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, 2022~~March 31, 2023

☐	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)

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

	5444 Westheimer Road
	Suite 1650
	Houston, Texas 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 ~~140,571,912~~4,693,569 shares of the registrant's common stock, par value $0.001 per share, outstanding as of ~~November 11, 2022.~~May 15, 2023.

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.	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)	76
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	98
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3530
	Overview	3631
	Results of Operations	3732
	Liquidity and Capital Resources	4136
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	4338
Item 4.	Controls and Procedures	4439
	Part II

Item 1.	Legal Proceedings	4540
Item 1A.	Risk Factors	4540
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds. Common Stock Issued	4641
Item 5.	Other Information	4641
Item 6.	Exhibits	4742
	Exhibit Index	4742
	Signatures	4843

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Orbital Infrastructure Group, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30,			December 31,			March 31,			December 31,
(in thousands, except share and per share amounts)	2022			2021			2023			2022

Assets:
Current Assets:
Cash and cash equivalents	$	27,960		$	26,865		$	23,993		$	21,489
Restricted cash - current portion		123			150			123			123
Trade accounts receivable, net of allowance of $921 and $1,487, respectively		50,803			48,752
Trade accounts receivable, net of allowance								49,968			52,652
Inventories		1,408			1,335			1,857			1,691
Contract assets		23,735			7,478			18,770			13,917
Note receivable, current portion		1,421			3,536			1,462			1,442
Prepaid expenses and other current assets		8,268			6,919			5,173			7,840
Assets held for sale, current portion		1,814			6,679			3,198			3,198
Total current assets		115,532			101,714			104,544			102,352


Property and equipment, less accumulated depreciation		25,889			29,638			21,718			22,930
Investment		1,063			1,063			1,063			1,063
Right of use assets - Operating leases		17,333			18,247			15,321			16,588
Right of use assets - Financing leases		9,341			14,702			7,447			8,394
Goodwill		7,006			100,899			7,006			7,006
Other intangible assets, net		123,853			142,656			108,945			111,134
Restricted cash, noncurrent portion		486			1,026			576			486
Note receivable, noncurrent portion		—			836
Deposits and other assets		1,606			1,558			1,593			1,618
Total assets	$	302,109		$	412,339		$	268,213		$	271,571

Liabilities and Stockholders' Equity (Deficit):
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts payable	$	35,595		$	10,111		$	49,318		$	41,333
Notes payable, current portion		129,034			72,774			250,711			144,708
Line of credit		4,000			2,500			4,000			4,000
Operating lease obligations - current portion		4,451			4,674			4,345			4,540
Financing lease obligations - current portion		5,167			4,939			5,437			5,316
Accrued expenses		30,296			28,301			45,198			39,065
Contract liabilities		351			6,503			2,700			10,218
Financial instrument liability, current portion		25,320			825
Liabilities held for sale, current portion		—			4,367
Financial instrument liabilities								45,392			43,693
Total current liabilities		234,214			134,994			407,101			292,873

Financial instrument liability, noncurrent portion		15,609			—			—			536
Warrant liabilities		5,492			—			1,131			1,777
Deferred tax liabilities		260			260
Notes payable, less current portion		107,738			156,605			1,276			100,528
Operating lease obligations, less current portion		13,150			13,555			11,327			12,350
Financing lease obligations, less current portion		9,023			9,939			6,311			7,673
Other long-term liabilities		720			720			570			570
Total liabilities		386,206			316,073			427,716			416,307

Commitments and contingencies

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
Stockholders' Equity:
Preferred stock, par value $0.001; 10,000,000 shares authorized; no shares issued at March 31, 2023 or December 31, 2022								—			—
Common stock, par value $0.001; 325,000,000 shares authorized; 4,658,274 shares issued and 4,649,447 shares outstanding at March 31, 2023 and 3,947,101 shares issued and 3,938,274 shares outstanding at December 31, 2022								5			4
Additional paid-in capital		338,565			311,487			353,251			347,511
Treasury stock at cost; 353,063 shares held at September 30, 2022 and December 31, 2021		(413	)		(413	)
Treasury stock at cost; 8,827 shares held at March 31, 2023 and December 31, 2022								(413	)		(413	)
Accumulated deficit		(421,424	)		(210,934	)		(507,286	)		(487,121	)
Accumulated other comprehensive loss		(687	)		(3,995	)		(673	)		(691	)
Total Orbital Infrastructure Group, Inc.'s stockholders' equity (deficit)		(83,834	)		96,227
Total Orbital Infrastructure Group, Inc.'s stockholders' equity								(155,116	)		(140,710	)
Noncontrolling interest		(263	)		39			(4,387	)		(4,026	)
Total stockholders' equity (deficit)		(84,097	)		96,266
Total liabilities and stockholders' equity (deficit)	$	302,109		$	412,339
Total stockholders' equity								(159,503	)		(144,736	)
Total liabilities and stockholders' equity							$	268,213		$	271,571

See accompanying notes to condensed consolidated financial statements

Table of Contents

Orbital Infrastructure Group, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

	For the Three Months						For the Nine Months						For the Three Months
(in thousands, except share and per share amounts)	Ended September 30,						Ended September 30,						Ended March 31,
	2022			2021			2022			2021			2023			2022

Revenues	$	99,822		$	24,822		$	263,989		$	41,902		$	80,186		$	70,254

Cost of revenues		105,671			22,523			248,439			44,982			66,069			58,671

Gross profit		(5,849	)		2,299			15,550			(3,080	)		14,117			11,583

Operating expenses (income):
Operating expenses:
Selling, general and administrative expense		12,746			11,729			33,790			37,491			14,260			8,126
Depreciation and amortization		5,465			1,333			16,193			3,418			2,659			5,323
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	)
Provision for (recovery of) bad debt														490			(60	)
Other operating income														(15	)		(18	)

Total operating expenses		122,861			13,149			153,755			40,987			17,394			13,371

Loss from operations		(128,710	)		(10,850	)		(138,205	)		(44,067	)		(3,277	)		(1,788	)

Gain (loss) on extinguishment of debt		(1,122	)		723			(29,354	)		1,633
Loss on financial instruments		(3,109	)		—			(17,911	)		—
Loss on extinguishment of debt														(583	)		(26,019	)
Loss on financial instrument														(1,196	)		(928	)
Gain on warrant liabilities		2,423			—			7,369			—			646			—
Other income (expense)		(1,128	)		(203	)		(1,834	)		370			(4,147	)		345
Interest expense		(9,714	)		(1,266	)		(27,566	)		(3,096	)		(11,164	)		(8,039	)

Loss from continuing operations before income taxes		(141,360	)		(11,596	)		(207,501	)		(45,160	)		(19,721	)		(36,429	)
Income tax expense (benefit)		207			(2,098	)		830			(11,035	)
Income tax expense														536			241

Loss from continuing operations, net of income taxes		(141,567	)		(9,498	)		(208,331	)		(34,125	)		(20,257	)		(36,670	)

Discontinued operations (Note 3)
Income (loss) from operations of discontinued businesses		(666	)		(649	)		(2,461	)		(2,187	)
Loss from discontinued operations, net of income taxes														(268	)		(953	)

Net loss		(142,233	)		(10,147	)		(210,792	)		(36,312	)	$	(20,525	)	$	(37,623	)
Less: net loss attributable to noncontrolling interest		(167	)		—			(302	)		—			(360	)		(22	)
Net loss attributable to Orbital Infrastructure Group, Inc.	$	(142,066	)	$	(10,147	)	$	(210,490	)	$	(36,312	)	$	(20,165	)	$	(37,601	)

Basic and diluted weighted average common shares outstanding		115,637,323			62,823,330			98,209,495			53,142,557			4,327,323			2,078,168

Loss from continuing operations per common share - basic and diluted	$	(1.22	)	$	(0.15	)	$	(2.12	)	$	(0.64	)	$	(4.60	)	$	(17.63	)

Loss from discontinued operations - basic and diluted		(0.01	)		(0.01	)		(0.03	)		(0.04	)
Loss from discontinued operations per common share - basic and diluted														(0.06	)		(0.46	)

Loss per common share - basic and diluted	$	(1.23	)	$	(0.16	)	$	(2.15	)	$	(0.68	)	$	(4.66	)	$	(18.09	)

See accompanying notes to condensed consolidated financial statements

Table of Contents

Orbital Infrastructure Group, Inc.

Condensed Consolidated Statements of Comprehensive Income and Loss

(Unaudited)

	For the Three Months						For the Nine Months						For the Three Months
(in thousands)	Ended September 30,						Ended September 30,						Ended March 31,
	2022			2021			2022			2021			2023			2022
Net loss	$	(142,233	)	$	(10,147	)	$	(210,792	)	$	(36,312	)	$	(20,525	)	$	(37,623	)
Other comprehensive income (loss)
Foreign currency translation adjustment		(182	)		129			(300	)		115			18			6
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	$	(142,415	)	$	(10,018	)	$	(207,484	)	$	(36,197	)	$	(20,507	)	$	(37,617	)
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 Infrastructure Group, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

(Unaudited)

(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 OIG Stockholder's Equity (Deficit)

Non-controlling Interest

Total Stockholders' Equity (Deficit)

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
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
— — — — — (37,601 ) — (37,601 ) (22 ) (37,623 )
Other comprehensive loss
— — — — — — 6 6 — 6
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
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
— — — — — (30,823 ) — (30,823 ) (113 ) (30,936 )
Other comprehensive income
— — — — — — 3,484 3,484 — 3,484
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
765,311 1 1,354 — — — — 1,355 1,355
Common stock issued for debt repayment
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
— — — — — (142,066 ) — (142,066 ) (167 ) (142,233 )
Other comprehensive loss
— — — — — — (182 ) (182 ) (182 )
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 OIG Stockholder's Equity			Non-controlling Interest			Total Stockholders' Equity

Balance, December 31, 2022		3,947,101	$	4	$	347,511	$	(8,827	)	$	(413	)	$	(487,121	)	$	(691	)	$	(140,710	)	$	(4,026	)	$	(144,736	)
Issuance of common stock via equity raise		245,833		—		1,862		—			—			—			—			1,862			—			1,862
Common stock issued and issuable for compensation, services and royalty payments		14,009		—		631		—			—			—			—			631			—			631
Common stock issued for debt repayment		451,331		1		3,247		—			—			—			—			3,248			—			3,248
Net loss		—		—		—		—			—			(20,165	)		—			(20,165	)		(361	)		(20,526	)
Other comprehensive loss		—		—		—		—			—			—			18			18			—			18
Balance, March 31, 2023		4,658,274		5		353,251		(8,827	)		(413	)		(507,286	)		(673	)		(155,116	)		(4,387	)		(159,503	)

~~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

(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 OIG Stockholder's Equity			Non-controlling Interest			Total Stockholders' Equity

Balance, December 31, 2021		2,056,494	$	2	$	311,567			(8,827	)	$	(413	)	$	(210,934	)	$	(3,995	)	$	96,227		$	39		$	96,266
Common stock issuable for acquisition		3,125		—		250			—			—			—			—			250			—			250
Common stock issued and issuable for compensation, services and royalty payments		19,885		—		(1,693	)		—			—			—			—			(1,693	)		—			(1,693	)
Common stock issued for debt repayment		66,334		—		4,445															4,445						4,445
Common stock issued to lenders for OID for $105 million debt - (reissued)		1,351		—		—			—			—			—			—			—			—			—
Net loss		—		—		—			—			—			(37,601	)		—			(37,601	)		(22	)		(37,623	)
Other comprehensive loss		—		—		—			—			—			—			6			6			—			6
Balance, March 31, 2022		2,147,189		2		314,569			(8,827	)		(413	)		(248,535	)		(3,989	)		61,634			17			61,651

See accompanying notes to condensed consolidated financial statements

Table of Contents

Orbital Infrastructure Group, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	For the Nine Months						For the Three Months
(in thousands)	Ended September 30,						Ended March 31,
	2022			2021			2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(210,792	)	$	(36,312	)	$	(20,525	)	$	(37,623	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		11,860			2,671			3,173			3,687
Amortization of intangibles		15,039			4,262			2,242			5,003
Amortization of debt discount		7,335			2,016			4,224			1,635
Amortization of note receivable discount		(63	)		(237	)		—			(63	)
Stock-based compensation and expense, net of forfeitures		(1,914	)		9,833			631			(3,050	)
Fair value adjustment to liability for stock appreciation rights		(269	)		2,543			—			(269	)
Fair value adjustment to financial instrument liabilities		17,912			—			1,196			928
Fair value adjustment to warrant liabilities		(7,369	)		—			(646	)		—
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
Loss on extinguishment of debt and debt modifications								583			26,019
Provision for bad debt								490			31
Deferred income taxes		6			(11,176	)		33			—
Impairment of goodwill and intangible assets		100,275			—
Impairment of financing leased assets		4,467			—
Inventory reserve		(3	)		(291	)		—			(22	)
Gain on sale of assets		(391	)		(15	)
Non-cash unrealized foreign currency loss		(1	)		233
Loss (gain) on sale of assets								212			(103	)
Liquidated damages from debt		2,271			—			4,068			—
Non-cash unrealized foreign currency (gain) loss								(5	)		48

