UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



☒

~~FORM 10-Q~~

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September30~~, 201~~7

28, 2019

☐

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

Commission File Number 001-35849

NV5 Global, Inc.

(Exact name of registrant as specified in its charter)


~~Delaware~~	~~45-3458017~~
Delaware			45-3458017
(State or other jurisdiction of		~~(I.R.S. Employer~~
incorporation or organization)			(I.R.S. Employer Identification No.)

200 South Park Road,	Suite 350		33021
Hollywood, ~~Florida~~	Florida		(Zip Code)
(Address of principal executive offices)

~~(954)~~

(954) 495-2112

(~~Registrant~~’sRegistrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	NVEE	The NASDAQ Stock Market

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

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

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

As of November 6, ~~2017,~~2019, there were ~~10,785,594~~12,818,872 shares outstanding of the registrant’s common stock, $0.01 par value.

NV5 GLOBAL, INC.

INDEX

			~~Page~~

		Page

PART I – FINANCIAL INFORMATION

ITEM 1	FINANCIAL STATEMENTS	1

	Consolidated Balance Sheets (unaudited)	1

	Consolidated Statements of Net Income and Comprehensive Income (unaudited)	2

	Consolidated Statement of Changes in ~~Stockholders~~’Stockholders’ Equity (unaudited)	3

	Consolidated S~~tatements~~Statements of Cash Flows (unaudited)	4

	Notes to Consolidated Financial Statements (unaudited)	6

ITEM 2	~~MANAGEMENT~~’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24 24
ITEM 3	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	35 34
ITEM 4	CONTROLS AND PROCEDURES	36 34


PART II – OTHER INFORMATION

ITEM 1	LEGAL PROCEEDINGS	37 35
ITEM 1A	RISK FACTORS	37 35
ITEM 2	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	37 36
ITEM 3	DEFAULTS UPON SENIOR SECURITIES	37 36
ITEM 4	MINE SAFETY DISCLOSURES	37 36
ITEM 5	OTHER INFORMATION	37 36
ITEM 6	EXHIBITS	38 37

SIGNATURES		39 39

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

NV5 Global, Inc. and Subsidiaries

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share data)

September 30, 2017

December 31, 2016

Assets

Current assets:

Cash and cash equivalents
$ 15,582 $ 35,666
Accounts receivable, net of allowance for doubtful accounts of $3,106 and $1,992 as of September 30, 2017 and December 31, 2016, respectively
113,004 75,511
Prepaid expenses and other current assets
2,860 1,874
Total current assets
131,446 113,051
Property and equipment, net
8,009 6,683
Intangible assets, net
68,374 40,861
Goodwill
97,384 59,380
Other assets
1,042 1,511
Total Assets
$ 306,255 $ 221,486

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable
$ 17,133 $ 13,509
Accrued liabilities
18,173 17,316
Income taxes payable
855 1,134
Billings in excess of costs and estimated earnings on uncompleted contracts
1,869 228
Client deposits
173 106
Current portion of contingent consideration
2,653 564
Current portion of notes payable and other obligations
10,821 10,764
Total current liabilities
51,677 43,621
Contingent consideration, less current portion
125 1,875
Notes payable and other obligations, less current portion
67,155 21,632
Deferred income tax liabilities, net
22,084 6,197
Total liabilities
141,041 73,325

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $0.01 par value; 5,000,000 shares authorized, no shares issued and outstanding
- -
Common stock, $0.01 par value; 45,000,000 shares authorized, 10,779,246 and 10,566,528 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively
108 106
Additional paid-in capital
122,576 118,026
Retained earnings
42,530 30,029
Total stockholders’ equity
165,214 148,161
Total liabilities and stockholders’ equity
$ 306,255 $ 221,486

September 28, 2019 December 29, 2018
Assets
Current assets:
Cash and cash equivalents $ 31,425
$ 40,739
Billed receivables, net 109,590
98,324
Unbilled receivables, net 53,818
43,411
Prepaid expenses and other current assets 9,198
2,582
Total current assets 204,031
185,056
Property and equipment, net 12,349
11,677
Right-of-use lease asset, net 42,366
—
Intangible assets, net 100,688
99,756
Goodwill 158,423
140,930
Other assets 2,886
2,002
Total Assets 520,743
$ 439,421

