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Form 10-Q GOLDFIELD CORP For: Sep 30

November 12, 2015 8:27 AM EST

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2015
or
o
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: 1-7525

The Goldfield Corporation
(Exact name of registrant as specified in its charter)
Delaware
 
88-0031580
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
1684 W. Hibiscus Boulevard
Melbourne, Florida 32901
(Address of principal executive offices) ( Zip Code)
 
(321) 724-1700
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
 
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  x    No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes  x 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. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
 
Accelerated filer
¨
 
 
 
 
 
Non-accelerated filer (Do not check if a smaller reporting company)
¨
 
Smaller reporting company
x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x
The number of shares of the Registrant’s Common Stock outstanding as of November 9, 2015 was 25,451,354.




THE GOLDFIELD CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2015
TABLE OF CONTENTS
 




PART I. FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS (UNAUDITED).
THE GOLDFIELD CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
 
September 30,
 
December 31,
 
2015
 
2014
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
7,645,491

 
$
9,822,179

Accounts receivable and accrued billings
18,786,292

 
17,840,680

Costs and estimated earnings in excess of billings on uncompleted contracts
11,612,548

 
6,537,280

Income taxes receivable
815,737

 
763,821

Current portion of notes receivable
61,412

 
53,332

Residential properties under construction
1,097,094

 

Prepaid expenses
685,620

 
613,765

Deferred income taxes
581,909

 
2,274,896

Other current assets
278,516

 
262,630

Total current assets
41,564,619

 
38,168,583

 
 
 
 
Property, buildings and equipment, at cost, net of accumulated depreciation of $29,970,793 in 2015 and $28,224,661 in 2014
37,039,527

 
37,002,843

Deferred charges and other assets
 
 
 
Land and land development costs
2,395,602

 
2,564,449

Cash surrender value of life insurance
548,841

 
546,291

Restricted cash
307,048

 
566,321

Notes receivable, less current portion
15,703

 
50,096

Goodwill
101,407

 
101,407

Intangibles, net of accumulated amortization of $124,759 in 2015 and $75,967 in 2014
889,041

 
937,833

Other assets
37,874

 
32,113

Total deferred charges and other assets
4,295,516

 
4,798,510

Total assets
$
82,899,662

 
$
79,969,936

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities
 
 
 
Accounts payable and accrued liabilities
$
9,669,477

 
$
9,674,961

Contract loss accruals
267,702

 
2,547,816

Billings in excess of costs and estimated earnings on uncompleted contracts
29,286

 
1,537,971

Current portion of notes payable
8,133,482

 
3,685,859

Accrued remediation costs
164,631

 
1,048,380

Total current liabilities
18,264,578

 
18,494,987

Deferred income taxes
7,868,045

 
7,988,539

Accrued remediation costs, less current portion
64,260

 
15,000

Notes payable, less current portion
23,665,518

 
22,657,973

Other accrued liabilities
69,227

 
55,766

Total liabilities
49,931,628

 
49,212,265

Commitments and contingencies (notes 3 and 5)

 

Stockholders’ equity
 
 
 
Preferred stock, $1 par value, 5,000,000 shares authorized, none issued

 

Common stock, $.10 par value, 40,000,000 shares authorized; 27,813,772 shares issued and 25,451,354 shares outstanding
2,781,377

 
2,781,377

Additional paid-in capital
18,481,683

 
18,481,683

Retained earnings
13,013,161

 
10,802,798

Treasury stock, 2,362,418 shares, at cost
(1,308,187
)
 
(1,308,187
)
Total stockholders’ equity
32,968,034

 
30,757,671

Total liabilities and stockholders’ equity
$
82,899,662

 
$
79,969,936

See accompanying notes to consolidated financial statements

1


THE GOLDFIELD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 (UNAUDITED)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2015
 
2014
 
2015
 
2014
Revenue
 
 
 
 
 
 
 
Electrical construction
$
26,813,125

 
$
22,111,299

 
$
90,509,971

 
$
66,520,732

Other
249,236

 
548,052

 
553,102

 
3,399,954

Total revenue
27,062,361

 
22,659,351

 
91,063,073

 
69,920,686

Costs and expenses
 
 
 
 
 
 
 
Electrical construction
20,966,266

 
17,849,577

 
77,422,210

 
56,141,402

Other
231,163

 
420,331

 
502,040

 
2,738,397

Selling, general and administrative
1,072,870

 
997,214

 
3,552,001

 
3,249,188

Depreciation and amortization
1,677,097

 
1,495,141

 
4,949,367

 
4,515,441

Gain on sale of property and equipment
(84,179
)
 
(161,035
)
 
(66,988
)
 
(323,936
)
Total costs and expenses
23,863,217

 
20,601,228

 
86,358,630

 
66,320,492

Total operating income
3,199,144

 
2,058,123

 
4,704,443

 
3,600,194

Other income (expense), net
 
 
 
 
 
 
 
Interest income
4,918

 
7,647

 
14,903

 
16,758

Interest expense
(175,651
)
 
(163,632
)
 
(509,478
)
 
(516,127
)
Other income, net
14,216

 
11,830

 
47,053

 
40,059

Total other expense, net
(156,517
)
 
(144,155
)
 
(447,522
)
 
(459,310
)
Income before income taxes
3,042,627

 
1,913,968

 
4,256,921

 
3,140,884

Income tax provision
1,199,211

 
728,243

 
1,746,602

 
1,192,826

Income from continuing operations
1,843,416

 
1,185,725

 
2,510,319

 
1,948,058

Loss from discontinued operations, net of tax benefit of ($39,395), $0, ($194,249) and ($405,478), respectively
(98,918
)
 

 
(299,956
)
 
(665,347
)
Net income
$
1,744,498

 
$
1,185,725

 
$
2,210,363

 
$
1,282,711

 
 
 
 
 
 
 
 
Net income (loss) per share of common stock — basic and diluted
 
 
 
 
 
 
 
Continuing operations
$
0.07

 
$
0.05

 
$
0.10

 
$
0.08

Discontinued operations
0.00

 

 
(0.01
)
 
(0.03
)
Net income
$
0.07

 
$
0.05

 
$
0.09

 
$
0.05

Weighted average shares outstanding — basic and diluted
25,451,354

 
25,451,354

 
25,451,354

 
25,451,354

See accompanying notes to consolidated financial statements


2


THE GOLDFIELD CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS 
(UNAUDITED)
 
Nine Months Ended September 30,
 
2015
 
2014
Cash flows from operating activities
 
 
 
Net income
$
2,210,363

 
$
1,282,711

Adjustments to reconcile net income to net cash (used in) provided by operating activities
 
 
 
Depreciation and amortization
4,949,367

 
4,515,441

Deferred income taxes
1,572,493

 
243,982

Gain on sale of property and equipment
(66,988
)
 
(323,936
)
Gain on cash surrender value of life insurance
(2,550
)
 
(3,761
)
Changes in operating assets and liabilities, net of effects of acquisition
 
 
 
Accounts receivable and accrued billings
(945,612
)
 
5,939,637

Real estate inventory

 
395,062

Costs and estimated earnings in excess of billings on uncompleted contracts
(5,075,268
)
 
(3,870,551
)
Residential properties under construction
(1,097,094
)
 
1,616,916

Income taxes receivable
(51,916
)
 
289,539

Prepaid expenses and other assets
(93,502
)
 
(639,900
)
Land and land development costs
168,847

 
(551,079
)
Restricted cash
259,273

 
(85,248
)
Accounts payable and accrued liabilities
(59,355
)
 
(1,139,271
)
Contract loss accruals
(2,280,114
)
 
(31,615
)
Billings in excess of costs and estimated earnings on uncompleted contracts
(1,508,685
)
 
(77,651
)
Accrued remediation costs
(834,489
)
 
583,742

Net cash (used in) provided by operating activities
(2,855,230
)
 
8,144,018

Cash flows from investing activities
 
 
 
Proceeds from disposal of property and equipment
814,293

 
1,701,819

Proceeds from notes receivable
26,313

 
38,898

Purchases of property, buildings and equipment
(5,617,232
)
 
(6,773,377
)
Net cash paid for acquisition

 
(5,743,665
)
Net cash used in investing activities
(4,776,626
)
 
(10,776,325
)
Cash flows from financing activities
 
 
 
Proceeds from notes payable
24,500,000

 
3,500,000

Repayments on notes payable
(15,785,197
)
 
(10,521,633
)
Installment loan repayments
(3,259,635
)
 
(1,470,349
)
Net cash provided by (used in) financing activities
5,455,168

 
(8,491,982
)
Net decrease in cash and cash equivalents
(2,176,688
)
 
(11,124,289
)
Cash and cash equivalents at beginning of period
9,822,179

 
20,214,569

Cash and cash equivalents at end of period
$
7,645,491

 
$
9,090,280

Supplemental disclosure of cash flow information
 
 
 
Interest paid
$
471,807

 
$
505,620

Income taxes paid, net
$
31,776

 
$
253,857

Supplemental disclosure of non-cash investing and financing activities
 
 
 
Liability for equipment acquired
$
67,332

 
$
385,044

See accompanying notes to consolidated financial statements

3


THE GOLDFIELD CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 – Organization and Summary of Significant Accounting Policies
Overview
The Goldfield Corporation (the “Company”) was incorporated in Wyoming in 1906 and subsequently reincorporated in Delaware in 1968. The Company’s principal line of business is electrical construction. The principal market for the Company’s electrical construction operation is electric utilities throughout much of the United States.
Basis of Financial Statement Presentation
In the opinion of management, the accompanying unaudited interim consolidated financial statements include all adjustments necessary to present fairly the Company’s financial position, results of operations, and changes in cash flows for the interim periods reported. These adjustments are of a normal recurring nature. All financial statements presented herein are unaudited with the exception of the consolidated balance sheet as of December 31, 2014, which was derived from the audited consolidated financial statements. The results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the year. These statements should be read in conjunction with the financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2014.
Allowance for Doubtful Accounts
The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based on customer specific information and historical write-off experience. The Company reviews its allowance for doubtful accounts quarterly. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Any increase in the allowance account has a corresponding negative effect on the results of operations. As of both September 30, 2015 and December 31, 2014, upon its review, management determined it was not necessary to record an allowance for doubtful accounts due to the majority of accounts receivable being generated by electrical utility customers who the Company considers creditworthy based on timely collection history and other considerations.
Use of Estimates
Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with U. S. generally accepted accounting principles (“GAAP”). Actual results could differ from those estimates. Management considers the most significant estimates in preparing these financial statements to be the estimated cost to complete electrical construction contracts in progress, the adequacy of the accrued remediation costs and the realizability of deferred tax assets.
Fair Value of Financial Instruments
The Company’s financial instruments include cash and cash equivalents, accounts receivable and accrued billings, notes receivable, restricted cash collateral deposited with insurance carriers, cash surrender value of life insurance policies, accounts payable, notes payable, and other current liabilities.
Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value guidance establishes a valuation hierarchy, which requires maximizing the use of observable inputs when measuring fair value.
The three levels of inputs that may be used are:
Level 1 - Quoted market prices in active markets for identical assets or liabilities.
Level 2 - Observable market based inputs or other observable inputs.
Level 3 - Significant unobservable inputs that cannot be corroborated by observable market data. These values are generally determined using valuation models incorporating management’s estimates of market participant assumptions.
Fair values of financial instruments are estimated through the use of public market prices, quotes from financial institutions, and other available information. Management considers the carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable and accrued billings, accounts payable and accrued liabilities, to approximate fair value due to the immediate or short-term maturity of these financial instruments. The fair value of notes receivable is considered by management to approximate carrying value based on their interest rates and terms, maturities, collateral, and current status of the receivables. The fair value of the Company’s long-term notes payable are also estimated by management to