Change in operating assets and liabilities, net of acquisition:
Trade accounts receivable		466			(5,396	)		2,145			(3,935	)
Inventories		334			(189	)		(167	)		20
Contract assets		(14,940	)		(2,077	)		(4,812	)		(6,378	)
Prepaid expenses and other current assets		1,993			1,944			2,748			(751	)
Right of use assets/lease liabilities, net		415			(21	)		33			35
Deposits and other assets		(29	)		(259	)		(16	)		(26	)
Accounts payable		24,688			(2,529	)		7,633			7,929
Accrued expenses		12,182			1,950			5,053			4,175
Contract liabilities		(5,385	)		(1,421	)		(7,518	)		1,145
NET CASH USED IN OPERATING ACTIVITIES		(13,355	)		(36,806	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES								775			(1,565	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisitions, net of cash received		(773	)		(36,890	)		—			(773	)
Cash paid for working capital adjustment on Front Line Power acquisition		(9,500	)		—
Purchases of property and equipment		(3,722	)		(6,594	)		(622	)		(1,351	)
Deposits on financing lease property and equipment		128			(481	)		8			26
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	)		—
Proceeds from sale of property and equipment								53			78
Purchase of other intangible assets		(74	)		(702	)		(18	)		(51	)
Proceeds from notes receivable		3,500			621			—			3,500
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(9,401	)		(43,953	)		(579	)		1,429

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit		3,500			—			—			3,500
Payments on line of credit		(2,000	)		(441	)		—			(2,000	)
Payments on financing lease obligations		(3,810	)		(897	)		(1,310	)		(1,212	)
Proceeds from notes payable		41,150			19,400			9,750			—
Payments on notes payable		(35,530	)		(7,490	)		(6,053	)		(5,804	)
Proceeds from sales of common stock and warrants		20,272			78,046
NET CASH PROVIDED BY FINANCING ACTIVITIES		23,582			88,618
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES								2,387			(5,516	)

Effect of exchange rate changes on cash		(298	)		(28	)		11			(268	)
Net increase in cash, cash equivalents and restricted cash		528			7,831
Net increase (decrease) in cash, cash equivalents and restricted cash								2,594			(5,920	)
Cash, cash equivalents and restricted cash at beginning of period		28,041			4,524			22,098			28,041

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	28,569		$	12,355		$	24,692		$	22,121

See accompanying notes to condensed consolidated financial statements

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Orbital Infrastructure Group, Inc.

Condensed Consolidated Statements of Cash Flows (continued)

(Unaudited)

	For the Nine Months					For the Three Months
(in thousands)	Ended September 30,					Ended March 31,
	2022		2021			2023		2022
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Income taxes paid (net refunded)	$	109	$	(439	)	$	100	$	(405	)
Interest paid	$	20,623	$	851		$	6,961	$	5,183

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
Non-cash investment in acquisition for equity issuances						$	—	$	250
Equipment purchased with debt	$	712	$	715		$	271	$	—
Accrued property and equipment purchases	$	9	$	882		$	118	$	126
Non-cash payments on debt						$	2,759	$	3,750

See accompanying notes to condensed consolidated financial statements

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Orbital 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 Infrastructure Group, "OIG," "The Company") is a diversified infrastructure services company serving customers in the electric power, telecommunications, and renewable markets. The Company’s reportable segments are the Electric Power 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.

The Electric Power segment consists of Front Line Power Construction, LLC based in Houston, Texas (acquired November 17, 2021), Orbital Power, Inc. based in Dallas, Texas, (began operations in Q1 2020) and Eclipse Foundation Group ~~based in Gonzales, Louisiana (began~~which began operations in Q1 ~~2021~~2021.). The segment provides comprehensive infrastructure solutions to customers in the electric power industry. Services performed by Front Line Power and Orbital Power, 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. Eclipse Foundation Group, which began operations in January 2021, is a drilled shaft foundation construction 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/Layer 3 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.

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, ~~2021.~~ 2022. The Condensed Consolidated Balance Sheet as of December 31, ~~2021~~ 2022has 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, ~~2021.~~2022.

At a special stockholders meeting held April 18, 2023, the Company’s stockholders approved an amendment to the Company’s Certificate of Formation to effect a reverse stock split of the Company’s outstanding common stock at a ratio ranging from any whole number between 10-for-1 and 40-for-1 in order to achieve a minimum bid price of $1.00 per share for a minimum of 10 consecutive trading days, as required for continued listing of the common stock on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2). The board of directors authorized a 1-for-40 ratio for the reverse stock split, which became effective on April 21, 2023. The accompanying condensed consolidated financial statements and notes to the condensed consolidated financial statements give retroactive effect to the reverse stock split for all periods presented.

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, ~~2022.~~2023.

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

	For the Nine Months				For the Three Months
(in thousands)	Ended September 30,				Ended March 31,
	2022		2021		2023		2022
Cash and cash equivalents at beginning of period	$	26,865	$	3,046	$	21,489	$	26,865
Restricted cash at beginning of period (1)		1,176		1,478		609		1,176
Cash, cash equivalents and restricted cash at beginning of period	$	28,041	$	4,524	$	22,098	$	28,041

Cash and cash equivalents at end of period	$	27,960	$	11,179	$	23,993	$	20,949
Restricted cash at end of period (1)		609		1,176		699		1,172
Cash, cash equivalents and restricted cash at end of period	$	28,569	$	12,355	$	24,692	$	22,121

(1) Restrictions on cash at ~~September 30, 2022~~ March 31, 2023and ~~September 30, 2021~~ March 31, 2022relate 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 record purchase price ~~allocation~~allocations for the Company's acquisitions, fair value measurements used in goodwill impairment tests, impairment estimations of long-lived assets, revenue recognition on cost-to-cost type contracts, allowances for uncollectible accounts, valuations of non-cash capital stock issuances, estimates of the incremental borrowing rate for long-term leases, fair value estimates and the valuation allowance on deferred tax 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 ~~2021~~2022 classifications in order to conform to the ~~2022~~2023 presentation.

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~~three months ended ~~September 30, 2022,~~ March 31, 2023, the Company had an accumulated deficit of ~~$421.4~~$507.3 million, loss from continuing operations of ~~$208.3~~$20.3 million, and net cash ~~used in~~provided by operating activities of ~~$13.4~~$0.8 million. Further, as of ~~September 30, 2022,~~ March 31, 2023, the Company had a working capital deficit of ~~$118.7~~$302.6 million, including current maturities of debt, and cash and cash equivalents of ~~$28.0~~$24.0 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~~.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~~.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,~~ March 31, 2023, 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.~~$64.0 million.

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~~were removed from the balance sheet and an equal impairment ~~has been~~was recognized in the amount of $4.5 ~~million.~~million in the third quarter of 2022. Future payments related to these leases will be approximately ~~$5.2~~$4.4 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 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 15% on any sales of the GasPT device related to Snam Rete Gas and/or the Future Billing Methodology (FBM) Project.

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Goodwill and Indefinite-lived intangible assets

The Company had ~~Goodwill~~goodwill from acquisitions made in 2020, 2021 and 2022. Goodwill in the Front Line Power and GTS reporting units was impaired in 2022 for $70.2 million and $25.8 million respectively due to triggering events in the third quarter related to a continued decline in the Company's market capitalization, significant losses in the Renewables segment and 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 of the reporting units was valued using a market approach. The impairment assessment concluded that the fair value of the Renewables reporting unit was in excess of its carrying amount, which was negative. After impairments, the Company had $7.0 million of goodwill remaining at December 31, 2022 associated with Orbital Solar Services ("OSS) acquired in 2020. At the same time as the goodwill impairment, the Company assessed the other intangibles in the Renewables segment and determined the Customer relationship intangible was fully impaired and the remaining $4.3 million of book value was written off in the third quarter of 2022.

During the 10fourth

~~Table~~ quarter of ~~Contents~~

~~Roll-forward~~2022, triggering events of the same nature led to further valuation of the Company's ~~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

indefinite-lived intangible assets using a relief from royalties method which resulted in impairment. The impairment assessment included significant assumptions related to revenue growth rates, royalty rates, and discount rates. For the year ended December 31, 2022, management concluded that indefinite-lived intangibles were impaired by $9.3 million dollars primarily attributable to the Front Line and GTS trade names.

The Company tests for impairment of ~~Indefinite-lived~~indefinite-lived intangibles and ~~Goodwill~~goodwill in the second quarter of each year and when events or circumstances indicate that the carrying amount of ~~Goodwill~~goodwill exceeds its fair value and may not be recoverable.

Under current accounting guidance, Orbital 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.

During the ~~three~~first ~~months ended~~quarter of ~~June 30, 2022,~~ ~~the Company completed a quantitative analysis to determine whether it was more likely than~~ ~~not~~2023, ~~that the fair value of its reporting units were less than 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.~~goodwill, noting none. The ~~review~~remaining goodwill of ~~goodwill, prepared as of~~ ~~May 31, 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~~$7.0 million dollars is associated with OSS which has a negative 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 Renewables reporting unit was in excess of its carrying amount.~~ value.

Accrued expenses

Accrued expenses are liabilities that reflect expenses on the statement of operations that have not been paid or recorded in accounts payable at the end of the period. At ~~September~~ ~~30,~~~~2022~~March 31, 2023 and December 31, ~~2021,~~ 2022, accrued expenses of ~~$30.3~~$45.2 million and ~~$28.3~~$39.1 million, respectively included the following components:

(in thousands)	September 30,		December 31		March 31		December 31
	2022		2021		2023		2022
Accrued bonding	$	1,631	$	167	$	1,962	$	1,920
Accrued compensation		4,365		6,369		4,559		5,589
Working capital adjustment on Front Line Power Construction acquisition		4,592		14,092		4,592		4,592
Accrued interest		4,340		2,902
Accrued interest payable						6,886		5,885
Accrued taxes payable		148		102		669		248
Accrued subcontractor expenses		6,775		—		16,274		11,299
Accrued union dues		1,044		870		874		937
Accrued vendor invoices and accrued other expenses		7,401		3,799		9,382		8,595
Total accrued expense	$	30,296	$	28,301	$	45,198	$	39,065

~~Impact of COVID-~~19 ~~Pandemic and current economic environment~~

~~The effects of the COVID-~~19 pandemic continues to impact certain aspects and geographies of the global economy due to supply chain, production and other logistical disruptions. While we have continued to operate as a provider of essential services from the onset of the pandemic, during the course of the pandemic our operations and financial results have been adversely impacted by governmental responses to the COVID-19 ~~pandemic, including shut-down orders and limitations on work site practices implemented by governments. The longer-term implications of the COVID-~~19 ~~pandemic on our financial performance remain uncertain and variable in the current economic environment including rising interest and inflation rates.~~

~~We continue to monitor governmental vaccination and testing standards or requirements related to COVID-~~~~19,~~ ~~as well as certain standards and guidance for preventing the spread of COVID-~~~~19.~~ ~~While the impact of these standards has lessened in~~ ~~2022,~~ ~~we continue to monitor changes in these standards that~~ ~~may~~ ~~impact our business.~~

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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, ~~2021~~ 2022filed with the SEC on ~~March 31, 2022.~~April 7, 2023.

3.	DISCONTINUED OPERATIONS AND SALE OF A BUSINESS

As part of the Company’s stated strategy to transform Orbital Infrastructure Group into a diversified energy infrastructure services platform serving North American energy customers, the Company’s board of directors made the decision to divest of its Orbital Gas subsidiaries. The Orbital Gas subsidiaries provide proprietary gas measurement and sampling technologies and the integration of process control and measuring/sampling systems. They are legacy businesses that are not part of the Company’s strategy of building an infrastructure services company serving the electric power, telecommunications and renewable markets. The disposition of the Orbital Gas subsidiaries will facilitate the Company’s restructuring and cost savings initiatives and are intended to realign and simplify its business structure and better position the Company for future growth and improved profitability. In the fourth quarter of 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 ~~sale~~Company's U.K. operations were divested in May 2022 and most of the ~~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 portionassets of the North ~~America business~~American operation were divested in the third quarter of ~~2022~~2022. ~~at approximately book value of~~ At March 31, 2023 and December 31, 2022, the ~~assets sold. Certain assets and liabilities~~ ~~not~~ ~~sold with the business were reclassified from held for sale to held and used. Remaining~~remaining assets held for sale at ~~September~~ ~~30,~~~~2022~~ ~~include~~were the Company's 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.~~certain fixed assets at Eclipse Foundation Group.

Assets ~~and liabilities~~ held for sale that are included on the Company's balance sheet, relate to the company's discontinued businesses, and are described below. As of March 31, 2023 and December 31, 2022 there were no liabilities held for sale.