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 23,082
$ 22,588
Accrued liabilities 33,654
20,853
Income taxes payable —
2,697
Billings in excess of costs and estimated earnings on uncompleted contracts 2,241
7,625
Client deposits 276
208
Current portion of contingent consideration 3,351
1,845
Current portion of notes payable and other obligations 17,578
17,139
Total current liabilities 80,182
72,955
Contingent consideration, less current portion 2,195
2,853
Long-term lease liability 32,781
—
Notes payable and other obligations, less current portion 40,638
29,847
Deferred income tax liabilities, net 16,881
16,224
Total liabilities 172,676
121,879

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized, no shares issued and outstanding —
—
Common stock, $0.01 par value; 45,000,000 shares authorized, 12,818,919 and 12,550,711 shares issued and outstanding as of September 28, 2019 and December 29, 2018, respectively 128
126
Additional paid-in capital 246,869
236,525
Retained earnings 101,070
80,891
Total stockholders’ equity 348,067
317,542
Total liabilities and stockholders’ equity $ 520,743
$ 439,421

See accompanying notes to consolidated financial statements (unaudited).

NV5 Global, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF NET INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

(in thousands, except share data)

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

2017

2016

2017

2016

Gross revenues
$ 91,263 $ 60,091 $ 239,058 $ 160,888

Direct costs (excluding depreciation and amortization):

Salaries and wages
28,219 20,274 75,235 53,744
Sub-consultant services
12,663 8,854 33,719 22,246
Other direct costs
3,635 3,307 10,276 8,209
Total direct costs
44,517 32,435 119,230 84,199

Gross Profit
46,746 27,656 119,828 76,689

Operating Expenses:

Salaries and wages, payroll taxes and benefits
23,090 14,096 62,847 40,575
General and administrative
7,362 4,415 19,931 12,640
Facilities and facilities related
3,547 2,066 9,162 5,803
Depreciation and amortization
3,788 1,604 9,542 4,285
Total operating expenses
37,787 22,181 101,482 63,303

Income from operations
8,959 5,475 18,346 13,386

Interest expense
(524 ) (81 ) (1,042 ) (221 )

Income before income tax expense
8,435 5,394 17,304 13,165
Income tax expense
(2,523 ) (1,990 ) (4,803 ) (4,847 )
Net Income and Comprehensive Income
$ 5,912 $ 3,404 $ 12,501 $ 8,318

Earnings per share:

Basic
$ 0.58 $ 0.34 $ 1.23 $ 0.94
Diluted
$ 0.55 $ 0.33 $ 1.16 $ 0.90

Weighted average common shares outstanding:

Basic
10,211,114 9,941,517 10,155,751 8,826,090
Diluted
10,785,630 10,353,793 10,744,619 9,215,365

Three Months Ended Nine Months Ended
September 28,
2019
September 29,
2018 September 28,
2019
September 29,
2018
Gross revenues $ 131,032
$ 104,185
$ 376,340
$ 302,737

Direct costs (excluding depreciation and amortization):

Salaries and wages 40,426
34,475
113,762
98,542
Sub-consultant services 19,972
14,989
56,969
43,349
Other direct costs 7,139
4,747
25,244
13,539
Total direct costs 67,536
54,211
195,975
155,430

Gross Profit 63,496
49,974
180,365
147,307

Operating Expenses:
Salaries and wages, payroll taxes and benefits 33,428
24,897
93,431
76,122
General and administrative 11,028
7,556
30,786
23,348
Facilities and facilities related 4,664
3,490
12,407
10,552
Depreciation and amortization 6,551
4,057
18,908
11,660
Total operating expenses 55,671
40,000
155,533
121,682

Income from operations 7,825
9,974
24,832
25,625

Interest expense (421 ) (451 ) (1,230 ) (1,712 )

Income before income tax expense 7,403
9,523
23,602
23,913
Income tax expense (1,560 ) (2,238 ) (3,422 ) (4,716 )
Net Income and Comprehensive Income $ 5,843
$ 7,285
$ 20,180
$ 19,197

Earnings per share:
Basic $ 0.48
$ 0.65
$ 1.67
$ 1.80
Diluted $ 0.46
$ 0.62
$ 1.62
$ 1.71

Weighted average common shares outstanding:
Basic 12,191,405
11,256,946
12,086,588
10,686,040
Diluted 12,566,966
11,701,394
12,485,049
11,205,748

See accompanying notes to consolidated financial statements (unaudited).

