be calculated as follows (the “Prepayment Premium”):

Prepayment Premium as a

Percentage of Aggregate

Period

Outstanding Principal Prepaid

September 19, 2019 to September 18, 2021

1%

After September 18, 2021

0%

Subject to certain exceptions, the Company must prepay an aggregate principal amount equal to 75% of its Excess Cash Flow (as defined in the New Centre Lane Facility), minus the sum of all voluntary prepayments, within five business days after the date that is 90 days following the end of each fiscal year. The New Centre Lane Facility also requires mandatory prepayment of certain amounts in the event the Company or its subsidiaries receive proceeds from certain events and activities, including, among others, asset sales, casualty events, the issuance of indebtedness and equity interests not otherwise permitted under the New Centre Lane Facility and the receipt of tax refunds or extraordinary receipts in excess of $500,000, plus, in certain instances, the applicable Prepayment Premium, calculated as set forth above.

The New Centre Lane Facility contains customary representations and warranties, as well as customary affirmative and negative covenants. The New Centre Lane Facility contains covenants that may, among other things, limit the Company’s ability to incur additional debt, incur liens, make investments or capital expenditures, declare or pay dividends, engage in mergers, acquisitions and dispositions, engage in new lines of business or certain transactions with affiliates and change accounting policies or fiscal year.

The New Centre Lane Facility requires the Company to regularly provide financial information to the lenders, and, beginning on December 31, 2018, to maintain certain total leverage and fixed charge coverage ratios and meet minimum consolidated adjusted EBITDA and minimum liquidity requirements (each of which as defined in the New Centre Lane Facility). The Company determined that it was not in compliance with certain of these covenants as of the last day of its third quarter, and accordingly, on November 13, 2019, the Company entered into an amendment to the New Centre Lane Facility that changed the required levels of both the leverage ratio and the minimum consolidated adjusted EBITDA so that the Company was in compliance with the New Centre Lane Facility as amended as of September 29, 2019. The Company’s expense related to this amendment was $0.3 million, which is included in general and administrative expenses on the consolidated statement of operations for the year ended December 31, 2019. As of December 31, 2019, the Company was in compliance with these covenants.

Events of default under the New Centre Lane FacilityRevolving Credit Agreement include, but are not limited to, a breach of any of the financialcertain 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, and impairment of security interests in collateral or invalidity of guarantees or security documents.

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.

F-27F-28

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Upon a default underOn August 3, 2022, the New Centre Lane Facility,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 senior secured lenders would have the right to accelerate the then-outstanding amounts under such facilitytransmission and to exercise their rightsdistribution business unit start-up, and remedies to collect such amounts, which would include foreclosing on collateral constituting substantially allcosts and expenses arising out of the Company’s assetslitigation with a designated former executive and thosehis employer (in each case, subject to certain specified dollar limits), (ii) permitted advances against certain eligible receivables of its subsidiaries. However, in October 2018,one of the Company’s joint ventures (also subject to specified dollar limits), (iii) included provisions that replaced 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.

On January 9, 2023, the Company entered into the MidCap Facility,third amendment to the Revolving Credit Agreement (the “Third Revolving Credit Amendment”). The Third Revolving Credit Amendment, among other things, (i) modified the financial covenants to require that the Company achieve certain designated minimum levels of trailing twelve-month EBITDA (as defined in the Revolving Credit Agreement) as of the end of each fiscal month beginning on February 5, 2023, and ending December 31, 2023; (ii) amended the calculation of EBITDA to include (or “add back”) certain non-recurring losses and expenses incurred in connection with projects executed by the Company’s Jacksonville, Florida office, one-time costs and expenses incurred in connection with the Company’s transmission and distribution business segment start-up, non-recurring costs and expenses arising out of the implementation of a new enterprise resource planning (“ERP”) system, and non-recurring costs and expenses arising out of pro forma headcount reductions implemented by the Company and certain litigation with a former executive and a competitor of the Company that was settled in the fourth quarter of 2022 (in each case, subject to certain specific dollar limits for certain fiscal quarters commencing in the second fiscal quarter of 2021 and ending December 31, 2022); (iii) provided temporary reserve relief of up to $1.0 million from the date of the Third Revolving Credit Amendment until June 30, 2023; (iv) reduced the Eligible Unbilled Receivables (as defined in the Revolving Credit Agreement) sublimit from $7.5 million to $5.5 million; (v) increased the Applicable Margin (as defined in the Revolving Credit Agreement) by 2%; and (vi) provided for an amendment fee of $0.3 million payable when the loan obligations under the Revolving Credit Agreement are repaid or, if earlier, June 30, 2023, and an exit fee of $0.3 million to be paid upon the occurrence of certain stated events, including a prepayment or maturity of the loan obligations under the Revolving Credit Agreement.

Additionally, on February 21, 2023, the Company entered into the fourth amendment to the Revolving Credit Agreement (the “Fourth Revolving Credit Amendment”). The Fourth Revolving Credit Amendment, among other things, provided for the consent of PNC to the Fourth Term Loan Amendment (as defined below) and incorporated into the Revolving Credit Agreement certain of the conditions and covenants provided for in the Fourth Term Loan Amendment, including the conditions to the Delayed Draw Term Loans (as defined below), the minimum liquidity covenant and the additional reporting obligations.

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.

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 (“EICF”), 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 was available upon the satisfaction of certain conditions precedent for up to 18 months following the Closing Date and expired in June 2022. The Term Loan Agreement matures on December 16, 2025.

F-29

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of December 31, 2022, borrowings under the Term Loan Agreement bore interest at 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 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 Borrowers’ Obligations (as defined in the Term Loan Agreement) are guaranteed by certain of the Company’s material, 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 asset-based revolving credit facility that provides borrowing availability against 85%by first-priority security interests on substantially all of eligiblethe 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 lesserIntercreditor 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 80%$1.0 million of eligible contract assetsthe outstanding principal amount, plus a prepayment fee. The prepayment fee was amended effective June 30, 2022, as described below.

Subject to certain exceptions, within 120 days of the end of each calendar year, beginning with the year 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 $1.0 million;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, 2022. 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.

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.

F-30

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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).

On December 30, 2022, the Company entered into a second amendment to the Term Loan Agreement, pursuant to which, among other things, the lenders agreed to defer payment of the principal, and part of the interest, due on January 1, 2023 to January 9, 2023.

On January 9, 2023, the Company entered into a third amendment to the Term Loan Agreement (the “Third Term Loan Amendment”) that, among other things, (i) modified the financial covenants to require that the Company achieve certain designated minimum levels of trailing twelve-month EBITDA (as defined in the Term Loan Agreement) as of the end of each fiscal month beginning on February 5, 2023, and ending December 31, 2023; (ii) amended the calculation of EBITDA to include (or “add back”) certain non-recurring losses and expenses incurred in connection with certain projects executed by the Company’s Jacksonville, Florida office, one-time costs and expenses incurred in connection with the Company’s transmission and distribution business segment start-up, non-recurring costs and expenses arising out of the implementation by the Company of a ERP system, and non-recurring costs and expenses arising out of pro forma headcount reductions implemented by the Company and certain litigation with a former executive and a competitor of the Company that was settled in the fourth quarter of 2022 (in each case, subject to certain specific dollar limits for certain fiscal quarters commencing in the second fiscal quarter of 2021 and ending December 31, 2022); (iii) adjusted the applicable interest rate to SOFR (as defined in the Term Loan Agreement) plus 11%; (iv) for each quarterly interest payment commencing January 1, 2023 through and including January 1, 2024, capped the amount of quarterly interest payable in cash at 10% per annum, with the remainder being payable in kind; (v) deferred amortization payments from the January 1, 2023 quarterly payment date until and including the January 1, 2024 quarterly payment date; (vi) increased the excess cash flow sweep from 50% to 75% for the fiscal year ending December 31, 2023 and each fiscal year thereafter; (vii) required certain additional reporting obligations, including the delivery of weekly updates of a 13-week cash flow forecast and hosting additional periodic conference calls with management and named advisors; (viii) increased, from the pre-existing levels, the permitted total leverage of the Company for the four quarter periods ended December 31, 2022 through March 31, 2024; and (ix) provided for an amendment fee equal to 1% of the principal loan balance under the Term Loan Agreement, payable in kind.

