UNITEDTable STATESof Contents

MISCORTable GROUP,of LTD. Contents

ITEM 1. FINANCIALTable STATEMENTSof Contents

(AmountsTable inof thousands, except share and per share data) Contents

TheTable unaudited interim condensed consolidated financial statements of MISCOR Group, Ltd. (the “Company”) as of and for the three months ended March 31, 2013 and April 1, 2012, have been prepared in accordance with generally accepted accounting principles for interim information and the rules and regulations of the Securities and Exchange Commission for interim financial information. Accordingly, they do not contain all of the information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of the Company’s management, all adjustments, consisting of normal, recurring adjustments, considered necessary for a fair statement have been included. The results for the three months ended March 31, 2013 are not necessarily indicative of the results to be expected for the year ending December 31, 2013. Refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2012 for the most recent disclosure of the Company’s accounting policies. Contents

AsTable of March 31, 2013, the Company has a Loan Agreement and Security Agreement (“PNC credit facility”) with PNC Bank, National Association (“PNC”). There are two components to the PNC credit facility: A Committed Line of Credit Note (“Line of Credit”) and a Term Note. Contents

ForTable the three months ended April 1, 2012, the Company’s common stock equivalents, consisting of warrants to purchase 308,197 shares of common stock and options to purchase 84,000 shares of common stock issued to employees under the 2005 Stock Option Plan, were not included in computing diluted income per share because the effect of including the warrants and options would have been anti-dilutive. Contents

TheTable carrying amounts of these items are a reasonable estimate of their fair values because of the current maturities of these instruments. Contents

AsTable previously disclosed on the Company’s March 13, 2013 Form 8-K filed with the Securities and Exchange Commission, the Company entered into a plan of merger by and among Integrated Electrical Services, Inc. (“IES”) and the Company, dated as of March 13, 2013 (the “Merger Agreement”), whereby the Company will merge with and into IES, with a subsidiary of IES as the surviving entity. Stockholders of the Company will have the right to elect to receive a guaranteed $1.415 per share or have their shares converted to shares of IES or a mix of cash consideration and stock consideration, depending if certain conditions are met. Contents

RecentTable Accountingof Pronouncements Contents

EarningsTable Beforeof Interest Expense, Income Taxes, Depreciation and Amortization (“EBITDA”) Contents

DuringTable 2013, we will continue to focus our efforts to maintain the generation of positive operating cash flows and to increase overall level of profitable sales for the Company. We continue to make significant investments to the Industrial Services sales team, adding more sales personnel and implementing a customer relationship management tool. Contents

OurTable disclosure controls and procedures (as defined in Rules13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) are designed to ensure that information we are required to disclose in our reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission. Our disclosure controls and procedures also are designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Accounting Officer, as appropriate to allow timely decisions regarding required disclosures. Contents

PursuantTable to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Contents

UNITEDTable STATESof Contents

MISCORTable GROUP,of LTD. Contents

ITEM 1. FINANCIALTable STATEMENTSof Contents

(AmountsTable inof thousands, except share and per share data) Contents

Table of Contents

AsTable of March 31, 2013, the Company has a Loan Agreement and Security Agreement (“PNC credit facility”) with PNC Bank, National Association (“PNC”). There are two components to the PNC credit facility: A Committed Line of Credit Note (“Line of Credit”) and a Term Note. Contents

Table of Contents

TheTable carrying amounts of these items are a reasonable estimate of their fair values because of the current maturities of these instruments. Contents

RecentTable Accountingof Pronouncements Contents

EarningsTable Beforeof Interest Expense, Income Taxes, Depreciation and Amortization (“EBITDA”) Contents

PursuantTable to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Contents

Table of Contents

Table of Contents

Table of Contents

~~SECURITIES~~UNITED ~~AND~~STATES ~~EXCHANGE COMMISSION~~

~~Washington,~~SECURITIES D.AND C.EXCHANGE ~~20549~~COMMISSION

~~FORM~~Washington, ~~10-Q~~ D. C. 20549

xFORM ~~Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~10-Q

~~For~~x ~~the~~Quarterly ~~quarterly~~report ~~period~~pursuant ~~ended~~to ~~March,~~Section ~~31,~~13 ~~2013~~or 15(d) of the Securities Exchange Act of 1934

ORFor the quarterly period ended June 30, 2013

~~¨ Transition Report Pursuant to Section 13~~ or ~~15(d) of the Securities Exchange Act of 1934~~

~~Commission~~¨ ~~file~~Transition ~~number:~~Report ~~000-52380~~Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

~~MISCOR~~Commission ~~GROUP, LTD.~~file number: 000-52380

~~(Exact~~MISCOR ~~name~~GROUP, LTD. ~~of registrant as specified in its charter)~~

Indiana		20-0995245
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

(Exact name of registrant as specified in its charter)

800 Nave Road, SE

Indiana

20-0995245

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

~~Massillon,~~800 OHNave ~~44646~~Road, SE

~~(Address~~Massillon, ofOH ~~principal~~44646 ~~executive offices/zip code)~~

(~~330) 830-3500~~Address of principal executive offices/zip code)

Registrant’s telephone number, including area code : (330) 830-3500

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ~~Yes~~ x No Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ~~Yes~~ x No Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ~~Exchange~~ Exchange Act). ~~Yes~~ ¨ No Yes x No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of ~~April~~July 16, 2013, there were 11,684,987 shares outstanding of the issuer’s Common Stock, without par value.

~~INDEX~~MISCOR TOGROUP, ~~FORM~~LTD. ~~10-Q~~

Item Number		PageNumber
PART I—FINANCIAL INFORMATION
1.	Financial Statements:
	Condensed Consolidated Balance Sheets as of March 31, 2013 (Unaudited) andDecember 31, 2012		1
	Unaudited Condensed Consolidated Statements of Operations for the Three Months ended March 31, 2013 and April 1, 2012		2
	Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months ended March 31, 2013 and April 1, 2012		3
	Notes to Unaudited Condensed Consolidated Financial Statements		4
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		10
3.	Quantitative and Qualitative Disclosures about Market Risk		13
4.	Controls and Procedures		13
PART II—OTHER INFORMATION
6.	Exhibits		15
	Signatures		16

INDEX TO FORM 10-Q


Item Number		Page Number
	PART I—FINANCIAL INFORMATION

1.	Financial Statements:

	Condensed Consolidated Balance Sheets as of June 30, 2013 (Unaudited) and December 31, 2012		1

	Unaudited Condensed Consolidated Statements of Income for the Three and Six Months ended June 30, 2013 and July 1, 2012		2

	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months ended June 30, 2013 and July 1, 2012		3

	Notes to Unaudited Condensed Consolidated Financial Statements		4

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		10

3.	Quantitative and Qualitative Disclosures about Market Risk		14

4.	Controls and Procedures		14

	PART II—OTHER INFORMATION

	Unregistered Sales of Equity Securities		16

6.	Exhibits		16

	Signatures		17

~~PART~~ii ~~I—FINANCIAL INFORMATION~~

~~MISCOR GROUP,~~PART ~~LTD.~~I—FINANCIAL ~~AND~~INFORMATION ~~SUBSIDIARIES~~

~~CONDENSED~~ITEM 1. ~~CONSOLIDATED~~FINANCIAL ~~BALANCE~~STATEMENTS ~~SHEETS~~

~~(Amounts~~MISCOR ~~in thousands~~GROUP, ~~except~~LTD. ~~share~~AND ~~data)~~SUBSIDIARIES

	March 31,2013			December 31,2012
	(Unaudited)
ASSETS
CURRENT ASSETS
Accounts receivable, net of allowance for doubtful accounts of $10 and $9, respectively	$	6,223		$	6,526
Inventories		5,902			5,767
Other current assets		1,157			922
Total current assets		13,282			13,215
PROPERTY AND EQUIPMENT, net		4,824			4,935
OTHER ASSETS
Customer relationships, net		5,668			5,764
Deferred income taxes		1,942			1,942
Technical library, net		513			522
Deposits and other assets		69			67
Total other assets		8,192			8,295
Total assets	$	26,298		$	26,445
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Revolving credit line	$	3,887		$	3,722
Current portion of long-term debt		550			1,478
Accounts payable		4,139			3,336
Accrued expenses and other current liabilities		1,364			1,293
Total current liabilities		9,940			9,829
LONG-TERM LIABILITIES
Long-term debt, less current portion		1,895			2,029
Total long-term liabilities		1,895			2,029
Total liabilities		11,835			11,858
STOCKHOLDERS EQUITY
Preferred stock, no par value; 800,000 shares authorized; no shares issued and outstanding		—			—
Common stock, no par value; 30,000,000 shares authorized; 11,807,826 shares issued and 11,683,987 shares outstanding		59,346			59,346
Treasury stock, 123,839 shares, at cost		(74	)		(74	)
Accumulated deficit		(44,809	)		(44,685	)
Total stockholders’ equity		14,463			14,587
Total liabilities and stockholders’ equity	$	26,298		$	26,445

CONDENSED CONSOLIDATED BALANCE SHEETS

~~The~~(Amounts ~~accompanying~~in ~~notes~~thousands, ~~are~~except anshare ~~integral~~data) ~~part of these unaudited condensed consolidated financial statements.~~


	June 30,			December 31,
	2013			2012
	(Unaudited)
ASSETS
CURRENT ASSETS	$	5,596		$	6,526
Accounts receivable, net of allowance for doubtful accounts of $17 and $9, respectively
Inventories		6,193			5,767
Other current assets		853			922

Total current assets		12,642			13,215
PROPERTY AND EQUIPMENT, net		4,667			4,935
OTHER ASSETS
Customer relationships, net		5,571			5,764
Deferred income taxes		1,942			1,942
Technical library, net		505			522
Deposits and other assets		67			67

Total other assets		8,085			8,295

Total assets	$	25,394		$	26,445

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Revolving credit line	$	3,486		$	3,722
Current portion of long-term debt		538			1,478
Accounts payable		3,319			3,336
Accrued expenses and other current liabilities		1,435			1,293

Total current liabilities		8,778			9,829
LONG-TERM LIABILITIES
Long-term debt, less current portion		1,761			2,029

Total long-term liabilities		1,761			2,029

Total liabilities		10,539			11,858
STOCKHOLDERS’ EQUITY
Preferred stock, no par value; 800,000 shares authorized; no shares issued and outstanding		—			—
Common stock, no par value; 30,000,000 shares authorized; 11,807,826 shares issued and 11,684,987 shares outstanding		59,346			59,346
Treasury stock, 123,839 shares, at cost		(74	)		(74	)
Accumulated deficit		(44,417	)		(44,685	)

Total stockholders’ equity		14,855			14,587

Total liabilities and stockholders’ equity	$	25,394		$	26,445

~~MISCOR~~The ~~GROUP,~~accompanying ~~LTD.~~notes ~~AND~~are ~~SUBSIDIARIES~~an integral part of these unaudited condensed consolidated financial statements.

