UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

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

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

For the transition period from _______ to ______

Commission File Number 0-29923

Orbital Infrastructure Group, Inc. (f/k/a Orbital Energy Group, Inc.)

(Exact name of registrant as specified in its charter)

~~Colorado~~Texas		84-1463284
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

	~~1924 Aldine Western~~5444 Westheimer Road
	Suite 1650
	Houston, Texas ~~77038~~77056

(Address of principal executive offices and zip code)

Former address:

1924 Aldine Western

Houston, Texas 77038

(832) 467-1420

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

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

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

There were ~~66,652,211~~140,571,912 shares of the registrant's common stock, par value $0.001 per share, outstanding as of November ~~15, 2021.~~11, 2022.

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.001 par value.	~~OEG~~OIG	Nasdaq Capital Market

Table of Contents

INDEX

		Page
	Part I

Item 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets (Unaudited)	2
	Condensed Consolidated Statements of Operations (Unaudited)	3
	Condensed Consolidated Statements of Comprehensive Income and Loss (Unaudited)	4
	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (Unaudited)	5
	Condensed Consolidated Statements of Cash Flows (Unaudited)	67
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	89
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3835
	Overview	3936
	Results of Operations	4037
	Liquidity and Capital Resources	4741
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	4943
Item 4.	Controls and Procedures	5144
	Part II

Item 1.	Legal Proceedings	5245
Item 1A.	Risk Factors	5245
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds. Common Stock Issued	5346
Item 5.	Other Information	5346
Item 6.	Exhibits	5447
	Exhibit Index	5447
	Signatures	5548

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Orbital ~~Energy~~Infrastructure Group, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30,			December 31,			September 30,			December 31,
(in thousands, except share and per share amounts)	2021			2020			2022			2021

Assets:
Current Assets:
Cash and cash equivalents	$	11,179		$	3,046		$	27,960		$	26,865
Restricted cash - current		150			452
Trade accounts receivable, net of allowance of $1,348 and $1,227 at September 30, 2021 and December 31, 2020, respectively		22,953			8,487
Restricted cash - current portion								123			150
Trade accounts receivable, net of allowance of $921 and $1,487, respectively								50,803			48,752
Inventories		1,790			1,123			1,408			1,335
Contract assets		9,048			7,860			23,735			7,478
Note receivable, current portion		44			44			1,421			3,536
Prepaid expenses and other current assets		5,926			3,786			8,268			6,919
Assets held for sale, current portion								1,814			6,679
Total current assets		51,090			24,798			115,532			101,714


Property and equipment, less accumulated depreciation of $3,814 and $2,158 at September 30, 2021 and December 31, 2020, respectively		14,800			6,395
Property and equipment, less accumulated depreciation								25,889			29,638
Investment		1,063			1,063			1,063			1,063
Right of use assets - Operating leases		12,880			7,054			17,333			18,247
Right of use assets - Financing leases		11,238			0			9,341			14,702
Goodwill		30,337			7,006			7,006			100,899
Other intangible assets, net		41,304			13,697			123,853			142,656
Restricted cash		1,026			1,026
Note receivable		3,210			3,602
Restricted cash, noncurrent portion								486			1,026
Note receivable, noncurrent portion								—			836
Deposits and other assets		1,083			1,404			1,606			1,558
Total assets	$	168,031		$	66,045		$	302,109		$	412,339

Liabilities and Stockholders' Equity:
Liabilities and Stockholders' Equity (Deficit):
Current Liabilities:
Accounts payable	$	7,710		$	9,913		$	35,595		$	10,111
Notes payable, current		25,175			12,246
Notes payable, current portion								129,034			72,774
Line of credit		0			441			4,000			2,500
Operating lease obligations - current portion		3,895			1,784			4,451			4,674
Financing lease obligations - current portion		3,805			1			5,167			4,939
Accrued expenses		10,290			5,881			30,296			28,301
Contract liabilities		4,188			6,810			351			6,503
Financial instrument liability, current portion								25,320			825
Liabilities held for sale, current portion								—			4,367
Total current liabilities		55,063			37,076			234,214			134,994

Financial instrument liability, noncurrent portion								15,609			—
Warrant liabilities								5,492			—
Deferred tax liabilities								260			260
Notes payable, less current portion		4,854			5,056			107,738			156,605
Operating lease obligations, less current portion		8,897			5,211			13,150			13,555
Financing lease obligations, less current portion		7,561			0			9,023			9,939
Contingent consideration		720			720
Other long-term liabilities		69			835			720			720
Total liabilities		77,164			48,898			386,206			316,073

Commitments and contingencies

Stockholders' Equity:
Preferred stock, par value $0.001; 10,000,000 shares authorized; no shares issued at September 30, 2021 or December 31, 2020		0			0
Common stock, par value $0.001; 325,000,000 shares authorized; 66,161,108 shares issued and 65,808,045 shares outstanding at September 30, 2021 and 31,029,642 shares issued and 30,676,579 shares outstanding at December 31, 2020		66			31
Stockholders' Equity (Deficit):
Preferred stock, par value $0.001; 10,000,000 shares authorized; no shares issued at September 30, 2022 or December 31, 2021								—			—
Common stock, par value $0.001; 325,000,000 shares authorized; 124,935,259 shares issued and 124,582,196 shares outstanding at September 30, 2022 and 82,259,739 shares issued and 81,906,676 shares outstanding at December 31, 2021								125			82
Additional paid-in capital		281,498			171,616			338,565			311,487
Treasury stock at cost; 353,063 shares held at September 30, 2021 and December 31, 2020		(413	)		(413	)
Treasury stock at cost; 353,063 shares held at September 30, 2022 and December 31, 2021								(413	)		(413	)
Accumulated deficit		(185,993	)		(149,681	)		(421,424	)		(210,934	)
Accumulated other comprehensive loss		(4,291	)		(4,406	)		(687	)		(3,995	)
Total stockholders' equity		90,867			17,147
Total liabilities and stockholders' equity	$	168,031		$	66,045
Total Orbital Infrastructure Group, Inc.'s stockholders' equity (deficit)								(83,834	)		96,227
Noncontrolling interest								(263	)		39
Total stockholders' equity (deficit)								(84,097	)		96,266
Total liabilities and stockholders' equity (deficit)							$	302,109		$	412,339

See accompanying notes to condensed consolidated financial statements

Table of Contents

Orbital ~~Energy~~Infrastructure Group, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	For the Three Months						For the Nine Months						For the Three Months						For the Nine Months
(in thousands, except share and per share amounts)	Ended September 30,						Ended September 30,						Ended September 30,						Ended September 30,
	2021			2020			2021			2020			2022			2021			2022			2021

Revenues	$	30,919		$	13,615		$	56,718		$	27,078		$	99,822		$	24,822		$	263,989		$	41,902

Cost of revenues		27,131			11,261			55,400			23,121			105,671			22,523			248,439			44,982

Gross profit		3,788			2,354			1,318			3,957			(5,849	)		2,299			15,550			(3,080	)

Operating expenses:
Operating expenses (income):
Selling, general and administrative expense		13,701			7,179			43,856			21,158			12,746			11,729			33,790			37,491
Depreciation and amortization		1,738			1,454			4,668			3,285			5,465			1,333			16,193			3,418
Research and development		1			6			2			51
Provision for bad debt		87			15			65			23
Other operating (income) expense		(6	)		23			(15	)		23
Impairment of goodwill and intangible assets														100,275			—			100,275			—
Impairment of financing leased assets														4,467			—			4,467			—
(Recovery of) provision for bad debt														19			93			(519	)		93
Other operating income, net														(111	)		(6	)		(451	)		(15	)

Total operating expenses		15,521			8,677			48,576			24,540			122,861			13,149			153,755			40,987

Loss from operations		(11,733	)		(6,323	)		(47,258	)		(20,583	)		(128,710	)		(10,850	)		(138,205	)		(44,067	)

Other income		754			860			3,009			62
Gain (loss) on extinguishment of debt														(1,122	)		723			(29,354	)		1,633
Loss on financial instruments														(3,109	)		—			(17,911	)		—
Gain on warrant liabilities														2,423			—			7,369			—
Other income (expense)														(1,128	)		(203	)		(1,834	)		370
Interest expense		(1,266	)		(333	)		(3,098	)		(469	)		(9,714	)		(1,266	)		(27,566	)		(3,096	)

Loss from continuing operations before income taxes and net loss of affiliate		(12,245	)		(5,796	)		(47,347	)		(20,990	)
Net loss of affiliate		0			0			0			(4,806	)
Loss from continuing operations before income taxes		(12,245	)		(5,796	)		(47,347	)		(25,796	)		(141,360	)		(11,596	)		(207,501	)		(45,160	)
Income tax benefit		(2,098	)		(61	)		(11,035	)		(3,211	)
Income tax expense (benefit)														207			(2,098	)		830			(11,035	)

Loss from continuing operations, net of income taxes		(10,147	)		(5,735	)		(36,312	)		(22,585	)		(141,567	)		(9,498	)		(208,331	)		(34,125	)

Discontinued operations
Income from operations of discontinued power and electromechanical components businesses		0			3,403			0			3,512
Income tax expense		0			870			0			835
Income from discontinued operations, net of income taxes		0			2,533			0			2,677
Discontinued operations (Note 3)
Income (loss) from operations of discontinued businesses														(666	)		(649	)		(2,461	)		(2,187	)

Net loss	$	(10,147	)	$	(3,202	)	$	(36,312	)	$	(19,908	)		(142,233	)		(10,147	)		(210,792	)		(36,312	)
Less: net loss attributable to noncontrolling interest														(167	)		—			(302	)		—
Net loss attributable to Orbital Infrastructure Group, Inc.													$	(142,066	)	$	(10,147	)	$	(210,490	)	$	(36,312	)

Basic and diluted weighted average common shares outstanding		62,823,330			30,430,422			53,142,557			29,761,135			115,637,323			62,823,330			98,209,495			53,142,557

Loss from continuing operations per common share - basic and diluted	$	(0.16	)	$	(0.19	)	$	(0.68	)	$	(0.76	)	$	(1.22	)	$	(0.15	)	$	(2.12	)	$	(0.64	)

Income from discontinued operations - basic and diluted		0			0.08			0			0.09
Loss from discontinued operations - basic and diluted														(0.01	)		(0.01	)		(0.03	)		(0.04	)

Loss per common share - basic and diluted	$	(0.16	)	$	(0.11	)	$	(0.68	)	$	(0.67	)	$	(1.23	)	$	(0.16	)	$	(2.15	)	$	(0.68	)

See accompanying notes to condensed consolidated financial statements

Table of Contents

Orbital ~~Energy~~Infrastructure Group, Inc.

Condensed Consolidated Statements of Comprehensive Income and Loss

(Unaudited)

	For the Three Months						For the Nine Months						For the Three Months						For the Nine Months
(in thousands)	Ended September 30,						Ended September 30,						Ended September 30,						Ended September 30,
	2021			2020			2021			2020			2022			2021			2022			2021
Net loss	$	(10,147	)	$	(3,202	)	$	(36,312	)	$	(19,908	)	$	(142,233	)	$	(10,147	)	$	(210,792	)	$	(36,312	)

Other comprehensive income (loss)
Foreign currency translation adjustment		129			(177	)		115			194			(182	)		129			(300	)		115
Reclassification from sale of business		0			(14	)		0			(14	)
Reclassification of Foreign currency translation adjustment from accumulated other comprehensive loss to gain on sale of Orbital U.K. upon disposition														—			—			3,608			—
Net other comprehensive income (loss)														(182	)		129			3,308			115
Comprehensive loss	$	(10,018	)	$	(3,393	)	$	(36,197	)	$	(19,728	)	$	(142,415	)	$	(10,018	)	$	(207,484	)	$	(36,197	)
Less: Comprehensive income (loss) attributable to noncontrolling interests														(167	)		—			(302	)		—
Comprehensive loss attributable to Orbital Infrastructure Group, Inc.													$	(142,248	)	$	(10,018	)	$	(207,182	)	$	(36,197	)

See accompanying notes to condensed consolidated financial statements

Table of Contents

Orbital ~~Energy~~Infrastructure Group, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

~~For the Nine Months Ended September 30, 2021 and 2020~~ (Deficit)

(Unaudited)

(in thousands, except share amounts)	Common Stock						Treasury Stock															Common Stock							Treasury Stock
	Shares		Amount		Additional Paid-in Capital		Shares			Amount			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity			Shares		Amount		Additional Paid-in Capital			Shares			Amount			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total OIG Stockholder's Equity (Deficit)			Non-controlling Interest			Total Stockholders' Equity (Deficit)

Balance, December 31, 2020		31,029,642	$	31	$	171,616		(353,063	)	$	(413	)	$	(149,681	)	$	(4,406	)	$	17,147
Issuance of common stock via equity raises		15,555,556		16		42,360		—			—			—			—			42,376
Common stock issued for cashless exercises of stock options		214,596		—		—		—			—			—			—			—
Balance, December 31, 2021																							82,259,739	$	82	$	311,487			(353,063	)	$	(413	)	$	(210,934	)	$	(3,995	)	$	96,227		$	39		$	96,266
Common stock issued for acquisition																							125,000		—		250			—			—			—			—			250			—			250
Common stock issued and issuable for compensation, services and royalty payments		40,188		—		2,551		—			—			—			—			2,551			795,384		1		(1,694	)		—			—			—			—			(1,693	)		—			(1,693	)
Common stock issued for debt repayment																							2,653,365		3		4,442			—			—			—			—			4,445			—			4,445
Common stock issued to lenders for OID for $105 million debt - (reissued)																							54,026		—		—			—			—			—			—			—			—			—
Net loss		—		—		—		—			—			(17,952	)		—			(17,952	)		—		—		—			—			—			(37,601	)		—			(37,601	)		(22	)		(37,623	)
Other comprehensive loss		—		—		—		—			—			—			(22	)		(22	)		—		—		—			—			—			—			6			6			—			6
Balance, March 31, 2021		46,839,982		47		216,527		(353,063	)		(413	)		(167,633	)		(4,428	)		44,100
Common stock issued for acquisition of Gibson Technical Services, Inc.		5,929,267		6		16,926		—			—			—			—			16,932
Balance, March 31, 2022																							85,887,514	$	86	$	314,485			(353,063	)	$	(413	)	$	(248,535	)	$	(3,989	)	$	61,634		$	17		$	61,651
Issuance of common stock																							9,000,000		9		—			—			—			—			—			9			—			9
Common stock issued for acquisition - purchase price adjustment																							—		—		(104	)		—			—			—			—			(104	)		—			(104	)
Issuance of common stock upon exercise of pre-funded warrants, net																							7,153,847		7		6,932			—			—			—			—			6,939			—			6,939
Common stock issued and issuable for compensation, services and royalty payments		1,282,318		1		5,503		—			—			—			—			5,504			348,855		—		870			—			—			—			—			870			—			870
Common stock issued for debt repayment																							4,173,095		4		4,322			—			—			—			—			4,326			—			4,326
Common stock issued to lenders based on a new reference price on subscription agreement																							4,693,348		5		2,920			—			—			—			—			2,925			—			2,925
Net loss		—		—		—		—			—			(8,213	)		0			(8,213	)		—		—		—			—			—			(30,823	)		—			(30,823	)		(113	)		(30,936	)
Other comprehensive income		—		—		—		—			—			—			8			8			—		—		—			—			—			—			3,484			3,484			—			3,484
Balance, June 30, 2021		54,051,567		54		238,956		(353,063	)		(413	)		(175,846	)		(4,420	)		58,331
Issuance of common stock via equity raise		10,410,959		10		35,660		—			—			—			—			35,670
Common stock issued for acquisition of IMMCO, Inc.		874,317		1		2,543		—			—			—			—			2,544
Balance, June 30, 2022																							111,256,659	$	111	$	329,425			(353,063	)	$	(413	)	$	(279,358	)	$	(505	)	$	49,260		$	(96	)	$	49,164
Issuance of common stock																							1,862,647		2		1,082			—			—			—			—			1,084						1,084
Common stock issued and issuable for compensation, services and royalty payments		86,660		—		1,765		—			—			—			—			1,765			765,311		1		1,354			—			—			—			—			1,355						1,355
Common stock issued for debt repayment		737,605		1		2,574		—			—			—			—			2,575			7,459,630		7		5,269			—			—			—			—			5,276						5,276
Common stock issued to lenders based on a new reference price on subscription agreement																							3,591,012		4		1,435			—			—			—			—			1,439						1,439
Net loss		—		—		—		—			—			(10,147	)		—			(10,147	)		—		—		—			—			—			(142,066	)		—			(142,066	)		(167	)		(142,233	)
Other comprehensive loss		—		—		—		—			—			—			129			129			—		—		—			—			—			—			(182	)		(182	)					(182	)
Balance, September 30, 2021		66,161,108	$	66	$	281,498		(353,063	)	$	(413	)	$	(185,993	)	$	(4,291	)	$	90,867
Balance, September 30, 2022																							124,935,259	$	125	$	338,565			(353,063	)	$	(413	)	$	(421,424	)	$	(687	)	$	(83,834	)	$	(263	)	$	(84,097	)

(in thousands, except share amounts)

Common Stock

Treasury Stock

Shares

Amount

Additional Paid-in Capital

Shares

Amount

Accumulated Deficit

Accumulated Other Comprehensive Income (Loss)

Total Stockholders' Equity

Balance, December 31, 2019
28,736,436 $ 29 $ 170,106 (353,063 ) $ (413 ) $ (122,234 ) $ (4,371 ) $ 43,117

Common stock issued for royalty payments
37,312 0 9 0 0 0 0 9
Net loss
— 0 0 — 0 (7,381 ) 0 (7,381 )
Other comprehensive income
— 0 0 — 0 0 415 415
Balance, March 31, 2020
28,773,748 29 170,115 (353,063 ) (413 ) (129,615 ) (3,956 ) 36,160
Common stock issued for acquisition of Orbital Solar Services
2,000,000 2 1,222 0 0 0 0 1,224
Common stock issued for compensation, services, and royalty payments
0 0 4 0 0 0 0 4
Net loss
— 0 0 — 0 (9,325 ) 0 (9,325 )
Other comprehensive loss
— 0 0 — 0 0 (44 ) (44 )
Balance, June 30, 2020
30,773,748 31 171,341 (353,063 ) (413 ) (138,940 ) (4,000 ) 28,019
Common stock issued for royalty payments
0 0 3 0 0 0 0 3
Net loss
— 0 0 — 0 (3,202 ) 0 (3,202 )
Other comprehensive income
— 0 0 — 0 0 (191 ) (191 )
Balance, September 30, 2020
30,773,748 $ 31 $ 171,344 (353,063 ) $ (413 ) $ (142,142 ) $ (4,191 ) $ 24,629

~~See accompanying notes to condensed consolidated financial statements~~

Table of Contents

(in thousands, except share amounts)	Common Stock						Treasury Stock
	Shares		Amount		Additional Paid-in Capital		Shares			Amount			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders' Equity

Balance, December 31, 2020		31,029,642	$	31	$	171,616		(353,063	)	$	(413	)	$	(149,681	)	$	(4,406	)	$	17,147
Issuance of common stock via equity raises		15,555,556		16		42,360		—			—			—			—			42,376
Common stock issued for cashless exercises of stock options		214,596		—		—		—			—			—			—			—
Common stock issued and vesting of restricted stock for compensation, services, and royalty payments		40,188		—		2,551		—			—			—			—			2,551
Net loss		—		—		—		—			—			(17,952	)		—			(17,952	)
Other comprehensive income		—		—		—		—			—			—			(22	)		(22	)
Balance, March 31, 2021		46,839,982		47		216,527		(353,063	)		(413	)		(167,633	)		(4,428	)		44,100
Common stock issued for acquisition of Gibson Technical Services, Inc.		5,929,267		6		16,926		—			—			—			—			16,932
Common stock issued for compensation, services, and royalty payments		1,282,318		1		5,503		—			—			—			—			5,504
Net loss		—		—		—		—			—			(8,213	)		—			(8,213	)
Other comprehensive loss		—		—		—		—			—			—			8			8
Balance, June 30, 2021		54,051,567		54		238,956		(353,063	)		(413	)		(175,846	)		(4,420	)		58,331
Issuance of common stock via equity raise		10,410,959		10		35,660		—			—			—			—			35,670
Common stock issued for acquisition of IMMCO, Inc.		874,317		1		2,543		—			—			—			—			2,544
Common stock issued for and issuable for compensation, services and royalty payments		86,660		—		1,765		—			—			—			—			1,765
Common stock issued for debt repayment		737,605		1		2,574		—			—			—			—			2,575
Net loss		—		—		—		—			—			(10,147	)		—			(10,147	)
Other comprehensive income		—		—		—		—			—			—			129			129
Balance, September 30, 2021		66,161,108		66		281,498		(353,063	)		(413	)		(185,993	)		(4,291	)		90,867

See accompanying notes to condensed consolidated financial statements

Table of Contents

Orbital ~~Energy~~Infrastructure Group, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

For the Nine Months

(in thousands)

Ended September 30,

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss
$ (36,312 ) $ (19,908 )
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation
2,671 573
Amortization of intangibles
4,262 3,043
Amortization of note receivable discount
(237 ) (214 )
Stock-based compensation and expense
9,833 12
Fair value adjustment to liability for stock appreciation rights
2,543 0
Amortization of debt discount
2,016 0
Gain on extinguishment of debt
(2,400 ) 0
Non-cash loss on equity method investment in affiliate
0 4,806
Gain on sale of business
0 (14 )
Provision for bad debt
65 23
Deferred income taxes
(11,176 ) (1,195 )
Inventory reserve
(291 ) (185 )
(Gain) loss on sale of assets
(15 ) 23
Non-cash unrealized foreign currency gain
233 516

Change in operating assets and liabilities, net of acquisitions:

Trade accounts receivable
(5,396 ) (3,273 )
Inventories
(189 ) 2,601
Contract assets
(2,077 ) (526 )
Prepaid expenses and other current assets
1,944 286
Right of use assets/lease liabilities, net
(21 ) (152 )
Deposits and other assets
(259 ) (1,184 )
Accounts payable
(2,529 ) 351
Accrued expenses
1,950 1,264
Contract liabilities
(1,421 ) 3,227
NET CASH USED IN OPERATING ACTIVITIES
(36,806 ) (9,926 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Cash paid for acquisitions, net of cash received
(36,890 ) (2,981 )
Purchases of property and equipment
(6,594 ) (1,474 )
Deposits on financing lease property and equipment
(481 ) 0
Cash paid for working capital adjustment on Power group disposition
0 (2,804 )
Sale of discontinued operations, net of cash
0 (227 )
Proceeds from sale of property and equipment
93 94
Purchase of other intangible assets
(702 ) (10 )
Purchase of convertible notes receivable
0 (260 )
Purchase of investment
0 (210 )
Proceeds from notes receivable
621 0
NET CASH USED IN INVESTING ACTIVITIES
(43,953 ) (7,872 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from line of credit
0 100
Payments on line of credit
(441 ) (99 )
Payments on financing lease obligations
(897 ) (3 )
Proceeds from notes payable
19,400 3,864
Payments on notes payable
(7,490 ) (1,747 )
Proceeds from sales of common stock
78,046 0
NET CASH PROVIDED BY FINANCING ACTIVITIES
88,618 2,115

Effect of exchange rate changes on cash
(28 ) (20 )
Net increase (decrease) in cash, cash equivalents and restricted cash
7,831 (15,703 )
Cash, cash equivalents and restricted cash at beginning of period
4,524 23,351

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD
$ 12,355 $ 7,648

~~See accompanying notes to condensed consolidated financial statements~~

~~Table of Contents~~

~~Orbital Energy Group, Inc.~~

~~Condensed Consolidated Statements of Cash Flows (continued)~~

~~(Unaudited)~~

For the Nine Months

(in thousands)

Ended September 30,

2021

2020

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Income taxes paid (net refunded)
$ (439 ) $ 103
Interest paid
$ 851 $ 268

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

Non-cash investment in acquisitions including seller notes, equity issued and contingent consideration
$ 19,476 $ 8,424
Financing note payable issued for payment on certain insurance policies
$ 2,234 $ 2,329
Accrued property and equipment purchases
$ 882 $ 267
Assets acquired via financing leases
$ 12,190 $ 0

	For the Nine Months
(in thousands)	Ended September 30,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(210,792	)	$	(36,312	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		11,860			2,671
Amortization of intangibles		15,039			4,262
Amortization of debt discount		7,335			2,016
Amortization of note receivable discount		(63	)		(237	)
Stock-based compensation and expense, net of forfeitures		(1,914	)		9,833
Fair value adjustment to liability for stock appreciation rights		(269	)		2,543
Fair value adjustment to financial instrument liabilities		17,912			—
Fair value adjustment to warrant liabilities		(7,369	)		—
Loss (gain) on extinguishment of debt and debt modifications		29,354			(2,400	)
Gain on sale of business		(299	)		—
(Recovery of) provision for bad debt		(497	)		65
Deferred income taxes		6			(11,176	)
Impairment of goodwill and intangible assets		100,275			—
Impairment of financing leased assets		4,467			—
Inventory reserve		(3	)		(291	)
Gain on sale of assets		(391	)		(15	)
Non-cash unrealized foreign currency loss		(1	)		233
Liquidated damages from debt		2,271			—
Change in operating assets and liabilities, net of acquisition:
Trade accounts receivable		466			(5,396	)
Inventories		334			(189	)
Contract assets		(14,940	)		(2,077	)
Prepaid expenses and other current assets		1,993			1,944
Right of use assets/lease liabilities, net		415			(21	)
Deposits and other assets		(29	)		(259	)
Accounts payable		24,688			(2,529	)
Accrued expenses		12,182			1,950
Contract liabilities		(5,385	)		(1,421	)
NET CASH USED IN OPERATING ACTIVITIES		(13,355	)		(36,806	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisitions, net of cash received		(773	)		(36,890	)
Cash paid for working capital adjustment on Front Line Power acquisition		(9,500	)		—
Purchases of property and equipment		(3,722	)		(6,594	)
Deposits on financing lease property and equipment		128			(481	)
Proceeds from sale of businesses, net of cash included in the business		1,026			—
Proceeds from sale of property and equipment and businesses		483			93
Purchases of investments		(469	)		—
Purchase of other intangible assets		(74	)		(702	)
Proceeds from notes receivable		3,500			621
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(9,401	)		(43,953	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit		3,500			—
Payments on line of credit		(2,000	)		(441	)
Payments on financing lease obligations		(3,810	)		(897	)
Proceeds from notes payable		41,150			19,400
Payments on notes payable		(35,530	)		(7,490	)
Proceeds from sales of common stock and warrants		20,272			78,046
NET CASH PROVIDED BY FINANCING ACTIVITIES		23,582			88,618

Effect of exchange rate changes on cash		(298	)		(28	)
Net increase in cash, cash equivalents and restricted cash		528			7,831
Cash, cash equivalents and restricted cash at beginning of period		28,041			4,524

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	28,569		$	12,355

See accompanying notes to condensed consolidated financial statements

Table of Contents

Orbital Infrastructure Group, Inc.

Condensed Consolidated Statements of Cash Flows (continued)

(Unaudited)

	For the Nine Months
(in thousands)	Ended September 30,
	2022		2021
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid (net refunded)	$	109	$	(439	)
Interest paid	$	20,623	$	851

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Non-cash investment in acquisitions including seller notes, equity issued and contingent consideration	$	146	$	19,476
Equipment purchased with debt	$	712	$	715
Accrued property and equipment purchases	$	9	$	882

See accompanying notes to condensed consolidated financial statements

Table of Contents

Orbital ~~Energy~~Infrastructure Group, Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1.	NATURE OF OPERATIONS, BASIS OF PRESENTATION AND COMPANY CONDITIONS

Nature of Operations

Orbital Infrastructure Group, Inc. f/k/a Orbital Energy Group, Inc. (Orbital ~~Energy~~Infrastructure Group, ~~"OEG,~~"OIG," "The Company") is a ~~platform~~diversified infrastructure services company ~~composed of~~ ~~three~~serving customers in the electric power, telecommunications, and renewable markets. The Company’s reportable segments are the Electric Power ~~and Solar Infrastructure Services~~ segment, the Telecommunications segment, and the Renewables segment. In December 2021, the Company announced the planned divestiture of its previously reported Integrated Energy Infrastructure Solutions and Services ~~segment, and the Other~~ segment. In ~~2019,~~ ~~the Company divested of most of its previous Power and Electromechanical segment and the remaining portion of that segment was divested in~~ ~~2020.~~ ~~The Other segment represents the remaining activities that are~~ ~~not~~ ~~included as part of the other reportable segments and represent primarily corporate activity.~~

The Electric Power ~~and Solar Infrastructure Services~~ segment consists of Front Line Power Construction, LLC based in Houston, Texas (acquired November 17, 2021), Orbital Power, ~~Services, Orbital Solar Services~~Inc. based in Dallas, Texas, (began operations in Q12020) and ~~Orbital Telecom Services.~~Eclipse Foundation Group based in Gonzales, Louisiana (began operations in Q12021). The segment provides comprehensive ~~network~~infrastructure solutions to customers in the electric power ~~telecom and solar industries.~~industry. Services performed by Front Line Power and Orbital Power, ~~Services~~Inc. generally include but are not limited to the engineering, design, installation, upgrade, repair and maintenance of electric power transmission and distribution infrastructure and substation facilities as well as emergency restoration ~~services, including the repair of infrastructure damaged by inclement weather, and~~services. Eclipse Foundation Group, which began operations in January 2021, is a drilled shaft foundation construction ~~services.~~company that specializes in providing services to the electric transmission and substation, industrial, telecommunication and disaster restoration market sectors, with expertise performing services in water, marsh and rock terrains. In the third quarter of 2022, in order to streamline operations, the Eclipse business was integrated into Front Line Power Construction, LLC, and ceased to be a separate business unit.

The Telecommunications segment is made up of Gibson Technical Services, Inc. (“GTS”) (acquired April 13, 2021) and subsidiaries. GTS is an Atlanta-based telecommunications company providing diversified telecommunications services nationally since 1990 and is the parent of IMMCO, Inc., Full Moon Telecom, LLC, and Coax Fiber Solutions, LLC. IMMCO, Inc. (acquired July 28, 2021), which includes two Indian subsidiaries, is an Atlanta-based, full-service telecom engineering and network design company providing diversified engineering services and customized software solutions to a global customer base since 1992. Full Moon Telecom, LLC (acquired October 22, 2021) is a Florida-based telecommunications service provider that offers an extensive array of wireless service capabilities and experience including Layer 2/Layer3 Transport, Radio Access Network (“RAN”) Integration, test and turn-up of Small Cell systems and Integration/Commissioning of Distributed Antenna (“DAS”) systems. Coax Fiber Solutions, LLC (acquired March 7, 2022), is based in Loganville, Georgia. Founded in 2016, Coax Fiber Solutions is a GDOT Certified contractor specializing in Aerial Installation, directional drilling, trenching, plowing, and missile crews for telecommunications, power, gas, water, CCTV, ATMS, and traffic signal cable installation.

The Renewables segment consists of Orbital Solar Services based in Raleigh, North Carolina. Orbital Solar Services provides engineering, procurement and construction (“EPC”) services that support the development of renewable energy generation focused on utility-scale solar construction. The Company serves a wide variety of project types, including commercial, substation, solar farms and public utility projects. ~~Orbital Telecom Services began operations in~~ ~~April 2021~~ with the acquisition of Gibson Technical Services ("GTS"). Services provided by Orbital Telecom Services include the engineering, design, construction and maintenance services to the broadband and wireless telecommunications industries.

The Company’s Integrated Energy Infrastructure Solutions and Services segment is made up of Orbital Gas Systems Ltd. (Orbital-UK) and Orbital Gas Systems, North America, Inc. (Orbital North America), collectively referred to as ("Orbital Gas Systems"). Orbital-UK is based in the United Kingdom and Orbital North America is based in Houston, Texas. Orbital Gas Systems is a provider of natural gas infrastructure and advanced technology, including metering, odorization, remote telemetry units (‘‘RTU’’) and provides a diverse range of personalized gas engineering solutions to the gas utilities, power generation, emissions, manufacturing and automotive industries. GasPT® and VE ~~Technology~~~~® products are sold through Orbital Gas Systems.~~

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information, which includes condensed consolidated financial statements. Accordingly, they do not include all the information and notes necessary for a comprehensive presentation of financial position and results of operations and should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. The Condensed Consolidated Balance Sheet as of December 31, ~~2020~~2021 has been derived from the audited financial statements as of that date included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

It is management's opinion that all material adjustments (consisting of normal recurring adjustments) have been made, which are necessary for a fair financial statement presentation. All intercompany accounts and transactions have been eliminated in consolidation. The results for the interim period are not necessarily indicative of the results to be expected for the remaining quarters or year ending December 31, ~~2021.~~2022.

