GSE Systems Inc. (GVP) 2023年年度報告「AMEX」.pdf

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1、GSE SYSTEMS INCFORM 10-K(Annual Report)Filed 04/02/24 for the Period Ending 12/31/23 Address6940 COLUMBIA GATEWAY DRIVE,SUITE 470COLUMBIA,MD,21046-3308Telephone4109707874CIK0000944480SymbolGVPSIC Code7372-Services-Prepackaged SoftwareIndustryIT Services&ConsultingSectorTechnologyFiscal Year12/31http

2、s:/www.edgar- Copyright 2024,EDGAR Online LLC,a subsidiary of OTC Markets Group.All Rights Reserved.Distribution and use of this document restricted under EDGAR Online LLC,a subsidiary of OTC Markets Group,Terms of Use.UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K(Mark

3、 One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2023 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from _ to _ Commission File Number 001-14785 GSE Systems

4、,Inc.(Exact name of registrant as specified in its charter)Delaware 52-1868008(State of incorporation)(I.R.S.Employer Identification Number)6940 Columbia Gateway Dr.,Suite 470,Columbia MD 21046(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code:(410)970

5、-7800 SECURITIES REGISTERED PURSUANT TO SECTION 12(b)OF THE ACT:Title of each class Trading Symbol(s)Name of each exchange on which registeredCommon Stock,$0.01 Par Value GVP The NASDAQ Capital MarketSECURITIES REGISTERED PURSUANT TO SECTION 12(g)OF THE ACT:NONEIndicate by check mark if the registra

6、nt is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed

7、by Section 13 or 15(d)of the Securities Exchange Act of 1934during 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 filingrequirements for the past 90 days.Yes No Indicate by check mark whether the registrant has

8、 submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark if disclosure of

9、 delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,and will not be contained,to thebest of registrants knowledge,in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to thisForm 10-K.Indicate by check ma

10、rk whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or anemerging growth company.See the definitions of“large accelerated filer”,“accelerated filer”,“smaller reporting company”and“emerging growth company”in Rule 12b-2 of the

11、 Exchange Act.(Check one):Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with anynew or revise

12、d financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of the effectiveness of its internalcontrol over financial reporting under Section 404(b)of the Sar

13、banes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared orissued its audit report.Yes No If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in thefiling reflect the correct

14、ion of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensationreceived by any of the registrants executive officers during the relevant recovery period pursuant

15、 to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in rule 12(b)-2 of the Exchange Act).Yes No The aggregate market value of Common Stock held by non-affiliates of the Registrant was$8,928,827 on June 30,2023,the last business day of theRegistrants most rece

16、ntly completed second fiscal quarter,based on the closing price of such stock on that date of$3.60.The number of shares outstanding of the registrants Common Stock as of March 31,2024 was 3,034,139 shares.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrants Proxy Statement for the 2024 Ann

17、ual Meeting of Shareholders to be filed pursuant to Regulation 14A under the SecuritiesExchange Act of 1934,as amended,are incorporated by reference into Part III.TABLE OF CONTENTSPART I PageItem 1.Business3Item 1A.Risk Factors15Item 1B.Unresolved Staff Comments26Item 1C.Cybersecurity26Item 2.Proper

18、ties27Item 3.Legal Proceedings27Item 4.Mine Safety Disclosures27 PART II Item 5.Market for Registrants Common Equity,Related Shareholder Matters,and Issuer Purchases of Equity Securities28Item 6.Selected Financial Data28Item 7.Managements Discussion and Analysis of Financial Condition and Results of

19、 Operations29Item 7A.Quantitative and Qualitative Disclosures About Market Risk38Item 8.Financial Statements and Supplementary Data38Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure74Item 9A.Controls and Procedures74Item 9B.Other Information75Item 9C.Disclo

20、sure Regarding Foreign Jurisdictions that Prevent Inspection75 PART III Item 10.Directors,Executive Officers and Corporate Governance*75Item 11.Executive Compensation*76Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters*76Item 13.Certain Relationsh

21、ips and Related Transactions,and Director Independence*77Item 14.Principal Accountant Fees and Services*77 PART IV Item 15.Exhibits and Financial Statement Schedules77Item 16.Form 10-K Summary82 SIGNATURES82 Exhibits Index78*to be incorporated by reference from the Proxy Statement for the registrant

22、s 2024 Annual Meeting of Shareholders.Table of ContentsCAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.This report and the documents incorporated by reference herein contain“forward-looking”statements within the meaning of Section 27A of the Securities Actof 1933 and Section 21E of the Sec

23、urities Exchange Act of 1934,as amended(the“Exchange Act”)that are based on managements assumptions,expectationsand projections about us,and the industry within which we operate,and that have been made pursuant to the Private Securities Litigation Reform Act of 1995reflecting our expectations regard

24、ing our future growth,results of operations,performance and business prospects and opportunities.Wherever possible,wordssuch as“anticipate”,“believe”,“continue”,“estimate”,“intend”,“may”,“plan”,“potential”,“predict”,“expect”,“should”,“will”and similar expressions,orthe negative of these terms or oth

25、er comparable terminology,have been used to identify these forward-looking statements.These forward-looking statementsmay also use different phrases.These statements regarding our expectations reflect our current beliefs and are based on information currently available to us.Accordingly,these statem

26、ents by their nature are subject to risks and uncertainties,including those listed under Item 1A Risk Factors,which could cause ouractual growth,results,performance and business prospects and opportunities to differ from those expressed in,or implied by,these forward-looking statements.We may not ac

27、tually achieve the plans,intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on ourforward-looking statements.Actual results or events could differ materially from the plans,intentions and expectations disclosed in the forward-lookingstateme

28、nts we make.Except as otherwise required by federal securities law,we are not obligated to update or revise these forward looking statements to reflectnew events or circumstances.We caution you that a variety of factors,including but not limited to the factors described below and in Item 1A Risk Fac

29、tors,could cause our business conditions and results to differ materially from what is contained in forward-looking statements:changes in the rate of economic growth in the United States and other major international economies;changes in investment by the nuclear and fossil electric utility industry

30、,the chemical and petrochemical industries,or the U.S.military;changes in the financial condition of our customers;changes in the regulatory environment;changes in political climate;changes in project design or schedules;contract cancellations;changes in our estimates of costs to complete projects;c

31、hanges in trade,monetary and fiscal policies worldwide;currency fluctuations;war and/or terrorist attacks on facilities either owned by our customers or our company,or where equipment or services are or may be provided;catastrophic failure or other incident at facilities either owned by our customer

32、s or our company,or where equipment or services are or may beprovided;initiation,prosecution,or outcomes of future litigation;protection and validity of our trademarks and other intellectual property rights;increasing competition by foreign and domestic companies;compliance with our debt covenants;r

33、ecoverability of claims against our customers and others;changes in estimates used in our critical accounting policies;andThe forward-looking statements are based upon managements beliefs and assumptions and are made as of the date of this report on Form 10-K.Other factorsand assumptions not identif

34、ied above were also involved in the formation of these forward-looking statements and the failure of such other assumptions to berealized,as well as other factors,may also cause actual results to differ materially from those projected.Most of these factors are difficult to predict accuratelyand are

35、generally beyond our control.You should consider the areas of risk described above and in Item 1A Risk Factors in connection with any forward-looking statements that may be made by us.You should not place undue reliance on any forward-looking statements.New factors emerge from time to time,and it is

36、 not possible for us to predict which factors will arise.We undertake no obligation to publicly update any forward-looking statements,whether as a result of new information,future events or otherwise.You areadvised,however,to consult any additional disclosures we make in proxy statements,quarterly r

37、eports on Form 10-Q and current reports on Form 8-K filedwith the SEC.2Table of ContentsCompany Information Available on the Internet Our Internet address is .We make available free of charge through our Internet site our annual reports on Form 10-K;quarterly reports on Form10-Q;current reports on F

38、orm 8-K;proxy statements,and any amendment to those reports filed or furnished pursuant to the Exchange Act as soon asreasonably practicable after such material is electronically filed with,or furnished to,the SEC.PART I ITEM 1.BUSINESS.GSE Systems,Inc.(hereinafter referred to as“GSE”,the“Company”,“

39、we”,“us”or“our”),a Nasdaq-listed company trading under the symbol GVP,is aleading provider of engineering services and technology,expert staffing,and simulation software to clients in the power and process industries.We providecustomers with simulation,engineering technology,engineering and plant se

40、rvices that help clients reduce risks associated with operating their plants,increaserevenue through improved plant and employee performance,and lower costs through improved operational efficiency.In addition,we provide professionalservices that help clients fill key vacancies in the organization on

41、 a short-term basis,including but not limited to,the following:procedure writing,planningand scheduling;engineering;senior reactor operator(“SRO”)training and certification;technical support and training personnel focused on regulatorycompliance and certification in the nuclear power industry.Our se

42、rvices help our customers provide clean energy to all in a reliable and safe manner.There is growing recognition of the importance of low and zerocarbon energy as the United States in particular,and the world in general,races to decarbonize power grids.We are uniquely positioned as one of the larges

43、tindependent nuclear services companies in the United States to support decarbonization of the power industry.In fact,the more wind and solar that comes ontothe grid,the greater zero carbon base-load becomes to ensure grid stability,reliability and safety.Decarbonization is a leading means of delive

44、ringenvironmental equity ensuring that anyone regardless of background and economic status can benefit from a safe and healthy environment,free of pollutionrelated to carbon intensive power generation.Our operations also include interactive software for tutorials and simulation for the refining,chem

45、ical,andpetrochemical industries.We execute projects globally with approximately 271 employees,as of December 31,2023.We operate from offices in the U.S.and China and with additionalemployees deployed at client sites.While most of our revenue comes from support provided to the nuclear power industry