4


approximate their carrying value since the interest rates prescribed by Branch Banking and Trust Company (the “Bank”) are variable market interest rates and are adjusted periodically. Restricted cash is considered by management to approximate fair value due to the nature of the asset held in a secured interest bearing bank account. The carrying value of cash surrender value of life insurance is also considered by management to approximate fair value as the carrying value is based on the current settlement value under the contract, as provided by the carrier.
Restricted Cash
The Company’s restricted cash includes cash deposited in a secured interest bearing bank account, as required by the Collateral Trust Agreement in connection with the Company’s workers’ compensation insurance policies, as described in note 8.
Goodwill and Intangible Assets
Intangible assets with finite useful lives are recorded at cost upon acquisition, and amortized over the term of the related contract or useful life, as applicable. Intangible assets held by the Company with finite useful lives include customer relationships and trademarks. All definite lived intangibles are amortized over their estimated useful lives. The Company reviews the values recorded for intangible assets and goodwill to assess recoverability from future operations annually or whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. As of December 31, 2014, the Company assessed the recoverability of its long-lived assets and believed that there were no events or circumstances present that would require a test of recoverability on those assets. As a result, there was no impairment of the carrying amounts of such assets and no reduction in their estimated useful lives.
Segment Reporting
The Company operates as a single reportable segment, electrical construction, under ASC Topic 280-10-50 Disclosures about Segments of an Enterprise and Related Information. Certain corporate costs are not allocated to a segment.
Reclassifications
Certain amounts previously reflected in the prior year statement of cash flows have been reclassified to conform to the Company’s 2015 presentation. The cash flows from operating activities include amounts under contract loss accruals which were previously reported within accounts payable and accrued liabilities. This reclassification had no effect on the previously reported total cash flows from operating activities.
Recent Accounting Pronouncements
In May 2014, the FASB issued ASU 2014-09, which will replace most existing revenue recognition guidance in U.S. generally accepted accounting principles and is intended to improve and converge the financial reporting requirements for revenue from contracts with customers with International Financial Reporting Standards (“IFRS”). The core principle of ASU 2014-09 is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. ASU 2014-09 also requires additional disclosures about the nature, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. ASU 2014-09 allows for both retrospective and prospective methods of adoption and is effective for periods beginning after December 15, 2016. The Company is currently evaluating the method of adoption and the impact that the adoption of ASU 2014-09 will have on its consolidated financial statements. In August 2015, the FASB issued ASU 2015-14 which provides a one-year deferral of the revenue recognition standard’s effective date. Public business entities are required to apply the revenue recognition standard to annual reporting periods beginning after December 15, 2017, and interim periods within those annual periods. Early application is permitted but not before the original effective date for public business entities (annual reporting periods beginning after December 15, 2016). The option to use either a retrospective or cumulative-effective transition method did not change.
In August 2014, the FASB issued ASU 2014-15 requiring management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. The standard also provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new guidance is effective for the annual period ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2014-15 will have on its consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03 that intends to simplify the presentation of debt issuance costs. The new standard will more closely align the presentation of debt issuance costs under U.S. generally accepted accounting principles with the presentation under comparable IFRS standards. Debt issuance costs related to a recognized debt liability will be presented on the balance sheet as a direct deduction from the debt liability, similar to the presentation of debt discounts. ASU 2015-03 is effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The cost of issuing debt will no longer be recorded as a separate asset, except when incurred before receipt of the funding from the associated debt liability. Under current U.S. generally accepted accounting principles, debt issuance costs are

5


reported on the balance sheet as assets and amortized as interest expense. The costs will continue to be amortized to interest expense using the effective interest method. Subsequent to the issuance of ASU 2015-03 the Securities and Exchange Commission staff made an announcement regarding the presentation of debt issuance costs associated with line-of-credit arrangements, which was codified by the FASB in ASU 2015-15. This guidance, which clarifies the exclusion of line-of-credit arrangements from the scope of ASU 2015-03, is effective upon adoption of ASU 2015-03. The Company is currently evaluating the impact that the adoption of both ASU 2015-03 and 2015-15 will have on its consolidated financial statements.
In April 2015, the FASB issued ASU 2015-05 which provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The guidance will not change U.S. generally accepted accounting principles for a customers accounting for service contracts. The standard will be effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. The Company is currently evaluating the impact that the adoption of ASU 2015-05 will have on its consolidated financial statements.
Note 2 – Income Taxes
The following table presents the provision for income tax and the effective tax rates from continuing operations for the three and nine month periods ended September 30 as indicated:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2015
 
2014
 
2015
 
2014
Income tax provision
$
1,199,211

 
$
728,243

 
$
1,746,602

 
$
1,192,826

Effective income tax rate
39.4
%
 
38.0
%
 
41.0
%
 
38.0
%
The Company’s expected tax rate for the year ending December 31, 2015, which was calculated based on the estimated annual operating results for the year, is 41.0%. The expected tax rate differs from the federal statutory rate of 34.0% mainly due to non-deductible expenses and state income taxes.
The effective tax rates for the three and nine months ended September 30, 2015 were 39.4% and 41.0%, respectively. The effective tax rate for the three months ended September 30, 2015 differs from the expected tax rate due to an adjustment of the estimated annual operating results for the year. The effective tax rate for the nine months ended September 30, 2015 reflects the expected tax rate for the year.
The effective tax rates for both the three and nine months ended September 30, 2014 were 38.0% and differ from the federal statutory rate of 34.0% primarily due to state income taxes.
The current deferred tax assets decreased to $582,000 as of September 30, 2015 from $2.3 million as of December 31, 2014 primarily due to the decrease in accrued contract losses and to a lesser extent the decrease in accrued remediation costs. The non-current deferred tax liabilities were $7.9 million and $8.0 million as of September 30, 2015 and December 31, 2014, respectively. This change is mainly due to a decrease between the book and tax net value of fixed assets.
The carrying amounts of deferred tax assets are reduced by a valuation allowance if, based on the available evidence, it is more likely than not such assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the deferred tax assets are expected to be recovered or settled. In the assessment for a valuation allowance, appropriate consideration is given to positive and negative evidence related to the realization of the deferred tax assets. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, experience with loss carryforwards expiring unused, and tax planning alternatives. If the Company determines it will not be able to realize all or part of the deferred tax assets, a valuation allowance would be recorded to reduce deferred tax assets to the amount that is more likely than not to be realized.
Based on assumptions with respect to forecasts of future taxable income and tax planning, among others, the Company anticipates being able to generate sufficient taxable income to utilize the deferred tax assets. Therefore, the Company has not recorded a valuation allowance against deferred tax assets. The minimum amount of future taxable income required to be generated to fully realize the deferred tax assets as of September 30, 2015 is approximately $2.1 million.
The Company has gross unrecognized tax benefits of $12,000 and $11,000 as of September 30, 2015 and December 31, 2014, respectively. The Company believes that it is reasonably possible that the liability for unrecognized tax benefits related to certain state income tax matters may be settled within the next twelve months. The federal statute of limitation has expired for

6


tax years prior to 2012 and relevant state statutes vary. The Company is currently not under any income tax audits or examinations and does not expect the assessment of any significant additional tax in excess of amounts provided.
The Company accrues interest and penalties related to unrecognized tax benefits as interest expense and other general and administrative expenses, respectively, and not as a component of income taxes.
Note 3 – Discontinued Operations
Commitments and Contingencies Related to Discontinued Operations
Through certain of our subsidiaries and predecessor companies, the Company was previously engaged in mining activities and ended all such activities in December 2002.
Effective September 15, 2014, the Company entered into an Administrative Order on Consent (“AOC”) with the United States Environmental Protection Agency (the “EPA”) with respect to a previously owned mining property, the Sierra Zinc Site located in Stevens County, Washington (the “Site”). The Company sold the Site over fifty years ago. The Site includes a tailings impoundment that was not previously reclaimed. Pursuant to the AOC, the Company agreed to undertake certain remediation actions at the Site, which work was completed by September 30, 2015.
Based on the foregoing, the Company has reasonably estimated the amounts related to this response action in accordance with ASC Topic 450-20, Loss Contingencies, and established a contingency provision within discontinued operations. As of September 30, 2015 and December 31, 2014, the balance of the estimated contingency provision accrued by the Company was $229,000 and $1.1 million, respectively, including an increase of $138,000 and $494,000 recognized in the three and the nine months ended September 30, 2015, respectively. This increase resulted mainly from changes in the scope of the project as required by the EPA. The remaining balance of the accrued remediation costs as of September 30, 2015, mainly represents estimated future charges for EPA response costs and monitoring of the Site. It is reasonably possible the total actual costs to be incurred at the Site in future periods may vary from this estimate.
The provision will be reviewed periodically based upon facts and circumstances available at the time. The costs provisioned for future expenditures related to this environmental obligation are not discounted to present value.
As of September 30, 2015 and December 31, 2014, respectively, discontinued operations had no liabilities other than the accrued remediation costs associated with the aforementioned EPA action.
 
 
September 30,
 
December 31,
 
 
2015
 
2014
Accrued remediation costs current
 
$
164,631

 
$
1,048,380

Accrued remediation costs non-current
 
64,260

 
15,000

Total liabilities of discontinued operations
 
$
228,891

 
$
1,063,380

The following table presents the operating results of the discontinued operations for the three and nine month periods ended September 30, as indicated:
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2015
 
2014
 
2015
 
2014
Provision for remediation costs
$
(138,313
)
 
$

 
$
(494,205
)
 
$
(1,070,825
)
 
 
 
 
 
 
 
 
Loss from discontinued operations before income taxes
(138,313
)
 

 
(494,205
)
 
(1,070,825
)
Income tax benefit
(39,395
)
 

 
(194,249
)
 
(405,478
)
Loss from discontinued operations, net of tax
$
(98,918
)
 
$

 
$
(299,956
)
 
$
(665,347
)
The Company’s effective tax benefit rates related to discontinued operations for the three and nine month periods ended September 30, 2015 was (28.5)% and (39.3)%, respectively. The effective tax benefit rate for the three months ended September 30, 2015 differs from the expected tax rate due to an adjustment of the estimated annual operating results for the year. The effective tax benefit rate for the nine months ended September 30, 2015 differs from the statutory rate of (34.0)% primarily due to non-deductible expenses and state income taxes. The Company’s effective tax benefit rates related to discontinued operations for the three and nine month periods ended September 30, 2014 was 0.0% and (37.9)%, respectively. The Company had no discontinued operations for the three months ended September 30, 2014. The effective tax benefit rate differs from the statutory rate of (34.0)% primarily due to state income taxes.