Table of Contents

Reconciliation of Cash, Cash Equivalents, and Restricted Cash on Condensed Consolidated Statements of Cash Flows

	For the Nine Months				For the Nine Months
(in thousands)	Ended September 30,				Ended September 30,
	2021		2020		2022		2021
Cash and cash equivalents at beginning of period	$	3,046	$	23,351	$	26,865	$	3,046
Restricted cash at beginning of period (1)		1,478		0		1,176		1,478
Cash, cash equivalents and restricted cash at beginning of period	$	4,524	$	23,351	$	28,041	$	4,524

Cash and cash equivalents at end of period	$	11,179	$	4,060	$	27,960	$	11,179
Restricted cash at end of period (1)		1,176		3,588		609		1,176
Cash, cash equivalents and restricted cash at end of period	$	12,355	$	7,648	$	28,569	$	12,355

(1) Restrictions on cash at September 30, 2022 ~~30,~~~~2021~~and September 30, 2021 ~~30,~~~~2020~~relate to collateral for several bank-issued letters of credit for contract guaranties.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include estimates used to ~~review~~record purchase price allocation for the ~~Company’s impairments and~~Company's acquisitions, fair value measurements used in goodwill impairment tests, impairment estimations of long-lived assets, revenue recognition on ~~cost-to-cost-method~~cost-to-cost type contracts, ~~inventory valuation, warranty reserves,~~allowances for uncollectible accounts, valuations of non-cash capital stock issuances, ~~valuation~~estimates of the incremental borrowing rate for ~~acquisitions,~~long-term leases, fair value estimates and the valuation allowance on deferred tax ~~assets, note receivable interest imputation, and the incremental borrowing rate used in determining the value of right of use~~ assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable in 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 from these estimates under different assumptions or conditions.

Reclassifications

Certain reclassifications have been made to the ~~2020~~2021 classifications in order to conform to the ~~2021~~2022 presentation.

Company Conditions

~~Orbital Solar Services has seen increasing customer opportunities including its association with the Black Sunrise Investment fund. The fund has identified through its investors~~ and ~~others, several projects~~Sources of ~~scale and for which Orbital Solar Services is expected to be awarded significant work. Orbital Power Services began operations during the~~ ~~first~~ ~~quarter of~~ ~~2020~~ ~~with work progressing under master service agreements with several new customers, and extended the service capabilities in~~ ~~January 2021~~ ~~to include drilled shaft foundation construction services. Orbital Telecom Services began operations in the~~ ~~second~~ ~~quarter of~~ ~~2021~~ ~~with the acquisition of GTS which had a positive impact on margins during the quarter and year-to-date periods. Orbital Gas Systems continues to face issues surrounding COVID-~~~~19,~~ ~~the overall economy in the United Kingdom, and the impact of pricing pressure on oil and gas industry customers.~~

Liquidity

The Company ~~had a~~has experienced net ~~loss of $36.3 million, a gross margin of $1.3 million, and~~losses, cash outflows from cash used in operating activities and a decline in share value over the past years. As of ~~$36.8 million during~~and for the nine months ended September 30, 2022, the Company had an accumulated deficit of $421.4 million, loss from continuing operations of $208.3 million, and net cash used in operating activities of $13.4 million. Further, as of September 30, 2022, the Company had a working capital deficit of $118.7 million, including current maturities of debt, and cash and cash equivalents of $28.0 million available for working capital needs and planned capital asset expenditures. As a result of the foregoing, the Company does not have sufficient liquidity and capital resources to meet its obligations and fund its operations for the ~~2021.~~twelve months following the issuance of these financial statements. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern.

The Company has plans to access additional capital to meet its obligations for the twelve months from the date these financial statements are available to be issued. Historically, the Company has raised additional equity and debt financing to fund its expansion; refer to Note 16 — Notes Payable and Line of Credit. The Company has also funded some of its capital expenditures through long-term financing with lenders and other investors as also described in further detail in Note 16 — Notes Payable and Line of Credit. Our ability to raise the additional capital is dependent on a number of factors, including, but not limited to, the market demand for our common stock, which itself is subject to a number of business risks and uncertainties, our creditworthiness and the uncertainty that we would be able to raise such additional capital at a price that is favorable to us. As of September 30, ~~2021,~~2022, ~~our accumulated deficit is $186.0~~the Company has an effective S-3 shelf registration statement for the issuance of various types of securities, including common stock, preferred stock, debt securities and/or warrants in the aggregate of up to $68.8 million. In addition, although no formal agreements exist, the company has solicited interest from various lenders to potentially raise additional term debt to restructure or refinance its existing notes.

The Company plans to meet its obligations as they become due over the next twelve months by raising additional capital through equity and debt financing sources and forecasted positive cash flows generated from operations. There can be no assurance that the Company will succeed in executing these plans. If unsuccessful, the Company will not have sufficient liquidity and capital resources to repay its indebtedness when it matures, or otherwise meet its cash requirements over the next twelve months, as noted above.

Restructuring Costs

In September 2022, the Company fully impaired its finance lease equipment related to the Eclipse Foundation Group in the Electric Power segment. These pieces of equipment are drilling specific and at this time, the Company does not plan to use the equipment for the remaining term of the leases. As these leases are non-cancelable and do not include a sub-leasing option, the full finance lease assets related to Eclipse have been removed from the balance sheet and an equal impairment has been recognized in the amount of $4.5 million. Future payments related to these leases will be approximately $5.2 million paid through June 2026.

Sale of Orbital U.K.

On May 11, 2022, the Company completed the sale of its Orbital U.K. operations for the agreed upon amount of 3,000,000 GBP. The Company received 1,575,000 GBP on the settlement date and ~~we had negative working capital~~the remaining 1,425,000 GBP was received on July 11, 2022. The Company could receive additional consideration if certain events transpire during the 12-month restricted period following the settlement date. In addition, the Company will receive a “royalty” of ~~$4.0 million.~~15% on any sales of the GasPT device related to Snam Rete Gas and/or the Future Billing Methodology (FBM) Project.

Goodwill and Indefinite-lived intangible assets

~~Upon acquisition of Reach Construction Group, LLC, (name changed to Orbital Solar Services) the Company recorded $7.0 million of goodwill. Goodwill was valued as of~~ ~~April 1, 2020~~ ~~by a~~ ~~third~~-party valuation expert and was recorded following the recognition of Orbital Solar Service's tangible assets and liabilities and $13.7 million of finite-lived identifiable intangible assets. Factors that contributed to the Company's goodwill are Orbital Solar Service's skilled workforce and reputation within its industry. The Company ~~also expected to achieve future synergies between the Orbital Solar Services~~had Goodwill from acquisitions made in 2020,2021 and ~~Orbital Power Services businesses. These synergies were expected to be achieved in the form of power line work necessary when bringing new solar power systems online.~~2022.

910

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~~Upon acquisition~~Roll-forward of ~~GTS, the Company recorded $12.3 million of goodwill. Goodwill was valued as of~~ ~~April 13, 2021~~ ~~by a~~ ~~third~~~~-party valuation expert and was recorded following the recognition of GTS's tangible assets and liabilities and $22.8 million of identifiable intangible assets. Factors that contributed to~~ the Company's goodwill are GTS's skilled workforce and reputation within its industry. Future synergies are expected with OPS with possibilities including shared equipment, shared engineering labor and telecommunication line work from OPS. Upon acquisition of IMMCO, the company recorded $11.0 million of goodwill. Goodwill was valued as of ~~July 28, 2021~~ ~~by a~~ ~~third~~-party valuation expert and was recorded following the recognition of IMMCO'S tangible assets and liabilities and $6.6 million of identifiable intangible assets. Factors that contributed to the Company's goodwill are skilled workforce, reputation with its industry and significant synergies to our telecom platform, GTS, by expanding the depth and breadth of the customer solutions we provide in a market with significant multi-year momentum driven by the rollout of 5G ~~spectrum.~~goodwill:

	*Electric Power*			*Telecommunications*			*Renewables*		*Total*
Goodwill - December 31, 2021	$	70,151		$	23,742		$	7,006	$	100,899
Acquisition of CFS		—			1,521			—		1,521
IMMCO purchase price allocation adjustment		—			537			—		537
September 30, 2022 - impairment		(70,151	)		(25,800	)		—		(95,951	)
Goodwill - September 30, 2022	$	—		$	—		$	7,006	$	7,006

The Company tests for impairment of Indefinite-lived intangibles and Goodwill in the second quarter of each year and when events or circumstances indicate that the carrying amount of Goodwill exceeds its fair value and may not be recoverable. ~~The Company’s qualitative assessment of impairment for indefinite-lived assets at~~ ~~May 31, 2021~~ ~~followed the guidance in ASC~~ ~~350~~-30-35-~~18A~~ ~~and~~ ~~18B~~ ~~and determined there was 0 impairment of indefinite-lived intangibles at that time.~~

Under current accounting guidance, Orbital ~~Energy~~Infrastructure Group is not required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. The guidance includes a number of factors to consider in conducting the qualitative assessment. ~~The Company tests for goodwill impairment in the~~ ~~second~~ ~~quarter of each year and whenever events or changes in circumstances indicate that the carrying amount of the asset exceeds its fair value and~~ ~~may~~ ~~not~~ ~~be recoverable.~~

~~As detailed in ASC~~During the ~~350~~-20-35-~~3A,~~three ~~in performing its testing for impairment of goodwill as of~~months ended ~~May 31, 2021,~~June 30, 2022, ~~management~~the Company completed a quantitative analysis ~~on the OSS reporting unit~~ to determine whether it was more likely than not that the fair value of aits reporting ~~unit is~~units were less than ~~its~~their carrying amount, including goodwill.

To complete the review, management evaluated the fair value of the Goodwill and considered all known events and circumstances that might trigger an impairment of goodwill. The review of goodwill, prepared as of May 31, ~~2021,~~2022, determined that there were not indicators present to suggest that it was more likely than not that the fair value of any of the Company's reporting units was less than its carrying amount and thus no impairment was necessary during the quarter ended June 30, 2022.

The Company did a second goodwill impairment analysis as of June 30, 2022 due to a 42-percent drop in the Company's stock price between May 31, 2022 and June 30, 2022, that caused an overall decrease in the Company’s market capitalization. We performed the interim impairment tests consistent with our approach for annual impairment testing, including similar models, inputs, and assumptions. As a result of the interim impairment testing, no impairment was identified as of June 30, 2022.

During the third quarter of 2022, triggering events were identified which led to performing interim goodwill impairment testing of our reporting units as of September 30, 2022. These events included a further decrease in the Company's market capitalization, the significant loss in the Renewables segment in the third quarter of 2022, interest rate increases and limitations on accessing capital, which raised substantial doubt regarding the Company’s ability to continue as a going concern. The fair value for our reporting units for the interim testing was valued using a market approach. The impairment assessment resulted in a conclusion that goodwill in the Electric Power and Telecommunications reporting units was impaired by $70.1 million and $25.8 million, respectively, during the three months ended September 30, 2022. The impairment assessment also concluded that the fair value of the ~~Orbital Solar Services . In addition, we evaluated~~Renewables reporting unit was in excess of its carrying amount.

Accrued expenses

Accrued expenses are liabilities that reflect expenses on the ~~OSS and GTS reporting units for possible triggering events~~statement of ~~possible impairment as of~~operations that have not been paid or recorded in accounts payable at the end of the ~~quarter ended~~period. At September 30,2022 and December 31, 2021, ~~noting~~ ~~none.~~accrued expenses of $30.3 million and $28.3 million, respectively included the following components:

(in thousands)

September 30,

December 31

2022

2021

Accrued bonding
$ 1,631 $ 167
Accrued compensation
4,365 6,369
Working capital adjustment on Front Line Power Construction acquisition
4,592 14,092
Accrued interest
4,340 2,902
Accrued taxes payable
148 102
Accrued subcontractor expenses
6,775 —
Accrued union dues
1,044 870
Accrued vendor invoices and accrued other expenses
7,401 3,799
Total accrued expense
$ 30,296 $ 28,301
Impact of COVID-19 ~~Assessment~~Pandemic and ~~Liquidity~~
In ~~March 2020,~~ ~~the World Health Organization categorized the~~ current ~~coronavirus disease (“COVID-~~~~19”~~~~) as a pandemic, and the President~~economic environment
The effects of ~~the United States declared~~ the COVID-19 ~~outbreak a national emergency. COVID-~~19pandemic continues to ~~spread throughout~~impact certain aspects and geographies of the ~~United States~~global economy due to supply chain, production and other ~~countries across~~logistical disruptions. While we have continued to operate as a provider of essential services from the ~~world, and the duration and severity of its effects can be severe. While the Company expects the effects~~onset of the pandemic, ~~to negatively impact its results from~~during the course of the pandemic our operations ~~cash flows~~ and financial ~~position, the current level of uncertainty over the economic and operational impacts of COVID-~~19 means the related financial impact cannot be reasonably estimated at this time. The Company has experienced customer delays and extensions for projects, supply chain delays, furloughs of personnel, increased utilization of telework, increased safety protocolsresults have been adversely impacted by governmental responses to ~~address COVID-~~19 ~~risks, decreased field service work and other impacts from~~ the COVID-19 ~~pandemic. While~~pandemic, including shut-down orders and limitations on work site practices implemented by governments. The longer-term implications of the ~~economic effects of~~ COVID-19 ~~are beginning to subside as a higher percentage of people become vaccinated, the highly transmissible delta variant~~pandemic on our financial performance remain uncertain and ~~the slowing rates of vaccination has caused there to be uncertainty regarding the future affects of the pandemic. Events and changes in circumstances arising after~~ ~~September 30, 2021,~~ ~~including those resulting from the impacts of COVID-~~~~19,~~ ~~will be reflected in management’s estimates for future periods.~~
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~~Table of Contents~~
~~Management believes with the Company's present cash flows along with access to additional debt and equity raises OEG will meet its obligations for~~ ~~twelve~~ months from the date these financial statements are available to be issued. Including our cash balance, we continue to manage working capital primarily related to trade accounts receivable, notes receivable, prepaid assets, contract assets and our inventory less current liabilities that we will manage during the next ~~twelve~~ ~~months. In~~ ~~2020~~ ~~and the~~ ~~first~~~~nine~~ ~~months of~~ ~~2021,~~ ~~the Company has entered into various long and short-term debt agreements (Note~~ ~~16.~~ ~~Notes Payable). In addition, the Company has secured funding and has an available S-~~3 ~~registration statement allowing the Company to issue various types of securities including common stock, preferred stock, debt securities and/or warrants, up to an aggregate amount of $150 million. In~~ ~~July 2021,~~ the Company utilized its registration statement and issued an updated prospectus to issue 10,410,959 additional common shares for an additional $38 million in proceeds before expenses, allowing for up to $112 million on its registration statement to be utilizedvariable in the ~~future. The Company used $17.1 million of these proceeds on the acquisition of IMMCO, Inc. in~~ ~~July 2021,~~ ~~which was immediately accretive to earnings.~~current economic environment including rising interest and inflation rates.

~~The Company’s available capital~~ ~~may~~ ~~be consumed faster than anticipated due~~We continue to ~~other events, including the length~~monitor governmental vaccination and ~~severity of the global novel coronavirus disease pandemic and measures taken~~testing standards or requirements related to ~~control the spread of~~ COVID-19, as well as ~~changes in~~certain standards and ~~progress~~guidance for preventing the spread of ~~our development activities and~~COVID-19. While the impact of ~~commercialization efforts due~~these standards has lessened in 2022, we continue to ~~the COVID-~~19 ~~pandemic. The Company~~monitor changes in these standards that may ~~seek to obtain additional capital as needed through equity financings, debt or other financing arrangements, but given the~~ impact ~~of COVID-~~19 ~~on the U.S. and global financial markets, the Company~~ ~~may~~ ~~be unable to access further equity or debt financing when needed. As such, there can be~~ no ~~assurance that the Company will be able to raise additional capital when needed or under acceptable terms, if at all. The sale of additional equity~~ ~~may~~ ~~dilute existing shareholders and newly issued shares~~ ~~may~~ ~~contain senior rights and preferences compared to currently outstanding common shares.~~our business.
~~Restructuring Charges~~
~~During the~~ ~~fourth~~ ~~quarter of~~ ~~2019,~~ ~~the Company completed the sale of its largest group within the Power and Electromechanical segment. The Company completed the sale of its Japan operations as of~~ ~~September 30, 2020.~~ ~~In conjunction with the~~ ~~2019~~ ~~sale, it was concluded that should the remaining power and electromechanical operations~~ ~~not~~ ~~sell, the Company would fulfill its backlog obligations and wind down the remaining operations of CUI-Canada during~~ ~~2020.~~ ~~As of~~ ~~December 31, 2020,~~ ~~the Company had remaining an accrued liability for estimated employee termination costs of $0.4 million related to the discontinued operations. As of~~ ~~September 30, 2021,~~ ~~there remains $28 thousand to be paid out during the remainder of~~ ~~2021.~~
~~Activity in the termination benefit liability in~~ ~~2021~~ ~~is as follows:~~
CUI-Canada termination benefits (in thousands)

December 31, 2020
$ 371
Severance payouts
(347 )
Translation
4
September 30, 2021
$ 28

Estimated total termination benefits paid and to be paid
$ 2,823

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Table of Contents

2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Our significant accounting policies are detailed in "Note 2 Summary of Significant Accounting Policies" within Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 filed with the SEC on March ~~30, 2021.~~ ~~Changes to the Company's accounting policies are discussed below:~~
~~Adoption of new accounting standards~~
On ~~January 1, 2021,~~ ~~the Company adopted ASU~~ ~~No.~~~~2020~~-~~04,~~ "~~Reference Rate Reform (Topic~~ ~~848~~~~) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting.~~~~" ASU~~ ~~2020~~-04 provides optional expedients and exceptions related to contract modifications and hedge accounting to address the transitions from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The guidance permits an entity to consider contract modification due to reference rate reform to be an event that does ~~not~~ ~~require contract re-measurement at the modification date or reassessment of a previous accounting determination. ASU~~ ~~2020~~-04 ~~also temporarily allows hedge relationships to continue without de-designation upon changes due to reference rate reform. The standard is effective upon issuance and can be applied as of~~ ~~March 12, 2020~~ ~~through~~ ~~December~~ 31, 2022.~~There was~~ ~~not~~ ~~a material effect on the Company's financial statements due to the Company~~ ~~not~~ ~~having any current financial instruments that are affected by this new guidance.~~
On ~~January 1, 2021,~~ ~~the Company adopted ASU~~ ~~2020~~-~~01,~~~~Investments - Equity Securities (Topic~~ ~~321~~~~), Investments - Equity Method and Joint Ventures (Topic~~ ~~323~~~~), and Derivatives and Hedging (Topic~~ ~~815~~~~): Clarifying the Interactions between Topic~~ ~~321,~~ ~~Topic~~ ~~323,~~ ~~and Topic~~ ~~815.~~ ~~ASU~~ ~~2020~~-01 clarifies the interaction between accounting standards related to equity securities, equity method investments, and certain derivatives, and is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. The amendments in ASU ~~2020~~-01 ~~are effective for the Company's~~ ~~2021~~ ~~fiscal year, including interim periods. The new guidance does~~ ~~not~~ ~~have a material impact on the Company's consolidated financial statements due to the Company currently~~ ~~not~~ ~~having any equity-method investments or any derivative instruments.~~
On ~~January 1, 2021,~~ ~~the Company adopted ASU~~ ~~2019~~-~~12,~~~~Simplifying the Accounting for Income Taxes~~~~, which is guidance intended to simplify various aspects related to accounting for income taxes, eliminate certain exceptions within ASC~~ ~~740~~ ~~and clarify certain aspects of the current guidance to promote consistency among reporting entities. The pronouncement is effective for the Company's~~ ~~2021~~ ~~fiscal year, including interim periods. The ASU does~~ ~~not~~ ~~have a material impact on the Company's consolidated financial statements.~~
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3.
DISCONTINUED OPERATIONS AND SALE OF A BUSINESS
As part of the Company’s ~~previously~~ stated strategy to transform Orbital ~~Energy~~Infrastructure Group ~~Inc.~~ into a diversified energy infrastructure services platform serving North American ~~and U.K.~~energy customers, in ~~2019~~ the Company’s ~~Board~~board of ~~Directors~~directors made the decision to divest of its ~~Power~~Orbital Gas subsidiaries. The Orbital Gas subsidiaries provide proprietary gas measurement and ~~Electromechanical businesses. On~~sampling technologies and the integration of process control and measuring/sampling systems. They are legacy businesses that are ~~September 30, 2019,~~ not~~Orbital Energy Group, Inc. entered into an asset sale agreement by and among, CUI, Inc. ("Seller"), a wholly owned subsidiary~~ part of the ~~Company ("Parent"),~~Company’s strategy of building an infrastructure services company serving the electric power, telecommunications and ~~Back Porch International, Inc. ("Buyer") to sell~~renewable markets. The disposition of the Orbital Gas subsidiaries will facilitate the Company’s ~~Electromechanical~~restructuring and cost savings initiatives and are intended to realign and simplify its business ~~to a management led group. In~~ ~~November 2019,~~ ~~Orbital Energy Group, Inc. entered into an asset sale agreement by~~structure and ~~among, the Seller and Bel Fuse, Inc. to sell the domestic Power supply business. Both sales closed in~~ ~~2019.~~ On ~~September 30, 2020,~~ better position the Company ~~sold the CUI Japan operations to Back Porch International~~ for ~~approximately $163 thousand. The assets of the Company's CUI-Canada subsidiary were divested in~~future growth and improved profitability. In the fourth quarter of ~~2020.~~2021, the Company recorded a $9.2 million impairment related to its U.K. operations to write the value of its investment in the U.K. operations to its expected realizable value of 3 million GBP ($4.1 million on December 31, 2021).

The ~~associated results of operations~~sale of the ~~discontinued Power~~U.K. operations closed in May of 2022. The Company could receive additional consideration if certain events transpire during the 12-month restricted period following the settlement date. In addition, the Company will receive a “royalty” of 15% on any sales of the GasPT device related to Snam Rete Gas and/or the Future Billing Methodology (FBM) Project. The Company sold a portion of the North America business in the third quarter of 2022 at approximately book value of the assets sold. Certain assets and ~~Electromechanical segment~~liabilities not sold with the business were reclassified from held for sale to held and used. Remaining assets held for sale at September 30,2022 include the VE Technology asset of the Company's North America Orbital Gas subsidiary. VE Technology is a gas sampling intellectual property, which provides a superior method of penetrating the gas flow without the associated vortex vibration, thereby making it a ‘‘stand-alone’’ product for thermal sensing (thermowells) and trace-element sampling.
Assets and liabilities held for sale that are ~~separately reported as Discontinued Operations for~~ ~~2020~~included on the ~~Condensed Consolidated Statements of Operations. Cash flows from these~~Company's balance sheet, relate to the company's discontinued businesses, and are included in the Condensed Consolidated Cash Flow statements. See below for additional information on operating and investing cash flows of the discontinued operations. Results from continuing operations for the Company and segment highlights exclude the former Power and Electromechanical segment, which is included in these discontinued operations.described below.

As of

As of

September 30,

December 31,

(in thousands)

2022

2021

Carrying amounts of the major classes of assets included in discontinued operations:

Trade accounts receivable
$ — $ 2,996
Inventories
— 530
Prepaid expenses and other current assets
— 114
Contract assets
— 1,141
Assets held for sale, current portion
— 4,781
Property and equipment
— 42
Other intangible assets
1,814 1,813
Deposits and other assets
— 43
Assets held for sale, noncurrent portion
1,814 1,898
Total assets of the disposal group classified as held for sale
$ 1,814 $ 6,679

Carrying amounts of the major classes of liabilities included in discontinued operations:

Accounts payable
$ — $ 1,657
Contract liabilities
— 1,414
Operating lease obligations - current portion
— 76
Accrued expenses
— 1,126
Liabilities held for sale, current portion
— 4,273
Operating lease obligations, less current portion
— 85
Other long-term liabilities
— 9
Liabilities held for sale, noncurrent portion
— 94
Total liabilities held for sale
$ — $ 4,367

~~The former Power and Electromechanical segment consisted~~
12
Table of the wholly owned subsidiaries: CUI, Inc. (CUI), based in Tualatin, Oregon; CUI Japan, based in Tokyo, Japan; CUI-Canada, based in Toronto, Canada; and the entity that previously held the corporate building, CUI Properties. The subsidiaries were providers of power and electromechanical components for Original Equipment Manufacturers (OEMs).
Contents
Selected data for these discontinued businesses consisted of the following:

Reconciliation of the Major Classes of Line Items Constituting Pretax Income from
Discontinued Operations to the After-Tax Income from Discontinued Operations That Are
Presented in the Condensed Consolidated Statement of Operations
~~(Unaudited)~~
(in thousands)

For the Three Months

For the Nine Months

For the Three Months

For the Nine Months

Ended September 30,

Ended September 30,

Ended September 30,

Ended September 30,

Major classes of line items constituting pretax profit of discontinued operations:

2021

2020

2021

2020

2022

2021

2022

2021

Revenues
$ 0 $ 8,579 $ 0 $ 14,523 $ 933 $ 6,097 $ 7,002 $ 14,816
Cost of revenues
0 (5,155 ) 0 (10,402 ) (938 ) (4,608 ) (5,621 ) (10,418 )
Selling, general and administrative expense
0 (65 ) 0 (870 ) (716 ) (1,973 ) (4,124 ) (6,367 )
Other income
0 30 0 247
Depreciation and amortization
— (404 ) — (1,249 )
(Provision) recovery of bad debt
25 5 (22 ) 27
Interest expense
— — (13 ) (2 )
Gain on extinguishment of PPP loan
— — — 779
Other expense
30 234 18 227
Pretax income of discontinued operations
0 3,389 0 3,498 (666 ) (649 ) (2,760 ) (2,187 )
Pretax gain on sale of electromechanical businesses
0 14 0 14
Pretax gain on sale of Orbital U.K.
— — 299 —
Income tax expense
0 870 0 835 — — — —
Total income from discontinued operations
$ 0 $ 2,533 $ 0 $ 2,677 $ (666 ) $ (649 ) $ (2,461 ) $ (2,187 )

Net cash used in operating activities of discontinued operations for the nine months ended September 30, 2022 ~~30,~~~~2020~~was ~~$1.9~~$0.8 million.

There was $1$62 thousand net cash provided inby investing activities of discontinued operations for the nine months ended September 30, ~~2020.~~2022.
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4.
REVENUE FROM CONTRACTS WITH CUSTOMERS

The Electric Power ~~and Solar Infrastructure Services~~ segment provides full service building, maintenance and support to the electrical power distribution, transmission, substation, ~~renewables,~~ and emergency response sectors of North America through Front Line Power, Orbital Power ~~Services.~~Services and Eclipse Foundation. The Telecommunications segment composed of Gibson Technical Services and subsidiaries provides technical implementation, design, maintenance, emergency and repair support services in the broadband, wireless, and outside plant and building technologies. The Renewables segment, Orbital Solar Services, provides engineering, procurement and construction (“EPC”) services that support the development of renewable energy generation focused on utility scale solar and community solar construction, and Orbital Telecom Services provides technical implementation, design, maintenance, emergency and repair support services in the broadband, wireless, and outside plant and building technologies.
The Integrated Energy Infrastructure Solutions and Services segment subsidiaries, collectively referred to as Orbital Gas Systems, generate their revenue from a portfolio of products, services and resources that offer a diverse range of personalized gas engineering solutions to the gas utilities, power generation, petrochemical, emissions, manufacturing and automotive industries among others.
Orbital Gas Systems accounts for a majority of its contract revenue proportionately over time. For our performance obligations satisfied over time, we recognize revenue by measuring the progress toward complete satisfaction of that performance obligation. The selection of the method to measure progress towards completion can be either an input method or an output method and requires judgment based on the nature of the goods or services to be provided.construction.

For our construction contracts, revenue is generally recognized over time. Our fixed price and unit-price construction projects generally use a cost-to-cost input method or an output method to measure our progress towards complete satisfaction of the performance obligation as we believe ~~these methods~~it best ~~depict~~depicts the transfer of control to the customer. Revenue is also generally recognized over time as the entity’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced. Under the cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. Under the output method, the measure of progress towards completion is ~~measured~~ based on units ~~or hours~~ of work completed multiplied by the contractual pricing amounts per unit. Under the output method, revenue is determined by actual work achieved. For jobs under the output method, revenue is earned based on each unit in the contract completed. We construct comprehensive revenue calculations based on quantifiable measures of actual units completed multiplied by the agreed upon contract prices per item completed.

~~The~~For our engineering and network design contracts, revenue is also generally recognized over time. In these jobs, timing of revenue recognition ~~for Integrated Energy Infrastructure products~~ also depends on the payment terms of the contract, as our performance does not create an asset with an alternative use to us. For those contracts where the Company's performance creates or enhances an asset that the customer controls as the asset is created or enhanced or for which we have a right to payment for performance completed to date at all times throughout our performance, inclusive of a cancellation, we recognize revenue over time. ~~These~~As discussed above, these performance obligations use a cost-to-cost input method or output method to measure our progress towards complete satisfaction of the performance obligation as we believe it best depicts the transfer of control to the customer. However, for those contracts for which we do not have a right, at all times, to payment for performance completed to date and we are not enhancing a ~~customer controlled~~customer-controlled asset, we recognize revenue at the point in time when control is transferred to the ~~customer, generally when the product is shipped.~~customer.

For our service contracts, revenue is also generally recognized over time as the customer simultaneously receives and consumes the benefits of our performance as we perform the service. For our fixed price service contracts with specified service periods, revenue is generally recognized on a straight-line basis over such service period when our inputs are expended evenly, and the customer receives and consumes the benefits of our performance throughout the contract term.
For certain of our revenue streams, such as call-out repair and service work, and outage services, that are performed under time and materials contracts, our progress towards complete satisfaction of such performance obligations is measured using an input method as the customer receives and consumes the benefits of our performance completed to date.

Due to uncertainties inherent in the estimation process, it is possible that estimates of costs to complete a performance obligation will be revised in the near-term. For those performance obligations for which revenue is recognized using a cost-to-cost input method, changes in total estimated costs, and related progress towards complete satisfaction of the performance obligation, are recognized on a cumulative catch-up basis in the period in which the revisions to the estimates are made. When the current estimate of total costs for a performance obligation indicates a loss, a provision for the entire estimated loss on the unsatisfied performance obligation is made in the period in which the loss becomes evident.

Under the output method, revenue is determined by actual work achieved. For time and materials jobs, revenue is recognized based on the output of hours of work completed multiplied by the contractual agreed upon rate per hour. For the remainder of jobs under the output method, revenue is earned based on each unit in the contract completed. We construct comprehensive revenue calculations based on quantifiable measures of actual units completed multiplied by the agreed upon contract prices per item completed. Revenue is also generally recognized over time as the customer simultaneously receives and consumes the benefits of our performance as we perform the service.
~~Product-type contracts (for example, sale of GasPT units) for which revenue does~~ ~~not~~ qualify to be recognized over time are recognized at a point in time. Revenues from extended warranty and maintenance activities are recognized ratably over the term of the warranty and maintenance period. Extended warranties are ~~not~~ ~~a material portion of our revenue.~~
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Accounts Receivable, Contract Assets and Contract Liabilities
Accounts receivable are recognized in the period when our right to consideration is unconditional. We also assess our customer's ability and intention to pay, which is based on a variety of factors, including our historical payment experience with and the financial condition of our customers.
Payment terms and conditions vary by contract, ~~although~~and are within industry standards across our ~~standard terms include a requirement of payment within~~ 30 ~~days.~~business lines. Accounts receivable are recognized net of an allowance for doubtful accounts.
The timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets include unbilled amounts from our construction projects when revenue recognized under the ~~cost-to-cost or~~ output method ~~measure of progress exceed~~or input cost-to-cost method exceeds the amounts invoiced to our customers, as the amounts cannot be billed under the terms of our contracts. Such amounts are recoverable from our customers based upon various measures of performance, including achievement of certain milestones, completion of specified units or completion of a contract. Also included in contract assets are retainage receivables and amounts we seek or will seek to collect from customers or others for errors or changes in contract specifications or design, contract change orders or modifications in dispute or unapproved as to both scope and/or price or other customer-related causes of unanticipated additional contract costs (claims and unapproved change orders). Our contract assets do not include capitalized costs to obtain and fulfill a contract. Contract assets are generally classified as current within the Condensed Consolidated Balance Sheets.