F-31

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On February 24, 2023, the Company entered into a fourth amendment to the Term Loan Agreement (the “Fourth Term Loan Amendment”). The Fourth Term Loan Amendment provided for delayed draw term loans in an aggregate principal amount of $1.5 million, which were funded at the time the Fourth Term Loan Amendment was signed, and discretionary delayed draw term loans in an aggregate principal amount of $3.5 million, which will be funded at the lenders’ discretion (together, the “Delayed Draw Term Loans”), subject to the conditions set forth in the Term Loan Agreement, as amended by the Fourth Term Loan Amendment. In addition to interest being payable on the same basis as existing borrowings under the Term Loan Agreement, on the earlier to occur of the maturity date or the termination date of the Term Loan Agreement or any acceleration of the obligations under the Term Loan Agreement, additional interest equal to 50% of the aggregate amount of the Delayed Draw Term Loans borrowed will be payable. The Fourth Term Loan Amendment also includes a minimum liquidity covenant. The Delayed Draw Term Loans are conditioned upon, amount other things, the Company using commercially reasonable best efforts to actively receive net cash proceeds from issuances of subordinated debt or equity of at least $0.5 million on terms acceptable to EICF and the lenders under the MidCap Facility holdTerm Loan Agreement, continuing its publicly announced review of strategic alternatives and, subject to the exercise by the Board of Directors of the Company of its fiduciary obligations, using commercially reasonable best efforts to conduct such review in accordance with  a first priority liencustomary indicative timeline. The Fourth Term Loan Amendment also imposed certain additional reporting obligations on the Company’s accounts receivableCompany, including the weekly delivery of a 13-week cash flow forecast.

On February 21, 2023, the Company received a $1.0 million advance pursuant to the then-existing terms of the Term Loan Agreement and, contract assets.on February 24, 2023, the Company received $1.5 million principal amount related to the delayed draw term loans allowed from the Fourth Term Loan Amendment. In addition to interest being payable on the same basis as existing borrowing under the Term Loan Agreement, on the earlier to occur of the maturity date or the termination date of the Term Loan Agreement or any acceleration of the obligations under the Term Loan Agreement, additional interest equal to $0.5 million will be payable in respect of this $1.0 million advance.

The scheduled maturities of the New Centre Lane Facility areTerm Loan were as follows:follows as of December 31, 2023:

 

 

 

 

December 31,

 

(in thousands)

2020

 

$

700

2021

 

 

700

2022

 

 

32,987

Thereafter

 

 

 —

Total

 

$

34,387

December 31,

(in thousands)

2023

$

-

2024

1,312

2025

23,970

Total

$

25,282

The Company’s borrowing rate under the New Centre Lane Facility atTerm Loan on December 31, 20192022 was 12.5%.11.0% plus SOFR.

F-32

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Wynnefield Notes

The Wynnefield Notes consist of (i) an Unsecured Promissory Note by and among the Company, as borrower, certain of its subsidiaries, as guarantors under a separate Guaranty Agreement, and Wynnefield Partners Small Cap Value, LP I in the aggregate principal amount of $400,000 and (ii) an Unsecured Promissory Note by and among the Company, as borrower, certain of its subsidiaries, as guarantors under a separate Guaranty Agreement, and Wynnefield Partners Small Cap Value, LP (together with Wynnefield Partners Small Cap Value, LP I, the “Wynnefield Lenders”) in the aggregate principal amount of $350,000. All principal and interest will be due on the maturity date of the Wynnefield Notes, which will be the earliest of (i) December 23, 2025; (ii) a change in control of the Company; (iii) a refinancing or maturity extension of either of the Term Loan Agreement or the Revolving Credit Agreement; or (iv) an acceleration following the occurrence of an event of default (as defined in the Wynnefield Notes, and which includes any default under the Term Loan Agreement or the Revolving Credit Agreement). The Wynnefield Notes bear interest at the fixed rate of (i) 8.0% per annum from the closing date; (ii) 13.0% per annum from and after the maturity date; and (iii) 13.0% per annum from and after an event of default (as defined in the Wynnefield Notes, and which includes any default under the Term Loan Agreement or the Revolving Credit Agreement). The Wynnefield Notes are subject to an aggregate exit fee of $100,000, payable upon the earlier of an event of default or payment in full of all obligations due under the Wynnefield Notes. In connection with the Wynnefield Notes, the Company, certain of its subsidiaries, the Wynnefield Lenders and the agents under each of the Revolving Credit Agreement and the Term Loan Agreement have entered into two Subordination and Intercreditor Agreements, pursuant to which the Wynnefield Lenders have agreed, on the terms and subject to the conditions set forth therein, to subordinate the Wynnefield Notes to the obligations of the Company under the Revolving Credit Agreement and the Term Loan Agreement.

The Wynnefield Lenders, together with their affiliates, are the Company’s largest equity investor. Nelson Obus, a member of the Company’s Board of Directors, is a managing member of Wynnefield Capital Management, LLC, the general partner of the Wynnefield Lenders.

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 MidCapRevolving Credit Facility allowsprovides for a letter of credit sublimit in an amount up to $6.0$2.0 million. The Company had $0.5 million of non-cash collateralized letters of credit at 6.0% interest,outstanding under the Revolving Credit Facility letter of which the Company had $1.8credit sublimit and $0.4 million and $2.7 millioncash collateralized standby letters of credit outstanding pursuant to its prior revolving credit facility with Wells Fargo Bank, National Association as of December 31, 2019 and 2018, respectively.2022. There were no amounts drawn upon these letters of credit.credit as of December 31, 2022.

In addition, as of December 31, 20192022 and 2018,December 31, 2021, the Company had outstanding payment and performance surety bonds of $59.3$59.2 million and $51.1$67.6 million, respectively.

Deferred Financing Costs and Debt Discount:

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

 

 

 

 

 

 

 

 

 

December 31,

(in thousands)

 

2019

 

2018

Initial Centre Lane Facility*

 

$

 —

 

$

1,460

New Centre Lane Facility

 

 

380

 

 

111

MidCap Facility

 

 

235

 

 

52

Total

 

$

615

 

$

1,623

December 31,

(in thousands)

2022

2021

Term loan

$

450

$

450

Debt discount

200

200

Revolving credit facility

381

381

Total

$

1,031

$

1,031

F-33

*

2018 includes accelerated amortization of deferred financing costs of $0.6 million associated with the fourth amendment to the Initial Centre Lane Facility entered into in April 2018.

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes unamortized deferred financing costs included on the Company's consolidated balance sheets:

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

(in thousands)

 

Location

 

2019

 

2018

New Centre Lane Facility

 

Long-term debt, net

 

$

1,029

 

$

1,409

MidCap Facility

 

Other long-term assets

 

 

419

 

 

654

Total

 

 

 

$

1,448

 

$

2,063

December 31,

(in thousands)

Location

2022

2021

Term Loan

Long-term debt, net

$

1,331

$

1,781

Debt discount

Long-term debt, net

591

791

Revolving Credit Facility

Other long-term assets

1,128

1,509

Total

$

3,050

$

4,081

F-28

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 12—EARNINGS PER SHARE

As of December 31, 2019, the Company’s 19,057,195 shares outstanding included 282,059 shares of contingently issued but unvested restricted stock. As of December 31, 2018, the Company’s 18,660,218 shares outstanding included 193,589 shares 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 (loss) per common share are calculated by dividing net income (loss) by the weighted average common shares outstanding during the period. Diluted earnings (loss) 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.

Basic and diluted lossincome (loss) per common share from continuing operations were calculated as follows:

 

 

 

 

 

 

 

 

 

Year Ended December 31,

(in thousands, except share data)

  

2019

  

2018

Income (loss) from continuing operations

 

$

1,022

 

$

(13,790)

 

 

 

 

 

 

 

Basic income (loss) per common share:

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

18,700,107

 

 

18,207,661

 

 

 

 

 

 

 

Basic income (loss) per common share

 

$

0.05

 

$

(0.76)

 

 

 

 

 

 

 

Diluted income (loss) per common share:

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

18,700,107

 

 

18,207,661

 

 

 

 

 

 

 

Diluted effect:

 

 

 

 

 

 

Unvested portion of restricted stock units and awards

 

 

221,905

 

 

 —

Weighted average diluted common shares outstanding

 

 

18,922,012

 

 

18,207,661

 

 

 

 

 

 

 

Diluted income (loss) per common share

 

$

0.05

 

$

(0.76)

Year Ended December 31,

(in thousands, except share data)

  

2022

  

2021

Income (loss) from continuing operations

$

(14,173)

$

2,702

Basic income (loss) per common share:

Weighted average common shares outstanding

26,032,960

25,506,748

Basic income (loss) per common share

$

(0.54)

$

0.11

Diluted income (loss) per common share:

Weighted average common shares outstanding

26,032,960

 

25,506,748

Diluted effect:

 

Unvested portion of restricted stock units and awards

630,896

Weighted average diluted common shares outstanding

 

26,032,960

 

26,137,644

 

Diluted income (loss) per common share

$

(0.54)

$

0.10

As of December 31, 2022, the Company’s 26,543,391 shares outstanding included 321,142 shares of contingently issued but unvested restricted stock. As of December 31, 2021, the Company’s 25,939,621 shares outstanding included 215,956 shares 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.