7


Note 4 – Notes Payable
The following table presents the balances of our notes payable as of the dates indicated:
 
Lending Institution
 
Maturity Date
 
September 30, 2015
 
December 31, 2014
 
Interest Rates
 
 
 
 
 
September 30, 2015
 
December 31, 2014
Working Capital Loan
Branch Banking and Trust Company
 
June 16, 2017
 
$
4,500,000

 
$

 
2.06
%
 
2.19
%
$6.94 Million Equipment Loan
Branch Banking and Trust Company
 
February 22, 2016
 

 
2,701,343

 
%
 
2.69
%
$1.5 Million Equipment Loan
Branch Banking and Trust Company
 
October 17, 2016
 

 
727,000

 
%
 
2.69
%
$4.25 Million Equipment Loan
Branch Banking and Trust Company
 
September 19, 2016
 

 
2,094,000

 
%
 
2.69
%
$1.5 Million Equipment Loan (2013)
Branch Banking and Trust Company
 
April 22, 2017
 

 
1,000,000

 
%
 
2.67
%
$5.0 Million Equipment Loan
Branch Banking and Trust Company
 
April 22, 2018
 

 
3,703,704

 
%
 
2.67
%
$3.5 Million Acquisition Loan
Branch Banking and Trust Company
 
January 28, 2019
 

 
2,858,150

 
%
 
2.19
%
$10.0 Million Equipment Loan
Branch Banking and Trust Company
 
July 28, 2020
 
10,000,000

 
10,000,000

 
2.25
%
 
2.19
%
$17.0 Million Equipment Loan
Branch Banking and Trust Company
 
March 6, 2020
 
15,299,000

 

 
2.06
%
 
%
$2.0 Million Equipment Loan
Branch Banking and Trust Company
 
March 6, 2020
 
2,000,000

 

 
2.06
%
 
%
$7.9 Million Installment Sale Contract
Caterpillar Financial Services Corporation
 
July 17, 2016
 

 
3,259,635

 
%
 
3.45
%
Total notes payable
 
 
 
 
31,799,000

 
26,343,832

 
 
 
 
Current portion of notes payable
 
(8,133,482
)
 
(3,685,859
)
 
 
 
 
Notes payable, less current portion
 
$
23,665,518

 
$
22,657,973

 
 
 
 
As of September 30, 2015, the Company, and the Company’s wholly owned subsidiaries Southeast Power, Pineapple House of Brevard, Inc. (“Pineapple House”), Bayswater Development Corporation (“Bayswater”), Power Corporation of America (“PCA”) and C and C Power Line, Inc. (“C&C”), collectively (the “Debtors,”) were parties to a Master Loan Agreement, dated March 6, 2015 (the “2015 Master Loan Agreement”), with Branch Banking and Trust Company (the “Bank”).
All loans with the Bank are guaranteed by the Debtors and include the grant of a continuing security interest in all now owned, hereafter acquired and wherever located personal property of the Debtors.

8


As of September 30, 2015, the Company had a loan agreement and a series of related ancillary agreements with the Bank providing for a revolving line of credit loan for a maximum principal amount of $15.0 million, to be used as a “Working Capital Loan.” As of September 30, 2015 and December 31, 2014, borrowings under the Working Capital Loan were $4.5 million and $0, respectively. On October 15, 2015 the Company paid down $3.0 million of the Working Capital Loan. Such amount has been reflected under the “current portion of notes payable” in the accompanying consolidated balance sheets.
The $10.0 Million Equipment Loan bears interest at a rate per annum equal to one month LIBOR (as defined in the ancillary loan documents) plus two percent 2.00%, which is adjusted monthly and subject to a maximum interest rate of 24.00%.
The Working Capital Loan, the $17.0 Million Equipment Loan and the $2.0 Million Equipment Loan bear interest at a rate per annum equal to one month LIBOR (as defined in the documentation related to each loan) plus 1.80%, which will be adjusted monthly and subject to a maximum rate of 24.00%.
The Company’s debt arrangements contain various financial and other covenants including, but not limited to: minimum tangible net worth, maximum debt to tangible net worth ratio and fixed charge coverage ratio. Other loan covenants prohibit, among other things, a change in legal form of the Company, and entering into a merger or consolidation. The loans also have cross-default provisions whereby any default under any loans of the Company (or its subsidiaries) with the Bank will constitute a default under all of the other loans of the Company (and its subsidiaries) with the Bank.
Note 5 – Commitments and Contingencies
Performance Bonds
In certain circumstances, the Company is required to provide performance bonds to secure its contractual commitments. Management is not aware of any performance bonds issued for the Company that have ever been called by a customer. As of September 30, 2015, outstanding performance bonds issued on behalf of the Company’s electrical construction subsidiary amounted to approximately $42.2 million.
Collective Bargaining Agreements
C&C, one of the Company’s electrical construction subsidiaries, is party to collective bargaining agreements with unions representing workers performing field construction operations. The collective bargaining agreements expire at various times and have typically been renegotiated and renewed on terms similar to the ones contained in the expiring agreements. The agreements require the subsidiary to pay specified wages, provide certain benefits to their respective union employees and contribute certain amounts to multi-employer pension plans and employee benefit trusts. The subsidiary’s multi-employer pension plan contribution rates generally are specified in the collective bargaining agreements (usually on an annual basis), and contributions are made to the plans on a “pay-as-you-go” basis based on such subsidiary’s union employee payrolls, which cannot be determined for future periods because contributions depend on, among other things, the number of union employees that such subsidiary employs at any given time; the plans in which it may participate vary depending on the projects it has ongoing at any time; and the need for union resources in connection with those projects. If the subsidiary withdraws from, or otherwise terminates its participation in, one or more multi-employer pension plans, or if the plans were to otherwise become substantially underfunded, such subsidiary could be assessed liabilities for additional contributions related to the underfunding of these plans. The Company is not aware of any amounts of withdrawal liability that have been incurred as a result of a withdrawal by C&C from any multi-employer defined benefit pension plans.
Note 6 – Income Per Share of Common Stock
Basic income per common share is computed by dividing net income by the weighted average number of common stock shares outstanding during the period. Diluted income per share reflects the potential dilution that could occur if common stock equivalents, such as stock options outstanding, were exercised into common stock that subsequently shared in the earnings of the Company.
As of September 30, 2015 and 2014, the Company had no common stock equivalents. The computation of the weighted average number of common stock shares outstanding excludes 2,362,418 shares of Treasury Stock for each of the three and nine month periods ended September 30, 2015 and 2014.
Note 7 – Customer Concentration
A significant portion of the Company’s electrical construction revenue has historically been derived from three or four utility customers each year. For the nine months ended September 30, 2015 and 2014, the three largest customers accounted for 57% and 56%, respectively, of the Company’s total revenue. For the three months ended September 30, 2015 and 2014, the three largest customers accounted for 77% and 55%, respectively, of the Company’s total revenue. The increase in concentration for the most recent quarter resulted from fluctuations in awards under existing MSAs.

9


Note 8 – Restricted Cash
On October 25, 2010, the Company, as grantor, Valley Forge Insurance Company (the “Beneficiary”) and Branch Banking and Trust Company (the “Trustee”) entered into a Collateral Trust Agreement (the “Agreement”) in connection with the Company’s workers’ compensation insurance policies issued by the Beneficiary (the “Policies”) beginning in 2009. The Agreement was made to grant the Beneficiary a security interest in certain of the Company’s assets and to place those assets in a Trust Account to secure the Company’s obligations to the Beneficiary under the Policies. The deposits maintained under the Agreement are recorded as restricted cash, within the non-current assets section of our balance sheet.
Note 9 – Goodwill and Other Intangible Assets Associated with the Acquisition of C&C
On January 3, 2014, PCA completed its acquisition of all the issued and outstanding shares of stock of C&C. The purchase price was $7.3 million in cash, subject to certain customary post-closing adjustments. As of December 31, 2014 all such adjustments were recognized. In connection with the acquisition of C&C, the Company acquired intangible assets with definite useful lives primarily consisting of trademarks and names, customer relationships and non-competition agreements and are amortized over periods from five to twenty years. The aggregate cash consideration paid, net of cash acquired of $1.4 million, was $5.8 million, of which $101,000 was allocated to goodwill, $1.0 million to acquired other intangible assets, $3.3 million to property and equipment, $2.6 million to net current assets and $1.3 million to net liabilities assumed.
The following table presents the gross and net balances of our goodwill and intangible assets as of the dates indicated:
 
 
 
September 30, 2015
 
December 31, 2014
 
Useful Life
(Years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Indefinite-lived and non-amortizable acquired intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
Goodwill
Indefinite
 
$
101,407

 
$

 
$
101,407

 
$
101,407

 
$

 
$
101,407

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Definite-lived and amortizable acquired intangible assets
 
 
 
 
 
 
 
 
 
 
 
 
Trademarks/Names
15
 
$
640,000

 
$
(74,667
)
 
$
565,333

 
$
640,000

 
$
(42,667
)
 
$
597,333

Customer relationships
20
 
350,000

 
(30,625
)
 
319,375

 
350,000

 
(17,500
)
 
332,500

Non-competition agreement
5
 
10,000

 
(5,667
)
 
4,333

 
10,000

 
(2,000
)
 
8,000

Other
1
 
13,800

 
(13,800
)
 

 
13,800

 
(13,800
)
 

Total intangible assets, net
 
$
1,013,800

 
$
(124,759
)
 
$
889,041

 
$
1,013,800

 
$
(75,967
)
 
$
937,833


10


Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
We make “forward-looking statements” within the meaning of the “safe harbor” provision of the Private Securities Litigation Reform Act of 1995 throughout this document. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” “plan,” and “continue” or similar words. We have based these statements on our current expectations about future events. Although we believe that our expectations reflected in or suggested by our forward-looking statements are reasonable, we cannot assure you that these expectations will be achieved. Our actual results may differ materially from what we currently expect. Factors that may affect the results of our operations include, among others: the level of construction activities by public utilities; the concentration of revenue from a limited number of utility customers; the loss of one or more significant customers; the timing and duration of construction projects for which we are engaged; our ability to estimate accurately with respect to fixed price construction contracts; and heightened competition in the electrical construction field, including intensification of price competition. Other factors that may affect the results of our operations include, among others: adverse weather; natural disasters; effects of climate changes; changes in generally accepted accounting principles; ability to obtain necessary permits from regulatory agencies; our ability to maintain or increase historical revenue and profit margins; general economic conditions, both nationally and in our region; adverse legislation or regulations; availability of skilled construction labor and materials and material increases in labor and material costs; and our ability to obtain additional and/or renew financing. Other important factors which could cause our actual results to differ materially from the forward-looking statements in this document include, but are not limited to, those discussed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as those discussed elsewhere in this report and as set forth from time to time in our other public filings and public statements. In addition to the other information included in this report and our other public filings and releases, a discussion of factors affecting our business is included in our Annual Report on Form 10-K for the year ended December 31, 2014 under “Item 1A. Risk Factors” and should be considered while evaluating our business, financial condition, results of operations and prospects.
You should read this report in its entirety and with the understanding that our actual future results may be materially different from what we expect. We may not update these forward-looking statements, even in the event that our situation changes in the future, except as required by law. All forward-looking statements attributable to us are expressly qualified by these cautionary statements.
Overview
We are a provider of electrical construction services in the southeast and mid-Atlantic regions of the United States including Texas. For the nine months ended September 30, 2015, our total consolidated revenue was $91.1 million.
Through our subsidiaries, Power Corporation of America (“PCA”), Southeast Power Corporation (“Southeast Power”) and C and C Power Line, Inc. (“C&C”), we are engaged in the construction and maintenance of electric utility facilities for electric utilities and industrial customers. Southeast Power performs electrical contracting services throughout the United States. Southeast Power is headquartered in Titusville, Florida and has additional offices in Bastrop, Texas and Spartanburg, South Carolina. C&C is a full service electrical contractor, headquartered in Jacksonville, Florida. C&C has a unionized workforce and has been involved in the electrical business primarily in Florida since 1989.
The electrical construction business is highly competitive and fragmented. We compete with other independent contractors, including larger regional and national firms that may have financial, operational, technical and marketing resources that exceed our own. We also face competition from existing and prospective customers establishing or augmenting in-house service and organizations that employ personnel who perform some of the same types of services as those provided by us. In addition, a significant portion of our electrical construction revenue is derived from a small group of customers, several of which account for a substantial portion of our revenue in any given year. The relative revenue contribution by any single customer or group of customers may significantly fluctuate from period to period. For example, for the nine months ended September 30, 2015 and the year ended December 31, 2014, three of our customers accounted for approximately 57% and 54%, respectively, of our consolidated revenue. The loss of, or decrease in current demand from, one or more of these customers, would, if not replaced by other business, result in a decrease in revenue, margins and profits, which could be material.
Critical Accounting Estimates
This discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to fixed price electrical construction contracts, the adequacy of our accrued remediation costs and deferred tax assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable, under the circumstances, the results of which form the basis for making judgments about the carrying