Contract liabilities from our construction contracts occur when amounts invoiced to our customers exceed revenues recognized under the cost-to-cost or output method measure of progress. Contract liabilities additionally include advanced payments from our customers on certain contracts and provision for future contract losses for those contracts estimated to close in a gross loss position. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation and are recorded as either current or long-term, depending upon when we expect to recognize such revenue.

Balances and activity in the current contract liabilities as of and for the nine months ended September 30, 2022 ~~30,~~and 2021 ~~and~~ ~~2020~~ was as follows:

For the Nine Months

Ended September 30,

(in thousands)

2021

2020

Total contract liabilities - beginning of period (1)
$ 6,996 $ 1,860
Contract additions - acquisition
100 3,349
Other contract additions, net
3,040 4,796
Revenue recognized
(2,726 ) (1,758 )
Contract settlements
(3,140 ) 0
Translation
(14 ) (24 )
Total contract liabilities - end of period
$ 4,256 $ 8,223

As of September 30,

(in thousands)

2021

2020

Current contract liabilities
$ 4,188 $ 8,047
Long-term contract liabilities (2)
68 176
Total contract liabilities
$ 4,256 $ 8,223
⁽¹⁾~~For the beginning balance in~~ ~~2021~~ ~~and~~ ~~2020,~~ ~~total contract liabilities included $186 thousand and $192 thousand, respectively that were classified as long term.~~
⁽²⁾ ~~Long-term contract liabilities are included in other long-term liabilities on the Condensed Consolidated Balance Sheets.~~

For the Nine Months

Ended September 30,

(in thousands)

2022

2021

Total contract liabilities - beginning of period
$ 6,503 $ 4,873
Other contract additions, net
1,003 720
Revenue recognized
(7,155 ) (754 )
Contract settlements
— (3,141 )
Total contract liabilities - end of period
$ 351 $ 1,698

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Performance Obligations
Remaining Performance Obligations
Remaining performance obligations represents the transaction price of contracts with customers for which work has not been performed and excludes unexercised contract options and potential orders under ordering-type contracts. As of September 30, ~~2021,~~2022, the Company's remaining performance obligations are generally expected to be filled within the next 12 months. For the contracts that are greater than 12 months the Company has approximately $198.1 million in the aggregate of future revenue related to remaining performance obligations that are unsatisfied or partially unsatisfied as of September 30, 2022.

Any adjustments to net revenues, cost of revenues, and the related impact to operating income are recognized as necessary in the period they become known. These adjustments may result from positive program performance and may result in an increase in operating income during the performance of individual performance obligations, if we determine we will be successful in mitigating risks surrounding the technical, schedule and cost aspects of those performance obligations. Likewise, these adjustments may result in a decrease in operating income if we determine we will not be successful in mitigating these risks. Changes in estimates of net revenues, cost of revenues and the related impact to operating income are recognized on a cumulative catch-up basis in the period they become known, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation's percentage of completion. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations. For separately priced extended warranty or product maintenance performance obligations, when estimates of total costs to be incurred on the performance obligation exceed total estimates of revenue to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is determined.

Performance Obligations Satisfied Over Time
To determine the proper revenue recognition method for our contracts, we evaluate whether a single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment and the decision to separate the single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period.

For most of our contracts, the customer contracts with us to provide a significant service of integrating a complex set of tasks and components into a single project or capability (even if that single project results in the delivery of multiple units). Hence, the entire contract is accounted for as one performance obligation. Less commonly, however, we may promise to provide distinct goods or services within a contract in which case we separate the contract into more than one performance obligation. If a contract is separated into more than one performance obligation, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. We infrequently sell standard products with observable standalone sales. In cases where we do, the observable standalone sales are used to determine the standalone selling price. More frequently, we sell a customized customer specific solution, and in these cases, we typically use the output method or the expected cost plus a margin approach to estimate the standalone selling price of each performance obligation.
~~Performance Obligations Satisfied at a Point in Time~~
~~Revenue from goods and services transferred to customers at a single point in time accounted for 21% and 12% of revenues for the~~ ~~three~~ ~~month periods ended~~ ~~September 30, 2021~~ ~~and~~ ~~2020,~~ ~~respectively and 18% and 19% for the~~ ~~nine~~ ~~month periods ended~~ ~~September~~ ~~30,~~~~2021~~ ~~and~~ ~~2020,~~ respectively. Revenue on these contracts is recognized when the product is shipped and the customer takes control of the product. Determination of control transfer is typically determined by shipping terms delineated on the customer purchase orders and is generally when shipped.

Variable Consideration
The nature of our contracts gives rise to several types of variable consideration. In rare instances, we include in our contract estimates, additional revenue for submitted contract modifications or claims against the customer when we believe we have an enforceable right to the modification or claim, the amount can be estimated reliably, and its realization is probable. In evaluating these criteria, we consider the contractual/legal basis for the claim, the cause of any additional costs incurred, the reasonableness of those costs and the objective evidence available to support the claim. These amounts are included in our calculation of net revenue recorded for our contracts and the associated remaining performance obligations. Additionally, if the contract has a provision for liquidated damages in the case that the Company misses a timing target, or fails to meet any other contract benchmarks, ~~we account~~the Company accounts for those estimated liquidated damages as variable consideration and will adjust revenue accordingly with periodic updates to the estimated variable consideration as the job progresses. Liquidated damages are recognized as variable consideration ~~only when we estimate that they will be a factor in the performance of the contract~~ and are ~~not~~ ~~common.~~estimated based on the most likely amount that is deemed probable of realization.

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Significant Judgments
Our contracts with certain customers may be subject to contract cancellation clauses. Contracts with other cancellation provisions may require judgment in determining the contract term, including the existence of material rights, transaction price and identifying the performance obligations and whether a contract should be accounted for over time or on a completed contract basis. Revenue is recognized for certain projects over time using cost-based input methods, in which significant judgement is required to evaluate assumptions including the amount of total estimated costs to determine our progress towards contract completion and to calculate the corresponding amount of revenue to recognize.

At times, customers may request changes that either amend, replace or cancel existing contracts. Judgment is required to determine whether the specific facts and circumstances within the contracts require the changes to be accounted for as a separate contract or as a modification. Generally, contract modifications containing additional goods and services that are determined to be distinct and sold at their stand-alone selling price are accounted for as a separate contract. For contract modifications where goods and services are not determined to be distinct and sold at their stand-alone selling price, the original contract is updated and the required adjustments to revenue and contract assets, liabilities, and other accounts will be made accordingly.

Our contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately rather than together may require significant judgment. For, example, we consider many of our contracts that coordinate multiple products into an integrated system to be a single performance obligation, while the same products would be considered separate performance obligations if not so integrated.

In contracts where there are timing differences between when we transfer a promised good or service to the customer and when the customer pays for that good or service, we have determined that, our contracts do not include a significant financing component.

The following tables present the Company's revenues disaggregated by ~~timing~~the type of ~~revenue recognition:~~customer:

For the Three Months

For the Three Months

For the Three Months

For the Three Months

Ended September 30, 2021

Ended September 30, 2020

Ended September 30, 2022

Ended September 30, 2021

(in thousands)

Electric Power and Solar Infrastructure Services

Integrated Energy Infrastructure Solutions and Services

Total

Electric Power and Solar Infrastructure Services

Integrated Energy Infrastructure Solutions and Services

Total

Electric Power

Telecommunications

Renewables

Total

Electric Power

Telecommunications

Renewables

Total

Revenues recognized at point in time
$ 4,845 $ 1,521 $ 6,366 $ 0 $ 1,573 $ 1,573
Revenues recognized over time
19,977 4,576 24,553 9,478 2,564 12,042
Utilities
$ 35,076 $ 132 $ — $ 35,208 $ 12,200 $ — $ — $ 12,200
Telecommunications
532 23,932 — 24,464 — 8,742 — 8,742
Renewables
— — 39,026 39,026 — — 3,880 3,880
Other
1,124 — — 1,124 — — — —
Total revenues
$ 24,822 $ 6,097 $ 30,919 $ 9,478 $ 4,137 $ 13,615 $ 36,732 $ 24,064 $ 39,026 $ 99,822 $ 12,200 8,742 $ 3,880 $ 24,822

For the Nine Months

For the Nine Months

For the Nine Months

For the Nine Months

Ended September 30, 2021

Ended September 30, 2020

Ended September 30, 2022

Ended September 30, 2021

(in thousands)

Electric Power and Solar Infrastructure Services

Integrated Energy Infrastructure Solutions and Services

Total

Electric Power and Solar Infrastructure Services

Integrated Energy Infrastructure Solutions and Services

Total

Electric Power

Telecommunications

Renewables

Total

Electric Power

Telecommunications

Renewables

Total

Revenues recognized at point in time
$ 5,187 $ 5,206 $ 10,393 $ 0 $ 5,078 $ 5,078
Revenues recognized over time
36,715 9,610 46,325 13,904 8,096 22,000
Utilities
$ 114,363 $ 132 $ — $ 114,495 $ 20,297 $ — $ — $ 20,297
Telecommunications
1,441 60,392 — 61,833 — 14,816 — 14,816
Renewables
— — 85,770 85,770 — — 6,789 6,789
Other
1,891 — — 1,891 — — — —
Total revenues
$ 41,902 $ 14,816 $ 56,718 $ 13,904 $ 13,174 $ 27,078 $ 117,695 $ 60,524 $ 85,770 $ 263,989 $ 20,297 $ 14,816 $ 6,789 $ 41,902

1716
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The following tables present the Company's revenues disaggregated by ~~region:~~type of contract:


For the Three Months

For the Three Months

Ended September 30, 2021

Ended September 30, 2020

(in thousands)

Electric Power and Solar Infrastructure Services
Integrated Energy Infrastructure Solutions and Services
Total

Electric Power and Solar Infrastructure Services
Integrated Energy Infrastructure Solutions and Services
Total

North America
$ 24,031 $ 2,947 $ 26,978 $ 9,478 $ 1,184 $ 10,662
Europe
241 3,119 3,360 0 2,939 2,939
Other
550 31 581 0 14 14
Total revenues
$ 24,822 $ 6,097 $ 30,919 $ 9,478 $ 4,137 $ 13,615

For the Three Months

For the Three Months

Ended September 30, 2022

Ended September 30, 2021

(in thousands)

Electric Power

Telecommunications

Renewables

Total

Electric Power

Telecommunications

Renewables

Total

Cost-plus contracts
$ 8,672 $ — $ — $ 8,672 $ 4,940 $ — $ — $ 4,940
Fixed price contracts
10,768 1,551 39,026 51,345 2,385 2,159 3,880 8,424
Unit price contracts
17,292 22,513 — 39,805 4,875 6,583 — 11,458
Total revenues
$ 36,732 $ 24,064 $ 39,026 $ 99,822 $ 12,200 $ 8,742 $ 3,880 $ 24,822

For the Nine Months

For the Nine Months

Ended September 30, 2021

Ended September 30, 2020

(in thousands)

Electric Power and Solar Infrastructure Services
Integrated Energy Infrastructure Solutions and Services
Total

Electric Power and Solar Infrastructure Services
Integrated Energy Infrastructure Solutions and Services
Total

North America
$ 41,111 $ 5,278 $ 46,389 $ 13,904 $ 5,574 $ 19,478
Europe
241 9,486 9,727 0 7,443 7,443
Other
550 52 602 0 157 157
Total revenues
$ 41,902 $ 14,816 $ 56,718 $ 13,904 $ 13,174 $ 27,078

For the Nine Months

For the Nine Months

Ended September 30, 2022

Ended September 30, 2021

(in thousands)

Electric Power

Telecommunications

Renewables

Total

Electric Power

Telecommunications

Renewables

Total

Cost-plus contracts
$ 33,282 $ 112 $ — $ 33,394 $ 7,757 $ — $ — $ 7,757
Fixed price contracts
34,661 6,429 85,770 126,860 3,614 3,034 6,789 13,437
Unit price contracts
49,752 53,983 — 103,735 8,926 11,782 — 20,708
Total revenues
$ 117,695 $ 60,524 $ 85,770 $ 263,989 $ 20,297 $ 14,816 $ 6,789 $ 41,902

5.
~~OTHER INTANGIBLE ASSETS~~
In ~~January 2021,~~ ~~the Company completed the acquisition of the VE~~ ~~Technology~~ ~~rights, which it has previously utilized the VE T~~~~echnology~~ ~~through a licensing agreement with Endet Ltd. Orbital Gas Systems has the existing proprietary knowledge for the marketing, engineering and production of the VE~~ ~~Technology~~ ~~based solutions. The VE~~ ~~Technology,~~ ~~amortized over~~ ~~ten~~ ~~years~~, ~~is the basis for a patented sampling system product line marketed by Orbital Gas Systems and utilized in many of its integrated solutions.~~
In ~~2020,~~ ~~the Company entered into an agreement to acquire the intellectual property rights and know-how associated with the VE~~ ~~Technology~~ ~~including patents for 1.5 million British pounds ("GBP"), or approximately $1.8 million. The completion of the acquisition was made upon the final payment towards this agreement. In~~ ~~June 2020,~~ ~~the parties to the agreement mutually agreed to extend the payments until~~ ~~January 15, 2021~~ ~~in consideration of the financial consequences created by the COVID-~~19 ~~pandemic in exchange for a technology fee of an additional 100,000 GBP. The Company paid the remaining 500,000 GBP in~~ ~~January 2021.~~ ~~The $1.9 million paid was recorded as an intangible asset upon making the final payment in~~ ~~January 2021~~ ~~with $0.7 million paid in~~ ~~2021~~ ~~and $1.2 million reclassified from long-term deposits. See Note~~ 19 ~~Acquisition for more information on acquisition intangibles included in recent acquisitions during~~ ~~2021~~ ~~and~~ ~~2020.~~
18

~~Table of Contents~~
~~Other Intangible Assets~~
~~The following table provides the components of identifiable intangible assets:~~
Finite-lived intangible assets (in thousands)

September 30, 2021

December 31, 2020

Estimated Useful Life (in years)

Weighted average remaining amortization period

Gross Carrying Amount

Accumulated Amortization

Identifiable Intangible Assets, less Accumulated Amortization

Gross Carrying Amount

Accumulated Amortization

Identifiable Intangible Assets, less Accumulated Amortization

Electric Power and Solar Infrastructure Services Segment

Customer Relationships
5 to 10 8.20 $ 28,610 $ (3,409 ) $ 25,201 $ 8,647 $ (1,297 ) $ 7,350
Trade name - Reach Construction Group
1 — 1,878 (1,878 ) 0 1,878 (1,409 ) 469
Technology-based asset
4 3.83 1,470 (61 ) 1,409 0 0 0
Computer software
3 to 5 2.17 544 (39 ) 505 0 0 0
Non-compete agreements
5 3.64 3,597 (1,000 ) 2,597 3,212 (482 ) 2,730
Total Electric Power and Solar Infrastructure Services Segment
36,099 (6,387 ) 29,712 13,737 (3,188 ) 10,549

Integrated Energy Infrastructure Solutions and Services Segment

Order backlog
2 — 2,998 (2,998 ) 0 3,041 (3,041 ) 0
Trade name - Orbital-UK
10 1.50 1,612 (1,370 ) 242 1,635 (1,267 ) 368
Customer list - Orbital-UK
10 1.50 6,269 (5,328 ) 941 6,358 (4,927 ) 1,431
Technology rights
10 9.28 2,271 (407 ) 1,864 341 (254 ) 87
Technology-Based Asset - Know How
12 3.50 2,540 (1,799 ) 741 2,576 (1,663 ) 913
Technology-Based Asset - Software
10 1.50 550 (468 ) 82 558 (433 ) 125
Computer software
3 to 5 1.58 743 (615 ) 128 751 (530 ) 221
Total Integrated Energy Infrastructure Solutions and Services Segment
16,984 (12,985 ) 3,998 15,260 (12,115 ) 3,145

Other category

Computer software
3 to 5 0.27 713 (712 ) 1 713 (710 ) 3
Product certifications
3 — 36 (36 ) 0 36 (36 ) 0
Total Other category
749 (748 ) 1 749 (746 ) 3

Total identifiable finite-lived other intangible assets
53,832 (20,120 ) 33,712 29,746 (16,049 ) 13,697

Identifiable indefinite-lived other intangible assets

Electric Power and Solar Infrastructure Services Segment

Trade Name - GTS
6,388 — 6,388 0 — 0
Trade Name - IMMCO
1,205 — 1,205 0 — 0
Total identifiable indefinite-lived other intangible assets
7,593 — 7,593 0 — 0

Total identifiable other intangible assets
$ 61,424 $ (20,120 ) $ 41,304 $ 29,746 $ (16,049 ) $ 13,697
19

~~Table of Contents~~
~~Estimated future amortization by category of finite-lived intangible assets at~~ ~~September 30.~~ ~~2021was~~ ~~as follows:~~
(in thousands)
For the Periods Ended December 31,

2021

2022

2023

2024

2025

2026 and thereafter

Totals

Trademarks and trade name
$ 40 $ 162 $ 40 $ 0 $ 0 $ 0 $ 242
Customer lists/relationships
1,088 4,353 3,882 3,726 2,429 10,664 26,142
Technology rights
50 201 201 201 201 1,010 1,864
Technology-based assets
159 634 593 579 267 0 2,232
Computer software
80 314 241 0 0 0 635
Non-compete agreements
180 719 719 719 238 22 2,597
Total Amortization
1,597 6,383 5,676 5,225 3,135 11,696 33,712
6.
INVENTORIES

Inventories consist of ~~raw materials,~~ work-in-process and finished goods and are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) method as a cost flow convention or through the moving average cost method. At September 30, 2022 ~~30,~~~~2021~~and December 31, ~~2020,~~ ~~accrued liabilities included $0.9 million and $0.1 million of accrued inventory payable, respectively. At~~ ~~September~~ ~~30,~~2021, ~~and~~ ~~December 31, 2020,~~ inventory by category is valued net of reserves and consists of:

As of September 30,

As of December 31,

As of September 30,

As of December 31,

(in thousands)

2021

2020

2022

2021

Finished goods
$ 224 $ 255
Raw materials
1,031 217 $ 1,198 $ 1,316
Work-in-process
535 651 210 19
Total inventories
$ 1,790 $ 1,123 $ 1,408 $ 1,335

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Table of Contents

7.6.
INVESTMENTS

The Company has a minority ownership in Virtual Power Systems ("VPS"). ~~Prior to the~~ ~~third~~ ~~quarter of~~ ~~2020,~~ based on its equity ownership and that the Company maintains a board seat and participated in operational activities of VPS, the Company maintained significant influence to account for the investment as an equity-method investment. Under the equity method of accounting, results are ~~not~~ ~~consolidated, but the Company records a proportionate percentage of the profit or loss of VPS as an addition to or a subtraction from the VPS investment asset balance. During the~~ ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~~~2020,~~ ~~the Company recorded a $4.8 million loss on its equity method investment in VPS.~~ The VPS investment basis at September 30, ~~2021~~2022 and December 31, ~~2020~~2021 was $1.1 million and $1.1 million, respectively, as reflected on the condensed consolidated balance sheets. ~~With the decrease in ownership percentage following a~~ Q3~~2020~~ ~~equity raise by VPS and additional board seats placed, OEG~~ no ~~longer has sufficient influence to recognize the investment under the equity method.~~ The investment is held at September 30, 2022 ~~30,~~~~2021~~under the cost method of accounting for investments.

~~The Company made a purchase of a convertible note receivable for~~ ~~$200~~ ~~thousand from VPS in the~~ ~~three~~ ~~months ended~~ ~~March 31, 2020,~~ ~~which was increased to $260 thousand in the~~ ~~second~~ ~~quarter of~~ ~~2020~~ ~~via payments made to VPS and accrued interest recorded by the Company as part of the transition agreement between the Company and VPS. VPS chose to convert the note receivable to equity in the~~ ~~third~~ ~~quarter of~~ ~~2020.~~ ~~In addition, the Company made additional cash investments of $0.1 million and a $0.3 million non-cash inventory investment in VPS during the~~ ~~third~~ ~~quarter of~~ ~~2020~~ ~~in exchange for additional equity.~~

8.7.
LEASES

Operating leases
Consolidated total operating lease costs were ~~$2.2 million and $4.3~~$5.2 million for the~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~~~2021~~ ~~and $0.6 million and $1.5 million for the~~ ~~three~~ ~~and~~ nine months ended September 30, ~~2020~~2022 and $3.0 million for the nine months ended September 30, 2021 and are included in cost of sales; selling, general and administrative expense; and other income (expense), on the condensed consolidated statement of operations.

Future minimum operating lease obligations at September 30, 2022 ~~30,~~~~2021~~are as follows for the years ended December 31:

(in thousands)

2021 (remaining period)
$ 1,194
2022
4,581
2022 (remaining period)
$ 1,437
2023
3,463 5,421
2024
1,929 4,501
2025
1,200 2,953
2026
2,551
Thereafter
2,450 3,905
Interest portion
(1,894 ) (3,167 )
Total operating lease obligations
$ 12,923 $ 17,601

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Table of Contents

Total lease cost and other lease information is as follows:

For the Three Months Ended

For the Nine Months Ended

For the Three Months Ended September 30,

For the Nine Months Ended September 30,
September 30, September 30,
(in thousands)

2021

2020

2021

2020

2022

2021

2022

2021

Operating lease cost
$ 1,178 $ 511 $ 2,825 $ 1,321 $ 1,600 $ 1,157 $ 4,924 $ 2,747
Short-term lease cost
148 41 221 117 7 114 78 134
Variable lease cost
176 102 488 295 111 175 564 478
Sublease income
(129 ) (78 ) (372 ) (254 ) (129 ) (129 ) (387 ) (372 )
Total lease cost
$ 1,373 $ 576 $ 3,162 $ 1,479 $ 1,589 $ 1,317 $ 5,179 $ 2,987

Other information - Operating leases (in thousands)

For the Nine Months Ended September 30,

For the Nine Months Ended September 30, 2022

2021

2020

2022

2021

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

Operating cash flows from operating leases (includes discontinued operations in 2020)
$ (2,782 ) $ (1,622 )
Operating cash flows from operating leases (includes discontinued operations)
$ (5,800 ) $ (2,782 )
Right-of-use assets obtained in exchange for new operating lease obligations
$ 7,290 $ 1,546 $ 3,908 $ 7,290
Weighted-average remaining lease term - operating leases (in years)
4.3 5.6 4.7 4.3
Weighted-average discount rate - operating leases
6.5 % 6.6 % 7.1 % 6.5 %
Variable lease costs primarily include common area maintenance costs, real estate taxes and insurance costs passed through to the Company from lessors.
Financing leases
Consolidated total financing lease costs were $4.6 million and $1.1 million for the nine months ended September 30, 2022 and 2021 and are included in depreciation in cost of sales and interest expense.
Future minimum finance lease obligations at September 30,2022are as ~~follows:~~follows for the years ended December 31:

(in thousands)

2021 (remaining period)
$ 1,102
2022
4,409
2023
4,408
2024
2,278
2025
136
Thereafter
92
Interest portion
(1,059 )
Total financing lease obligations
$ 11,366
(in thousands)

2022 (remaining period)
$ 1,478
2023
5,911
2024
5,342
2025
1,842
2026
893
Thereafter
48
Interest portion
(1,324 )
Total financing lease obligations
$ 14,190

Total financing lease costs are as follows:

For the Three Months Ended

For the Nine Months Ended

For the Three Months Ended September 30,

For the Nine Months Ended September 30,
September 30, September 30,
(in thousands)

2021

2020

2021

2020

2022

2021

2022

2021

Depreciation of financing lease assets
$ 658 $ 1 $ 974 $ 3 $ 1,319 $ 657 $ 3,946 $ 972
Interest on lease liabilities
119 0 177 0 207 118 672 176
Total finance lease cost
$ 777 $ 1 $ 1,151 $ 3 $ 1,526 $ 775 $ 4,618 $ 1,148

In addition to the financing lease costs noted above, for the three and nine months ended September 30, 2022, the Company recognized $4.5 million in impairments on outstanding financing leases at Eclipse Foundation Group. See Note 1 for additional information on the impairments.
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Table of Contents

Other information - Financing leases

For the Nine Months Ended September 30,

(in thousands)

2021

2020

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

Operating cash flows from financing leases
$ (177 ) $ 0
Financing cash flows from financing leases
$ (897 ) $ (3 )
Right-of-use assets obtained in exchange for new financing lease obligations
$ 12,190 $ 0
Weighted-average remaining lease term - financing leases (in years)
2.9 0.58
Weighted-average discount rate - operating leases
6.5 % 5.0 %

Other information - Financing leases

For the Nine Months Ended September 30,

(in thousands)

2022

2021

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

Operating cash flows from financing leases
$ (671 ) $ (177 )
Cash paid for amounts included in the measurement of lease obligations:
$ (3,810 ) $ (897 )
Right-of-use assets obtained in exchange for new financing lease obligations
$ 1,195 $ 12,190
Weighted-average remaining lease term - financing leases (in years)
2.8 2.9
Weighted-average discount rate - finance leases
6.5 % 6.5 %

9.8.
STOCK-BASED COMPENSATION AND EXPENSE

Through December 31, 2021, the Company had been vesting a series of stock appreciation rights (SARS) to be settled in cash to certain executives. The SARS were considered liability-classified awards meaning their fair-values were remeasured at the end of each reporting period using a binomial lattice model and any changes in fair value for the vesting periods to-date were recorded through the income statement with a corresponding liability accrued on the balance sheet. Since December 31, 2021, the SARS have been exchanged for restricted stock units (RSUs) on the modification date of January 14, 2022 as approved by the Board of Directors. To account for this exchange, the company revalued the SARS as of the modification date of January 14, 2022 using the binomial lattice model and recorded changes in the vested value since December 31, 2021 as an adjustment to the income statement. The Company ~~records its stock-based compensation~~then reclassified the SARS accrued liability to APIC for new RSUs and recognized incremental expense. Shares deemed vested at the modification date were released and issued net of tax in March 2022. The SARS that converted to RSUs, were added to the Company's existing RSU program. The company recorded $1.1 million and $2.4 million of expense ~~on options issued in~~for RSUs for the ~~past under its stock option plans~~three and ~~the Company also issues stock for services and royalties. The Company's current stock incentive award plan was approved in~~ ~~2020~~ ~~following the expiration of its previous stock incentive award plan in~~ ~~2018.~~ ~~The Company did~~ ~~not~~ ~~issue any stock options during the~~ nine months ended September 30, ~~30,~~2022.~~2021~~ or ~~2020.~~ A detailed description of the awards under these plans and the respective accounting treatment is included in the “Notes to the Consolidated Financial Statements” included in the Company’s Annual Report on Form 10~~-K for the year ended~~ ~~December 31, 2020~~ ~~and filed with the SEC on~~ ~~March 30, 2021.~~ ~~For the~~ ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~~~2021~~ ~~and~~ ~~2020,~~ ~~the Company recorded stock-based compensation expense of $9.8 million and $12 thousand, respectively.~~

Restricted Stock
In March 2021, the Company granted 3 million restricted shares with an aggregate fair value of $16.4 million with a graded vesting schedule. One-third of which were vested in April 2021, one-third of which ~~will~~were due to vest in April 2022, and one-third of which ~~will~~were due to vest in April 2023. ~~The Company recorded $1.4 million and $8.0 million in compensation expense related to the partial vesting of these grants in~~In the three and nine months ended September 30, ~~2021,~~2022, the Company recorded zero and a net credit of $3.9 million, respectively, to compensation expense related to the forfeiture and ~~total unrecognized share-based compensation for restricted stock was $8.4~~partial vesting of these grants compared to $1.4 million and ~~will be recognized over the remaining vesting period.~~
~~Stock Appreciation Rights ("SARs")~~
~~In addition to stock-based~~$8.0 million of compensation ~~settled~~expense in ~~stock, the Company also has cash settled stock appreciation rights ("SARs") which were granted in~~ ~~June 2020~~ ~~as described in the Company's Form~~ 10~~-K filed~~ ~~March 30, 2021~~ ~~and additional grant made in~~ ~~April 2021~~ ~~as reflected in the table below. Accrued compensation for SARs at~~ ~~September 30, 2021~~ ~~and~~ ~~December 31, 2020~~ ~~were $3.2 million and $0.6 million, respectively and were recorded in accrued expenses within the Condensed Consolidated Balance Sheets. Vesting expense for~~ the three and nine months ended September 30, 2021 for partial vesting of the grants. The credit to compensation expense in the ~~30,~~first ~~2021~~nine months of 2022 was (due to a reversal of expense related to the forfeiture of the unvested restricted stock upon the termination of an employee as of September 30, 2022.
~~$0.1~~Restricted Stock Units

Number of restricted shares

Weighted-average grant date fair value

Non-vested shares, beginning of year
3,018,788 $ 4.58
Granted
5,943,197 1.33
Vested
(2,222,770 ) 1.54
Forfeited
(2,139,872 ) 5.31
Non-vested shares, September 30, 2022
4,599,343 $ 1.50
9. WARRANTS
On April 28, 2022, the Company entered into a Securities Purchase Agreement with an institutional investor. The Purchase Agreement provides for the sale and issuance by the Company of an aggregate of: (i) 9,000,000 shares of the Company’s common stock, $0.001 par value, (ii) pre-funded warrants to purchase up to 7,153,847 shares of Common Stock and (iii) accompanying warrants to purchase up to 16,153,847 shares of Common Stock. The offering price per share and associated prefunded warrants was $1.30 for the shares and $1.2999 for the prefunded warrants. The prefunded warrants were immediately exercisable, had an exercise price of .0001 ~~million)~~ and ~~$2.5 million, respectively, compared with $84 thousand, and $0.1 million, respectively, for~~were exercised during the three months ended June 30, 2022.
The accompanying warrants have an exercise price of $1.31, and will be exercisable 6-months after their date of issuance and will expire on the fifth anniversary of the original issuance date.
Common stock warrants are accounted for in accordance with applicable accounting guidance provided in ASC Topic 815, Derivatives and Hedging - Contracts in Entity's Own Equity (ASC Topic 815), as either derivative liabilities or equity instruments depending on the specific terms of the warrant agreement.
The Company’s warrants are considered to be derivative warrants, are classified as liabilities, and are recorded at fair value. The warrants are subject to re-measurement at each balance sheet date and any change in fair value is recognized as a component of change in fair value of warrant liability in the consolidated statements of operations. The Company uses the Black-Scholes pricing model to estimate the fair value of the related derivative warrant liability. The warrants are classified as Level 3 liabilities (see Note 12 for fair value disclosures.)
Warrants outstanding and warrant activity for the nine months ended September 30, 2022 ~~30,~~~~2020~~ ~~and was recorded within selling, general and administrative expense within the Condensed Consolidated Statements of Operations.~~is as follows:

The fair value of cash-settled SARs is revalued (mark-to-market) each reporting period using a binomial lattice valuation model based on the company’s period-end stock price. Expected volatility is based on the historical volatility of the company’s stock for the length of time corresponding to the expected term of the SARs. The risk-free interest rate is based on the U.S treasury yield curve in effect as of the reporting date for the length of time corresponding to the expected term of the SARs.
Description
Classification

Exercise Price

Expiration Date

Balance December 31, 2021

Warrants Issued

Warrants Exercised

Warrants Expired

Balance September 30, 2022

Warrants
Liability
$ 1.31
April 2027
— 16,153,847 — — 16,153,847
Pre-funded warrants
Liability
$ 0.0001
April 2027
— 7,153,847 7,153,847 — —
Total
— 23,307,694 7,153,847 — 16,153,847

~~The following weighted-average assumptions were used in calculating the fair value of cash-settled SARs outstanding as of~~ ~~September~~ ~~30,~~~~2021~~ ~~and~~ ~~December 31, 2020.~~

As of

September 30, 2021

December 31, 2020

Expected term of cash-settled SARs (in years)
1.80 3.42
Expected volatility factor
160.91 % 210.56 %
Risk-free interest rate
0.33 % 0.17 %

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Table of Contents
~~Changes to the company’s non-vested cash-settled SARs during the~~ ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~~~2021,~~ ~~are as follows:~~

Cash-settled SARs

Fair Value Price per Share*

(in thousands)

Non-vested cash-settled SARs at December 31, 2020
748 $ 2.12
Granted
3,771 2.26
Vested
(946 ) 2.37
Non-vested cash-settled SARs at September 30, 2021
3,573 $ 2.37
* weighted-average

10.
SEGMENT REPORTING

Operating segments are defined in accordance with ASC 280-10 as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The measurement basis of segment profit or loss is income (loss) from operations. Management has identified ~~three~~five operating segments based on the activities of the Company in accordance with ASC 280-10. These operating segments have been aggregated into three reportable segments. The three reportable segments are Electric Power, Telecommunications, and ~~Solar Infrastructure Services, Integrated Energy Infrastructure Solutions~~Renewables and ~~Services, and Other.~~an Other category.