~~CONDENSED~~1 ~~CONSOLIDATED STATEMENTS OF OPERATIONS~~

	Three months ended
	March 31, 2013			April 1, 2012
	(Unaudited)			(Unaudited)
REVENUES
Service revenue	$	6,039		$	6,921
Product sales		5,402			5,557
Total revenues		11,441			12,478
COST OF REVENUES
Cost of service revenue		5,412			5,909
Cost of product sales		3,505			3,541
Total cost of revenues		8,917			9,450
GROSS PROFIT		2,524			3,028
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		2,578			2,014
INCOME (LOSS) FROM OPERATIONS		(54	)		1,014
OTHER (INCOME) EXPENSE
Interest expense		71			193
Other income		(6	)		(9	)
Total other expense		65			184
NET INCOME (LOSS) BEFORE TAXES		(119	)		830
Provision for income taxes		5			15
NET INCOME (LOSS)	$	(124	)	$	815
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE	$	(0.01	)	$	0.07
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		11,683,987			11,785,826

MISCOR GROUP, LTD. AND SUBSIDIARIES

~~The~~CONDENSED ~~accompanying~~CONSOLIDATED ~~notes~~STATEMENTS ~~are~~OF anINCOME ~~integral part of these unaudited condensed consolidated financial statements.~~

2(Amounts in thousands, except share and per share data)

MISCOR GROUP, LTD. AND SUBSIDIARIES


	Three months ended				Six months ended
	June 30, 2013		July 1, 2012		June 30, 2013		July 1, 2012
	(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
REVENUES
Service revenue	$	6,420	$	7,705	$	12,459	$	14,627
Product sales		5,435		5,557		10,837		11,113

Total revenues		11,855		13,262		23,296		25,740
COST OF REVENUES
Cost of service revenue		5,379		6,810		10,791		12,719
Cost of product sales		3,574		3,142		7,078		6,683

Total cost of revenues		8,953		9,952		17,869		19,402

GROSS PROFIT		2,902		3,310		5,427		6,338
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		2,436		2,333		5,014		4,347

INCOME FROM OPERATIONS		466		977		413		1,991
OTHER EXPENSE
Interest expense		39		174		110		367
Other expense		33		20		27		11

Total other expense		72		194		137		378

NET INCOME BEFORE TAXES		394		783		276		1,613
Provision for Income Taxes		3		29		8		44

NET INCOME	$	391	$	754	$	268	$	1,569

BASIC INCOME PER COMMON SHARE	$	0.03	$	0.06	$	0.02	$	0.13

BASIC WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		11,684,800		11,785,826		11,684,395		11,785,826

DILUTED INCOME PER COMMON SHARE	$	0.03	$	0.06	$	0.02	$	0.13

DILUTED WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		11,775,065		12,177,023		11,775,065		12,167,023

~~CONDENSED~~The ~~CONSOLIDATED~~accompanying ~~STATEMENTS~~notes OFare ~~CASH~~an ~~FLOWS~~integral part of these unaudited condensed consolidated financial statements.

~~(Amounts~~2 ~~in thousands, except share and per share data)~~

	Three months ended
	March 31, 2013			Apri1 1, 2012
	(Unaudited)			(Unaudited)
OPERATING ACTIVITIES
Net income (loss)	$	(124	)	$	815
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		397			410
Bad debt recovery		—			(85	)
Loss on sale of equipment		7			—
Changes in operating assets and liabilities:
Accounts receivable		303			145
Inventories		(135	)		(409	)
Other current assets		(235	)		93
Deposits and other non-current assets		(2	)		—
Accounts payable		803			(587	)
Accrued expenses and other current liabilities		71			(267	)
Net cash provided by operating activities		1,085			115
INVESTING ACTIVITIES
Acquisition of property and equipment		(188	)		(134	)
Net cash utilized by investing activities		(188	)		(134	)
FINANCING ACTIVITIES
Payments on capital lease obligations		(928	)		(8	)
Short-term debt borrowings, net		165			199
Repayments of long-term debt		(134	)		(172	)
Net cash provided (utilized) by financing activities		(897	)		19
CHANGE IN CASH		—			—
Cash, beginning of period		—			—
Cash, end of period	$	—		$	—
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	88		$	191

~~The~~MISCOR ~~accompanying~~GROUP, ~~notes~~LTD. ~~are~~AND anSUBSIDIARIES ~~integral part of these unaudited condensed consolidated financial statements.~~

3CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

~~MISCOR~~(Amounts ~~GROUP,~~in ~~LTD.~~thousands)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	Six months ended
	June 30, 2013			July 1, 2012
	(Unaudited)			(Unaudited)
OPERATING ACTIVITIES
Net income	$	268		$	1,569
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		807			813
Bad debt provision (recovery)		—			(11	)
Loss on sale of equipment		22			13
Changes in operating assets and liabilities:
Accounts receivable		930			(266	)
Inventories		(426	)		215
Other current assets		69			300
Deposits and other non-current assets		—			16
Accounts payable		(17	)		(651	)
Accrued expenses and other current liabilities		142			(365	)

Net cash provided by operating activities		1,795			1,633
INVESTING ACTIVITIES
Acquisition of property and equipment		(351	)		(271	)
Proceeds from disposal of property and equipment		—			14

Net cash utilized by investing activities		(351	)		(257	)
FINANCING ACTIVITIES
Payments on capital lease obligations		(918	)		(16	)
Short-term debt payments		(236	)		(249	)
Repayments of long-term debt		(290	)		(1,111	)

Net cash utilized by financing activities		(1,444	)		(1,376	)

CHANGE IN CASH		—			—
Cash, beginning of period		—			—

Cash, end of period	$	—		$	—

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	133		$	349

~~(Amounts~~The inaccompanying ~~thousands,~~notes ~~except~~are ~~share~~an ~~and~~integral ~~per~~part ~~share~~of ~~data)~~these unaudited condensed consolidated financial statements.

~~NOTE~~3 ~~A—BASIS OF PRESENTATION~~

~~NOTE~~MISCOR ~~B—RECENT~~GROUP, ~~ACCOUNTING~~LTD. ~~PRONOUNCEMENTS~~

~~The~~NOTES ~~Company~~TO ~~does~~UNAUDITED ~~not~~CONDENSED ~~expect~~CONSOLIDATED ~~the~~FINANCIAL ~~adoption~~STATEMENTS ~~of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flows.~~

~~NOTE~~(Amounts ~~C—MERGER~~in ~~AGREEMENT~~thousands, except share and per share data)

AsNOTE ~~previously~~A—BASIS ~~disclosed~~OF onPRESENTATION the Company’s March 13, 2013 Form 8-K filed with the Securities and Exchange Commission, the Company entered into a plan of merger by and among a subsidiary of Integrated Electrical Services, Inc. (“IES”) and the Company, dated as of March 13, 2013 (the “Merger Agreement”), whereby the Company will merge with and into IES, with a subsidiary of IES as the surviving entity. Stockholders of the Company will have the right to elect to receive a guaranteed $1.415 per share or have their shares converted to shares of IES or a mix of cash consideration and stock consideration, depending if certain conditions are met.

OnThe ~~April 26,~~unaudited ~~2013~~interim condensed consolidated financial statements of MISCOR Group, aLtd. ~~joint~~(the ~~prospectus~~“Company”) as of and ~~proxy~~for ~~statement~~the ~~(Form~~three ~~S-4)~~and ~~was~~six ~~filed~~months ended June 30, 2013 and July 1, 2012, have been prepared in accordance with generally accepted accounting principles for interim information and the rules and regulations of the Securities and Exchange Commission for interim financial information. ~~Comments~~Accordingly, ~~regarding~~they do not contain all of the ~~Form~~information ~~S-4~~and ~~have~~footnotes ~~not~~required ~~yet~~by generally accepted accounting principles for complete financial statements. However, in the opinion of the Company’s management, all adjustments, consisting of normal, recurring adjustments, considered necessary for a fair statement have been ~~received~~included. ~~from~~The results for the ~~Securities~~three and ~~Exchange~~six ~~Commission~~months ended June 30, 2013 are not necessarily indicative of the results to be expected for the year ending December 31, 2013. Refer to our Annual Report on Form 10-K for the fiscal year ended December 31, 2012 for the most recent disclosure of the Company’s accounting policies.

NOTE DB—~~INVENTORY~~RECENT ACCOUNTING PRONOUNCEMENTS

~~Inventory~~The ~~consists~~Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the ~~following:~~Company’s results of operations, financial position or cash flows.

	March 31,2013		December 31,2012
Raw materials	$	2,518	$	2,457
Work-in-progress		1,991		1,879
Finished goods		1,393		1,431
	$	5,902	$	5,767

NOTE C—MERGER AGREEMENT

~~NOTE~~As ~~E—OTHER~~previously ~~INTANGIBLE~~disclosed ~~ASSETS~~on the Company’s March 13, 2013 Form 8-K and July 11, 2013 Form 8-K, both filed with the Securities and Exchange Commission, the Company entered into a plan of merger by and among a subsidiary of Integrated Electrical Services, Inc. (“IES”) and the Company, dated as of March 13, 2013 (the “Merger Agreement”), whereby the Company will merge with and into IES, with a subsidiary of IES as the surviving entity. Stockholders of the Company will have the right to elect to receive a guaranteed minimum of $1.415 per share in cash or have their shares converted to shares of IES, or to receive a mix of cash consideration and stock consideration, depending on whether certain conditions are met.

~~Intangible~~On ~~assets~~April 26, ~~consist~~2013, a joint prospectus and proxy statement (Form S-4) was filed with the Securities and Exchange Commission (“SEC”). Comments have been received from the SEC, and joint responses have been submitted to the SEC on each of the ~~following:~~SEC’s comments. On July 30, 2013, Amendment #3 of the Form S-4, along with responses to SEC comments, was submitted to the SEC.

			March 31, 2013							December 31, 2012
	EstimatedUsefulLives (inYears)		GrossCarryingAmount		AccumulatedAmortization			Net		GrossCarryingAmount		AccumulatedAmortization			Net
Customer Relationships		15-20	$	7,722	$	(2,054	)	$	5,668	$	7,722	$	(1,958	)	$	5,764
Technical Library		20		700		(187	)		513		700		(178	)		522
Total			$	8,422	$	(2,241	)	$	6,181	$	8,422	$	(2,136	)	$	6,286

NOTE D—INVENTORY

4Inventory consists of the following:

The estimated future amortization expense related to intangible assets for the periods subsequent to March 31, 2013 on a calendar year basis is as follows:


	June 30, 2013		December 31, 2012
Raw materials	$	2,392	$	2,457
Work-in-progress		2,233		1,879
Finished goods		1,568		1,431

	$	6,193	$	5,767

Year Ending December 31—
2013	$	315
2014		421
2015		421
2016		421
2017		421
Thereafter		4,182
Total	$	6,181

NOTE E—OTHER INTANGIBLE ASSETS

~~NOTE~~Intangible ~~F—SENIOR~~assets ~~CREDIT~~consist ~~FACILITY~~of the following:

~~Senior~~4 ~~Credit Facility with PNC Bank~~

The Line of Credit allows for borrowings up to $6,500 which are collateralized by 85% of eligible accounts receivable and 50% of eligible inventory. Additionally, the Line of Credit allows for Letter(s) of Credit in the aggregate at any time outstanding not to exceed $1,500. The Line of Credit bears interest at a rate per annum equal to the Daily LIBOR Rate plus the applicable “LIBOR Margin” as set based on certain metrics (effectively 2.95% at March 31, 2013). At March 31, 2013, $3,887 is outstanding on the Line of Credit, with $2,613 of availability on the Line of Credit. The termination date of the Line of Credit is December 24, 2014.