46、,we also serve agencies in the UnitedStates Department of Energy(“DOE”),the United States Navy and adjacent defense opportunities,and the oil and gas,refining,chemical,and petrochemicalmarkets.GSE was formed to consolidate the simulation and related businesses of General Physics International Engine

47、ering&Simulation,S3 Technologies,andEuroSim.We completed our Initial Public Offering in 1995.Since 2014,GSE has grown by consolidating and acquiring businesses serving the nuclear power industry.On November 14,2014,we acquired Hyperspring,LLC(now doing business as-“GSE Training Services”or“Training

48、Services”).Training Services is a nuclear industry focused staffing and training firm thatemploys highly skilled,high-value professionals primarily filling training and consulting positions on a contract basis for nuclear power plant operators.Training Services professionals provide training,operati

49、ons and maintenance support including:generic fundamentals exams,accreditation training visitpreparation,SRO certification,procedure development,work management,tagging/labeling,outage execution,planning/scheduling,corrective action,self-assessments and equipment reliability.On September 20,2017,we

50、acquired Absolute Consulting,Inc.(now doing business as-“GSE Technical Staffing”or“Technical Staffing”).Technical Staffing is a provider of technical consulting and staffing solutions to the global nuclear power industry with expertise inprocedure writing,engineering,technical support,scheduling,pla

51、nning,project management,training,project controls,and corrective actions.On May 11,2018,we acquired True North Consulting,LLC(now doing business as-“GSE Programs&Performance”or“Programs&Performance”).Programs&Performance is a provider of engineering solutions to nuclear and non-nuclear power plants

52、 with an emphasis on regulatory-driven,American Society ofMechanical Engineers(“ASME”)code programs.On February 15,2019,we acquired DP Engineering Ltd,Co.(now doing business as-“GSE Design&Analysis”or“Design&Analysis”).Design&Analysis is a specialized provider of high-value engineering services and

53、solutions to the nuclear power industry.Founded in 1995 in Fort Worth,Texas,Design&Analysis generates over 90%of its revenue from the nuclear power industry with core expertise in mechanicaldesign;civil/structural design;electrical,instrumentation and controls design;digital controls/cyber security;

54、and fire protection.Design&Analysis primarilyworks under master service agreements as the Engineer of Choice(“EOC”).3Table of ContentsFOCUS FOR 2024 As we look ahead to 2024 and beyond,there is a continued focus from the current administration on decarbonizing the power sector,driving to a carbon fr

55、eegrid by 2030,and a net carbon neutral economy beyond that.This effort is recognized as a key means in achieving environmental equity.The bipartisaninfrastructure plan passed in 2021,and Inflation Reduction Act passed in August 2022,each included spending elements specifically in support of nuclear

56、power and nuclear technology development.The monies from these initiatives should start to flow to support the existing nuclear power fleet operate longerand produce more power from the fleet over time through capital investment.GSE is positioned to align with these primary initiatives of the United

57、 Statesoperating fleet.As such,we will focus our efforts on capturing more business as this is where industry spend is focused for the foreseeable future.GSE will also continue to focus on growing business in the DOE lab system and adjacencies.DOE labs related to U.S.Navy and other areas of focus co

58、ntinueto be a growth engine for GSE.Uranium enrichment is also an adjacency where GSE has experienced success,and this will be an area of focus for growth aswell.In sum,GSE is focused on driving business from the existing nuclear power fleet and adjacencies such as DOE and national defense areas.OPE

59、RATING SEGMENTS We operate through two reportable business segments:Engineering and Workforce Solutions.Each segment focuses on delivering solutions to customerswithin our target markets.Marketing and communications,accounting,finance,legal,human resources,corporate development,information systems a

60、nd otheradministrative services are organized at the corporate or parent level.Business development and sales resources are generally aligned with each segment tosupport existing customer accounts and new customer development.The business units collaborate to facilitate cross-selling and the develop

61、ment of newsolutions.The following is a description of our business segments:Engineering(approximately 71.0%of revenue)Our Engineering segment primarily encompasses our power plant high-fidelity simulation solutions,technical engineering services for ASME programs,powerplant thermal performance opti

62、mization,and interactive computer-based tutorials/simulation focused on the process industry.The Engineering segmentincludes various simulation products,engineering consulting services,and operation training systems delivered across the industries we serve:primarily in thenuclear,fossil fuel power g

63、eneration and the process industries.Our simulation solutions include the following:(1)simulation software and services,includingoperator training systems,for the nuclear power industry,(2)simulation software and services,including operator training systems,for the fossil powerindustry,and(3)simulat

64、ion software and services for the process industries used to teach fundamental industry processes and control systems to newly hiredemployees and for ongoing workforce development and training.We and our predecessors have been providing these services since 1976.Our Engineering segment also provides

65、 the following:(1)in-service testing for engineering programs focused on ASME OM code including Appendix J,balance of plant programs,and thermal performance;(2)in-service inspection for specialty engineering including ASME Section XI;(3)software solutions;and(4)mechanical design,civil/structural des

66、ign,electrical,instrumentation and controls design,digital controls/cyber security,and fire protection for nuclearpower plant design modifications.Our subsidiaries,Programs&Performance and Design&Analysis,typically work as either the EOC or specialty EOC forour clients under master services agreemen

67、ts and are included in our Engineering segment due to their service offerings.We have been providing theseengineering solutions and services since 1995.4Table of ContentsWorkforce Solutions(approximately 29.0%of revenue)The Workforce Solutions segment,formerly known as Hyperspring and Absolute Consu

68、lting,supports entire project lifecycles by providing highly specialized,technical talent and specialty services throughout the energy,engineering,and adjacent industries including construction,government,infrastructure,environmental,and manufacturing.This includes a wide range of solutions includin

69、g training services,professional services,procedure writing services,andflexible staffing and talent acquisition services through our Training Services and Technical Staffing businesses.Working together,Workforce Solutions gives our customers increased agility by providing the ability to identify th

70、e right talent,hire quickly for short or long-term needs,and/or even take on entire project scopes with fixed price or hourly billing options.We also partner with and support our Engineering Servicesdivision,offering our customers yet another option for outsourcing managed tasks.Additionally,by util

71、izing our services,our customers gain additionalbenefits such as reductions in response time,overhead costs,overtime pay,risk,training,time to fill,onboarding,and more.We do these things,all whileproviding timely,flexible,and effective solutions.Examples of some of the highly skilled positions we fu

72、lfill are senior reactor operations instructors,procedure writers,project managers,engineers,workmanagement specialists,planners and training material developers.Financial information is provided in Note 18 of the accompanying consolidated financial statements regarding our business segments and geo

73、graphicoperations and revenue.BUSINESS STRATEGY,INDUSTRY TRENDS,PRODUCTS AND SERVICESBusiness Strategy Serve existing customers and adjacencies with compelling solutions,focused on decarbonization and supporting the investment required to extend theoperating lifetime and produce more power from the

74、fleet overtime Our objective is to create a leading business focused on decarbonizing the power industries by providing a diverse set of highly unique and essential servicesand technologies,primarily in the nuclear power industry.We are now one of the few,publicly-traded engineering and technology c

75、ompanies serving the zero-carbon energy sector of nuclear power and adjacent nuclear markets in Department of Energy,U.S.Navy and related sectors.As a result of this effort andestablished leadership in key sectors,we are positioned to expand into essential clean energy opportunities that may arise s

76、uch as wind,solar,hydrogenproduction,and others.This positioning has allowed us to grow into adjacencies as the arise such as working on engineering projects for a uranium enrichmententity in the United States.The engineering services and technology that we provide to industry are focused on essenti

77、al capabilities to help plants extend theiroperating lifetimes,capture the value of the power they produce on to the grid,produce more power from existing assets,and most importantly operate safelyin an optimal manner.In 2023,we were keenly focused on organic growth in the sectors we serve by:cross

78、selling and upselling in our existing markets as wefocus on delivering significant value to our customers;creating new and compelling solutions in-house as a result of advancements in our technology offeringsin partnership with industry early adopters focused on critical business needs;developing ne

79、w services through combination of our expertise;expanding intocompelling adjacent markets such as clean energy as they may arise with renewed sales focus.The focus on organic growth reflects our need to grow in a self-funded manner to achieve cash flow break even and,ultimately,recover to our pre-pa

80、ndemic revenue levels.We expect a similar focus in 2024.Cross-sell and upsell into existing markets For the past several years,we have devoted considerable time and effort to diversify both of the Company segments solutions capabilities for the nuclearpower sector,via a rollup of essential services

81、providers to the industry.To ensure efficient and streamlined operations for the business,we have brought innew engineering experts who are deeply credentialed in the nuclear power industry.We have also retooled our Workforce Solutions sales and recruiting effortsto ensure we are covering the indust

82、ry broadly.The business units operate uniformly within their respective structure.This structure greatly enhances theopportunity to cross-sell our capabilities across our entire customer base,fostering an important focus of our sales efforts.This further differentiates us as acomprehensive provider

83、to industry versus providers of specific,niche services.Our expectation is that unified go-to-market efforts,such as cross-sellingcapabilities,will lead to greater share of available spending within the customer base,which in turn will lead to significant upselling opportunity.5Table of ContentsJust

84、 as the broader economy was impacted by the onset of the pandemic,so too have our end markets been affected.We believe that the industries that we serveare quick to respond to a crisis and disruption,but slow to emerge and recover to pre-crisis operations.While understandable,we believe that thesech

85、aracteristics are especially true for our primary market:the nuclear power industry.We have previously observed similar cycles during prior market andindustry disruptions including the 2008 global economic crisis and the Fukushima disaster in 2011.Now,more recently,we believe that the industries tha