The Electric Power ~~and Solar Infrastructure Services~~ segment consists of Front Line Power Construction, LLC, Orbital Power, ~~Services, Orbital Solar Services~~Inc. and ~~Orbital Telecom Services providing a~~Eclipse Foundation Group. The segment provides comprehensive ~~network of infrastructure services~~solutions to customers in the electric power ~~telecommunications and solar~~ industries.

The ~~Integrated Energy Infrastructure Solutions and Services~~Telecommunications segment is made up of Gibson Technical Services, Inc. (“GTS”) (acquired April 13, 2021). GTS is an Atlanta-based telecommunications company providing diversified telecommunications services nationally since 1990 and is the parent of the following companies: IMMCO, Inc., Full Moon Telecom, and Coax Fiber Solutions, LLC.
The Renewables segment consists of Orbital Solar Services based in Raleigh, North Carolina. Orbital Solar Services provides engineering, procurement and construction (“EPC”) services that support the development of renewable energy generation focused on ~~the operations~~utility-scale solar construction. The Company serves a wide variety of ~~Orbital Gas Systems Ltd. in the UK~~project types, including commercial, substation, solar farms and ~~Orbital Gas Systems, North America, Inc. which includes gas related test and measurement systems, including the GasPT.~~public utility projects.

The Other ~~segment represents~~category is made up primarily of the ~~remaining activities that are~~Company's corporate activities. This category does not ~~included as part of the other reportable~~include any operating segments and ~~represent primarily corporate activity. In~~does ~~2019,~~not the Company sold its domestic power and electromechanical businesses and reclassified the income of the former Power and Electromechanical segment to income from discontinued operations. The Company sold the remaining portions of the Power and Electromechanical segment in ~~2020.~~generate revenue.

The following information represents segment activity for the three months ended September 30,~~2021:~~ 2022:
(in thousands)

Electric Power and Solar Infrastructure Services

Integrated Energy Infrastructure Solutions and Services

Other

Total

Revenues from external customers
$ 24,822 $ 6,097 $ 0 $ 30,919
Depreciation and amortization (1)
2,483 404 12 2,899
Interest expense
128 0 1,138 1,266
Loss from operations
(6,486 ) (1,169 ) (4,078 ) (11,733 )
Expenditures for long-lived assets (2)
1,861 3 38 1,902
(in thousands)

Electric Power

Telecommunications

Renewables

Other

Total

Revenues from external customers
$ 36,732 $ 24,064 $ 39,026 $ — $ 99,822
Depreciation and amortization (1)
6,975 1,315 608 16 8,914
Interest expense
4,441 19 1 5,253 9,714
Income (loss) from operations
(76,606 ) (23,213 ) (26,535 ) (2,356 ) (128,710 )
Expenditures for long-lived assets
368 396 10 43 817

⁽¹⁾ ~~For the Electric Power and Solar Infrastructure segment, depreciation~~Depreciation and amortization includes ~~$1.2~~$3.5 million of depreciation expense which was included in cost of revenues in the Condensed Consolidated Statements of Operations.
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The following information represents segment activity for the three months ended September 30, 2021:
(in thousands)

Electric Power

Telecommunications

Renewables

Other

Total

Revenues from external customers
$ 12,200 $ 8,742 $ 3,880 $ — $ 24,822
Depreciation and amortization (1)
1,095 774 614 416 2,899
Interest expense
116 9 256 885 1,266
Loss from operations
(2,445 ) (436 ) (3,605 ) (4,364 ) (10,850 )
Expenditures for long-lived assets (2)
1,391 393 77 41 1,902
⁽¹⁾ Depreciation and amortization includes $1.2 million of depreciation expense which was included in cost of revenues in the Condensed Consolidated Statements of Operations and $0.4 million of depreciation and amortization which was included in Other that was discontinued operations.
⁽²⁾Includes purchases of property, plant and equipment and other intangible assets. The Other category includes expenditures for discontinued operations of $3 thousand.
The following information represents selected balance sheet items by segment as of September 30, 2022:
(in thousands)

Electric Power

Telecommunications

Renewables

Other

Total

Segment assets
$ 184,801 $ 68,480 $ 29,765 $ 19,063 $ 302,109
Goodwill
— — 7,006 — 7,006
Other intangible assets, net
95,287 26,960 1,606 — 123,853

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The following information represents segment activity for the nine months ended September 30, ~~2021:~~2022:

(in thousands)

Electric Power and Solar Infrastructure Services

Integrated Energy Infrastructure Solutions and Services

Other

Total

Electric Power

Telecommunications

Renewables

Other

Total

Revenues from external customers
$ 41,902 $ 14,816 $ 0 $ 56,718 $ 117,695 $ 60,524 $ 85,770 $ — $ 263,989
Depreciation and amortization (1)
5,653 1,249 31 6,933 21,445 3,582 1,825 47 26,899
Interest expense
202 2 2,894 3,098 12,743 115 5 14,703 27,566
Loss from operations
(29,789 ) (4,067 ) (13,402 ) (47,258 )
Income (loss) from operations
(77,621 ) (21,662 ) (32,280 ) (6,642 ) (138,205 )
Expenditures for long-lived assets (2)
6,488 713 95 7,296 2,719 975 19 83 3,796

⁽¹⁾ ~~For the Electric Power and Solar Infrastructure segment, depreciation~~Depreciation and amortization includes ~~$2.3~~$10.7 million of depreciation expense which was included in cost of revenues in the Condensed Consolidated Statements of Operations.
⁽²⁾~~Includes purchases of property, plant and equipment and other intangible assets.~~

~~The following information represents selected balance sheet items by segment as of~~ ~~September~~ ~~30,~~~~2021:~~
(in thousands)

Electric Power and Solar Infrastructure Services

Integrated Energy Infrastructure Solutions and Services

Other

Total

Segment assets
$ 134,165 $ 17,988 $ 15,878 $ 168,031
Goodwill
30,337 0 0 30,337
Other intangible assets, net
37,305 3,998 1 41,304
~~The following information represents segment activity for the~~ ~~three~~ ~~months ended~~ ~~September 30, 2020:~~
(in thousands)

Electric Power and Solar Infrastructure Services

Integrated Energy Infrastructure Solutions and Services

Other

Total

Revenues from external customers
$ 9,478 $ 4,137 $ 0 $ 13,615
Depreciation and amortization (1)
1,197 373 11 1,581
Interest expense
108 2 223 333
Loss from operations
(2,220 ) (1,827 ) (2,276 ) (6,323 )
Expenditures for long-lived assets (2)
76 5 7 88
⁽¹⁾ For the Electric Power and Solar Infrastructure Services segment, depreciation and amortization includes $0.1 million, which was included in cost of revenues in the Condensed Consolidated Statements of Operations.
⁽²⁾  Includes purchases of property, plant and equipment and other intangible assets. The Other category includes expenditures for discontinued ~~operations.~~operations of $10 thousand.

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The following information represents segment activity for the nine months ended September 30,~~2020:~~ 2021:

(in thousands)

Electric Power and Solar Infrastructure Services

Integrated Energy Infrastructure Solutions and Services

Other

Total

Electric Power

Telecommunications

Renewables

Other

Total

Revenues from external customers
$ 13,904 $ 13,174 $ 0 $ 27,078 $ 20,297 $ 14,816 $ 6,789 $ — $ 41,902
Depreciation and amortization (1)
2,477 1,109 30 3,616 1,944 1,389 2,319 1,281 6,933
Interest expense
237 3 229 469 175 10 270 2,641 3,096
Loss from operations
(7,293 ) (5,291 ) (7,999 ) (20,583 ) (11,461 ) (1,185 ) (17,178 ) (14,243 ) (44,067 )
Expenditures for long-lived assets (2)
1,380 24 80 1,484 5,532 838 118 808 7,296
⁽¹⁾ ~~For the Electric Power and Solar Infrastructure Services segment, depreciation~~Depreciation and amortization includes ~~$0.3~~$2.3 million of depreciation expense which was included in cost of revenues in the Condensed Consolidated Statements of ~~Operations.~~Operations and $1.2 million of depreciation and amortization which was included in Other that was discontinued operations.
⁽²⁾  Includes purchases of property, plant and equipment and other intangible assets. The Other category includes expenditures for discontinued ~~operations.~~operations of $0.7 million.

The following information represents selected balance sheet items by segment as of December 31, ~~2020:~~2021:

(in thousands)

Electric Power and Solar Infrastructure Services

Integrated Energy Infrastructure Solutions and Services

Other

Total

Segment assets
$ 35,825 $ 17,094 $ 13,126 $ 66,045
Goodwill
7,006 0 0 7,006
Other intangible assets, net
10,550 3,144 3 13,697
~~The following represents revenue by country:~~
(dollars in thousands)

For the Three Months Ended September 30,

2021

2020

Amount

%

Amount

%

USA
$ 26,974 87 % $ 10,413 77 %
United Kingdom
2,993 10 % 2,189 16 %
All Others
952 3 % 1,013 7 %
Total
$ 30,919 100 % $ 13,615 100 %

(dollars in thousands)

For the Nine Months Ended September 30,

2021

2020

Amount

%

Amount

%

USA
$ 46,385 82 % $ 19,230 71 %
United Kingdom
8,664 15 % 6,388 24 %
All Others
1,669 3 % 1,460 5 %
Total
$ 56,718 100 % $ 27,078 100 %
(in thousands)

Electric Power

Telecommunications

Renewables

Other

Total

Segment assets
$ 273,726 $ 80,800 $ 28,324 $ 29,489 $ 412,339
Goodwill
70,151 23,742 7,006 — 100,899
Other intangible assets, net
106,377 28,571 7,708 — 142,656

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11.
RECENT ACCOUNTING PRONOUNCEMENTS

OnIn ~~October 28,~~September 2022, the Financial Accounting Standards Board ~~("FASB"~~(“FASB”) issued Accounting Standards Update ~~("ASU"~~(“ASU”)2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations to enhance transparency about an entity’s use of supplier finance programs. Under the ASU, the buyer in a supplier finance program is required to disclose information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a roll-forward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented. An entity should also consider whether the existence of a supplier finance program changes the appropriate presentation of the payables in the program from trade payables to borrowings. The amendments in this update are effective for the Company for fiscal periods beginning after December 15, 2022, including interim periods within those fiscal years, except for the disclosure of roll-forward information, which is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company is currently evaluating the effect of this new standard, which is not expected to have a material effect on the Company's financial position or results of operations.
In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security should not be considered in measuring fair value. It also requires the following disclosures for equity securities subject to the contractual sale restrictions: 1) the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet; 2) the nature and remaining duration of the restriction(s); and 3) the circumstances that could cause a lapse in the restriction(s). ASU 2022-03 is effective for the fiscal years and interim periods within those fiscal years, beginning after December 15, 2023. Early adoption is permitted. The guidance should be applied prospectively. ASU 2022-03 is not expected to have a material effect on our consolidated financial statements.
On October 28, 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This guidance will require entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. This standard was designed to provide consistent recognition and measurement guidance for revenue contracts with customers. Legacy guidance requires entities to record contract assets and contract liabilities acquired to be recorded at fair value. The amendments will be effective for the Company beginning for fiscal years beginning after December 15, 2022. Early adoption is allowed. If an entity early adopts, the entity would be required to apply the new guidance to all acquisitions made in the year of the early adoption. The Company is still reviewing the standard and as of the reporting date of this filing has not elected to early adopt.

12.
FAIR VALUE MEASUREMENTS

The Company’s fair value hierarchy for ~~its contingent consideration~~our financial assets and ~~convertible note payable~~liabilities as of September 30, 2022 ~~30,~~~~2021~~and December 31, ~~2020~~2021 was as follows:

(in thousands)

September 30, 2022

Level 1

Level 2

Level 3

Total

Contingent consideration
$ — $ — $ 720 $ 720
Front Line Power Construction Seller Financed debt
— 68,501 — 68,501
Financial instrument liability - related to Syndicated debt
— — 844 844
Financial instrument liability - related to Front Line Power Construction seller financed debt
— — 40,085 40,085
Prepaid advance agreement
— 4,666 — 4,666
Warrant liabilities
— — 5,492 5,492
Total liabilities
$ — $ 73,167 $ 47,141 $ 120,308

(in thousands)

September 30, 2021

Level 1

Level 2

Level 3

Total

Contingent consideration
$ 0 $ 0 $ 720 $ 720
Total liabilities
$ 0 $ 0 $ 720 $ 720
December 31, 2020

Level 1

Level 2

Level 3

Total

Convertible note payable
$ 0 $ 0 $ 1,955 $ 1,955
Contingent consideration
0 0 720 720
Total liabilities
$ 0 $ 0 $ 2,675 $ 2,675
~~Changes in Fair Value Measurements~~
~~Using Significant Unobservable Inputs (Level~~ 3)
(in thousands)

Convertible note payable

Balance at December 31, 2020
$ 1,955
Loss on extinguishment on amendment to remove convertible feature
250
Amortization of original issue discount
40
Accrued interest
57
Extinguishment of note
(2,302 )
Balance at September 30, 2021
$ 0
December 31, 2021

Level 1

Level 2

Level 3

Total

Contingent consideration
$ — $ — $ 720 $ 720
Front Line Power Construction Seller financed debt
— 86,183 — 86,183
Financial instrument liability
— — 825 825
Total liabilities
$ — $ 86,183 $ 1,545 $ 87,728

(in thousands)

Financial Instrument Liability - related to Syndicated debt

Balance at December 31, 2021
$ 825
Issuance of shares upon exercise and reset of instrument (instrument includes reference price of $0.40 per share at September 30, 2022)
(4,361 )
Fair value adjustments to Financial instrument liability
4,380
Balance at September 30, 2022
$ 844
(in thousands)

Financial Instrument Liability - related to FLP seller financed debt

Balance at December 31, 2021
$ —
Fair value of financial instrument liability at inception
26,782
Fair value adjustment to Derivative liability
13,303
Balance at September 30, 2022
$ 40,085
(in thousands)

Warrant Liability

Balance at December 31, 2021
$ —
Fair value of warrant liability at inception
27,625
Exercise of pre-funded warrants
(6,939 )
Fair value adjustment to warrant liability
(15,194 )
Balance at September 30, 2022
$ 5,492
See note 16 for more information about the Company's prepaid advance agreement. There were no transfers between Level 3 and Level 2 in the three months ended September 30, 2022 ~~30,~~~~2021~~as determined at the end of the reporting period.

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13.
LOSS PER COMMON SHARE

In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification Topic 260 (“FASB ASC 260”), “Earnings per Share,” Basic loss from continuing operations per share, basic income from discontinued operations per share and basic net income (loss) per share that is available to shareholders is computed by dividing the income or loss by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the respective loss available to common stockholders by the weighted average number of diluted shares outstanding during the period calculated using the treasury stock method. Due to the Company’s loss from continuing operations in the three and nine months ended September 30, 2022 ~~30,~~~~2021~~and September 30, 2021, ~~30,~~~~2020,~~the assumed exercise of stock options, warrants and the unvested restricted stock that would otherwise increase diluted shares using the treasury stock method would have had an antidilutive effect and therefore 0.2 million shares related to stock options, 16.2 million warrants outstanding at September 30, ~~2021~~2022 and 24.6 million shares of restricted stock units were excluded from the computation of diluted net loss per share for the three and nine months ended September 30, 2022 ~~30,~~~~2021~~and ~~0.8~~0.2 million shares related to stock options outstanding at September 30, 2021 ~~30,~~~~2020~~were excluded for the three and nine months ended September 30, ~~2020.~~2021 and 2.3 million shares of restricted stock and restricted stock units were excluded from the computation of diluted net loss per share for the nine months ended September 30, 2021. Accordingly, diluted earnings (loss) per share for continuing operations, discontinued operations and net income is the same as basic earnings (loss) per share for continuing operations, discontinued operations and net income for the three and nine months ended September 30, 2022 ~~30,~~~~2021~~and ~~2020.~~2021.

For the Three Months

For the Nine Months

For the Three Months

For the Nine Months

(in thousands, except share and per share amounts)

Ended September 30,

Ended September 30,

Ended September 30,

Ended September 30,

2021

2020

2021

2020

2022

2021

2022

2021

Loss from continuing operations, net of income taxes
$ (10,147 ) $ (5,735 ) $ (36,312 ) $ (22,585 ) $ (141,567 ) $ (9,498 ) $ (208,331 ) $ (34,125 )
Income from discontinued operations, net of income taxes
0 2,533 0 2,677
Income (loss) from discontinued operations, net of income taxes
(666 ) (649 ) (2,461 ) (2,187 )

Net loss
$ (10,147 ) $ (3,202 ) $ (36,312 ) $ (19,908 ) $ (142,233 ) $ (10,147 ) $ (210,792 ) $ (36,312 )

Basic and diluted weighted average number of shares outstanding
62,823,330 30,430,422 53,142,557 29,761,135 115,637,323 62,823,330 98,209,495 53,142,557

Loss from continuing operations per common share - basic and diluted
$ (0.16 ) $ (0.19 ) $ (0.68 ) $ (0.76 ) $ (1.22 ) $ (0.15 ) $ (2.12 ) $ (0.64 )

Income from discontinued operations - basic and diluted
0 0.08 0 0.09
Loss from discontinued operations - basic and diluted
(0.01 ) (0.01 ) (0.03 ) (0.04 )

Loss per common share - basic and diluted
$ (0.16 ) $ (0.11 ) $ (0.68 ) $ (0.67 ) $ (1.23 ) $ (0.16 ) $ (2.15 ) $ (0.68 )

14.
INCOME TAXES

The Company is subject to taxation in the U.S., as well as various state and foreign jurisdictions. The Company continues to record a full valuation allowance against the Company's U.S. net deferred tax assets and ~~foreign net~~a partial valuation allowance on its Canada deferred tax assets as it is not more likely than not that the Company will realize a benefit from these assets in a future ~~period.~~period other than a $91 thousand carryback benefit at Canada. In future periods, tax benefits and related deferred tax assets will be recognized when management concludes realization of such amounts is more likely than not.

Total net income tax expense of $0.2 million and $0.8 million were recorded to the income tax provision from continuing operations for the three and nine months ended September 30, 2022, resulting in an effective tax rate of (0.1%) and (0.4%), respectively. Income tax expense was primarily due to state minimum taxes and estimated Texas gross receipts taxes.
Total net income tax benefit of $2.1 million and $11.0 million was recorded to the income tax provision from continuing operations for the three and nine months ended September 30, 2021, respectively, resulting in an effective tax rate of ~~17.1%~~18.1% and ~~23.3%~~24.4%, respectively. The income tax benefit from continuing operations for the threeand nine months ended September 30,2021, was as a result of the release of valuation allowances currently held against the Company’s deferred tax assets as a result of the additional $11.2 million of deferred tax liabilities assumed in the April 2021 and July 2021 acquisitions of GTS and IMMCO. As a result, for the three and nine months ended September 30, 2021the Company recorded a $2.2 million and $11.2 million tax benefit, respectively, for a reduction in prior recorded valuation allowances. All of the Company’s domestic and foreign net deferred tax assets were reduced by a full valuation allowance.
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~~Total net income tax benefit of $61 thousand and $3.2 million for the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~~~2020~~ resulting in an effective tax rate of 1.1% and 12.4%, respectively. A net income tax expense of $0.9 million and $0.8 million was recorded to the income tax provision from discontinued operations for the ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020,~~ ~~respectively. The income tax benefit from continuing operations for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2020~~ ~~was due to application of ASC~~ ~~740~~-20-45-7, domestic state minimum taxes, benefits from refundable tax credits from our United Kingdom operations and a reduction in our domestic valuation allowance on our net deferred tax assets as a result of additional deferred tax liabilities assumed as a part of the Reach Construction Group, LLC acquisition. All of the Company’s domestic and foreign net deferred tax assets were reduced by a full valuation allowance.

15.
ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss are as follows:

(in thousands)

As of September 30, 2021

As of December 31, 2020

As of September 30, 2022

As of December 31, 2021

Foreign currency translation adjustment
$ (4,291 ) $ (4,406 ) $ (687 ) $ (3,995 )
Accumulated other comprehensive loss
$ (4,291 ) $ (4,406 ) $ (687 ) $ (3,995 )
In the nine months ended September 30, 2022, the Company reclassified $3.6 million related to accumulated foreign currency adjustment from Accumulated Other Comprehensive Loss to net loss as a result of the sale of the Company's U.K operations.

16.
NOTES PAYABLE AND LINE OF CREDIT

Notes payable is summarized as follows:

(in thousands)

As of September 30, 2021

As of December 31, 2020

Note Payable - Financing notes (1)
$ 1,444 $ 1,163
Pay-check protection loans (2)
0 1,924
Seller Financed notes payable - Reach Construction Group, LLC acquisition (3)
3,480 6,480
Vehicle and equipment loans (4)
294 195
Non-recourse payable agreements (5)
0 2,699
Notes payable - Institutional investor (6)
22,475 2,245
Conditional settlement notes payable agreement (7)
3,500 3,500
Subtotal
31,193 18,206
Unamortized prepaid financing fees
(1,164 ) (904 )
Total long-term debt
30,029 17,302
Less: notes payable, current
(25,175 ) (12,246 )
Notes payable, less current portion
$ 4,854 $ 5,056
(in thousands)

As of September 30, 2022

As of December 31, 2021

Syndicated debt (1)
$ 104,475 $ 105,000
Seller Financed notes payable - Front Line Power Construction, LLC acquisition (2)
69,168 86,730
Note Payable - Financing notes (3)
2,650 1,357
Seller Financed notes payable - Reach Construction Group, LLC acquisition (4)
3,480 3,480
Vehicle and equipment loans (5)
1,752 222
Non-recourse payable agreements (6)
9,610 8,269
Notes payable - Institutional investor (7)
50,006 33,922
Prepaid Advance agreement (8)
4,720 —
Conditional settlement notes payable agreement (9)
2,500 3,000
Full Moon and CFS - loans to prior owners (10)
31 2
Subtotal
248,392 241,982
Unamortized prepaid financing fees and debt discounts
(11,620 ) (12,603 )
Total notes payable
236,772 229,379
Less: notes payable, current
(129,034 ) (72,774 )
Notes payable, less current portion
$ 107,738 $ 156,605

⁽¹⁾
On November 17, 2021, the Company entered into a credit agreement and associated documents (the “Credit Agreement”) with Alter Domus (US), LLC (“Alter Domus”), as administrative agent and collateral agent and various lenders (the “Lenders”) in order to enable the Company to finance the acquisition of Front Line Power Construction, LLC. The Lenders made a Term Loan to Front Line in the initial principal amount of $105,000,000 for the purposes of financing the acquisition and the associated expenses. The term loan initially bears interest at the three-month Adjusted LIBOR Rate, plus the Applicable Margin, of which 2.5% may be paid in-kind. The Term Loan shall be repaid in consecutive quarterly installments of $262,500, and commenced on June 30, 2022. The Credit Agreement provides for mandatory prepayments on the occurrence of events such as sales of assets, Consolidated Excess Cash Flow and Excess Receipts during the term. The credit agreement provides for prepayment premiums (initially 5% on prepayments made in the first30 months of the term, declining to 1% in the final year of the term). The Term Loan matures on November 17, 2026, subject to acceleration on Events of Default. Interest rate at September 30, 2022 on the term notes is 15.45% at September 30,2022 with a current effective rate of 18.0%. The Company was in compliance with all debt covenants except for a default identified and cured as a subsequent event. See Note ~~payable~~20 for more information on the cured default.
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⁽²⁾
On November 17, 2021, the Company entered into two unsecured promissory notes, one with Kurt A Johnson, Jr, for $34,256,000 and the second for $51,384,000 with Tidal Power Group LLC. These promissory notes bear an ~~original~~interest rate of 6% per annum and as modified on April 29, 2022, $20 million was paid on May 6, 2022, $15 million is due on December 31, 2022, and the remaining balance is due on May 31, 2023. On December 10, 2021, Kurt A Johnson Jr. received an additional unsecured promissory note in the principal sum of $1,090,000 also with a 6% per annum interest rate in exchange for ~~$1.4 million~~a reduction of shares issued to Mr. Johnson of 400,000. This note was paid off as part of the May 6, 2022 payment. Additionally in a Q12022 amendment to the note, the Company also agreed to reduce the restriction period under the Tidal Lockup letter from two years to one year and to the extent that if the value of the shares previously issued to Tidal Power were less than $4.00 per share upon expiration of the restriction period, the Company has agreed to pay additional consideration to Tidal Power so that the value of Tidal Power's shares are equal to no less than $28,852,844. For the Johnson lockup letter, the Company agreed to pay additional consideration to Mr. Johnson upon expiration of the restriction period so that the value of his stock consideration is no less than $17,635,228, which is equal to $4.00 per common share. Any shortfall would be made up by issuing Mr. Johnson additional common shares.
⁽³⁾
The Company has a note payable to First Insurance Funding ~~was~~ executed in ~~July~~ 2022~~2020~~ ~~by the Company~~ for the purposes of financing a portion of the Company's insurance coverage. The ~~Note had~~note has an annual percentage rate of ~~3.35% with~~3.28% to be paid in ~~nine~~ten monthly payments ~~of approximately $159 thousand~~ and ~~was paid off~~are set to mature in May 2023. At December 31, 2021, the Company had three notes payable with First Insurance Funding executed in the ~~three~~third ~~months ended~~and ~~June 30 ,2021.~~ ~~The Company financed~~ ~~two~~ ~~additional insurance policies in the~~ fourth ~~quarter of~~ ~~2020~~ ~~for $0.1 million and $0.4 million, respectively. The smaller of which matured in~~ ~~April 2021~~ ~~and the other of which matured in~~ ~~September 2021,~~ ~~and for which had annual interest rates of 3.35% and 4.35%, respectively. The Company executed~~ ~~two~~ ~~additional notes payable in the~~ ~~third~~ quarter of 2021 for ~~$1.7 million and $54 thousand, respectively~~the purpose of financing a portion of the Company's insurance coverage at ~~interest~~annual percentage rates ranging from 3.00% to 4.35% all of ~~3.00% and 4.35%, respectively.~~which are paid off at September 30, 2022.

⁽²⁴⁾
On ~~April 30, 2020~~ ~~and~~ ~~May 2, 2020,~~ the Company entered into unsecured loans in the aggregate principal amount of approximately $1.9 million (the “Loans”) pursuant to the Paycheck Protection Program (the “PPP”), sponsored by the Small Business Administration (the “SBA”) as guarantor of loans under the PPP.  The Loans, and interest accrued thereon, were forgivable, partially or in full, if certain conditions were met. The Loans were evidenced by ~~four~~ ~~promissory notes,~~ ~~three~~ ~~with Bank of America, NA which were dated as of~~ ~~April 30, 2020~~ ~~and~~ ~~one~~ ~~with Dogwood State Bank dated~~ ~~May 2, 2020.~~ ~~The Bank of America notes were to mature~~ ~~two~~ ~~years from funding date of the notes and the Dogwood State Bank note was to mature~~ ~~two~~ ~~years from the note date. Each of the notes bore interest at a fixed rate of~~ ~~1.0%~~ ~~per annum with payments deferred. Prepayments on the Loans were permitted at any time prior to maturity with~~ no ~~prepayment penalties. All $1.9 million of the loans outstanding at~~ ~~December 31, 2020~~ ~~were forgiven in the~~ ~~three~~ ~~months ending~~ ~~June 30, 2021.~~ ~~The remaining $1.4 million of Pay-check Protection loans were acquired as part of the GTS acquisition, and which were forgiven in the~~ ~~third~~ ~~quarter of~~ ~~2021.~~ ~~The Company had a contingent receivable associated with the remaining PPP loan whereby the Company would be paid by the Sellers of GTS if the remaining PPP loan was~~ ~~not~~ ~~forgiven. Upon forgiveness of the loan, the receivable was relieved resulting in~~ no ~~gain or loss on the transaction.~~
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⁽³⁾ Includes two ~~seller financed~~seller-financed notes payable, one for $5 million and the second for $1.5 million. ~~The~~In August 2021, the $5 million note was amended from its original 18-month ~~term to provide for installments of $1 million paid on~~ ~~March 3, 2021,~~ a ~~second~~ ~~$1 million payment to be made on~~ ~~October 31, 2021~~ ~~and a final principal payment of $3 million on~~ ~~March 31, 2022.~~ In ~~August 2021,~~ term; the Company paid $1 million in cash and exchanged 155,763 shares of common stock in exchange for an additional $1 million reduction in principal. ~~The Company recorded this as an extinguishment of debt and a gain on extinguishment of $0.7 million.~~ The new loan had a face value of $2.0 million at a rate of 6% per annum and was recorded based on an estimated market interest rate of 10% per annum with aan original issue discount of $48 thousand. ~~The original payment terms called for the full $5 million principal to be paid~~ no ~~later than~~ ~~November 1, 2021~~ ~~without separate installments.~~ The second seller financed note payable is due 36-months from the April 1, 2020 acquisition date. Both notes had an original stated interest rate of 6% per annum. In 2022, the Company filed and served a Federal Civil Complaint asserting various causes-of-action against the holder of the note, including misrepresentations made during the course of negotiating this transaction. Based on that complaint, the evidence contained therein, and the conduct described, the Company reasonably believes that it owes no additional compensation as a result of this transaction.

⁽⁴⁵⁾
Includes vehicle and equipment loans with interest rates ranging from ~~5.74%~~0% to ~~8.99%~~9.15%.