			June 30, 2013							December 31, 2012
	Estimated Useful Lives (in Years)		Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Customer Relationships		15-20	$	7,722	$	(2,151	)	$	5,571	$	7,722	$	(1,958	)	$	5,764
Technical Library		20		700		(195	)		505		700		(178	)		522

Total			$	8,422	$	(2,346	)	$	6,076	$	8,422	$	(2,136	)	$	6,286

The ~~Term~~estimated ~~Note~~future isamortization ~~for~~expense ~~the~~related amount of $2,500, together with interest accruing on the outstanding principal balance from December 24, 2012. This loan is collateralized by various real estate and equipment. The Term Note bears interest at a rate per annum equal to ~~the~~intangible ~~Daily~~assets ~~LIBOR~~for ~~Rate plus~~ the ~~applicable~~periods ~~“LIBOR~~subsequent ~~Margin” as set based on certain metrics (effectively 3.20% at March 31, 2013). The Company is obligated~~ to ~~make equal monthly installments of $42, commencing on January~~June 2430, 2013~~, and continuing on the same day of each month thereafter. Interest shall be payable at the same time as the principal payments. Any outstanding principal and accrued interest shall be~~ ~~due and payable in full~~ on ~~December 24,~~a ~~2017.~~calendar Atyear ~~March 31,~~basis ~~2013, $2,375~~ is ~~outstanding~~as onfollows: ~~the Term Note.~~

The Company paid a closing fee of $4 on the Line of Credit and a closing fee of $4 on the term loan. Debt issue costs amortized to interest expense were $1 for the three months ended March 31, 2013. Net debt issue costs at March 31, 2013 were $7.


Year Ending December 31—
2013	$	211
2014		421
2015		421
2016		421
2017		421
Thereafter		4,181

Total	$	6,076

~~Interest~~NOTE ~~expense~~F—SENIOR ~~under~~CREDIT ~~the~~FACILITY ~~PNC credit facility, including the Line of Credit and Term note and excluding amortization of debt issue costs, was $43 for the three months ended March 31, 2013.~~

~~Covenants~~Senior Credit Facility with PNC Bank

~~Terms~~As of June 30, 2013, the Company has a Loan Agreement and Security Agreement (“PNC ~~Credit~~credit ~~Facility~~facility”) ~~require~~with ~~the~~PNC ~~Company~~Bank, toNational ~~meet~~Association (“PNC”). There are two ~~financial~~components ~~covenants~~to the PNC credit facility: A Committed Line of Credit Note (“Line of Credit”) and a Term Note.

•The ~~Maintain~~Line as of ~~the~~Credit ~~end~~allows for ofborrowings ~~each~~up ~~fiscal~~to ~~quarter~~$6,500 onwhich aare ~~rolling~~collateralized ~~four~~by ~~quarters~~85% ~~basis~~of eligible accounts receivable and 50% of eligible inventory. Additionally, athe ~~ratio~~Line of ~~Funded~~Credit ~~Debt~~allows tofor ~~EBITDA~~Letter(s) of ~~less~~Credit ~~than~~in orthe ~~equal~~aggregate toat ~~2.50~~any time outstanding not to exceed $1,500.00 The atLine ~~close~~of ~~and~~Credit bears interest at ~~December~~a ~~31,~~rate ~~2012;~~per ~~and~~annum ~~2.25~~equal to the Daily LIBOR Rate plus the applicable “LIBOR Margin” based on certain metrics (effectively 1.0095% at ~~December~~June 30, 312013). At June 30, 2013, ~~and~~$3,486 ~~thereafter~~is outstanding on the Line of Credit, with $2,811 of availability on the Line of Credit. The termination date of the Line of Credit is December 24, 2014.

•The ~~Maintain~~Term asNote ofis for the ~~end~~amount of ~~each~~$2,500, ~~fiscal~~together ~~quarter,~~with interest accruing on athe ~~rolling~~outstanding ~~four~~principal ~~quarters~~balance ~~basis~~from December 24, a2012. ~~Fixed~~This ~~Charge~~loan ~~Coverage~~is ~~Ratio~~collateralized ofby ~~greater~~various ~~than~~real orestate and equipment. The Term Note bears interest at a rate per annum equal to 1the Daily LIBOR Rate plus the applicable “LIBOR Margin” based on certain metrics (effectively 2.2520% at June 30, 2013). The Company is obligated to 1make equal monthly installments of $42, commencing on January 24, 2013, and continuing on the same day of each month thereafter.00 Interest shall be payable at the same time as the principal payments. Any outstanding principal and accrued interest shall be due and payable in full on December 24, 2017. At June 30, 2013, $2,250 is outstanding on the Term Note.

AtThe ~~March 31,~~Company ~~2013~~paid a closing fee of $4 on the Line of Credit and ~~December~~a closing fee of $4 on the term loan. Debt issue costs amortized to interest expense were $1 and $2 for the three and six months ended June 3130, ~~2012,~~2013. ~~the~~Net ~~Company~~debt isissue incosts ~~compliance~~at ~~with~~June 30, ~~its~~2013 ~~covenants~~were ~~with PNC~~$6.

5Interest expense under the PNC credit facility, including the Line of Credit and Term note and excluding amortization of debt issue costs, was $30 and $73 for the three and six months ended June 30, 2013.

~~NOTE~~Covenants ~~G—DEBT~~

~~Long-term~~Terms ~~debt~~of the PNC Credit Facility require the Company to meet two financial covenants:

~~Long-term~~5 ~~debt consists of the following:~~

	March 31,2013		December 31,2012
Term note, as described above (See Note F—Senior Credit Facility)	$	2,375	$	2,500
Note payable to bank in monthly installments of $3 through November 16, 2014, plus interest at 8% secured by a security interest in certain equipment		54		63
Capital lease obligations		16		944
		2,445		3,507
Less: current portion		550		1,478
	$	1,895	$	2,029

~~Aggregate~~• ~~maturities~~Maintain as of ~~long-term~~the ~~debt~~end ~~for~~of ~~the~~each ~~periods~~fiscal ~~subsequent~~quarter, on a rolling four quarters basis, a ratio of Funded Debt to ~~March~~ EBITDA of less than or equal to 2.50 to 1.00 at close and at December 31, ~~2013~~2012; onand a2.25 ~~calendar year~~to ~~basis~~1.00 ~~are~~at asDecember ~~follows:~~31, 2013 and thereafter,

Years Ending December 31,	Amount
2013	$	425
2014		520
2015		500
2016		500
2017		500
	$	2,445

•

Maintain as of the end of each fiscal quarter, on a rolling four quarters basis, a Fixed Charge Coverage Ratio of greater than or equal to 1.25 to 1.00.

~~Following~~At isJune 30, a2013 ~~summary~~and ofDecember 31, ~~interest~~2012, ~~expense for~~ the ~~three~~Company ~~months~~was ~~ended~~in ~~March 31,~~compliance ~~2013~~with ~~and~~its covenants ~~April 1,~~with ~~2012:~~PNC.

	Three Months Ended
	March 31,2013		April 1,2012
Interest expense on principal	$	70	$	185
Amortization of debt issue costs		1		8
	$	71	$	193

NOTE G—DEBT

~~NOTE~~Long-term ~~H—OPERATING~~debt ~~LEASES~~

~~The~~Long-term ~~Company~~debt ~~leases~~consists ~~its Hammond, Indiana, and Boardman, Ohio facilities from companies controlled by its Chairman~~ of the ~~Board~~ ~~and~~following: stockholder under agreements expiring in August 2015. Renewal options are available for each property. The Company leases the Hagerstown, Maryland facility from a partnership, one partner of which is an officer of one of the Company’s subsidiaries, under an agreement expiring in July 2016. The Company leases the Massillon, Ohio facility from a partnership, one partner of which is a former officer of one of the Company’s subsidiaries, under an agreement expiring in November 2017. The Company leases its Merrillville, Indiana, Huntington, West Virginia, and Visalia, California facilities from unrelated parties under agreements expiring before November 2016. Total rent expense for all facility leases was approximately $315 and $347 for the three months ended March 31, 2013 and April 1, 2012, respectively, including $226 and $234, respectively, to related parties.

The Company leased a facility in South Bend for its previous corporate offices from its Chairman of the Board and stockholder. This lease expired in August 2012. As a result of the closure and relocation of the corporate office to Massillon in 2010, the Company no longer uses this office space.


	June 30,		December 31,
	2013		2012
Term note, as described above (See Note F—Senior Credit Facility)	$	2,250	$	2,500
Note payable to bank in monthly installments of $3 through November 16, 2014, plus interest at 8% secured by a security interest in certain equipment		46		63
Capital lease obligations		3		944

		2,299		3,507
Less: current portion		538		1,478

	$	1,761	$	2,029

~~NOTE~~Aggregate ~~I—RELATED~~maturities ~~PARTY~~of ~~TRANSACTIONS~~long-term debt for the periods subsequent to June 30, 2013 on a calendar year basis are as follows:

The Company retired three subordinated notes due to related parties in late 2012 with initial funding under the PNC credit facility. Outstanding aggregate balances on these notes were $2,180 as of December 24, 2012. Interest expense related to these notes was $93 for the three months ended April 1, 2012.


Years Ending December 31,	Amount
2013	$	279
2014		520
2015		500
2016		500
2017		500

	$	2,299

6Following is a summary of interest expense for the three and six months ended June 30, 2013 and July 1, 2012:

See Note H—Operating Lease Commitments regarding related party leases, which the Company believes to be on terms comparable to lease terms available in arms length transactions.


	Three Months Ended				Six Months Ended
	June 30, 2013		July 1, 2012		June 30, 2013		July 1, 2012
Interest expense on principal	$	38	$	166	$	108	$	351
Amortization of debt issue costs		1		8		2		16

	$	39	$	174	$	110	$	367

NOTE JH—~~INCOME~~OPERATING ~~(LOSS)~~LEASES ~~PER SHARE~~

The Company ~~accounts~~leases ~~for~~its ~~income~~Hammond, ~~(loss)~~Indiana, ~~per~~and ~~common~~Boardman, ~~share~~Ohio facilities from companies controlled by its Chairman of the Board and stockholder under agreements expiring in August 2015. Renewal options are available for each property. The Company leases the ~~provisions~~Hagerstown, Maryland facility from a partnership, one partner of ~~Accounting~~which ~~Standards~~is ~~Codification~~an officer of one of the Company’s ~~260~~subsidiaries, ~~Earnings~~under ~~Per~~an ~~Share~~agreement ~~(“ASC 260”)~~expiring in July 2016. The Company leases the Massillon, Ohio facility from a partnership, one partner of which ~~requires~~is a ~~dual~~former ~~presentation~~officer of ~~basic~~one ~~and~~of ~~diluted~~the ~~income~~Company’s ~~(loss)~~subsidiaries, ~~per~~under ~~common~~an ~~share~~agreement expiring in November 2017. ~~Basic~~The ~~income~~Company ~~(loss)~~leases ~~per~~its ~~common~~Merrillville, ~~share~~Indiana, ~~excludes~~Huntington, ~~dilution~~West Virginia, and isVisalia, ~~computed~~California byfacilities ~~dividing~~from ~~income~~unrelated ~~available~~parties tounder agreements expiring before November 2016. Total rent expense for all facility leases was approximately ~~common~~$317 ~~stockholders~~and by$347 for the ~~weighted~~three ~~average~~months ~~number~~ended ofJune 30, ~~common~~2013 ~~shares~~and ~~outstanding~~July 1, 2012, respectively, and $635 and $694 for the ~~year~~six months ended June 30, 2013 and July 1, 2012, respectively. ~~Diluted~~Included ~~income~~in ~~(loss)~~rent ~~per~~expense ~~common~~is ~~share~~rent that is ~~computed~~paid ~~assuming~~to related ~~the~~parties. ~~conversion~~Total ofrent ~~common~~paid ~~stock~~to ~~equivalents,~~related ~~when~~parties ~~dilutive.~~for the six months ended June 30,

~~For~~6 the three months ended March 31, 2013, the Company’s common stock equivalents, consisting of warrants to purchase 9,079 shares of common stock and options to purchase 82,000 shares of common stock issued to employees under the 2005 Stock Option Plan, were not included in computing diluted loss per share because the effect of including the warrants and options would have been anti-dilutive.