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		As of
	March 31,		December 31,
(in thousands)	2023		2022

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

Property and equipment	$	1,385	$	1,385
Other intangible assets		1,813		1,813
Total assets of the disposal group classified as held for sale	$	3,198	$	3,198

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Selected data for these discontinued businesses consisted of the following:

Reconciliation of the Major Classes of Line Items Constituting Pretax ~~Income~~Loss from

Discontinued Operations to the After-Tax ~~Income~~Loss from Discontinued Operations That Are

Presented in the Condensed Consolidated Statement of Operations

(in thousands)	For the Three Months						For the Nine Months						For the Three Months
	Ended September 30,						Ended September 30,						Ended March 31,
Major classes of line items constituting pretax profit of discontinued operations:	2022			2021			2022			2021
Major classes of line items constituting pretax loss from discontinued operations:													2023			2022

Revenues	$	933		$	6,097		$	7,002		$	14,816		$	85		$	3,986
Cost of revenues		(938	)		(4,608	)		(5,621	)		(10,418	)		(191	)		(2,694	)
Selling, general and administrative expense		(716	)		(1,973	)		(4,124	)		(6,367	)		(162	)		(2,139	)
Depreciation and amortization		—			(404	)		—			(1,249	)
(Provision) recovery of bad debt		25			5			(22	)		27
(Provision) credit for bad debt														—			(91	)
Interest expense		—			—			(13	)		(2	)		—			(7	)
Gain on extinguishment of PPP loan		—			—			—			779
Other expense		30			234			18			227			—			(8	)
Pretax income of discontinued operations		(666	)		(649	)		(2,760	)		(2,187	)
Pretax gain on sale of Orbital U.K.		—			—			299			—
Pretax loss from discontinued operations														(268	)		(953	)
Income tax expense		—			—			—			—			—			—
Total income from discontinued operations	$	(666	)	$	(649	)	$	(2,461	)	$	(2,187	)
Total loss from discontinued operations													$	(268	)	$	(953	)

Net cash ~~used in~~provided by operating activities of discontinued operations for the ~~nine~~three months ended ~~September 30, 2022~~ March 31, 2023was ~~$0.8~~$ 0.6 million.

~~There was $62 thousand net~~Net cash provided by investing activities of discontinued operations for the ~~nine~~three months ended ~~September 30,~~ March 31, 2023~~2022.~~ was $0 dollars.

4.	REVENUE FROM CONTRACTS WITH CUSTOMERS

The Electric Power segment provides full service building, maintenance and support to the electrical power distribution, transmission, substation, and emergency response sectors of North America through Front Line Power, and Orbital Power ~~Services and Eclipse Foundation.~~Services. 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.

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 it best 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 of work completed ~~multiplied by~~based on 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.~~amounts. We construct comprehensive revenue calculations based on quantifiable measures of actual units completed multiplied by the agreed upon contract prices per item completed.

~~For our engineering and network design contracts, revenue~~Revenue is also generally recognized over ~~time.~~time as the customer simultaneously receives and consumes the benefits of our performance as we perform the service.

For certain types of over time revenue jobs, the Company utilizes the right-to-invoice practical expedient. In these ~~jobs,~~instances, we have a right to invoice the customer for an amount that corresponds directly with the value transferred to the customer for our performance completed to date. When this practical expedient is used, we recognize revenue based on billing and calculate any additional revenue earned that is unbilled at the period end. We have contracts which have payment terms dictated by daily or hourly rates where some contracts may have mixed pricing terms which include a fixed fee portion. For contracts in which we charge the customer a fixed rate based on the time or materials spent during the project, we recognize revenue in the amount to which we have the right to invoice, which corresponds to the value transferred to the customer.

For any job where the customer does not simultaneously receive and consume the benefits of our performance as we perform the service, the timing of revenue recognition also depends on the payment terms of the ~~contract, as our performance does~~ ~~not~~ ~~create an asset with an alternative use to us.~~contract. 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. 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 asset, we recognize revenue at the point in time when control is transferred to the 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.

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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 integration systems 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.

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, and are within industry standards across our 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 output method 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~~three months ended ~~September 30, 2022~~ March 31, 2023and ~~2021~~2022 was as follows:

	For the Nine Months						For the Three Months
	Ended September 30,						Ended March 31,
(in thousands)	2022			2021			2023			2022
Total contract liabilities - beginning of period	$	6,503		$	4,873		$	10,218		$	6,503
Other contract additions, net		1,003			720			1,701			6,905
Change in provision for loss								(3,567	)		—
Revenue recognized		(7,155	)		(754	)		(5,652	)		(6,938	)
Contract settlements		—			(3,141	)
Total contract liabilities - end of period	$	351		$	1,698		$	2,700		$	6,470

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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~~ March 31, 2023~~30,~~~~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~~$142.2 million in the aggregate of future revenue related to remaining performance obligations that are unsatisfied or partially unsatisfied as of ~~September 30, 2022.~~ March 31, 2023.

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.

Performance Obligations Satisfied Over Time

To determine the proper revenue recognition method for our contracts satisfied over time, 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.

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, 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 and are estimated based on the most likely amount that is deemed probable of realization.

Two large solar projects have liquidated damages included within their customer contracts. In the event of a delay in the achievement of project milestones, the contracts specify the dollar amount of delay damages owed each day past the agreed upon milestone date. These delay liquidated damages are capped at 15% of the project contract price. During Q42022, the estimated completion dates on these two large solar projects were pushed passed milestone due dates in which the Company is contractually obligated to meet. As a result of these delays, the Company recorded liquidated damages as variable consideration, reducing the contract price on these two projects by a total of $17.1 million in 2022. This reduction in contract price along with additional estimated costs to complete the projects resulted in a catch-up adjustment to reduce revenue recorded year-to-date in 2022 by $21.4 million dollars. The customer on these two solar projects has the right to invoice, but as of May 15, 2023, has not yet sent an invoice for liquidated damages. Although the Company accrued for these liquidated damages in 2022, there is a possibility that some or all of the $17.1 million in liquidated damages could be reversed in future years if the customer does not invoice for these damages or if a legal settlement is reached.

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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.

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~~table presents the Company's revenues disaggregated by the type of customer:

	For the Three Months								For the Three Months								For the Three Months								For the Three Months
	Ended September 30, 2022								Ended September 30, 2021								Ended March 31, 2023								Ended March 31, 2022
(in thousands)	Electric Power		Telecommunications		Renewables		Total		Electric Power		Telecommunications		Renewables		Total		Electric Power		Telecommunications		Renewables		Total		Electric Power		Telecommunications		Renewables		Total

Utilities	$	35,076	$	132	$	—	$	35,208	$	12,200	$	—	$	—	$	12,200	$	36,808	$	214	$	—	$	37,022	$	39,251	$	—	$	—	$	39,251
Telecommunications		532		23,932		—		24,464		—		8,742		—		8,742		133		26,745		—		26,878		—		16,095		—		16,095
Renewables		—		—		39,026		39,026		—		—		3,880		3,880		—		—		14,929		14,929		—		—		14,464		14,464
Other		1,124		—		—		1,124		—		—		—		—		1,357		—		—		1,357		444		—		—		444
Total revenues	$	36,732	$	24,064	$	39,026	$	99,822	$	12,200		8,742	$	3,880	$	24,822	$	38,298	$	26,959	$	14,929	$	80,186	$	39,695		16,095	$	14,464	$	70,254

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

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
$ 117,695 $ 60,524 $ 85,770 $ 263,989 $ 20,297 $ 14,816 $ 6,789 $ 41,902

The following table presents the Company's revenues disaggregated by type of contract:

	For the Three Months								For the Three Months
	Ended March 31, 2023								Ended March 31, 2022
(in thousands)	Electric Power		Telecommunications		Renewables		Total		Electric Power		Telecommunications		Renewables		Total

Cost-plus contracts	$	15,268	$	—	$	—	$	15,268	$	17,237	$	112	$	—	$	17,349
Fixed price contracts		6,187		1,291		14,929		22,407		7,742		2,319		14,464		24,525
Unit price contracts		16,843		25,668		—		42,511		14,716		13,664		—		28,380
Total revenues	$	38,298	$	26,959	$	14,929	$	80,186	$	39,695	$	16,095	$	14,464	$	70,254

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

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, 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.	INVENTORIES

Inventories consist of raw materials and 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~~March 31, 2023 and December 31, ~~2021,~~2022, inventory by category is valued net of reserves and consists of:

	As of September 30,		As of December 31,		As of March 31,		As of December 31,
(in thousands)	2022		2021		2023		2022
Raw materials	$	1,198	$	1,316	$	1,706	$	1,338
Work-in-process		210		19		151		353
Total inventories	$	1,408	$	1,335	$	1,857	$	1,691

~~Table of Contents~~

6.	INVESTMENTS

The Company has a minority ownership in Virtual Power Systems ("VPS"). The VPS investment basis at ~~September~~ ~~30,~~~~2022~~March 31, 2023 and December 31, ~~2021~~ 2022was $1.1 million and $1.1 million, respectively, as reflected on the condensed consolidated balance sheets. The investment is held at ~~September 30, 2022~~ March 31, 2023under the cost method of accounting for investments.

LEASES

Operating leases

Consolidated total operating lease costs were ~~$5.2~~$1.6 million for the ~~nine~~three months ended ~~September 30, 2022~~ March 31, 2023and ~~$3.0~~$1.8 million for the ~~nine~~three months ended ~~September 30, 2021~~ March 31, 2022and 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~~ March 31, 2023are as follows for the years ended December 31:

(in thousands)
2022 (remaining period)	$	1,437
2023		5,421
2023 (remaining period)				$	4,212
2024		4,501			4,619
2025		2,953			3,118
2026		2,551			2,616
2027					1,963
Thereafter		3,905			1,815
Interest portion		(3,167	)		(2,672	)
Total operating lease obligations	$	17,601		$	15,671

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Total lease cost and other lease information is as follows:

	For the Three Months Ended March 31,
(in thousands)	2023			2022
Operating lease cost	$	1,591		$	1,623
Short-term lease cost		62			59
Variable lease cost		71			251
Sublease income		(129	)		(129	)
Total lease cost	$	1,595		$	1,804

For the Three Months Ended

For the Nine Months Ended

September 30, September 30,
(in thousands)

2022

2021

2022

2021

Operating lease cost
$ 1,600 $ 1,157 $ 4,924 $ 2,747
Short-term lease cost
7 114 78 134
Variable lease cost
111 175 564 478
Sublease income
(129 ) (129 ) (387 ) (372 )
Total lease cost
$ 1,589 $ 1,317 $ 5,179 $ 2,987

Other information - Operating leases (in thousands)	For the Nine Months Ended September 30, 2022						For the Three Months Ended March 31,
	2022			2021			2023			2022
Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows from operating leases (includes discontinued operations)	$	(5,800	)	$	(2,782	)
Operating cash flows used in operating leases							$	(1,526	)	$	(1,635	)
Right-of-use assets obtained in exchange for new operating lease obligations	$	3,908		$	7,290		$	240		$	3,172
Weighted-average remaining lease term - operating leases (in years)		4.7			4.3			4.5			4.5
Weighted-average discount rate - operating leases		7.1	%		6.5	%		7.1	%		7.1	%

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~~$1.2 million and ~~$1.1~~$1.5 million for the ~~nine~~three months ended ~~September 30, 2022~~ March 31, 2023and ~~2021~~2022 and are included in depreciation in cost of sales and interest expense.

Future minimum finance lease obligations at ~~September~~ ~~30,~~~~2022~~March 31, 2023 are as follows for the years ended December 31:

(in thousands)
2022 (remaining period)	$	1,478
2023		5,911
2023 (remaining period)				$	4,658
2024		5,342			5,336
2025		1,842			1,945
2026		893			946
2027					48
Thereafter		48			—
Interest portion		(1,324	)		(1,188	)
Total financing lease obligations	$	14,190		$	11,745

Total financing lease costs are as follows:

	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,				For the Three Months Ended March 31,
(in thousands)	2022		2021		2022		2021		2023		2022
Depreciation of financing lease assets	$	1,319	$	657	$	3,946	$	972	$	1,016	$	1,308
Interest on lease liabilities		207		118		672		176		199		241
Total finance lease cost	$	1,526	$	775	$	4,618	$	1,148	$	1,215	$	1,549

~~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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Other information - Financing leases	For the Three Months Ended March 31,
(in thousands)	2023			2022
Cash paid for amounts included in the measurement of lease obligations:
Operating cash flows from financing leases	$	(199	)	$	(241	)
Financing cash flows from financing leases	$	(1,310	)	$	(1,212	)
Right-of-use assets obtained in exchange for new financing lease obligations	$	67		$	837
Weighted-average remaining lease term - financing leases (in years)		2.4			2.8
Weighted-average discount rate - finance leases		6.5	%		6.5	%

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 %

8.	STOCK-BASED COMPENSATION AND EXPENSE

All common stock share and per share data reflects the reverse stock split effective April 21, 2023, as described in Note 19 Subsequent Events, Reverse stock split.