The weighted-average number of shares outstanding used in the computation of basic and diluted earnings per share does not include the effect of the following potential outstanding common stock. The effects of thesethe potentially outstanding sharesservice-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:

 

 

 

 

 

Year Ended December 31,

 

2019

  

2018

Unvested service-based restricted stock awards

422,486

 

1,515

Unvested performance- and market-based restricted stock awards

892,814

 

620,457

Stock options

122,000

 

122,000

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 December 31, 2022 and 2021.

Year Ended December 31,

2022

  

2021

Unvested service-based restricted stock and restricted stock unit awards

535,051

Unvested performance- and market-based restricted stock unit awards

643,784

765,857

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Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 13—STOCK‑BASEDSTOCK-BASED COMPENSATION

Description of the Plans

The Company has one equity incentive plan: the 2015 Equity Incentive Plan, as amended and restated on June 10, 2019,March 15, 2022 (the “2015 Plan”). The 2015 Plan allows for the issuance of up to 1,000,0004,500,000 shares of stock awards to the Company’s employees and directors in the form of a variety of instruments, including stock options, restricted stock, restricted share units, stock appreciation rights and other share-based awards. The Company provides the option to repurchase the number of shares required to satisfy tax withholding obligations in connection with the vesting of restricted stock unit awards issued to employees participating in the 2015 Plan. The 2015 Plan also allows for cash-based awards. Generally, all participants who voluntarily terminate their employment with the Company forfeit 100% of all unvested equity awards. Persons who are terminated without cause, or in some cases leave for good reason, are generally entitled to proportionate vesting. Time-basedThe vesting of proportionate vestedtime-based shares areis accelerated, and such shares distributed upon theirsuch individuals’ termination date. Proportionate market-based and performance-based restricted shares remain categorized as unvested pending final conclusion on the achievement of the related awards. As of December 31, 2019,2022, the Company had approximately 973,3351,841,944 shares available for grant under the 2015 Plan.

F-29

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Plan to settle previously granted awards.  

During 2019 and 2018,2022, the Company granted 143,0001,391,679 restricted shares and 967,029 restricted stock units respectively, to certain employees outside ofunder the 2015 Plan. All amounts and units described below include these awards.

Total stock‑basedstock-based compensation expense during the years ended December 31, 20192022 and 20182021 was $1.6$1.7 million and $1.2$3.0 million, respectively, with no related excess tax benefit recognized, and was included in general and administrative expenses on the Company’s consolidated statements of operations. As of December 31, 2019,2022, total unrecognized compensation expense related to all unvested restricted stock and restricted stock unit awards for which terms and conditions are known totaled $1.9$2.1 million, which is expected to be recognized over a weighted average period of 1.9 years. The fair value of shares that vested during 20192022 and 20182021 based on the stock price at the applicable vesting date was $0.7$1.5 million and $1.7$2.3 million, respectively. The weighted average grant date fair value of the Company’s restricted shares and restricted stock units was $2.29$1.95 and $2.07$3.27 for the years ended December 31, 20192022 and 2018,2021, respectively.

Service-Based Restricted Stock and Unit Awards: During 2019,2022, the Company granted 358,613658,484 service-based restricted shares and restricted stock units under the 2015 PlanPlan. The grants included: 366,590 service-based restricted stock units to certain employees at a grant date fair value of $2.35$1.99 per share. Theseshare on March 31, 2022 and 291,894 service-based restricted share awards to its six non-employee directors at a grant date fair value of $1.85 per share on February 3, 2022. The service-based restricted stock unitsunit grants vest ratably over a three-year period beginning on March 31, 2020.2023, and the restricted shares vest after a one-year service period on February 3, 2023 for the six non-employee directors. The fair value of service-based restricted stock units represents the closing price of the Company’s common stock on the date of grant.

Additionally, during 2019, service-based restricted stock units of 21,500 and 100,000 were granted to certain employees outside of the 2015 Plan at a grant date fair value of $2.60 per share and $1.95 per share, respectively. These service-based restricted stock units generally vest over a period of three years and will be settled with treasury stock. The Company also granted 149,639 service-based restricted stock awards out of treasury stock to its five non-employee directors at a grant date fair value of $2.45 per share. The service-based restricted stock awards vest ratably over a four- year period beginning on January 22, 2020. The fair value of service-based restricted stock unitsunit and restricted stock awards represents the closing price of the Company’s common stock on the date of grant. These restricted stock units and restricted stock awards are accounted for as equity awards and are included in the table below.

During 2019 and 2018, certain service-based restricted stock units (the “modified service awards”) that were previously accounted for as liabilities totaling 62,962 and 210,668, respectively, vested. These awards were modified and settled, partially, with shares from the 2015 Plan and the remaining out of the Company’s treasury stock, which resulted in accounting for these awards under the equity method. The fair value of the modified service awards was based on the closing price of the Company’s stock on the modification date. The modification of these awards resulted in a $0.2 million and $0.3 million reduction in stock compensation expense for the years ended December 31, 2019 and 2018, respectively.

Information for service-based restricted stock and restricted stock units, excluding those accounted for as liability awards, is as follows:

 

 

 

 

 

 

 

  

 

  

Weighted-Average

 

 

 

 

Grant Date

 

 

Shares

 

Fair Value per Share

Unvested restricted stock and restricted stock units at December 31, 2018

 

634,754

 

 

2.65

Granted

 

654,857

 

 

2.32

Vested

 

(375,515)

 

 

3.04

Modified

 

62,962

 

 

4.30

Forfeited

 

(54,556)

 

 

2.50

Unvested restricted stock and restricted stock units at December 31, 2019

 

922,502

 

$

2.41

Market-Based Restricted Stock Unit Awards:  During 2019, market-based restricted stock units of 21,500 were granted to certain employees outside of the 2015 Plan and will be settled with treasury stock. The 2019 units contain a market condition based on a stock price goal. The stock price goal will be met if the Company’s common stock price per share equals or exceeds $5.00 for any period of 30 consecutive trading days during a three-year period ending on March 31, 2021. These restricted stock units will vest ratably over a period of three years if the stock price goal is met on or before March 31, 2019. However, if the stock price goal is achieved after March 31, 2019 and on or prior to March 31, 2020, the restricted stock units will vest in three installments, with one-third vesting on the date the stock price goal is met, one-third vesting on March 31, 2020 and one-third vesting on March 31, 2021. Further, if the stock price goal is achieved after March 31, 2020 and on or prior to March 31, 2021, the restricted stock units will vest in two installments, with two-thirds vesting on the date the stock price

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

goal is met and one-third vesting on March 31, 2021. If the stock price goal is met after March 31, 2021 and during the three-year implied service period, the restricted stock units will vest in full on the date that the stock price goal is met.

Information for market-based restricted stock units is as follows:

 

 

 

 

 

 

 

  

 

  

Weighted-Average

 

 

 

 

Grant Date

 

 

Shares

 

Fair Value per Share

Unvested restricted stock units at December 31, 2018

 

620,457

 

$

1.72

Granted

 

21,500

 

 

0.75

Vested

 

 —

 

 

 —

Modified

 

 —

 

 

 —

Forfeited

 

(21,808)

 

 

0.94

Unvested restricted stock units at December 31, 2019

 

620,149

 

$

1.79

The Company estimates the fair value of its market‑based restricted stock unit awards on the date of grant using a Monte Carlo simulation valuation model. This pricing model uses multiple simulations to evaluate the likelihood of achieving the market conditions set forth in the award agreements. Expense is only recorded for the number of market‑based restricted stock unit awards granted. The assumptions used to estimate the fair value of market‑based restricted stock unit awards granted during 2019 and accounted for under the equity method were as follows:

 

 

 

 

 

Expected term (years)

  

  

2.46

 

Expected volatility

 

 

37.0

%

Expected dividend yield

 

 

0.00

%

Risk-free interest rate

 

 

2.52

%

Weighted-average grant date fair value

 

$

0.75

 

Performance-based awards:  During 2019, the Company granted cash-based performance awards under the 2015 Plan valued at $1.7 million. At the Company’s discretion, these performance-based restricted stock awards can be settled in cash or shares. The performance objectives associated with these awards are established by the Compensation Committee of the Board of Directors (the “Compensation Committee”) on an annual basis. For the 2019 performance period, the performance objective is based on the Company’s backlog performance target as of December 31, 2019. Performance objectives for the two succeeding years will be established by the Compensation Committee in the respective performance period. Award payouts range from a threshold of 50% to a maximum of 200% for each respective annual performance period. Because the Company intends to settle the cash-based performance awards that are scheduled vest on March 31, 2020 with shares, the fair value of the cash-based performance awards with an established 2019 performance objectivegrants represents the closing price of the Company’s common stock on the date of grant. The fair valueCompany accrued $1.3 million of stock-compensation expense recorded in general and administrative expenses on the cash-basedincome statement and paid-in capital on the balance sheet.