~~NOTE~~ 2013 ~~K—CONCENTRATIONS~~and OFJuly 1, ~~CREDIT~~2012 ~~RISK~~was $452 and $468, respectively. Total rent paid to related parties for the three months ended June 30, 2013 and July 1, 2012 was $226 and $234, respectively.

The Company ~~grants~~leased ~~credit,~~a ~~generally~~facility ~~without collateral, to its customers, which are primarily~~ in ~~the~~South ~~steel,~~Bend ~~metal working,~~for ~~scrap~~its ~~and~~previous ~~rail~~corporate ~~industries.~~offices ~~Consequently,~~from ~~the Company is subject to potential credit risk related to changes in economic conditions within those industries. However, management believes that~~ its ~~billing~~Chairman ~~and collection policies are adequate to minimize the potential credit risk. At March 31, 2013 and December 31, 2012, approximately 37% and 36%, respectively,~~ of ~~gross accounts receivable were due from entities in~~ the ~~rail~~Board ~~industry, respectively,~~ and ~~approximately 23% and 22%,~~stockholder. ~~respectively,~~This oflease ~~gross~~expired ~~receivables were due from entities~~ in ~~the~~August ~~steel, metal working and scrap industries~~2012. ~~Two~~As ~~customers,~~a ~~combined,~~result ~~doing~~of ~~business with~~ the ~~Company’s~~closure ~~Industrial Services~~ and ~~Rail~~relocation ~~Services segments, accounted for approximately 37% and 36%~~ of ~~total consolidated revenue for~~ the ~~three~~corporate ~~months~~office ~~ended~~to ~~March 31,~~Massillon ~~2013~~in ~~and April 1~~2010, ~~2012, respectively. For~~ the ~~three~~Company ~~months~~no ~~ended~~longer ~~March 31,~~uses ~~2013,~~this ~~these~~office ~~two customers accounted for 20% and 17% of the total consolidated revenue, respectively~~space. ~~The loss of any of these customers would have a material adverse effect on the Company.~~

NOTE LI—~~COMMITMENTS~~RELATED ~~AND~~PARTY ~~CONTINGENCIES~~TRANSACTIONS

~~Collective~~The ~~bargaining~~Company ~~agreements~~retired three subordinated notes due to related parties in late 2012 with initial funding under the PNC credit facility. Outstanding aggregate balances on these notes were $2,180 as of December 24, 2012. Interest expense related to these notes was $80 and $173 for the three and six months ended July 1, 2012, respectively.

AtSee ~~March 31,~~Note ~~2013~~H—Operating ~~and~~Lease ~~December 31,~~Commitments ~~2012,~~regarding ~~approximately~~related ~~12%~~party ofleases, which the Company’s ~~employees~~believes ~~were~~to ~~covered~~be byon ~~collective~~terms ~~bargaining~~comparable to lease ~~agreements~~terms available in arms length transactions.

~~Warranty~~NOTE ~~reserves~~J—INCOME PER SHARE

The ~~Company~~following ~~warrants~~table ~~workmanship~~details ~~after~~ the ~~sale~~computation of ~~its~~basic ~~products~~ and ~~services,~~diluted ~~generally~~earnings ~~for~~per acommon ~~period~~share offrom ~~one~~continuing ~~year. An accrual~~ operations for ~~warranty costs is recorded based upon~~ the ~~historical~~periods ~~level~~presented: ~~of warranty claims and management’s estimates of future costs.~~

Product warranty activity for the three months ended March 31, 2013 and April 1, 2012 is as follows:


	Three months ended				Six months ended
	June 30,		July 1,		June 30,		July 1,
	2013		2012		2013		2012
Net income	$	391	$	754	$	268	$	1,569
Weighted-average common shares outstanding (basic)		11,684,800		11,785,826		11,684,395		11,785,826
Effect of dilutive securities from equity awards		90,265		391,197		90,670		381,197

Weighted-average common shares outstanding (diluted)		11,775,065		12,177,023		11,775,065		12,167,023
Basic earnings per common share	$	0.03	$	0.06	$	0.02	$	0.13

Diluted earnings per common share	$	0.03	$	0.06	$	0.02	$	0.13

	Three months ended
	March 31,2013			April 1,2012
Balance at beginning of period	$	163		$	84
Warranty claims paid		(29	)		(23	)
Warranty expense (recovery)		(16	)		31
Balance at end of period	$	118		$	92

The weighted-average common shares outstanding (diluted) computation is not impacted during any period where the exercise price of a stock option is greater than the average market price. As of June 30, 2013, there were no warrants and 1,000 stock options outstanding that were anti-dilutive. As of July 1, 2012 there were 308,197 warrants and 1,000 stock options outstanding that were anti-dilutive.

7NOTE K—CONCENTRATIONS OF CREDIT RISK

~~Employment~~The ~~Agreement~~Company grants credit, generally without collateral, to its customers, which are primarily in the steel, metal working, scrap and rail industries. Consequently, the Company is subject to potential credit risk related to changes in economic conditions within those industries. However, management believes that its billing and collection policies are adequate to minimize the potential credit risk. At June 30, 2013 and December 31, 2012, approximately 32% and 36%, respectively, of gross accounts receivable were due from entities in the rail industry, respectively, and approximately 29% and 22%, respectively, of gross receivables were due from entities in the steel, metal working and scrap industries. Two customers, combined, doing business with the Company’s Industrial Services and Rail Services segments, accounted for approximately 37% and 36% of total consolidated revenue for the three and six months ended June 30, 2013 and July 1, 2012, respectively. For the three and six months ended June 30, 2013, these two customers accounted for 21% and 16% of the total consolidated revenue, respectively. The loss of any of these customers would have a material adverse effect on the Company.

OnNOTE ~~June 18,~~L—COMMITMENTS ~~2010,~~AND ~~the~~CONTINGENCIES Company entered into an employment agreement with its President and CEO, Michael P. Moore. The agreement was for an initial one-year term, subject to earlier termination as provided in the agreement. At each year-end, the agreement will automatically renew for successive one-year periods unless either party, at least three months before the end of the initial term or any renewal term, requests termination or renegotiation of the agreement. The employment agreement provides for certain benefits to the executive if employment is terminated by the Company for cause, by the executive with good reason, or due to death or disability. The benefits include continuation of the executive’s base salary for six months, any earned but unpaid profit-sharing or incentive bonus, stock option and company-paid health insurance for six months. As a result of the pending merger with a subsidiary of IES, no changes are anticipated to this agreement.

~~NOTE~~Collective ~~M—FAIR~~bargaining ~~VALUE~~agreements ~~OF FINANCIAL INSTRUMENTS~~

~~The~~At ~~following~~June 30, ~~methods~~2013 and ~~assumptions~~December 31, ~~were~~2012, ~~used~~approximately to12% ~~estimate~~of the ~~fair~~Company’s ~~value~~employees ofwere ~~each~~covered ~~class~~by ofcollective ~~financial~~bargaining ~~instrument:~~ agreements.

~~Cash~~7 ~~and cash equivalents, accounts receivable, accounts payable and accrued expenses~~

~~Debt~~Warranty reserves

AsThe ofCompany ~~March 31,~~warrants ~~2013~~workmanship ~~and~~after ~~December 31, 2012, rates currently available to~~ the ~~Company~~sale ~~for~~of ~~long~~its ~~term~~products ~~borrowings with similar terms~~ and ~~remaining~~services, ~~maturities~~generally ~~are~~for ~~used~~a toperiod ~~estimate the fair value~~ of ~~existing~~ ~~borrowings~~one ~~at the present value of expected cash flows~~year. ~~Interest~~An ~~rates~~accrual ~~associated~~for towarranty costs ~~the~~is ~~Company’s~~recorded ~~debt are at variable rates,~~ based onupon ~~market rates, thus~~ the ~~debts’~~historical ~~fair~~level ~~value~~of ~~(generally~~warranty ~~based~~claims onand ~~Level~~management’s 3estimates ~~inputs)~~of ~~approximates~~future ~~its carrying value~~costs.

~~NOTE~~Product warranty ~~N—SEGMENT~~activity ~~INFORMATION~~for the three and six months ended June 30, 2013 and July 1, 2012 is as follows:

The Company operates in two segments: Industrial Services and Rail Services.


	Three months ended						Six months ended
	June 30, 2013			July 1, 2012			June 30, 2013			July 1, 2012
Balance at beginning of period	$	118		$	91		$	163		$	84
Warranty claims paid		(43	)		(3	)		(72	)		(26	)
Warranty expense		25			28			9			58

Balance at end of period	$	100		$	116		$	100		$	116

~~The~~Employment ~~Industrial~~Agreement Services segment is primarily engaged in providing maintenance and repair services to the electric motor industry and repairing, remanufacturing and manufacturing industrial lifting magnets for the steel and scrap industries. The Rail Services segment rebuilds and manufactures power assemblies, engine parts, and other components related to large diesel engines for the rail and marine industries.

~~The~~On June 18, 2010, the Company ~~evaluates~~entered into an employment agreement with its President and CEO, Michael P. Moore. The agreement was for an initial one-year term, subject to earlier termination as provided in the ~~performance~~agreement. At each year-end, the agreement will automatically renew for successive one-year periods unless either party, at least three months before the end of ~~its~~the initial ~~business~~term ~~segments~~or ~~based~~any onrenewal ~~net~~term, ~~income~~requests termination or ~~loss~~renegotiation of the agreement. ~~Corporate~~ ~~administrative~~The ~~and~~employment ~~support~~agreement ~~services~~provides for certain benefits to the executive if employment is terminated by the Company ~~are~~for ~~allocated~~cause, toby the ~~business~~executive ~~segments~~with good reason, ~~except~~or due to death or disability. The benefits include continuation of the executive’s base salary for ~~corporate~~six ~~depreciation~~months, any earned but unpaid profit-sharing or incentive bonus, stock option and ~~interest~~company-paid ~~expense~~health insurance for six months. As a result of the pending merger with a subsidiary of IES, no changes are anticipated to this agreement.

~~Summarized~~NOTE ~~financial~~M—FAIR ~~information~~VALUE ~~concerning~~OF ~~the~~FINANCIAL ~~Company’s~~INSTRUMENTS ~~reportable segments as of and for the three months ended March 31, 2013 and April 1, 2012 is shown in the following tables:~~

8The following methods and assumptions were used to estimate the fair value of each class of financial instrument:

2013	IndustrialServices			RailServices		Corporate			IntersegmentEliminations		ThreemonthsendedMarch 31,2013
External revenue:
Service revenue	$	6,039		$	—	$	—		$	—	$	6,039
Product sales		1,050			4,352		—			—		5,402
Deprecation included in the cost of revenues		218			47		—			—		265
Gross profit		1,350			1,174		—			—		2,524
Other depreciation & amortization		113			1		18			—		132
Interest expense		16			1		54			—		71
Net income (loss)		(323	)		647		(448	)		—		(124	)
Capital expenditures		—			188		—			—		188
Total assets at March 31, 2013		18,429			4,885		2,984			—		26,298
2012	IndustrialServices			RailServices		Corporate			IntersegmentEliminations		ThreemonthsendedApril 1,2012
External revenue:
Service revenue	$	6,921		$	—	$	—		$	—	$	6,921
Product sales		1,304			4,253		—			—		5,557
Deprecation included in the cost of revenues		221			44		—			—		265
Gross profit		1,820			1,208		—			—		3,028
Other depreciation & amortization		113			—		32			—		145
Interest expense		35			2		156			—		193
Net income (loss)		244			740		(169	)		—		815
Capital expenditures		38			78		18			—		134
Total assets at December 31, 2012		18,951			4,681		2,813			—		26,445

Cash and cash equivalents, accounts receivable, accounts payable and accrued expenses

9The carrying amounts of these items are a reasonable estimate of their fair values because of the current maturities of these instruments.