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 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~~$0.6 million of expense for RSUs for the three ~~and~~ ~~nine~~months ended ~~September 30,~~ March 31, 2023~~2022.~~.

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 were due to vest in April 2022, and one-third of which were due to vest in April 2023. ~~In the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~September~~ ~~30,~~~~2022,~~ ~~the~~The Company recorded zero and a net credit of $3.9 million, respectively, to compensation expense related to the forfeiture ~~and partial vesting~~ of these grants ~~compared to $1.4 million and $8.0 million of compensation expense~~ in the three ~~and~~ ~~nine~~months ended ~~September 30, 2021~~March 31, 2023 ~~for partial vesting of the grants.~~and March 31, 2022 respectively. The credit to compensation expense in the first ~~nine~~three months of 2022 was due to a $5.2 million reversal of expense related to the forfeiture of the unvested restricted stock upon the termination of an employee as of ~~September 30,~~March 31, 2022.

Restricted Stock Units

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

Non-vested shares, beginning of year		3,018,788		$	4.58		104,094		$	55.35
Granted		5,943,197			1.33		—			—
Vested		(2,222,770	)		1.54		(14,802	)		78.70
Forfeited		(2,139,872	)		5.31		(2,147	)		106.08
Non-vested shares, September 30, 2022		4,599,343		$	1.50
Non-vested shares, end of year							87,145		$	50.13

WARRANTS

All common stock share and per share data reflects the reverse stock split effective April 21, 2023, as described in Note 19 Subsequent Events, Reverse stock split.

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~~225,000 shares of the Company’s common stock, $0.001 par value, (ii) pre-funded warrants to purchase up to ~~7,153,847~~178,847 shares of Common Stock and (iii) accompanying warrants to purchase up to ~~16,153,847~~403,846 shares of Common Stock. The offering price per share and associated prefunded warrants was ~~$1.30~~$52.00 for the shares and ~~$1.2999~~$51.996 for the prefunded warrants. The prefunded warrants were immediately exercisable, had an exercise price of ~~.0001~~.004 and were exercised during the three months ended June 30, 2022.

The accompanying warrants have an exercise price of ~~$1.31,~~$52.40, 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~~three months ended ~~September 30, 2022~~ March 31, 2023is as follows:

Description	*Classification*	*Exercise Price*		*Expiration Date*	*Balance December 31, 2021*		*Warrants Issued*		*Warrants Exercised*		*Warrants Expired*		*Balance September 30, 2022*		*Classification*	*Exercise Price*		*Expiration Date*	*Balance December 31, 2022*		*Warrants Issued*		*Warrants Exercised*		*Warrants Expired*		*Balance March 31, 2023*

Warrants	Liability	$	1.31	April 2027		—		16,153,847		—		—		16,153,847	Liability	$	52.40	April 2027		403,846		-		-		-		403,846
Pre-funded warrants	Liability	$	0.0001	April 2027		—		7,153,847		7,153,847		—		—
Total	Total					—		23,307,694		7,153,847		—		16,153,847	Total					403,846		-		-		-		403,846

2018

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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 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 Renewables and an Other category.

The Electric Power segment consists of Front Line Power Construction, LLC, Orbital Power, Inc. and Eclipse Foundation Group. The segment provides comprehensive solutions to customers in the electric power industries.

The 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 Other category is made up primarily of the Company's corporate activities. This category does not include any operating segments and does not generate revenue.

The following information represents segment activity for the three months ended ~~September 30, 2022:~~March 31, 2023:

(in thousands)	Electric Power			Telecommunications			Renewables			Other			Total			Electric Power		Telecommunications		Renewables			Other			Total
Revenues from external customers	$	36,732		$	24,064		$	39,026		$	—		$	99,822		$	38,298	$	26,959	$	14,929		$	—		$	80,186
Depreciation and amortization (1)		6,975			1,315			608			16			8,914			3,988		1,232		179			16			5,415
Interest expense		4,441			19			1			5,253			9,714			5,852		106		12			5,194			11,164
Income (loss) from operations		(76,606	)		(23,213	)		(26,535	)		(2,356	)		(128,710	)		2,705		2,826		(4,613	)		(4,195	)		(3,277	)
Expenditures for long-lived assets		368			396			10			43			817			297		336		1			6			640

⁽¹⁾ ~~Depreciation~~For the Electric Power segment, the Telecommunications segment, and the Renewables segment, depreciation and amortization includes ~~$3.5~~$2.6 million, ~~of depreciation expense~~$0.18 million and $5 thousand respectively, which was included in cost of revenues in the Condensed Consolidated ~~Statements~~Statement of Operations.

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The following information represents segment activity for the three months ended ~~September 30, 2021:~~March 31, 2022:

(in thousands)	Electric Power			Telecommunications			Renewables			Other			Total			Electric Power			Telecommunications		Renewables		Other			Total
Revenues from external customers	$	12,200		$	8,742		$	3,880		$	—		$	24,822		$	39,695		$	16,095	$	14,464	$	—		$	70,254
Depreciation and amortization (1)		1,095			774			614			416			2,899			6,975			1,091		608		16			8,690
Interest expense		116			9			256			885			1,266			4,071			37		2		3,929			8,039
Loss from operations		(2,445	)		(436	)		(3,605	)		(4,364	)		(10,850	)
Income (loss) from operations																	(711	)		477		428		(1,982	)		(1,788	)
Expenditures for long-lived assets (2)		1,391			393			77			41			1,902			943			423		—		36			1,402

⁽¹⁾ ~~Depreciation~~For the Electric Power segment and the Telecommunications segment, depreciation and amortization includes ~~$1.2~~$3.2 million ~~of depreciation expense~~and $0.2 million respectively, which was included in cost of revenues in the Condensed Consolidated ~~Statements~~Statement 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

~~Table of Contents~~

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

(in thousands)

Electric Power

Telecommunications

Renewables

Other

Total

Revenues from external customers
$ 117,695 $ 60,524 $ 85,770 $ — $ 263,989
Depreciation and amortization (1)
21,445 3,582 1,825 47 26,899
Interest expense
12,743 115 5 14,703 27,566
Income (loss) from operations
(77,621 ) (21,662 ) (32,280 ) (6,642 ) (138,205 )
Expenditures for long-lived assets (2)
2,719 975 19 83 3,796

⁽¹⁾ ~~Depreciation and amortization includes $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 Other category includes expenditures for discontinued operations of $10 thousand.

The following information represents selected balance sheet items by segment ~~activity for the~~as of ~~nine~~March 31, 2023 ~~months ended~~ ~~September 30, 2021:~~:

(in thousands)

Electric Power

Telecommunications

Renewables

Other

Total

Revenues from external customers
$ 20,297 $ 14,816 $ 6,789 $ — $ 41,902
Depreciation and amortization (1)
1,944 1,389 2,319 1,281 6,933
Interest expense
175 10 270 2,641 3,096
Loss from operations
(11,461 ) (1,185 ) (17,178 ) (14,243 ) (44,067 )
Expenditures for long-lived assets (2)
5,532 838 118 808 7,296

⁽¹⁾ Depreciation and amortization includes $2.3 million of depreciation expense which was included in cost of revenues in the Condensed Consolidated Statements of 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 of $0.7 million.~~

(in thousands)	Electric Power		Telecommunications		Renewables		Other		Total
Segment assets	$	162,779	$	72,749	$	17,297	$	15,388	$	268,213
Goodwill		—		—		7,006		—		7,006
Other intangible assets, net		83,955		23,705		1,285		—		108,945

The following information represents selected balance sheet items by segment as of December 31, ~~2021:~~2022:

(in thousands)	Electric Power		Telecommunications		Renewables		Other		Total		Electric Power		Telecommunications		Renewables		Other		Total
Segment assets	$	273,726	$	80,800	$	28,324	$	29,489	$	412,339	$	167,245	$	67,920	$	18,932	$	17,474	$	271,571
Goodwill		70,151		23,742		7,006		—		100,899		—		—		7,006		—		7,006
Other intangible assets, net		106,377		28,571		7,708		—		142,656		85,355		24,333		1,446		—		111,134

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11.

RECENT ACCOUNTING PRONOUNCEMENTS

In ~~September 2022,~~March 2023,the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects to allow reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted in any interim period, but it shall be adopted as of the beginning of the fiscal year that includes that interim period. ASU 2023-02 is not expected to have a material effect on our consolidated financial statements.

In March 2023, the FASB issued ASU 2023-01, Leases (Topic) 842:Common Control Arrangements. Topic 842 requires that entities determine whether a related-party arrangement between entities under common control is a lease. If the arrangement is determined to be a lease, an entity must classify and account for the lease on the same basis as an arrangement with an unrelated party. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted in any interim period, but it shall be adopted as of the beginning of the fiscal year that includes that interim period. ASU 2023-01 is not expected to have a material effect on our consolidated financial statements.

In September 2022, the FASB issued 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~~were 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~~did not identify any supplier finance program obligations and the ~~effect of this~~ new standard ~~which is~~did not ~~expected to~~ have ~~a material~~an effect on the Company's financial position or results of operations.

In June 2022, the FASB issued ASU 2022-03, ~~“Fair~~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~~requires 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~~were 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.~~completed any business combinations since the effective date of the new standard therefor, there is no impact on the Company's financial position or results of operations.

12.

FAIR VALUE MEASUREMENTS

The Company’s fair value hierarchy for our financial ~~assets and~~ liabilities as of ~~September 30, 2022~~ March 31, 2023and December 31, ~~2021~~ 2022was as follows:

(in thousands)
September 30, 2022	Level 1		Level 2		Level 3		Total
March 31, 2023									Level 1		Level 2		Level 3		Total
Contingent consideration	$	—	$	—	$	720	$	720	$	—	$	—	$	570	$	570
Front Line Power Construction Seller Financed debt		—		68,501		—		68,501
Front Line Power Construction seller financed debt, net of discount										—		69,000		—		69,000
Financial instrument liability - related to Syndicated debt		—		—		844		844		—		—		607		607
Financial instrument liability - related to Front Line Power Construction seller financed debt		—		—		40,085		40,085		—		—		44,785		44,785
Prepaid advance agreement		—		4,666		—		4,666		—		—		—		—
Warrant liabilities		—		—		5,492		5,492
Warrant liability										—		—		1,131		1,131
Total liabilities	$	—	$	73,167	$	47,141	$	120,308	$	—	$	69,000	$	47,092	$	116,093

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

December 31, 2022	Level 1		Level 2		Level 3		Total
Contingent consideration	$	—	$	—	$	570	$	570
Front Line Power Construction seller financed debt, net of discount		—		68,753		—		68,753
Financial instrument liability - related to Syndicated debt		—		—		536		536
Financial instrument liability - related to Front Line Power Construction seller financed debt		—		—		43,693		43,693
Prepaid advance agreement		—		1,829		—		1,829
Warrant liability		—		—		1,777		1,777
Total liabilities	$	—	$	70,582	$	46,575	$	117,158

(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 Syndicated debt
Balance at December 31, 2022	$	536
Fair value adjustment to financial instrument liability		71
Balance at March 31, 2023	$	607

(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)	Financial Instrument Liability - related to FLP seller financed debt
Balance at December 31, 2022	$	43,693
Fair value adjustment to financial instrument liability		1,093
Balance at March 31, 2023	$	44,785

(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

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(In thousands)	Warrant Liability
Balance at December 31, 2022	$	1,777
Fair value adjustment to warrant liability		(646	)
Balance at December 31, 2022	$	1,131

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~~ March 31, 2023as determined at the end of the reporting period.

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13.

LOSS PER COMMON SHARE

All common stock share and per share data reflects the reverse stock split effective April 21, 2023, as described in Note 19 Subsequent Events, Reverse stock split.

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~~ March 31, 2023and ~~September 30, 2021,~~ March 31, 2022, 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~~5 thousand shares related to stock options, ~~16.2~~0.4 million warrants outstanding at ~~September~~ ~~30,~~~~2022~~March 31, 2023 and ~~4.6 million~~87 thousand 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~~ March 31, 2023and ~~0.2 million~~5 thousand shares related to stock options outstanding at ~~September 30, 2021~~ March 31, 2022were excluded for the three ~~and~~ ~~nine~~months ended ~~September~~ ~~30,~~~~2021~~March 31, 2022 and ~~2.3 million~~zero shares of restricted stock and restricted stock units were excluded from the computation of diluted net loss per share for the ~~nine~~three months ended ~~September 30, 2021.~~ March 31, 2022. 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~~discontinuing operations and net ~~income~~loss for the three ~~and~~ ~~nine~~months ended ~~September 30, 2022~~ March 31, 2023and ~~2021.~~2022.