86、t weserve responded quickly to the global pandemic and resulting economic disruption but,as with past events,our end markets are only now catching up towidespread delays in necessary engineering,design and related projects.Our Company is well positioned to take advantage of the recovery as it occurs

87、.As a result of a rejuvenated cross-sell and upsell effort,we are equipped to take this new approach to the market.In particular,with the passage of theInfrastructure Investment and Jobs Act and the Inflation Reduction Act,for the first time there are specific economic incentives from the U.S.Govern

88、ment fornuclear power development and the production of more nuclear baseload power to the grid.We are eager for these incentives to flow to industry spurring thecapital investment required to extend the lifetime of the plants and production of more power.With economic incentives in place,the indust

89、ry can now plan tomake such investments.The challenge we are seeing is that the industry is still slow to advance investments that will result in an uptick in business forcompanies like GSE that serve the sector.Although we believe it is only a matter of time until this rollout progresses,the curren

90、t pace presents a challenge inthe interim and the company has taken steps to align to the realities of the current state of industry spend.As a key provider of essential services to the nuclearpower sector,we are poised to benefit from industry investment as it rolls out to the vendor ecosystem.We f

91、urther retooled our Workforce Solutions business in2023 to align to the realities of industry spend,and continue to bring in key engineering talent to align and grow our engineering business teams as thatbusiness has shown nascent signs of growth.We have also spent significant effort putting in plac

92、e Master Services Agreements(“MSAs”)with key utilityoperators.Having this commercial infrastructure in place is a significant step forward to facilitate ease of consumption of our solutions once a decision to do sois made by clients/prospects.In 2024 this effort will continue with the added focus of

93、 converting workorders and POs from the MSAs we win.Organic growth through new and compelling technologyWhile managing through the pandemic,in parallel,our leadership was investigating compelling opportunities by which we could utilize our capabilities tocreate significant value for the industry and

94、 advance the efforts of decarbonizing the power sector.As a result,we have identified a robust pipeline of new andcompelling technology solutions to develop and take to market.Net new solutions,such as Data Validation and Reconciliation(“DVR”),MeasurementUncertainty Recapture(“MUR”)and Thermal Syste

95、m Monitoring(“TSM”),have created new revenue streams with the potential of on-going licensingrevenue,software maintenance and services revenue.Additional information on our DVR,MUR and TSM developments is included below.GSE hasannounced a handful of new wins for these new solutions,which were create

96、d through our unique combination of our industry/engineering know-how andsoftware development capabilities.As we have demonstrated in the past few years,small wins over time accrue into meaningful revenue on an on-going basis.This is a key element of our organic growth thesis:focusing on creating an

97、d bringing to market compelling technology solutions.Focus on compelling adjacencies in clean energy,defense,and national labs Research and Development(R&D).We invest in R&D to deliver unique solutions that add value to our end-user markets.Our software tools leverage thehigh-end expertise of our ex

98、perienced staff in helping plants operate better and more efficiently.Our software technology together with our deep staff expertisesupports multiple industries including the nuclear industry,as a part of the larger initiative toward decarbonization.Our software technology includes decision-support

99、tools for engineering simulation supporting design and plant commissioning,operational performance tools,and training platforms.We have also made recent,significant enhancement in product offerings for improving the thermal performance of power plants.We have introduced a nextgeneration platform in

100、TSM,providing a technology platform to centralize and continuously monitor plant thermal performance.The solution benefits ourcustomers by automating standardized reporting in modern dashboards available to engineers and decision makers across the fleet,leveraging automation tofacilitate troubleshoo

101、ting plant performance issues,reducing time and error with direct access to source data,and applying industry guidelines for problemresolution.This platform also supports integration with DVR(implemented by Programs&Performance)that enhances the quality of data for plantperformance insights,analysis

102、 and decision making,providing a solution to better detect and identify faulty measurements/sensors and thus reducemaintenance costs by focusing on critical components.Other recent platform improvements have included integration with Asset Management Systems(tostreamline work processes and increase

103、efficiencies)and enhancements in digitizing troubleshooting knowledge for custom scenarios/plants.6Table of ContentsIn the area of engineering simulations,GSE Systems&Simulation group,delivers nuclear core and balance-of-plant modeling and visualization systems to theindustry.To address the nuclear

104、industrys need for more accurate simulation of both normal and accident scenarios,we provide our DesignEP and RELAP5-HD solutions.Our entire JADETM suite of simulation software,including industry leading JTOPMERET and JElectricTM software,provides the mostaccurate simulation of balance-of-plant and

105、electrical systems available to the nuclear and fossil plant simulation market.The significant enhancements wehave made to our SimExec and OpenSimTM platforms enables customers to be more efficient in the daily operation of their simulators.We have broughtSimExec and OpenSimTM together into a next g

106、eneration unified environment that adds new capabilities as requested by clients and driven by market need.Additionally,enhancements to training content and delivery continue through the EnVision On-Demand platform,allowing our customers to access trainingcontent from anywhere in synchronous and asy

107、nchronous modes,thus increasing their efficiency and reducing infrastructure costs.We intend to continue tomake pragmatic and measured investments in R&D that first and foremost are driven by the market and complement our growth strategy.Such investments inR&D may result in on-going enhancement of e

108、xisting solutions as well as the creation of new solutions to serve our target markets,ensuring that we addgreater value that is easier to use,at lower total cost of ownership than any alternative available to customers.Recent enhancements to our EnVision On-Demand SaaS platform include usability im

109、provements for administrators,instructors and trainees as well as enhanced access security for cloud learning andsimulation portal.We have pioneered a number of industry standards and intend to continue to be one of the most innovative companies in our industry.We hadR&D expenditures totaling$1.1 mi

110、llion and$1.0 million,of which,$0.5 million and$0.4 million were capitalized during the years ended December 31,2023and 2022,respectively.Strengthen and develop our talent while delivering high-quality solutionsOver the past several years,we have assembled a unique and highly experienced group of ta

111、lent through organic growth and strategic acquisition.Ourengineering team is comprised of design,simulation,regulatory compliance,and performance optimization professionals who are unique to the industry andcapable of addressing the entire power generation life cycle.Our workforce solutions team inc

112、ludes numerous industry experts,including hands on experiencewithin the energy and engineering sectors.The experience and knowledge among the staff ensure understanding of customer needs and a better ability to offerthe best solutions.Working together,our engineering and workforce teams are able to

113、offer our customers a full set of services that would otherwise requirenumerous companies to obtain the same capabilities.Our experienced employees and management team are our most valuable resources.The continued integration of our team in parallel with attracting,training,and retaining top talent

114、is critical to our success.To achieve our goals,we intend to remain focused on providing our employees with opportunities to increaseclient contact within their areas of expertise and to expand and deepen our service offerings.As we refine our product and service areas to best align with thecritical

115、 areas listed above,we will also integrate and apply our composite employee talent to the fullest extent possible combining employee personal andprofessional growth opportunities with fulfillment of cutting-edge industry needs.Performance-based incentives including opportunities for stock ownership,

116、bonuses and competitive benefits as benchmarked to our industry and locations will also be utilized to ensure continuity of our approach.The Company is not immune to the intense pressure and business risks associated with attracting and retaining talented professionals in this currentenvironment.We

117、have developed a strong reputation for quality services based upon our industry-recognized depth of experience,ability to attract and retainquality professionals,and exceptional expertise across multiple service sectors.As we continue to integrate and leverage our individual company componentsassemb

118、led over the past several years,our capabilities and reputation will further strengthen.Attracting and retaining excellent professionals is a key effort forthe company.7Table of ContentsIndustry Trends Industry needs to build and sustain a highly skilled workforce We believe a critical ongoing chall

119、enge facing the industries we serve is access to,and continued development of,a highly trained and efficient workforce.Thischallenge manifests primarily in three ways:the fact that industry knowledge and experience are being lost as a significant percentage of the existingexperienced workforce reach

120、es retirement age;the knowledge gap between the retiring workforce and those earlier in their career;and the competition fromother employers as,there is a increased demand for the skill sets needed.A challenge we are facing in our Workforce Solutions business is that it continues an extended period

121、of malaise.The reality is that once COVID hit,manyutilities sent employees as well as all contractors and staff augmentation personnel,home,where feasible.Over the past three years,the industry has becomeaccustomed to operating short-staffed and has not begun to ramp up their use of staff augmentati

122、on.This is a broadly recognized state of the industry.As aresult,this is an ongoing challenge for our Workforce Solutions business.We remain poised to take advantage of staff augmentation projects as they initiate,albeit few and far between in the current state of industry.Products and Services Engi

123、neering Our engineering team,comprised of design,simulation,regulatory compliance,and performance optimization capabilities are unique to the industry andcapable of addressing the entire power generation life cycle.As we move forward in alignment with client and industry goals targeting clean energy

124、 productionand overall decarbonization we are positioned to be at the forefront in three critical areas:maintain regulatory complianceextend the operating lifetime of the existing fleetsupport capital investment to produce more power from the fleet over timeEngineering Solutions for Decarbonization,

125、Plant Lifetime Extension and More Power Production Over Time With overall decarbonization as a key focus,we will blend our current and future efforts in those areas described above to best support that goal.This willposition our engineering team as recognized leaders in the pursuit of low carbon ene

126、rgy as the world progresses on the current energy transition efforts.Anoverview highlighting many areas of our current and planned involvement,as well as,associated benefits,is summarized below:With nuclear power being such a high percentage of carbon free power generation,the continued safe and eff

127、icient operation of these plants is critical tomeeting decarbonization goals and providing for national security.We help the industry achieve these goals by providing better training and engineeringservices to optimize performance while maintaining regulatory compliance.Our focus is on products and

128、services that improve efficiency and lower operatingcosts for existing power generation assets as well as helping the next generation of carbon free power plants achieve design approval and plant startup asquickly as possible.Training plant operators and engineers is critical to safe operations and