~~ITEM 2. MANAGEMENT’S~~Debt ~~DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

~~Overview~~As of June 30, 2013 and December 31, 2012, rates currently available to the Company for long term borrowings with similar terms and remaining maturities are used to estimate the fair value of existing borrowings at the present value of expected cash flows. Interest rates associated to the Company’s debt are at variable rates, based on market rates, thus the debts’ fair value (generally based on Level 3 inputs) approximates its carrying value.

~~The~~NOTE ~~Company~~N—SEGMENT ~~began~~INFORMATION operations in July 2000 with the acquisition of the operating assets of an electric motor and magnet shop in South Bend, Indiana. Through acquisitions and internal growth, we expanded the nature of our operations, as well as our geographic presence, until the economic crisis forced retrenchment.

WeThe ~~provide electrical~~Company ~~and~~operates ~~mechanical~~in ~~solutions~~two tosegments: ~~industrial,~~Industrial ~~commercial~~Services and ~~institutional~~Rail ~~customers primarily in the United States~~Services. ~~At March 31, 2013, we operated primarily in two business segments:~~

•The Industrial Services~~—Providing~~ ~~maintenance~~segment ~~and~~is ~~repair~~primarily ~~services~~engaged toin ~~several~~providing ~~industries including electric motor repair and rebuilding;~~ maintenance and repair ofservices ~~electro-mechanical~~to ~~components for~~ the ~~utility~~electric ~~and~~motor ~~wind power~~ industry; and ~~the~~ repairing, ~~manufacturing,~~remanufacturing and ~~remanufacturing~~manufacturing of industrial lifting magnets for the steel and scrap industries. ToThe ~~supplement~~Rail ~~our~~Services ~~service~~segment ~~offerings,~~rebuilds weand ~~also~~manufactures ~~provide~~power ~~on-site~~assemblies, ~~maintenance~~engine ~~services~~parts, and ~~custom~~other ~~and~~components ~~standardized~~related ~~industrial~~to ~~maintenance~~large ~~training~~diesel ~~programs~~engines for the rail and marine industries.

•The ~~Rail~~Company ~~Services—Manufacturing~~evaluates ~~and~~the ~~remanufacturing~~performance of ~~power~~its ~~assemblies~~business ~~for~~segments ~~large~~based ~~diesel~~on ~~engines~~net income or loss. Corporate administrative and support services for the ~~rail,~~Company ~~marine~~are allocated to the business segments, except for corporate depreciation and ~~power~~interest ~~industries~~expense.

~~Recent~~8 ~~Developments~~

InSummarized ~~December~~financial ~~2012,~~information weconcerning ~~entered into a new credit agreement with PNC Bank, National Association (“PNC Bank”) (~~the ~~“PNC~~Company’s ~~Credit Facility”)~~reportable ~~which~~segments ~~established~~as ~~a $6.5 million line~~ of ~~credit note (the “Line of Credit”)~~ and ~~a $2.5 million term note (the “Term Note,” and together with the Line of Credit, the “PNC Credit Facility”). The PNC Credit~~ ~~Facility~~for ~~replaced our previous credit facility with Wells Fargo Bank, N.A. (“Wells Fargo”) (~~the ~~“Wells~~three ~~Fargo Credit Facility”). Initial borrowings under the PNC Credit Facility were used to repay outstanding obligations under the Wells Fargo Credit Facility~~ and tosix ~~pay~~months ~~off~~ended our outstanding subordinated debt. We believe that the more favorable terms under the PNC Credit Facility compared to those in the Wells Fargo Credit Facility primarily reflect our improved financial and operating results and our enhanced liquidityJune 30, as2013 ~~well as more favorable conditions in the credit markets. The PNC Credit Facility allows us to significantly reduce our borrowing rates compared to the rates under the Wells Fargo Credit Facility~~ and ~~our~~ ~~subordinated debt~~July 1, as2012 ~~well~~is asshown ~~our banking fees. The PNC Credit Facility contains certain financial and other covenants. In the event we are unable to achieve the results required~~ in ~~our covenants, we may have future debt covenant violations and~~ the ~~lender~~following ~~could~~tables: claim a default and demand repayment. If PNC Bank demands immediate repayment of the outstanding borrowings under the PNC Credit Facility, we do not currently have means to repay or refinance the amounts that would be due. If demanded, and if we were unable to repay or refinance the amounts due under the PNC Credit Facility, PNC Bank could exercise its contractual remedies, including foreclosing on substantially all of our assets, which we pledged as collateral to secure our obligations under the PNC Credit Facility.

Significant Accounting Policies


2013	Industrial Services			Rail Services		Corporate			Intersegment Eliminations		Three months ended June 30, 2013
External revenue:
Service revenue	$	6,420		$	—	$	—		$	—	$	6,420
Product sales		1,009			4,426		—			—		5,435
Deprecation included in the cost of revenues		222			48		—			—		270
Gross profit		1,849			1,053		—			—		2,902
Other depreciation & amortization		114			1		26			—		141
Interest expense		—			2		37			—		39
Net income (loss)		301			572		(482	)		—		391
Capital expenditures		88			75		—			—		163
Total assets at June 30, 2013		18,280			4,473		2,641			—		25,394

2012	Industrial Services			Rail Services		Corporate			Intersegment Eliminations		Three months ended July 1, 2012
External revenue:
Service revenue	$	7,705		$	—	$	—		$	—	$	7,705
Product sales		1,244			4,313		—			—		5,557
Deprecation included in the cost of revenues		224			44		—			—		268
Gross profit		1,890			1,420		—			—		3,310
Other depreciation & amortization		115			—		28			—		143
Interest expense		35			2		137			—		174
Net income (loss)		40			915		(201	)		—		754
Capital expenditures		99			6		32			—		137
Total assets at December 31, 2012		18,951			4,681		2,813			—		26,445

2013	Industrial Services			Rail Services		Corporate			Intersegment Eliminations		Six months ended June 30, 2013
External revenue:
Service revenue	$	12,459		$	—	$	—		$	—	$	12,459
Product sales		2,059			8,778		—			—		10,837
Deprecation included in the cost of revenues		440			95		—			—		535
Gross profit		3,200			2,227		—			—		5,427
Other depreciation & amortization		227			2		44			—		273
Interest expense		16			3		91			—		110
Net income (loss)		(22	)		1,219		(929	)		—		268
Capital expenditures		173			178		—			—		351
Total assets at June 30, 2013		18,280			4,473		2,641			—		25,394

2012	Industrial Services			Rail Services		Corporate			Intersegment Eliminations		Six months ended July 1, 2012
External revenue:
Service revenue	$	14,627		$	—	$	—		$	—	$	14,627
Product sales		2,547			8,566		—			—		11,113
Deprecation included in the cost of revenues		445			88		—			—		533
Gross profit		3,710			2,628		—			—		6,338
Other depreciation & amortization		228			—		52					280
Interest expense		70			4		293			—		367
Net income (loss)		284			1,655		(370	)				1,569
Capital expenditures		137			84		50			—		271
Total assets at December 31, 2012		18,951			4,681		2,813			—		26,445

~~The~~9 significant accounting polices used in preparation of the Company’s consolidated financial statements are disclosed in Note B of the Notes to the Consolidated Financial Statements within our Annual Report on Form 10-K for the year ended December 31, 2012. No additional significant accounting policies have been adopted during the three months ended March 31, 2013.

~~The~~ITEM ~~Company~~2. ~~does~~MANAGEMENT’S ~~not~~DISCUSSION ~~expect~~AND ~~the~~ANALYSIS ~~adoption~~OF ofFINANCIAL ~~recently~~CONDITION ~~issued~~AND ~~accounting~~RESULTS ~~pronouncements~~OF ~~to have a significant impact on the Company’s results of operations, financial position or cash flows.~~ OPERATIONS

10Overview

~~Results~~The Company began operations in July 2000 with the acquisition of the ~~Operations~~ operating assets of an electric motor and magnet shop in South Bend, Indiana. Through acquisitions and internal growth, we expanded the nature of our operations, as well as our geographic presence, until the economic crisis forced retrenchment.

~~Three~~We ~~Months~~provide ~~Ended~~electrical ~~March 31,~~and ~~2013~~mechanical ~~Compared~~solutions to ~~Three~~industrial, ~~Months~~commercial ~~Ended~~and ~~April~~institutional customers primarily in the United States. At June 130, ~~2012~~2013, we operated primarily in two business segments:

~~Revenues.~~• ~~Total~~Industrial ~~revenues~~Services—Providing ~~decreased~~maintenance byand ~~$1,037~~repair orservices ~~8.3%~~ to ~~$11,441~~several ~~for~~industries ~~the~~including ~~three~~electric ~~months~~motor ~~ended~~repair ~~March 31,~~and ~~2013~~rebuilding; ~~from~~maintenance ~~$12,478~~and ~~for~~repair ~~the three months ended April 1, 2012. This decrease is comprised~~ of anelectro-mechanical ~~$882~~components orfor ~~12.7%~~the ~~decrease~~utility ~~in service revenues~~ and awind ~~$155~~power orindustry; ~~2.8%~~and ~~decrease~~the inrepairing, ~~product~~manufacturing, ~~sales.~~and ~~Industrial~~remanufacturing ~~Services~~of ~~revenues~~industrial ~~decreased~~lifting bymagnets ~~$1,136 or 13.8%, while revenues~~ for the ~~Rail~~steel ~~Services~~and ~~segment~~scrap ~~increased $99 or 2~~industries.~~3%.~~ ~~The~~To ~~decrease~~supplement inour ~~the~~ service ~~revenues~~ ~~represents low demand in the market place~~offerings, ~~primarily~~we ~~due~~also toprovide ~~customer~~on-site ~~“fiscal~~maintenance ~~cliff”~~services ~~concerns~~and ~~during~~custom ~~the~~and ~~first~~standardized ~~half~~industrial ofmaintenance ~~the~~training ~~three months ended March 31, 2013~~programs. ~~The increase in product sales is primarily related to demand for engine components produced by our Rail Services unit.~~

~~Gross~~• ~~Profit. Total~~Rail ~~gross~~Services—Manufacturing profit for the three months ended March 31, 2013 was $2,524 or 22.1% of total revenues compared to $3,028 or 24.3% of total revenues for the three months ended April 1, 2012. This represents a decrease of $504 or 16.6%. The decrease is comprised of a decline in gross profits of $385 or 38.0% in service revenues and aremanufacturing ~~decrease in gross profits~~ of ~~$119~~power orassemblies ~~5.9% in product sales. Industrial Services gross profit decreased by $470 or 25.8%, while gross profit~~ for ~~the~~large ~~Rail~~diesel ~~Services~~engines ~~decreased $34 or 2.8%. The decline in gross profits associated with service revenues is due to a decline in sales volume~~ for the ~~three months ended March 31~~rail, ~~2013. Additionally~~marine, asand apower ~~result of a “soft” market, we were required to reduce our selling price, consequentially our gross profit, on various projects, in order to obtain the projects~~industries. ~~Although product sales reflected a slight increase in sales, gross profit decreased due to mix of customer sales, as we experienced an increase in sales for lower gross profit customers.~~

~~Selling,~~Recent ~~General~~Developments and Administrative Expenses. Selling, general and administrative expenses attributed to operations increased to $2,578 for the three months ended March 31, 2013 from $2,014 for the three months ended April 1, 2012. This is an increase of $564 or 28.0%. Selling expenses were $725 or 6.3% of total revenues for the three months ended March 31, 2013 and $726 or 5.8% of total revenues for the three months ended April 1, 2012. While selling expenses remained constant for the three months ended March 31, 2013, when compared to the three months ended April 1, 2012, commissions declined as a result of the decline in sales. However these savings were offset by recruiting fees incurred to hire additional sales personnel. Selling expenses for Industrial Services were $545 or 7.7% of Industrial Services revenue for the three months ended March 31, 2013 and $569 or 6.9% of Industrial Services revenues for the three months ended April 1, 2012. Selling expenses for Rail Services were $157 or 3.6% of Rail Services revenues for the three months ended March 31, 2013 and $148 or 3.5% of Rail Services revenues for the three months ended April 1, 2012. General and administrative expenses increased $565 or 43.9% to $1,853 for the three months ended March 31, 2013 from $1,288 for the three months ended April 1, 2012. This increase is due to professional fees incurred related to the preparation, processing and filing of our Form S-1 registration statement with the Securities and Exchange Commission, and professional fees incurred related to our pending merger with IES. General and administrative expenses were 16.2% and 10.3% of total revenues for three months ended March 31, 2013 and April 1, 2012, respectively. General and administrative expenses for Industrial Services were 15.7% of Industrial Service revenues for the three months ended March 31, 2013 and 11.8% of Industrial Services revenues for the three months ended April 1, 2012. General and administrative expenses for Rail Services were 8.5% of Rail Services revenues for the three months ended March 31, 2013 and 7.5% of Rail Service revenues for the three months ended April 1, 2012.

