Orbital Infrastructure Group, Inc. (Form: 8-K, Received: 08/11/2022 07:16:18)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported):

August 11, 2022

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 jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

1924 Aldine Western, Houston, Texas		77038
(Address of Principal Executive Offices)		(zip code)

(832) 467-1420

(Registrant’s telephone number)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a- 12)

☐

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.1 4d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

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

Item 2.02. Results of Operations and Financial Condition.

On August 11, 2022, Orbital Infrastructure Group, Inc. (the “Company”) issued a press release announcing the Company’s financial results for the three and six months ended June 30, 2022. The press release is being furnished with this report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference. This report (including the exhibit) shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference in any filing made by the Registrant pursuant to the Securities Act of 1933, as amended, other than to the extent that such filing incorporates by reference any or all of such information by express reference thereto.

The press release is available at the Company’s website, www.orbitalenergygroup.com.

Section 9 - Financial Statement and Exhibits

Item 9.01 Financial Statement and Exhibits.

(d) Exhibits

Exhibit No.		Description of Exhibit
99.1		Press Release dated August 11, 2022

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

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 11^th day of August 2022.

Orbital Infrastructure Group, Inc.

(Registrant)

By:	/s/ Nicholas M. Grindstaff
	Nicholas M. Grindstaff
	Chief Financial Officer

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

Assets:
Current Assets:
Cash and cash equivalents	$	31,584		$	26,865
Restricted cash - current		123			150
Trade accounts receivable, net of allowance		51,433			48,752
Inventories		1,077			1,335
Contract assets		22,055			7,478
Note receivable, current portion		1,401			3,536
Prepaid expenses and other current assets		8,032			6,919
Assets held for sale - current		4,209			6,679
Total current assets		119,914			101,714


Property and equipment, less accumulated depreciation		27,553			29,638
Investment		1,063			1,063
Right of use assets - Operating leases		19,105			18,247
Right of use assets - Financing leases		13,155			14,702
Goodwill		102,966			100,899
Other intangible assets, net		133,186			142,656
Restricted cash		486			1,026
Note receivable		—			836
Deposits and other assets		1,579			1,558
Total assets	$	419,007		$	412,339

Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts payable	$	27,595		$	10,111
Notes payable, current		117,589			72,774
Line of credit		4,000			2,500
Operating lease obligations - current portion		4,858			4,674
Financing lease obligations - current portion		5,170			4,939
Accrued expenses		31,740			28,301
Contract liabilities		2,367			6,503
Financial instrument liability, current portion		24,080			825
Liabilities held for sale, current		1,380			4,367
Total current liabilities		218,779			134,994
Financial instrument liability, noncurrent portion		15,404			—
Warrant liabilities		7,915			—
Deferred tax liabilities		260			260
Notes payable, less current portion		104,022			156,605
Operating lease obligations, less current portion		14,423			13,555
Financing lease obligations, less current portion		8,320			9,939
Other long-term liabilities		720			720
Total liabilities		369,843			316,073

Commitments and contingencies

Stockholders' Equity:
Preferred stock, par value $0.001; 10,000,000 shares authorized; no shares issued at June 30, 2022 or December 31, 2021		—			—
Common stock, par value $0.001; 325,000,000 shares authorized; 111,256,659 shares issued and 110,903,596 shares outstanding at June 30, 2022 and 82,259,739 shares issued and 81,906,676 shares outstanding at December 31, 2021		111			82
Additional paid-in capital		329,425			311,487
Treasury stock at cost; 353,063 shares held at June 30, 2022 and December 31, 2021		(413	)		(413	)
Accumulated deficit		(279,358	)		(210,934	)
Accumulated other comprehensive loss		(505	)		(3,995	)
Total Orbital Infrastructure Group, Inc.'s stockholders' equity		49,260			96,227
Noncontrolling interest		(96	)		39
Total stockholders' equity		49,164			96,266
Total liabilities and stockholders' equity	$	419,007		$	412,339

	For the Three Months						For the Six Months
(in thousands, except share and per share amounts)	Ended June 30,						Ended June 30,
	2022			2021			2022			2021

Revenues	$	93,913		$	11,519		$	164,167		$	17,080

Cost of revenues		84,097			14,377			142,768			22,459

Gross profit		9,816			(2,858	)		21,399			(5,379	)

Operating expenses:
Selling, general and administrative expense		12,917			13,743			21,044			25,762
Depreciation and amortization		5,405			1,002			10,728			2,085
Recovery of bad debt		(478	)		—			(538	)		—
Other operating expense		(322	)		(9	)		(340	)		(9	)