129、continued viability of the industry.Using state-of-the-art modeling tools combinedwithour leading nuclear power modeling expertise,we provide simulation solutions that achieve unparalleled fidelity and accuracy.We have also adapted thesesolutions to provide highly accurate training across a variety

130、of delivery platforms.These include universal or generic simulators which are excellent inteaching fundamental concepts,systems,and plant behaviors.They are also used by academia for research on improved plant operations,human factors designand the development of automated procedures and decision su

131、pport systems for the next generation of reactors.Our part task simulators and virtual controlpanels are cost effective solutions enabling customers broader freedom in where they deliver simulation training and opening the door for plant engineers andmaintenance staff to access high fidelity trainin

132、g without interrupting the operator training program.Our full-scope simulators use the most sophisticatedmodeling technology.For these reasons,we have delivered more nuclear power plant simulators than any other company in the world.8Table of ContentsWe deliver training products through cloud-based

133、platforms.This delivery method reduces our customers infrastructure and ownership costs and providesanytime,anywhere access to rich learning content.Innovative critical thinking exercises enable autonomous simulation training to take place,reducing theburden on instructors and increasing training to

134、uch time for students and employees.All of which enable the training organization to be more flexible andefficient.Our simulation solutions not only address industry training needs,but are used for simulation-assisted engineering,that is,the process of using simulation tovirtually test and commissio

135、n plant designs prior to construction.Because new builds and upgrades to existing plants result in deployment of new technology,our high-fidelity simulator enables designers to model the interaction between systems in advance of construction.With our combination of simulationtechnology and expert en

136、gineering,we were chosen to build first-of-a-kind simulators for the AP1000,PBMR,and small modular reactors such as those beingbuilt by NuScale Power Corporation.This technique reduces design costs,accelerates design approvals,de-risks projects,and provides clients with a tool tosell their new plant

137、 designs to both customers and regulators.In essence,enabling our customers to get to market faster.Beyond training,our technology is used to improve the efficiency of existing power generation assets.Our TSM System provides live insights into plantoperations,by monitoring performance of key plant e

138、quipment,analyzing degradation and recommending actions.When combined with DVR techniques,wecan help reduce operating and maintenance cost.DVR enhances the quality of data for analysis and decision making,providing a solution to better detect andidentify faulty measurements/sensors and thus reduce m

139、aintenance costs by focusing on critical components.Our EP-Plus software suite provides one common platform for all engineering programs,helping client engineers keep track of engineering program inspectionand monitoring requirements aimed at safe plant operations.This reduces the engineering worklo

140、ad of our customers,saving costs and enabling staff to focuson the most critical activities.All of these technologies leverage the vast experience and industry expertise of our engineering team.Our engineering team helps our clients throughout theentire plant lifecycle.We are the Engineer of Choice(

141、“EOC”)in areas such as:Design engineering for plant mechanical,electrical,I&C,civil and structural,fire protection and cyber systemsEngineering programs addressing ASME codes,balance of plant programs other regulatory programs and economic driven programs such asplant thermal performanceSimulation e

142、ngineering for nuclear,thermal and process plant training and virtual commissioningWe see organic growth through closer integration of these engineering activities and technologies to provide solutions to improve the performance of ourcustomers people and plants.Workforce Solutions As our customers

143、experienced employees retire or pursue other opportunities,access to industry experts is essential to ensure ongoing operations andadvancements.Our Workforce Solutions segment provides flexible staffing services,knowledge transfer support,end to end workforce management programs,procedures services,

144、and specialized training programs and services.Staffing and training needs change over time and,in turn,our clients need options.Inorder to find the best solutions for our customers,we emphasize fully understanding the unique needs of each customer.The industries we serve need talent,including but n

145、ot limited to operating personnel,procedure writers,engineers,operators,technical professionals,andinstructors.Our customers need talent who can step in quickly and make an impact.Identifying technical professionals with the right knowledge andexperience,who can perform the work and/or share their k

146、nowledge with others is critical,and we specialize in this area of need.We provide qualifiedprofessionals,instructors and turnkey projects/courses that work within the clients system and complement the methods already in place.Example staffing services include:Temporary,Temp-to-Hire,Direct Hire,Staf

147、f Development,Managed Staffing Programs,Payroll Services,and Vets On Call.9Table of ContentsSample Skilled Categories:Electrical and I&C Engineering Project Management Leadership Mentoring Civil and Mechanical Engineering Manufacturing Operator Requalification Operations,Outage&Work Mgmt.Maintenance

148、 Design Project Controls QA/QC Construction Procedure Specialists Safety&Inspection Field Service Procedure Writing Operations Specialists Thermal Performance Training Instructors Simulation Specialists Programs&ComplianceExample training services include:Turn-key Training,On-demand Training,Certifi

149、cation Courses,Continuing Education Courses,Custom Training.Sample Training Programs:ACAD Fundamentals Technical Training for Engineers ANSI Fundamentals Electrical/Mechanical/I&C Generic Fundamentals Maintenance&Technical SRO Certification Radiation Worker/Chemistry Power Plant Familiarization Lice

150、nsed&Non Licensed Operator Licensed Operator Requalification Control Room Operator Qualification Job and Task Analysis Knowledge/Skill Assessment Media/Mode Evaluation Instructor Bootcamp Curriculum Architecture Training Needs Assessment Program Evaluation Existing Program Audit Instructional Techno

151、logyIn addition to our core training and staffing business lines in the nuclear sector,we believe there may be organic growth opportunity with our WorkforceSolutions segment by expanding our service offerings to meet the evolving needs of the energy and engineering industries.Due to our teams compos

152、ition anddirect industry experience,we are positioned to attempt to expand our Workforce Solutions segment offerings through our existing relationships and industryknowledge.Historically,we have placed emphasis on cross-selling and combining the services offered by our Workforce Solutions segment wi

153、th ourEngineering segment.Workforce solutions is not only a complement to our other service offerings;have looked for opportunities to lead the way as the preferred method for many ofour clients to execute entire projects and/or supplement their own staff during project peak periods or with speciali

154、zed skill sets that are often hard to find.Ourindustry experts give our customers the ability to ramp up quickly,eliminate risks,and provide more flexible options as situations often demand.The Workforce Solutions segment has historically allowed us to expand our footprint,adding new customers in ou

155、r primary and adjacent industries.Whilecontinuing to diversify our customer base and add new business,its important to remain focused in our areas of expertise.In spite of challenging economicconditions,we believe that Workforce Solutions is uniquely positioned for success.Our flexible solutions,and

156、 specialized industry experience,allow us tomore easily adapt to customer needs and position us to serve both current and future needs.One recent example is our demonstrated ability to adapt toincreased customer needs for direct hire services,but as the economic conditions shift,we are seeing a shif

157、t to more field professional hiring and anticipatecustomers to continue with this trend.We have endeavored to better position ourselves to support these opportunities with strategic hires,staff alignment,and a unified approach.Following theCOVID-19 pandemic,employees are making changes in their prof

158、essional lives for many reasons,and our Workforce Solutions team provides our customerswith results and flexibility to support ever-changing needs.We recognize the necessity to listen to the needs of our customers and provide the right solution.Whether the answer is one of our traditional service of

159、ferings,involving or referring our engineering services team,or putting together a customized approach,we have the capabilities to help our customers get the jobdone.We bring together the collection of skills we have amassed over more than 40 years beginning with our traditional roots in custom high

160、-fidelitysimulation and training solutions for the power industries,extended through the acquisition of specialized engineering capabilities,enhanced by the entry andintermediate level training solutions of EnVision,backed by the extensive Workforce Solutions services of Technical Staffing and Train

161、ing Services,and nowstrengthened by our ability to successfully adapt,diversify,combine,and offer a solutions based approach with our Workforce Solutions team.10Table of ContentsCUSTOMER AND LOCATIONSFor over 50 years,we have been developing next-generation,custom training simulation technologies.Si

162、nce we built the first commercial full-scope nuclearpower plant simulator in 1971,we have completed more than 1,100 installations across the power and process industries in 50 countries.In 2023,approximately 12.1%of our revenue was generated from end-users outside the United States and we have a con

163、centration of revenue from oneindividual customer,which accounted for 22.7%of our consolidated revenue,respectively.A small representative list of our customer base includes:ABB Inc.,American Electric Power,Bechtel Hanford National Laboratory,Duke Energy,EDF Energy(United Kingdom),Emerson Process Ma

164、nagement,EntergyNuclear Operations Inc,Exelon,Constellation,PSEG Nuclear,Inc.,Siemens AG(Germany),Southern Nuclear Operating Company,Inc.,Savannah RiverNuclear Solutions,LLC,Slovenkse Elektrarne,A.S.(Slovakia),Tennessee Valley Authority,and Westinghouse Electric Co.Hydrocarbon and chemicalprocess cu

165、stomers include numerous large oil refineries and chemical plants such as BP(worldwide),Statoil ASA(Norway),Chevron,Shell Oil Company(worldwide),Total(Belgium),Vistra(USA),Urenco(USA),and Valero(USA).MARKETING AND SALES We market our products and services through a network of direct sales staff,agen

166、ts and representatives,and strategic alliance partners.Market-orientedbusiness and customer account teams define and implement specific campaigns to pursue opportunities.We continue to have a proactive public relations program,issuing non-financial press releases to announce product development and

167、significant deliveries,aswell as our presence at numerous industry trade shows and technical conferences.We are active on numerous social media platforms and strive to build astrong presence across all media that our clients use to find information about the Companys comprehensive capabilities.Our g

168、oal is to provide usefulinformation at each stage of the clients journey with us.Our ability to support our multi-facility,international,and multinational clients is facilitated by our network of offices and strategic partners in the U.S.andoverseas.In addition to our office located in China,our abi