	For the Three Months						For the Nine Months						For the Three Months
(in thousands, except share and per share amounts)	Ended September 30,						Ended September 30,						Ended March 31,
	2022			2021			2022			2021			2023			2022
Loss from continuing operations, net of income taxes	$	(141,567	)	$	(9,498	)	$	(208,331	)	$	(34,125	)	$	(20,257	)	$	(36,670	)
Income (loss) from discontinued operations, net of income taxes		(666	)		(649	)		(2,461	)		(2,187	)
Loss from discontinued operations, net of income taxes														(268	)		(953	)

Net loss	$	(142,233	)	$	(10,147	)	$	(210,792	)	$	(36,312	)	$	(20,525	)	$	(37,623	)

Basic and diluted weighted average number of shares outstanding		115,637,323			62,823,330			98,209,495			53,142,557			4,327,323			2,078,168

Loss from continuing operations per common share - basic and diluted	$	(1.22	)	$	(0.15	)	$	(2.12	)	$	(0.64	)	$	(4.60	)	$	(17.63	)

Loss from discontinued operations - basic and diluted		(0.01	)		(0.01	)		(0.03	)		(0.04	)
Loss from discontinued operations per common share - basic and diluted														(0.06	)		(0.46	)

Loss per common share - basic and diluted	$	(1.23	)	$	(0.16	)	$	(2.15	)	$	(0.68	)	$	(4.66	)	$	(18.09	)

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 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 other than a $91 thousand carryback benefit at Canada.~~assets. 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~~$0.5 million and ~~$0.8~~$0.2 million were recorded to the income tax provision from continuing operations for the three ~~and~~ ~~nine~~ months ended ~~September 30,~~ March 31, 2023, and March 31,2022, respectively, resulting in an effective tax rate of ~~(0.1%~~(2.7%) and ~~(0.4%~~(0.7%), 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 18.1% and 24.4%, respectively. The income tax benefit from continuing operations for the~~ ~~three~~~~and~~ ~~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, 2021~~ the 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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15.

ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss are as follows:

(in thousands)	As of September 30, 2022			As of December 31, 2021			As of March 31, 2023			As of December 31, 2022
Foreign currency translation adjustment	$	(687	)	$	(3,995	)	$	(673	)	$	(691	)
Accumulated other comprehensive loss	$	(687	)	$	(3,995	)	$	(673	)	$	(691	)

~~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, 2022			As of December 31, 2021			As of March 31, 2023			As of December 31, 2022
Syndicated debt (1)	$	104,475		$	105,000		$	114,463		$	114,725
Seller Financed notes payable - Front Line Power Construction, LLC acquisition (2)		69,168			86,730			69,168			69,168
Note Payable - Financing notes (3)		2,650			1,357
Note Payable - financing notes (3)								887			2,210
Seller Financed notes payable - Reach Construction Group, LLC acquisition (4)		3,480			3,480			3,480			3,480
Vehicle and equipment loans (5)		1,752			222			2,120			2,014
Non-recourse payable agreements (6)		9,610			8,269			5,220			10,400
Notes payable - Institutional investor (7)		50,006			33,922			75,677			60,780
Prepaid Advance agreement (8)		4,720			—			-			1,829
Conditional settlement notes payable agreement (9)		2,500			3,000			1,500			2,250
Full Moon and CFS - loans to prior owners (10)		31			2			23			29
Subtotal		248,392			241,982			272,538			266,885
Unamortized prepaid financing fees and debt discounts		(11,620	)		(12,603	)
Total notes payable		236,772			229,379
Unamortized prepaid financing fees								(20,551	)		(21,649	)
Total long-term debt								251,987			245,236
Less: notes payable, current		(129,034	)		(72,774	)		(250,711	)		(144,708	)
Notes payable, less current portion	$	107,738		$	156,605		$	1,276		$	100,528

⁽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 first 30 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~~The interest rate at ~~September 30, 2022~~ on the term notes ~~is 15.45%~~ at ~~September~~March ~~30,~~31, ~~2022~~2023 was 17.38% with ~~a current~~an effective rate of ~~18.0%~~23.5%. 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 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 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 date of the first intercompany advance that the Company made. The $10.5 million was added to the original issue discount and will be amortized to interest expense over the life of the loan. At March 31,2023 the Company was not in compliance with all debt covenants ~~except for~~but is seeking a ~~default identified and cured as a subsequent event. See Note~~ 20 ~~for more information~~forbearance on the ~~cured default.~~default, and has reclassified the $96.5 million long-term balance of the term loan net of discount to current liabilities.

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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 interest at a rate of 6% per annum and as modified on April 29, 2022 and December 30, 2022, $20 million was paid on May 6, 2022, $15 million is due on or before ~~December 31, 2022,~~April 1, 2023 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 a reduction of shares issued to ~~Mr. Johnson~~Kurt of 400,000. This note was paid off as part of the May 6, 2022 payment. Additionally in a Q1~~2022~~ ~~amendment~~amendments 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~~$160.00 per share after the effects of the reverse stock split, upon expiration of the restriction period ending April 1, 2023, 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 ending April 1, 2023, so that the value of his stock consideration is no less than $17,635,228, which is equal to ~~$4.00~~$160.00 per common ~~share.~~share after the effects of the reverse stock split. Any shortfall would be made up by issuing Mr. Johnson additional common shares. In 2022, the Company recorded a $26.2 million loss on extinguishment related to these loan modifications. The Company did not make the required cash payments on April 1, 2023 and is in default on the unsecured promissory notes but received a verbal forbearance from the note holders. The Company did not issue make-whole shares upon the April 1, 2023 expiration of the restriction period and effected an agreement to extend the restriction period to September 30, 2023. See Note 19 - Subsequent Events for additional information.


⁽³⁾	The Company ~~has a note~~executes notes payable towith First Insurance Funding ~~executed in~~ ~~2022~~ for the purposes of financing a portion of the Company's insurance coverage. The Company executed a note ~~has an annual percentage rate of~~payable in July 2022 for $3.3 million and one in November 2022 for $0.7 million both at 3.28% ~~to be paid in~~ ~~ten~~ ~~monthly payments and~~interest. These two notes are ~~set~~scheduled to mature in May 2023.At ~~December 31, 2021,~~ ~~the Company had~~ ~~three~~ ~~notes payable with First Insurance Funding executed in the~~ ~~third~~ ~~and~~ ~~fourth~~ ~~quarter of~~ ~~2021~~ ~~for the purpose of financing a portion of the Company's insurance coverage at annual percentage rates ranging from 3.00% to 4.35% all of which are paid off at~~ ~~September 30, 2022.~~

⁽⁴⁾	Includes two seller-financed notes payable, one for $5 million and the second for $1.5 million. In August 2021, the $5 million note was amended from its original 18-month term; the Company paid $1 million in cash and exchanged ~~155,763~~3,895 shares of common stock after the effects of the reverse stock split in exchange for an additional $1 million reduction in principal. 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 an original issue discount of $48 thousand. 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.~~transaction and will be making no payments toward this obligation until legal determinations have been made.

⁽⁵⁾	Includes vehicle and equipment loans with interest rates ranging from 0% to 9.15%.

⁽⁶⁾	The Company entered into a non-recourse 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 a debt discount of $2.6 million. Under the terms of the agreement, for the first 12 weeks, the Company 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 three non-recourse agreements ~~with~~ C6 ~~Capital~~ for the sale of future revenues in the combined amount of $20.2 million. The Company received approximately $13.3 million after the deduction of an original issue discount and upfront fees. In April 2022, the Company used part of the proceeds from these non-recourse agreements to pay off the non-recourseC6 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~~were being amortized based on an effective interest rate of 88% and ~~will~~were scheduled to mature in the first quarter of 2023. In December 2022, The Company refinanced the remaining two agreements and recorded a loss on extinguishment of $0.5 million. As part of the refinancing, the Company took out three new agreements with a combined face amount of $11.4 million, which included combined original issue discounts of $3.6 million. Payments are $260 thousand per week until the agreements mature in October 2023, and the discounts were being amortized at a 94% effective interest rate. In February 2023, in order to remove certain liens associated with these obligations, proceeds from a new note with the institutional investor in item 7 below, were used to pay down an additional amount toward these three collective agreements of $1.8 million which created a new weighted-average effective interest rate across the three agreements of 164% and will cause the agreements to be paid off by the end of August 2023, prior to the original maturity. The combined carrying value of the agreements net of the approximately $1.4 million of original issue discounts at March 31,2023 was $3.8 million.

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⁽⁷⁾	On ~~March 23,~~December 20, 2021, the Company completed a note payable agreement with an institutional investor, as replaced on February 24, 2023, to surrender the original Unsecured Note with a Secured Promissory Note, with a face amount of ~~$10.7~~$14.9 million and a stated interest rate of 9.0%~~, an estimated effective interest rate~~. As part of ~~19.6%, and an original issue discount~~the cancellation of ~~$1.0 million. This~~the old note, ~~was paid off in~~the company recognized a $94 thousand loss on extinguishment. We ~~August 2022.~~may On ~~May 11, 2021,~~ prepay all or a portion of the ~~Company completed~~outstanding obligations under the note at a ~~note payable agreement with~~price equal to 115% of the ~~institutional investor with a face~~ amount of $10.7 million, a stated interest rate of 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 $5.3 million at ~~September~~ ~~30,~~~~2022.~~ ~~The net proceeds were~~we elect to ~~be used for working capital, future acquisitions and general corporate purposes.~~prepay. Beginning six (6) months from the purchase price date of the new note, investor has the right, in its sole and absolute discretion, to redeem all or any portion of the Note (such amount, the ~~“Redemption Amount”~~"Redemption Amount") subject to the monthly maximum ~~monthly~~ redemption amount of $1$1.25 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 ~~eighteen~~ ~~(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, 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.~~ "Redemption Notice". This note ~~also includes~~contains 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$2.5 million ~~for each of the months of~~per month starting ~~June~~ ~~and~~ ~~July 2022.~~March 2023. If the Company ~~failed~~fails to make the required payments, the ~~Lender’s~~investor's sole and exclusive remedy ~~was~~is to require, as liquidated damages, a ~~ten~~2.5% ~~percent (10%)~~ increase to the outstanding balance for such month on this note. The Company failed to ~~meet~~make the ~~debt reduction requirement~~required payments in ~~June~~ ~~and~~ ~~July 2022~~March and recorded liquidated damages in other expense in the amount of ~~$2.3~~$.4 million, which was added to the principal amount of the note. The ~~original agreement~~note also ~~called~~calls for a ~~similar debt reduction requirement in~~mandatory prepayment of ~~August 2022,~~ 50%~~but this term was later removed by a subsequent agreement.~~ of the unpaid principal balance on April 1, 2023. The carrying value of the note is $15.4 million as of March 31, 2023. On ~~August 2,~~December 9, 2022, the Company ~~completed~~entered into a Forbearance and Investment Agreement with the same institutional investor and its successors and/or assigns pursuant to which the Company issued a Secured Promissory Note in the face amount of $42.1 million. The note ~~payable agreement with~~reflects the cancellation of $36.7 million of obligations under certain prior promissory notes issued to the institutional investor ~~with~~and $5,000,000 of additional funds made available to the Company. As part of the cancellation of the former debt, the Company recorded a ~~face amount~~loss on extinguishment of ~~$8.6~~$1.3 million ~~a stated interest rate~~ in December of ~~9.0%, an estimated effective interest rate of 16.4%, and~~2022. The new note carries an original issue discount of ~~$0.6 million.~~$350,000 and reimbursement of investor’s transactional expenses of $50,000, which are included in the initial principal balance of the new note. The note ~~payable is payable within~~bears interests at ~~eighteen~~nine ~~(18) months after the purchase~~percent 9% per annum and has a maturity date ~~and the creditor~~of ~~may~~ ~~request payment of up to $0.8 million per month beginning~~ 618 months after ~~initial issuance. The carrying value was $8.2~~its issuance date of December 9, 2022. We may prepay all or a portion of the outstanding obligations under the new note at a price equal to 115% of the amount we elect to prepay. Beginning six (6) months from the purchase price date of the new note, 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 monthly maximum redemption amount of $2.5 million at ~~September~~ ~~30,~~~~2022.~~ ~~The~~per calendar month, by providing Company ~~has~~ ~~not~~ ~~made any payments on this note as of~~ ~~September 30, 2022.~~ with a "Redemption Notice". 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~~contains 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$2.5 million ~~for each of the months of~~per month starting ~~February,~~December 2022. ~~March~~ ~~and~~ ~~April~~ ~~2023.~~If the Company fails to make the required payments, the ~~Lender’s~~investor's sole and exclusive remedy is to require, as liquidated damages, a ~~ten~~2.5% ~~percent (10%)~~ increase to the outstanding balance for such month on this note. The Company failed to make the required payments in January, February and March of 2023 and recorded liquidated damages in other expense in the amount of $3.4 million, which was added to the principal amount of the note. The note also calls for a mandatory prepayment of 50% of the unpaid principal balance on April 1, 2023. The carrying value of the note is $48.6 million as of March 31, 2023. On March 6, 2023, the Company entered into an Amended and Restated Secured Promissory Note, which was a replacement and substitution for a Secured Promissory Note issued to the institutional investor by the Company on February 1, 2023. The restated note has a face value of up to $20.9 million, a 9% stated interest rate, and carries an original issue discount of up to $2.9 million, of which, $.3 million was already earned as of the restatement date due to original cash draws received of $4.25 million and $1.5 million was associated with a restructuring fee. Additional draws are not to exceed $13.8 million and are subject to draw conditions. The outstanding balance shall be repaid on or before June 30, 2023 provided that no draws are advanced to the Company after June 27, 2023. Draws on this note through March 31, 2023 total $9.75 million in cash proceeds. This note contains a debt reduction clause whereby the Company has agreed to make payments on all of its outstanding agreements with the investor totaling at least $2.5 million per month starting March 2023. If the Company fails to make the required payments, the investor's sole and exclusive remedy is to require, as liquidated damages, a 2.5% increase to the outstanding balance for such month on this note. The Company failed to make the required payments in March and recorded liquidated damages in other expense in the amount of $.3 million, which was added to the principal amount of the note. The note also calls for a mandatory prepayment of 50% of the unpaid principal balance on April 1, 2023. The carrying value of the note is $10.6 million as of March 31, 2023. Pursuant to the restated note, the investor agreed to forebear from calling certain defaults against the Company applicable to all three of the outstanding notes prior to June 30, 2023. The agreement contains milestone events and deadlines which require the Company to pursue divestment of certain businesses in 2023 or incur penalties. Refer to the Company's Current Report on Form 8-K dated March 13, 2023 for further details.