⁽⁵⁶⁾ ~~To refinance an earlier~~
The Company entered into a non-recourse ~~note~~agreement with C6 which was originated in November 2021 with a face amount of $9.5 million. The Company received net cash proceeds of $6.9 million. The Company recorded a liability of $9.5 million and ~~to provide~~a debt discount of $2.6 million. Under the terms of the agreement, for the first12 weeks, the Company ~~with additional capital,~~ made weekly payments of $148 thousand and for the final 20 weeks, the Company was to make payments of $384 thousand. The agreement had no stated interest rate, but the discount and loan origination fees were being amortized based on an 89% interest rate.
In April, 2022, the Company took out ~~two~~three non-recourse agreements with C6 Capital for the sale of future revenues in the ~~total~~combined amount of ~~$3.5~~$20.2 million. ~~These agreements had 0 stated interest rate and~~The Company received approximately $13.3 million after the deduction of an original issue discount ~~including~~and upfront ~~fees~~fees. In April 2022, the Company used part of the proceeds from these non-recourse agreements to pay off the non-recourse C6 note of $4.2 million that was on the balance sheet as of March 31, 2022 and recorded a loss on extinguishment of $0.4 million. The loans vary in length from 26 to 48 weeks. The Company paid off the smallest of the three notes in June 2022 and recorded a loss on extinguishment of $0.1 million. Discounts on the remaining agreements are being amortized ~~using~~based on an effective interest rate of ~~approximately 117%. After combined weekly payments of approximately $54 thousand for~~88% and will mature in the first ~~four~~ ~~weeks, the combined payments increased to approximately $116 thousand until~~ ~~June 2021.~~ Asquarter of ~~June 30, 2021,~~ 2023.~~the non-recourse note was paid off.~~
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⁽⁶⁷⁾
On ~~November 13, 2020,~~ the Company completed a Securities Purchase Agreement with an institutional investor, pursuant to which the Company agreed to issue to the Investor an unsecured convertible instrument in the principal amount of $2.2 million (the “Convertible Security” or “Note”) to purchase shares of the Company’s common stock, $0.001 par value per share (the “Common Stock”) against the payment of the applicable consideration therefore. Upon the closing on ~~November 13, 2020,~~ ~~the Company received gross proceeds of $2.2 million before fees and other expenses associated with the transaction, including but~~ ~~not~~ limited to, a $0.2 million original issue discount payable to the Investor. The net proceeds received by the Company were used primarily for working capital, debt repayment and general corporate purposes. The Note is payable in full within ~~eighteen~~ ~~(18) months after the purchase price date in accordance with the terms set forth in the Note and accrues interest on the outstanding balance at the rate of~~ ~~ten~~ percent (10%) per annum from the Purchase Price Date until the Note is paid in full. All interest shall compound daily and shall be payable in accordance with the terms of the Note. The Company has the right to prepay all or any portion of the outstanding balance in an amount equal to 115% multiplied by the portion of the outstanding balance to be prepaid. The creditor ~~may~~ ~~request payment of up to $250 thousand per month beginning~~ 6 months after initial issuance. Original issue discount is amortized over the expected life of the investment at an effective interest rate of approximately 29%. The Company elected the fair value option for this note and as a result did ~~not~~ ~~bifurcate any potential embedded derivatives. In~~ ~~February 2021,~~ ~~the Company negotiated modified terms which effectively removed the convertible option from the note and the Company recorded a $250 thousand loss on extinguishment. In~~ ~~July 2021,~~ ~~the Company issued 248,509 shares of common stock in exchange for a payment against the debt of $1 million and in~~ ~~September 2021,~~ ~~the Company signed an exchange agreement to issue 83,333 shares of common stock in exchange for a payment against the debt of $250 thousand. The carrying value was $1.1 million at~~ ~~September 30, 2021.~~
On March 23, 2021, the Company completed a ~~second~~note payable agreement with ~~the same~~an institutional investor with a face amount of $10.7 million, a stated interest rate of 9.0%, an estimated effective interest rate of 19.6%, and an original issue discount of $1.0 million. InThis note was paid off in ~~September 2021,~~ August 2022.~~the Company issued 333,333 shares of common stock in exchange for a payment against the debt of $1 million. The carrying value was $9.7 million at~~ ~~September 30, 2021.~~ ~~The note payable is payable within~~ ~~eighteen~~ ~~(18) months after the purchase date and the creditor~~ ~~may~~ ~~request payment of up to $1 million per month beginning~~ 6 ~~months after initial issuance.~~

On May 11, 2021, the Company completed a ~~third~~note ~~purchase~~payable agreement with the institutional investor with a face amount of $10.7 million, a stated interest rate of 9%9.0% per annum, and estimated effective interest rate of 19.6% at inception, and a combined original issue discount and unamortized prepaid fees of $1.0 million and a carrying value of ~~$10.5~~$5.3 million at September 30, ~~2021.~~ 2022.The net proceeds were to be used for working capital, future acquisitions and general corporate purposes. Beginning six (6) months from the purchase price date, ~~Investor~~investor has the right, in its sole and absolute discretion, to redeem all or any portion of the Note (such amount, the “Redemption Amount”) subject to the maximum monthly redemption amount of ~~$1,000,000~~$1 million per calendar month, by providing Company with a “Redemption Notice," and is payable in full in November 2022.
On December 20, 2021, the Company completed a note payable agreement with the institutional investor with a face amount of $16.1 million, a stated interest rate of 9.0%, an estimated effective interest rate of 16.3%, and an original issue discount of $1.1 million. The note payable is payable within 18eighteen (18) months after the purchase date and the creditor may request payment of up to $1.5 million per month beginning 6 months after initial issuance. The carrying value was $16.9 million at September 30, 2022. The Company has not made any payments on this note as of September 30, ~~2021.~~ 2022.
On June 9, 2022, the Company completed a note payable agreement with the institutional investor with a face amount of $10.7 million, a stated interest rate of 9.0%, an estimated effective interest rate of 16.4%, and an original issue discount of $0.7 million. The note payable is payable within eighteen (18) months after the purchase date and the creditor may request payment of up to $1.0 million per month beginning 6 months after initial issuance. The carrying value was $12.8 million at September 30,2022. The Company has not made any payments on this note as of September 30, 2022. This note also includes a debt reduction clause whereby the Company has agreed to make payments on all of its outstanding agreements with the investor totaling at least $4 million for each of the months of June and July 2022. If the Company failed to make the required payments, the Lender’s sole and exclusive remedy was to require as liquidated damages, a ten percent (10%) increase to the outstanding balance for such month on this note. The Company failed to meet the debt reduction requirement in June and July 2022 and recorded liquidated damages in other expense in the amount of $2.3 million, which was added to the principal amount of the note. The original agreement also called for a similar debt reduction requirement in August 2022, but this term was later removed by a subsequent agreement.
On August 2, 2022, the Company completed a note payable agreement with the institutional investor with a face amount of $8.6 million, a stated interest rate of 9.0%, an estimated effective interest rate of 16.4%, and an original issue discount of $0.6 million. The note payable is payable within eighteen (18) months after the purchase date and the creditor may request payment of up to $0.8 million per month beginning 6 months after initial issuance. The carrying value was $8.2 million at September 30,2022. The Company has not made any payments on this note as of September 30, 2022. This note also included a debt reduction clause whereby the Company had agreed to make payments on all of its outstanding agreements with the investor totaling at least $4 million for each of the months of October, November and December 2022. If the Company failed to make the required payments, the Lender’s sole and exclusive remedy was to require as liquidated damages, a ten percent (10%) increase to the outstanding balance for such month on this note. The debt reduction provision was superseded by a subsequent agreement.
On September 29, 2022, the Company completed a note payable agreement with the institutional investor with a face amount of $5.4 million, a stated interest rate of 9.0%, an estimated effective interest rate of 16.5%, and an original issue discount of $0.4 million. The note payable is payable within eighteen (18) months after the purchase date and the creditor may request payment of up to $0.5 million per month beginning 6 months after initial issuance. The carrying value was $5.0 million at September 30,2022. The Company has not made any payments on this note as of September 30, 2022. This note also includes a debt reduction clause whereby the Company has agreed to make payments on all of its outstanding agreements with the investor totaling at least $4 million for each of the months of February, March and April 2023. If the Company fails to make the required payments, the Lender’s sole and exclusive remedy is to require as liquidated damages, a ten percent (10%) increase to the outstanding balance for such month on this note.
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(8)
On August 18, 2022, the Company entered into a Prepaid Advance Agreement (the “PPA”) with YA II PN, Ltd., a Cayman Islands exempt limited partnership (“Yorkville”). In accordance with the terms of the PPA, the Company may request advances of up to $5.0 million from Yorkville (or such greater amount that the parties may mutually agree) (the “Pre-Paid Advance”), with a limitation on outstanding Pre-Paid Advances of $5.0 million and an aggregate limitation on the Pre-Paid Advances of $50.0 million. Each such Pre-Paid Advance will be offset upon the issuance of the Company’s common stock, par value $0.001 per share (“Common Stock”) to Yorkville at a price per share equal to the lower of: (a) a price per share equal to $0.01 above the market price on The Nasdaq Global Select Market (“Nasdaq”) as of the trading day immediately prior to the date of each closing (the “Fixed Price”), or (b) 96% of the lowest daily volume weighted average price of our Common Stock on Nasdaq during the five (5) trading days prior to each conversion date (the “Market Price” and the lower of the Fixed Price and the Market Price shall be referred to as the “Purchase Price”); however, in no event shall the Purchase Price be less than $0.20 per share. The Company elected the fair value option for this agreement with the debt being marked to market on a quarterly basis. The debt had an original issue discount of $150 thousand and with a carrying value of $4.7 million at September 30, 2022. The discount is amortized through interest expense over the life of the loan. The note had an original maturity date of October 27, 2022, which was extended to February 2023 in October 2022. See note 12 for fair value information on this prepaid advance agreement and note 20 related to an extension of the maturity.
⁽⁷⁹⁾
In October 2020, the Company entered into a conditional settlement agreement with a subcontractor to make payments of $3.5 million at zero interest over three years. The ~~full balance~~Company made a $0.5 million payment in the fourth quarter of ~~this settlement agreement~~2021. The Company made a $150,000 payment in February 2022, and a $350,000 payment on March 31, 2022. The Company is ~~still owed as of~~ ~~September 30, 2021.~~ In ~~January 2021,~~ ~~the Company entered into a conditional settlement agreement with a subcontractor~~scheduled to make ~~payments of $1.4~~a $1 million ~~over approximately 5 months at 12% annual interest rate with~~payment by November 2022 and the final $1.5 million payment ~~on or before~~by ~~June 30, 2021.~~ November 2023.~~This loan was paid off during the~~
^{(three10 months ended June 30, 2021.)}
Represents Coax Fiber Solutions and Full Moon Telecom, LLC opening balance sheet loans to prior Coax Fiber Solutions and Full Moon Telecom, LLC owners.

Line of Credit
On August 19, 2021, the Company's GTS subsidiary entered into a $4.0 million variable rate line of credit agreement. Interest accrues at a rate of 2.05% over the Daily Simple Secured Overnight Financing Rate ("SOFR") index rate. The original maturity date of the line of credit was August 19, 2022, but the maturity date was extended three months to November 2022. At September 30, ~~2021~~2022 the Company ~~did~~ ~~not~~ ~~have~~had an outstanding balance on the line of credit ~~and~~of $4.0 million ~~was~~with zero dollars available for borrowing.

Debt Modifications
In the first quarter of 2022, the Company entered into a loan modification on the Front Line Seller Financed notes payable. In order to extend the maturity date of these loans from the original maturity date of May 16, 2022, the Company agreed to reduce the restriction period on the stock granted to one of the sellers from two years to one and guarantee a $4.00 stock value upon the expiration of the restriction period. The stock price guarantee was valued as a put option and the additional expected cost of the debt from the put option was determined to be an extinguishment of debt for which the Company recorded a $26.2 million loss on extinguishment and a new financial instrument valued at $26.8 million. The put option was re-valued at $40.1 million at September 30, 2022. The change between the original put option value and the value as of September 30,2022 was recorded as a $13.3 million loss on financial instrument for the nine months ended September 30, 2022, and the change between the June 30, 2022 put option value and the September 30, 2022 value was recorded as a $1.7 million loss on financial instrument for the three months ended September 30, 2022.
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17.
CONCENTRATIONS

The ~~Company's~~Company’s major product lines ~~are energy infrastructure services including natural gas infrastructure solutions~~in 2021 and ~~services through Orbital Gas Systems; full-service building,~~2022 were electric power transmission and distribution maintenance and support to the electrical power distribution, transmission, substation, renewables, and emergency response sectors of North America through Orbital Power Services; EPC services that support the development of renewable energy generation focused on utility scaleservice, utility-scale solar construction ~~through Orbital Solar Services;~~projects and ~~diversified~~ telecommunications ~~services provided by Orbital Telecom Services.~~ maintenance and service.
The Company had the following revenue concentrations by customer greater than 10% of consolidated revenue:

For the Three Months Ended September 30, For the Three Months Ended September 30,
Customer

2021

2020

2022

2021

Customer 1
13 %
<10%
20 % <10%
Customer 2
<10% 41 % 16 % <10%
Customer 3

<10%
12 %
19
% <10%
Customer 4
13 % 16 %
Customer 5
12 % <10%
Total concentrations
13 % 53 % 80 % 16 %

For the Nine Months Ended September 30,
For the Nine Months Ended September 30,

Customer
2021
2020
2022

2021

Customer 1 10 % <10% 14 % <10%
Customer 2 <10% 21 % 21 % <10%
Customer 3
18 % <10%
Customer 4
14 % 14 %
Total concentrations 10 % 21 % 67 % 14 %

The Company ~~had the following~~did not have geographic revenue concentrations outside the U.S.A. greater than 10% of consolidated ~~revenue:~~revenue.
~~For the Three Months Ended September 30,~~
~~Country~~
~~2021~~
~~2020~~
~~United Kingdom~~
~~<10%~~ 16 %
~~Total concentrations~~
~~<10%~~ 16 %
For the Nine Months Ended September 30,
Country

2021

2020

United Kingdom
15 % 24 %
Total concentrations
15 % 24 %

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The Company had the following gross trade accounts receivable concentrations by customer greater than 10% of gross trade accounts receivable:

As of September 30,

As of December 31,

As of September 30,

As of December 31,

Customer

2021

2020

2022

2021

Customer 1
11 % <10%
Customer 2
22 % 30 %
Customer 4

<10%
19 %
29
% <10%
Customer 5
<10% 12 % 17 % <10%
Customer 6
<10% 11 %
Customer 3
<10% 16 %
Total concentrations
11 % 42 % 68 % 46 %

The Company ~~had the following~~did not have geographic concentrations ~~of gross trade accounts receivable~~ outside of the U.S.A. greater than 10% of gross trade accounts ~~receivable:~~receivable.

~~As of September 30,~~
~~As of December 31,~~
~~Country~~
~~2021~~
~~2020~~
~~United Kingdom~~
~~<10%~~ 21 %
~~Total concentrations~~
~~<10%~~ 21 %
~~The Company had~~ no ~~supplier concentration for~~For the three months ended September 30, 2022, ~~30,~~~~2021~~ ~~and~~the Company had ~~one~~three supplier ~~concentration~~concentrations of approximately ~~19%~~14%, 13%, and 11% in the ~~three~~ ~~months ended~~ ~~September~~ ~~30,~~~~2020~~ ~~in the Electric Power~~Renewables segment and ~~Solar Infrastructure Services segment. There was~~ nozero supplier ~~concentration~~concentrations for the nine months ended September 30, 2022.  In the ~~30,~~three months ended September 30, 2021,the Company did not have any supplier concentration over 10%.  orIn the nine months ended September 30, ~~2020.~~2021, the Company had one supplier concentration at approximately 10% in the Electric Power segment.
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18.
~~OTHER EQUITY TRANSACTIONS~~ACQUISITIONS

S-3 ~~registration~~Acquisition of Coax Fiber Solutions
Effective March 7, 2022, GTS, an OIG subsidiary included in the Telecommunications segment, entered into a share purchase agreement to acquire Coax Fiber Solutions (CFS), a Georgia based GDOT Certified contractor specializing in Aerial Installation, directional drilling, trenching, plowing, and missile crews for telecommunications, power, gas, water, CCTV, ATMS, and traffic signal cable installation. GTS paid $0.8 million and issued 125,000 shares of restricted common stock to the Seller to purchase CFS with the stock valued at $146,000. Goodwill reflects the excess purchase price over the fair value of net assets. The Company ~~filed an S-~~3 ~~registration statement on~~ ~~July 17, 2020~~ ~~containing a prospectus that was effective in~~ ~~September~~ ~~2020.~~ ~~The Company utilized~~recorded opening balance items of $0.4 million of current assets, $0.5 million of fixed assets, $1.5 million of goodwill, and $1.5 million of liabilities as part of this ~~filing in~~ ~~January 2021~~ ~~to issue common stock for $45 million before costs of $2.6 million for net proceeds of $42.4 million in~~ ~~two~~ ~~separate equity raises. The Company has used and plans to use the remaining funds for general corporate purposes and future acquisitions. General corporate purposes~~ ~~may~~ include operating expenses, working capital to improve and promote our commercially available products and service offerings, advance product and service offering candidates or share repurchases, expand our market presence and commercialization, general capital expenditures and satisfaction of debt obligations.transaction.

~~The Company filed a new S-~~3 ~~shelf registration in~~ ~~January 2021,~~ ~~which, as amended, became effective in~~ ~~April 2021.~~ ~~With this filing, Orbital Energy Group~~ ~~may~~ ~~from time to time issue various types of securities, including common stock, preferred stock, debt securities and/or warrants, up to an aggregate amount of $150 million. In~~ ~~July,~~ ~~the Company issued $38 million of stock before costs of approximately $2.3 million for net proceeds of approximately~~ ~~$35.7million.~~
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~~19.~~
~~ACQUISITIONS~~
Acquisition of IMMCO
Effective July 28, 2021,the Company entered into a share purchase agreement to acquire IMMCO, Inc., an Atlanta-based telecommunications company providing enterprise solutions to the cable and telecommunications industries since1992.The acquisition was effectuated pursuant to the Share Purchase Agreement (the “Agreement”), with the shareholders of IMMCO (the "Seller"). Orbital ~~Energy~~Infrastructure Group paid $16 million and issued 874,317 shares of restricted common stock issued to the Seller ($~~2.5~~2.0 million estimated fair value as of July 28, 2021) plus a $0.6 million working capital adjustment for a combined total of ~~$19.1~~$18.6 million. Goodwill reflects the excess purchase price over the fair value of net assets. The Company recorded ~~$11.0~~$11.1 million of goodwill as part of this transaction and all of this goodwill is deductible for tax purposes. Acquisition-related expenses incurred during the nine months ended September 30, 2021 for the IMMCO acquisitions were approximately $0.6 million before taxes, which were recognized within the Selling, general and administrative expense line of the Condensed Consolidated Statements of Operations.

The purchase consideration was as follows:

(in thousands)
Purchase Consideration

Cash payment
$ 16,597 $ 16,597
Orbital Energy common stock issued - 874,317 restricted shares
2,544
Fair value of common stock issued to sellers
2,024
Total
$ 19,141 $ 18,621

The acquisition was accounted for using the purchase method of accounting and the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated preliminary fair values at the date of acquisition.

(in thousands)
Purchase price
$ 19,141 $ 18,621

Cash and cash equivalents
$ 1,634 $ 1,634
Trade accounts receivable, net
1,254 1,254
Contract assets
1,001 1,001
Prepaid expenses and other current assets
1,088 551
Property and equipment
760 760
Goodwill
10,992
Intangible, customer relationships
3,888 3,800
Intangible, trade name
1,205 1,162
Intangible, technology know how
1,470 1,459
Other long-term assets
76 76
Deferred tax liability
(2,127 ) (2,090 )
Liabilities assumed
(2,100 ) (2,100 )

Net assets acquired
7,507
Goodwill
11,114
Purchase price allocation
$ 19,141 $ 18,621

(in thousands)

Revenue since July 28, 2021 acquisition date
$ 1,301
Income from continuing operations, net of income taxes since July 28, 2021 acquisition date
2,189
*
(in thousands)

Revenue from July 28, 2021 acquisition date to September 30, 2021
$ 1,301
Income from continuing operations, net of income taxes from July 28, 2021 acquisition date to September 30, 2021
2,189
*

*  The deferred tax liability recorded at acquisition was offset against the Company's valuation allowance and recorded as a tax benefit in the nine months ended September 30, 2021 within the income tax benefit line of the Condensed Consolidated Statement of Operations and is included in the total.

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Acquisition of Gibson Technical Services
Effective April 13, 2021, the Company entered into a share purchase agreement to acquire Gibson Technical Services, an Atlanta-based telecommunications company providing diversified telecommunications services nationally since 1990. The acquisition was effectuated pursuant to the Share Purchase Agreement (the “Agreement”), dated as of April 13, 2021, between Orbital ~~Energy~~Infrastructure Group and the shareholders of GTS (the "Seller"). Orbital ~~Energy~~Infrastructure Group paid $22 million and issued 5,929,267 shares of restricted common stock issued to the Seller ($16.9 million estimated fair value as of April 13, 2021) for a combined total of $38.9 million. Goodwill reflects the excess purchase price over the fair value of net assets. The Company recorded $12.3 million of goodwill as part of this transaction and all of this goodwill is deductible for tax purposes. Acquisition-related expenses incurred during the nine months ended September 30, 2021 were approximately $0.9 million before tax which were recognized within the Selling, general and administrative expense line of the Condensed Consolidated Statements of Operations.

The purchase consideration was as follows:
~~(in thousands)~~
(in thousands)

Purchase Consideration

Cash payment
$ 22,000 $ 22,000
Orbital Energy common stock issued - 5,929,267 restricted shares
16,932
Fair value of common stock issued to sellers
16,932
Total
$ 38,932 $ 38,932

The acquisition was accounted for using the purchase method of accounting and the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated preliminary fair values at the date of acquisition.

~~(in thousands)~~
Purchase price
$ 38,932 $ 38,932

Cash and cash equivalents
$ 610 $ 610
Trade accounts receivable
7,871 7,871
Contract assets
1,686 1,686
Contingent receivable
1,424 1,424
Prepaid expenses and other current assets
408 408
Property and equipment
3,795 3,795
Right of use assets - Operating leases
860 860
Goodwill
12,269
Intangible, customer relationships
16,075 16,075
Intangible, trade name
6,388 6,388
Intangible, non-compete agreements
385 385
Other long-term assets
123 123
Deferred tax liability
(8,978 ) (9,048 )
Liabilities assumed
(3,984 ) (3,984 )

Net assets acquired
26,593
Goodwill
12,339
Purchase price allocation
$ 38,932 $ 38,932

(in thousands)

Revenue since April 13, 2021 acquisition date
$ 13,515
Income from continuing operations, net of income taxes since April 13, 2021 acquisition date
9,224
*
(in thousands)

Revenue from April 13, 2021 acquisition date to September 30, 2021
$ 13,515
Income from continuing operations, net of income taxes from April 13, 2021 acquisition date to September 30, 2021
9,224
*

*  The deferred tax liability recorded at acquisition was offset against the Company's valuation allowance and recorded as a tax benefit in the nine months ended September 30, 2021 within the income tax benefit line of the Condensed Consolidated Statement of Operations and is included in the total.

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The table below summarizes the unaudited condensed pro forma information of the results of operations of Orbital ~~Energy~~Infrastructure Group, Inc. for the three and nine months ended September 30, 2021 ~~and~~ ~~2020~~as though the acquisitions of GTS and IMMCO had been completed asof January 1, 2020.

For the Three Months Ended September 30,

For the Nine Months Ended September 30,
For the Three Months Ended September 30, For the Nine Months Ended September 30
(in thousands)
2021

2020

2021

2020

2021

2021

Gross revenue
$ 31,462 $ 24,648 $ 69,867 $ 60,093 $ 31,462 $ 69,867
Loss from continuing operations, net of income taxes
$ (13,919 ) $ (5,748 ) $ (41,876 ) $ (24,855 ) $ (13,919 ) $ (41,876 )

~~Acquisition of Reach Construction Group, LLC~~
~~Effective~~ ~~April 1, 2020,~~ the Company entered into an equity purchase agreement to acquire 100% of the assets of Reach Construction Group, LLC (Renamed "Orbital Solar Services"), an, industry-leading solar construction company. Headquartered in Sanford, NC, Orbital Solar Services is an EPC company with expertise in the renewable energy industry. The acquisition was effectuated pursuant to the Equity Purchase Agreement, dated as of ~~April 1, 2020,~~ ~~between Orbital Energy Group and the Seller. Orbital Energy Group issued 2,000,000 shares of restricted common stock issued to Brandon Martin ($1.2 million estimated fair value as of~~ ~~April 1, 2020)~~ ~~along with~~ ~~two~~ ~~seller notes for a combined total of $35 million (Adjusted to $6.5 million following preliminary working capital adjustment as of~~ ~~April 1, 2020)~~ ~~and an earn-out~~ ~~not~~ ~~in excess of $30 million ($0.7 million estimated fair value as of~~ ~~April 1, 2020.)~~ ~~The seller notes were subject to a $28.5 million preliminary working capital adjustment.~~
~~The purchase consideration was as follows:~~
~~(in thousands)~~
Purchase Consideration

Orbital Energy Stock issued - 2 million shares
$ 1,224
18-Month Seller Note
5,000
3-year Seller Note
1,480
Contingent consideration
720
Cash payment
3,000
Total
$ 11,424
The acquisition was accounted for using the purchase method of accounting and the purchase price was allocated to the assets acquired and liabilities assumed based upon their estimated preliminary fair values at the date of acquisition.
~~(in thousands)~~
Purchase price
$ 11,424

Cash and cash equivalents
$ 19
Trade accounts receivable, net of allowance
6,972
Contract assets
3,299
Prepaid expenses and other current assets
427
Property and equipment
382
Right of use assets - Operating leases
890
Goodwill
7,006
Intangible, customer relationships & backlog
8,647
Intangible, trade name
1,878
Intangible, non-compete agreements
3,212
Deferred tax liability
(1,570 )
Liabilities assumed
(19,738 )

Purchase price allocation
$ 11,424

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~~20.~~19.
COMMITMENTS AND CONTINGENCIES

Off-Balance Sheet Arrangements

Performance and Payment Bonds and Parent Guarantees
In the ordinary course of business, Orbital ~~Energy~~Infrastructure Group and its subsidiaries are required by certain customers to provide performance and payment bonds for contractual commitments related to ~~its~~their projects. These bonds provide a guarantee to the customer that the Company will perform under the terms of a contract and that the Company will pay its subcontractors and vendors. If the Company fails to perform under a contract or to pay its subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. The Company must reimburse the surety for expenses or outlays it incurs. Certain bonds are for open-ended contracts with multiple work orders so the value may increase as the work progresses and more work orders are started. The bonds will remain in place as the Company completes projects and resolves any disputed matters with the customers, vendors and subcontractors related to the bonded projects. As of September 30, ~~2021~~2022, the total amount of the outstanding performance and payment bonds was approximately ~~$4.4~~$38.4 million. In addition, the Company had letters of credit outstanding of $1.4 million as of September 30, 2022.

Additionally, from time to time, we guarantee certain obligations and liabilities of our subsidiaries that may arise in connection with, among other things, contracts with customers, equipment lease obligations, and contractor licenses. These guarantees may cover all of the subsidiary’s unperformed, undischarged and unreleased obligations and liabilities under or in connection with the relevant agreement. For example, with respect to customer contracts, a guarantee may cover a variety of obligations and liabilities arising during the ordinary course of the subsidiary’s business or operations, including, among other things, warranty and breach of contract claims, third-party and environmental liabilities arising from the subsidiary’s work and for which it is responsible, liquidated damages, or indemnity claims.

Contingent Liabilities
Orbital ~~Energy~~Infrastructure Group, Inc. is occasionally party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, negligence or gross negligence and/or property damages, wage and hour and other employment-related damages, punitive damages, civil penalties or other losses, or injunctive or declaratory relief.

Regarding all lawsuits, claims and proceedings, Orbital ~~Energy~~Infrastructure Group, Inc. records a reserve when it is probable that a liability has been incurred and the loss can be reasonably estimated. ~~Other than the reserve on the item described below, the Company currently has~~ no ~~such reserves.~~ In addition, Orbital ~~Energy~~Infrastructure Group, Inc. discloses matters for which management believes a material loss is at least reasonably possible. ~~Except as otherwise stated below,~~ ~~none~~None of these proceedings are expected to have a material adverse effect on Orbital ~~Energy~~Infrastructure Group, Inc.’s consolidated financial position, results of operations or cash flows. In all instances, management has assessed the matter based on current information and made a judgment concerning its potential outcome, considering the nature of the claim, the amount and nature of damages sought and the probability of success. Management’s judgment may prove materially inaccurate, and such judgment is made subject to the known uncertainties of litigation.
Financial Instrument Liabilities
Seller Financed debt - financial instrument
To the extent that the fair value of the shares of common stock previously issued to Tidal Power are less than $4.00 per share upon expiration of the restriction period in November 2022, the Company has agreed to pay additional consideration to Tidal Power so that the value of Tidal Power's shares of common stock are equal to no less than $28,852,844. For the Johnson lockup letter, the Company agreed to pay additional consideration to Mr. Johnson upon expiration of the restriction period in November 2023 so that the value of his stock consideration is no less than $17,635,228, which is equal to $4.00 per common share. Any shortfall would be made up by issuing Mr. Johnson additional common shares. The fair value of this liability at September 30, 2022 was $40.1 million. See Note 12 for additional information on this financial instrument.
Syndicated debt - subscription agreement financial instrument
To the extent that the Company issues shares of its common stock at a price less than the current reference price, the Company is obligated to issue additional shares to the syndicated lenders based on formulas included in their subscription agreements. When additional shares are issued to the lenders the reference price is reset. The reference price was $0.40 at September 30, 2022. The financial instrument liability had a fair value of $0.8 million at September 30, 2022. See Note 12 for additional information on this financial instrument and Note 20 for additional issuances and changes to the reference price related to the subscription agreement following the September 30, 2022 reporting date.
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Table of Contents

~~21.~~20.
SUBSEQUENT EVENTS

~~Acquisition~~Orbital Solar Services potential liquidated damages.
On October ~~22, 2021~~23, 2022, ,Orbital Solar Services had a project completion milestone due that was not met. Contractually, liquidated damages may be incurred at $150,000 per day related to this milestone. In aggregate, delay-related liquidated damages cannot exceed a cap of $9.4 million specific to this contract. Liquidated damages are due and payable within 15 days of invoice per the ~~Company entered into a definitive share purchase agreement to acquire 100%~~language in the contract. As of ~~Full Moon Telecom, LLC (“Full Moon”). Full Moon is a Florida-based privately-owned telecommunications service provider that offers an extensive array of wireless service capabilities~~November 14, 2022, the project milestone has not been completed and ~~experience including Layer~~we have ~~2/Layer~~not 3 ~~Transport, Radio Access Network (“RAN”) Integration, test and turn-up of Small Cell systems and Integration/Commissioning of Distributed Antenna (“DAS”) systems.~~been invoiced.

~~Subject~~New home office facility lease
On October 6, 2022, the Company signed a lease for its new home office in Houston, Texas. The lease is for 46 months and commences at $7 thousand per month.
Cured default on syndicated debt
In November 2022, The Company resolved a dispute with the Syndicated lenders whereby the Syndicated lenders deemed the Company to be in default of its credit agreement due to the ~~terms and conditions set forth in the Purchase Agreement, the base purchase price for~~ ~~100%~~Company using proceeds from Front Line Power's operations to pay down $9.5 million of the ~~ownership of Full Moon is $1,900,000,~~Company's working capital adjustment with the ~~consideration structured as follows:~~sellers of Front Line Power. As part of a consent agreement with the lenders, the Company agreed to pay the lenders in a paid-in-kind amount of $10.5 million, which was added to the Syndicated debt balance and included $1.0 million of interest calculated from the first intercompany advance that the Company made.

●
~~$1,235,000 in cash paid at closing less the amount needed to pay certain outstanding debt of Full Moon; and plus or minus the amount needed for estimated closing working capital to equal a~~ 2 to 1 ~~ratio; and~~
●
~~227,974 shares of restricted common stock issued to the Full Moon owners with an aggregate value of $665,000 based upon a per share value of $2.917.~~
Extension of prepaid advance maturity date
The ~~Purchase Agreement provides~~maturity date for the ~~adjustment~~Company's prepaid advance, which had a fair value of ~~the selling price~~$4.7 million at September 30, 2022, was extended to ~~adjust the final closing working capital at the acquisition date as a post-closing adjustment for net working capital above or below a~~ 2February 28, 2023 -1 ~~ratio for the closing working capital ratio estimated on the acquisition date and to be finalized within~~ 45 ~~days after the closing~~from its original maturity date of October ~~22, 2021.~~27, 2022 for additional consideration of $52,500.
Shares issued to lenders of the Company's syndicated debt as part of the Company's subscription agreement with those lenders
On November 7, 2022, the Company issued the lenders of the Company's syndicated debt an additional 3,325,010 shares, which dropped the subscription agreement's reference price from $0.40 at September 30, 2022 to $0.30 and on November 10, the Company issued the same lenders an additional 3,685,971 shares, which set a new reference price of $0.2349 for the subscription agreement. See Note 16 for more information about the Company's syndicated debt, and note 12 and 19 for information on the financial instrument liability related to the subscription agreement.