NV5 Global, Inc. and Subsidiaries

CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CHANGES IN ~~STOCKHOLDERS~~’STOCKHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except share data)

Common Stock

Additional
Paid-In

Retained

Shares

Amount

Capital

Earnings

Total

Balance, December 31, 2016
10,566,528 $ 106 $ 118,026 $ 30,029 $ 148,161

Stock compensation
- - 2,743 - 2,743
Restricted stock issuance, net
163,016 2 (2 ) - -
Stock issuance for acquisitions
47,982 - 1,746 - 1,746
Payment of contingent consideration with common stock
1,720 - 63 - 63
Net income
- - - 12,501 12,501
Balance, September 30, 2017
10,779,246 $ 108 $ 122,576 $ 42,530 $ 165,214

Common Stock
Additional
Paid-In
Capital

Retained
Earnings

Shares Amount Total
Balance, June 30, 2018 11,129,082
$ 111
$ 131,746
$ 65,947
$ 197,804
Stock compensation —
—
1,902
—
1,902
Restricted stock issuance, net 25,672
—
(1 ) —
—
Stock issuance for acquisitions 37,146
—
2,886
—
2,886
Proceeds from secondary offering, net of costs 1,270,000
13
93,456
—
93,469
Net income —
—
—
7,285
7,285
Balance, September 29, 2018 12,461,900
$ 125
$ 229,989
$ 73,232
$ 303,346

Balance, June 29, 2019 12,657,841
$ 127
$ 243,646
$ 95,228
$ 339,001
Stock compensation —
—
2,819
—
2,819
Restricted stock issuance, net 155,307
1
—
—
1
Stock issuance for acquisitions 5,771
—
403
—
403
Net income —
—
—
5,843
5,843
Balance, September 28, 2019 12,818,919
$ 128
$ 246,869
$ 101,070
$ 348,067

Common Stock
Additional
Paid-In
Capital

Retained
Earnings

Shares Amount Total
Balance, December 30, 2017 10,834,770
$ 108
$ 125,954
$ 54,035
$ 180,097
Stock compensation —
—
4,541
—
4,541
Restricted stock issuance, net 144,118
2
(2 ) —
—
Stock issuance for acquisitions 73,012
1
4,949
—
4,950
Proceeds from secondary offering, net of costs 1,270,000
13
93,456
—
93,469
Proceeds from exercise of warrants, net of costs 140,000
1
1,091
—
1,092
Net income —
—
—
19,197
19,197
Balance, September 29, 2018 12,461,900
$ 125
$ 229,989
$ 73,232
$ 303,346

Balance, December 29, 2018 12,550,711
$ 126
$ 236,525
$ 80,891
$ 317,542
Stock compensation —
—
6,989

6,989
Restricted stock issuance, net 215,431
2
(2 )

—
Stock issuance for acquisitions 41,592
—
2,632

2,632
Payment of contingent consideration with common stock 11,185
—
725

725
Net income —
—
—
20,180
20,180
Balance, September 28, 2019 12,818,919
$ 128
$ 246,869
$ 101,070
$ 348,067

See accompanying notes to consolidated financial statements (unaudited).

NV5 Global, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

Nine Months Ended

September 30, 2017

September 30, 2016

Cash Flows From Operating Activities:

Net income
$ 12,501 $ 8,318
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization
9,542 4,285
Provision for doubtful accounts
445 246
Stock compensation
2,743 1,704
Change in fair value of contingent consideration
56 88
Loss on disposal property and equipment
2 2
Excess tax benefit from stock based compensation
- (155 )
Deferred income taxes
320 88
Changes in operating assets and liabilities, net of impact of acquisitions:

Accounts receivable
(17,031 ) (7,795 )
Prepaid expenses and other assets
(13 ) 372
Accounts payable
(1,827 ) 2,892
Accrued liabilities
(3,251 ) 476
Income taxes payable
(279 ) 96
Billings in excess of costs and estimated earnings on uncompleted contracts
1,641 (78 )
Client deposits
822 147
Net cash provided by operating activities
5,671 10,686

Cash Flows From Investing Activities:

Cash paid for acquisitions (net of cash received from acquisitions)
(60,241 ) (24,388 )
Purchase of property and equipment
(1,591 ) (566 )
Net cash used in investing activities
(61,832 ) (24,954 )

Cash Flows From Financing Activities:

Proceeds from borrowings from Senior Credit Facility
47,000 -
Proceeds from secondary offering
- 51,319
Payments of borrowings from Senior Credit Facility
(5,000 ) -
Payments of secondary offering costs
- (4,172 )
Payments on notes payable
(5,360 ) (4,156 )
Payments of contingent consideration
(563 ) (296 )
Excess tax benefit from stock based compensation
- 155
Proceeds from exercise of unit warrant
- 1,008
Net cash provided by financing activities
36,077 43,858

Net (decrease) increase in Cash and Cash Equivalents
(20,084 ) 29,590
Cash and cash equivalents – beginning of period
35,666 23,476
Cash and cash equivalents – end of period
$ 15,582 $ 53,066

Nine Months Ended
September 28, 2019 September 29, 2018
Cash Flows From Operating Activities:
Net income $ 20,180
$ 19,197
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 18,908
11,660
Non-cash lease expense 6,770
—
Provision for doubtful accounts 1,725
843
Stock based compensation 6,989
4,541
Change in fair value of contingent consideration 49
267
Gain on disposals of property and equipment (48 ) —
Deferred income taxes (3,839 ) 564
Changes in operating assets and liabilities, net of impact of acquisitions:
Billed receivables 508
(6,396 )
Unbilled receivables (4,490 ) (3,759 )
Prepaid expenses and other assets (5,279 ) 819
Accounts payable (2,053 ) (679 )
Accrued liabilities (9,170 ) (3,259 )
Income taxes payable (2,789 ) (6,713 )
Billings in excess of costs and estimated earnings on uncompleted contracts (5,972 ) 485
Deposits 68
—
Net cash provided by operating activities 21,557
17,570

Cash Flows From Investing Activities:
Cash paid for acquisitions (net of cash received from acquisitions) (29,365 ) (28,460 )
Purchase of property and equipment (1,810 ) (1,582 )
Net cash used in investing activities (31,175 ) (30,042 )

Cash Flows From Financing Activities:
Proceeds from secondary offering —
93,469
Borrowings from Senior Credit Facility 10,000
—
Payments on notes payable (8,483 ) (7,410 )
Payments of contingent consideration (1,213 ) (728 )
Proceeds from exercise of unit warrant —
1,092
Payments of borrowings from Senior Credit Facility —
(36,500 )
Net cash provided by financing activities 304
49,923

Net (decrease) increase in Cash and Cash Equivalents (9,314 ) 37,451
Cash and cash equivalents – beginning of period 40,739
18,751
Cash and cash equivalents – end of period $ 31,425
$ 56,202

See accompanying notes to consolidated financial statements (unaudited).

NV5 Global, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

Nine Months Ended

September 30, 2017

September 30, 2016

Supplemental disclosures of cash flow information:

Cash paid for interest
$ 843 $ 255
Cash paid for income taxes
$ 4,962 $ 4,642

Non-cash investing and financing activities:

Contingent consideration (earn-out)
$ 908 $ -
Notes payable and other obligations issued for acquisitions
$ 9,371 $ 9,333
Stock issuance for acquisitions
$ 1,746 $ 1,075
Payment of contingent consideration and other obligations with common stock
$ 62 $ 162

Nine Months Ended
September 28, 2019 September 29, 2018
Non-cash investing and financing activities:
Contingent consideration (earn-out) $ 2,570
$ 1,565
Notes payable and other obligations issued for acquisitions $ 10,044
$ 8,356
Stock issuance for acquisitions $ 2,632
$ 4,950
Capital leases $ 769
$ 2,878

See accompanying notes to consolidated financial statements (unaudited).