Information for service-based restricted stock and restricted stock units as of December 31, 2022 was as follows:

  

  

Weighted-Average

Grant Date

Shares

Fair Value per Share

Unvested restricted stock and restricted stock units on December 31, 2021

885,800

$

1.37

Granted

658,484

1.92

Vested

(463,502)

2.57

Forfeited

(102,321)

2.42

Unvested restricted stock and restricted stock units on December 31, 2022

978,461

$

2.22

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Performance-based awards:  During 2022, the Company established its 2022 long-term incentive program and granted 733,195 performance-based restricted stock units under the 2015 Plan. At the Company’s discretion, these performance-based restricted stock units can be settled in cash or shares. The performance-based restricted stock units under the 2022 long-term incentive program had three annual performance awards thatperiods (fiscal years 2022, 2023 and 2024), with operating income and free cash flow goals (equally weighted) for each year established on the date of grant.  The annual achievement levels are scheduledaccumulated over the three-year performance period. 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.  Payout for each year ranges from 50% for threshold performance, 100% for target performance and up to 200% for maximum performance.  The earned amounts, if any, vest on March 31, 2021 and 2022 will be measured in the year that the respective performance objective is established and approved by the Compensation Committee. The Company recognizes stock-based compensation expense related to its cash-based performance awards based on its determination of the likelihood of achieving the performance objective.2025.  The Company reassesses the likelihood of meeting the specified performance objective at the end of each reporting period and adjusts compensation expense, as necessary, based on the likelihood of achieving the performance objective.objectives. The Company’s performance-based liability grant did not satisfy the performance objective and was forfeited. The Company accrued $0.1 million of stock-compensation expense recorded in general and administrative expenses on the income statement and paid-in capital on the balance sheet.

Cash-based awards:  During 2017, cash-based awards totaling $0.9 million were awarded to employees. The cash-based awards granted to employees generally vest over a period of two years and areInformation for performance-based restricted stock units (excluding those accounted for as liability awards. Asawards because the award was based on a cash amount and not based on an amount of restricted share units) as of December 31, 2018, the Company had a $0.2 million liability related to this award which2022 was included in other current liabilities on the consolidated balance sheet. No cash-based awards were granted in 2019 or 2018.as follows:

Stock Options:  During 2015, the Company granted a stock option to purchase 122,000 shares of its common stock to its former chief executive officer at an exercise price of $13.85 per share. The option provides for immediate vesting of 32,000 shares, with the remaining 90,000 vesting ratably over a ten month period beginning in June 2015 and has a five year term. This is the only stock option grant the Company has made to date.

  

  

Weighted-Average

Grant Date

Shares

Fair Value per Share

Unvested restricted stock and restricted stock units on December 31, 2021

547,133

$

3.68

Granted

733,195

1.98

Forfeited

(636,545)

3.46

Unvested restricted stock and restricted stock units on December 31, 2022

643,783

$

2.03

F-31F-36

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Market-based awards: The Company previously granted market-based restricted share units in (i) 2016 under the 2015 Plan that would have vested in August 5, 2021 if the Company would have achieved a per share stock price of $5.50, (ii) 2017 under the 2015 Plan that would have vested in March 31, 2021 if the company would have achieved a per share stock price of $6.00, and (iii) 2018 outside the 2015 Plan that would have vested in June 30, 2021 if the Company would have achieved a per share stock price of $5.00. The Compensation Committee extended the performance period for each of these market-based restricted share unit grants to December 31, 2022 and this extension will permit current employees to vest in an outstanding award if (i) he or she remains employed until that date, and (ii) the applicable stock price goal has been achieved on or before the date. The 2016 market-based restricted grant was modified to provide seven employees a grant of 137,000 restricted shares under the 2015 Plan, the 2017 market-based restricted grant was modified to provide eleven employees a grant of 51,096 restricted shares under the 2015 Plan and the 2018 market-based restricted grant was modified to provide twenty employees a grant of 261,463 restricted shares outside the 2015 Plan. The 2016 and 2017 market-based restricted grants did not satisfy the market objective under the modification and were forfeited. The market based restricted share units granted in 2018 satisfied the market objective under the modification and the eleven participants that remained employed on December 31, 2022 vested in 185,265 shares granted. Nine participants forfeited 76,198 shares because they were no longer employed by the Company on December 31, 2022.

The following table summarizes stock option activitymarket based restricted share unit modifications were expensed at the incremental accounting expense over a service period for the year endedtwenty-one months ending on December 31, 2019:

 

 

 

 

 

 

 

 

 

 

  

 

  

Weighted-Average

  

Weighted-Average

 

 

Options

 

Exercise Price

 

Remaining Contract Term

Outstanding at December 31, 2018

 

122,000

 

$

13.85

 

 

 

Outstanding at December 31, 2019

 

122,000

 

$

13.85

 

 

2.625 years

Exercisable at December 31, 2019

 

122,000

 

$

13.85

 

 

2.625 years

2022. The weighted average fair valueCompany accrued $0.3 million of the stock optionstock-compensation expense recorded in paid-in capital on the date of the grant was $2.58. The fair value of each stock option is estimatedconsolidated balance sheet and general and administrative expenses on the date of grant using the Black-Scholes option pricing model. The exercise price of the options is based on the fair market value of the common shares on the date of grant.consolidated income statement.

Cash flows resulting from excess tax benefits are classified as part of cash flows from financing activities. Excess tax benefits are realized tax benefits from tax deductionsInformation for vestedmarket-based restricted stock and restricted stock unit awards, and exercised options in excessunits as of the deferred tax asset attributable to stock compensation costs for such equity awards. The Company realized no excess tax benefits for the years ended December 31, 2019 and 2018 due to the use of NOL carryforwards.2022 was as follows:

  

  

Weighted-Average

Grant Date

Shares

Fair Value per Share

Unvested restricted stock units on December 31, 2021

369,525

$

1.73

Vested

(185,265)

1.82

Forfeited

(184,260)

1.63

Unvested restricted stock units on December 31, 2022

$

NOTE 14—EMPLOYEE BENEFIT PLANS

Defined Contribution Plan: The Company maintains a 401(k) plan covering substantially all of its U.S. employees. ExpenseThe expense for the Company’s 401(k) plan during thefor both years ended December 31, 20192022 and 20182021 was $0.8 million and $0.6 million, respectively.$0.9 million.

Multiemployer Pension Plans:  During 2019,2022, the Company contributed to approximately 7079 multiemployer pension plans throughout the U.S. and, historically, it has contributed to over 150200 union sponsored multiemployer pension plans throughout the U.S. under the terms of collective‑bargainingcollective-bargaining agreements that cover the Company’s union‑representedunion-represented employees. The risks of participating in these multiemployer pension plans are different from single‑employersingle-employer pension plans primarily in the following aspects:

1.

Assets contributed to the multiemployer pension plan by one employer may be used to provide benefits to employees of other participating employers.

2.

If a participating employer stops contributing to the multiemployer pension plan, the unfunded obligations of the multiemployer pension plan may be borne by the remaining participating employers.

3.

If the Company chooses to stop participating in some of its multiemployer pension plans, it may be required to pay those plans an amount based on the underfunded status of the multiemployer pension plan, referred to as a withdrawal liability.