36

~~Table of Contents~~
~~The acquisition will add revenues and be accretive to earnings beginning immediately. Subsequent to~~ ~~September 30, 2021,~~ ~~Full Moon will become a wholly-owned subsidiary of OEG, expanding Orbital Telecom Services service offerings to its customers. The Company has~~ ~~not~~ ~~completed the initial purchase price allocation for this transaction as it is still in the preliminary stages of assessing the fair value of the underlying tangible and intangible assets.~~
~~Exchange agreements to partially pay off notes payable~~
On ~~October 19, 2021,~~ the Company issued 500,000 shares of common stock to an institutional investor, and creditor of the Company in exchange for $1.25 million to decrease the outstanding balance of a $2.2 million loan originated in ~~November 2020~~ ~~by $250 thousand and a $10.7 million loan originated in~~ ~~March 2021~~ ~~by $1 million.~~
~~Non-recourse financing agreement~~
On ~~October 27, 2021~~ ~~and~~ ~~October 29, 2021,~~ ~~the Company took out~~ ~~two~~ ~~non-recourse agreements with~~ C6 Capital for the sale of future revenues in the combined amount of $10.8 million. The Company received approximately $7.8 million after the deduction of an original issue discount and upfront fees. This agreement has no stated interest rate and the original issue discount including upfront fees will be amortized using a weighted average effective interest rate of approximately 89.2%. After combined weekly payments of approximately $169 thousand for the ~~first~~~~twelve~~ ~~weeks, the payments increase to approximately $439 thousand until~~ ~~June 2022.~~
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Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Important Note about Forward-Looking Statements
The following discussion and analysis should be read in conjunction with the Company’s unaudited condensed consolidated financial statements as of September 30, ~~2021~~2022 and notes thereto included in this document and the audited consolidated financial statements in the Company’s 10-K filing for the period ended December 31, ~~2020~~2021 and the notes thereto. In addition to historical information, the following discussion and other parts of this Form 10-Q contain forward-looking information that involves risks and uncertainties. The Company’s actual results could differ materially from those anticipated by such forward-looking information due to factors discussed elsewhere in this Form 10-Q.

The statements that are not historical constitute “forward-looking statements.” Said forward-looking statements involve risks and uncertainties that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements, express or implied by such forward-looking statements. These forward-looking statements are identified by their use of such terms and phrases as "expects,” “intends,” “goals,” “estimates,” “projects,” “plans,” “anticipates,” “should,” “future,” “believes,” and “scheduled.”

The variables which may cause differences include, but are not limited to, the following: general economic and business conditions; changes in regulatory environment; extraordinary external events such as the ~~current~~ pandemic health event resulting from COVID-19; competition; success of operating initiatives; operating costs; advertising and promotional efforts; the existence or absence of adverse publicity; changes in business strategy or development plans; the ability to retain management; availability, terms and deployment of capital; business abilities and judgment of personnel; availability of qualified personnel; labor and employment benefit costs; availability and costs of raw materials and supplies; and changes in, or failure to comply with various government regulations. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate; therefore, there can be no assurance that the forward-looking statements included in this Form 10-Q will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any person that the objectives and expectations of the Company will be achieved.

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Overview
Orbital ~~Energy~~Infrastructure Group is a ~~platform~~diversified infrastructure services company serving customers in the electric power, telecommunications, and renewable markets. The Company is dedicated to maximizing shareholder value through greenfield development and the acquisition of, and investment in successful, entrepreneurial led companies to profitably grow revenues by providing end-to-end solutions to customers, primarily in the renewable, electric power transmission and distribution, and telecommunications infrastructure markets. ~~Orbital Energy Group’s~~The Company is organized in three segments. The Electric Power segment consists of Front Line Power Construction, LLC based in Houston, Texas, Orbital Power, Inc. based in Dallas, Texas, and ~~Solar Infrastructure Services~~Eclipse Foundation Group based in Gonzales, Louisiana. The segment provides comprehensive ~~network~~infrastructure solutions to customers in the electric power ~~telecommunications~~industry. Services performed by Front Line Power and ~~solar industries. This segment includes~~ Orbital Power, Services, Orbital Solar Services, and Orbital Telecom Services. The Company started its Orbital Power Services operations during the first three months of 2020 as a full-service provider of building, maintenance and supportInc. generally include but are not limited to the ~~electrical~~engineering, design, installation, upgrade, repair and maintenance of electric power transmission and distribution ~~transmission,~~infrastructure and substation ~~renewables, and~~facilities as well as emergency ~~response sectors of North America.~~restoration services. Eclipse Foundation Group, ~~Inc.,~~ which began operations in January 2021, ~~within Orbital Power Services,~~ is a drilled shaft foundation construction company that specializes in providing services to the electric transmission and substation, industrial, ~~communication towers~~telecommunication and disaster restoration market sectors, with expertise performing services in water, marsh and rock terrains. In the third quarter of 2022, in order to streamline operations, the Eclipse business was integrated into Front Line Power Construction, LLC, and ceased to be a separate business unit.
The Telecommunications segment consists of Gibson Technical Services (GTS) along with its subsidiaries IMMCO, Inc. based in Atlanta, Georgia and Full Moon Telecom, LLC based in Florida. GTS provides engineering, design, construction, and maintenance services to the broadband and wireless telecommunication industries and was acquired by the Company effective April 13, 2021. IMMCO, Inc. provides enterprise solutions to the cable and telecommunication industries and was acquired by the Company effective July 28, 2021. Full Moon Telecom, LLC provides telecommunication services including an extensive array of wireless service capabilities and was acquired by the Company effective October 22, 2021. Coax Fiber Solutions was acquired as of March 7, 2022, and is a Georgia based GDOT Certified contractor specializing in Aerial Installation, directional drilling, trenching, plowing, and missile crews for telecommunications, power, gas, water, CCTV, ATMS, and traffic signal cable installation.
Orbital Solar Services, ~~(formerly Reach Construction Group, LLC) as of April 1, 2020, which~~LLC (OSS), based in Raleigh, North Carolina, makes up the Renewables segment. OSS provides engineering, procurement and construction (“EPC”) services that support the development of renewable energy generation focused on ~~utility scale~~utility-scale solar and community solar projects. Orbital Telecom was launched through the acquisition of GTS in April 2021 and expanded its service offerings in July 2021 with the acquisition of IMMCO. The Telecom group provided both topside and bottom line benefits to the Company since acquisition.construction.

The Company has ~~more~~experienced rapid growth through organic growth and acquisitions as the Company benefits from its 2021 investments and acquisitions and as the economy continues to emerge from the COVID-19 induced slowdown. Third quarter 2022 revenue was over four times greater than doubled its third-quarter revenue year over year and has also more than doubled its revenue for the first nine months of 2021 compared to the similar period in 2020. This has been accomplished through the Company's total revenue from the third quarter of 2021. Improved revenues and income were a result of the inclusion of operations from the November acquisition ~~and organic growth efforts. However, ramp-up costs at Orbital~~of Front Line Power ~~Services contributed to lower margins and increased SG&A~~Construction in the Electric Power segment and ~~Solar Infrastructure Services~~continued growth in the Telecommunications segment ~~during~~acquired in the three ~~and nine~~ months ended ~~September~~June 30, 2021. The ~~Company also continued to incur professional fees related to mergers and acquisitions as the~~ Company continues to pursue both organic growth and growth through acquisitions. The Company's ~~Integrated Energy Infrastructure Solutions~~Telecommunications segment made an additional "tuck-in" acquisition in the first quarter of 2022 for cash and ~~Services Segment include subsidiaries, Orbital Gas Systems, Ltd., and Orbital Gas Systems, North America, Inc., which are leaders in innovative gas solutions with more than 30 years~~stock consideration of ~~experience in design, installation and~~approximately $0.9 million.
During the commissioning of industrial gas sampling, measurement and delivery systems providing solutions to the energy, power and processing markets. Orbital Gas Systems manufactures and delivers a broad range of technologies including environmental monitoring, gas metering, process control, telemetry, gas sampling and BioMethane. The three-and nine-month ~~periods~~period ended September 30, 2022, the Company began to see tangible benefits for all segments from the investments the Company made in 2021 ~~for both segments continue~~through improved revenue. These benefits were offset by sub-contractor labor and material cost over-runs at OSS's Black Bear project that is projected to ~~face headwinds due~~be completed by the end of the year. The Company is in the midst of a reset of its solar business. The solar reset should not materially change the revenue mix in the near term. Given some of the recent legislation and executive order, solar projects that had been delayed are now likely to be opportunities in 2023 and beyond. As the Company moves away from providing engineering, procurement, and construction ("EPC") services to being a specialized contractor providing skilled resources to EPC companies, the Company will benefit from a reduced risk profile that comes with being an EPC, and margins will be enhanced as we will not share profits or losses with our joint venture partners as we are now required to do.
The Company's results were affected negatively in the first nine months of 2022 by the $29.4 million loss on extinguishment of debt primarily related to the ~~COVID-19 pandemic that has caused economic slowdowns throughout~~Company's seller financed debt on the ~~world, but economic activity has begun~~November 2021 Front Line Construction acquisition and stock-based payments made against its investor held debt for which the stock was issued at a discount to ~~improve and backlogs are strong~~the stock's fair value.
In the third quarter of 2021, the Company incurred ramp-up costs in the Electric Power ~~and Solar Infrastructure segment.~~
Insegment that put downward pressure on margins in the ~~first half~~third quarter of ~~2020, the~~2021.The Company launched Orbital Power Services. The first nine months of 2020 included set up costs related to Orbital Power Services and the establishment of the Company's shared services center in Dallas, Texas as well as elevatedalso incurred professional fees related to mergers and acquisitions as the Company ~~pivoted from its legacy Power and Electromechanical business that was divested in~~finalized the ~~second half~~acquisition of ~~2019 with the remaining Canada and Japan business being divested in 2020.~~GTS. The ~~second quarter of 2020 was~~three-month period ended September 30, 2021, for both segments were also negatively affected by generally lower economic activity due to the COVID-19 pandemic that caused economic slowdowns throughout the world, which hampered growth in its electric power and solar infrastructure ventures. The first nine months of 2020 also included a $4.8 million net loss of affiliate in Virtual Power Systems ("VPS"), respectively primarily as a result of a $3.5 million impairment loss on the investment in the three months ended June 30, 2020. world.

For the three and nine months ended September 30, ~~2021,~~2022, Orbital ~~Energy~~Infrastructure Group, Inc. had a consolidated loss from continuing operations of ~~$11.7~~$141.6 million and ~~$47.3~~$208.3 million, respectively, compared to a consolidated loss from continuing operations in the three and nine months ended September 30, ~~2020~~2021, of ~~$6.3~~$9.5 million and ~~$20.6 million.~~ $34.1 million, respectively.
During the ~~three and~~ nine months ended September 30, ~~2021,~~2022, Orbital Energy Group, Inc. had a consolidated loss from continuing operations of $10.1 million and $36.3 million, respectively compared to a loss of $5.7 million and $22.6 million, respectively, in the comparable prior-year period.
~~During the three and nine months ended September 30, 2021, Orbital Energy~~Infrastructure Group, Inc. had a consolidated net loss of ~~$10.1~~$210.8 million ~~and $36.3 million, respectively,~~ compared to a consolidated net loss in the ~~three and~~ nine months ended September 30, ~~2020~~2021, of ~~$3.2 million and $19.9 million, respectively.~~$36.3 million. The greater net loss for the ~~three~~nine months ended September 30, ~~2021,~~2022, was primarily the result of ~~stock-based compensation, start-up costs related to Orbital Power~~impairments on goodwill, intangibles, and ~~ongoing merger and acquisition activity.  Partially offsetting these costs were $9.0 million tax benefit~~financing leased assets, the loss on extinguishment of debt related to the ~~acquisition~~loan modification of ~~GTS~~the seller financed debt, and increased interest expense related to acquisitions financed by debt in the ~~nine months ended September 30, 2021 and $2.5 million tax benefit related to the acquisition~~second half of IMMCO. These tax benefits partially offset higher cost of revenue and selling, general and administrative expense ("SG&A") in the Electric Power and Solar Infrastructure Services and Integrated Energy Infrastructure segments. Cost increases were associated with the inclusion of IMMCO since its July 28, 2021 acquisition, GTS since its April 13, 2021 acquisition and the inclusion of the Orbital Solar Services business since its April 1, 2020 acquisition, including amortization costs on IMMCO, GTS and Orbital Solar Service's acquisition intangibles, the ramp up of the Orbital Power Services operations, and stock-based compensation. As the Company adds new service crews in the Orbital Power Services business, there is a certain amount of upfront costs related to that, including equipment, supplies and training before the new crews can start generating income for the Company. As the Company aggressively has ramped up the Orbital Power Services business, it has absorbed more of these type set-up costs than it will need to once all teams are in place and operating at full capacity. SG&A cost increases in the Other segment relate to vesting and mark to market adjustments on cash-based executive stock appreciation rights and employee performance bonus payments as well as continuing merger and acquisition costs. 2021.

Revenues from continuing operations increased for the ~~three and~~ nine months ended September 30, ~~2021~~2022, due to the continued ramp-up of ~~Orbital~~the Electric Power ~~Services~~ and Renewables segments along with the ~~additions~~addition of ~~GTS, IMMCO~~the Telecommunications segment which was assembled via acquisitions starting in the second quarter of 2021 and ~~Orbital Solar Services.~~ continuing into 2022.

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Continuing Results of Operations
The following tables set forth, for the period indicated, certain financial information regarding revenue and ~~costs~~operating results by segment.

For the Three Months Ended September 30, ~~2021:~~2022:

(dollars in thousands)

Electric Power and Solar Infrastructure Services

Percent of Segment Revenues

Integrated Energy Infrastructure Solutions and Services

Percent of Segment Revenues

Other

Percent of Segment Revenues

Total

Percent of Total Revenues

$%

$%

$%

$%

Revenues
$ 24,822 100.0 % $ 6,097 100.0 % $ — — % $ 30,919 100.0 %
Cost of revenue
22,561 90.9 % 4,608 75.6 % (38 ) — % 27,131 87.7 %
Gross profit
2,261 9.1 % 1,489 24.4 % 38 — % 3,788 12.3 %

Operating expenses:

Selling, general and administrative
7,338 29.5 % 2,259 37.1 % 4,104 — % 13,701 44.3 %
Depreciation and amortization
1,322 5.3 % 404 6.6 % 12 — % 1,738 5.6 %
Research and development
— — % 1 — % — — % 1 — %
Provision for (recovery of) bad debt
93 0.4 % (6 ) (0.1 )% — — % 87 0.3 %
Other operating Expenses
(6 ) — % — — % — — % (6 ) — %
Total operating expenses
8,747 35.2 % 2,658 43.6 % 4,116 — % 15,521 50.2 %
Loss from operations
$ (6,486 ) (26.1 )% $ (1,169 ) (19.2 )% $ (4,078 ) — % $ (11,733 ) (37.9 )%
(dollars in thousands)

Electric Power

Percent of Segment Revenues

Telecommunications

Percent of Segment Revenues

Renewables

Percent of Segment Revenues

Other

Percent of Segment Revenues

Total

Percent of Total Revenues

$

%

$

%

$

%

$

%

$

%

Revenues
$ 36,732 100.0 % $ 24,064 100.0 % $ 39,026 100.0 % $ — — % $ 99,822 100.0 %
Income (loss) from operations
$ (76,606 ) (208.6 )% $ (23,213 ) (96.5 )% $ (26,535 ) (68.0 )% $ (2,356 ) — % $ (128,710 ) (128.9 )%

For the Three Months Ended September 30, ~~2020:~~2021:
(dollars in thousands)

Electric Power

Percent of Segment Revenues

Telecommunications

Percent of Segment Revenues

Renewables

Percent of Segment Revenues

Other

Percent of Segment Revenues

Total

Percent of Total Revenues

$

%

$

%

$

%

$

%

$

%

Revenues
$ 12,200 100.0 % $ 8,742 100.0 % $ 3,880 100.0 % $ — — % $ 24,822 100.0 %
Loss from operations
$ (2,445 ) (20.0 )% $ (436 ) (5.0 )% $ (3,605 ) (92.9 )% $ (4,364 ) — % $ (10,850 ) (43.7 )%
(dollars in thousands)

Electric Power and Solar Infrastructure Services

Percent of Segment Revenues

Integrated Energy Infrastructure Solutions and Services

Percent of Segment Revenues

Other

Percent of Segment Revenues

Total

Percent of Total Revenues

$

%

$

%

$

%

$

%

Revenues
$ 9,478 100.0 % $ 4,137 100.0 % $ — — % $ 13,615 100.0 %
Cost of revenue
8,353 88.1 % 2,908 70.3 % — — % 11,261 82.7 %
Gross profit
1,125 11.9 % 1,229 29.7 % — — % 2,354 17.3 %

Operating expenses:

Selling, general and administrative
2,252 23.8 % 2,663 64.4 % 2,264 — % 7,179 52.7 %
Depreciation and amortization
1,070 11.3 % 372 9.0 % 12 — % 1,454 10.7 %
Research and development
— — % 6 0.1 % — — % 6 —
Provision for bad debt
— — % 15 0.4 % — — % 15 0.1 %
Other operating expenses
23 0.2 % — 0.0 % — — % 23 0.2 %
Total operating expenses
3,345 35.3 % 3,056 73.9 % 2,276 — % 8,677 63.7 %
Loss from operations
$ (2,220 ) (23.4 )% $ (1,827 ) (44.2 )% $ (2,276 ) — % $ (6,323 ) (46.4 )%

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~~Table of Contents~~
For the Nine Months Ended September 30, 2022:
(dollars in thousands)

Electric Power

Percent of Segment Revenues

Telecommunications

Percent of Segment Revenues

Renewables

Percent of Segment Revenues

Other

Percent of Segment Revenues

Total

Percent of Total Revenues

$

%

$

%

$

%

$

%

$

%

Revenues
$ 117,695 100.0 % $ 60,524 100.0 % $ 85,770 100.0 % $ — — % $ 263,989 100.0 %
Income (loss) from operations
$ (77,621 ) (66.0 )% $ (21,662 ) (35.8 )% $ (32,280 ) (37.6 )% $ (6,642 ) — % $ (138,205 ) (52.4 )%

For the Nine Months Ended September 30, 2021:
(dollars in thousands)

Electric Power and Solar Infrastructure Services

Percent of Segment Revenues

Integrated Energy Infrastructure Solutions and Services

Percent of Segment Revenues

Other

Percent of Segment Revenues

Total

Percent of Total Revenues

$
%

$

%
$
%

$

%

Revenues
$ 41,902 100.0 % $ 14,816 100.0 % $ — — % $ 56,718 100.0 %
Cost of revenue
45,032 107.5 % 10,452 70.5 % (84 ) — % 55,400 97.7 %
Gross profit (loss)
(3,130 ) (7.5 )% 4,364 29.5 % 84 — % 1,318 2.3 %

Operating expenses:

Selling, general and administrative
23,194 55.3 % 7,207 48.7 % 13,455 — % 43,856 77.3 %
Depreciation and amortization
3,387 8.1 % 1,250 8.4 % 31 — % 4,668 8.2 %
Research and development
— — % 2 — % — — % 2 — %
Provision for (Recovery of) bad debt
93 — % (28 ) (0.2 )% — — % 65 0.1 %
Other operating expenses
(15 ) — % — — % — — % (15 ) — %
Total operating expenses
26,659 63.6 % 8,431 56.9 % 13,486 — % 48,576 85.6 %
Loss from operations
$ (29,789 ) (71.1 )% $ (4,067 ) (27.4 )% $ (13,402 ) — % $ (47,258 ) (83.3 )%
~~For the Nine Months Ended September 30, 2020:~~
(dollars in thousands)

Electric Power and Solar Infrastructure Services

Percent of Segment Revenues

Integrated Energy Infrastructure Solutions and Services

Percent of Segment Revenues

Other

Percent of Segment Revenues

Total

Percent of Total Revenues

$

%

$

%

$

%

$

%

Revenues
$ 13,904 100.0 % $ 13,174 100.0 % $ — — % $ 27,078 100.0 %
Cost of revenue
14,132 101.6 % 8,989 68.2 % — — % 23,121 85.4 %
Gross profit (loss)
(228 ) (1.6 )% 4,185 31.8 % — — % 3,957 14.6 %

Operating expenses:

Selling, general and administrative
4,895 35.2 % 8,294 63.0 % 7,969 — % 21,158 78.1 %
Depreciation and amortization
2,147 15.4 % 1,108 8.4 % 30 — % 3,285 12.1 %
Research and development
— — % 51 0.4 % — — % 51 0.2 %
Provision for bad debt
— — % 23 0.2 % — — % 23 0.1 %
Other operating expenses
23 0.2 % — — % — — % 23 0.1 %
Total operating expenses
7,065 50.8 % 9,476 72.0 % 7,999 — % 24,540 90.6 %
Loss from operations
$ (7,293 ) (52.4 )% $ (5,291 ) (40.2 )% $ (7,999 ) — % $ (20,583 ) (76.0 )%
(dollars in thousands)

Electric Power

Percent of Segment Revenues
Telecommunications
Percent of Segment Revenues

Renewables

Percent of Segment Revenues

Other

Percent of Segment Revenues

Total

Percent of Total Revenues

$

%

$

%

$

%

$

%

$

%

Revenues
$ 20,297 100.0 % $ 14,816 100.0 % $ 6,789 100.0 % $ — — % $ 41,902 100.0 %
Loss from operations
$ (11,461 ) (56.5 )% $ (1,185 ) (8.0 )% $ (17,178 ) (253.0 )% $ (14,243 ) — % $ (44,067 ) (105.2 )%

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Table of Contents

Revenue
~~(dollars in thousands)~~

For the Three Months Ended

Revenues by Segment

September 30,

2021

2020

$ Change

% Change

Electric Power and Solar Infrastructure Services
$ 24,822 $ 9,478 $ 15,344 161.9 %
Integrated Energy Infrastructure Solutions and Services
6,097 4,137 1,960 47.4 %
Total revenues
$ 30,919 $ 13,615 $ 17,304 127.1 %

For the Nine Months Ended

Revenues by Segment

September 30,

2021

2020

$ Change

% Change

Electric Power and Solar Infrastructure Services
$ 41,902 $ 13,904 $ 27,998 201.4 %
Integrated Energy Infrastructure Solutions and Services
14,816 13,174 1,642 12.5 %
Total revenues
$ 56,718 $ 27,078 $ 29,640 109.5 %
The revenues for the three and nine months ended September 30, ~~2021~~2022, increased compared to the ~~2020~~2021 comparable ~~period~~periods primarily due to the additions of
~~Orbital Telecom Services~~the Telecommunications segment following the acquisitions of GTS in Q2 ~~and~~2021, IMMCO in Q3 2021, Full Moon in Q4 2021 and ~~Orbital Solar Services~~Coax Fiber Solutions, LLC in ~~Q2 2020 as well as~~Q1 2022 along with the ~~ramp up~~acquisition of Front Line Power Construction, LLC, included in the Company's Electric Power segment, added in Q4 2021. In addition, Orbital Power ~~Services operations including a significant amount of storm-related work in the quarter~~Inc. in the Electric Power ~~and Solar Infrastructure Services segment. In addition, the Integrated Energy Infrastructure Solutions and Services~~ segment ~~increased~~has continued to ramp up operations in 2022. Renewables had significantly higher revenues in the three months ended September 30, 2022, on the strength of several large projects compared to the three months ended September 30, 2021, ~~due to significantly higher revenue in our U.K. operations~~which was affected by supply chain issues and ~~slightly higher revenue in~~a general slow-down caused by the ~~North American operations.~~
COVID-19 epidemic.

The U.K. operations saw a rebound following a 2020 year slowed by Covid and Brexit. The U.S. markets continues to face headwinds surrounding COVID-19. Revenues will fluctuate generally around the timing of customer project delivery schedules.
The Electric Power ~~and Solar Infrastructure Services~~ Segment held backlogs of customer orders of approximately ~~$399.9~~$226.8 million as of September 30, ~~2021~~2022, and ~~$30.3~~$207.7 million at December 31, ~~2020.~~2021. The increase in backlog is generally due to timing of master service agreement renewals. The Telecommunications segment held backlogs of customer orders of approximately $209.2 million as of September 30, 2022, compared to a backlog of $194.5 million at December 31, 2021. Increases to the backlog are due to the ~~acquisitions and~~continuous growth of ~~Orbital Telecom, the ramp up~~Gibson Technical Services. The Renewables segment had a backlog of the Orbital Power Services operations and an improved Orbital Solar Services backlog compared to December 31, 2020. The Integrated Energy Infrastructure Solutions and Services segment held backlogs of customer orders of approximately $10.7$36.3 million as of September 30, ~~2021, an increase from the~~2022 compared to $121.4 million as of December 31, ~~2020 backlog of $10.1 million~~2021 which is due to ~~the improvement~~further work being completed and revenue being recognized in the ~~business climate in both the U.S. and U.K. markets.~~quarter on projects that make up this backlog. Of the September 30, ~~2021~~2022, backlog totals, the amounts expected to be recognized in the twelve ~~and eighteen~~ months following Q3 ~~were~~2022 are approximately ~~$191.5 million and $270.4 million, respectively.~~$265.9 million. The amounts expected to be recognized in the twelve ~~and eighteen~~ months following Q3 ~~consisted~~2022 consist of ~~$180.7~~$150.1 million ~~and $259.7 million, respectively,~~ from the Electric Power ~~and Solar Infrastructure Services~~segment, $79.5 million from the Telecommunications segment and ~~$10.7~~$36.3 million ~~and 10.7 million, respectively,~~ from the ~~Integrated Energy Infrastructure Solutions and Services~~Renewables segment.

Cost of revenues
~~(dollars in thousands)~~

For the Three Months Ended

Cost of revenues by Segment

September 30,

2021

2020

$ Change

% Change

Electric Power and Solar Infrastructure Services
$ 22,561 $ 8,353 $ 14,208 170.1 %
Integrated Energy Infrastructure Solutions and Services
4,608 2,908 1,700 58.5 %
Other
(38 ) — (38 ) (100.0 )%
Total cost of revenues
$ 27,131 $ 11,261 $ 15,870 140.9 %

For the Nine Months Ended

Cost of revenues by Segment

September 30,

2021

2020

$ Change

% Change

Electric Power and Solar Infrastructure Services
$ 45,032 $ 14,132 $ 30,900 218.7 %
Integrated Energy Infrastructure Solutions and Services
10,452 8,989 1,463 16.3 %
Other
(84 ) — (84 ) (100.0 )%
Total cost of revenues
$ 55,400 $ 23,121 $ 32,279 139.6 %
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~~Table of Contents~~
For the three ~~and nine~~ months ended September 30, ~~2021,~~2022, the cost of revenues as a percentage of revenue increased to ~~88% and 98% respectively~~105.9% from ~~83% and 85%, respectively~~90.7% from the prior-year period primarily due to the significant cost overruns at the Black Bear solar project in the Renewables segment in the quarter. For the nine months ended September 30, 2022, the cost of revenues as a percentage of revenue decreased to 94.1% from 107.4% from the prior-year period. This ~~increase~~decrease was primarily in the Electric Power ~~and Solar Infrastructure Services~~ segment and was attributable to ramp-up of revenues in the segment both organically and the addition of Front Line Power Construction and was partially offset by lower margins in the Renewables segment due to cost overruns in the Black Bear solar project. The Black Bear project had negative gross margins of $18.8 million and $22.2 million for the three and nine months ended September 30, 2022. At September 30, 2022, the Company had a loss provision of $3.8 million for estimated future losses on the Black Bear contract. Margin percentages will vary based upon the mix of projects including emergency response services, new crew onboarding costs, and the competitive markets in which the Company competes.
The three and nine months ended September 30, 2021 were affected by start-up costs at the Company's Orbital Power Services group, ~~and~~ lower margin projects during the period for Orbital Solar ~~Services.~~Services and was also affected negatively by the COVID-19 pandemic and the resulting world-wide economic slowdown. Ramp-up costs ~~have~~ included onboarding personnel, equipment and supplies in advance of projected work in order to obtain the necessary resources in a competitive market as ~~we prepare~~the Company prepared for forward demand expectations. Additionally, adverse weather negatively impacted several ~~of Orbital~~Electric Power ~~Services'~~ fixed price jobs in the first quarter of 2021, which are now complete. Margin percentages will vary based upon the mix of natural gas systems sold, proprietary technology included in projects, contract labor necessary to complete gas related projects, mix of Orbital Power Services projects including emergency response services, new crew onboarding costs, Orbital Solar Services solar projects, the competitive markets in which the Company competes, and foreign exchange rates.
~~The three and~~ nine months ended September 30, 2020 were affected by start-up costs at the Company's Orbital Power Services group, lower margin projects during the period for Orbital Solar Service and was also affected negatively by the COVID-19 pandemic and the resulting world-wide economic slowdown.of 2021.

The Company expects continued improvement in margins during the remainder of ~~2021~~2022 as ~~Orbital~~the Electric Power ~~Services~~segment continues to gain efficiencies and increase revenues, ~~Orbital Telecom Services~~and the Telecommunications segment sees continued synergistic benefits from the acquisitions of GTS, IMMCO, Full Moon, and ~~IMMCO, as companies continue to learn to cope with the COVID-19 pandemic, and several large Orbital Solar Services solar projects begin.~~ Coax Fiber Solutions.

Selling, General and Administrative Expenses
~~(dollars in thousands)~~

For the Three Months Ended

Selling, general, and administrative expense by Segment

September 30,

2021

2020

$ Change

% Change

Electric Power and Solar Infrastructure Services
$ 7,338 $ 2,252 $ 5,086 225.8 %
Integrated Energy Infrastructure Solutions and Services
2,259 2,663 (404 ) (15.2 )%
Other
4,104 2,264 1,840 81.3 %
Total selling, general and administrative expense
$ 13,701 $ 7,179 $ 6,522 90.8 %

For the Nine Months Ended

Selling, general, and administrative expense by Segment

September 30,

2021

2020

$ Change

% Change

Electric Power and Solar Infrastructure Services
$ 23,194 $ 4,895 $ 18,299 373.8 %
Integrated Energy Infrastructure Solutions and Services
7,207 8,294 (1,087 ) (13.1 )%
Other
13,455 7,969 5,486 68.8 %
Total selling, general and administrative expense
$ 43,856 $ 21,158 $ 22,698 107.3 %
Selling, General and Administrative (SG&A) expenses include such items as wages, commissions, consulting, general office expenses, business promotion expenses and costs of being a public company, including legal and accounting fees, insurance and investor relations. SG&A expenses are generally associated with the ongoing activities to reach new customers, promote new product and service lines including ~~Orbital Gas Systems, Orbital~~for the Electric Power ~~Services, Orbital Solar Services, Orbital Telecom Services~~segment, Renewables segment, and ~~other new product and service introductions.~~Telecommunications segments.