NV5 Global, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands, except share data)

Note 1 - Organization and Nature of Business Operations

Business

NV5 Global, Inc. and its subsidiaries (collectively, the ~~“Company”~~ or“Company,” “NV5 ~~Global”~~Global,” “our,” “we”) is a provider of professional and technical engineering and consulting solutions to public and private sector clients in the infrastructure, energy, construction, real estate and environmental ~~markets.~~markets, operating nationwide and abroad. The Company’s clients include the U.S. federal, state and local governments, and the private sector. NV5 Global provides a wide range of services, including, but not limited to, planning, design, consulting, permitting, inspection and field supervision, testing inspection and certification, management oversight, forensic engineering, litigation support, condition assessment and compliance certification.

to:



●	Infrastructure, engineering and support	●	Management oversight
●	Construction quality assurance, testing and inspection	●	Permitting
●	Program management	●	Inspection and field supervision
●	Energy	●	Testing inspection and certification
●	Environmental	●	Forensic engineering
●	Planning	●	Litigation support
●	Design	●	Condition assessment
●	Consulting	●	Compliance certification

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The consolidated financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for reporting of interim financial information. Pursuant to such rules and regulations, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. The consolidated financial statements include the accounts of ~~NV5 Global, Inc.~~the Company and ~~those of~~ its ~~wholly owned~~ subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.

Certain amounts in the consolidated financial statements and associated notes may not add due to rounding. All percentages have been calculated using unrounded amounts.

In the opinion of management, the accompanying unaudited interim consolidated financial statements of the Company contain allall adjustments necessary to present fairly the financial position and results of operations of the Company as of the dates and for the periods presented. Accordingly, these statements should be read in conjunction with the consolidated financial statements and notes contained in the Company’s Annual Report on Form 10-K for the year ended December ~~31, 2016. The accompanying consolidated balance sheet as of December 31, 2016 has been derived from those financial statements.~~29, 2018 (the “2018 Form 10-K”). The results of operations and cash flows for the interim periods presented are not necessarily indicative of the results to be expected for any future interim period or for the full ~~2017~~2019 fiscal year.

~~Fiscal Year~~

Effective March 7, 2017, the Audit Committee of our Board of Directors and the Board of Directors approved a change in our fiscal year-end and financial accounting cycle. With effect from January 1, 2017, the Company commenced reporting its financial results on a 52/53 week fiscal year ending on the Saturday closest to December 31st (whether or not in the following calendar year), with interim calendar quarters ending on the Saturday closest to the end of such calendar quarter (whether or not in the following calendar quarter). As such, in calendar year 2017, the first fiscal quarter ended on April 1, 2017, the second fiscal quarter ended on July 1, 2017, the third fiscal quarter ended on September 30, 2017, and the fiscal year will end on December 30, 2017.

~~Use of Estimates~~

~~The preparation of financial statements in conformity with~~ U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. These estimates and assumptions are based on management’s most recent assessment of underlying facts and circumstances using the most recent information available. Actual results could differ significantly from these estimates and assumptions, and the differences could be material.

~~NV5 Global, Inc. and Subsidiaries~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(in thousands, except share data)~~

Estimates and assumptions are evaluated periodically and adjusted when necessary. The more significant estimates affecting amounts reported in the consolidated financial statements relate to the fair value estimates used in accounting for business combinations including the valuation of identifiable intangible assets and contingent consideration, fair value estimates in determining the fair value of ~~the Company’s reporting units for goodwill impairment assessment, revenue recognition on the percentage-of-completion method, allowances for uncollectible accounts and provision for income taxes.~~

~~Concentration of Credit Risk~~

Trade receivable balances carried by the Company are comprised of accounts from a diverse client base across a broad range of industries and are not collateralized. However, approximately 32% and 35% of the Company’s gross revenues for the nine months ended September 30, 2017 and 2016, respectively, are from California-based projects. The Company does not have any clients individually representing more than 10% of gross revenues during the nine months ended September 30, 2017 and 2016. Furthermore, approximately 57% and 71% of the Company’s accounts receivable as of September 30, 2017 and December 31, 2016, respectively, are for public and quasi-public projects. Management continually evaluates the creditworthiness of these and future clients and provides for bad debt reserves as necessary.

~~Fair Value of Financial Instruments~~

~~A financial instrument~~’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of valuation hierarchy are defined as follows:

~~Level 1~~ ~~- inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.~~

~~Level 2~~ - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

~~Level 3~~ ~~- inputs to the valuation methodology are unobservable and significant to the fair value measurement.~~

The Company considers cash and cash equivalents, accounts receivable, accounts payable, income taxes payable, accrued liabilities and debt obligations to meet the definition of financial instruments. As of September 30, 2017 and December 31, 2016, the carrying amount of cash and cash equivalents, accounts receivable, accounts payable, income taxes payable and accrued liabilities approximate their fair value due to the relatively short period of time between their origination and their expected realization or payment. The carrying amounts of debt obligations approximate their fair values as the terms are comparable to terms currently offered by local lending institutions for arrangements with similar terms to industry peers with comparable credit characteristics.