169、lity to conduct international business is enhanced by our multilingual and multicultural workforce.We have strategic relationships with system integrators and agents representing its interests in the US,Bulgaria,Japan,Malaysia,Singapore,South Korea,Taiwan,Ukraine and various locations in the Gulf Co

170、ast Countries of the Middle East.COMPETITION In the nuclear simulation market,we compete directly with firms primarily from Canada,France and the U.S.,such as L-3 MAPPS Inc.,CORYS T.E.S.S(France)and Western Services Corporation.In the fossil simulation market,we compete with smaller companies in the

171、 US.and overseas.In the processindustry,our main competition comes from large digital control system/automation companies such as Honeywell and Schneider.In our engineering market,we compete with firms primarily from North America such as Enercon Services,Kinectrics,Sargent&Lundy LLC,and AECOM.The W

172、orkforce Solutions business services include technical professional and training-related and services as well as staff augmentation solutions.Competitorsof the Company for these services include but is not limited to the following:GP Strategies(acquired by Learning Technologies Group plc in 2021),Th

173、eWestwind Group,Professional Training Technologies,and Western Technical Services.The competition for staff augmentation includes:System One,Aerotek,and Peak Technical.Competition with staff augmentation is further impacted by wide-scale industry consolidation as a result of the growing movement tow

174、arduse of Managed Staffing Providers(MSPs).As some competitors have been forced to close their doors,MSP models have caused others to lose market share,as MSPs can offer a clearer picture of which companies can best deliver.By conducting in-depth reviews and ensuring strategic alignment with MSP pro

175、viders,the Companys Workforce Solutions segment has continuously found success with the MSP models and avoided the missteps that have impacted othercompetitors in this regard.11Table of ContentsCompetitive Advantages Although there is competition in various industry niches,few companies in our space

176、 compare to our engineering,simulation and performance optimizationexpertise,especially for the nuclear power industry.Few of our competitors serve the broader engineering market and few work across the full spectrum ofenergy markets addressing clean energy sources and decarbonization initiatives,sp

177、ecifically,existing nuclear generation,advanced reactor applications,andongoing integration with renewable power sources.Our unique combination of talent and expertise,built through organic and acquisition-based growth haspositioned us perfectly to align with the clean energy initiatives of our clie

178、nts and the industry at large.Full Spectrum Support.Over the past several years we have assembled a unique and highly experienced group of talent through organic growth and strategicacquisition.Our Engineering team comprised of design,simulation,regulatory compliance,and performance optimization cap

179、abilities are unique to theindustry and capable of addressing the entire power generation life cycle.A major and ongoing attribute associated with this unique grouping of expertise is ourmulti-tiered approach aimed at leveraging the aggregate strengths and abilities of our resource components toward

180、s maximizing client and shareholder value.This centers on the following key areas:Retain and strengthen our“Base”revenue through optimization of current capabilities and established client relationships.Integrate our product and service areas to provide more comprehensive or enhanced solutions when

181、internal or external value can be identified.Explore,evaluate,and develop new collaborative service areas,products,and solutions closely aligned with internal core strengths,client goals,andoverall industry clean power initiatives.Base Revenue and Strategic Integration.We will continue to build upon

182、 the Engineering segments historical success of maintaining our client connections byproviding clear and immediate returns to the customer,such as optimized power generation and efforts that reduce or extend testing and inspectionrequirements.In parallel,we are aggressively evaluating ways to integr

183、ate and package our design,simulation,and plant performance components to furtherenhance client benefit.In many cases this is structured with our historical base scope of supply proposed as the stand-alone foundation with optional scopesincluded to deliver a more integrated comprehensive solution if

184、 desired.New Product/Service Areas.A dedicated,strategically focused exercise centered on evaluation of core capabilities,potential adjacencies,client needs,andindustry direction has resulted in several new product or service initiatives within our Engineering group.Further development,expansion,and

185、 application ofexisting product lines and associated services have moved to the forefront of this effort with the added benefit of minimizing engineering and informationtechnology level of effort while maintaining very high client benefit.Additional competitive advantages are also present through cl

186、ient contracts which helpfund the R&D components of the initiatives.Proprietary Software Tools.We developed a library of proprietary software tools including auto-code generators and first principles-based system models thatsubstantially improve and expedite the design,production and integration,tes

187、ting and modification of software and systems.These tools are used toautomatically generate the computer code and systems models required for specific functions commonly used in simulation applications,thereby enabling us orour customers to develop repeatable high-fidelity,real-time software quickly

188、,accurately and at lower costs.We also have an expertise integrating third-partyengineering codes into our simulation environment,thereby offering some of the most sophisticated technical solutions in the market.We have a substantiallibrary of process-specific simulation models and e-learning module

189、s aimed at the oil and gas,refining and specialty chemicals markets.Lastly,our TSMplatform is being used as a plant performance reporting tool and as the graphical user interface for our DVR service initiatives which provide high value clientreturn through power recovery and other optimization strat

190、egies.This platform also serves as the foundation for our new product service initiatives withnumerous optional modules and applications under consideration.Performance Expertise.We are a leading innovator and developer of engineering directed solutions for the power generation industry.Our design,s

191、imulation,and plant performance resources are fully engaged with industry developments and client requirements routinely providing answers to our clients most pressingneeds.Design modifications addressing base generation usage for nuclear facilities,optimization of power production through innovativ

192、e statistical analysis,and real-time simulation software producing high-fidelity,real-time plant simulation are representative examples.As of December 31,2023,we employed ahighly educated and experienced multinational workforce of approximately 271 employees,including approximately 148 engineers and

193、 scientists in fields suchas nuclear,chemical,mechanical and electrical engineering,applied mathematics and computer sciences,and approximately 64 instructors and plant operationsstaff specialists.12Table of ContentsUnique Combination of Talent.Few in our market space bring together the sophisticati

194、on of simulation technology with the engineering expertise,trainingexpertise and plant performance expertise to provide the holistic people and plant engineering solutions as well as we do.Reputation for Customer Satisfaction.As part of its ISO-9001:2015 Quality Program Certification,we measure cust

195、omer satisfaction across numerous factorssuch as on-time delivery,problem solving,and customer communication.In each category measured,we routinely exceed customer expectations.Training Curricula We have developed hundreds of detailed courses and simulator exercise material and specific industrial a

196、pplications including oil and gas refining,gas-oilproduction,nuclear and combined cycle gas turbine power plant and desalination.Our Workforce Solutions business is mostly focused on training and operations support.Our trainers and consultants provide their services at customerfacilities which allow

197、s us to interface with our customers directly in the course of doing business versus only periodically calling on customers.Our proximitygives us a significant competitive advantage in that we can immediately offer and implement solutions rather than contending with lengthy bid processes.INTELLECTUA

198、L PROPERTY We depend upon our intellectual property rights in our proprietary technologies and our distinctive trade and service marks.We maintain a portfolio of:trademarks and servicemarks(both registered and unregistered)on our logos,product and service names,and other elements of trade dress;copy

199、rights(bothregistered and unregistered)on written materials including software code,manuals,and other creative works;trade secret protections on its proprietarytechnologies and methodologies;and licenses from third parties to use and commercially exploit other protected intellectual property.While s

200、uch trademarks,copyrights,trade secrets,and inbound licenses as a group are of material importance to us,we do not consider any one trademark,copyright,trade secret,orlicense to be of such importance that the loss or expiration thereof would materially affect us.We distribute our software products u

201、nder software licenseagreements that grant customers nonexclusive and nontransferable licenses for the use of the products.Usage of our licensed on-premise software is restrictedto designated computers at specified sites,unless the customer obtains a site-wide license for its use of the software.Our

202、 software products delivered as aservice(SaaS)over the internet also contain customer verifications and usage limitations.We employ not only software and hardware security measures toprevent unauthorized use of its software,but also detailed contractual terms and limitations within our license and s

203、ervice agreements to prohibit unauthorizedusage or reproduction.We offer our customers both perpetual software licenses with unlimited duration(as long as the customer complies with the licenseterms)and term-limited software licenses and usage agreements.We do not own any patents.We believe that all

204、 of our trademarks are valid and will have an unlimited duration as long as they are adequately protected andsufficiently used.We have numerous registered U.S.trademarks,including word and design trademarks on:GSE Systems,GSE Solutions,JTOPMERET,RELAP5-HD,VPanel,and SimExec among others,as well as a

205、 design trademark on the“GSE”logo.We believe that our internationaltrademark protection is adequate to our business needs.We also claim trademark rights to various other product and service offerings including DesignEP,Java Application and Development Environment(JADE),OpenSim,PSA-HD,SimSuite Pro,Sm

206、artTutor,THOR,and Xtreme I/S,amongothers.Despite these protections,we cannot be sure that we have protected or will be able to protect our intellectual property adequately,that the unauthorizeddisclosure or use of our intellectual property will be prevented,that others have not or will not develop s

207、imilar technology independently,or,to the extent weown any patents in the future,that others have not or will not be able to design around those patents.Furthermore,the laws of certain countries in which ourproducts are sold do not protect our products and intellectual property rights to the same ex

208、tent as do the laws of the United States.GOVERNMENT REGULATIONS Our operations are directly and indirectly affected by political developments and both domestic and foreign governmental regulations.We cannot determine theextent to which changing political priorities,new legislation,new regulations or

209、 changes in existing laws or regulations may affect our future operations,positively or negatively.13Table of ContentsINDUSTRIES SERVEDThe following chart illustrates the approximate percentage of our 2023 and 2022 consolidated revenue by industries served:Years ended December 31,2023 2022 Nuclear p