⁽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~~$8.00 per ~~share.~~share after the effects of the reverse stock split. 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~~was 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.~~2022 ~~See note~~and was paid off and has 12no ~~for fair value information on this prepaid advance agreement and note~~carrying balance as of 20March 31, 2023. ~~related to an extension of the maturity.~~

⁽⁹⁾	In October 2020, the Company entered into a conditional settlement agreement with a subcontractor as amended to make payments of $3.5 million, of which $2.6 million is at zero interest, ~~over~~ ~~three~~$0.9 million is at 5% interest and the total term of the agreement was amended to be two and a half years. The Company made a ~~$0.5 million~~$500,000 payment in the fourth quarter of ~~2021.~~2021, $500,000 in payments in the first quarter of 2022, a $250,000 payment in the fourth quarter of 2022, and $750,000 in payments in the first quarter of 2023. The Company ~~made~~was scheduled to make the final payment of $1.5 million plus accrued interest in April 2023 but amended the agreement in April 2023 to adjust the maturity to June 2023. The amendment also applies a ~~$150,000 payment in~~ ~~February 2022,~~ ~~and a $350,000 payment on~~5% interest rate from the date of the amendment to the outstanding principal balance which was $1.5 million as of March 31, ~~2022.~~ ~~The Company is scheduled to make a $1 million payment by~~ ~~November 2022~~ ~~and the final $1.5 million payment by~~ ~~November~~ 2023.

⁽¹⁰⁾	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~~In November 2022, the maturity date offor the line of credit was ~~August 19, 2022,~~ ~~but the maturity date was~~ extended~~three~~ ~~months~~ to November ~~2022.~~2023. At ~~September 30, 2022~~March 31,2023the Company had ana $4.0 million outstanding balance on the line of credit ~~of $4.0 million with~~and zero dollars were available for borrowing.

~~Debt Modifications~~

~~In the~~ ~~first~~ ~~quarter of~~ ~~2022,~~ ~~the Company entered into a loan modification~~ Collateral on the ~~Front Line Seller Financed notes payable. In order to extend the maturity date~~line of ~~these loans from the original maturity date~~credit includes inventory, accounts receivable, equipment and general intangibles. The line of ~~May 16, 2022,~~ ~~the Company agreed to reduce the restriction period on the stock granted to~~ ~~one~~credit agreement includes certain affirmative covenants, all 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~~in compliance with as of ~~September~~March ~~30,~~31, ~~2022~~2023. ~~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 major product lines in ~~2021~~2022 and ~~2022~~2023 were electric power transmission and distribution maintenance and service, utility-scale solar construction projects and telecommunications 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,
Customer

2022

2021

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

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

	For the Nine Months Ended September 30,						For the Three Months Ended March 31,
Customer	2022			2021			2023			2022
Customer 1		14	%		<10%		19		%		28	%
Customer 2		21	%		<10%			17	%		<10%
Customer 3		18	%		<10%		16		%		19	%
Customer 4		14	%		14	%		15	%	14		%
Total concentrations		67	%		14	%		67	%		61	%

The Company did not have geographic revenue concentrations outside the U.S.A. greater than 10% of consolidated revenue.

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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 March 31,			As of December 31,
Customer	2022			2021			2023			2022
Customer 1								18	%		26	%
Customer 2		22	%		30	%		22	%		21	%
Customer 3								<10%			11	%
Customer 4	29		%		<10%		16		%		14	%
Customer 5		17	%		<10%
Customer 3		<10%			16	%
Total concentrations		68	%		46	%		56	%		72	%

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

For the three months ended ~~September 30, 2022,~~ March 31, 2023, the Company had ~~three~~no supplier ~~concentrations of approximately 14%, 13%, and 11% in the Renewables segment and~~ ~~zero~~ ~~supplier concentrations for the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2022.~~ Inconcentrations. For the three months ended ~~September 30, 2021,~~ March 31, 2022~~the Company did~~ ~~not~~ ~~have any supplier concentration over~~ ~~10%.~~ ~~In the~~ ~~nine~~ ~~months ended~~ ~~September 30, 2021,~~ , the Company had one supplier concentration atof approximately ~~10%~~12% in the ~~Electric Power~~Renewables segment.

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18.

~~ACQUISITIONS~~

~~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 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 transaction.

~~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 since~~1992.~~The acquisition was effectuated pursuant to the Share Purchase Agreement (the “Agreement”), with the shareholders of IMMCO (the "Seller"). Orbital Infrastructure Group paid $16 million and issued 874,317 shares of restricted common stock issued to the Seller ($2.0 million estimated fair value as of ~~July 28, 2021)~~ plus a $0.6 million working capital adjustment for a combined total of $18.6 million. Goodwill reflects the excess purchase price over the fair value of net assets. The Company recorded $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
Fair value of common stock issued to sellers
2,024
Total
$ 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
$ 18,621

Cash and cash equivalents
$ 1,634
Trade accounts receivable, net
1,254
Contract assets
1,001
Prepaid expenses and other current assets
551
Property and equipment
760
Intangible, customer relationships
3,800
Intangible, trade name
1,162
Intangible, technology know how
1,459
Other long-term assets
76
Deferred tax liability
(2,090 )
Liabilities assumed
(2,100 )
Net assets acquired
7,507
Goodwill
11,114
Purchase price allocation
$ 18,621

(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.~~

~~Table of Contents~~

~~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 Infrastructure Group and the shareholders of GTS (the "Seller"). Orbital 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)

Purchase Consideration

Cash payment
$ 22,000
Fair value of common stock issued to sellers
16,932
Total
$ 38,932

Purchase price
$ 38,932

Cash and cash equivalents
$ 610
Trade accounts receivable
7,871
Contract assets
1,686
Contingent receivable
1,424
Prepaid expenses and other current assets
408
Property and equipment
3,795
Right of use assets - Operating leases
860
Intangible, customer relationships
16,075
Intangible, trade name
6,388
Intangible, non-compete agreements
385
Other long-term assets
123
Deferred tax liability
(9,048 )
Liabilities assumed
(3,984 )
Net assets acquired
26,593
Goodwill
12,339
Purchase price allocation
$ 38,932

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

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

2021

2021

Gross revenue
$ 31,462 $ 69,867
Loss from continuing operations, net of income taxes
$ (13,919 ) $ (41,876 )

~~Table of Contents~~

~~19.~~

COMMITMENTS AND CONTINGENCIES

Legal Matters

The Company may be involved in certain legal actions arising from the ordinary course of business. While it is not feasible to predict or determine the outcome of these matters, we do not anticipate that any of these matters, or these matters in the aggregate, will have a material adverse effect on the financial position or results of operations.

Off-Balance Sheet Arrangements

- Performance and Payment Bonds and Parent Guarantees

In the ordinary course of business, Orbital Infrastructure Group and its subsidiaries are required by certain customers to provide performance and payment bonds for contractual commitments related to 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~~ March 31, 2023~~30,~~~~2022,~~, the total amount of the outstanding performance and payment bonds was approximately ~~$38.4 million.~~$5.0 million. In addition, the Company had letters of credit outstanding of ~~$1.4~~$1.5 million as of ~~September 30, 2022.~~March 31, 2023.

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 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.

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.

The Company and its subsidiary, OSS, were involved in a contract dispute with Jingoli Power (“Jingoli”) regarding the Joint Venture between Jingoli and OSS for construction of the Black Bear and Happy - Lightsource BP Projects. The Company contends that Jingoli unjustifiably and without proper authority took over management and control of the two projects and that, as a direct result of Jingoli’s mismanagement, the projects have suffered significant losses. The Company has disclosed and accrued losses including liquidated damages for both projects and entered into a settlement agreement in April 2023 which is discussed further in Note 19 - Subsequent Events.

Regarding all lawsuits, claims and proceedings, Orbital Infrastructure Group, Inc. records a reserve when it is probable that a liability has been incurred and the loss can be reasonably estimated. In addition, Orbital 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 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~~$28,852,844 upon expiration of the restriction period inon ~~November 2022,~~April 1, 2023, 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.~~the original $28,852,844. For the Johnson lockup letter, the Company agreed to pay additional consideration to Mr. Johnson upon expiration of the restriction period inon ~~November~~April 1, 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.~~$17,635,228. Any shortfall would be made up by issuing Mr. Johnson additional common shares. The fair value of this liability at March 31, 2023 was $44.8 million. The Company did not issue make-whole shares upon the April 1, 2023 expiration of the restriction period and effected an agreement to extend the restriction period to September 30, ~~2022~~2023. ~~was $40.1 million.~~ See Note 19 - Subsequent Events for additional information and 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~~$6.00 per share at ~~September 30, 2022.~~ March 31, 2023 after the effect of the reverse stock split. The financial instrument liability had a fair value of ~~$0.8~~$0.6 million at ~~September 30, 2022.~~ March 31, 2023. 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.~~instrument.

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~~20.~~19.

SUBSEQUENT EVENTS

~~Orbital Solar Services potential liquidated damages.~~Reverse Stock Split

On ~~October 23, 2022,~~April 18, 2023, ~~Orbital Solar Services~~the Company held a special meeting (the “Special Meeting”) of stockholders of the Company. At the Special Meeting, the Company’s shareholders voted to approve an amendment to the Company’s Certificate of Formation to effect a reverse stock split of the Company’s outstanding common stock (the “Reverse Stock Split”) at a ratio ranging from any whole number between 10-for-1 and 40-for-1, subject to, and as determined, by the board of directors.

Following the Special Meeting, the board of directors of the Company approved a 1-for-40 Reverse Stock Split. The Reverse Stock Split became effective on April 21, 2023.

Upon effectiveness of the Reverse Stock Split, every 40 shares of common stock were automatically combined and converted into one share of common stock. Appropriate adjustments were also made to all outstanding derivative securities of the Company, including all outstanding equity awards and warrants.

Shareholders who were entitled to receive fractional share interests of common stock in connection with the Reverse Stock Split (the “Fractional Shareholders”), had ~~a project completion milestone due~~their fractional interest rounded up to the nearest whole number of shares (the “Rounded Up Shares”). The determination as to whether the Rounded Up Shares were issuable was based on the total number of shares of common stock that ~~was~~were being exchanged that were held by such Fractional Shareholder, not ~~met. Contractually, liquidated damages~~upon each share of common stock being exchanged.

The purpose of the Reverse Stock Split was to increase the per share trading price of our common stock on the Nasdaq Capital Market to regain compliance with the Bid Price Rule. On ~~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 language in the contract. As of~~ ~~November 14, 2022,~~May 8, 2023, the ~~project milestone~~Company received a letter from Nasdaq confirming that our common stock had regained compliance with the Bid Price Rule, and as a result, our common stock continues to trade on the Nasdaq Capital Market.

It remains, that the Company is still deficient with the Market Value of Listed Securities (“MVLS”) requirement, as set forth in Nasdaq Listing Rule 5810(c)(3)(C), and has until ~~not~~June 26, 2023 ~~been completed and we have~~ ~~not~~ ~~been invoiced.~~to regain compliance.