11


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. Our management has discussed the selection and development of our critical accounting policies, estimates, and related disclosure with the Audit Committee of the Board of Directors.
Percentage of Completion
We recognize revenue from fixed price contracts on a percentage-of-completion basis, using the cost-to-cost method based on the percentage of total cost incurred to date, in proportion to total estimated cost to complete the contract. Total estimated cost, and thus contract income, is impacted by several factors including, but not limited to: changes in productivity and scheduling, the cost of labor, subcontracts, materials and equipment. Additionally, external factors such as weather, site conditions and scheduling that differ from those assumed in the original bid (to the extent contract remedies are unavailable), customer needs, customer delays in providing approvals and materials, the availability and skill level of workers in the geographic location of the project, a change in the availability and proximity of materials, and governmental regulation, may also affect the progress and estimated cost of a project’s completion and thus the timing of income and revenue recognition.
The accuracy of our revenue and profit recognition in a given period is almost solely dependent on the accuracy of our estimates of the cost to complete each project. Our projects can be complex and in almost every case the profit margin estimates for a project will either increase or decrease, to some extent, from the amount that was originally estimated at the time of bid. If a current estimate of total costs indicates a loss on a contract, the projected loss is recognized in full when determined. Accrued contract losses as of September 30, 2015 decreased to $268,000 from $2.5 million as of December 31, 2014. The accrued contract losses for 2015 and 2014 are mainly attributable to transmission projects experiencing either adverse weather conditions or unexpected construction issues. The 2014 accrued amount related mainly to projects in Texas, where adverse weather conditions were especially severe. Revenue from change orders, extra work, variations in the scope of work and claims is recognized when realization is probable.
Accrued Remediation Costs
In 2013, we originally established a contingency provision within discontinued operations of $1.2 million relating to a pending environmental matter with respect to a mining property, the Sierra Zinc Site located in Stevens County, Washington (the “Site”), which we sold over fifty years ago. As described in note 3 to the consolidated financial statements, during the nine months ended September 30, 2015 and 2014, we increased the contingency provision within discontinued operations by $494,000 and $1.1 million, respectively. The increase in the contingency provision for the nine months ended September 30, 2015 resulted mainly from changes in the scope of the project as required by the EPA.
The balance of the accrued remediation costs as of September 30, 2015 and December 31, 2014, was $229,000 and $1.1 million, respectively. We anticipate that the current accrual will be adequate to cover the full remediation costs. However, the accrual will be reviewed periodically based upon facts and circumstances available at the time, which could result in changes to this amount. We have taken certain remediation actions at the Site, which work is now completed, with future costs accrued related mainly to EPA response costs and the monitoring of the site.
Deferred Tax Assets and Liabilities
We account for income taxes in accordance with ASC Topic 740, Income Taxes, which establishes the recognition requirements. Deferred tax assets and liabilities are recognized for the future tax effects attributable to temporary differences and carryforwards between the financial statement carrying amounts of existing assets and liabilities and the respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
As of September 30, 2015, our deferred tax assets were largely comprised of accrued vacation, accrued workers’ compensation claims, accrued remediation costs and federal net operating loss carryforward. The carrying amounts of deferred tax assets are reduced by a valuation allowance, if based on the available evidence, it is more likely than not such assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the deferred tax assets are expected to be recovered or settled. In the assessment for a valuation allowance, appropriate consideration is given to positive and negative evidence related to the realization of the deferred tax assets. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with loss carryforwards expiring unused, and tax planning alternatives. If we determine we will not be able to realize all or part of our deferred tax assets, a valuation allowance would be recorded to reduce our deferred tax assets to the amount that is more likely than not to be realized.
Based on our assumption with respect to forecasts of future taxable income and tax planning, among others, we anticipate being able to generate sufficient taxable income to utilize our deferred tax assets. Therefore, we have not recorded a valuation allowance against deferred tax assets. The minimum amount of future taxable income required to be generated to fully realize the deferred tax assets as of September 30, 2015 is approximately $2.1 million.

12


RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2015 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2014
The table below presents our operating income from continuing operations for the nine months ended September 30, 2015 and 2014:
 
2015
 
2014
Revenue
 
 
 
Electrical construction
$
90,509,971

 
$
66,520,732

Other
553,102

 
3,399,954

Total revenue
91,063,073

 
69,920,686

Costs and expenses
 
 
 
Electrical construction
77,422,210

 
56,141,402

Other
502,040

 
2,738,397

Selling, general and administrative
3,552,001

 
3,249,188

Depreciation and amortization
4,949,367

 
4,515,441

Gain on sale of property and equipment
(66,988
)
 
(323,936
)
Total costs and expenses
86,358,630

 
66,320,492

Total operating income
$
4,704,443

 
$
3,600,194

Operating income equals total operating revenue less operating costs and expenses inclusive of depreciation and amortization, and selling, general and administrative expenses. Operating costs and expenses also include any gains or losses on the sale of property and equipment. Operating income excludes interest expense, interest income, other income, and income taxes.
The table below presents our operating income from electrical construction operations for the nine months ended September 30, 2015 and 2014:
 
2015
 
2014
Revenue
$
90,509,971

 
$
66,520,732

Cost and expenses (excluding depreciation and amortization):
77,422,210

 
56,141,402

Selling, general and administrative
253,677

 
369,039

Depreciation and amortization
4,856,430

 
4,450,733

Gain on sale of property and equipment
(66,988
)
 
(323,936
)
Total operating income from electrical construction operations
$
8,044,642

 
$
5,883,494

Operating income from electrical construction operations equals electrical construction revenue less electrical construction costs and expenses inclusive of depreciation and amortization, and selling, general and administrative expenses. Electrical construction operating costs and expenses also include any gains or losses on the sale of property and equipment. Electrical construction operating income excludes interest expense, interest income, other income, and income taxes.
Revenue
Total revenue for the nine months ended September 30, 2015 increased 30.2% to $91.1 million, from $69.9 million in the same period in 2014, due to the increase in electrical construction operations revenue. Electrical construction operations revenue increased $24.0 million (36.1%) to $90.5 million, from $66.5 million in the same period in 2014, due primarily to growth in our construction under master service agreements (“MSA”).
Backlog
Our backlog represents the uncompleted portion of services to be performed under existing project-specific fixed-price and maintenance contracts and the estimated value of future services that we expect to provide under our existing MSAs.
The table below presents our total backlog as of September 30, 2015 and 2014 along with an estimate of the backlog amounts expected to be realized within 12 months and during the total life of each of the MSAs. The existing MSAs have initial terms ranging from one year to four years and some provide for additional renewals at the option of the customer. The calculation assumes exercise of the renewal options by the customer. Revenue from assumed exercise of renewal options represents $97.7 million (63.5%) of our total estimated MSA backlog as of September 30, 2015.

13


 
 
Backlog as of
 
Backlog as of
 
 
September 30, 2015
 
September 30, 2014
Electrical Construction Operations
 
12 Months
 
Total
 
12 Months
 
Total
Project-Specific Firm Contracts
 
$
48,792,425

 
$
60,592,086

 
$
39,823,589

 
$
41,345,422

Estimated Master Service Agreements (MSAs)
 
39,704,268

 
153,916,666

 
47,584,962

 
245,941,406

Total
 
$
88,496,693

 
$
214,508,752

 
$
87,408,551

 
$
287,286,828

 
 
 
 
 
 
 
 
 
Our total backlog as of September 30, 2015, was $214.5 million, compared to $287.3 million as of September 30, 2014. Of the $214.5 million backlog as of September 30, 2015, $60.6 million (28.2%) is believed to be firm under project-specific fixed-price and maintenance contracts and the balance represents the estimated value of future services under our existing MSAs. This compares to a backlog of $287.3 million as of September 30, 2014, of which $41.3 million (14.4%) was believed to be firm under project-specific fixed-price and maintenance contracts and the balance was attributable to estimated value of future services under our existing MSAs. Of our total backlog as of September 30, 2015, we expect approximately $88.5 million (41.3%) to be completed over the next twelve months.
As of September 30, 2015, compared to December 31, 2014, our total backlog declined $60.5 million (22.0%) and our 12-month backlog increased $3.2 million (3.7%). The decline in our total backlog resulted primarily from completion of some MSA work, not replaced by new work and the reduction in estimated work under certain MSAs. Growth in non-MSA firm contracts partially offset the decrease in MSAs.
The estimated amount of backlog for work under MSAs is calculated by using recurring historical trends inherent in current MSAs and projected customer needs based upon ongoing communications with the customer. Our estimated backlog also assumes exercise of existing customer renewal options. Certain MSAs are not exclusive to the Company and, therefore, the size and amount of projects we may be awarded cannot be determined with certainty. Accordingly, the amount of future revenue from MSA contracts may vary substantially from our current estimate. Backlog is not a term recognized under U.S. generally accepted accounting principles, but is a common measurement used in our industry. While we believe that our methodology of calculation is appropriate, such methodology may not be comparable to that employed by some other companies.
Backlog is only a snap-shot at a particular point in time and is not completely determinative of total future revenue in any particular period. It does not reflect future revenue from a significant number of short-term projects undertaken and completed between the snap-shot dates.
As of September 30, 2015 and 2014, the estimated value of future services under MSAs accounted for approximately 71.8% and 85.6% of total backlog, respectively. We plan to continue our efforts to grow MSA business. MSA contracts are generally multi-year which allows for more consistent work load and improved operating efficiencies.
Revenue estimates included in our backlog can be subject to change as a result of project accelerations, cancellations or delays due to various factors, including but not limited to: commercial issues, material deficiency, regulatory requirements and adverse weather. Our customers are not contractually committed to specific level of services under our MSAs. While we did not experience any material cancellations during the current period, most of our contracts may be terminated, even if we are not in default under the contract.
Operating Results
Electrical construction operations operating income increased $2.2 million (36.7%) to $8.0 million for the nine months ended September 30, 2015, from $5.9 million in the same period in 2014. This increase was mainly due to the aforementioned increase in revenue attributable to growth in our construction under master service agreements.
Electrical construction operations operating margins increased to 8.9% for the nine months ended September 30, 2015, from 8.8% in the same period in 2014, mainly attributable to the aforementioned increase in MSA revenue and partially offset by losses recognized in the nine months ended September 30, 2015. These losses were largely recognized in the first quarter and primarily resulted from extreme adverse weather conditions affecting several large projects in Texas which are now completed.
We had total operating income of $4.7 million for the nine months ended September 30, 2015, compared to total operating income of $3.6 million in the same period in 2014. This increase resulted mainly from a 36.1% revenue increase in electrical construction operations coupled with improved operating margins in the third quarter of 2015, attributable to the completion of certain unprofitable projects in Texas.
Costs and Expenses
Electrical construction operations cost of goods sold increased by $21.3 million to $77.4 million for the nine months ended September 30, 2015, from $56.1 million in the same period in 2014. This increase was primarily attributable to a 36.1% higher