210、ower 92%89%Fossil fuel power 4%6%Process 4%5%Total 100%100%BACKLOG As of December 31,2023,we had approximately$34.5 million of total gross revenue in backlog compared to$32.9 million as of December 31,2022.Most ofour contract terms are for less than 24 months.Our backlog includes only those amounts

211、that have been funded and authorized and does not reflect the fullamounts we may receive over the term of such contracts.Our backlog includes future expected revenue at contract rates,excluding contract renewals orextensions that are at the discretion of the client.We calculate backlog without regar

212、d to possible project reductions or expansions or potential cancellationsunless and until we have reason to believe that such changes may occur.Backlog is expressed in terms of gross revenue and,therefore,may include significant estimated amounts of third-party or pass-through costs to subcontractor

213、sand other parties.Because backlog is not a defined accounting term,our computation of backlog may not necessarily be comparable to that of our industrypeers.HUMAN CAPITAL As of December 31,2023,we had approximately 271 employees,which include 201 in our Engineering segment and 70 in our Workforce S

214、olutions segment.The 271 employees are comprised of 218 fulltime employees and 53 part time employees,excluding our Workforce Solutions segment,which consistsprimarily of technical professionals.Our employee attrition rate for 2023 among all staff was approximately 41.5%.This attrition rate is prima

215、rily attributableto the Workforce Solutions business model as the business segment accounts for 66%of all turnover during the year.To date,we have been able to locate andengage highly qualified employees as needed and we expect our growth efforts to be addressed through attracting top talent.Our peo

216、ple are what make us who we are today.Not only does it depend on employing highly skilled professionals but also people who can work together,effectively and collaboratively,as a team,whether departmental,cross functional,or cross company.Our employees come from diverse backgrounds as well asa diver

217、se geography,and we look to attract people by offering a positive and welcoming work environment,strong management and leadership teams,alongwith a competitive compensation and benefit package.Talent Management We are committed to recruiting,hiring,retaining,and developing the most talented and skil

218、led professionals and graduates available in the job market.Ourapproach to talent management includes a rigorous selection process followed by coaching,training,and knowledge transfer.HR provides support but the day-to-day interactions that ensure the employees success come from the manager.They coa

219、ch and develop employees through their active and regularinteractions.This is a critical part of both current performance as well as knowledge transfer from our more experienced staff that may be nearing the end oftheir career,to our less experienced.Training takes place internally and across our co

220、mpanies to take advantage of our SMEs in our industry.As a result of thiswe can integrate different talent pools to be interchangeable across projects.In addition,we offer tuition reimbursement that allows employees to further theireducation or attend external professional development programs.14Tab

221、le of ContentsCompensation&BenefitsWe offer market competitive compensation and benefit programs for our employees in order to attract and retain superior talent.In addition to competitive basewages,additional benefits provided include:a Long-Term Incentive Stock Option Plan,a Company matched 401(k)

222、Plan,healthcare and insurance benefits,health savings accounts,paid time off,family leave,and employee assistance programs.Diversity&Inclusion A diverse and inclusive workforce adds value to our Company and helps us succeed.We believe diversity is important because it provides varied insight andvari

223、ed perspectives which results in innovative thinking,better decision making and faster problem solving.Having a diverse workforce also brings differentskill sets and experiences that are shared throughout the Company.Our culture,which is collaborative in nature,provides for inclusion of all employee

224、s in allaspects of our work.Health&Safety The health and safety of our employees is of paramount importance to us.Our OSHA records show that we have had zero recordable injuries/illnesses asdefined by OSHA in the past five years,and we attribute that to our employees working carefully so they dont g

225、et injured.We provide a safety manual toemployees that work in the field,and they are also provided with the necessary safety training on site.We provide multiple mental health resources for our employees and their families as well as a wellness program that incentivizes and motivates people to eath

226、ealthy,get some form of exercise,and destress.We also offer an Employee Assistance Program(“EAP”)and full access to mental health providers throughour health partner,Cigna.And in order for our employees to be able to assist in the virtual learning environment with their children,we have offered flex

227、iblework schedules to accommodate their needs.ITEM 1A.RISK FACTORS.The following are some of the factors that we believe could cause our actual results to differ materially from historical results and from the resultscontemplated by the forward-looking statements contained in this report and other p

228、ublic statements we have made.Additional risks and uncertainties notpresently known to us,or that we currently see as immaterial,may also harm our business.Most of these risks are generally beyond our control.If any of therisks or uncertainties described below,or any such other or additional risks a

229、nd uncertainties actually occurs,our business,results of operations and financialcondition could be materially and adversely affected.The following information should be read in conjunction with Item 1 Business,Item 7 ManagementsDiscussion and Analysis of Financial Condition and Results of Operation

230、s and the consolidated financial statements and related notes under Item 8 FinancialStatements and Supplementary Data.RISKS RELATED TO A NASDAQ DELISTING EVENTIf we are unable to maintain compliance with Nasdaqs listing requirements,our common stock may be delisted from The Nasdaq Stock Market,which

231、 would allow our Lender to deliver a demand for payment,result in an event of default under certain convertible notes,could have a materialadverse effect on the Companys financial condition and could make it more difficult for holders of the Companys common stock to sell their shares.The companys co

232、mmon stock is listed on the Nasdaq Capital Market and we are,therefore,subject to its continued listing requirements,includingrequirements with respect to the market value of publicly-held shares,market value of listed shares,minimum bid price per share,and minimum stockholdersequity,among others,an

233、d requirements relating to board and committee independence.If we fail to satisfy one or more of these continued listing requirements,our common stock may be delisted from the Nasdaq Capital Market.On November 4,2022,the Company received a written notice(from the Listing Qualifications Department of

234、 The Nasdaq Stock Market LLC(“Nasdaq”)stating that the Company failed to maintain a minimum closing bid price of$1.00 per share for the prior 30 consecutive trading day period,as set forth inNasdaq Listing Rule 5550(a)(2).Although we accomplished a reverse stock split on October 30,2023,which result

235、ed the issuance of one newly-issued share ofour common stock for every ten issued and outstanding shares as of such date,and regained compliance with the Nasdaq minimum closing bid price of$1.00per share on November 10,2023,there can be no assurances that we will continue to satisfy the minimum clos

236、ing bid price requirement or otherwise satisfy theother listing qualifications of Nasdaq necessary to maintain our listing on Nasdaq.There can also be no assurances that we will continue to satisfy other listedcompany requirements.15Table of ContentsUnder that certain Senior Convertible Promissory N

237、ote issued by the Company to Lind Global Fund II LP(“Lind”)on June 23,2023(as amended,the“SecondNote”)and the Amended and Restated Senior Convertible Promissory Note issued to Lind on June 23,2023(as amended,the“First Note”and,together withthe Second Note,the“Lind Notes”),if our common stock ceases

238、to be listed on Nasdaq(or another stock exchange),Lind(or the holder of the Lind Notes)may deliver a demand for payment to the Company and,if such a demand is delivered,the Company shall,within ten(10)Business Days following receipt ofthe demand for payment from the Holder,pay all of the outstanding

239、 principal amount on the Notes or,at its election,Lind(or such holder)may elect to convertall or a portion of the outstanding principal amount and the conversion price shall be adjusted to the lower of the then-current conversion price and eightypercent(80%)of the average of the three(3)lowest daily

240、 variable average weighted prices during the twenty(20)trading days prior to delivery.Additionally,ifwe are unable to maintain our listing on Nasdaq,it will constitute an event of default under the Lind Notes,which would trigger certain obligation under theLind Notes including,but not limited to,cau

241、sing an amount equal one hundred twenty percent(120%)of the outstanding principal amount of the Lind Notes toimmediately become due.Delisting from Nasdaq also may adversely affect our ability to raise additional financing through the public or private sale of equity securities,maysignificantly affec

242、t the ability of investors to trade our securities and may negatively affect the value and liquidity of our common stock.Delisting also couldhave other negative results,including the potential loss of investor confidence or interest in strategic transactions or opportunities,as well as negatively im

243、pactour ability to recruit and retain personnel through equity incentive awards.RISKS RELATED TO MACROECONOMIC CONDITIONS AND GLOBAL CONDITIONS A regional epidemic or global pandemic,including the reemergence of the COVID-19 pandemic,may adversely affect our business operations andfinancial conditio

244、n.In March 2020,the World Health Organization declared the COVID-19 virus a global pandemic and then-President Donald J.Trump declared a nationalemergency in the United States.This pandemic caused substantial disruptions to populations,including economic markets and businesses,worldwide.Regulations

245、and restrictions to ensure public safety,adopted at varying times and extents in the affected locations,had serious adverse impacts on economicmarkets and the operation of businesses in those locations.The COVID-19 pandemic increased macroeconomic and stock market volatility and uncertainty.Parts of

246、 our business were and continue to be adversely affected by the COVID-19 pandemic.In response to the pandemic,varying restrictions wereimplemented,either by government order or by voluntary measures,such as temporary closures or restrictions on business operations,and/or the imposition ofsocial dist

247、ancing,quarantine,remote work,or other limitations on in-person meetings.The timing and severity of these imposed restrictions varied and,whilemost have been lifted,restrictions could be reinstated at any time.These disruptions adversely affected our customers operations and our business,most promin

248、ently by increasing costs and delaying customer projects andexpenditures.The reemergence of the COVID-19 pandemic or the emergence of other regional epidemics or global pandemics,depending upon their duration and severity,could have a material adverse effect on our business.Depending on the severity

249、 and duration of these disruptions and the subsequent supply chain effects,customer demand,our ability to meet demand,and our revenue and profit margins,may continue to be negatively impacted.Due to the uncertainty of the severity and duration of these potential events,the extent and effectiveness o

250、f containment and mitigation measures that may betaken by governmental authorities or voluntarily,to the extent an epidemic or global pandemic may adversely impact our business,such impact may alsoheighten other risks set forth in this Section 1A Risk Factors.16Table of ContentsOur business is subje

251、ct to risks related to global economic conditions,including inflation,consumer demand,global supply chain challenges and othermacroeconomic issues that could have an adverse effect on our business and financial performance.General economic downturns impacting our key customers and global markets can

252、 adversely affect our business operations,demand for our products and ourfinancial results.The global economy,including credit and financial markets,has experienced extreme volatility and disruptions,including higher interest rates,relatively high levels of inflation,strained supply chains and expec

253、tations of lower economic growth,which have put pressure on our business.For example,Russias invasion of Ukraine in the first quarter of 2022 and the resulting geopolitical responses lessened international demand for our simulation products.When challenging macroeconomic conditions such as these exi

254、st,our customers may delay,decrease or cancel purchases from us and may also delay paymentor fail to pay us altogether.Suppliers may have difficulty filling our orders and distributors may have difficulty getting our products to customers,which mayaffect our ability to meet customer demands and resu

255、lt in a loss of business.Weakened global economic conditions may also result in unfavorable changes inour product prices and product mix and lower profit margins.All of these factors could have a material adverse effect on demand for our products,our financialcondition and our results of operations.