~~Income~~As ~~(Loss)~~previously ~~from~~disclosed ~~Operations. Income~~on ~~from~~the ~~operations~~Company’s ~~declined $1~~March 13,~~068~~ ~~from~~2013 ~~$1,014~~and ~~for the three months ended April~~July 111, ~~2012~~ to2013 aForm ~~loss~~8-K ofboth ~~$54~~filed ~~for~~with the ~~three~~Securities ~~months~~and ~~ended~~Exchange ~~March 31~~Commission, ~~2013.~~the ~~The~~Company ~~decline~~entered isinto ~~directly~~a ~~attributable~~plan toof ~~decreased~~merger ~~sales~~by and among ~~gross~~Integrated ~~profit~~Electrical ~~and~~Services, ~~increased~~Inc. ~~general~~(“IES”) and ~~administrative~~the ~~expenses~~Company, dated as ~~explained~~of ~~above, for the three months ended~~ March 3113, 2013. ~~Industrial~~(the ~~Services~~“Merger ~~generated~~Agreement”), awhereby ~~loss~~the ~~from~~Company ~~operations~~will ofmerge ~~$323~~with ~~for~~and ~~the~~into ~~three months ended March 31~~IES, ~~2013.~~with ~~This is~~ a ~~decline~~subsidiary of ~~$567~~IES ~~from~~as ~~income~~the ~~from~~surviving ~~operations~~entity. Stockholders of ~~$244~~the ~~for~~Company ~~the~~will ~~three~~have ~~months~~the ~~ended~~right ~~April 1,~~to ~~2012.~~elect ~~Rail Services~~to ~~generated~~receive ~~income~~a ~~from~~guaranteed ~~operations~~minimum of $~~647~~1.415 ~~for~~per ~~the~~share ~~three~~in ~~months~~cash, ~~ended~~or ~~March 31,~~have ~~2013~~their orshares aconverted ~~decline~~to shares of ~~$93~~IES ~~from~~or ~~income~~a ~~from~~mix ~~operations~~ of ~~$740~~cash ~~for~~consideration ~~the~~and ~~three~~stock ~~months~~consideration, ~~ended~~depending ~~April 1,~~if ~~2012~~certain conditions are met.

~~Interest~~On ~~Expense~~April 26, 2013, a joint prospectus and ~~Other~~proxy ~~Expense~~statement (~~Income~~Form S-4). ~~Interest~~was ~~expense~~filed ~~decreased~~with ~~for~~ the ~~three~~Securities and ~~months~~Exchange ~~ended~~Commission ~~March 31,~~(“SEC”). ~~2013~~Comments tohave ~~$71~~been received from ~~$193~~ ~~for~~ the ~~three months April 1~~SEC, ~~2012.~~and ~~This~~joint ~~reduction~~responses ishave ~~the~~been ~~result~~submitted ofto the ~~Company~~SEC ~~entering~~on ~~into~~each aof ~~new~~the ~~credit~~SEC’s ~~facility~~comments. ~~with~~On ~~PNC~~July 30, in2013, ~~December~~Amendment ~~2012~~#3 ~~and~~of nothe ~~longer~~Form ~~maintaining any high~~S-~~cost~~4, ~~subordinated~~along ~~debt.~~with ~~Other~~responses ~~Income decreased $3~~ to ~~$6 for~~ ~~the~~SEC ~~three months ended March 31~~comments, ~~2013~~was ~~from~~submitted $9to ~~of income for~~ the ~~three months ended April 1, 2012~~SEC.

~~Provision~~In ~~for~~December 2012, we entered into a new credit agreement with PNC Bank, National ~~Income~~Association ~~Taxes~~(“PNC Bank”) (the “PNC Credit Facility”) which established a $6.5 ~~Prior~~million toline ~~the~~of ~~fourth~~credit ~~quarter~~note (the “Line of ~~fiscal~~Credit”) ~~2012~~and a $2.5 million term note (the “Term Note,” and together with the ~~amount~~Line of Credit, ~~objectively-measured~~the ~~negative~~“PNC ~~evidence~~Credit ~~related~~Facility”). The PNC Credit Facility replaced our previous credit facility with Wells Fargo Bank, N.A. (“Wells Fargo”) (the “Wells Fargo Credit Facility”). Initial borrowings under the PNC Credit Facility were used to ~~cumulative~~repay ~~losses~~outstanding inobligations under the ~~most~~Wells ~~recent~~Fargo ~~three-year~~Credit ~~period~~Facility ~~outweighed~~and to pay off our outstanding subordinated debt. We believe that the ~~available~~more ~~positive~~favorable ~~evidence~~terms ~~regarding~~under the ~~realization~~PNC Credit Facility compared to those in the Wells Fargo ofCredit Facility primarily reflect our ~~deferred~~improved ~~tax~~financial ~~assets~~and operating results and our enhanced liquidity, as well as more favorable conditions in the credit markets. ByThe PNC Credit Facility allows us to significantly reduce our borrowing rates compared to the ~~end~~rates under the Wells Fargo Credit Facility and our subordinated debt, as well as our banking fees. The PNC Credit Facility contains certain financial and other covenants. In the event we are unable to achieve the financial objectives required in our covenants, we may have future debt covenant violations and the lender could claim a default and demand repayment. If PNC Bank demands immediate repayment of ~~2012~~the outstanding borrowings under the PNC Credit Facility, ~~cumulative~~we do ~~taxable~~not ~~losses~~currently have means to repay or refinance the amounts that would be due. If demanded, and if we were ~~offset~~unable byto ~~recent~~repay or refinance the amounts due under the PNC Credit Facility, PNC Bank could exercise its contractual remedies, including foreclosing on substantially all of our assets, which we pledged as collateral to secure our obligations under the PNC Credit Facility.

11Significant Accounting Policies

~~operating performance, which included positive results for both 2011 and 2012.~~ The ~~improvement in profitability has been driven by the complete refinancing of our debt with~~ significant ~~reductions~~accounting polices used in ~~borrowing~~preparation ~~costs and improved operational performance through restructuring and cost controls. The historical factors that drive the minimal cumulative loss have reduced significantly because~~ of the ~~significant~~Company’s ~~reduction~~consolidated infinancial ~~finance~~statements ~~costs~~are ~~through the~~disclosed ~~refinancing, and our aligned cost structure results~~ in ~~the~~Note ~~more~~B ~~likely than not realization~~ of ~~certain of~~ the ~~deferred~~Notes ~~future~~to ~~tax benefits. Hence,~~ the ~~Company~~Consolidated ~~recorded~~Financial aStatements ~~$1,942~~within ~~income~~our ~~tax~~Annual ~~benefit~~Report inon ~~fourth~~Form ~~quarter~~10-K ~~2012~~ for the ~~reversal~~year ~~of valuation~~ended ~~allowances~~December 31, ~~previously established against the deferred tax assets~~2012. ~~Due~~No toadditional significant ~~economic~~accounting ~~uncertainty~~policies ~~beyond the immediate future, we~~ have ~~reversed~~been ~~$1,942~~adopted ofduring the ~~valuation~~three ~~allowance,~~and ~~which~~six wemonths ~~reasonably~~ended ~~estimate to be realized in 2013. At March~~June 3130, 2013~~, the Company believes that the income tax benefit recognized in 2012 is appropriate~~.

~~Net~~10 Income (Loss). Net loss was $124 for the three months ended March 31, 2013 compared to net income of $815 for the three months ended April 1, 2012. This is a decrease of $939 or 115.2%. As indicated above, the decline year over year is due to reduced level of sales, reduced gross margins, and increased expenditures related to general and administrative expenses.

~~EBITDA~~Recent ~~decreased~~Accounting byPronouncements $1,084 from $1,433 for the three months ended April 1, 2012 to $349 for the three months ended March 31, 2013. The primary decrease in EBITDA is a result of decreased profitability during the three months ended March 31, 2013 versus the three months ended April 1, 2012.

	Three months ended
	March 31, 2013			April 1, 2012
EBITDA—Consolidated
Net income (loss)	$	(124	)	$	815
Add back:
Interest Expense		71			193
Depreciation and amortization		397			410
Income Taxes		5			15
EBITDA (1)	$	349		$	1,433

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flows.

~~(1)~~Results ~~EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. Our management believes EBITDA is useful in evaluating our operating performance compared to that~~ of ~~other~~Operations companies in our industry because the calculation of EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending and acquisitions. We believe EBITDA is useful to investors to assist them in getting a more accurate picture of our results from operations.

~~However, EBITDA~~Three isMonths ~~not~~Ended ~~a recognized measurement under GAAP and when analyzing our operating performance~~June 30, ~~readers~~2013 ~~should~~Compared ~~use EBITDA in addition~~ to, ~~and~~Three ~~not~~Months asEnded ~~an alternative for~~July 1, ~~net~~2012 income as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not consider certain cash requirements such as tax and debt service payments. The amounts shown for EBITDA also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.

~~Liquidity~~Revenues. Total revenues decreased by $1,407 or 10.6% to $11,855 for the three months ended June 30, 2013 from $13,262 for the three months ended July 1, 2012. This decrease is comprised of a $1,285 or 16.7% decrease in service revenues and ~~Capital~~a ~~Resources~~$122 or 2.2% decrease in product sales. Industrial Services revenues decreased by $1,520 or 17.0%, while revenues for the Rail Services segment increased $113 or 2.6%. The decrease in the service revenues represents lower than anticipated demand in railroad, steel and utility markets due to low demand by our customers during the three months ended June 30, 2013. Although product sales decreased, Rail Services product sales increased due to increased demand, and was offset by a decrease in Industrial Services product sales.