~~The Company applies the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805,~~ ~~Business Combinations~~, in the accounting for its acquisitions, which requires recognition of the assets acquired and the liabilities assumed at their acquisition date fair values, separately from goodwill. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition date fair values of the tangible and identifiable intangible assets acquired and liabilities assumed. The allocation of the purchase price to identifiable intangible assets (customer relationships, customer backlog, trade name and non-compete) is based on valuations performed to determine the fair values of such assets as of the acquisition dates. Generally, the Company engages a third-party independent valuation specialist to assist in management’s determination of fair values of tangible and intangible assets acquired and liabilities assumed. The fair values of earn-out arrangements are included as part of the purchase price of the acquired companies on their respective acquisition dates. The Company estimates the fair value of contingent earn-out payments as part of the initial purchase price and records the estimated fair value of contingent consideration as a liability on the consolidated balance sheet. Changes in the estimated fair value of contingent earn-out payments are included in General and Administrative expenses on the Consolidated Statements of Net Income and Comprehensive Income.

~~NV5 Global, Inc. and Subsidiaries~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(in thousands, except share data)~~

~~Several factors are considered when determining contingent~~ consideration liabilities as part of the purchase price, including whether (i) the valuation of the acquisitions is not supported solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach to determining the purchase price; and (ii) the former owners of the acquired companies that remain as key employees receive compensation other than contingent earn-out payments at a reasonable level compared with the compensation of other key employees. The contingent earn-out payments are not affected by employment termination.

~~We review and re-assess the estimated fair value of contingent consideration~~ liabilities on a quarterly basis, and the updated fair value could differ materially from the initial estimates. The Company measures contingent consideration recognized in connection with business combinations at fair value on a recurring basis using significant unobservable inputs classified within Level 3, as defined in the accounting guidance. The Company uses a probability-weighted discounted cash flow approach as a valuation technique to determine the fair value of the contingent consideration liabilities on the acquisition date and at each reporting period. The significant unobservable inputs used in the fair value measurements are projections over the earn-out period, and the probability outcome percentages that are assigned to each scenario. Significant increases or decreases to either of these inputs in isolation could result in a significantly higher or lower liability with a higher liability capped by the contractual maximum of the contingent consideration liabilities. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate on the acquisition date and amount paid will be recorded in earnings (see Note 10). Adjustments to the estimated fair value related to changes in all other unobservable inputs are reported in income from operations.

Goodwill and Intangible Assets

Goodwill is the excess of consideration paid for an acquired entity over the amounts assigned to assets acquired, including other identifiable intangible assets and liabilities assumed in a business combination. To determine the amount of goodwill resulting from a business combination, the Company performs an assessment to determine the acquisition date fair value of the acquired ~~company~~’scompany’s tangible and identifiable intangible assets and liabilities.

Goodwill is required to be evaluated for impairment on an annual basis or whenever events or changes in circumstances indicate the asset may be impaired. An entity has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. These qualitative factors include: macroeconomic and industry conditions, cost factors, overall financial performance and other relevant entity-specific events. If the entity determines that this threshold is met, then performing the two-step quantitative impairment test is unnecessary. The two-step impairment test requires a comparison of the carrying value of the assets and liabilities associated with a reporting unit, including goodwill, with the fair value of the reporting unit. The Company

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determines fair value through multiple valuation techniques, and weights the results accordingly. NV5 Global is required to make certain subjective and complex judgments in assessing whether an event of impairment of goodwill has occurred, including assumptions and estimates used to determine the fair value of its reporting units. If the carrying value of a reporting unit exceeds the fair value of the reporting unit, the Company would calculate the implied fair value of its reporting unit goodwill as compared to the carrying value of its reporting unit goodwill to determine the appropriate impairment charge, if any. The Company has elected to perform its annual goodwill impairment review on August 1 of each year. The Company ~~historically~~ conducts its annual impairment tests on the goodwill using the quantitative method of evaluating goodwill.