F-37

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s participation in these multiemployer pension plans during the year ended December 31, 20192022 is outlined in the following table. All information in the tablestable is as of December 31, of the relevant year, or 2019,2022, unless otherwise stated. The “EIN/Pension Plan Number” column provides the Employer Identification Number (“EIN”) and the three‑digitthree-digit plan number, if applicable. Unless otherwise noted, the most recent Pension Protection Act zone status available during 20192022 and 20182021 is for the respective plan’s fiscal year‑endyear-end as of 20192022 and 2018,2021, respectively. The zone status is based on information that the Company received from the plan and is certified by the plan’s actuary. Among other factors, plans in the green zone are at least 80 percent funded. If a plan is critical and declining, the plan sponsor may file an application with the Secretary of the Treasury requesting a temporary or permanent reduction of benefits to keep the plan from running out of money. If a fund is in critical status, adjustable benefits may be reduced and no lump sum distributions in excess of $5,000 can be made. Plans that are in critical and endangered status are required to adopt a plan aimed at restoring the financial health of the benefit plan. The “Rehab Plan Status Pending/Implemented” column indicates plans for which a financial improvement plan or a rehabilitation plan is either pending or has been implemented. The nestnext to last column lists the expiration date of the collective‑bargainingcollective-bargaining agreement to which the plans are subject.

F-32F-38

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Certain plans have been aggregated in the “All Others” line in the following table, as the contributions to each of these individual plans are not material. Only with respect to multiemployer pension plans, we considered contributions in excess of $0.1 million in any period disclosed to be individually significant.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

   

 

   

 

   

 

   

 

   

 

   

 

   

Expiration

   

 

 

 

 

 

Pension

 

 

 

($ in thousands)

 

 

 

Date of

 

 

 

 

 

 

Protection Act

 

Rehab Plan status

 

Contributions by

 

 

 

Collective

 

 

 

 

EIN/Pension

 

Zone Status

 

Pending/

 

the Company

 

Surcharge

 

Bargaining

 

 

Pension Fund

 

Plan Number

 

2019

 

2018

 

Implemented

 

2019

 

2018

 

Imposed

 

Agreement

 

Notes

Boilermaker-Blacksmith National Pension Trust

 

48-6168020 001

 

Critical

 

Critical

 

Rehabilitation Plan Adopted 05/28/17

 

2,139

 

2,117

 

No (7)

 

Multiple Agreements

 

1, 5

Central Pension Fund of the IUOE and Participating Employers

 

36-6052390 001

 

Green

 

Green

 

 

 

280

 

105

 

 

 

Multiple Agreements

 

5

Central States, Southeast, and Southwest  Pension Fund

 

36-6044243 001

 

Critical & Declining

 

Critical & Declining

 

Rehabilitation Plan Adopted 2008

 

70

 

65

 

No (7)

 

Multiple Agreements

 

5

Excavators Union Local 731 Pension Fund

 

13-1809825 001

 

Green

 

Green

 

 

 

303

 

385

 

 

 

04/30/22

 

10

IBEW Local 1579 Pension Plan

 

58-1254974 001

 

Endangered

 

Seriously Endangered

 

Funding Improvement Plan Adopted 08/11/17

 

385

 

123

 

 

 

Varies through 07/31/20

 

2

Iron Workers District Council of Tennessee Valley & Vicinity Pension Plan

 

62-6098036 001

 

Green

 

Green

 

 

 

250

 

128

 

 

 

Annual Agreements-Automatic Renewal

 

3

IUPAT Industry Pension Plan

 

52-6073909 001

 

Seriously Endangered

 

Seriously Endangered

 

Funding Improvement Plan Updated 2017

 

1,853

 

2,061

 

 

 

Multiple Agreements

 

5

Laborers National Pension Fund

 

75-1280827 001

 

Critical

 

Critical

 

Rehabilitation Plan Adopted 2017

 

176

 

111

 

 

 

Multiple Agreements

 

5

National Asbestos Workers Pension Plan

 

52-6038497 001

 

Endangered

 

Critical

 

Rehabilitation Plan Updated 12/2010

 

1,288

 

1,315

 

No (8)

 

Multiple Agreements

 

5

National Electrical Benefits Fund

 

53-0181657 001

 

Green

 

Green

 

 

 

308

 

203

 

 

 

Multiple Agreements

 

5

Plumbers & Pipefitters National Pension Fund

 

52-6152779 001

 

Endangered

 

Endangered

 

Funding Improvement Plan Adopted 04/05/10

 

284

 

244

 

 

 

Multiple Agreements

 

5

Plumbers & Steamfitters Local Union No. 43 Pension Fund

 

62-6101288 001

 

Green

 

Green

 

 

 

162

 

117

 

 

 

Annual Agreements-Automatic Renewal

 

3

Sheet Metal Workers' National Pension Fund

 

52-6112463 001

 

Endangered

 

Endangered

 

Funding Improvement Plan Updated 01/01/17

 

204

 

354

 

 

 

Multiple Agreements

 

5

Southern Ironworkers Pension  Plan

 

59-6227091 001

 

Green

 

Green

 

 

 

260

 

111

 

 

 

Varies through 07/31/20

 

2

Tri-State Carpenters & Joiners Pension Trust Fund

 

62-0976048 001

 

Seriously Endangered

 

Endangered

 

Rehabilitation Plan Adopted

 

322

 

238

 

No (8)

 

Annual Agreements-Automatic Renewal

 

3

Washington State Plumbing & Pipefitting Industry Pension Plan

 

91-6029141 001

 

Green

 

Green

 

 

 

99

 

69

 

 

 

Annual Agreements-Automatic Renewal

 

4

Washington-Idaho Laborers-Employers Pension Trust

 

91-6123988 001

 

Green

 

Green

 

 

 

153

 

74

 

 

 

Annual Agreements-Automatic Renewal

 

4

Washington-Idaho-Montana Carpenters-Employers Retirement Fund

 

91-6123987 001

 

Endangered

 

Endangered

 

Funding Improvement Plan Adopted 03/05/12

 

287

 

77

 

 

 

Annual Agreements-Automatic Renewal

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Others

 

 

 

 

 

 

 

 

 

1,399

 

1,335

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10,221

 

9,233

 

 

 

 

 

 


   

   

   

   

   

   

   

   

Expiration

   

Pension

Rehab Plan

($ in thousands)

Date of

Protection Act

status

Contributions by

Collective

EIN/Pension

Zone Status

Pending/

the Company

Surcharge

Bargaining

Pension Fund

Plan Number

2022

2021

Implemented

2022

2021

Imposed

Agreement

Notes

Boilermaker-Blacksmith National Pension Trust

48-6168020 001

Green

Endangered

Funding Improve

2,194

4,263

No (8)

Annual Agreements - Automatic Renewal

3,4,6,9

IBEW Local 1579 Pension Plan

58-1254974 001

Green

Green

1,337

1,239

No (8)

Agreement through end of Job

2, 3, 6, 9, 10

National Asbestos Workers Pension Plan

52-6038497 001

Critical

Critical

Rehab Plan 2019

1,091

1,258

No (7)

Annual Agreements-Automatic Renewal

2, 3, 9, 10

Excavators Union Local 731 Pension Fund

13-1809825 002

Green

Green

786

523

No (8)

Annual Agreements-Automatic Renewal

6

National Electrical Benefits Fund

53-0181657 001

Green

Green

456

578

No (8)

Multiple Agreements

10

Central Pension Fund of the IUOE and Participating Employers

36-6052390 001

Green

Green

380

366

No (8)

Multiple Agreements

3, 11

Tri-State Carpenters & Joiners Pension Trust Fund

62-0976048 001

Endangered

Endangered

Funding Improve

376

512

No (8)

Annual Agreements-Automatic Renewal

2, 3, 5, 10

Laborers National Pension Fund

75-1280827 001

Critical

Critical

Rehab Plan

372

417

No (7)

Multiple Agreements

1, 2, 3, 5, 9, 10

New Jersey Building Laborers Statewide Pension Fund

22-6077693 001

Critical

Critical

Rehab Plan

356

1,340

No (7)

Annual Agreements-Automatic Renewal

3

Southern Ironworkers Pension Plan

59-6227091 001

Green

Green

355

270

No (8)

Agreement through end of Job

2, 3, 4, 5, 9, 10

United Association National Pension Fund

52-6152779 001

Green

Endangered

Funding Improve

341

315

No (7)

Multiple Agreements

9

Connecticut laborers Pension Plan

06-6044348 001

Green

Green

228

37

No (8)

CBA (Expires 03/31/23)

2, 3, 4, 5, 9, 10

Iron Workers District Council of Tennessee Valley & Vicinity Pension Plan

62-6098036 001

Green

Green

225

316

No (8)

Annual Agreements-Automatic Renewal

9, 11

IUPAT Industry Pension Plan

52-6073909 001

Critical

Seriously Endangered

Rehab Plan

184

184

No (8)

Multiple Agreements

3, 11

Iron Workers Local No. 402 Pension Trust

59-6227518 001

Critical

Critical

Rehab Plan

124

47

No (8)

Annual Agreements-Automatic Renewal

10, 11

IUOE Local 478 Pension Fund

06-0733831 001

Green

Green

108

29

No (8)

CBA (Expires 03/31/23)

3

Pavers and Road Builders District Council Pension Fund

13-1990171 074

Green

Green

104

62

No (8)

Annual Agreements-Automatic Renewal

4, 11

Central States, Southeast, and Southwest Pension Fund

36-6044243 001

Critical & Declining

Critical & Declining

Rehab Plan

104

103

No (8)

Multiple Agreements

4, 11

All Others

1,437

3,983

Total

10,558

15,842

(1)

(1)

Defined Benefit Plans for Unions employed through the GPPMA agreement for Fitzpatrick Nuclear Plant.  The GPPMA Agreements are annual agreements that automatically renew each year.