14


level of electrical construction operations, and to a lesser extent, the aforementioned losses relating primarily to the Texas projects also contributed to this increase. Mainly due to this increase in electrical construction expenses, total costs and expenses increased by $20.0 million to $86.4 million for the nine months ended September 30, 2015, from $66.3 million in the same period in 2014.
The following table sets forth selling, general and administrative (“SG&A”) expenses for the nine months ended September 30, 2015 and 2014:
 
2015
 
2014
Electrical construction operations
$
253,677

 
$
369,039

Other
324,750

 
412,421

Corporate
2,973,574

 
2,467,728

Total
$
3,552,001

 
$
3,249,188

During the nine months ended September 30, 2015 as compared to the same period in 2014, SG&A expenses increased 9.3% to $3.6 million, primarily due to increases in corporate administrative expenditures, mainly compensation and increases in other professional services (specifically legal and consulting services). As a percentage of revenue, SG&A expenses decreased to 3.9% for 2015, from 4.6% in 2014, due primarily to the aforementioned increase in revenue during the nine months ended September 30, 2015.
The following table sets forth depreciation and amortization expense for the nine months ended September 30, 2015 and 2014:
 
2015
 
2014
Electrical construction operations
$
4,856,430

 
$
4,450,733

Other
8,793

 
10,134

Corporate
84,144

 
54,574

Total
$
4,949,367

 
$
4,515,441

Depreciation and amortization expense, which includes $49,000 and $60,000 of amortization expense for acquired intangibles in 2015 and 2014, respectively, increased to $4.9 million for the nine months ended September 30, 2015, from $4.5 million for the nine months ended September 30, 2014, an increase of 9.6%. The increase in depreciation is mainly due to the acquisition of C&C and an increase in fixed assets purchases for new equipment, primarily for our electrical construction operations, as a result of our growth and expansion efforts.
Income Taxes
The following table presents our provision for income tax and effective income tax rates from continuing operations for the nine months ended September 30, 2015 and 2014:
 
2015
 
2014
Income tax provision
$
1,746,602

 
$
1,192,826

Effective income tax rate
41.0
%
 
38.0
%
Our expected tax rate for the year ending December 31, 2015, which was calculated based on the estimated annual operating results for the year, is 41.0%. Our expected tax rate differs from the federal statutory rate of 34.0% mainly due to non-deductible expenses and state income taxes.
Our effective tax rate for the nine months ended September 30, 2015 was 41.0% and reflects the expected tax rate. Our effective tax rate for the nine months ended September 30, 2014 was 38.0% and differs from the federal statutory rate of 34.0% primarily due to state income taxes.
Discontinued Operations
Through certain of our subsidiaries and predecessor companies, we were previously engaged in mining activities and ended all such activities in December 2002. Refer to the discussion in note 3 to the consolidated financial statements for more information regarding the Site and our discontinued operations.

15


The following table presents our results of discontinued operations for the nine months ended September 30, 2015 and 2014:
 
2015
 
2014
Provision for remediation costs
$
(494,205
)
 
$
(1,070,825
)
 
 
 
 
Loss from discontinued operations before income taxes
(494,205
)
 
(1,070,825
)
Income tax benefit
(194,249
)
 
(405,478
)
Loss from discontinued operations, net of tax
$
(299,956
)
 
$
(665,347
)
Our effective income tax benefit rate related to discontinued operations for the nine months ended September 30, 2015 was (39.3)%. The effective tax benefit rate differs from the statutory rate of (34.0)% for the nine months ended September 30, 2015 primarily due to non-deductible expenses and state income taxes. Our effective tax benefit rate related to discontinued operations for the nine months ended September 30, 2014 was (37.9)%. The effective tax benefit rate differs from the statutory rate of (34.0)% for the nine months ended September 30, 2014 primarily due to state income taxes.
THREE MONTHS ENDED SEPTEMBER 30, 2015 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2014
The table below presents our operating income from continuing operations for the three months ended September 30, 2015 and 2014:
 
2015
 
2014
Revenue
 
 
 
Electrical construction
$
26,813,125

 
$
22,111,299

Other
249,236

 
548,052

Total revenue
27,062,361

 
22,659,351

Costs and expenses
 
 
 
Electrical construction
20,966,266

 
17,849,577

Other
231,163

 
420,331

Selling, general and administrative
1,072,870

 
997,214

Depreciation and amortization
1,677,097

 
1,495,141

Gain on sale of property and equipment
(84,179
)
 
(161,035
)
Total costs and expenses
23,863,217

 
20,601,228

Total operating income
$
3,199,144

 
$
2,058,123

Operating income equals total operating revenue less operating costs and expenses inclusive of depreciation and amortization, and selling, general and administrative expenses. Operating costs and expenses also include any gains or losses on the sale of property and equipment. Operating income excludes interest expense, interest income, other income, and income taxes.
The table below presents our operating income from electrical construction operations for the three months ended September 30, 2015 and 2014:
 
2015
 
2014
Revenue
$
26,813,125

 
$
22,111,299

Cost and services (excluding depreciation and amortization):
20,966,266

 
17,849,577

Selling, general and administrative
39,029

 
72,354

Depreciation and amortization
1,646,003

 
1,471,491

Gain on sale of property and equipment
(84,179
)
 
(161,035
)
Total operating income from electrical construction operations
$
4,246,006

 
$
2,878,912

Operating income from electrical construction operations equals electrical construction revenue less electrical construction costs and expenses inclusive of depreciation and amortization, and selling, general and administrative expenses. Electrical construction operating costs and expenses also include any gains or losses on the sale of property and equipment. Electrical construction operating income excludes interest expense, interest income, other income, and income taxes.

16


Revenue
Total revenue for the three months ended September 30, 2015 increased 19.4% to $27.1 million, from $22.7 million in the same period in 2014, due to the increase in electrical construction operations revenue. Electrical construction operations revenue increased $4.7 million to $26.8 million, from $22.1 million in the same period in 2014, due primarily to growth in our construction under our MSAs work.
Operating Results
Electrical construction operations operating income increased $1.4 million to $4.2 million for the three months ended September 30, 2015, from $2.9 million in the same period in 2014. This increase largely resulted from the aforementioned growth in large transmission projects under our current MSAs and non-MSAs.
Electrical construction operations operating margins increased to 15.8% for the three months ended September 30, 2015, from 13.0% in the same period in 2014. The increase in operating margins was largely the result of the aforementioned increase in transmission revenue, which provides the electrical construction operations the ability to spread its fixed costs over a larger revenue base.
We had total operating income of $3.2 million for the three months ended September 30, 2015, compared to total operating income of $2.1 million in the same period in 2014. This increase resulted mainly from a 21.3% revenue increase in electrical construction operations coupled with improved operating margins in the third quarter of 2015, attributable to the completion of certain unprofitable projects in Texas.
Costs and Expenses
Electrical construction operations cost of goods sold increased by $3.1 million to $21.0 million for the three months ended September 30, 2015, from $17.8 million in the same period in 2014. This increase was primarily attributable to a 21.3% higher level of electrical construction operations. Mainly due to this increase in electrical construction expenses, total costs and expenses increased by $3.3 million to $23.9 million for the three months ended September 30, 2015, from $20.6 million in the same period in 2014.
The following table sets forth selling, general and administrative (“SG&A”) expenses for the three months ended September 30, 2015 and 2014:
 
2015
 
2014
Electrical construction operations
$
39,029

 
$
72,354

Other
98,670

 
105,385

Corporate
935,171

 
819,475

Total
$
1,072,870

 
$
997,214

During the three months ended September 30, 2015 as compared to the same period in 2014, SG&A expenses increased 7.6% to $1.1 million, primarily due to increases in corporate administrative expenditures, mainly compensation. As a percentage of revenue, SG&A expenses decreased to 4.0% for 2015, from 4.4% in 2014, due primarily to the aforementioned increase in revenue during the three months ended September 30, 2015.
The following table sets forth depreciation and amortization expense for the three months ended September 30, 2015 and 2014:
 
2015
 
2014
Electrical construction operations
$
1,646,003

 
$
1,471,491

Other
2,938

 
4,577

Corporate
28,156

 
19,073

Total
$
1,677,097

 
$
1,495,141

Depreciation and amortization expense, which includes $18,000 and $16,000 of amortization expense for acquired intangibles in 2015 and 2014, respectively, increased to $1.7 million for the three months ended September 30, 2015, from $1.5 million for the three months ended September 30, 2014, an increase of 12.2%. The increase in depreciation is mainly due to the acquisition of C&C and an increase in fixed assets purchases for new equipment, primarily for our electrical construction operations, as a result of our growth and expansion efforts.

17


Income Taxes
The following table presents our provision for income tax and effective income tax rates from continuing operations for the three months ended September 30, 2015 and 2014:
 
2015
 
2014
Income tax provision
$
1,199,211

 
$
728,243

Effective income tax rate
39.4
%
 
38.0
%
Our expected tax rate for the year ending December 31, 2015, which was calculated based on the estimated annual operating results for the year, is 41.0%. Our expected tax rate differs from the federal statutory rate of 34.0% mainly due to non-deductible expenses and state income taxes.
Our effective tax rate for the three months ended September 30, 2015 was 39.4% and differs from the expected tax rate due to an adjustment of the estimated annual operating results for the year. Our effective tax rate for the three months ended September 30, 2014 was 38.0% and differs from the federal statutory rate of 34.0% primarily due to state income taxes.
Discontinued Operations
Through certain of our subsidiaries and predecessor companies, we were previously engaged in mining activities and ended all such activities in December 2002. Refer to the discussion in note 3 to the consolidated financial statements for more information regarding the Site and our discontinued operations.
The following table presents our results of discontinued operations for the three months ended September 30, 2015 and 2014:
 
2015
 
2014
Provision for remediation costs
$
(138,313
)
 
$

 
 
 
 
Loss from discontinued operations before income taxes
(138,313
)
 

Income tax benefit
(39,395
)
 

Loss from discontinued operations, net of tax
$
(98,918
)
 
$

Our effective income tax benefit rate related to discontinued operations for the three months ended September 30, 2015 was (28.5)%. The effective tax benefit rate for the three months ended September 30, 2015 differs from the expected tax benefit rate due to an adjustment of the estimated annual operating results for the year. We had no discontinued operations for the three months ended September 30, 2014.