During the three months ended September 30, 2022, SG&A increased $1.0 million compared to the three months ended September 30, 2021, primarily due to organic growth and the Company's 2021 and 2022 acquisitions. In the nine months ended September 30, 2022 SG&A decreased $3.7 million compared to the prior-year comparative periods. The decrease in SG&A for the nine month period was primarily due to decreased SG&A costs in the Renewables segment due to the $5.2 million restricted stock forfeiture related to a Renewables' Executive termination in Q1 2022 and higher stock-based compensation in the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2022 due to the restricted stock vesting expense recorded in 2021 on the restricted stock that was subsequently forfeited in the first quarter of 2022. Also contributing to the decreased SG&A was lower executive bonuses in Q1 2022 and a $0.3 million positive cash settled SARS mark-to-market fair value adjustment in 2022 compared to a $2.5 million mark-to-market expense in the nine months ended September 30, 2021. These decreases were partially offset by increases in SG&A in the Electric Power and Telecommunications segments primarily due to organic growth and the Company's 2021 and 2022 acquisitions.
Impairments of goodwill and intangible assets
The Company recorded $100.3 million of impairments of goodwill and intangible assets in the three and nine months ended September 30, ~~2021, SG&A increased $6.5 million~~2022 due to an additional 25-percent drop in the Company's stock price between June 30, 2022 and ~~$22.7 million, respectively, compared~~September 30, 2022, that caused an overall further decrease in the Company's market capitalization. Additional triggering events included the significant loss in the Renewables segment in the third quarter of 2022, interest rate increases and limitations on accessing capital, which raised substantial doubt regarding the Company’s ability to continue as a going concern. See Note 1 for more information on goodwill and goodwill impairments.
Restructuring Costs
In September 2022, the Company fully impaired its finance lease equipment related to the ~~prior-year comparative periods. The increase in SG&A for the quarter and year-to-date periods were due to increased SG&A costs~~Eclipse Foundation Group in the Electric Power segment, which was integrated by Front Line Power. These pieces of equipment are drilling specific and ~~Solar Infrastructure Services segment primarily due~~at this time, the Company does not plan to ramp-up costs at Orbital Power Services group, which included increased payroll and insurance costs and start-up costs at Eclipse Foundation Group, as well as $1.4 million and $8.0 million of employee stock-based compensation vesting expense,use the equipment for the three and nine month periods, respectively.  The addition of GTS in April 2021, IMMCO in July 2021, and Orbital Solar Services in April 2020 compared to the first nine months of 2020, which only included Orbital Solar Services for sixremaining term of the ~~nine months ended September 30, 2020, also contributed~~leases. As these leases are non-cancelable and do not include a sub-leasing option, the full finance lease assets related to Eclipse have been removed from the ~~increase in SG&A costs. Also contributing to the increase were increased corporate costs~~balance sheet and an equal impairment has been recognized in the ~~Other segment due~~amount of $4.5 million. Future payments related to ~~a $2.4~~these leases will be approximately $5.2 million ~~increase in the mark to market adjustment to the executive cash-based stock appreciation rights and $0.8 million increase in employee performance bonuses~~ paid ~~year to date. These increases were partially offset by decreased SG&A costs in the Integrated Energy Infrastructure Solutions and Services segment due to cost saving measures.~~through June 2026.

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Depreciation and Amortization
(dollars in thousands)

For the Three Months Ended

For the Three Months Ended

Depreciation and amortization expense by Segment

September 30,

September 30,

2021

2020

$ Change

% Change

2022

2021

$ Change

% Change

Electric Power and Solar Infrastructure Services
$ 2,483 $ 1,197 $ 1,286 107.4 %
Integrated Energy Infrastructure Solutions and Services
404 373 31 8.3 %
Electric Power
$ 6,975 $ 1,095 $ 5,880 537.0 %
Telecommunications
1,315 774 541 69.9 %
Renewables
608 614 (6 ) (1.0 )%
Other
12 11 1 9.1 % 16 416 (400 ) (96.2 )%
Total depreciation and amortization
$ 2,899 $ 1,581 $ 1,318 83.4 % $ 8,914 $ 2,899 $ 6,015 207.5 %

For the Nine Months Ended

For the Nine Months Ended

Depreciation and amortization by Segment

September 30,

September 30,

2021

2020

$ Change

% Change

2022

2021

$ Change

% Change

Electric Power and Solar Infrastructure Services
$ 5,653 $ 2,477 $ 3,176 128.2 %
Integrated Energy Infrastructure Solutions and Services
1,249 1,109 140 12.6 %
Electric Power
$ 21,445 $ 1,944 $ 19,501 1003.1 %
Telecommunications
3,582 1,389 2,193 157.9 %
Renewables
1,825 2,319 (494 ) (21.3 )%
Other
31 30 1 3.3 % 47 1,281 (1,234 ) (96.3 )%
Total depreciation and amortization
$ 6,933 $ 3,616 $ 3,317 91.7 % $ 26,899 $ 6,933 $ 19,966 288.0 %

Depreciation and amortization expenses are associated with depreciation on ~~buildings,~~leasehold improvements, furniture, equipment, vehicles, and amortization of intangible assets over the estimated useful lives of the related assets.

Depreciation and amortization expense in the three and nine months ended September 30, ~~2021~~2022, were up compared to the three and nine months ended September 30, ~~2020~~2021, primarily due to additional amortization in the Electric Power and ~~Solar Infrastructure Services segment including Orbital Solar Services and GTS and IMMCO~~Telecommunication segments from acquisition intangibles that were acquired in the second, third and fourth quarter of ~~2020 and~~ 2021 and depreciation of equipment used by Orbital Power Services which ~~has~~had been ramping up their capital expenditures as more crews ~~are~~were added.
~~Equity Method/Cost Method Investment~~
The Company owns a cost-basis investment in VPS with a book value at September 30, 2021 of $1.1 million. Through June 30, 2020, the Company accounted for its investment in VPS under the equity method of accounting and accordingly recorded income or loss of affiliate based on the equity method of accounting. The Company recorded losses in the three and nine months ended September 30, 2020 of zero and $4.8 million, respectively, related to its share of VPS's loss. Due to additional outside investments into VPS during the third quarter of 2020, which diluted OEG's ownership percentage coupled with increased board seats reducing OEG's board influence, the Company's management determined that it no longer met the qualification of having significant influence necessary to record its investment under the equity method of accounting. Following this change, the Company has recorded its investment under the cost method of accounting. There were no changes in the basis in the Company's investment in the three and nine months ended September 30, 2021.

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~~Other Income (Expense), net~~Gain (loss) on Extinguishment of debt
~~(dollars~~Loss on extinguishment of debt in ~~thousands)~~the three and nine months ended September 30, 2022, was $1.1 million and $29.4 million, respectively. The loss included $26.2 million related to loan modifications on the Company's seller financed debt with the sellers of Front Line Power Construction recorded in the first two quarters of the year and approximately $1.1 million and 2.7 million loss on extinguishment in the three and nine months ended September 30, 2022, related to the payment of certain loans with stock-based payments for which the stock was issued at a discount to the stock's fair value. The loss on extinguishment on the seller financed debt was primarily related to financial instruments included in the first quarter 2022 loan modification. The loss on extinguishment also included $0.5 million from the paydown of two non-recourse agreements with C6 in the second quarter of 2022.

For the Three Months Ended

Other Income (Expense), net

September 30,

2021

2020

$ Change

% Change

Foreign exchange gain (loss)
$ (395 ) $ 707 $ (1,102 ) (155.9 )%
Interest income
82 75 7 9.3 %
Rental income
129 78 51 65.4 %
Gain on extinguishment of debt
722 — 722 100.0 %
Other income
216 — 216 100.0 %
Total Other income (expense)
$ 754 $ 860 $ (106 ) (12.3 )%

For the Nine Months Ended

Other Income (Expense), net

September 30,

2021

2020

$ Change

% Change

Foreign exchange gain (loss)
$ (265 ) $ (410 ) $ 145 (35.4 )%
Interest income
245 218 27 12.4 %
Rental income
372 254 118 46.5 %
Gain on extinguishment of debt
2,412 — 2,412 100.0 %
Other income
245 — 245 100.0 %
Total Other income (expense)
$ 3,009 $ 62 $ 2,947 4753.2 %
~~Other income (expense) changes were primarily the result of gains~~Gain on extinguishment of debt in the three and nine months ended September 30, 2021 of $0.7 million and ~~$2.4~~$1.6 million ~~respectively,~~was due to the forgiveness by the U.S. government of certain payroll protection loans ~~and certain exchange agreements that Company entered into~~ in the ~~third quarter of 2021. For the nine month period, the gain on extinguishment was~~three months ended September 30, 2021, partially offset by the loss on the extinguishment of debt due to the amendment to remove the convertible equity feature of its convertible debt and the earlier paydown of two non-recourse agreements with C6 during the nine months ended September 30, ~~2021 compared~~2021.
Loss on financial instruments
Loss on financial instruments Include mark to ~~the nine months ended September 30, 2020. Foreign currency gain/loss fluctuations~~market adjustment on financial instrument related to Syndicated debt in the ~~three and nine-month periods principally~~amount of $4.4 million, $13.3 million related to the ~~fluctuation~~financial instrument embedded in the ~~U.K. pound~~Front Line seller notes and $0.2 million related to the Company's prepaid advance agreement. See Note 12 for more information on these financial instruments.
Other Income (Expense), net
(dollars in ~~both 2020~~thousands)

For the Three Months Ended

Other Income (Expense), net

September 30,

2022

2021

$ Change

% Change

Foreign exchange gain (loss)
$ 34 $ (380 ) $ 414 (108.9 )%
Interest income
20 82 (62 ) (75.6 )%
Rental income
129 129 — 0.0 %
Liquidated damages on debt
(1,194 ) — (1,194 ) 100.0 %
Other, net
(117 ) (34 ) (83 ) 244.1 %
Total Other income (expense)
$ (1,128 ) $ (203 ) $ (925 ) 455.7 %

For the Nine Months Ended

Other Income (Expense), net

September 30,

2022

2021

$ Change

% Change

Foreign exchange loss
$ (7 ) $ (241 ) $ 234 (97.1 )%
Interest income
118 245 (127 ) (51.8 )%
Rental income
488 372 116 31.2 %
Liquidated damages on debt
(2,271 ) — (2,271 ) 100.0 %
Other, net
(162 ) (6 ) (156 ) 2600.0 %
Total Other income (expense)
$ (1,834 ) $ 370 $ (2,204 ) (595.7 )%
Other income (expense) changes contributing to increased expenses were liquidated damages incurred on the Company's investor held debt and less favorable foreign currency affects in 2022 compared to 2021. Losses were offset by greater rental income in the year-to-date period.

Interest Expense
For the three and nine months ended September 30, ~~2021,~~2022, the Company incurred interest expense of ~~$1.3~~$9.7 million and ~~$3.1~~$27.6 million, respectively, compared to interest for the three and nine months ended September 30, ~~2020~~2021, of ~~$0.3~~$1.3 million and ~~$0.5~~$3.1 million, respectively. The increase in interest expense in ~~2021~~2022 is related to the increase in notes payable outstanding in the three and nine months ended September 30, ~~2021~~2022, compared to the three and nine months ended September 30, ~~2020. See note 16 for more information~~2021, primarily related to the Front Line Power Construction acquisition. Also contributing to the increase is the increase in the variable rate on the Company's ~~notes payable.~~$104.5 million Syndicated debt that increased from 13.50% at inception to 15.45% at September 30, 2022.

Income Tax Expense ~~(Benefit)~~
The Company is subject to taxation in the U.S., various state and foreign jurisdictions. The Company continues to record a full valuation allowance against the Company's U.S. ~~and United Kingdom~~ net deferred tax assets and partial valuation allowance against the Company’s Canada net deferred tax assets, as it is not more likely than not that the Company will realize a benefit from these assets in a future period.

In the three months ended September 30, 2021, as a result of the assets acquired and liabilities assumed related to the acquisition of IMMCO, the Company recorded a $2.5 million deferred tax liability. As a result, the Company recorded a $2.5 million tax benefit for a reduction in prior recorded valuation allowances.
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In the three months ended June 30, 2021, as a result of the assets acquired and liabilities assumed related to the acquisition of GTS, the Company recorded a $9.0 million deferred tax liability. As a result, the Company recorded a $9.0 million tax benefit for a reduction in prior recorded valuation allowances.
In the three months ended June 30, 2020, as a result of the assets acquired and liabilities assumed related to the acquisition of Reach Construction, LLC, the Company recorded a $1.6 million deferred tax liability. As a result, the Company recorded a $1.6 million tax benefit for a reduction in prior recorded valuation allowances.
For the three and nine months ended September 30, 2020, the Company is allocating income tax expense (benefit) in accordance to ASC 740-20-45-7 to more than one financial statement component other than continuing operations. Prior period comparative allocations have also been made.
In the nine months ended September 30, 2020, as a result of HM Revenue & Customs review, the Company recorded a $1.6 million tax benefit for estimated prior year taxes related to refunds for the surrender for cash, United Kingdom net operating losses generated related to enhanced research and development deduction claims.

For additional analysis, see Note 14, "Income Taxes," of the condensed consolidated financial statements in Part I - Item I, "Financial Statements."

~~Restructuring Charges~~
During the fourth quarter of 2019, the Company completed the sale of its largest group within the Power and Electromechanical segment. The Company completed the sale of its Japan operations as of September 30, 2020 and completed the disposal of Canada's assets in the fourth quarter of 2020. The Company recorded an accrued liability of $4.0 million Canadian dollars ($3.1 million US dollars at December 31, 2019) for estimated employee termination costs. This accrual was adjusted down by $0.3 million Canadian dollars ($0.2 million US dollars) in 2020 based on updated estimates. The termination costs began to be paid out in the third quarter of 2020 and the majority of the remaining accrual was paid in the fourth quarter of 2020. The Company paid out an additional $0.3 million of termination benefits in the first nine months of 2021 and expect to pay the remaining $28 thousand during the remainder of 2021. For more information on the Company's restructuring charges, see Note 1 Nature of Operations, Basis of Presentation and Company Conditions under the Restructuring Charges subheading.
46

~~Table of Contents~~
Liquidity and Capital Resources
Company Conditions and Sources of Liquidity
The Company has experienced net losses, cash outflows from cash used in operating activities and a decline in share value over the past years. As of and for the nine months ended September 30, 2022, the Company had an accumulated deficit of $421.4 million, loss from continuing operations of $208.3 million, and net cash used in operating activities of $13.4 million. Further, as of September 30, 2022, the Company had a working capital deficit of $118.7 million, including current maturities of debt, and cash and cash equivalents of $28.0 million available for working capital needs and planned capital asset expenditures. As a result of the foregoing, the Company does not have sufficient liquidity and capital resources to meet its obligations and fund its operations for the twelve months following the issuance of these financial statements. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern.
The Company has plans to access additional capital to meet its obligations for the twelve months from the date these financial statements are available to be issued. Historically, the Company has raised additional equity and debt financing to fund its expansion; refer to Note 16 — Notes Payable and Line of Credit. The Company has also funded some of its capital expenditures through long-term financing with lenders and other investors as also described in further detail in Note 16 — Notes Payable and Line of Credit. Our ability to raise the additional capital is dependent on a number of factors, including, but not limited to, the market demand for our common stock, which itself is subject to a number of business risks and uncertainties, our creditworthiness and the uncertainty that we would be able to raise such additional capital at a price that is favorable to us. As of September 30, 2022, the Company has an effective S-3 shelf registration statement for the issuance of various types of securities, including common stock, preferred stock, debt securities and/or warrants in the aggregate of up to $68.8 million. In addition, although no formal agreements exist, the company has solicited interest from various lenders to potentially raise additional term debt to restructure or refinance its existing notes.
The Company plans to meet its obligations as they become due over the next twelve months by raising additional capital through equity and debt financing sources and forecasted positive cash flows generated from operations. There can be no assurance that the Company will succeed in executing these plans. If unsuccessful, the Company will not have sufficient liquidity and capital resources to repay its indebtedness when it matures, or otherwise meet its cash requirements over the next twelve months, as noted above.

General
As of September 30, ~~2021,~~2022, the Company held cash and cash equivalents of ~~$11.2~~$28.0 million and restricted cash of ~~$1.2~~$0.6 million. Operations, investments, and equipment have been funded through cash on hand, the issuance of common stock authorized by its July 2020 and February 2021 S-3 filings, seller financing, and the issuance of debt and financing through the sale of future revenues. The Company filed an S-3 in February of 2021 which became effective in April 2021 for the issuance of additional stock or public debt. In ~~July, 2021,~~April 2022, the Company issued ~~10,410,959~~9,000,000 shares of common stock ~~at $3.65 a share~~and pre-funded warrants to purchase up to 7,153,847 shares of Common Stock for a total raise of ~~$38.0~~$21.0 million before expenses. In August of 2021, the Company opened a $4.0 million dollar line of credit to support additional funding. ~~The Company's cash used in operations was more in the first nine months of 2021 than in the first nine months of 2020 primarily driven by a larger net loss.~~ Major uses of cash in the first nine months of ~~2021~~2022 included the ~~acquisitions of Gibson Technical Services and IMMCO Inc.,~~ purchases of property and equipment, ~~completion of the purchase of the VE~~ ~~Technology~~debt payments and changes in working capital. The Company continues to work to improve its short-term liquidity through management of its working capital. Long-term liquidity is expected to benefit from revenue growth and earnings through its existing operations. Overall volume growth in the Company's businesses both organically and through acquisitions are expected to benefit cash flows as well.

Cash Used in Operations
Cash used in operations of ~~$36.8~~$13.4 million was a ~~$26.9~~$23.5 million ~~increase~~decrease in cash used compared to the nine-month period in 2020. Cash used in operations for the nine months ended September 30, 2021 were approximately $14.5 million in the other segment, $19.3 million in the Electric Power and Solar Infrastructure Services segment, $3.0 millionin the Integrated Energy Infrastructure Solutions and Services segment. Included in the Other segment is a $0.3 million source of cash related to the former discontinued operations of the Power and Electromechanical segment, which was primarily the collection of trade accounts receivable. This compares to prior year nine-month-period cash used of approximately $7.7 million used in the Other segment, $2.9 million used for the Electric Power and Solar Infrastructure Services segment $1.2 million used by the Integrated Energy Infrastructure Solutions and Services segment and $1.9 million provided by discontinued Power and Electromechanical segment.2021.

~~Increased~~The decrease in uses of cash in the first nine months of ~~2021~~2022 are primarily ~~for~~related to higher merger and acquisition costs ~~associated with mergers and acquisitions~~ in the ~~Electric Power~~first quarter of 2021 as compared to 2022 along with company growth in 2022. Due to the large increase in revenue and ~~Solar Infrastructure Services segment in addition~~associated costs both through acquisitions and organic growth, the Company was better able to ~~normal administrative~~cover it's fixed costs, ~~ramp-up~~but increased interest costs partially offset the benefits of much greater sales. Also, with the growth of the company's revenue comes increased accounts receivables and accounts payable, which outside of timing, generally have offsetting cash flow effects. In the short-term, rapid growth can have a detrimental effect on cash flows as sales on account with positive gross margins waiting to be collected exceed accounts payable not yet paid. As the Company's Orbital Power Services group, and cash used by Orbital Solar Services operations. The Company believes that revenue generated by recent Orbital Telecom Services acquisitions Gibson Technical Services and IMMCO, Inc. will improve cash flow from operating activities. While the Company saw an initial cost increase from Orbital Power Services, management expects these groupsgrowth begins to ~~become cash flow positive, as the business environment normalizes and the Company continues to increase revenue-generating service crews deployed. The Company believes~~moderate, overall cash used in operations will continue to improve through revenue growth associated with new customers and larger projects, the additional cash expected from operations of Orbital Solar Services when it begins work on contracts with solar developers including performing as company "of choice" for the recently-formed Black Sunrise Century Fund, which over the next three years is expected to build over 1 gigawatt of solar power.
projects. The change in cash used in operating activities since December 31, 2021, exclusive of net loss, is primarily the result of the following line items: payment towards accounts payable increased cash used in operating activities by $2.5 million, increased cash used for right of use assets, which are partially offset by increased lease liabilities related to the ramp up of the Orbital Power Services group. Timing of cash ~~receipts~~payments on ~~trade~~ accounts ~~receivable~~payable and accrued liabilities was a ~~$5.2~~combined $36.9 million increase in cash ~~used in~~provided by operating activities related to ~~build up of accounts receivable at Orbital Gas Systems, Orbital Power Services partially offset by sources of cash~~larger projects at Orbital Solar ~~Services, Orbital Telecom Services and receipts of final sales at CUI-Canada.~~Services. Changes in ~~prepaid expenses~~cost in excess of ~~$1.4 million~~billing and accounts receivable from December 31, 2021, was a ~~source~~combined $14.5 million use of cash for the period and ~~were due to timing of payments primarily related to changes~~reflects the greater revenue volumes in ~~prepaid expenses at Orbital Gas Systems, Orbital Power Services, and the Other segment.~~
During the nine months ended September 30, 2021 and 2020, the Company recorded a total of $9.8 million and $12 thousand, respectively, for share-based compensation related to equity given, or to be given to directors, employees and consultants for services provided and as payment for royalties earned. The increase in expense during the first nine months of ~~2021~~2022 compared to the first nine months of 2020 is primarily due to employee stock-based bonuses and increased director stock-based compensation in 2021 compared to director stock-based compensation in the nine months of 2020 when director compensation was being accrued as cash compensation while the structure of their compensation was being evaluated. During the nine months ended the Company recorded $11.2 million of non-cash deferred tax benefits as a result of the acquisition of GTS and IMMCO, which allowed the Company to utilize deferred tax assets that had been fully reserved. Also during the nine months ended September 30, 2021, the Company recorded fair value adjustments of $2.5 million on unsettled stock appreciation rights held by corporate officers that will be settled in cash at a future date. 2021.

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S-3 registration
The Company filed an S-3 registration statement on July 17, 2020, containing a prospectus that was effective in September 2020. The Company utilized this filing in January 2021 to issue common stock for $45 million before costs. The Company filed a new S-3 shelf registration in January 2021, which, as amended, became effective in April 2021. With this filing, Orbital ~~Energy~~Infrastructure Group may from time-to-time issue various types of securities, including common stock, preferred stock, debt securities and/or warrants, up to an aggregate amount of $150 million. The Company utilized this S-3 registration to issue additional common stock in July 2021 for $38 million before expenses. In May 2022, the Company utilized the S-3 to issue shares and prefunded warrants for $21.0 million and additional warrants with a cumulative exercise value of $21.2 million. The Company has approximately $68.8 million remaining available to issue additional securities from its shelf registration.

As the Company focuses on growing its infrastructure services market presence both organically and through strategic acquisitions, technology development, product and service line additions, and increasing Orbital’s market presence, it will fund these activities together with related operating, sales and marketing efforts for its various product and service offerings with cash on hand, and possible proceeds from future issuances of equity through the S-3 registration statement, and available debt.

Orbital ~~Energy~~Infrastructure Group may raise additional capital needed to fund the further development and marketing of its products and services as well as payment of its debt obligations.

See the section entitled Recent Sales of Unregistered Securities for a complete listing of all unregistered securities transactions.

Capital Expenditures and Investments
During the first nine months of 2022 and 2021, ~~and 2020,~~ Orbital ~~Energy~~Infrastructure Group invested ~~$6.6~~$3.7 million and ~~$1.5~~$6.6 million, respectively, in property and equipment. ~~These purchases in 2021 were primarily for capital assets associated with the Company's Orbital Power Services and Orbital Telecom Services.~~ These investments typically include additions to equipment including vehicles and equipment for powerline service and maintenance, engineering, furniture, computer equipment for office personnel, facilities improvements and other fixed assets as needed for operations. In addition, during the nine months ended September 30, ~~2021 and 2020,~~2022, the Company ~~paid cash for acquisitions, net~~had collections from a notes receivable of ~~cash received of $36.9~~$3.5 million and $3.0 million respectively. The Company anticipates further investment in fixed assets and acquisitions during 2021 in support of its on-going business and continued development of its infrastructure services operations. The Company entered into a $3 million note receivable with Orbital Solar Services during the three months ended March 31, 2020 priorrelated to the ~~April 1 acquisition. This payment became part~~sale of the Company's ~~purchase consideration upon the close of the acquisition.~~electromechanical business in 2019.

Financing Activities
To date in 2021, the Company issued a total of 26.0 million shares of common stock in three separate equity raises with a face amount of $83.0 million for which the Company netted $78.0 million after expenses. For the nine months ended September 30, 2021, the Company received cash proceeds of $19.4 million for the issuance of debt with a face value of $23.4 million and a weighted average stated interest rate of 8.5% and a weighted average estimated effective rate of 18.3%. In the nine months ended September 30, ~~2021 and 2020~~2022, the Company made cash payments on notes payable of $35.5 million and had proceeds from notes payable of $41.2 million, respectively. This compared to $19.4 million of proceeds from notes payable and $7.5 million of payments on notes payable in the nine months ended September 30, 2021. The Company also received $3.5 million in proceeds from their line of credit and ~~$1.7 million, respectively, including~~made $2.0 million in ~~2021 toward the seller notes payable related~~payments on this line of credit in 2022 compared to the April 2020 acquisition of Orbital Solar Services. The Company also implemented several exchange agreements whereby shares of common stock were exchanged for additional debt reduction. The Company recorded a $0.7 million extinguishment of debt of the Reach Construction seller note due to the Company making an early cash payment in exchange for a portion of the loan being forgiven and a portion being paid by the Company with shares of its common stock.  See Note 16 for more information on the Company's notes payable. In addition, the Company paid $0.4 million paid in the ~~three~~first nine months ~~ended March 31,~~of 2021 to close its line of credit that was acquired with the Orbital Solar Services business. In the nine months ended September 30, 2022, and 2021 the Company recorded payments on finance lease obligations of $3.8 million and $0.9 million dollars, respectively.

Recap of Liquidity and Capital Resources
At September 30, ~~2021,~~2022, the Company had unrestricted cash and cash equivalents balances of ~~$11.2 million.~~$28.0 million of which $2.5 million is covered by insured deposit programs. At September 30, ~~2021~~2022, the Company had ~~$1.8~~$0.6 million of restricted cash and cash equivalents balances at domestic financial institutions including $0.4 million that ~~were~~is covered under the FDIC insured deposits programs and $0.1 million and $72 thousand, at foreign financial institutions covered under the United Kingdom Financial Services Compensation (FSC) and Canada Deposit Insurance Corporation (CDIC), respectively. At September 30, 2021, the Company had cash and cash equivalents of $1.0 million in European bank accounts and $72 thousand in Canadian bank accounts.programs.

The Company had a net loss of ~~$36.3~~$210.8 million and cash used in operating activities of ~~$36.8~~$13.4 million during the nine months ended September 30, ~~2021.~~2022. As of September 30, ~~2021,~~2022, the Company's accumulated deficit ~~is $186.0~~was $421.4 million.

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The Company expects the revenues from its continuing operations, and cash on hand, to cover operating and other expenses for the next twelve months of operations. However, in the short-term, the Company expects to continue to need cash support as the Company's businesses increase their market positions and revenue. The Company may issue additional debt or equity to support continuing operations and acquisition efforts in the remaining months of ~~2021.~~2022.

Critical Accounting Policies

The Company has adopted various accounting policies to prepare the consolidated financial statements in accordance with Generally Accepted Accounting ~~Principals,~~Principles, ("GAAP"). Certain of the Company's accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. In the Company's ~~2020~~2021 Annual Report on Form 10-K filed on March ~~30, 2021,~~31, 2022, the Company identified the critical accounting policies that affect the Company's more significant estimates and assumptions used in preparing the Company's consolidated financial statements.
~~Adoption of new accounting standards~~
See Note 2 Summary of Significant Accounting Policies - Update of the condensed consolidated financial statements in Part I—Item I, “Financial Statements” for a description of recent accounting pronouncement adoptions, including the dates of adoption and effects on financial position, results of operations and cash flows if any.

Recent Accounting Pronouncements

See Note 11 Recent Accounting Pronouncements of the condensed consolidated financial statements in Part I—Item I, “Financial Statements” for a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects on financial position, results of operations and cash flows.

Off-Balance Sheet Arrangements

See Note 2019 Commitments and Contingencies of the condensed consolidated financial statements in Part I—Item I, “Financial Statements” for a description of the Company's off-balance sheet arrangements.

Item 3.
Quantitative and Qualitative Disclosure about Market Risk.

The Company is exposed to market risk in the ordinary course of business. Market risk represents the risk of loss that may impact the Company’s financial position due to adverse changes in financial market prices and rates. This market risk exposure is primarily a result of fluctuations in foreign currency exchange rates and interest rates. The Company neither holds nor issues financial instruments for trading purposes.

The following sections provide quantitative information on the Company’s exposure to foreign currency exchange rate risk. The Company makes use of sensitivity analyses that are inherently limited in estimating actual losses in fair value that can occur from changes in market conditions.
~~Foreign Currency Exchange Rates~~
The Company conducts continuing operations in two principal currencies: the U.S. dollar and the British pound sterling. These currencies operate primarily as the functional currency for the Company’s U.S. and U.K. operations, respectively. Cash is managed centrally within each of the two regions.
Because of fluctuations in currency exchange rates, the Company is subject to currency translation exposure on the results of its operations. Foreign currency translation risk is the risk that exchange rate gains or losses arise from translating foreign entities’ statements of earnings and balance sheets from functional currency to the Company’s reporting currency, the U.S. dollar, for consolidation purposes. As currency exchange rates fluctuate, translation of the Company’s statements of operations into U.S. dollars affects the comparability of revenues and operating expenses between years.
Revenues and operating expenses from continuing operations are primarily denominated in the currencies of the countries in which the Company’s operations are located, the U.S. and U.K. The Company’s consolidated results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates.
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~~The tables below detail the percentage of revenues and expenses from continuing operations by the two principal currencies:~~

British Pound

U.S. Dollar

Sterling

For the Three Months Ended September 30, 2021

Revenues
90 % 10 %
Operating expenses
90 % 10 %

For the Three Months Ended September 30, 2020

Revenues
78 % 22 %
Operating expenses
81 % 19 %

British Pound

U.S. Dollar

Sterling

For the Nine Months Ended September 30, 2021

Revenues
83 % 17 %
Operating expenses
90 % 10 %

For the Nine Months Ended September 30, 2020

Revenues
69 % 31 %
Operating expenses
79 % 21 %
To date, the Company has not entered into any hedging arrangements with respect to foreign currency risk and have limited activity with forward foreign currency contracts or other similar derivative instruments. The Company believes that during the three and nine months ended September 30, 2021, the effect of a hypothetical 100 basis point shift in foreign currency exchange rates applicable to the Company’s business would not have had a material impact on the Company’s condensed consolidated financial statements.
~~Brexit Risk~~
On January 31, 2020, the United Kingdom (“UK”) formally withdrew from the European Union (“EU”), entering a transitional period which came to an end on December 31, 2020. During this transitional period, EU law continued to apply in the UK while providing time for the UK and EU to negotiate the details of their future relationship. Now that the transition has ended, the two sides are free to negotiate new trade agreements. The impact of the withdrawal may adversely affect business activity, political stability and economic conditions in the UK, the European Union and elsewhere. The economic conditions and outlook could be further adversely affected by the uncertainty concerning new or modified trading arrangements between the UK and other countries. Any of these developments could negatively affect economic growth or business activity in the UK, the European Union and elsewhere, and could materially and adversely affect our business and results of operations. We continue to closely monitor the negotiations and the impact to foreign currency markets, however we cannot predict the direction of Brexit-related developments or the impact of those developments on our UK operations and the economies of the markets in which we operate.
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Investment Risk
The Company has an Investment Policy that, ~~among other things,~~inter alia, provides an internal control structure that takes into consideration safety (credit risk and interest rate risk), liquidity and yield. ~~The Company’s investment committee consists of two independent Directors~~Our Investment officers, CEO and ~~the~~ CFO, ~~who~~ oversee the investment portfolio and compile a quarterly analysis of the investment portfolio ~~if any investments exist during the period.~~
~~Investments made by~~when applicable for internal use. In addition, the Company ~~are subject~~has an Investment Committee to administer and operate the portfolio. At September 30, 2022, the Investment ~~committee Charter~~Committee is comprised of C. Stephen Cochennet, Corey A. Lambrecht, Chairman, and investment policy, which limits the Company’s risk of loss exposure by setting appropriate credit quality requirements for investments held, limiting maturities to be 1 year or less, and also setting appropriate concentration levels to prevent concentrations. This includes a requirement that no more than 3% of the portfolio, or $0.5 million, whichever is greater, may be invested in one particular issue. In 2019, since the investment in VPS was considered a strategic investment, the board and management reviewed and approved the investment above the board set limit for individual issuers.Nicholas M. Grindstaff, CFO.

Cash and cash equivalents are diversified and maintained with several financial institutions. Deposits held with banks may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and are maintained with financial institutions of reputable credit, therefore, bear minimal credit risk.

The Company has trade receivable and ~~revenues~~revenue concentrations with large customers. ~~Additionally,~~See Note 17 of the ~~Company has a large~~Company's financial statements for more information on the Company's concentration of cash, trade receivables and revenues in foreign countries including the United Kingdom. Owning assets in a foreign country exposes the Company to foreign currency risk coupled with liquidity risk. Foreign owned assets may be difficult to timely convert to U.S. dollars if necessary.risks.

Item 4.
Controls and Procedures.

Evaluation of Disclosure Controls and Procedures
The Company's management, with the participation of the Company's Chief Executive Officer (CEO) and its Chief Financial Officer (CFO), evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report. In designing and evaluating the Company’s disclosure controls and procedures, the Company’s 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, and the Company’s management is required to apply their judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based upon that evaluation, the Company's management, including the CEO and the CFO, concluded that, as of September 30, ~~2021,~~2022, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.effective.

