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3/25/22, 9:42 AM
<br />Table of Contents
<br />road -20210930
<br />Concentration of Risks, to the consolidated financial statements included elsewhere in this report for information relating to
<br />concentrations of revenues by type of customer and for a description of our largest customers.
<br />Government contracts generally are subject to a variety of governmental regulations, requirements and statutes, the violation or
<br />alleged violation of which could have a material adverse effect on our business.
<br />Our contracts with governmental agencies are generally subject to specific procurement regulations, contract provisions and a variety
<br />of socioeconomic requirements relating to their formation, administration, performance and accounting and often include express or
<br />implied certifications of compliance. We may be subject to claims for civil or criminal fraud for actual or alleged violations of these
<br />governmental regulations, requirements or statutes. In addition, we may also be subject to qui tam litigation brought by private
<br />individuals on behalf of the government under the federal False Claims Act, which could include claims for treble damages. Further, if
<br />we fail to comply with any of these regulations, requirements or statutes, or if we have a substantial number of workplace safety
<br />violations, our existing government contracts could be terminated, and we could be suspended from government contracting or
<br />subcontracting, including federally funded projects at the state level. Even if we have not violated these regulations, requirements or
<br />statutes, allegations of violations or defending qui tam litigation could harm our reputation and require us to incur material costs to
<br />defend any such allegations or lawsuits. Any one or more of these events could have a material adverse effect on our financial
<br />condition, results of operations, cash flow and liquidity.
<br />The cancellation of a significant number of contracts, our disqualification from bidding on new contracts and the unpredictable
<br />timing of new project opportunities could have a material adverse effect on our business.
<br />Government contracts typically can be canceled at any time, with us receiving payment only for the work completed. The cancellation
<br />of an unfinished contract could result in lost revenues and cause our equipment to be idled for a significant period of time until other
<br />comparable work becomes available. In addition, we could be prohibited from bidding on certain government contracts if we fail to
<br />maintain qualifications required by those entities. For example, various laws, including those governing wages, benefits, overtime,
<br />working conditions, equal employment opportunity, affirmative action and drug testing, provide for mandatory suspension and/or
<br />debarment of contractors in certain circumstances involving violations of those laws. In addition, federal and state laws provide for
<br />discretionary suspension and/or debarment in certain circumstances, including as a result of being convicted of, or being found civilly
<br />liable for, fraud or a criminal offense in connection with obtaining, attempting to obtain or performing a public contract or subcontract.
<br />The scope and duration of any suspension or debarment may vary depending upon the facts of a particular case and the grounds for
<br />debarment. Finally, the timing of project awards is unpredictable and outside of our control. Project awards, including expansions of
<br />existing projects, often involve complex and lengthy negotiations and competitive bidding processes.
<br />If we are unable to accurately estimate the overall risks, revenues or costs on our projects, we may incur contract losses or achieve
<br />lowerprofts than anticipated.
<br />Pricing on fixed unit price contracts is based on approved quantities irrespective of our actual costs, and contracts with a fixed total
<br />price require that the work be performed for an agreed-upon price irrespective of our actual costs. We only generate profits on fixed
<br />unit price and fixed total price contracts when our revenues exceed our actual costs, which requires us to accurately estimate our costs,
<br />control our actual costs and avoid cost overruns. If our cost estimates are too low or if we do not perform the contract within our cost
<br />estimates, then cost overruns may cause us to incur a loss or cause the contract not to be as profitable as we expected. The costs
<br />incurred and profit realized, if any, on our contracts can vary, sometimes substantially, from our original projections due to a variety of
<br />factors, including, but not limited to;
<br />• the failure to include materials or work in a bid, or the failure to estimate properly the quantities or costs needed to complete a
<br />fixed total price contract;
<br />• delays caused by weather conditions or otherwise failing to meet scheduled acceptance dates;
<br />• contract or project modifications or conditions creating unanticipated costs that are not covered by change orders;
<br />• changes in the availability, proximity and costs of materials, including liquid asphalt cement, aggregates and other
<br />construction materials, as well as fuel and lubricants for our equipment;
<br />• to the extent not covered by contractual cost escalators, variability in, and our inability to predict, the costs of diesel fuel,
<br />liquid asphalt and cement;
<br />• the availability and skill level of workers;
<br />• onsite conditions that differ from those assumed in the original bid;
<br />https:/Jwww.sec.gov/Archives/edgar/data/00017182271000171822721000107/road-20210930.htm 221144
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