Identifiable intangible assets primarily include customer backlog, customer relationships, trade names and non-compete agreements. Amortizable intangible assets are amortized on a straight-line basis over their estimated useful lives and reviewed for impairment whenever events or changes in circumstances indicate that the assets may be impaired. If an indicator of impairment exists, the Company compares the estimated future cash flows of the asset, on an undiscounted basis, to the carrying value of the asset. If the undiscounted cash flows exceed the carrying value, no impairment is indicated. If the undiscounted cash flows do not exceed the carrying value, then impairment, if any, is measured as the difference between fair value and carrying value, with fair value typically based on a discounted cash flow model.

On August 1, 2019, the Company conducted its annual impairment tests using the quantitative method of evaluating goodwill. Based on the quantitative analyses the Company determined the fair value of each of the reporting units exceeded its carrying value. Therefore, the goodwill was not impaired and the Company did not recognize an impairment charge relating to goodwill as of August 1, 2019. Furthermore, there were no indicators, events or changes in circumstances that would indicate goodwill was impaired during the period from August 2, 2019 through September 28, 2019.

See Note 78 for further information on goodwill and identified intangibles.

There have been no significant changes, other than those related to the adopted new accounting standards below, in the Company’s accounting policies from those disclosed in our 2018 Form 10-K.

Adoption of New Accounting Standards

Leases

We adopted ASU No. 2016-2, Leases ("Topic 842"), as of the first day of the fiscal year 2019 using the modified retrospective approach and elected not to adjust comparative periods. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and the initial direct costs. We elected the practical expedient to keep leases with an initial term of 12 months or less off the balance sheet and the practical expedient to account for non-lease components in a contract as part of a single lease component. Lease payments are recognized in the Consolidated Statements of Operations on a straight-line basis over the lease term. Adoption of the new standard resulted in the recording of additional right-of-use lease assets and lease liabilities of $34,186 and $34,965, respectively, as of the first day of the fiscal year 2019. The standard did not materially impact our consolidated net earnings and had no impact on cash flows. Additionally, there was no cumulative effect of adoption on retained earnings in the Statement of Changes in Stockholders' Equity.

Revenue Recognition

On the first day of fiscal year 2018, we adopted ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”), using the modified retrospective approach to all contracts that were not completed as of the beginning of fiscal year 2018. We utilize the portfolio method practical expedient, which allows companies to account for multiple contracts as a portfolio, instead of accounting for them on a contract by contract basis (commonly known as the contract method). For our time and materials contracts, we apply the as-invoiced practical expedient, which permits us to recognize revenue as the right to invoice for services performed. The new standard did not materially affect our consolidated net income, financial position, or cash flows.

Performance Obligations

Some of our contracts have a single performance obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and therefore, is not distinct. However, in some instances, we may also promise to provide distinct goods or services within a contract, resulting in multiple performance obligations. For contracts

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~~Earnings per Share~~

~~Basic earnings per share~~

with multiple performance obligations, we allocate the contract transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract. Typically, we sell a customer a specific service and use the expected cost plus a margin approach to estimate the standalone selling price of each performance obligation.

The Company’s performance obligations are satisfied as work progresses or at a point in time. Revenue on our cost-reimbursable contracts is ~~calculated by dividing net income~~recognized over time using direct costs incurred or direct costs incurred to date as compared to the estimated total direct costs for performance obligations because it best depicts the transfer of control to the customer. Contract costs include labor, subcontractors’ costs and other direct costs.

Gross revenue from services transferred to customers at a point in time is recognized when the customer obtains control of the asset, which is generally upon delivery and acceptance by the ~~weighted average number~~customer of ~~common shares outstanding during~~ the ~~period. Diluted~~reports and/or analysis performed.

As of September 28, 2019, we had $504,349 of remaining performance obligations, of which $390,454 is expected to be recognized over the next 12 months and the majority of the balance over the next 24 months. Contracts for which work authorizations have been received are included in performance obligations. Most of our government contracts are multi-year contracts for which funding is appropriated on an annual basis, therefore performance obligations includes only those amounts that have been funded and authorized and does not reflect the full amounts we may receive over the term of such contracts. In the case of non-government contracts and project awards, performance obligations includes future revenue at contract or customary rates, excluding contract renewals or extensions that are at the discretion of the client. For contracts with a not-to-exceed maximum amount, we include revenue from such contracts in performance obligations to the extent of the remaining estimated amount.