256、We are subject to a wide variety of laws and regulations,and these may change.Our businesses are subject to regulation by U.S.federal and state laws,and foreign laws,government regulations and policies,and other administrativerequirements.Changes to laws or regulations may require us to modify our b

257、usiness objectives if existing practices become more restricted,subject toescalating costs,or prohibited outright.Particular risks include possible curtailment of our intended business activities or strategies as a result of changed ornew regulatory risks arising from federal laws and regulations,su

258、ch as laws and regulations regarding export of sensitive technologies or technical informationor changed interpretations of existing laws and regulations.Our business and the industries in which we operate are also at times being reviewed orinvestigated by regulators,which could lead to enforcement

259、actions,fines and penalties,or the assertion of private litigation claims and damages.Anysignificant change to laws,regulations,enforcement policies,or liability regimes,or other actions by government bodies having jurisdiction over our business,may have material adverse effects on our business and

260、profitability.We have only limited ability to foresee,plan for,or influence changes to theserequirements.RISKS RELATED TO OUR INDUSTRY Our business is largely dependent on sales to the nuclear power industry.Any significant disruption in this industry would have a material adverseeffect upon our rev

261、enue and profitability.In both 2023 and 2022,92.0%and 89.0%of our revenue,respectively,was from customers in the nuclear power industry.We expect to derive a significantportion of our revenue from customers in the nuclear power industry for the foreseeable future.Market demand for,and our ability to

262、 supply nuclear powerplant simulators and related products and services is dependent on the continued operation of nuclear power plants globally and,to a lesser extent,on theconstruction of new nuclear power plants.A wide range of factors affect the continued operation and construction of nuclear po

263、wer plants,including thepolitical,regulatory and legal environment in which they operate,the availability and cost of alternative means of power generation,the occurrence of futurenuclear incidents,such as the one which occurred at the Fukushima Daiichi nuclear plant in 2011,and general economic con

264、ditions.Significant regulatorychanges in the U.S.or abroad could materially affect demand for our products,the profitability of our service deliveries to nuclear power industry customers,and the overall efficacy of our current business model.Customer concentration in the U.S.nuclear power industry s

265、ubjects us to risks and uncertainty,which we may not be able to mitigate throughdiversification.The U.S.nuclear industry has significant customer concentration with a limited number of entities owning all of the 93 nuclear reactors currently operating inthe United States.In 2023,we continued to expe

266、rience high customer concentration with respect to each of our businesses.Indeed,one customer accounted for22.7%of our total consolidated revenue for the year-ended December 31,2023.As a result of this concentration,a reduction in business from our customers,could have a disproportionately adverse e

267、ffect on our business,results of operations,and prospects.We monitor our customer concentration and seek todiversify our customer base within this concentrated industry.In addition to pursuing diversification strategies and expanding relationships with targetedcustomers,we mitigate the associated cu

268、stomer concentration risk by developing meaningful relationships with each nuclear power plant,which are oftenseparately responsible for vendor selection and individual procurement decisions.17Table of ContentsThe nuclear power industry,our largest customer group,is associated with a number of hazar

269、ds which could create significant liabilities.Our business could expose us to third party claims with respect to product,environmental and other similar liabilities.Although we have sought protectionfrom these potential liabilities through a variety of legal and contractual provisions as well as thr

270、ough liability insurance,the effectiveness of such protectionshas not been fully tested.Certain of our products and services are used by the nuclear power industry primarily in operator training.Although our contracts forsuch products and services typically contain provisions designed to protect us

271、from potential liabilities associated with such use,there can be no assurance thatwe would not be materially adversely affected by claims or actions which may potentially arise due to factors that may be outside of our direct control.The industries in which we operate are highly competitive.This com

272、petition may prevent us from raising prices at the same pace at which our costsincrease.Our businesses operate in highly competitive environments with both domestic and foreign competitors,many of whom have substantially greater financial,marketing,and other resources than we do.The principal factor

273、s affecting competition in our industries include price,technological proficiency,ease of systemconfiguration and use,product reliability,applications expertise,engineering support,local presence,personal relationships,and the relative financial stabilityof the competitor.We believe competition in t

274、he simulation fields may further intensify in the future as a result of advances in technology,consolidations andstrategic alliances among competitors,increased costs required to develop new technology and the increasing importance of software content in systems andproducts.Because our business has

275、a significant international component,changes in the value of the dollar could adversely affect our ability to competeinternationally and could reduce our profitability on international business opportunities that we do win.Any of these competitive factors,or any combinationof two or more factors,co

276、uld make it more difficult for us to bid successfully on new projects,or to complete projects at profit margins that we considerreasonable.An inability or reduced ability to win new work would have a material adverse impact on our backlog and revenue,and an inability or reducedability to secure reas

277、onable profit margins on projects awarded to us would have a material adverse impact on our profitability and overall results of operations.RISKS RELATED TO OUR PRODUCTS,SERVICES,AND BUSINESS PRACTICES Our simulation business is dependent on product innovation and research and development,which cost

278、s are incurred prior to realization of revenuefor new products and improvements.We believe that our success will depend in large part on our ability to maintain and enhance our current product line,develop new products,maintaintechnological competitiveness and meet an expanding range of customer nee

279、ds.Our product development activities are aimed at the development andexpansion of our library of software modeling tools,the improvement of our display systems and workstation technologies,and the advancement andupgrading of our simulation technology.The life cycles for software modeling tools,grap

280、hical user interfaces,and simulation technology are variable andlargely determined by competitive pressures and the evolution of software and standards that may be controlled by third parties.Consequently,we will need tocontinue to make significant investments in research and development to enhance

281、and expand our capabilities in these areas and to maintain our competitiveadvantage.We cannot control,and we may be unable to predict accurately,the development and evolution of these competitive pressures and external softwareand standards.We may be unable to monetize our investment in research and

282、 development in a timely manner,or at all.Unexpected or excessive delays inrealizing a return on these investments may have a material and adverse effect on our cash position,results of operations,and financial condition.18Table of ContentsOur backlog is subject to unexpected adjustments and cancell

283、ations and may not be a reliable indicator of future revenues or earnings.Backlog represents products or services that our customers have committed by contract or purchase order to purchase from us and that we have not yetdelivered or recognized as revenue.Our backlog as of December 31,2023 and 2022

284、 was$34.5 million and$32.9 million,respectively.There can be noassurance that the revenues projected in our backlog will be realized or,if realized,will result in profits.Because of project cancellations or changes in projectscope and schedule,we cannot predict with certainty whether or when backlog

285、 services will be performed,or products delivered.In addition,even where aproject proceeds as scheduled,it is possible that contracted parties may default and fail to pay amounts owed to us.Our poor project performance couldincrease the cost associated with a project.Thus,delays,suspensions,cancella

286、tions,payment defaults,scope changes and poor project execution couldmaterially reduce or eliminate the revenues and profits that we actually realize from projects in backlog.Reductions in our backlog due to cancellation ormodification by a customer or for other reasons may adversely affect,potentia

287、lly to a material extent,the revenues and earnings we actually receive fromcontracts and orders included in our backlog.Many,but not all,of the contracts in our backlog provide for cancellation fees in the event customers cancelprojects.These cancellation fees usually provide for reimbursement of ou

288、r out-of-pocket costs and payments,for work performed prior to cancellationincluding varying percentages of the profits we would have realized had the contract been completed.We usually have no contractual right to payment for all ofthe lost revenue or lost profits in the event of cancellation of th

289、e contracts and orders reflected in our backlog,however.Projects may remain in our backlog forextended periods of time.If we experience significant project terminations,suspensions,or scope adjustments to contracts reflected in our backlog,ourfinancial condition,results of operations and cash flows

290、may be adversely impacted.RISKS RELATED TO FOREIGN OPERATIONSOur sales to foreign customers expose us to risks associated with operating internationally.Sales of products and services to end users outside the United States accounted for approximately 12%of our consolidated revenue in 2023 and 16%ofc

291、onsolidated revenue in 2022.Consequently,our businesses are subject to a variety of risks that are specific to international operations,including thefollowing:export laws and regulations that could erode our profit margins or restrict the export of some or all of our products;compliance with the U.S

292、.Foreign Corrupt Practices Act and similar non-U.S.regulations;the burden and cost of compliance with foreign laws,treaties and technical standards generally,as well as responding to changes in thoserequirements;contract award and funding delays;potential restrictions on transfers of funds;potential

293、 difficulties in accounts receivable collection;currency fluctuations,including costs and potentially limited availability of viable hedging options;import and export duties and value added or other taxes;transportation and communication delays and interruptions;differences in insurance availability