St. Lucie and Turkey Point.

(2)

(2)

Defined Benefit Plans for Unions employed through the Southern Company Power Maintenance & Modification Agreement. The Southern Company SCMMA expires 07/31/20202026 and renews each year unless terminated. The individual Union CBA range from 1 to 3 years in duration.

(3)

(3)

Defined Benefit Plans for Unions employed through the TVA PMMA and Other Agreements. The TVA Labor Agreements are annual agreements that automatically renew each year.

(4)

(4)

Defined Benefit Plans for Unions employed through the GPPMA agreement for Columbia Generating Station. The GPPMA Agreements are annual agreements that automatically renew each year.

(5)

(5)

Regional and National Defined Benefit Funds for multiple unions employed under different labor agreements.

(6)

(6)

Defined Benefit Plan for Union employed at Con Ed sites.

(7)

(7)

No Surcharge required if proper Rehabilitation Plan adopted in labor agreement

agreement.

(8)

(8)

No Surcharge required if Plan is not in Critical or Critical & Declining Status

Status.

(9)

(9)

Defined Benefit Plans for Unions employed through the GPPMA agreement for San Onofre, Oyster Creek, Pilgrim, LaSalle, Byron, Quad Cities, Peach Bottom, Limerick, Ginna, Point Beach, Waterford III, Calvert CliffsSalem/Hope Creek and DC Cook Nuclear Plants (Holtec).

Also work under Decommissioning Agreement at Oyster Creek and Pilgrim (CDI).

(10)

(10)

Defined Benefit Plans for Unions employed through the Nuclear Power ConstructtionConstruction Agreement. The Nuclear Power Construction Agreement is for new work at Vogtle and runs through the duration of the project.

(11)The status of this plan had not been issued as of the date of filing this Form 10-K. A plan in green status with a calendar year has the option to issue its Annual Funding Notice in March or April of the subsequent year.

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Employees covered by multiemployer pension plans are hired for project‑basedproject-based building and construction purposes. The Company’s participation level in these plans varies as a result.

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Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company believes that its responsibility for potential withdrawal liabilities associated with participating in multiemployer plans is limited because the building and construction trades exemption should apply to the substantial majority of the Company’s plan contributions. However, pursuant to the Pension Protection Act of 2006 and other applicable laws, the Company is also exposed to other potential liabilities associated with plans that are underfunded. As of December 31, 2019,2022, the Company had been notified that certain pension plans were in critical funding status. Currently, certain plans are developing, or have developed, a rehabilitation plan that may call for a reduction in participant benefits or an increase in future employer contributions. Therefore, in the future, the Company could be responsible for potential surcharges, excise taxes and/or additional contributions related to these plans. Additionally, market conditions and the number of participating employers remaining in each plan may result in a reorganization, insolvency or mass withdrawal that could materially affect the funded status of multiemployer plans and the Company’s potential withdrawal liability, if applicable. The Company continues to actively monitor, assess, and take steps to limit its potential exposure to any surcharges, excise taxes, additional contributions and/or withdrawal liabilities. However, the Company cannot, at this time, estimate the full amount, or even the range, of this potential exposure.

NOTE 15—COMMITMENTS AND CONTINGENCIES

Litigation and Claims:  The Company is from time to timetime-to-time party to various lawsuits, 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 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 inon July 11, 2018. This could require the Company to incur legal fees and other expenses related to liabilities from this bankruptcy filing. TheseWhile the Company does not anticipate these liabilities couldwill have a material adverse effect on its results of operations, cash flows and financial position.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 5—Changes in Business” to the consolidated financial statements.

The Company prevailed in a putative shareholder class action, which was captioned Budde v. Global Power Equipment Group Inc. and filed in the U.S. District Court for the Northern Districtacquiror of Texas naming the Company and certain former officers as defendants. This action and another action were filed on May 13, 2015 and June 23, 2015, respectively and, on July 29, 2015, the court consolidated the two actions and appointed a lead plaintiff  following the District Court’s dismissal with prejudice on September 11, 2018, Plaintiffs appealed the decision to the United States Court of Appeals for the Fifth Circuit. The Fifth Circuit held oral arguments on August 5, 2019. On August 23, 2019, the Fifth Circuit issued a per curiam decision affirming the District Court’s dismissal. Plaintiffs have until November 21, 2019, to petition for certiorari review by the Supreme Court of the United States, but did not do so. The matter is now concluded.

In previous periods, the Company reported thatassets from a former operating unit of the Company hadhas been named as a defendant in a limited number ofan asbestos personal injury lawsuits.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 these actions. As of April 2019, all pending asbestos-related litigation against such former operating unit had been dismissed, and there are no longer any such claims outstanding against the unit. Such litigation didthis action. The Company does not expect that this claim will have a material adverse effect on the Company’sits 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.

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 year ended December 31, 20192022 and 2018,2021, insurance expense, including insurance premiums related to the excess claim coverage and claims incurred for continuing operations, was $2.8$6.4 million and $2.1$5.2 million, respectively.

The Company’s 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 December 31, 20192022 and 2018.2021. As of both December 31, 2019

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Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2022 and 2018,2021, the Company provided $0.8$0.9 million and $1.1 million, respectively in letters of credit and provided cash collateral of $0.2$1.5 million and $0.3 million, respectively, as security for possible workers’ compensation claims.

Executive Severance: At On December 31, 2019,2022, 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 $3.0$6.4 million aton December 31, 2019.2022.

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Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

NOTE 16—MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

The Company has certain customers that representrepresented more than 10 percent of its consolidated accounts receivable. The balance for these customers as a percentage of the consolidated accounts receivable iswas as follows:

 

 

 

 

 

 

 

 

December 31,

 

Customer

    

2019

    

2018

 

Southern Nuclear Operating Company

 

45%

 

34%

 

Tennessee Valley Authority

 

*

 

11%

 

Energy Northwest

 

*

 

10%

 


December 31,

 

Customer

    

2022

    

2021

 

Southern Nuclear Operating Company

42%

16%

Con Edison

12%

*

Tennessee Valley Authority

*

18%

Bruce Power

*

17%

Comprehensive Decommissioning International

*

10%

All others

46%

39%

Total

100%

100%

*Less than 10%

The Company has certain customers that representrepresented more than 10 percent of consolidated revenue. The revenue for these customers as a percentage of the consolidated revenue iswas as follows:

 

 

 

 

 

 

 

Year Ended December 31,

Customer

  

2019

 

2018

Southern Nuclear Operating Company

 

26%

 

25%

Tennessee Valley Authority

 

22%

 

26%

Richmond County Constructors, LLC ("RCC")

 

14%

 

18%

Energy Northwest

 

10%

 

*

All others

 

28%

 

31%

Total

 

100%

 

100%

Year Ended December 31,

Customer

  

2022

2021

Southern Nuclear Operating Company

 

23%

16%

GUBMK

14%

11%

Tennessee Valley Authority

10%

11%

Richmond County Constructors, LLC ("RCC")

10%

*

Bruce Power

*

12%

Comprehensive Decommissioning International

*

10%

All others

 

43%

40%

Total

 

100%

100%

*Less than 10%

NOTE 17—OTHER SUPPLEMENTAL INFORMATION

Other current assets consistconsisted of the following:

 

 

 

 

 

 

 

 

 

December 31,

(in thousands)

 

2019

 

2018

Equity method investment in RCC

 

$

2,265

 

$

785

Right-of-use lease assets

 

 

5,743

 