Liquidity and Capital Resources
Working Capital Analysis
Our primary cash needs have been for capital expenditures and working capital. Our primary sources of cash have been cash flow from operations and borrowings under our lines of credit and equipment financing. As of September 30, 2015, we had cash and cash equivalents of $7.6 million and working capital of $23.3 million, as compared to cash and cash equivalents of $9.8 million, and working capital of $19.7 million as of December 31, 2014.
In addition to cash flow from operations, we have a $15.0 million revolving line of credit of which $10.5 million was unused as of September 30, 2015. On October 15, 2015, we paid down $3.0 million on this line of credit. The revolving line of credit is used as a Working Capital Loan, as discussed in note 4 to the consolidated financial statements. We anticipate that this cash on hand, our credit facilities and our future cash flows from operating activities will provide sufficient cash to enable us to meet our operating needs and debt requirements for the next twelve months.
Cash Flow Analysis
The following table presents our net cash flows for each of the nine months ended September 30, 2015 and 2014:
 
2015
 
2014
Net cash (used in) provided by operating activities
$
(2,855,230
)
 
$
8,144,018

Net cash used in investing activities
(4,776,626
)
 
(10,776,325
)
Net cash provided by (used in) financing activities
5,455,168

 
(8,491,982
)
Net decrease in cash and cash equivalents
$
(2,176,688
)
 
$
(11,124,289
)

18


Operating Activities
Cash flows from operating activities are comprised of net income, adjusted to reflect the timing of cash receipts and disbursements therefrom. Our cash flows are influenced by the level of operations, operating margins and the types of services we provide, as well as the stages of our electrical construction projects.
Cash used in our operating activities totaled $2.9 million for the nine months ended September 30, 2015, compared to cash provided by operating activities of $8.1 million for 2014. The decrease in cash flows from operating activities was approximately $11.0 million, and was primarily due to the changes reflected in the items “accounts receivable and accrued billings” and “costs and estimated earnings in excess of billings on uncompleted contracts.” For the nine months ended September 30, 2015, the change in accounts receivable and accrued billings was $(946,000), compared to $5.9 million for the nine months ended September 30, 2014. This decrease was mainly due to the increase in receivable balances of several large customers in 2015, mainly attributable to the increase in MSA revenue in 2015, compared to a decrease in the receivable balances of several large utility customers in 2014, which was primarily attributable to the status of some large projects. For the nine months ended September 30, 2015, the change in costs and estimated earnings in excess of billings was $(5.1) million, compared to $(3.9) million for the nine months ended September 30, 2014. This decrease was primarily due to large electrical construction transmission projects, which are in the beginning stages of construction. Operating cash flows normally fluctuate relative to the status of our electrical construction projects.
Days of Sales Outstanding Analysis
We evaluate fluctuations in our “accounts receivable and accrued billings” and “costs and estimated earnings in excess of billings on uncompleted contracts,” for our electrical construction operations, by comparing days of sales outstanding (“DSO”). We calculate DSO as of the end of any period by utilizing the respective quarter’s electrical construction revenue to determine sales per day. We then divide “accounts receivable and accrued billings, net of allowance for doubtful accounts” at the end of the period, by sales per day, to calculate DSO for accounts receivable. To calculate DSO for costs and estimated earnings in excess of billings, we divide “costs and estimated earnings in excess of billings on uncompleted contracts,” by sales per day.
For the quarters ended September 30, 2015 and 2014, our DSO for accounts receivable were 64 and 45, respectively, and our DSO for costs and estimated earnings in excess of billings were 40 and 37, respectively. The increase in our DSO for accounts receivable and accrued billings for the quarter ended September 30, 2015, when compared to the same quarterly period in 2014, was mainly due to the increase in the balances of several large customers’ mainly attributable to the increase in MSA project revenue, and the increase in our balance of costs and estimated earnings in excess of billings. The increase in our DSO for costs and estimated earnings in excess of billings was mainly due to the increase in the balance of costs and estimated earnings in excess of billings of large projects which are in the beginning stages of construction for the quarter ended September 30, 2015, when compared to the same quarterly period in 2014. As of November 9, 2015, we have received approximately 97.0% of our September 30, 2015 outstanding trade accounts receivable and have billed 85.4% of our costs and estimated earnings in excess of billings balance.
Income Taxes Paid
Income tax payments decreased to $32,000 for the nine months ended September 30, 2015 from $254,000 for the nine months ended September 30, 2014. Taxes paid for the nine months ended September 30, 2015 were for the estimated 2014 income tax liability, compared to taxes paid for the same annual period in 2014, which were primarily for the estimated 2013 income tax liability.
Investing Activities
Cash used in investing activities for the nine months ended September 30, 2015, was $4.8 million, compared to cash used in investing activities of $10.8 million for 2014. The decrease in cash used in our investing activities for the nine months ended September 30, 2015, when compared to 2014, is primarily due to the acquisition of C&C in 2014. On January 3, 2014, PCA completed its acquisition of C&C as described in note 9 to the consolidated financial statements. The aggregate cash consideration paid, net of cash acquired, was $5.8 million, of which $101,000 was allocated to goodwill, $1.0 million to acquired intangible assets, $3.3 million to fixed assets, $2.6 million to current assets and $1.3 million to liabilities assumed.
Our investing activities for the nine months ended September 30, 2015 were mainly attributable to capital expenditures of $5.6 million. Our capital expenditures are mainly for the purchases of equipment, primarily trucks and heavy machinery, used by our electrical construction operations for the upgrading and replacement of equipment, as well as for our expansion efforts. Our capital budget for 2015 is expected to total approximately $7.6 million, the majority of which is for continued upgrading and purchases of equipment, for our electrical construction operations. We plan to fund these purchases through our cash on hand and equipment financing, consistent with past practices.

19


Financing Activities
Cash provided by financing activities for the nine months ended September 30, 2015, was $5.5 million, compared to cash used in financing activities of $8.5 million for 2014. Our financing activities for the nine months ended September 30, 2015 consisted mainly of net borrowings on our $17.0 Million Equipment Loan totaling $17.0 million, as well as borrowings on our Working Capital Loan of $5.5 million and borrowings on our $2.0 Million Equipment Loan of $2.0 million. These borrowings were offset by net repayments on our electrical construction equipment loans totaling $10.2 million, repayments on our $3.5 Million Acquisition Loan of $2.9 million, installment loan repayments of $3.3 million, repayments on our Working Capital Loan of $1.0 million, and repayments on our $17.0 Million Equipment Loan of $1.7 million. Our financing activities for the nine months ended September 30, 2014 consisted mainly of repayments on our Working Capital Loan of $7.0 million, net repayments on our equipment loans totaling $3.1 million, repayments on our acquisition loan of $467,000 and installment loan repayments of $1.5 million. These repayments were offset by borrowings on our acquisition loan of $3.5 million.
We have paid no cash dividends on our Common Stock since 1933, and it is not expected that we will pay any cash dividends on our Common Stock in the immediate future.
Debt Covenants
Our debt arrangements contain various financial and other covenants including cross-default provisions whereby any default under any loans of the Company (or its subsidiaries) with the lender will constitute a default under all of the other loans of the Company (and its subsidiaries) with the lender. The most significant of the covenants are: maximum debt to tangible net worth ratio and fixed charge coverage ratio. We must maintain: a tangible net worth of at least $20.0 million calculated quarterly; no more than $500,000 in outside debt (with certain exceptions); a maximum debt to tangible net worth ratio of no greater than 2.5 : 1.0 and a fixed charge coverage ratio that is to equal or exceed 1.3 : 1.0. The fixed charge coverage ratio is calculated annually using EBITDAR (earnings before interest, taxes, depreciation, amortization and rental expense) divided by the sum of CPLTD (current portion of long term debt), interest expense and rental expense. We were in compliance with all of our covenants as of September 30, 2015.
The following are computations of these most restrictive financial covenants:
 
 
 
 
Actual as of
Covenants Measured at Quarter End:
 
Covenant
 
September 30, 2015
Tangible net worth minimum
 
$
20,000,000

 
$
31,977,586

Outside debt not to exceed
 
$
500,000

 
$

Maximum debt/tangible net worth ratio not to exceed
 
2.5 : 1.0

 
1.56 : 1:0

Covenants Measured at Year End:
 
 
 
 
Fixed charge coverage ratio must equal or exceed
 
1.3 : 1.0

 
1.52 : 1.0

Forecast
We anticipate our cash on hand and cash flows from operations and credit facilities will provide sufficient cash to enable us to meet our working capital needs, debt service requirements and planned capital expenditures, for at least the next twelve months. The amount of our planned capital expenditures will depend, to some extent, on the results of our future performance. However, our revenue, results of operations and cash flows, as well as our ability to seek additional financing, may be negatively impacted by factors including, but not limited to: a decline in demand for electrical construction services, general economic conditions, heightened competition, availability of construction materials, increased interest rates, and adverse weather conditions.
Item 3.     Quantitative and Qualitative Disclosures About Market Risk.
Not applicable to smaller reporting companies.
Item 4.    Controls and Procedures.
Evaluation of disclosure controls and procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management in a timely manner. An evaluation was performed under the supervision and with the participation of our management, including John H. Sottile, our Chief Executive Officer (“CEO”), and Stephen R. Wherry, our Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures (as

20


defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2015. Based upon this evaluation, our management, including our CEO and our CFO, concluded that our disclosure controls and procedures were effective, as of September 30, 2015, at the reasonable assurance level.
Management’s report on internal control over financial reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f), which consists of processes and procedures designed to provide reasonable assurance to our management and board of directors regarding the preparation and fair presentation of our published financial statements. Under the supervision and with the participation of our management, including our CEO and CFO, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2014, based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework). Based on our assessment, we believe that as of December 31, 2014, our internal control over financial reporting was effective based on those criteria.
Changes in internal control
Our management, with the participation of our CEO and CFO, is responsible for evaluating changes in our internal control over financial reporting that occurred during the third quarter of 2015 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. No changes in our internal control over financial reporting occurred during the third quarter of 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the effectiveness of controls
A control system, no matter how well conceived and operated, can provide only reasonable assurance, not absolute assurance that the objectives of the control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that the design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies and procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
PART II. OTHER INFORMATION
Item 1.    Legal Proceedings.
Through certain of our subsidiaries and predecessor companies, the Company was previously engaged in mining activities and ended all such activities in December 2002. Effective September 15, 2014, the Company entered into an Administrative Order on Consent (“AOC”) with the United States Environmental Protection Agency (the “EPA”) with respect to a previously owned mining property, the Sierra Zinc Site (the “Site”), located in Stevens County, Washington. The Company sold the Site over fifty years ago. For more detailed information regarding this matter please see the discussion set forth in note 3 to the consolidated financial statements in this Form 10-Q.
Item 1A.    Risk Factors.
There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
(a) None
(b) None
(c) The Company has had a stock repurchase plan since September 17, 2002, when the Board of Directors approval was announced. As last amended by the Board of Directors on September 17, 2015, this plan permits the purchase of up to 3,500,000 shares. There is currently available for purchase through September 30, 2016 a maximum of 1,154,940 shares. The Company may repurchase its shares either in the open market or through private transactions. The volume of the shares to be repurchased is contingent upon market conditions and other factors. No shares have been purchased since 2006. As of September 30, 2015, the total number of shares repurchased under the Repurchase Plan was 2,345,060 at a cost of $1,289,467