~~New home office facility lease~~Front Line Seller Restriction Period Amendment

On ~~October 6, 2022,~~April 1, 2023 the Company, ~~signed a lease for its new home office~~and Tidal Power Group, LLC and Kurt Johnson, collectively referred to as the Front Line Sellers , agreed to amend the restriction period under the Tidal Lockup Letter and Johnson Lockup Letter to be from the Closing until September 30, 2023. All other existing terms remain in ~~Houston, Texas. The lease is for 46 months and commences at $7 thousand per month.~~ full force.

Settlement with Jingoli Power

~~Cured default on syndicated debt~~

In ~~November 2022,~~April 2023, ~~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 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 ofentered into a ~~consent~~settlement agreement with ~~the lenders,~~Jingoli Power, LLC (JPOW), under which the Company agreed to pay $34 million dollars and JPOW, upon being paid the ~~lenders in a paid-in-kind~~entire settlement amount, ~~of $10.5 million, which was added to~~will bear all costs associated with completing the ~~Syndicated debt balance~~Black Bear and ~~included $1.0 million of interest calculated from the~~ ~~first~~ ~~intercompany advance that the Company made.~~

~~Extension of prepaid advance maturity date~~Happy solar projects.

~~The maturity date for the Company's prepaid advance, which had a fair value of $4.7 million at~~ ~~September 30, 2022,~~ ~~was extended to~~ ~~February 28, 2023~~ ~~from its original maturity date of~~ ~~October 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.~~

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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, 2022~~March 31, 2023 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, ~~2021~~2022 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~~expressed 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 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 Infrastructure Group is a 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. 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 Eclipse Foundation ~~Group based in Gonzales, Louisiana.~~Group. The segment provides comprehensive infrastructure solutions to customers in the electric power industry. Services performed by Front Line Power and Orbital Power, 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. Eclipse Foundation Group, which began operations in January 2021, is a drilled shaft foundation construction 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 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, 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 solar construction.

The Company has 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~~First quarter ~~2022~~2023 revenue was ~~over four times~~14% greater than 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 of Front Line Power Construction in the Electric Power segment and continued growth in the Telecommunications segment acquired in the three months ended June 30, 2021. The Company continues to pursue both organic growth and growth through acquisitions. The Company's Telecommunications segment made an additional "tuck-in" acquisition in the first quarter of ~~2022 for cash and stock consideration of approximately $0.9 million.~~

During the nine-month period ended September 30, 2022, the Company began to see tangible benefits for all segments from the investments the Company made in 2021 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 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.

2022. 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 Company's seller financed debt on the 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 the stock's fair value.

In the third quarter of 2021, the Company incurred ramp-up costs in the Electric Power segment that put downward pressure on margins in the third quarter of 2021.The Company also incurred professional fees related to mergers and acquisitions as the Company finalized the acquisition of GTS. The three-month period ended September 30, 2021, for both segments were also negatively affected by ~~generally lower economic activity due to~~a combined $15.2 million in interest expense and liquidated damages associated with the ~~COVID-19 pandemic that caused economic slowdowns throughout the world.~~Company's debt.

~~For~~During the three ~~and nine~~ months ended September 30, 2022, Orbital Infrastructure Group, Inc. had a consolidated loss from continuing operations of $141.6 million and $208.3 million, respectively, compared to a consolidated loss from continuing operations in the three and nine months ended September 30, 2021, of $9.5 million and $34.1 million, respectively.

~~During the nine months ended September 30, 2022,~~March 31, 2023, Orbital Infrastructure Group, Inc. had a consolidated net loss of ~~$210.8~~$20.5 million compared to a consolidated net loss in the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, of ~~$36.3~~$37.6 million. The greater net loss for the ~~nine~~three months ended ~~September 30,~~March 31, 2022, was primarily the result of ~~impairments on goodwill, intangibles, and financing leased assets,~~ the $25.3 million loss on extinguishment of debt related to the ~~loan modification~~Company's seller-financed debt on the November 2021 Front Line Construction acquisition, partially offset by a $5.2 million gain on the forfeiture of ~~the seller financed debt, and increased interest expense related to acquisitions financed~~restricted stock by ~~debt in the second half of 2021.~~

a Renewable segment executive. Revenues from continuing operations increased for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, primarily due to ~~the~~ continued ~~ramp-up of the Electric Power and Renewables segments along with the addition of~~growth in the Telecommunications ~~segment which was assembled via acquisitions starting in the second quarter of 2021 and continuing into 2022.~~segment.

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Continuing Results of Operations

The following tables set forth, for the period indicated, certain financial information regarding revenue and operating results by segment.

For the ~~Three Months Ended September 30, 2022:~~three months ended March 31, 2023:

(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			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	%	$	38,298		100.0	%	$	26,959		100.0	%	$	14,929			100.0	%	$	—			—	%	$	80,186			100.0	%
Income (loss) from operations	$	(76,606	)		(208.6	)%	$	(23,213	)		(96.5	)%	$	(26,535	)		(68.0	)%	$	(2,356	)		—	%	$	(128,710	)		(128.9	)%	$	2,705		7.1	%	$	2,826		10.5	%	$	(4,613	)		(30.9	)%	$	(4,195	)		—	%	$	(3,277	)		(4.1	)%

For the ~~Three Months Ended September 30, 2021:~~three months ended March 31, 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			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	%	$	39,695			100.0	%	$	16,095		100.0	%	$	14,464		100.0	%	$	—			—	%	$	70,254			100.0	%
Loss from operations	$	(2,445	)		(20.0	)%	$	(436	)		(5.0	)%	$	(3,605	)		(92.9	)%	$	(4,364	)		—	%	$	(10,850	)		(43.7	)%
Income (loss) from operations																															$	(711	)		(1.8	)%	$	477		3.0	%	$	428		3.0	%	$	(1,982	)		—	%	$	(1,788	)		(2.5	)%

~~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

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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Revenue

The revenues for the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, increased compared to the ~~2021~~2022 comparable ~~periods~~period primarily due to the ~~additions~~ramp up of Rural Digital Opportunity Fund ("RDOF") projects associated with the Telecommunications segment. RDOF is an initiative designed to bring broadband and voice service to millions of unserved homes and small businesses in rural parts of the ~~Telecommunications segment following~~United States. GTS has partnered with a key customer on both state and federally-funded RDOF projects which are in their early stages and are expected to continue over the acquisitions of GTS in Q2 2021, IMMCO in Q3 2021, Full Moon in Q4 2021 and Coax Fiber Solutions, LLC in Q1 2022 along with the acquisition of Front Line Power Construction, LLC, included in the Company's Electric Power segment, added in Q4 2021. In addition, Orbital Power Inc. in the Electric Power segment has continuednext five 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, which was affected by supply chain issues and a general slow-down caused by the COVID-19 epidemic.six years.

The Electric Power Segment held unaudited backlogs of customer orders of approximately ~~$226.8~~$224.7 million as of ~~September 30, 2022, and $207.7~~March 31, 2023, compared to $229.4 million at December 31, ~~2021.~~2022. The ~~increase~~decrease in backlog is generally due to timing of master service agreement renewals. The Telecommunications segment held backlogs of customer orders of approximately ~~$209.2~~$193.1 million as of ~~September 30, 2022,~~March 31, 2023, compared to a backlog of ~~$194.5~~$199.0 million at December 31, ~~2021. Increases to the backlog are due to the continuous growth~~2022. The decrease is a result of ~~Gibson Technical Services.~~run-off of existing RDOF projects that will continue for another 5-6 years outpacing new customer orders. The Renewables segment had a backlog of ~~$36.3~~$19.2 million as of ~~September 30, 2022~~March 31, 2023 compared to ~~$121.4~~$34.1 million as of December 31, ~~2021~~2022 which is due to further work being completed and revenue being recognized in the quarter on projects that make up this backlog. Of the ~~September 30, 2022,~~March 31, 2023 backlog totals, the amounts expected to be recognized in the twelve months following ~~Q3 2022~~Q1 2023 are approximately ~~$265.9~~$249.4 million. The amounts expected to be recognized in the twelve months following ~~Q3 2022~~Q1 2023 consist of ~~$150.1~~$144.9 million from the Electric Power segment, ~~$79.5~~$85.3 million from the Telecommunications segment and ~~$36.3~~$19.2 million from the Renewables segment.

Cost of revenues

For the three months ended ~~September 30, 2022,~~March 31, 2023, the cost of revenues as a percentage of revenue ~~increased~~was 82.4% compared to ~~105.9% from 90.7%~~83.5% from the prior-year comparative period ~~primarily due to the significant cost overruns at the Black Bear solar project in~~which is an indicator of business normalizing. As the Renewables segment inworks toward conclusion of their large EPC projects, they continue to shift their model toward better margin subcontractor work to support 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 decrease was primarily in the Electric Power 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.market. Margin percentages in general 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, lower margin projects during the period for Orbital Solar Services and was also affected negatively by the COVID-19 pandemic and the resulting world-wide economic slowdown. Ramp-up costs included onboarding personnel, equipment and supplies in advance of projected work in order to obtain the necessary resources in a competitive market as the Company prepared for forward demand expectations. Additionally, adverse weather negatively impacted several Electric Power fixed price jobs in the first nine months of 2021.

The Company expects continued improvement in margins during the remainder of ~~2022~~2023 as the ~~Electric Power segment continues to gain efficiencies and increase revenues, and~~RDOF projects in the Telecommunications segment ~~sees continued synergistic benefits from~~continue to ramp and the ~~acquisitions of GTS, IMMCO, Full Moon,~~Renewables segment is able to refocus on lower risk and ~~Coax Fiber Solutions.~~higher margin projects.

Selling, General and Administrative Expenses

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 for the Electric Power segment, Renewables segment, and Telecommunications segments.

During the three months ended ~~September 30, 2022,~~March 31, 2023, SG&A increased ~~$1.0~~$6.0 million ~~compared~~compared to the three months ended ~~September 30, 2021,~~March 31, 2022, primarily due ~~to organic growth and the Company's 2021 and 2022 acquisitions. In the nine months ended September 30, 2022~~lower than usual SG&A ~~decreased $3.7~~in 2022 related to a $5.2 million ~~compared~~dollar credit to ~~the prior-year comparative periods. The decrease in SG&A~~compensation expense for ~~the nine month period was primarily due to decreased SG&A costs in the Renewables segment due to the $5.2 million~~a restricted stock forfeiture ~~related to~~associated with the termination of 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 thatRenewables segment executive. This decrease 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~~increased professional and advisory fees in ~~SG&A in the Electric Power and Telecommunications segments primarily due~~2023 associated with opportunities 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, 2022 due to an additional 25-percent drop in the Company's stock price between June 30, 2022 and 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.refinance or restructure existing debt.

Restructuring Costs

In September 2022, the Company fully impaired its finance lease equipment related to ~~the~~ Eclipse Foundation Group in the Electric Power ~~segment, which was integrated by Front Line 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~~were removed from the balance sheet and an equal impairment ~~has been~~was recognized in the amount of $4.5 ~~million.~~million in the third quarter of 2022. Future payments related to these leases will be approximately ~~$5.2~~$4.4 million paid through June 2026.

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Depreciation and Amortization

(dollars in thousands)

For the Three Months Ended

Depreciation and amortization expense by Segment

September 30,

2022

2021

$ Change

% Change

Electric Power
$ 6,975 $ 1,095 $ 5,880 537.0 %
Telecommunications
1,315 774 541 69.9 %
Renewables
608 614 (6 ) (1.0 )%
Other
16 416 (400 ) (96.2 )%
Total depreciation and amortization
$ 8,914 $ 2,899 $ 6,015 207.5 %

	For the Nine Months Ended										For the Three Months Ended
Depreciation and amortization by Segment	September 30,
Depreciation and amortization expense by Segment											March 31,
	2022		2021		$ Change			% Change			2023		2022		$ Change			% Change
Electric Power	$	21,445	$	1,944	$	19,501			1003.1	%	$	3,988	$	6,975	$	(2,987	)		(42.8	)%
Telecommunications		3,582		1,389		2,193			157.9	%		1,232		1,091		141			12.9	%
Renewables		1,825		2,319		(494	)		(21.3	)%		179		608		(429	)		(70.6	)%
Other		47		1,281		(1,234	)		(96.3	)%		16		16		—			0.0	%
Total depreciation and amortization	$	26,899	$	6,933	$	19,966			288.0	%	$	5,415	$	8,690	$	(3,275	)		(37.7	)%

Depreciation and amortization expenses are associated with depreciation on 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, 2022, were up~~March 31, 2023, was down compared to the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, primarily due to ~~additional~~a $2.3 million decrease in amortization expense as a result of a Front Line Power acquisition intangible becoming fully amortized in 2022 as well as due to a decrease in depreciation expense associated the finance lease ROU assets at Eclipse that were fully impaired in the ~~Electric Power and Telecommunication segments from acquisition intangibles that were acquired in the second,~~ third ~~and fourth~~ quarter of ~~2021 and depreciation of equipment used by Orbital Power Services which had been ramping up their capital expenditures as more crews were added.~~ 2022 no longer being depreciated.