Total operating expenses		17,522			14,736			30,894			27,838

Loss from operations		(7,706	)		(17,594	)		(9,495	)		(33,217	)

Gain (loss) on extinguishment of debt		(2,213	)		1,160			(28,232	)		910
Loss on financial instrument		(13,874	)		—			(14,802	)		—
Gain on warrant liabilities		4,946			—			4,946			—
Other income (expense)		(1,052	)		260			(706	)		573
Interest expense		(9,813	)		(1,096	)		(17,852	)		(1,830	)

Loss from continuing operations before income taxes		(29,712	)		(17,270	)		(66,141	)		(33,564	)

Income tax expense (benefit)		382			(8,952	)		623			(8,937	)

Loss from continuing operations, net of income taxes		(30,094	)		(8,318	)		(66,764	)		(24,627	)

Discontinued operations
Income (loss) from operations of discontinued businesses		(842	)		105			(1,795	)		(1,538	)

Net loss		(30,936	)		(8,213	)		(68,559	)		(26,165	)
Less: net loss attributable to noncontrolling interest		(113	)		—			(135	)		—
Net loss attributable to Orbital Infrastructure Group, Inc.	$	(30,823	)	$	(8,213	)	$	(68,424	)	$	(26,165	)

Basic and diluted weighted average common shares outstanding		95,355,532			51,838,830			89,292,201			48,221,943

Loss from continuing operations per common share - basic and diluted	$	(0.31	)	$	(0.16	)	$	(0.75	)	$	(0.51	)

Loss from discontinued operations - basic and diluted		(0.01	)		—			(0.02	)		(0.03	)

Loss per common share - basic and diluted	$	(0.32	)	$	(0.16	)	$	(0.77	)	$	(0.54	)

	For the Six Months
(in thousands)	Ended June 30,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(68,559	)	$	(26,165	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		7,963			1,295
Amortization of intangibles		10,022			2,739
Amortization of debt discount		4,088			956
Amortization of note receivable discount		(63	)		(155	)
Stock-based compensation and expense, net of forfeitures		(2,188	)		8,066
Fair value adjustment to liability for stock appreciation rights		(269	)		2,691
Fair value adjustment to financial instrument liability		14,802			—
Fair value adjustment to warrant liabilities		(4,946	)		—
Loss (gain) on extinguishment of debt and debt modifications		28,232			(1,677	)
Gain on sale of business		(299	)		—
Recovery of bad debt		(491	)		(22	)
Deferred income taxes		6			(8,978	)
Inventory reserve		—			(252	)
Gain on sale of assets		(441	)		(9	)
Non-cash unrealized foreign currency (gain) loss		12			(145	)
Liquidated damages		1,077			—
Change in operating assets and liabilities, net of acquisition:
Trade accounts receivable		(869	)		3,976
Inventories		319			(165	)
Contract assets		(14,402	)		(934	)
Prepaid expenses and other current assets		(406	)		1,390
Right of use assets/lease liabilities, net		306			7
Deposits and other assets		(24	)		4
Accounts payable		17,829			(4,099	)
Accrued expenses		4,366			158
Contract liabilities		(3,347	)		(1,450	)
NET CASH USED IN OPERATING ACTIVITIES		(7,282	)		(22,769	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisitions, net of cash received		(773	)		(21,390	)
Purchases of property and equipment		(2,940	)		(4,699	)
Deposits on financing lease property and equipment		129			(315	)
Proceeds from sale of business, net of cash included in the business		(454	)		—
Proceeds from sale of property and equipment		424			56
Purchases of investments		(469	)		—
Purchase of other intangible assets		(58	)		(695	)
Proceeds from notes receivable		3,500			621
NET CASH USED IN INVESTING ACTIVITIES		(641	)		(26,422	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit		3,500			—
Payments on line of credit		(2,000	)		(441	)
Payments on financing lease obligations		(2,470	)		(289	)
Proceeds from notes payable		23,300			19,400
Payments on notes payable		(29,799	)		(5,582	)
Proceeds from sales of common stock and warrants		19,810			42,376
NET CASH PROVIDED BY FINANCING ACTIVITIES		12,341			55,464

Effect of exchange rate changes on cash		(266	)		9
Net increase (decrease) in cash, cash equivalents and restricted cash		4,152			6,282
Cash, cash equivalents and restricted cash at beginning of period		28,041			4,524