AtGross ~~March~~Profit. 31Total gross profit for the three months ended June 30, 2013, wewas ~~had~~ $32,~~342~~902 or 24.5% of ~~working~~total ~~capital~~revenues compared to $3,310 aor ~~decline~~25.0% of ~~$44~~total asrevenues ~~compared~~for tothe ~~December~~three months ended July 311, 2012. This represents a decrease of $408 or 12.3%. The decrease is comprised of an increase in ~~working~~gross ~~capital~~profits isof ~~primarily~~$146 ~~due~~or to16.3% ~~reduced~~in ~~accounts~~service ~~receivable,~~revenues and ~~an increase~~a decrease in ~~accounts~~gross ~~payable,~~profits ~~offset~~of by$554 anor ~~increase~~22.9% in ~~inventory~~product sales. Industrial Services gross profit decreased by $41 or 2.2%, while gross profit for the Rail Services decreased $367 or 25.8%. The ~~increase~~decline in ~~accounts~~gross ~~payable~~profits atassociated ~~March~~with service revenues is due to a decline in sales volume for the three months ended June 3130, 2013. The decline in Rail Services gross profit is adue ~~direct~~to ~~result~~a combination of increased ~~purchasing~~international ~~activity~~sales, ~~during~~increased ~~March~~scrap ~~2013~~charges, toincreased ~~support~~material ~~second~~costs ~~quarter~~and ~~sales~~lower ~~efforts~~Environmental Protection Agency certificate sales.

~~Net~~Selling, ~~cash~~General ~~provided~~and byAdministrative ~~operating~~Expenses. ~~activities~~Selling, ~~was~~general and administrative expenses attributed to operations increased to $12,~~085~~436 for the three months ended ~~March~~June 3130, 2013 ~~compared~~from to $~~115~~2,333 for the three months ended ~~April~~July 1, 2012. This is an increase isof ~~primarily~~$103 ~~due~~or to4.4%. ~~increased~~Selling ~~accounts~~expenses ~~payable~~were $699 or 5.9% of total revenues for the three months ended June 30, 2013 and a$729 ~~reduction~~or 5.5% of total revenues for the three months ended July 1, 2012. The decline in ~~accounts~~selling ~~receivable~~expenses for the three months ended June 30, 2013, when compared to the three months ended July 1, 2012, is due to a reduction in commissions as a result of the decline in sales. Selling expenses for Industrial Services were $533 or 7.2% of Industrial Services revenue for the three months ended June 30, 2013 and $561 or 6.3% of Industrial Services revenues for the three months ended July 1, 2012. Selling expenses for Rail Services were $149 or 3.4% of Rail Services revenues for the three months ended June 30, 2013 and $143 or 3.3% of Rail Services revenues for the three months ended July 1, 2012. General and administrative expenses increased ~~efforts~~$133 or 8.8% to ~~collect~~$1,737 ~~accounts~~for ~~receivable~~the ~~combined~~three months ended June 30, 2013 from $1,604 for the three months ended July 1, 2012. This increase is due to an increase in professional fees related to the pending merger with ~~lower~~IES ~~sales~~of ~~volume~~$214, as accounting, legal and other professional fees incurred related to our pending merger with IES were $408 and $194, for the three months ended June 30, 2013 and July 1, 2012, respectively. General and administrative expenses were 14.7% and 12.1% of total revenues for three months ended June 30, 2013 and July 1, 2012, respectively. General and administrative expenses for Industrial Services were 13.6% of Industrial Service revenues for the three months ended June 30, 2013 and 14.0% of Industrial Services revenues for the three months ended July 1, 2012. General and administrative expenses for Rail Services were 7.1% of Rail Services revenues for the three months ended June 30, 2013 and 8.1% of Rail Service revenues for the three months ended July 1, 2012.

12Income from Operations. Income from operations declined $511 from $977 for the three months ended July 1, 2012 to $466 for the three months ended June 30, 2013. The decline is directly attributable to decreased sales and gross profit and increased general and administrative expenses, as explained above, for the three months ended June 30, 2013. Industrial Services generated income from operations of $304 for the three months ended June 30, 2013. This is an increase of $230 from income from operations of $74 for the three months ended July 1, 2012. Rail Services generated income from operations of $588 for the three months ended June 30, 2013 or a decline of $340 from income from operations of $928 for the three months ended July 1, 2012.

~~For~~Interest ~~the~~Expense ~~three~~and ~~months~~Other ~~ended~~Expense. ~~March 31,~~Interest ~~2013,~~expense ~~net~~decreased ~~cash~~for ~~flows~~the ~~utilized by investing~~three ~~activities~~months ~~increased~~ended byJune 30, ~~$54~~2013 to $~~188~~39 ~~compared~~from to $~~134~~174 for the three months ~~ended April~~July 1, 2012. ~~The~~This ~~increase~~reduction is the result of the Company entering into a new credit facility with PNC in ~~capital~~December ~~spending~~2012 isand ~~due~~no tolonger ~~our~~maintaining ~~need~~any high-cost subordinated debt. Other expenses increased $13 to ~~put~~$33 afor ~~new~~the ~~roof~~three onmonths ~~our~~ended ~~Weston~~June 30, ~~West~~2013 ~~Virginia~~from ~~facility.~~$20 for the three months ended July 1, 2012.

~~Net~~11 cash provided (utilized) by financing activities decreased by $916 to a utilization of $897 as of March 31, 2013 as compared to cash provided of $19 as of April 1, 2012. This decrease is directly attributed to paying off a $917 capital lease, in February 2013, related to our Visalia, California facility.

AsProvision for Income Taxes. Prior to the fourth quarter of ~~March 31~~fiscal 2012, ~~2013~~the amount of objectively-measured negative evidence related to cumulative losses in the most recent three-year period outweighed the available positive evidence regarding the realization of our deferred tax assets. By the end of 2012, wecumulative ~~did~~taxable ~~not~~losses were offset by recent operating performance, which included positive results for both 2011 and 2012. The improvement in profitability has been driven by the complete refinancing of our debt with significant reductions in borrowing costs and improved operational performance through restructuring and cost controls. The historical factors that drive the minimal cumulative loss have ~~any~~reduced ~~material~~significantly ~~commitments~~because of the significant reduction in finance costs through the refinancing, and our aligned cost structure results in the more likely than not realization of certain of the deferred future tax benefits. Hence, the Company recorded a $1,942 income tax benefit in fourth quarter 2012 for ~~capital~~the ~~expenditures~~reversal of valuation allowances previously established against the deferred tax assets. Due to economic uncertainty beyond the immediate future, we have reversed $1,942 of the valuation allowance, which we reasonably estimate to be realized in 2013. At June 30, 2013, the Company believes that the income tax benefit recognized in 2012 is appropriate.

~~Discussion~~Net Income. Net income was $391 for the three months ended June 30, 2013 compared to net income of ~~Forward-Looking~~$754 ~~Statements~~for the three months ended July 1, 2012. This is a decrease of $363 or 48.1%. As indicated above, the decline year over year is due to reduced level of sales, reduced gross margins, and increased expenditures related to general and administrative expenses.

~~Certain~~Six ~~matters~~Months ~~described~~Ended ~~in the foregoing “Management’s Discussion and Analysis of Financial Condition and Results of Operations~~June 30,” as2013 ~~well~~Compared as other statements contained in this Quarterly Report on Form 10-Q are forward-looking statements, which include any statement that is not a historical fact, such as statements regarding our future operations, future financial position, business strategy, plans and objectives. Without limiting the generality of the foregoing, words such as “may,” “intend,” “expect,” “believe,” “anticipate,” “could,” “estimate” or “plan” or the negative variations of those words or comparable terminology are intended to ~~identify~~Six ~~forward-looking statements. A “safe harbor” for forward-looking statements is provided by the Private Securities Litigation Reform Act of 1995 (Reform Act of 1995). The Reform Act of~~Months ~~1995~~Ended ~~was adopted to encourage such forward-looking statements without the threat of litigation~~July 1, ~~provided~~2012 those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause the actual results to differ materially from those projected in the statement.

~~Management~~Revenues. ~~based~~Total ~~the forward-looking~~revenues ~~statements~~decreased ~~largely~~by on$2,444 ~~its~~or ~~current~~9.5% ~~expectations~~to ~~and~~$23,296 ~~perspectives~~for ~~about~~the ~~future~~six ~~events~~months ~~and~~ended June 30, ~~financial~~2013 ~~trends~~from ~~that~~$25,740 ~~management~~for ~~believes~~the ~~may~~six ~~affect~~months ~~our~~ended ~~financial condition~~July 1, ~~results~~2012. This decrease is comprised of ~~operations~~a $2,168 ~~business~~or ~~strategies,~~14.8% ~~short-term~~decrease ~~and long-term~~in ~~business~~service ~~objectives,~~revenues and ~~financial~~a ~~needs~~$276 or 2.5% ~~These~~decrease ~~forward-looking~~in ~~statements~~product ~~are~~sales. ~~subject~~Industrial toServices arevenues ~~number~~decreased ofby ~~risks~~$2,656 or ~~uncertainties~~15.5%, ~~and~~while ~~assumptions,~~revenues ~~that~~for ~~may~~the ~~cause~~Rail ~~actual~~Services ~~results~~segment toincreased ~~differ~~$212 ~~materially~~or ~~from~~2.5%. ~~those~~The ~~indicated~~decrease in the ~~forward-looking statements~~service revenues represents lower than anticipated demand in railroad, steel and utility markets due to, ~~among~~low ~~other~~demand ~~things,~~by ~~factors~~our ~~identified~~customers induring ~~this~~the ~~report,~~six months ~~and~~ended ~~those~~June 30, ~~identified~~2013. inThis ~~our~~includes ~~Annual~~lost ~~Report~~sales onas ~~Form~~a ~~10-K~~result ~~for~~of the “fiscal ~~year~~cliff” ~~ended~~during ~~December 31~~January 2013 and February 2013. Although product sales decreased, ~~2012~~Rail Services product sales increased due to increased demand, and was offset by a decrease in Industrial Services product sales.

~~ITEM~~Gross Profit. Total gross profit for the six months ended June 30, 2013 was $5,427 or 23.3% of total revenues compared to $6,338 or 24. ~~QUANTITATIVE~~6% ~~AND~~of ~~QUALITATIVE~~total ~~DISCLOSURES~~revenues ~~ABOUT~~for ~~MARKET~~the ~~RISK~~six months ended July 1, 2012. This represents a decrease of $911 or 14.4%. The decrease is comprised of a decrease in gross profits of $240 or 12.6% in service revenues and a decrease in gross profits of $671 or 22.9% in product sales. Industrial Services gross profit decreased by $510 or 13.8%, while gross profit for the Rail Services decreased $401 or 15.2%. The decline in gross profits associated with service revenues is due to a decline in sales volume for the six months ended June 30, 2013. The decline in Rail Services gross profit is due to a combination of increased international sales, increased scrap charges, increase material costs and lower Environmental Protection Agency certificate sales.

~~Not~~Selling, ~~Applicable~~General and Administrative Expenses. Selling, general and administrative expenses attributed to operations increased to $5,014 for the six months ended June 30, 2013 from $4,347 for the six months ended July 1, 2012. This is an increase of $667 or 15.3%. Selling expenses were $1,425 or 6.1% of total revenues for the six months ended June 30, 2013 and $1,455 or 5.7% of total revenues for the six months ended July 1, 2012. The decline in selling expenses for the six months ended June 30, 2013, when compared to the six months ended July 1, 2012, is due to a reduction in commissions as a result of the decline in sales. Selling expenses for Industrial Services were $1,078 or 7.4% of Industrial Services revenue for the six months ended June 30, 2013 and $1,130 or 6.6% of Industrial Services revenues for the six months ended July 1, 2012. Selling expenses for Rail Services were $306 or 3.5% of Rail Services revenues for the six months ended June 30, 2013 and $291 or 3.4% of Rail Services revenues for the six months ended July 1, 2012. General and administrative expenses increased $697 or 24.1% to $3,589 for the six months ended June 30, 2013 from $2,892 for the six months ended July 1, 2012. This increase is due to an increase in professional fees related to the pending merger with IES, amounting to $788 in expenditures. General and administrative expenses were 15.4% and 11.2% of total revenues for six months ended June 30, 2013 and July 1, 2012, respectively. General and administrative expenses for Industrial Services were 14.6% of Industrial Service revenues for the six months ended June 30, 2013 and 12.9% of Industrial Services revenues for the six months ended July 1, 2012. General and administrative expenses for Rail Services were 7.7% of Rail Services revenues for the six months ended June 30, 2013 and 7.8% of Rail Service revenues for the six months ended July 1, 2012.