21


(average cost of $0.55 per share). The Company currently holds the repurchased stock as Treasury Stock, reported at cost. Prior to September 17, 2002, the Company had 17,358 shares of Treasury Stock which it had purchased at a cost of $18,720.
Item 3.    Defaults Upon Senior Securities.
None.
Item 4.    Mine Safety Disclosures.
Not applicable.
Item 5.    Other Information.
None.
Item 6.
Exhibits.
10-1
Modification Promissory Note, dated September 4, 2015 (incorporated by reference to Exhibit 10-1 of the Company’s Current Report on Form 8-K dated September 4, 2015 heretofore filed with the Securities and Exchange Commission (file no. 1-7525))
10-2
Addendum to Modification Promissory Note, dated September 4, 2015 (incorporated by reference to Exhibit 10-2 of the Company’s Current Report on Form 8-K dated September 4, 2015 heretofore filed with the Securities and Exchange Commission (file no. 1-7525))
31-1
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, 15 U.S.C. Section 7241
31-2
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, 15 U.S.C. Section 7241
32-1 (1)
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
32-2 (1)
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
101.INS
XBRL Instance Document
101.SCH
XBRL Schema Document
101.CAL
XBRL Calculation Linkbase Document
101.LAB
XBRL Label Linkbase Document
101.PRE
XBRL Presentation Linkbase Document
(1)
These exhibits are furnished in accordance with Regulation S-K Item 601(b)(32) and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section. These exhibits shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the registrant specifically incorporates them by reference.


22


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.
Dated: November 12, 2015
 
 
THE GOLDFIELD CORPORATION
 
 
 
 
 
 
 
 
 
By:
 
/s/ JOHN H. SOTTILE
 
 
 
John H. Sottile
 
 
 
Chairman of the Board, President and Chief
 
 
 
Executive Officer (Principal Executive Officer)
 
 
 
 
 
 
 
/s/ STEPHEN R. WHERRY
 
 
 
Stephen R. Wherry
 
 
 
Senior Vice President, Chief Financial
 
 
 
Officer, Treasurer and Assistant Secretary
 
 
 
(Principal Financial and Accounting Officer)



23


EXHIBIT INDEX

Exhibit
Description of Exhibit
10-1
Modification Promissory Note, dated September 4, 2015 (incorporated by reference to Exhibit 10-1 of the Company’s Current Report on Form 8-K dated September 4, 2015 heretofore filed with the Securities and Exchange Commission (file no. 1-7525))
10-2
Addendum to Modification Promissory Note, dated September 4, 2015 (incorporated by reference to Exhibit 10-2 of the Company’s Current Report on Form 8-K dated September 4, 2015 heretofore filed with the Securities and Exchange Commission (file no. 1-7525))
31-1
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, 15 U.S.C. Section 7241
31-2
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, 15 U.S.C. Section 7241
32-1 (1)
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
32-2 (1)
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
101.INS
XBRL Instance Document
101.SCH
XBRL Schema Document
101.CAL
XBRL Calculation Linkbase Document
101.LAB
XBRL Label Linkbase Document
101.PRE
XBRL Presentation Linkbase Document
(1)
These exhibits are furnished in accordance with Regulation S-K Item 601(b)(32) and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liability of that section. These exhibits shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the registrant specifically incorporates them by reference.



24
Exhibit 10-1

MODIFICATION PROMISSORY NOTE

Borrower: The Goldfield Corporation, a Delaware corporation

Account Number: 9660933082

Address: 1684 W Hibiscus Blvd., Melbourne, FL 32901

Note Number: 00002

Date: September 4, 2015


THE UNDERSIGNED REPRESENTS THAT THE LOAN EVIDENCED HEREBY IS BEING OBTAINED FOR BUSINESS/COMMERCIAL PURPOSES. For value received, the undersigned, jointly and severally, if more than one, promises to pay to BRANCH BANKING AND TRUST COMPANY, a North Carolina banking corporation (the Bank), or order, at any of Banks offices in the above referenced city (or such other place or places as may be hereafter designated by Bank), the sum of FIFTEEN MILLION AND 00/100 Dollars ($15,000,000.00), in immediately available coin or currency of the United States of America. This Note modifies that certain Modification Promissory Note dated December 16, 2013 in the principal amount of $15,000,000.00, previously executed by Borrower in favor of Bank.

Interest shall accrue from the date hereof on the unpaid principal balance outstanding from time to time at the:
See Addendum to Promissory Note attached hereto.


Principal and Interest are payable as follows:
Interest only payments commencing on September 16, 2015, and on the 16th day of each month thereafter, through and including the interest only payment due June 16, 2017, with one final payment of all remaining principal also due on June 16, 2017.

The undersigned shall pay to Bank a late fee in the amount of five percent (5%) of any installment past due for ten (10) or more days. When any installment payment is past due for ten (10) or more days, subsequent payments shall first be applied to the past due balance. In addition, the undersigned shall pay to Bank a returned payment fee if the undersigned or any other obligor hereon makes any payment at any time by check or other instrument, or by any electronic means, which is returned to Bank because of nonpayment due to nonsufficient funds.

All interest shall be computed and charged for the actual number of days elapsed on the basis of a year consisting of three hundred sixty (360) days. In the event periodic accruals of interest shall exceed any periodic fixed payment amount described above, the fixed payment amount shall be immediately increased, or additional supplemental interest payments required on the same periodic basis as specified above (increased fixed payments or supplemental payments to be determined in the Bank's sole discretion), in such amounts and at such times as shall be necessary to pay all accruals of interest for the period and all accruals of unpaid interest from previous periods. Such adjustments to the fixed payment amount or supplemental payments shall remain in effect for so long as the interest accruals shall exceed the original fixed payment amount and shall be further adjusted upward or downward to reflect changes in the variable interest rate; provided that unless elected otherwise above, the fixed payment amount shall not be reduced below the original fixed payment amount. However, Bank shall have the right, in its sole discretion, to lower the fixed payment amount below the original payment amount.

Florida documentary stamp tax is not required, as they were previously paid and are capped.

This note ("NOTE") is given by the undersigned in connection with the following agreements (if any) between the undersigned and the Bank:

Security Agreement granting a security interest to Bank of even date, given by Borrower.

Master Loan Agreement previously, executed by Borrower and Guarantors.

The above - described documents executed in connection with this Note are hereinafter collectively referred to as the Agreements.
No delay or omission on the part of the holder in exercising any right hereunder shall operate as a waiver of such right or of any other right of such holder, nor shall any delay, omission or waiver on any one occasion be deemed a bar to or waiver of the same or of any other right on any future occasion. Every one of the undersigned and every endorser or guarantor of this note regardless of the time, order or place of signing waives presentment, demand, protest and notices of every kind and assents to any one or more extensions or postponements of the time of payment or any other indulgences, to any substitutions, exchanges or releases of collateral if at any time there be available to the holder of collateral for this note, and to the additions or releases of any other parties or persons primarily or secondarily liable.
The failure to pay any part of the principal or interest when due on this Note or to fully perform any covenant, obligation or warranty on this or on any other liability to the Bank by any one or more of the undersigned, by any affiliate of the undersigned (as defined in 11 USC Section (101) (2)), or by any guarantor or surety of this Note (said affiliate, guarantor, or surety are herein called Obligor); or if any financial statement or other representation made to the Bank by any of the undersigned or any Obligor shall be found to be materially incorrect or incomplete; or if any of the undersigned shall fail to furnish information to the Bank sufficient to verify the identity of the undersigned as required under the USA Patriot Act; or in the event of a default under any of the Agreements or any other obligation of any of the undersigned or any Obligor; or in the event the Bank demands that the undersigned secure or provide additional security for its obligations under this Note and security deemed adequate and sufficient by the Bank is not given when



demanded; or in the event one or more of the undersigned or any Obligor shall die, terminate its existence, allow the appointment of a receiver for any part of its property, make an assignment for the benefit of creditors, or where a proceeding under bankruptcy or insolvency laws is initiated by or against any of the undersigned or any Obligor; or in the event the Bank should otherwise deem itself, its security interest, or any collateral unsafe or insecure; or should the Bank in good faith believe that the prospect of payment or other performance is impaired; or if there is an attachment, execution, or other judicial seizure of all or any portion of the Borrower's or any Obligor's assets, including an action or proceeding to seize any funds on deposit with the Bank, and such seizure is not discharged within 20 days; or if final judgment for the payment of money shall be rendered against the Borrower or any Obligor which is not covered by insurance or debt cancellation and shall remain undischarged for a period of 30 days unless such judgment or execution thereon is effectively stayed; or the termination of any guaranty agreement given in connection with this Note, then any one of the same shall be a material default hereunder and this Note and other debts due the Bank by any one or more of undersigned shall immediately become due and payable at the option of the Bank without notice or demand of any kind, which are hereby waived. From and after any event of default hereunder, interest shall accrue on the sum of the principal balance and accrued interest then outstanding at the variable rate equal to the Bank's Prime Rate plus 5% per annum ("Default Rate") until such principal and interest have been paid in full, provided that such rate shall not exceed at any time the highest rate of interest permitted by the laws of the State of Florida; and further provided that such rate shall also apply after judgement. In addition, upon default, the Bank may pursue its full legal remedies at law or equity, and the balance due hereunder may be charged against any obligation of the Bank to any party including any Obligor. Bank shall not be obligated to accept any check, money order, or other payment instrument marked "payment in full" on any disputed amount due hereunder, and Bank expressly reserves the right to reject all such payment instruments. Borrower agrees that tender of its check or other payment instrument so marked will not satisfy or discharge its obligation under this Note, disputed or otherwise, even if such check or payment instrument is inadvertently processed by Bank unless in fact such payment is in fact sufficient to pay the amount due hereunder.

WAIVER OF TRIAL BY JURY. UNLESS EXPRESSLY PROHIBITED BY APPLICABLE LAW, THE UNDERSIGNED HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS OR CLAIMS ARISING OUT OF THIS NOTE OR ANY LOAN DOCUMENT EXECUTED IN CONNECTION HEREWITH OR OUT OF THE CONDUCT OF THE RELATIONSHIP BETWEEN THE UNDERSIGNED AND BANK. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BANK TO MAKE THE LOAN EVIDENCED BY THIS NOTE. FURTHER, THE UNDERSIGNED HEREBY CERTIFY THAT NO REPRESENTATIVE OR AGENT OF BANK, NOR BANK'S COUNSEL, HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WOULD NOT SEEK TO ENFORCE THIS WAIVER OR RIGHT TO JURY TRIAL PROVISION IN THE EVENT OF LITIGATION, NO REPRESENTATIVE OR AGENT OF BANK, NOR BANK'S COUNSEL, HAS THE AUTHORITY TO WAIVE, CONDITION OR MODIFY THIS PROVISION.