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Changes in Internal Control over Financial Reporting
During the three months ended September 30, 2021, the Company, including certain of its subsidiaries, implemented an enterprise resource planning (“ERP”) system, in order to update existing technology and to integrate, simplify and standardize processes among the Company and its subsidiaries. Accordingly, we have made changes to our internal controls to address systems and/or processes impacted by the ERP implementation. Neither the ERP implementation nor the related control changes were undertaken in response to any deficiencies in the Company’s internal control over financial reporting.
~~Other than as discussed above, there~~There have been no changes in our internal controls over financial reporting (as defined in Rule 13(a)-15(f) or Rule 15d-15(f) of the Exchange Act) during the three months ended September 30, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART ll – OTHER INFORMATION

Item 1. Legal Proceedings.

Orbital ~~Energy~~Infrastructure Group, Inc. is occasionally party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, negligence or gross negligence and/or property damages, wage and hour and other employment-related damages, punitive damages, civil penalties or other losses, or injunctive or declaratory relief.

Regarding all lawsuits, claims and proceedings, Orbital ~~Energy~~Infrastructure Group, Inc. records a reserve when it is probable that a liability has been incurred and the loss can be reasonably estimated. The Company currently has no such reserves. In addition, Orbital ~~Energy~~Infrastructure Group, Inc. discloses matters for which management believes a material loss is at least reasonably possible. None of these proceedings are expected to have a material adverse effect on Orbital ~~Energy~~Infrastructure Group, Inc.’s consolidated financial position, results of operations or cash flows. In all instances, management has assessed the matter based on current information and made a judgment concerning its potential outcome, considering the nature of the claim, the amount and nature of damages sought and the probability of success. Management’s judgment may prove materially inaccurate, and such judgment is made subject to the known uncertainties of litigation.

The Company recently filed and served a federal civil complaint in the United States District Court for the Northern District of Texas – Dallas Division against the former owner of Reach Construction Group LLC (“Reach”). The complaint alleges, among other things, misrepresentations and misconduct committed by the former owner in conjunction with the purchase and sale of Reach to Orbital Infrastructure Group, Inc. Based on the information and evidence contained in the complaint, the Company reasonably believes that it owes no more compensation to the former owner and is seeking return of certain funds already paid and relief of certain debt and accruals currently on the balance sheet.
Item 1A. Risk Factors.

~~The following risk factor was added during the three months ended September 30, 2021:~~
Potential government imposed COVID-19 vaccine mandates could adversely affect our ability to attract and retain employees, which could have a material adverse impact on our business and results of operations.
On September 9, 2021, President Biden directed the Department of Labor’s Occupational Safety and Health Administration ("OSHA") to issue an Emergency Temporary Standard requiring that all employers with at least 100 employees ensure that their employeesThere are fully vaccinated for COVID-19 or require employees to obtain a negative COVID-19 test at least once a week and wear a mask while in the workplace. On November 4, 2021, it was announced that the mask mandate deadline is December 5, 2021 and by January 4, 2022 companies must require their workers to be fully vaccinated or submit to weekly coronavirus testing. It is unclear, among other things, how compliance will be documented and enforced but could include investigating complaints through OSHA's whistle-blower system and penalties. As a company with more than 100 employees, we will be required to mandate COVID-19 vaccination of our workforce or have our unvaccinated employees undergo required weekly COVID-19 testing.
Any requirement to mandate COVID-19 vaccination of our workforce or require our unvaccinated employees to be tested weekly could result in employee attrition and difficulty securing future labor needs, and may have an adverse effect on our future revenues, costs and results of operations.
~~There were~~ no ~~other~~ material changes from Risk Factors as previously disclosed in the Company’s Form 10-K filed with the Commission on March ~~30, 2021.~~31, 2022.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. Common Stock Issued.

During the nine months ended September 30, ~~2021,~~2022, the Company issued the following shares of common stock, which were not registered under the Securities Act. The Company relied on Section 4(2) of the Securities Act of 1933 as the basis for an exemption from registration for the following issuances.

Date of issuance

Type of issuance

Expense/ Prepaid/ Cash

Stock issuance recipient

Reason for issuance

Total no. of shares

Grant date fair value recorded at issuance and periodic vesting (in thousands)

January, April, May, and August 2021

Common stock

Expense

Eight directors

Director compensation
142,708 $ 620
January, April, and May 2021

Common stock

Expense

Employees

Employee bonuses
1,016,613 8,040
February, June, July and August 2021

Common stock

Expense

4 Consultants

Services
244,274 1,138
February 2021

Common stock

Cashless exercise

Employee

Stock option exercise
214,596
*
—
April and June 2021

Common stock

Acquisition

Various GTS sellers

GTS acquisition
5,929,267 16,932
July 2021

Common stock

Acquisition

Various IMMCO sellers

IMMCO acquisition
874,317 2,544
July, August and September 2021

Common stock

Debt payment

Various

Debt payment
737,605 2,575
May and July 2021

Common stock

Expense

Consultant

Royalty
5,571 23
Total other equity transactions
9,164,951 $ 31,872
Date of issuance

Type of issuance

Stock issuance recipient

Reason for issuance

Total no. of shares

Grant date fair value recorded at issuance and periodic vesting (in thousands)

January, April 2022

Common stock

Consultant

Services
117,320 $ 212
January, February, March, April, May, June, July, August, September 2022

Common stock

Institutional investor

Debt payment
14,286,090 14,048
February 2022

Common stock

1 Syndicated debt lender

Portion of original issue discount on $105 million credit facility *
54,026 —
June and September 2022
Common stock Syndicated debt lenders Shares issued to lenders as part of amended and restated subscription agreement 8,284,360 4,361
Total other equity transactions
22,741,796 $ 18,621

* ~~The cashless exercise consisted~~These shares were issuable as of ~~an exercise of 552,663 shares for which 338,067 of those share options were returned to the Company in return for the 214,596 shares issued. Expense related to these stock options~~November 17, 2021 and were recorded as part of additional paid in capital prior ~~periods as they were fully vested.~~to issuance.

Item 5. Other Information.

~~Appointment~~Cured default on syndicated debt
On November 7, 2022, The Company resolved a dispute with the Syndicated lenders whereby the Syndicated lenders deemed the Company to be in default of ~~new CFO~~
~~As of November 16, 2021, Nicholas M. Grindstaff, age 59, will be appointed~~its credit agreement due to the ~~position of Chief Financial Officer. Concurrent with Mr. Grindstaff's appointment on November 16, Daniel N. Ford will transition out~~Company using proceeds from Front Line Power's operations to pay down $9.5 million of the Company's working capital adjustment with the sellers of Front Line Power. As part of a consent agreement with the lenders, the Company ~~but will assist with Mr. Grindstaff's transition through next spring. As OEG continues~~agreed to ~~increase~~pay the lenders in ~~scope, size,~~a paid-in-kind amount of $10.5 million, which was added to the Syndicated debt balance and ~~complexity, it is strategically important~~included $1.0 million of interest calculated from the first intercompany advance that the Company made. See Exhibit 10.139 for the ~~C-Suite to reside in one location, which is in Houston.~~
Nicholas M. Grindstaff served as Vice President – Finance since May 2011 and Treasurer since October 1999 for Quanta Services, Inc., a leading provider of specialty contracting services, delivering comprehensive infrastructure solutions for the electric and gas utility, communications, pipeline and energy industries primarily in the United States, Canada and Australia.
As an executive officer at Quanta Services, Inc. he was responsible for capital structure, which included numerous capital raises across various markets, managing acquisitions, financial planning and analysis, internal and SOX control compliance, procurement, working capital allocation, treasury operations as well as numerous other strategic initiatives. Mr. Grindstaff holds a Master of Science degree in Accounting.
Mr. Grindstaff signed a four-year employment agreement effective as of November 15, 2021. The agreement provides for an annual salary of $650,000 per year with minimum annual increases of 3% per year and minimum annual bonuses of 100% of his annual salary. Mr. Grindstaff will also receive long-term incentive compensation in the form of restricted stock units, which will vest monthly over thirty-six months.consent agreement.

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Item 6. Exhibits.

The following exhibits are included as part of this Form 10-Q.

Exhibit No.
Description
~~10.114~~
10.136 ¹ ~~Employment agreement with Nicholas M. Grindstaff effective November 15, 2021.~~Home Office lease dated October 5, 2022 by and between Franklin Post Oak, Ltd and Orbital Infrastructure Group, Inc.

~~10.115~~10.137 ¹ ~~$4,000,000 Business loan agreement line of credit between Gibson Technical Services,~~Executive Long Term Retention Equity Award Agreement by Orbital Infrastructure Group, Inc. and ~~Truist Bank~~William J. Clough
10.138¹ Executive Long Term Retention Equity Award Agreement by Orbital Infrastructure Group, Inc and James F. O'Neil
10.139 ¹ Limited Consent to Credit Agreement between Alter Domus LLC, Front Line Power Construction LLC and Orbital Infrastructure Group, Inc.

31.1 ¹
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934

31.2 ¹
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934

32.1 ¹
Certification of Chief Executive Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350

32.2 ¹
Certification of Chief Financial Officer Pursuant to Rule 13a-14(b)/15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350

101.INS ¹
Inline XBRL Instance Document

101.SCH ¹
Inline XBRL Taxonomy Extension Schema Document

101.CAL ¹
Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF ¹
Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB ¹
Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE ¹
Inline XBRL Taxonomy Extension Presentation Linkbase Document

104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Footnotes to Exhibits:
¹Filed herewith.

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SIGNATURES

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

Signed and submitted this ~~15th~~14th day of November ~~2021.~~2022.

Orbital ~~Energy~~Infrastructure Group, Inc.

By:
/s/ James F. O'Neil

James F. O'Neil,

Chief Executive Officer

(~~Principle~~Principal Executive Officer)

By:
/s/ ~~Daniel N. Ford~~Nicholas M. Grindstaff

~~Daniel N. Ford,~~Nicholas M. Grindstaff,

Chief Financial Officer

(~~Principle~~Principal Financial Officer)

5548

(in thousands)	September 30,		December 31
	2022		2021
Accrued bonding	$	1,631	$	167
Accrued compensation		4,365		6,369
Working capital adjustment on Front Line Power Construction acquisition		4,592		14,092
Accrued interest		4,340		2,902
Accrued taxes payable		148		102
Accrued subcontractor expenses		6,775		—
Accrued union dues		1,044		870
Accrued vendor invoices and accrued other expenses		7,401		3,799
Total accrued expense	$	30,296	$	28,301

CUI-Canada termination benefits (in thousands)

December 31, 2020	$	371
Severance payouts		(347	)
Translation		4
September 30, 2021	$	28

Estimated total termination benefits paid and to be paid	$	2,823

	As of		As of
	September 30,		December 31,
(in thousands)	2022		2021

Carrying amounts of the major classes of assets included in discontinued operations:

Trade accounts receivable	$	—	$	2,996
Inventories		—		530
Prepaid expenses and other current assets		—		114
Contract assets		—		1,141
Assets held for sale, current portion		—		4,781
Property and equipment		—		42
Other intangible assets		1,814		1,813
Deposits and other assets		—		43
Assets held for sale, noncurrent portion		1,814		1,898
Total assets of the disposal group classified as held for sale	$	1,814	$	6,679

Carrying amounts of the major classes of liabilities included in discontinued operations:

Accounts payable	$	—	$	1,657
Contract liabilities		—		1,414
Operating lease obligations - current portion		—		76
Accrued expenses		—		1,126
Liabilities held for sale, current portion		—		4,273
Operating lease obligations, less current portion		—		85
Other long-term liabilities		—		9
Liabilities held for sale, noncurrent portion		—		94
Total liabilities held for sale	$	—	$	4,367

	As of September 30,
(in thousands)	2021		2020
Current contract liabilities	$	4,188	$	8,047
Long-term contract liabilities (2)		68		176
Total contract liabilities	$	4,256	$	8,223

	For the Three Months						For the Three Months
	Ended September 30, 2021						Ended September 30, 2020
(in thousands)	Electric Power and Solar Infrastructure Services		Integrated Energy Infrastructure Solutions and Services		Total		Electric Power and Solar Infrastructure Services		Integrated Energy Infrastructure Solutions and Services		Total

North America	$	24,031	$	2,947	$	26,978	$	9,478	$	1,184	$	10,662
Europe		241		3,119		3,360		0		2,939		2,939
Other		550		31		581		0		14		14
Total revenues	$	24,822	$	6,097	$	30,919	$	9,478	$	4,137	$	13,615

	For the Three Months								For the Three Months
	Ended September 30, 2022								Ended September 30, 2021
(in thousands)	Electric Power		Telecommunications		Renewables		Total		Electric Power		Telecommunications		Renewables		Total

Cost-plus contracts	$	8,672	$	—	$	—	$	8,672	$	4,940	$	—	$	—	$	4,940
Fixed price contracts		10,768		1,551		39,026		51,345		2,385		2,159		3,880		8,424
Unit price contracts		17,292		22,513		—		39,805		4,875		6,583		—		11,458
Total revenues	$	36,732	$	24,064	$	39,026	$	99,822	$	12,200	$	8,742	$	3,880	$	24,822

Finite-lived intangible assets (in thousands)					September 30, 2021							December 31, 2020
	Estimated Useful Life (in years)		Weighted average remaining amortization period		Gross Carrying Amount		Accumulated Amortization			Identifiable Intangible Assets, less Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization			Identifiable Intangible Assets, less Accumulated Amortization
Electric Power and Solar Infrastructure Services Segment
Customer Relationships		5 to 10		8.20	$	28,610	$	(3,409	)	$	25,201	$	8,647	$	(1,297	)	$	7,350
Trade name - Reach Construction Group		1		—		1,878		(1,878	)		0		1,878		(1,409	)		469
Technology-based asset		4		3.83		1,470		(61	)		1,409		0		0			0
Computer software		3 to 5	2.17			544		(39	)		505		0		0			0
Non-compete agreements		5		3.64		3,597		(1,000	)		2,597		3,212		(482	)		2,730
Total Electric Power and Solar Infrastructure Services Segment						36,099		(6,387	)		29,712		13,737		(3,188	)		10,549

Integrated Energy Infrastructure Solutions and Services Segment
Order backlog		2		—		2,998		(2,998	)		0		3,041		(3,041	)		0
Trade name - Orbital-UK		10		1.50		1,612		(1,370	)		242		1,635		(1,267	)		368
Customer list - Orbital-UK		10		1.50		6,269		(5,328	)		941		6,358		(4,927	)		1,431
Technology rights		10		9.28		2,271		(407	)		1,864		341		(254	)		87
Technology-Based Asset - Know How		12		3.50		2,540		(1,799	)		741		2,576		(1,663	)		913
Technology-Based Asset - Software		10		1.50		550		(468	)		82		558		(433	)		125
Computer software		3 to 5		1.58		743		(615	)		128		751		(530	)		221
Total Integrated Energy Infrastructure Solutions and Services Segment						16,984		(12,985	)		3,998		15,260		(12,115	)		3,145

Other category
Computer software		3 to 5		0.27		713		(712	)		1		713		(710	)		3
Product certifications		3		—		36		(36	)		0		36		(36	)		0
Total Other category						749		(748	)		1		749		(746	)		3

Total identifiable finite-lived other intangible assets						53,832		(20,120	)		33,712		29,746		(16,049	)		13,697

Identifiable indefinite-lived other intangible assets

Electric Power and Solar Infrastructure Services Segment
Trade Name - GTS						6,388		—			6,388		0		—			0
Trade Name - IMMCO						1,205		—			1,205		0		—			0
Total identifiable indefinite-lived other intangible assets						7,593		—			7,593		0		—			0

Total identifiable other intangible assets					$	61,424	$	(20,120	)	$	41,304	$	29,746	$	(16,049	)	$	13,697

(in thousands)		For the Periods Ended December 31,
	2021		2022		2023		2024		2025		2026 and thereafter		Totals
Trademarks and trade name	$	40	$	162	$	40	$	0	$	0	$	0	$	242
Customer lists/relationships		1,088		4,353		3,882		3,726		2,429		10,664		26,142
Technology rights		50		201		201		201		201		1,010		1,864
Technology-based assets		159		634		593		579		267		0		2,232
Computer software		80		314		241		0		0		0		635
Non-compete agreements		180		719		719		719		238		22		2,597
Total Amortization		1,597		6,383		5,676		5,225		3,135		11,696		33,712

	As of September 30,		As of December 31,		As of September 30,		As of December 31,
(in thousands)	2021		2020		2022		2021
Finished goods	$	224	$	255
Raw materials		1,031		217	$	1,198	$	1,316
Work-in-process		535		651		210		19
Total inventories	$	1,790	$	1,123	$	1,408	$	1,335

(in thousands)
2021 (remaining period)	$	1,194
2022		4,581
2022 (remaining period)				$	1,437
2023		3,463			5,421
2024		1,929			4,501
2025		1,200			2,953
2026					2,551
Thereafter		2,450			3,905
Interest portion		(1,894	)		(3,167	)
Total operating lease obligations	$	12,923		$	17,601

													For the Three Months Ended						For the Nine Months Ended
	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						September 30,						September 30,
(in thousands)	2021			2020			2021			2020			2022			2021			2022			2021
Operating lease cost	$	1,178		$	511		$	2,825		$	1,321		$	1,600		$	1,157		$	4,924		$	2,747
Short-term lease cost		148			41			221			117			7			114			78			134
Variable lease cost		176			102			488			295			111			175			564			478
Sublease income		(129	)		(78	)		(372	)		(254	)		(129	)		(129	)		(387	)		(372	)
Total lease cost	$	1,373		$	576		$	3,162		$	1,479		$	1,589		$	1,317		$	5,179		$	2,987

Other information - Operating leases (in thousands)	For the Nine Months Ended September 30,						For the Nine Months Ended September 30, 2022
	2021			2020			2022			2021
Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows from operating leases (includes discontinued operations in 2020)	$	(2,782	)	$	(1,622	)
Operating cash flows from operating leases (includes discontinued operations)							$	(5,800	)	$	(2,782	)
Right-of-use assets obtained in exchange for new operating lease obligations	$	7,290		$	1,546		$	3,908		$	7,290
Weighted-average remaining lease term - operating leases (in years)		4.3			5.6			4.7			4.3
Weighted-average discount rate - operating leases		6.5	%		6.6	%		7.1	%		6.5	%

(in thousands)
2021 (remaining period)	$	1,102
2022		4,409
2023		4,408
2024		2,278
2025		136
Thereafter		92
Interest portion		(1,059	)
Total financing lease obligations	$	11,366

Other information - Financing leases	For the Nine Months Ended September 30,
(in thousands)	2021			2020
Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows from financing leases	$	(177	)	$	0
Financing cash flows from financing leases	$	(897	)	$	(3	)
Right-of-use assets obtained in exchange for new financing lease obligations	$	12,190		$	0
Weighted-average remaining lease term - financing leases (in years)		2.9			0.58
Weighted-average discount rate - operating leases		6.5	%		5.0	%

	*Number of restricted shares*			*Weighted-average grant date fair value*

Non-vested shares, beginning of year		3,018,788		$	4.58
Granted		5,943,197			1.33
Vested		(2,222,770	)		1.54
Forfeited		(2,139,872	)		5.31
Non-vested shares, September 30, 2022		4,599,343		$	1.50

Description	*Classification*	*Exercise Price*		*Expiration Date*	*Balance December 31, 2021*		*Warrants Issued*		*Warrants Exercised*		*Warrants Expired*		*Balance September 30, 2022*

Warrants	Liability	$	1.31	April 2027		—		16,153,847		—		—		16,153,847
Pre-funded warrants	Liability	$	0.0001	April 2027		—		7,153,847		7,153,847		—		—
Total						—		23,307,694		7,153,847		—		16,153,847

	Cash-settled SARs			Fair Value Price per Share*
(in thousands)
Non-vested cash-settled SARs at December 31, 2020		748		$	2.12
Granted		3,771			2.26
Vested		(946	)		2.37
Non-vested cash-settled SARs at September 30, 2021		3,573		$	2.37

(dollars in thousands)	For the Three Months Ended September 30,
	2021					2020
	Amount		%			Amount		%
USA	$	26,974		87	%	$	10,413		77	%
United Kingdom		2,993		10	%		2,189		16	%
All Others		952		3	%		1,013		7	%
Total	$	30,919		100	%	$	13,615		100	%

(in thousands)
September 30, 2022	Level 1		Level 2		Level 3		Total
Contingent consideration	$	—	$	—	$	720	$	720
Front Line Power Construction Seller Financed debt		—		68,501		—		68,501
Financial instrument liability - related to Syndicated debt		—		—		844		844
Financial instrument liability - related to Front Line Power Construction seller financed debt		—		—		40,085		40,085
Prepaid advance agreement		—		4,666		—		4,666
Warrant liabilities		—		—		5,492		5,492
Total liabilities	$	—	$	73,167	$	47,141	$	120,308

December 31, 2020	Level 1		Level 2		Level 3		Total
Convertible note payable	$	0	$	0	$	1,955	$	1,955
Contingent consideration		0		0		720		720
Total liabilities	$	0	$	0	$	2,675	$	2,675

(in thousands)	Convertible note payable
Balance at December 31, 2020	$	1,955
Loss on extinguishment on amendment to remove convertible feature		250
Amortization of original issue discount		40
Accrued interest		57
Extinguishment of note		(2,302	)
Balance at September 30, 2021	$	0

December 31, 2021	Level 1		Level 2		Level 3		Total
Contingent consideration	$	—	$	—	$	720	$	720
Front Line Power Construction Seller financed debt		—		86,183		—		86,183
Financial instrument liability		—		—		825		825
Total liabilities	$	—	$	86,183	$	1,545	$	87,728

(in thousands)	Financial Instrument Liability - related to Syndicated debt
Balance at December 31, 2021	$	825
Issuance of shares upon exercise and reset of instrument (instrument includes reference price of $0.40 per share at September 30, 2022)		(4,361	)
Fair value adjustments to Financial instrument liability		4,380
Balance at September 30, 2022	$	844

(in thousands)	Warrant Liability
Balance at December 31, 2021	$	—
Fair value of warrant liability at inception		27,625
Exercise of pre-funded warrants		(6,939	)
Fair value adjustment to warrant liability		(15,194	)
Balance at September 30, 2022	$	5,492

(in thousands)	As of September 30, 2021			As of December 31, 2020			As of September 30, 2022			As of December 31, 2021
Foreign currency translation adjustment	$	(4,291	)	$	(4,406	)	$	(687	)	$	(3,995	)
Accumulated other comprehensive loss	$	(4,291	)	$	(4,406	)	$	(687	)	$	(3,995	)


⁽³⁾	The Company has a note payable to First Insurance Funding ~~was~~ executed in ~~July~~ 2022~~2020~~ ~~by the Company~~ for the purposes of financing a portion of the Company's insurance coverage. The ~~Note had~~note has an annual percentage rate of ~~3.35% with~~3.28% to be paid in ~~nine~~ten monthly payments ~~of approximately $159 thousand~~ and ~~was paid off~~are set to mature in May 2023. At December 31, 2021, the Company had three notes payable with First Insurance Funding executed in the ~~three~~third ~~months ended~~and ~~June 30 ,2021.~~ ~~The Company financed~~ ~~two~~ ~~additional insurance policies in the~~ fourth ~~quarter of~~ ~~2020~~ ~~for $0.1 million and $0.4 million, respectively. The smaller of which matured in~~ ~~April 2021~~ ~~and the other of which matured in~~ ~~September 2021,~~ ~~and for which had annual interest rates of 3.35% and 4.35%, respectively. The Company executed~~ ~~two~~ ~~additional notes payable in the~~ ~~third~~ quarter of 2021 for ~~$1.7 million and $54 thousand, respectively~~the purpose of financing a portion of the Company's insurance coverage at ~~interest~~annual percentage rates ranging from 3.00% to 4.35% all of ~~3.00% and 4.35%, respectively.~~which are paid off at September 30, 2022.

⁽²⁴⁾	On ~~April 30, 2020~~ ~~and~~ ~~May 2, 2020,~~ the Company entered into unsecured loans in the aggregate principal amount of approximately $1.9 million (the “Loans”) pursuant to the Paycheck Protection Program (the “PPP”), sponsored by the Small Business Administration (the “SBA”) as guarantor of loans under the PPP. The Loans, and interest accrued thereon, were forgivable, partially or in full, if certain conditions were met. The Loans were evidenced by ~~four~~ ~~promissory notes,~~ ~~three~~ ~~with Bank of America, NA which were dated as of~~ ~~April 30, 2020~~ ~~and~~ ~~one~~ ~~with Dogwood State Bank dated~~ ~~May 2, 2020.~~ ~~The Bank of America notes were to mature~~ ~~two~~ ~~years from funding date of the notes and the Dogwood State Bank note was to mature~~ ~~two~~ ~~years from the note date. Each of the notes bore interest at a fixed rate of~~ ~~1.0%~~ ~~per annum with payments deferred. Prepayments on the Loans were permitted at any time prior to maturity with~~ no ~~prepayment penalties. All $1.9 million of the loans outstanding at~~ ~~December 31, 2020~~ ~~were forgiven in the~~ ~~three~~ ~~months ending~~ ~~June 30, 2021.~~ ~~The remaining $1.4 million of Pay-check Protection loans were acquired as part of the GTS acquisition, and which were forgiven in the~~ ~~third~~ ~~quarter of~~ ~~2021.~~ ~~The Company had a contingent receivable associated with the remaining PPP loan whereby the Company would be paid by the Sellers of GTS if the remaining PPP loan was~~ ~~not~~ ~~forgiven. Upon forgiveness of the loan, the receivable was relieved resulting in~~ no ~~gain or loss on the transaction.~~


⁽³⁾	Includes two ~~seller financed~~seller-financed notes payable, one for $5 million and the second for $1.5 million. ~~The~~In August 2021, the $5 million note was amended from its original 18-month ~~term to provide for installments of $1 million paid on~~ ~~March 3, 2021,~~ a ~~second~~ ~~$1 million payment to be made on~~ ~~October 31, 2021~~ ~~and a final principal payment of $3 million on~~ ~~March 31, 2022.~~ In ~~August 2021,~~ term; the Company paid $1 million in cash and exchanged 155,763 shares of common stock in exchange for an additional $1 million reduction in principal. ~~The Company recorded this as an extinguishment of debt and a gain on extinguishment of $0.7 million.~~ The new loan had a face value of $2.0 million at a rate of 6% per annum and was recorded based on an estimated market interest rate of 10% per annum with aan original issue discount of $48 thousand. ~~The original payment terms called for the full $5 million principal to be paid~~ no ~~later than~~ ~~November 1, 2021~~ ~~without separate installments.~~ The second seller financed note payable is due 36-months from the April 1, 2020 acquisition date. Both notes had an original stated interest rate of 6% per annum. In 2022, the Company filed and served a Federal Civil Complaint asserting various causes-of-action against the holder of the note, including misrepresentations made during the course of negotiating this transaction. Based on that complaint, the evidence contained therein, and the conduct described, the Company reasonably believes that it owes no additional compensation as a result of this transaction.

⁽⁴⁵⁾	Includes vehicle and equipment loans with interest rates ranging from ~~5.74%~~0% to ~~8.99%~~9.15%.

⁽⁵⁶⁾	~~To refinance an earlier~~ The Company entered into a non-recourse ~~note~~agreement with C6 which was originated in November 2021 with a face amount of $9.5 million. The Company received net cash proceeds of $6.9 million. The Company recorded a liability of $9.5 million and ~~to provide~~a debt discount of $2.6 million. Under the terms of the agreement, for the first12 weeks, the Company ~~with additional capital,~~ made weekly payments of $148 thousand and for the final 20 weeks, the Company was to make payments of $384 thousand. The agreement had no stated interest rate, but the discount and loan origination fees were being amortized based on an 89% interest rate. In April, 2022, the Company took out ~~two~~three non-recourse agreements with C6 Capital for the sale of future revenues in the ~~total~~combined amount of ~~$3.5~~$20.2 million. ~~These agreements had 0 stated interest rate and~~The Company received approximately $13.3 million after the deduction of an original issue discount ~~including~~and upfront ~~fees~~fees. In April 2022, the Company used part of the proceeds from these non-recourse agreements to pay off the non-recourse C6 note of $4.2 million that was on the balance sheet as of March 31, 2022 and recorded a loss on extinguishment of $0.4 million. The loans vary in length from 26 to 48 weeks. The Company paid off the smallest of the three notes in June 2022 and recorded a loss on extinguishment of $0.1 million. Discounts on the remaining agreements are being amortized ~~using~~based on an effective interest rate of ~~approximately 117%. After combined weekly payments of approximately $54 thousand for~~88% and will mature in the first ~~four~~ ~~weeks, the combined payments increased to approximately $116 thousand until~~ ~~June 2021.~~ Asquarter of ~~June 30, 2021,~~ 2023.~~the non-recourse note was paid off.~~


(8)	On August 18, 2022, the Company entered into a Prepaid Advance Agreement (the “PPA”) with YA II PN, Ltd., a Cayman Islands exempt limited partnership (“Yorkville”). In accordance with the terms of the PPA, the Company may request advances of up to $5.0 million from Yorkville (or such greater amount that the parties may mutually agree) (the “Pre-Paid Advance”), with a limitation on outstanding Pre-Paid Advances of $5.0 million and an aggregate limitation on the Pre-Paid Advances of $50.0 million. Each such Pre-Paid Advance will be offset upon the issuance of the Company’s common stock, par value $0.001 per share (“Common Stock”) to Yorkville at a price per share equal to the lower of: (a) a price per share equal to $0.01 above the market price on The Nasdaq Global Select Market (“Nasdaq”) as of the trading day immediately prior to the date of each closing (the “Fixed Price”), or (b) 96% of the lowest daily volume weighted average price of our Common Stock on Nasdaq during the five (5) trading days prior to each conversion date (the “Market Price” and the lower of the Fixed Price and the Market Price shall be referred to as the “Purchase Price”); however, in no event shall the Purchase Price be less than $0.20 per share. The Company elected the fair value option for this agreement with the debt being marked to market on a quarterly basis. The debt had an original issue discount of $150 thousand and with a carrying value of $4.7 million at September 30, 2022. The discount is amortized through interest expense over the life of the loan. The note had an original maturity date of October 27, 2022, which was extended to February 2023 in October 2022. See note 12 for fair value information on this prepaid advance agreement and note 20 related to an extension of the maturity.

⁽⁷⁹⁾	In October 2020, the Company entered into a conditional settlement agreement with a subcontractor to make payments of $3.5 million at zero interest over three years. The ~~full balance~~Company made a $0.5 million payment in the fourth quarter of ~~this settlement agreement~~2021. The Company made a $150,000 payment in February 2022, and a $350,000 payment on March 31, 2022. The Company is ~~still owed as of~~ ~~September 30, 2021.~~ In ~~January 2021,~~ ~~the Company entered into a conditional settlement agreement with a subcontractor~~scheduled to make ~~payments of $1.4~~a $1 million ~~over approximately 5 months at 12% annual interest rate with~~payment by November 2022 and the final $1.5 million payment ~~on or before~~by ~~June 30, 2021.~~ November 2023.~~This loan was paid off during the~~

^{(three10 months ended June 30, 2021.)}	Represents Coax Fiber Solutions and Full Moon Telecom, LLC opening balance sheet loans to prior Coax Fiber Solutions and Full Moon Telecom, LLC owners.

	For the Three Months Ended September 30,						For the Three Months Ended September 30,
Customer	2021			2020			2022			2021
Customer 1		13	%	<10%			20		%		<10%
Customer 2	<10%				41	%		16	%		<10%
Customer 3	<10%				12	%	19		%		<10%
Customer 4								13	%	16		%
Customer 5								12	%		<10%
Total concentrations		13	%		53	%		80	%		16	%

	For the Nine Months Ended September 30,						For the Nine Months Ended September 30,
Customer	2021			2020			2022			2021
Customer 1		10	%	<10%				14	%		<10%
Customer 2	<10%				21	%		21	%		<10%
Customer 3								18	%		<10%
Customer 4								14	%		14	%
Total concentrations		10	%		21	%		67	%		14	%