 

 —

Other long-term assets

 

 

541

 

 

865

Total

 

$

8,549

 

$

1,650

December 31,

(in thousands)

    

2022

    

2021

Unamortized commercial insurance premiums

$

2,611

$

2,389

Security deposits - real estate

1,978

1,978

Prepaid expenses

1,511

1,136

Sales tax receivable - Canada

6

4,866

Other current assets

152

680

Total

$

6,258

$

11,049

Other current liabilities consistlong-term assets consisted of the following:

 

 

 

 

 

 

 

 

 

December 31,

(in thousands)

 

2019

  

2018

Accrued workers compensation

 

$

604

 

$

699

Accrued job cost

 

 

1,320

 

 

1,385

Accrued legal and professional fees

 

 

36

 

 

691

Restructuring reserve

 

 

 —

 

 

367

Short-term lease liability

 

 

2,985

 

 

 —

Other accrued expenses

 

 

1,463

 

 

2,376

Total

 

$

6,408

 

$

5,518

December 31,

(in thousands)

2022

2021

Right-of-use lease assets

$

4,223

$

1,527

Equity method investment in RCC

1,868

2,521

Unamortized Debt Issuance Cost

1,128

1,509

Unamortized software subscriptions

757

Other long-term assets

299

155

Total

$

8,275

$

5,712

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WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Other current liabilities consisted of the following:

December 31,

(in thousands)

    

2022

    

2021

Accrued job cost

$

2,136

$

2,433

Short-term lease liability

1,603

1,606

Cloud computing software liability

692

-

Stock Compensation

493

938

Legal fees

145

113

Sales tax payable - Canada

-

5,135

Other current liabilities

641

792

Total

$

5,710

$

11,017

Other long-term liabilities consistconsisted of the following:

 

 

 

 

 

 

 

 

 

December 31,

(in thousands)

 

2019

 

2018

Long-term lease liability

 

 

2,939

 

 

 —

Liability for uncertain tax positions

 

 

1,030

 

 

967

Other long-term liabilities

 

 

59

 

 

429

Total

 

$

4,028

 

$

1,396

December 31,

(in thousands)

    

2022

    

2021

Long-term lease liability

$

3,010

$

511

Liability for uncertain tax positions (with interest and penalty)

1,115

1,136

Other long-term liabilities

800

-

Total

$

4,925

$

1,647

Disaggregated long-lived assets by the geographic area were as follows:

December 31,

(in thousands)

    

2022

    

2021

United States

$

56,170

$

52,669

Canada

134

86

Total

$

56,304

$

52,755

NOTE 18—SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

A summary of the quarterly operating results during 2019 and 2018 follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except per share data)

  

First

  

Second

  

Third

  

Fourth

  

2019

Year Ended December 31, 2019

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Total

Revenue

 

$

50,652

 

$

71,466

 

$

56,862

 

$

66,807

 

$

245,787

Gross profit

 

 

6,682

 

 

9,192

 

 

5,956

 

 

9,070

 

 

30,900

Income (loss) from continuing operations

 

 

395

 

 

1,286

 

 

(363)

 

 

(296)

 

 

1,022

Income (loss) per common share from continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.02

 

$

0.07

 

$

(0.02)

 

$

(0.02)

 

$

0.05

Diluted

 

$

0.02

 

$

0.07

 

$

(0.02)

 

$

(0.02)

 

$

0.05

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except per share data)

  

First

  

Second

  

Third

  

Fourth

  

2018

Year Ended December 31, 2018

 

Quarter

 

Quarter

 

Quarter

 

Quarter

 

Total

Revenue

 

$

43,121

 

$

47,975

 

$

53,467

 

$

44,355

 

$

188,918

Gross profit

 

 

6,450

 

 

6,747

 

 

10,212

 

 

5,332

 

 

28,741

Income (loss) from continuing operations

 

 

(2,238)

 

 

(6,024)

 

 

(2,840)

 

 

(2,688)

 

 

(13,790)

Income (loss) per common share from continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.12)

 

$

(0.33)

 

$

(0.16)

 

$

(0.15)

 

$

(0.76)

Diluted

 

$

(0.12)

 

$

(0.33)

 

$

(0.16)

 

$

(0.15)

 

$

(0.76)

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Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

d

NOTE 19—18—SUBSEQUENT EVENTS

In the first quarter of 2023, the Company entered into the following engagement and amendments, each of which is described below:

the third and fourth amendment to the Revolving Credit Facility;
the third and fourth amendment to the Term Loan;
the Wynnefield Notes, which are two unsecured promissory notes in favor of the Wynnefield Lenders.

On January 13, 2020,9, 2023, the Company entered into the Third Revolving Credit Amendment to the Revolving Credit Agreement. The Third Revolving Credit Amendment, among other things, (i) modified the financial covenants to require that the Company achieve certain designated minimum levels of trailing twelve-month EBITDA (as defined in the Revolving Credit Agreement) as of the end of each fiscal month beginning on February 5, 2023, and ending December 31, 2023; (ii) amended the calculation of EBITDA to include (or “add back”) certain non-recurring losses and expenses incurred in connection with projects executed by the Company’s Jacksonville, Florida office, one-time costs and expenses incurred in connection with the Company’s transmission and distribution business segment start-up, non-recurring costs and expenses arising out of the implementation of a ERP system, and non-recurring costs and expenses arising out of pro forma headcount reductions implemented by the Company and certain litigation with a former executive and a competitor of the Company that was settled in the fourth quarter of 2022 (in each case, subject to certain specific dollar limits for certain fiscal quarters commencing in the second fiscal quarter of 2021 and ending December 31, 2022); (iii) provided temporary reserve relief of up to $1.0 million from the date of the Third Revolving Credit Amendment until June 30, 2023; (iv) reduced the Eligible Unbilled Receivables (as defined in the Revolving Credit Agreement) sublimit from $7.5 million to $5.5 million; (v) increased the Applicable Margin (as defined in the Revolving Credit Agreement) by 2%; and (vi) provided for an amendment fee of $0.3 million payable when the loan obligations under the Revolving Credit Agreement are repaid or, if earlier, June 30, 2023, and an exit fee of $0.3 million to be paid upon the occurrence of certain stated events, including a prepayment or maturity of the loan obligations under the Revolving Credit Agreement.

Additionally, on February 21, 2023, the Company entered into the Fourth Revolving Credit Amendment. The Fourth Revolving Credit Amendment, among other things, provided for the consent of PNC to the Fourth Term Loan Amendment and incorporated into the Revolving Credit Agreement,  certain of the conditions and covenants provided for in the Fourth Term Loan Amendment, including the conditions to the Delayed Draw Term Loans, the minimum liquidity covenant and the additional reporting obligations.

On January 9, 2023, the Company entered into a Third Term Loan Amendment to the New Centre Lane Facility that, among other things, redefined(i) modified the financial covenants to require that the Company achieve certain designated minimum levels of trailing twelve-month EBITDA (as defined in the Term Loan Agreement) as of the end of each fiscal month beginning on February 5, 2023, and changedending December 31, 2023; (ii) amended the minimum leverage ratio requirementcalculation of EBITDA to include (or “add back”) certain non-recurring losses and changedexpenses incurred in connection with certain projects executed by the minimum consolidated Adjusted EBITDACompany’s Jacksonville, Florida office, one-time costs and minimum liquidity requirements. In addition,expenses incurred in connection with the New Centre Lane AgreementCompany’s transmission and distribution business segment start-up, non-recurring costs and expenses arising out of the implementation by the Company of a ERP system, and non-recurring costs and expenses arising out of pro forma headcount reductions implemented by the Company and certain litigation with a former executive and a competitor of the Company that was settled in the fourth quarter of 2022 (in each case, subject to certain specific dollar limits for certain fiscal quarters commencing in the second fiscal quarter of 2021 and ending December 31, 2022); (iii) adjusted the applicable interest rate to SOFR (as defined in the Term Loan Agreement) plus 11%; (iv) for each quarterly interest payment commencing January 1, 2023 through and including January 1, 2024, capped the amount of quarterly interest payable in cash at 10% per annum, with the remainder being payable in kind; (v) deferred amortization payments from the January 1, 2023 quarterly payment date until and including the January 1, 2024 quarterly payment date; (vi) increased the Prepayment Premiumexcess cash flow sweep from 50% to 2% beginning on January 13, 202075% for the fiscal year ending December 31, 2023 and each fiscal year thereafter; (vii) required certain additional reporting obligations, including the delivery of weekly updates of a 13-week cash flow forecast and hosting additional periodic conference calls with management and named advisors; (viii) increased, from the pre-existing levels, the permitted total leverage of the Company for the four quarter periods ended December 31, 2022 through March 31, 2024; and (ix) provided for an amendment fee equal to 1% beginning January 14, 2021 and thereafter. The New Centre Laneof the principal loan balance under the Term Loan Agreement, also waived the requirement to prepay future cash proceeds generated from the Company’s Rights Offering (as defined below) and any eventpayable in kind.