Unless otherwise required under a Loan Agreement, if applicable, and as long as any indebtedness evidenced by this Note remains outstanding or as long as Bank remains obligated to make advances, the undersigned shall furnish annually an updated financial statement in a form satisfactory to Bank, which, when delivered shall be the property of the Bank.

The term "Prime Rate," if used herein, means the rate of interest per annum announced by the Bank from time to time and adopted as its Prime Rate. The Prime Rate is one of several rate indexes employed by the Bank when extending credit, and not necessarily the lowest rate. Any change in the interest rate resulting from a change in the Bank's Prime Rate shall become effective as of the opening of business on the effective date of the change. If this Note is placed with an attorney for collection, the undersigned agrees to pay, in addition to principal, interest and late fees, if any, all costs of collection, including but not limited to reasonable attorneys' fees. All obligations of the undersigned and of any Obligor shall bind his heirs, executors, administrators, successors, and/or assigns. Use of the masculine pronoun herein shall include the feminine and the neuter, and also the plural. If more than one party shall execute this Note, the term "undersigned" as used herein shall mean all the parties signing this Note and each of them, and all such parties shall be jointly and severally obligated hereunder. Wherever possible, each provision of this Note shall be interpreted in such a manner to be effective and valid under applicable law, but if any provision of this Note shall be prohibited by or invalid under such law, such provision shall be ineffective but only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note. All of the undersigned hereby waive all exemptions and homestead laws as may be permitted by Florida law. The proceeds of the loan evidenced by this Note may be paid to any one or more of the undersigned.

From time to time the maturity date of this Note may be extended, or this Note may be renewed in whole or in part, or a new note of different form may be substituted for this Note, or the rate of interest may be modified, or changes may be made in consideration of loan extensions, and the holder hereof, from time to time may waive or surrender, either in whole or in part any rights, guaranties, secured interest, or liens, given for the benefit of the holder in connection with the payment and the securing the payment of this Note; but no such occurrence shall in any manner affect, limit, modify, or otherwise impair any rights, guaranties or security of the holder not specifically waived, released, or surrendered in writing, nor shall the undersigned, or any obligor, either primarily or contingently, be released by reason of the occurrence of any such event. The holder hereof, from time to time, shall have the unlimited right to release any person who might be liable hereon, and such release shall not affect or discharge the liability of any other person who is or might be liable hereon. No waivers and modifications shall be Valid unless in writing and signed by the Bank. The Bank may, at its option, charge any fees for the modification, renewal, extension, or amendment of any of the terms of the Note permitted by the laws of the state of Florida. In case of a conflict between the terms of this Note and the Loan Agreement issued in connection herewith, the priority of controlling terms shall be first the Loan Agreement, then this Note. This Note shall be governed by and construed in accordance with the laws of Florida.

(SIGNATURES ON FOLLOWING PAGE)







MODIFICATION PROMISSORY NOTE SIGNATURE PAGE

Borrower: The Goldfield Corporation, a Delaware corporation

Account Number: 9660933082

Note Amount: $15,000,000.00

Note Number: 00002

Date: September 4, 2015

IN WITNESS WHEREOF, THE UNDERSIGNED, on the day and year first written above, has caused this instrument to be executed under seal.



 
 
Borrower:
 
 
 
/s/ Mary Manger
 
The Goldfield Corporation, a Delaware corporation
Witness:
 
 
 
 
 
Mary Manger
 
By: /s/ Stephen R. Wherry
Print Name:
 
Stephen R. Wherry, its Senior Vice President
 
 
 
/s/ Linda R. White
 
 
Witness:
 
Date: September 4, 2015
 
 
 
Linda R. White
 
 
Print Name:
 
 
 
 
 


Exhibit 10-2

ADDENDUM TO MODIFICATION PROMISSORY NOTE

THIS ADDENDUM TO MODIFICATION PROMISSORY NOTE ("Addendum") is hereby made a part of the Modification Promissory Note dated September 4, 2015 from The Goldfield Corporation, a Delaware corporation ("Borrower") payable to the order of Branch Banking and Trust Company ("Bank") in the modified principal amount of $15,000,000.00 (including all renewals, extensions, modifications and substitutions therefore, the "Note").

I.
DEFINITIONS

1.1
Adjusted LIBOR Rate means a rate of interest per annum equal to the sum obtained (rounded upwards, if necessary, to the next higher 1/100th of 1.0%) by adding (i) the One Month LIBOR plus (ii) 1.80 % per annum, which shall be adjusted monthly on the first day of each LIBOR Interest Period. The Adjusted LIBOR Rate shall be adjusted for any change in the LIBOR Reserve Percentage so that Bank shall receive the same yield. The interest rate will not exceed a fixed maximum rate of 24.00% and will not decrease below a minimum rate of 0.000%. If the loan has been repaid prior to this date, no reimbursement will be made.

1.2
Business Day means a day other than a Saturday, Sunday, legal holiday or any other day when the Bank is authorized or required by applicable law to be closed.

1.3
LIBOR Advance means the advances made by Bank to Borrower evidenced by this Note upon which the Adjusted LIBOR Rate of interest shall apply.

1.4
LIBOR Interest Period means the period, as may be elected by the Borrower applicable to any LIBOR Advance, commencing on the date the Note is first made (or the data of any subsequent LIBOR addendum to the Note) and ending on the day that is immediately prior to the numerically corresponding day of each month thereafter, provided that:

(a)
any LIBOR Interest Period which would otherwise end on a day which is not a Business Day shall be extended to the next succeeding Business Day unless such business Day falls in another calendar month, in which case such LIBOR Interest Period shall end on the next preceding Business Day; and

(b)
any LIBOR Interest Period which begins on a day for which there is no numerically corresponding day in the subsequent month shall end on the last Business Day of each subsequent month.


1.5
LIBOR Reserve Percentage means the maximum aggregate rate at which reserves (including, without limitation, any marginal supplemental or emergency reserves) are required to be maintained under Regulation D by member banks of the Federal Reserve System with respect to dollar funding in the London interbank market. Without limiting the effect of the foregoing, the LIBOR Reserve Percentage shall reflect any other reserves required to be maintained by such member banks by reason of any applicable regulatory change against (i) any category of liability which includes deposits by reference to which the Adjusted LIBOR Rate is to be determined or (ii) any category of extensions of credit or other assets related to LIBOR.

1.6
One Month LIBOR means the average rate quoted on Reuters Screen LIBOR01 Page (or such replacement page) on the determination date for deposits in U.S. Dollars offered in the London interbank market for one month determined as of 11:00 am London time two (2) Business Days prior to the commencement of the applicable LIBOR Interest Period; provided that if the above method for determining one-month LIBOR shall not be available, the rate quoted in the Wall Street Journal, or a rate determined by a substitute method of determination agreed on by Borrower and Bank; provided, is such agreement is not reached within a reasonable period of time (in Bank’s sole judgment), a rate reasonably determined by Bank in its sole discretion as a rate being paid, as of the determination date, by first class banking organizations (as determined by Bank) in the London interbank market for U.S. Dollar deposits.




1.7
Standard Rate means, for any day, a rate per annum equal to the Bank's announced Prime Rate minus 0% per annum, and each change in the Standard Rate shall be effective on the date any change in the Prime Rate is publicly announced as being effective.

II.
LOAN BEARING ADJUSTED LIBOR RATE

2.1
Application of Adjusted LIBOR Rate. The Adjusted LIBOR Rate shall apply to the entire principal balance outstanding of a LIBOR Advance for any LIBOR Interest Period.

2.2
Adjusted LIBOR Based Rate Protections.

(a)
Inability to Determine Rate. In the event that Bank shall have determined, which determination shall be final, conclusive and binding, that by reason of circumstances occurring after the date of this Note affecting the London interbank market, adequate and fair means do not exist for ascertaining the One Month LIBOR on the basis provided for in this Note, Bank shall give notice (by telephone confirmed in writing or by telecopy) to Borrower of such determination, whereupon (i) no LIBOR Advance shall be made until Bank notifies Borrower that the circumstances giving rise to such notice no longer exist, and (ii) any request by Borrower for a LIBOR Advance shall be deemed to be a request for an advance at the Standard Rate.

(b)
Illegality; Impracticability. In the event that Bank shall determine, which determination shall be final, conclusive and binding, that the making, maintaining or continuance of any portion of a LIBOR Advance (i) has become unlawful as a result of compliance by Bank with any law, treaty, governmental rule, regulation, guideline or order (or would conflict with any of the same not having the force of law even though the failure to comply therewith would not be unlawful) or (ii) has become impracticable, or would cause Bank material hardship, as a result of contingencies occurring after the date of this Note materially and adversely affect the London interbank market or Bank's ability to make LIBOR Advances generally, then, and in any such event, Bank shall give notice (by telephone confirmed in writing or by telecopy) to Borrower of such determination. Thereafter, (x) the obligation of Bank to make any LIBOR Advances or to convert any portion of the loan to a LIBOR Advance shall be suspended until such notice shall be withdrawn by Bank, and (y) any request by Borrower for a LIBOR Advance shall be deemed to be a request for an advance at the Standard Rate.



 
 
Borrower:
 
 
 
/s/ Mary Manger
 
The Goldfield Corporation, a Delaware corporation
Witness:
 
 
 
 
 
Mary Manger
 
By: /s/ Stephen R. Wherry
Print Name:
 
Stephen R. Wherry, its Senior Vice President
 
 
 
/s/ Linda R. White
 
 
Witness:
 
Date: September 4, 2015
 
 
 
Linda R. White
 
 
Print Name:
 
 
 
 
 



Exhibit 31-1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002 15 U.S.C. SECTION 7241


I, John H. Sottile, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of The Goldfield Corporation;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ JOHN H. SOTTILE     
John H. Sottile
Chairman of the Board, President
and Chief Executive Officer (Principal
Executive Officer)
November 12, 2015



Exhibit 31-2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY
ACT OF 2002 15 U.S.C. SECTION 7241


I, Stephen R. Wherry, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of The Goldfield Corporation;

2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

/s/ STEPHEN R. WHERRY                
Stephen R. Wherry
Senior Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary (Principal Financial and Accounting Officer)
November 12, 2015



Exhibit 32-1

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
18 U.S.C. SECTION 1350

In connection with the Quarterly Report of The Goldfield Corporation (the “Company”) on Form 10-Q for the nine months ended September 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John H. Sottile, Chairman of the Board, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to The Goldfield Corporation and will be retained by The Goldfield Corporation and furnished to the Securities and Exchange Commission or its staff upon request.
    


/s/ JOHN H. SOTTILE     
John H. Sottile
Chairman of the Board, President
and Chief Executive Officer (Principal
Executive Officer)
November 12, 2015




Exhibit 32-2

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
18 U.S.C. SECTION 1350

In connection with the Quarterly Report of The Goldfield Corporation (the “Company”) on Form 10-Q for the nine months ended September 30, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stephen R. Wherry, Senior Vice President, Treasurer, Assistant Secretary and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to The Goldfield Corporation and will be retained by The Goldfield Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ STEPHEN R. WHERRY                
Stephen R. Wherry
Senior Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary (Principal Financial and Accounting Officer)
November 12, 2015





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