294、 and coverage in some jurisdictions;difficulties involving strategic alliances and managing foreign sales agents or representatives;uncertainties arising from foreign local business practices and cultural considerations;andpotential military conflicts and political risks,including particularly the c

295、urrent conflict between Russia and Ukrainepotential disruption of our international business due to the worldwide COVID-19 virus outbreak.In December 2019,an outbreak of the COVID-19 virus was reported in Wuhan,China.On March 11,2020,the World Health Organization declared theCOVID-19 virus a global

296、pandemic.The pandemic adversely affected our international customers operations,our employees,and our employee productivity.It also impacted the ability of our subcontractors,partners,and suppliers to operate and fulfill their contractual obligations,and result in an increase in costs,delays or disr

297、uptions in performance.These supply chain effects,and the direct effect of the virus and the disruption on our employees and operations,fromCOVID-19,or from other national or global health related outbreaks,may negatively impact both our ability to meet customer demand and our revenue andprofit marg

298、ins.In late February 2022,following rising tensions between the regions,Russian military forces launched significant military action against Ukraine,andsustained tension,conflict,and disruption in the region is expected.We do not have employees or operations in Russia or Ukraine,but we do have custo

299、merswho do business in these countries or surrounding countries.Such operations and customers may be adversely affected by the continued conflict and anyrelated disruptions,sanctions or other governmental actions.While we have and will continue to adopt measures to reduce the potential impact of los

300、ses resulting from the risks of our foreign business,we cannot ensurethat such measures will be adequate.During the years ended December 31,2023 and 2022,we did not have revenues greater than 10%from any individualforeign country.19Table of ContentsExports and sales to certain foreign countries,incl

301、uding the Peoples Republic of China,are subject to regulatory,political,and other risks.The export and sale of our services and technology to certain foreign countries including China,are subject to U.S.export control regulations.Export controlpolicy pertaining to China and other countries may be en

302、forced through laws and regulations administered by the Department of Commerce and theDepartment of Energy,and jurisdiction with regard to the export and sale of our services and technology may be overlapping and unclear.Specificgovernmental authorizations may be required before we can export our se

303、rvices or technology to countries such as China or collaborate with foreign entities orforeign individuals located in countries such as China.These restrictions include our own wholly-owned Chinese subsidiary and its employees.If export orother authorizations are required and not granted,or are sign

304、ificantly delayed,our international business plans pertaining to China and other countries could bematerially affected.Further,our exports and sales to China and other countries with respect to which the United States may have shifting or negative diplomaticand trade relations,including sales made b

305、y or through our wholly-owned Chinese subsidiary,expose us to particular risks associated with the political andregulatory relationship between the U.S.and China and between the U.S.and such other countries.In October 2018,DOE announced the tightening of certain export control restrictions with rega

306、rd to the export of nuclear technology to China,includingcertain presumptive denials with regard to the export of identified nuclear technologies to China.Although we do not believe that these policy changes coverall of our technologies or services,restrictions pertaining to U.S.regulation and polic

307、y pertaining to international trade with China could adversely affect ourbusiness in China and the performance of our Chinese subsidiary.Finally,regulation pertaining to the sale and export of products and services to China and other countries can be complex and involve judgments exercised bythe Com

308、pany with which the Department of Commerce,DOE and other regulators may not agree or consent.Violation of export control regulations,includingthose pertaining to China,could subject us to fines and other penalties,such as losing the ability to export for a period of years,which would limit our reven

309、uegrowth opportunities and significantly hinder our attempts to expand our business internationally.Although we take steps to monitor and ensure our compliancewith all applicable export laws and regulations,we are nevertheless exposed to political and regulatory risks that we may not be able to miti

310、gate fully and thatmay have a material adverse effect upon our international business operations.Our operations within China subject us to risks and uncertainties relating to the laws and regulations of China.Our business and operations within China may be adversely affected by Chinas continuously e

311、volving internal policies,laws and regulations,including thoserelating to nuclear technology,trade,taxation,import and export tariffs or restrictions,currency controls,cybersecurity and data protection,indigenousinnovation and the promotion of a domestic nuclear industry,and intellectual property ri

312、ghts and enforcement and protection of those rights.Enforcement ofexisting laws or agreements in China may be inconsistent.In addition,changes in the political environment,governmental policies,international trade policiesand relations,or U.S.-China relations could result in revisions to laws or reg

313、ulations or their interpretation and enforcement,exposure of our proprietaryintellectual property to risk of loss,increased taxation,trade sanctions,the imposition of import duties or tariffs,restrictions on imports or exports,currencyrevaluations,or retaliatory actions by the Chinese government in

314、response to U.S.actions,any or all of which could have an adverse effect on our businessplans and operating results.20Table of ContentsRISKS RELATED TO OUR FINANCIAL CONDITIONS,ACCOUNTING,AND CONTRACTS If we cannot comply with the financial or other restrictive covenants in our credit agreements,or

315、obtain waivers or other relief from our lender,wemay cause an event of default to occur,which could result in loss of our sources of liquidity and acceleration of our debt.In order to fund general working capital needs,repayment of indebtedness,and other corporate purposes,we entered into securities

316、 purchase agreement withLind Global Fund II LP(“Lind Global”)on February 23,2022,pursuant to which we issued to Lind Global a two-year,secured,interest-free convertiblepromissory note in the amount of$5.75 million(the“First Note”)and a common stock purchase warrant to acquire 1,283,732 shares of our

317、 common stock(the“First Warrant”).We entered into an amendment and restatement of the First Note on June 23,2023.On June 23,2023,the Company entered into a securitiespurchase agreement with Lind Global,pursuant to which the Company issued to Lind Global that certain Senior Convertible Promissory Not

318、e,dated February23,2022(the“Second Note”and,together with the First Note,the“Lind Notes”)and the issuance of common stock purchase warrant to acquire 4,264,271shares of the Companys common stock(the“Second Warrant”).In addition to payment obligations,each of the Lind Notes contain covenants pertaini

319、ng to theCompany and our business including,but not limited to,an obligation to maintain an equity market capitalization of at least$7,000,000.If we fail to maketimely payments on the Lind Notes,or otherwise fail to satisfy the covenants contained therein,Lind Global(or the holder of the Lind Notes)

320、may deliver ademand for payment to the Company and,if such a demand is delivered,the Company shall,within ten(10)Business Days following receipt of the demand forpayment from the holder,pay all of the outstanding principal amount on the Notes or,at its election,Lind(or such holder)may elect to conve

321、rt all or a portionof the outstanding principal amount and the conversion price shall be adjusted to the lower of the then-current conversion price and eighty percent(80%)of theaverage of the three(3)lowest daily variable average weighted prices during the twenty(20)trading days prior to delivery.Ad

322、ditionally,if we are unable tomaintain our listing on Nasdaq,it will constitute an event of default under the Lind Notes,which would trigger certain obligation under the Lind Notesincluding,but not limited to,causing an amount equal one hundred twenty percent(120%)of the outstanding principal amount

323、 of the Lind Notes toimmediately become due.At December 31,2023,management concluded that substantial doubt exists for the Company to continue as a going concern through March 31,2025.Additionally,our inability to generate sufficient cash flow to satisfy repayment obligations or to refinance or rest

324、ructure these obligations on commerciallyreasonable terms could have a material adverse effect on our business,financial condition,results of operations and cash flows.Upon the occurrence of anevent of default under the Convertible Note,or another credit arrangement,our lenders could elect to declar

325、e all amounts outstanding thereunder to beimmediately due and payable.If we were unable to repay all outstanding amounts in full,our lenders could exercise various remedies including institutingforeclosure proceedings against our assets pledged to them as collateral to secure that debt.Our revenue,r

326、esults of operations,and cash flows may suffer upon the loss of a significant customer.For the years ended December 31,2023 and 2022,four customers have provided more than 10%of Workforce Solutions segments revenues:Years ended December 31,2023 2022 Customer A 23%9%Customer B 17%16%Customer C 11%24%

327、Customer D 11%9%Training Services and Technical Staffing,which together comprise our Workforce Solutions segment,may lose a significant customer if any existing contractwith such customer expires without extension,renewal,or negotiation or if it is terminated by the customer prior to expiration,to t

328、he extent such earlytermination is permitted by the contract.A number of Training Services and Technical Staffings contracts typically are subject to expiration during each year,and either company may lose any of these contracts if we are unable to extend,renew,or renegotiate the contracts.The loss

329、of any significant customer wouldadversely affect our Workforce Solutions segments revenue,results of operations,and cash flows.For the years ended December 31,2023 and 2022,one customer has provided more than 10%of Engineering segments revenues,respectively:Years ended December 31,2023 2022 Custome

330、r E 32%22%Performance(DBA Systems&Simulation),Programs&Performance,and Design&Analysis,which together comprise our Engineering segment,may lose asignificant customer if any existing contract with such customer expires without extension,renewal,or negotiation or if it is terminated by the customer pr

331、ior toexpiration,to the extent such early termination is permitted by the contract.A majority of the contracts entered into by our Engineering businesses are able tobe terminated by our customer on relatively short notice without cause or further compensation.The loss of any significant customer wou

332、ld adversely affectour Engineering segments revenue,results of operations,and cash flows.Customer E also provided 22.7%of our total consolidated revenue for the years ended December 31,2023.21Table of ContentsOur expense levels are based upon our expectations as to future revenue,and we may be unabl

333、e to adjust spending to compensate for a revenueshortfall.Accordingly,any revenue shortfall would likely have a disproportionate effect on our operating results.Our revenue was$45.0 million and$47.7 million for the years ended December 31,2023 and 2022,respectively.We incurred an operating loss of$6.8 millionand$14.4 million for the years ended December 31,2023 and 2022,respectively.Our operating