F-44

On January 13, 2020,February 24, 2023, the Company entered into a Thirdthe Fourth Term Loan Amendment. The Fourth Term Loan Amendment provided for delayed draw term loans in an aggregate principal amount of $1.5 million, which were funded at the time the Fourth Term Loan Amendment was signed, and discretionary delayed draw term loans in an aggregate principal amount of $3.5 million, which will be funded at the lenders’ discretion (together, the “Delayed Draw Term Loans”), subject to the MidCap Facility that, among other things, increasedconditions set forth in the maximum principal amount from $15.0 millionTerm Loan Agreement, as amended by the Fourth Term Loan Amendment. In addition to $25.0 million and extendedinterest being payable on the same basis as existing borrowings under the Term Loan Agreement, on the earlier to occur of the maturity date or the termination date of the Term Loan Agreement or any acceleration of the obligations under the Term Loan Agreement, additional interest equal to October 11, 2022. In addition,50% of the MidCap Agreement redefinded and changedaggregate amount of the minimum leverage ratio requirement and changed the minimum consolidated Adjusted EBITDA andDelayed Draw Term Loans borrowed will be payable. The Fourth Term Loan Amendment also includes a minimum liquidity requirements. Further, beginningcovenant. The Delayed Draw Term Loans are conditioned upon, amount other things, the Company using commercially reasonable best efforts to actively receive net cash proceeds from issuances of subordinated debt or equity of at least $0.5 million on January 13, 2020terms acceptable to EICF and the MidCaplenders under the Term Loan Agreement, changedcontinuing its publicly announced review of strategic alternatives and, subject to the exercise by the Board of Directors of the Company of its fiduciary obligations, using commercially reasonable best efforts to conduct such review in accordance with  a customary indicative timeline. The Fourth Term Loan Amendment also imposed certain additional reporting obligations on the Company, including the weekly delivery of a 13-week cash flow forecast.

On February 21, 2023, the Company received a $1.0 million advance pursuant to the then-existing terms of the origination fee to 2.0% inTerm Loan Agreement and, on February 24, 2023, the first two years, 1.5% for the third year, and 1.0% in the first nine months of the fourth year. The Company’s expenseCompany received $1.5 million principal amount related to the MidCap Agreement was $0.2 million and will be included in general and administrative expenses ondelayed draw term loans allowed from the consolidated statement of operations for the three months ended March 31, 2020.

Fourth Term Loan Amendment. In addition to interest being payable on the above, bothsame basis as existing borrowing under the Centre LaneTerm Loan Agreement, on the earlier to occur of the maturity date or the termination date of the Term Loan Agreement or any acceleration of the obligations under the Term Loan Agreement, additional interest equal to $0.5 million will be payable in respect of this $1.0 million advance.

The Wynnefield Notes consist of (i) an Unsecured Promissory Note by and among the Company, as borrower, certain of its subsidiaries, as guarantors under a separate Guaranty Agreement, and Wynnefield Partners Small Cap Value, LP I in the aggregate principal amount of $400,000 and (ii) an Unsecured Promissory Note by and among the Company, as borrower, certain of its subsidiaries, as guarantors under a separate Guaranty Agreement, and Wynnefield Partners Small Cap Value, LP in the aggregate principal amount of $350,000. All principal and interest will be due on the maturity date of the Wynnefield Notes, which will be the earliest of (i) December 23, 2025; (ii) a change in control of the Company; (iii) a refinancing or maturity extension of either of the Term Loan Agreement or the Revolving Credit Agreement; or (iv) an acceleration following the occurrence of an event of default (as defined in the Wynnefield Notes, and which includes any default under the Term Loan Agreement or the Revolving Credit Agreement). The Wynnefield Notes bear interest at the fixed rate of (i) 8.0% per annum from the closing date; (ii) 13.0% per annum from and after the maturity date; and (iii) 13.0% per annum from and after an event of default (as defined in the Wynnefield Notes, and which includes any default under the Term Loan Agreement or the Revolving Credit Agreement). The Wynnefield Notes are subject to an aggregate exit fee of $100,000, payable upon the earlier of an event of default or payment in full of all obligations due under the Wynnefield Notes. In connection with the Wynnefield Notes, the Company, certain of its subsidiaries, the Wynnefield Lenders and the agents under each of the Revolving Credit Agreement and the MidCapTerm Loan Agreement require certain Canadian subsidiarieshave entered into two Subordination and Intercreditor Agreements, pursuant to which the Wynnefield Lenders have agreed, on the terms and subject to the conditions set forth therein, to subordinate the Wynnefield Notes to the obligations of the Company to become guarantors under the respective credit agreement and to grant liens on their assets to secure such guarantees.  The Company was also required to complete its Rights Offering on or before March 13, 2020. The New Centre LaneRevolving Credit Agreement and the MidCap Agreement both waive the requirement to prepay future cash proceeds generated fromTerm Loan Agreement.

The Wynnefield Lenders, together with their affiliates, are the Company’s recent Rights Offering and any event of default that would otherwise result from failure to pay such amounts.  – check this last sentence for accuracy against the MidCap Agreement.

On March 6, 2020, the Company announced the results of its fully backstopped $7.0 million registered offering of subscription rights to purchase shareslargest equity investor. Nelson Obus, a member of the Company’s common stock to existing holdersBoard of Directors, is a managing member of Wynnefield Capital Management, LLC, the general partner of the Company’s common stock (the “Rights Offering”) followingWynnefield Lenders.

F-45

Table of Contents

WILLIAMS INDUSTRIAL SERVICES GROUP INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As future advances of Delayed Draw Term Loans are discretionary on the expirationpart of our Term Loan lenders, it is possible that the subscription period on March 2, 2020. The Rights Offering, in which 5,384,615 sharesTerm Loan lenders may require enhanced rights or additional fees or interest before funding future advances.  In certain circumstances, we may require the consent of common stock were available for subscription atPNC before we can agree to such terms. Such a priceconsent from PNC, and any proposed amendments to our intercreditor agreement that might be associated with such a consent, may involve the payment of $1.30 per share, was oversubscribed by 2,960,021 shares. The Rights Offering was backstopped by a commitment from Wynnefield Capital, Inc. to purchase any unsubscribed shares of common stock. However, the backstop was not utilized due to demand from other shareholders participating in the offeringfurther fees and oversubscription. The distribution of all new shares took place on March 6, 2020. 

The Company’s business could be adversely affectedexpenses by the effects of widespread outbreak of contagious disease, includingCompany to PNC and any amendments to our intercreditor agreement may require negotiations between our Term Loan lenders, PNC and the recent outbreak of respiratory illness caused by COVID-19, novel coronavirus first identifiedCompany. A failure to procure any necessary consents or a failure to successfully negotiate such amendments to our intercreditor agreement could result in Wuhan, Hubei Province, China. Any outbreak of contagious diseases and other adverse public health developmentsfuture Delayed Draw Term Loans not being available to the Company, which could have a material and adverse effect on our liquidity position and our operations.  The Company anticipates that enhanced rights or additional fees or interest in relation to the funding of future advances of Delayed Draw Term Loans will be forthcoming and that consent fees and related amendments to the Company’s business operations. These could include disruptionsintercreditor agreement may be requested or restrictions onrequired by our lenders and may be agreed to by the Company and its employees’ abilityin order to travel or to distribute services and materials, as well as temporary closures of the facilities of its suppliers or customers. Any disruption of the Company’s suppliers or customers would likely impact its sales and operating results. In addition, a significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect both the U.S. and global economy and financial markets, resulting in an economic downturn that could impact the Company’s operating results. For instance, COVID-19 has caused volatility in the global financial markets and threatened a slowdown in the global economy. While it is not possible at this time to estimate the impact that COVID-19 could have on the Company’s operations, the continued spread of COVID-19, the measures taken by the governments of countries affected, actions taken to protect employees, and the impact of the pandemic on various business activities in affected states and countries could adversely affect the Company’s financial condition, results of operations and cash flows. secure necessary funding.    

F-37F-46