~~ITEM~~Income from Operations. 4Income from operations declined $1,578 from $1,991 for the six months ended July 1, 2012 to $413 for the six months ended June 30, 2013. ~~CONTROLS~~ ~~AND~~The ~~PROCEDURES~~decline is directly attributable to decreased sales and gross profit and increased general and administrative expenses, as explained above, for the six months ended June 30, 2013. Industrial Services generated income from operations of $2 for the six months ended June 30, 2013. This is a decrease of $369

~~Evaluation~~12 ~~of Effectiveness of Disclosure Controls and Procedures~~

~~Our~~ ~~management,~~from ~~under~~income ~~the~~from ~~supervision~~operations ~~and with the participation~~ of ~~our~~$371 ~~Chief~~for ~~Executive Officer and Chief Accounting Officer, evaluated~~ the ~~effectiveness~~six ofmonths ~~our~~ended ~~disclosure controls and procedures in effect as of March~~July 311, ~~2013~~2012. ~~Based~~Rail onServices ~~this evaluation,~~generated ~~our~~income ~~Chief~~from ~~Executive~~operations ~~Officer~~of ~~and~~$1,243 ~~Chief~~for ~~Accounting~~the ~~Officer~~six ~~concluded~~months ~~that,~~ended ~~as of March~~June 3130, 2013, ~~our~~or ~~disclosure~~a ~~controls and procedures were effective to provide reasonable assurance that material information relating to the Company~~decline ~~and~~of ~~its~~$427 ~~consolidated~~from ~~subsidiaries~~income ~~required~~from tooperations beof ~~included in our Exchange Act reports~~$1,670 ~~including~~for ~~this Quarterly Report on Form 10-Q, is recorded, processed, summarized, and reported as required, and is made known to management, including~~ the ~~Chief Executive~~six ~~Officer~~months ~~and~~ended ~~Chief Accounting Officer~~July 1, ~~on a timely basis~~2012.

13Interest Expense and Other Expense. Interest expense decreased for the six months ended June 30, 2013 to $110 from $367 for the six months July 1, 2012. This reduction is the result of the Company entering into a new credit facility with PNC in December 2012 and no longer maintaining any high-cost subordinated debt. Other expenses increased $16 to $27 for the six months ended June 30, 2013 from $11 for the six months ended July 1, 2012.

~~Changes~~Provision for Income Taxes. Prior to the fourth quarter of fiscal 2012, the amount of objectively-measured negative evidence related to cumulative losses in ~~Internal~~the ~~Control~~most ~~Over~~recent ~~Financial~~six-year ~~Reporting~~period outweighed the available positive evidence regarding the realization of our deferred tax assets. By the end of 2012, cumulative taxable losses were offset by recent operating performance, which included positive results for both 2011 and 2012. The improvement in profitability has been driven by the complete refinancing of our debt with significant reductions in borrowing costs and improved operational performance through restructuring and cost controls. The historical factors that drive the minimal cumulative loss have reduced significantly because of the significant reduction in finance costs through the refinancing, and our aligned cost structure results in the more likely than not realization of certain of the deferred future tax benefits. Hence, the Company recorded a $1,942 income tax benefit in fourth quarter 2012 for the reversal of valuation allowances previously established against the deferred tax assets. Due to economic uncertainty beyond the immediate future, we have reversed $1,942 of the valuation allowance, which we reasonably estimate to be realized in 2013. At June 30, 2013, the Company believes that the income tax benefit recognized in 2012 is appropriate.

~~There~~Net ~~were~~Income. noNet ~~changes~~income inwas ~~our~~$268 ~~internal~~for ~~control~~the ~~over~~six ~~financial~~months ~~reporting~~ended ~~that~~June 30, ~~occurred~~2013 ~~during~~compared to net income of $1,569 for the ~~quarter~~six months ended ~~March~~July 311, ~~2013,~~2012. ~~that have~~This ~~materially~~is ~~affected~~a decrease of $1,301 or ~~are~~82.9%. ~~reasonably~~As ~~likely~~indicated above, the decline year over year is due to ~~materially~~reduced ~~affect~~level of sales, ~~our~~reduced ~~internal~~gross ~~control~~margins, ~~over~~and ~~financial~~increased ~~reporting~~expenditures related to general and administrative expenses.

14Earnings Before Interest Expense, Income Taxes, Depreciation and Amortization (“EBITDA”)

~~PART~~EBITDA ~~II—OTHER~~decreased ~~INFORMATION~~by $524 from $1,368 for the three months ended July 1, 2012 to $844 for the three months ended June 30, 2013. The primary decrease in EBITDA is a result of decreased profitability during the three months ended June 30, 2013 versus the three months ended July 1, 2012.

~~ITEM~~EBITDA decreased by $1,600 from $2,793 for the six months ended July 61, 2012 to $1,193 for the six months ended June 30, 2013. ~~EXHIBITS~~ The primary decrease in EBITDA is a result of decreased profitability during the six months ended June 30, 2013 versus the six months ended July 1, 2012.

The following documents are included or incorporated by reference in this Quarterly Report on Form 10-Q:


	Three months ended				Six months ended
	June 30, 2013		July 1, 2012		June 30, 2013		July 1, 2012
EBITDA—Consolidated
Net income	$	391	$	754	$	268	$	1,569
Add back:
Interest Expense		39		174		110		367
Depreciation and amortization		411		411		807		813
Income Taxes		3		29		8		44

EBITDA (1)	$	844	$	1,368	$	1,193	$	2,793

Exhibit No.		Description
31.1		Certification by Chief Executive Officer required by Rule 13a-14(a) or 15d-14(a) of the Exchange Act
31.2		Certification by Chief Accounting Officer required by Rule 13a-14(a) or 15d-14(a) of the Exchange Act
32		Section 1350 Certifications
101		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, formatted in XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) the Notes to Unaudited Condensed Consolidated Financial Statements.

(1) EBITDA represents earnings before interest expense, income taxes, depreciation and amortization. Our management believes EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry because the calculation of EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending and acquisitions. We believe EBITDA is useful to investors to assist them in getting a more accurate picture of our results from operations.

15However, EBITDA is not a recognized measurement under GAAP and when analyzing our operating performance, readers should use EBITDA in addition to, and not as an alternative for, net income as determined in accordance with GAAP. Because not all companies use identical calculations, our presentation of EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not consider certain cash requirements such as tax and debt service payments. The amounts shown for EBITDA also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to

~~SIGNATURES~~13

determine compliance with financial covenants and our ability to engage in certain activities, such as incurring additional debt and making certain restricted payments.

16Liquidity and Capital Resources

At June 30, 2013, we had $3,864 of working capital, an increase of $478 as compared to December 31, 2012. The increase in working capital is primarily due to reduced short-term debt.

Net cash provided by operating activities was $1,795 for the six months ended June 30, 2013 compared to $1,633 for the six months ended July 1, 2012. This increase is primarily due to increased accounts payable and a reduction in accounts receivable, as a result of increased efforts to collect accounts receivable combined with lower sales volume.

For the six months ended June 30, 2013, net cash flows utilized by investing activities increased by $94 to $351 compared to $257 for the six months ended July 1, 2012. The increase in capital spending is due to our need to put a new roof on our Weston, West Virginia facility.

Net cash utilized by financing activities increased by $68 to $1,444 as of June 30, 2013 as compared to $1,376 as of July 1, 2012. This is a direct result of generating additional cash flows from operations and the resultant pay-down of debt. This includes paying off a $917 capital lease, in February 2013, related to our Visalia, California facility.

During 2013, we continue to focus our efforts to maintain the generation of positive operating cash flows and to increase overall level of profitable sales for the Company. We continue to make significant investments to the Industrial Services sales team, adding more sales personnel and implementing a customer relationship management tool.

As of June 30, 2013, we did not have any material commitments for capital expenditures.

Discussion of Forward-Looking Statements

Certain matters described in the foregoing “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as other statements contained in this Quarterly Report on Form 10-Q are forward-looking statements, which include any statement that is not a historical fact, such as statements regarding our future operations, future financial position, business strategy, plans and objectives. Without limiting the generality of the foregoing, words such as “may,” “intend,” “expect,” “believe,” “anticipate,” “could,” “estimate” or “plan” or the negative variations of those words or comparable terminology are intended to identify forward-looking statements. A “safe harbor” for forward-looking statements is provided by the Private Securities Litigation Reform Act of 1995 (Reform Act of 1995). The Reform Act of 1995 was adopted to encourage such forward-looking statements without the threat of litigation, provided those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause the actual results to differ materially from those projected in the statement.

Management based the forward-looking statements largely on its current expectations and perspectives about future events and financial trends that management believes may affect our financial condition, results of operations, business strategies, short-term and long-term business objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, that may cause actual results to differ materially from those indicated in the forward-looking statements, due to, among other things, factors identified in this report, and those identified in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Effectiveness of Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rules13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) are designed to ensure that information we are required to disclose in our reports filed

under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the rules of the Securities and Exchange Commission. Our disclosure controls and procedures also are designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Accounting Officer, as appropriate to allow timely decisions regarding required disclosures.

Our management, under the supervision and with the participation of our Chief Executive Officer and Chief Accounting Officer, evaluated the effectiveness of our disclosure controls and procedures in effect as of June 30, 2013. Based on this evaluation, our Chief Executive Officer and Chief Accounting Officer concluded that, as of June 30, 2013, our disclosure controls and procedures were effective to provide reasonable assurance that material information relating to the Company and its consolidated subsidiaries required to be included in our Exchange Act reports, including this Quarterly Report on Form 10-Q, is recorded, processed, summarized, and reported as required, and is made known to management, including the Chief Executive Officer and Chief Accounting Officer, on a timely basis.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES

On April 8, 2013, a warrant holder of the Company exercised an outstanding warrant to purchase 1,000 common shares for the per share price of $0.0250. The aggregate amount received by the Company in connection with the exercise of the warrant was $25. MISCOR will use the proceeds for general corporate purposes. The securities issued were not registered under the Securities Act of 1933, as amended, pursuant to an exemption under Section 4(3) of the Securities Act of 1933.

ITEM 6.

EXHIBITS

The following documents are included or incorporated by reference in this Quarterly Report on Form 10-Q:


Exhibit No.		Description

2.1		First Amendment to Agreement and Plan of Merger, dated as of July 10, 2013, by and among Integrated Electrical Services, Inc., the Registrant, and IES Subsidiary Holdings, Inc. (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed on July 11, 2013

31.1#		Certification by Chief Executive Officer required by Rule 13a-14(a) or 15d-14(a) of the Exchange Act

31.2#		Certification by Chief Accounting Officer required by Rule 13a-14(a) or 15d-14(a) of the Exchange Act

32#		Section 1350 Certifications

101#		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, formatted in XBRL: (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) the Notes to Unaudited Condensed Consolidated Financial Statements.

#	Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	MISCOR GROUP, LTD.

August 9, 2013	By:	/s/ Marc Valentin, CPA, CGMA

		Marc Valentin, CPA, CGMA
		Chief Accounting Officer
		(Signing on behalf of the registrant as Principal Financial and Accounting Officer)

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