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	32,193		$	10,806

(In thousands)	For the Three Months Ended						For the Six Months Ended
(Unaudited)	June 30,						June 30,
	2022			2021			2022			2021
Loss from continuing operations, net of income taxes (GAAP)	$	(30,094	)	$	(8,318	)	$	(66,764	)	$	(24,627	)
Interest expense, net		9,794			1,014			17,755			1,667
Income tax expense (benefit)		382			(8,952	)		623			(8,937	)
Depreciation and amortization		9,295			1,874			17,985			3,189
EBITDA from continuing operations (a)		(10,623	)		(14,382	)		(30,401	)		(28,708	)
Stock-based compensation and expense, net of forfeitures (b)		862			5,447			(2,457	)		9,914
Acquisition costs (c)		—			903			32			903
(Gain) loss on disposal of assets (d)		(338	)		(9	)		(441	)		(9	)
(Gain) loss on extinguishment and modification of debt (e)		3,290			(1,927	)		29,309			(1,677	)
Fair value adjustments to equity-linked financial instruments (f)		8,928			—			9,856			—
Adjusted EBITDA from continuing operations (a)	$	2,119		$	(9,968	)	$	5,898		$	(19,577	)

(c)	The amounts for the six months ended June 30, 2022 include costs incurred for the acquisition of Coax Fiber Solutions, Inc. The amounts for the six months ended June 30, 2021 include costs incurred for the acquisition of Gibson Technical Services, Inc.
(d)	The amounts relate to net gains or losses recognized on the disposal of the Company’s fixed assets.
(e)	The amounts for the three and six months ended June 30, 2022 relate to losses recognized on the modification of the Company’s seller financed notes payable issued for the acquisition of Front Line Power Construction, LLC, the issuance of shares of common stock in exchange for payment on notes payable with an institutional investor, and liquidated damages incurred on notes payable with an institutional investor. The amounts for the three and six months ended June 30, 2021 relate to a gain recognized for the forgiveness of payroll protection loans by the U.S. government offset by a loss from the modification of certain convertible notes payable.
(f)	The amounts for the three and six months ended June 30, 2022 relate to changes in fair value of certain down-round and anti-dilutive protections on equity-linked financial instruments issued to the lenders of the Company's syndicated debt and changes in fair value of warrant liabilities from pre-funded warrants and common stock warrants issued to an institutional investor.

(a)	The calculations of EBITDA and Adjusted EBITDA from continuing operations for the three and six months ended June 30, 2021 have been amended to conform to the current period calculations of EBITDA and Adjusted EBITDA from continuing operations, net of income taxes.
(b)	The amounts include non-cash expenses recognized from the vesting of stock-based compensation awards issued to employees, executives, directors and consultants for services provided, net of forfeitures. The amount for the six months ended June 30, 2022 includes non-cash expenses recognized from modifications to executive stock appreciation rights (SARS) compensation awards.

	Estimated Range
(In thousands) (Unaudited)	Full Year Ending December 31, 2022
Loss from continuing operations, net of income taxes (GAAP)	$	(72,183	)	$	(67,283	)
Interest expense, net		33,527			33,527
Income tax expense (benefit) (a)		1,150			1,250
Depreciation and amortization		34,850			34,850
EBITDA from continuing operations		(2,656	)		2,344
Stock-based compensation and expense, net of forfeitures (b)		1,900			1,900
Acquisition costs (c)		32			32
(Gain) loss on disposal of assets (d)		(441	)		(441	)
(Gain) loss on extinguishment and modification of debt (e)		29,309			29,309
Fair value adjustments to equity-linked financial instruments (f)		9,856			9,856
Adjusted EBITDA from continuing operations	$	38,000		$	43,000

(b)	The amount includes non-cash expenses recognized from the vesting of stock-based compensation awards issued to employees, executives, directors and consultants for services provided, net of forfeitures, and modifications to executive stock appreciation rights (SARS) compensation awards.
(c)	The amount includes costs incurred for the acquisition of Coax Fiber Solutions, Inc.
(d)	The amount includes net gains and losses recognized on the disposal of the Company’s fixed assets.
(e)	The amount includes losses recognized from the modification of the Company’s seller financed notes payable issued for the acquisition of Front Line Power Construction, LLC, the issuance of shares of common stock in exchange for payment on notes payable with an institutional investor, and liquidated damages.
(f)	The amount represents changes in fair value of certain down-round and anti-dilutive protections on financial instruments issued to the lenders of the Company's syndicated debt and changes in fair value of warrant liabilities from pre-funded warrants and common stock warrants issued to an institutional investor.