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~~Gain (loss)~~Loss on Extinguishment of debt

Loss on extinguishment of debt infor the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023 was ~~$1.1~~$.6 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,was 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~~Loss on extinguishment onof debt for the ~~seller financed debt~~three months ended March 31, 2022 was $26.0 million and was primarily related to ~~financial instruments included~~loan modifications on the Company's seller financed debt with the sellers of Front Line Power Construction and approximately $0.7 million loss on extinguishment 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.~~

Gain on extinguishment of debt in the three and nine months ended September 30, 2021 of $0.7 million and $1.6 million was due to the forgiveness by the U.S. government of certain payroll protection loans in the three months ended ~~September 30, 2021, partially offset by the loss on the extinguishment of debt due~~March 31, 2022 related to the ~~amendment to remove the convertible equity feature~~payment of ~~its convertible debt and the earlier paydown of two non-recourse agreements~~certain loans with ~~C6 during the nine months ended September 30, 2021.~~ stock-based payments.

Loss on financial instruments

Loss on financial instruments ~~Include~~for the three months ended March 31, 2023 includes mark to market ~~adjustment~~adjustments on the financial instrument related to Syndicated debt in the amount of ~~$4.4~~$71 thousand and $1.1 million ~~$13.3 million~~ related to the financial instrument embedded in the Front Line seller ~~notes and $0.2 million~~notes. Loss on financial instruments for the three months ended March 31, 2022 includes mark to market adjustments on the financial instrument related to Syndicated debt in the ~~Company's prepaid advance agreement.~~amount of $.9 million. See Note 12 for more information on these financial instruments.

Other Income (Expense), net

(dollars in 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												For the Three Months Ended
Other Income (Expense), net	September 30,												March 31,
	2022			2021			$ Change			% Change			2023			2022			$ Change			% Change
Foreign exchange loss	$	(7	)	$	(241	)	$	234			(97.1	)%
Foreign exchange gain (loss)														5		$	(49	)	$	54			(110.2	)%
Liquidated damages from debt														(4,068	)		—			(4,068	)		100.0	%
Interest income		118			245			(127	)		(51.8	)%		20			78			(58	)		(74.4	)%
Rental income		488			372			116			31.2	%		129			129			—			0.0	%
Liquidated damages on debt		(2,271	)		—			(2,271	)		100.0	%
Other, net		(162	)		(6	)		(156	)		2600.0	%
Other income														(233	)		187			(420	)		(224.6	)%
Total Other income (expense)	$	(1,834	)	$	370		$	(2,204	)		(595.7	)%	$	(4,147	)	$	345		$	(4,492	)		(1302.0	)%

Other income (expense) changes contributing to the majority of the 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.~~debt.

Interest Expense

For the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, the Company incurred interest expense of ~~$9.7~~$11.2 million, ~~and $27.6 million, respectively,~~ compared to interest for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022 of ~~$1.3 million and $3.1 million, respectively.~~$8.0 million. The increase in interest expense in ~~2022~~2023 is related to the increase in notes payable outstanding in the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, compared to the three ~~and nine~~ months ended ~~September 30, 2021, primarily related to~~March 31, 2022 and new debt agreements obtained having higher effective interest rates than those of the ~~Front Line Power Construction acquisition.~~debt agreements that existed in the previous year. Also contributing to the increase is the increase in the variable rate on the Company's $104.5 million Syndicated debt that increased from 13.50% at inception to ~~15.45%~~17.38% at ~~September 30, 2022.~~ March 31, 2023.

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Income Tax Expense

The Company is subject to taxation in the U.S., and 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 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.

~~Table of Contents~~

assets.

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

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~~three months ended ~~September 30, 2022,~~March 31, 2023, the Company had an accumulated deficit of ~~$421.4~~$507.3 million, loss from continuing operations of ~~$208.3~~$20.3 million, and net cash ~~used in~~provided by operating activities of ~~$13.4~~$0.8 million. Further, as of ~~September 30, 2022,~~March 31, 2023, the Company had a working capital deficit of ~~$118.7~~$302.6 million, including current maturities of debt, and cash and cash equivalents of ~~$28.0~~$24.0 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~~.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~~.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,~~March 31, 2023, 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~~$64.0 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, 2022,~~March 31, 2023, the Company held cash and cash equivalents of ~~$28.0~~$24.0 million and restricted cash of ~~$0.6~~$0.7 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 April 2022, the Company issued ~~9,000,000~~225,000 shares of common stock and pre-funded warrants to purchase up to ~~7,153,847~~178,847 shares of ~~Common Stock~~common stock accounting for the effects of the 2023 reverse stock split, for a total raise of $21.0 million before expenses. ~~In August of 2021, the Company opened a $4.0 million dollar line of credit to support additional funding.~~ Major uses of cash in the first ~~nine~~three months of ~~2022~~2023 included the purchases of property and equipment, debt and finance lease 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~~Provided by (Used in) Operations

Cash provided by operations for the three months ended March 31, 2023 was $.8 million which was a $2.3 million improvement compared to the three-month period in 2022 which had cash used in operations of ~~$13.4 million was a $23.5 million decrease in cash used compared to the nine-month period in 2021.~~$1.6 million.

The decrease in uses of cash in the first ~~nine~~three months of ~~2022~~2023 are primarily related to ~~higher merger and acquisition costs in~~ the first quarter of 2021 as compared to 2022 along with company growth in 2022. Due to the large increase in revenue and associated costs both through acquisitions and organic growth, the Company was better able to cover it's fixed costs, 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 growth begins to moderate, overall cash used in operations will continue to improve through revenue growth associated with new customers and larger 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: Timing of cash payments on accounts payable and accrued liabilities which was a combined ~~$36.9~~$12.7 million increase in cash provided by operating activities largely related to ~~larger~~ projects at Orbital Solar Services. ~~Changes~~Other contributors of cash provided by operating activities were changes in ~~cost in excess of billing~~accounts receivable and ~~accounts receivable~~prepaid expenses from December 31, ~~2021, was~~2022 of a combined ~~$14.5~~$4.9 million ~~use of cash for the period and reflects the greater revenue volumes in the first nine months of 2022 compared to the first nine months of 2021.~~dollars.

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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 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~~$64.0 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 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~~three months of ~~2022~~2023 and ~~2021,~~2022, Orbital Infrastructure Group invested ~~$3.7~~$0.6 million and ~~$6.6~~$1.4 million, respectively, in property and equipment. 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~~three months ended ~~September 30,~~March 31, 2022 the Company had collections from a ~~notes~~note receivable of $3.5 million related to the sale of the Company's electromechanical business in 2019.

Financing Activities

In the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the Company made cash payments on notes payable and finance leases of ~~$35.5~~$6.1 million and $1.3 million respectively and had proceeds from notes payable of ~~$41.2 million, respectively.~~$9.75 million. This compared to ~~$19.4 million of~~no proceeds from notes payable and ~~$7.5~~$5.8 million and $1.2 million of payments on notes payable and finance leases respectively in the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The Company also received $3.5 million in proceeds from their line of credit and made $2.0 million in payments on this line of credit in 2022 compared to ~~$0.4 million paid in~~ the ~~first nine months 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. having no activity or capacity in 2023.

Recap of Liquidity and Capital Resources

At ~~September 30, 2022,~~March 31, 2023, the Company had unrestricted cash and cash equivalents balances of ~~$28.0~~$24.0 million of which ~~$2.5~~$2.4 million is covered by insured deposit programs. At ~~September 30, 2022,~~March 31, 2023, the Company had ~~$0.6~~$0.7 million of restricted cash and cash equivalents balances at domestic financial institutions including ~~$0.4~~$0.25 million that is covered under the FDIC insured deposits programs.

The Company had a net loss of ~~$210.8~~$20.5 million and cash ~~used in~~provided by operating activities of ~~$13.4~~$0.8 million during the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023 . As of ~~September 30, 2022,~~March 31, 2023 , the Company's accumulated deficit was ~~$421.4~~$507.3 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 ~~2022.~~2023.

Critical Accounting Policies

The Company has adopted various accounting policies to prepare the consolidated financial statements in accordance with Generally Accepted Accounting 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 ~~2021~~2022 Annual Report on Form 10-K filed on ~~March 31, 2022,~~April 7, 2023, 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.

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 1918 - 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.~~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.

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Investment Risk

The Company has an Investment Policy that, inter alia, provides an internal control structure that takes into consideration safety (credit risk and interest rate risk), liquidity and yield. Our Investment officers, CEO and CFO, oversee the investment portfolio and compile a quarterly analysis of the investment portfolio when applicable for internal use. In addition, the Company has an Investment Committee to administer and operate the portfolio. At ~~September 30, 2022,~~March 31, 2023, the Investment Committee is comprised of C. Stephen Cochennet, Corey A. Lambrecht, Chairman, and 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 revenue concentrations with large customers. See Note 17 of the Company's financial statements for more information on the Company's concentration risks.

Item 4. Controls and Procedures

~~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, 2022,~~March 31, 2023, the Company’s disclosure controls and procedures were effective.

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Changes in Internal Control over Financial Reporting

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, 2022~~March 31, 2023 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.

Regarding all lawsuits, claims and proceedings, Orbital 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 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 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 and its subsidiary, OSS, were involved in a contract dispute with Jingoli Power (“Jingoli”) regarding the Joint Venture between Jingoli and OSS for construction of the Black Bear and Happy - Lightsource BP Projects. The Company contends that Jingoli unjustifiably and without proper authority took over management and control of the two projects and that, as a direct result of Jingoli’s mismanagement, the projects have suffered significant losses. The Company has disclosed and accrued losses including liquidated damages for both projects and entered into a settlement agreement in April 2023 which is discussed further in Note 19 - Subsequent Events.

Item 1A. Risk Factors.

There are no material changes from Risk Factors as previously disclosed in the Company’s Form 10-K filed with the Commission on ~~March 31, 2022.~~April 7, 2023.

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

During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, 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

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

* These shares were issuable as of November 17, 2021 and were recorded as part of additional paid in capital prior to issuance.

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 and February 2023

Common stock

Institutional investor

Debt payment

451,331

3,248

Total other equity transactions

451,331

3,248

Item 5. Other Information.

~~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 its credit agreement due to the 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 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. See Exhibit 10.139 for the consent agreement.None.

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Item 6. Exhibits.

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

Exhibit No.	Description

~~10.136~~10.115 ¹	~~Home Office lease dated October 5, 2022 by and between Franklin Post Oak, Ltd and~~Amendment No. 4 to Modification Agreement among Orbital Infrastructure Group, Inc., Kurt A. Johnson Jr. & Tidal Power Group LLC

~~10.137~~10.116 ¹	~~Executive Long Term Retention Equity Award Agreement by Orbital Infrastructure Group, Inc. and William J. Clough~~

~~10.138~~¹	~~Executive Long Term Retention Equity Award Agreement by Orbital Infrastructure Group, Inc and James F. O'Neil~~

~~10.139~~ ¹	~~Limited Consent to Credit~~Settlement Agreement between ~~Alter Domus LLC, Front Line~~Jingoli Power ~~Construction LLC~~ and Orbital Infrastructure Group ~~Inc.~~dated as April 19, 2023.

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 ~~14th~~15th day of ~~November 2022.~~May 2023.

		Orbital Infrastructure Group, Inc.
	By:	/s/ James F. O'Neil
		James F. O'Neil,
		Chief Executive Officer
		(Principal Executive Officer)

	By:	/s/ Nicholas M. Grindstaff
		Nicholas M. Grindstaff,
		Chief Financial Officer
		(Principal Financial Officer)

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	*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

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

Purchase Consideration

Cash payment	$	16,597
Fair value of common stock issued to sellers		2,024
Total	$	18,621

Purchase price	$	18,621

Cash and cash equivalents	$	1,634
Trade accounts receivable, net		1,254
Contract assets		1,001
Prepaid expenses and other current assets		551
Property and equipment		760
Intangible, customer relationships		3,800
Intangible, trade name		1,162
Intangible, technology know how		1,459
Other long-term assets		76
Deferred tax liability		(2,090	)
Liabilities assumed		(2,100	)
Net assets acquired		7,507
Goodwill		11,114
Purchase price allocation	$	18,621

(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	*

Purchase price	$	38,932

Cash and cash equivalents	$	610
Trade accounts receivable		7,871
Contract assets		1,686
Contingent receivable		1,424
Prepaid expenses and other current assets		408
Property and equipment		3,795
Right of use assets - Operating leases		860
Intangible, customer relationships		16,075
Intangible, trade name		6,388
Intangible, non-compete agreements		385
Other long-term assets		123
Deferred tax liability		(9,048	)
Liabilities assumed		(3,984	)
Net assets acquired		26,593
Goodwill		12,339
Purchase price allocation	$	38,932

(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	*

	For the Three Months Ended September 30,			For the Nine Months Ended September 30
	2021			2021
Gross revenue	$	31,462		$	69,867
Loss from continuing operations, net of income taxes	$	(13,919	)	$	(41,876	)