Contract Assets and Liabilities

The timing of revenue recognition, billings and cash collections results in billed receivables, unbilled receivables (contract assets), and billings in excess of costs and estimated earnings ~~per share reflects~~on uncompleted contracts (contract liabilities) on the ~~potential dilution~~Consolidated Balance Sheet. The liability “Billings in excess of costs and estimated earnings on uncompleted contracts” represents billings in excess of revenues recognized on these contracts as of the reporting date. This liability is generally classified as current. Revenue recognized that ~~could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted~~was included in the ~~issuance of common stock that then shared in~~contract liability balance at the ~~earnings~~beginning of the ~~Company. In accordance with the FASB ASC 260,~~ ~~Earnings per Share~~, the effect of potentially dilutive securities is not considered during periods of loss or if the effect is anti-dilutive. The weighted average number of shares outstanding in calculating basic earnings per sharefiscal year was $2 and $6,437 for the three and nine months ended September ~~30, 2017~~28, 2019, respectively and ~~2016 exclude 560,689~~$222 and 434,082 non-vested restricted shares, respectively, issued since 2010. These non-vested restricted shares are not included in basic earnings per share until the vesting requirement is met. The weighted average number of shares outstanding in calculating diluted earnings per share$434 for the three and nine months ended September 30, 2017 and 2016 includes, if outstanding, non-vested restricted shares and units, issuable shares related to acquisitions, and the warrants associated with the Company’s initial public offering. In calculating diluted earnings per share for the three and nine months ended September 30, 2017 and 2016, there were no potentially anti-dilutive securities.

~~The following table represents a reconciliation of the net income and weighted average shares outstanding for the calculation of basic and diluted earnings~~ ~~per share for the three and nine months ended September 30, 2017 and 2016:~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

2017

2016

2017

2016

Numerator:

Net income – basic and diluted
$ 5,912 $ 3,404 $ 12,501 $ 8,318

Denominator:

Basic weighted average shares outstanding
10,211,114 9,941,517 10,155,751 8,826,090
Effect of dilutive non-vested restricted shares and units
311,677 203,997 305,392 209,032
Effect of issuable shares related to acquisitions
146,958 102,810 170,768 55,551
Effect of warrants
115,881 105,469 112,708 124,692
Diluted weighted average shares outstanding
10,785,630 10,353,793 10,744,619 9,215,365
29, 2018, respectively.

Note 3 – Recent Accounting Pronouncements

In January 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other ~~(Topic 350) Simplifying~~("Topic 350") simplifying the ~~Test~~test for ~~Goodwill Impairment.~~goodwill impairment. This ASU eliminates Step 2 of the goodwill impairment test and simplifies how the amount of an impairment loss is determined. The update is effective for public companies in the beginning of fiscal year 2020 and ~~shall~~will be applied on a prospective basis. ~~Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company does~~We will adopt this ASU at the beginning of fiscal year 2020. We do not expect the impact of this ASU to be material to ~~its~~our consolidated financial statements.

~~In August 2016,~~

Note 4 –Earnings per Share

Basic earnings per share is calculated by dividing net income by the ~~FASB issued ASU 2016-15,~~ ~~Statement~~weighted average number of ~~Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments.~~ ~~This ASU clarifies guidance for cash flow classification~~common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to ~~reduce current and potential future diversity in practice. The update is effective for public companies~~issue common stock were exercised or converted into common stock or resulted in the ~~beginning~~issuance of ~~fiscal 2018. The amendments should be applied using a retrospective transition method to each period presented. For items~~common stock that ~~are impractical to apply~~then shared in the ~~amendments retrospectively, they shall be applied prospectively as~~earnings of the ~~earliest date practicable. Early adoption~~Company. The effect of potentially dilutive securities is ~~permitted.~~ not considered during periods of loss or if the effect is anti-dilutive.

The ~~Company does not expect the impact~~weighted average number of ~~this ASU to be material to its consolidated financial statements.~~

~~In March 2016, FASB issued Accounting Standards Update 2016-09,~~ ~~Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting.~~ ASU 2016-09 simplifies the accounting for share-based payment award transactions including: income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The Company adopted the requirements of ASU 2016-09 on January 1, 2017 on a prospective basis, which resultedshares outstanding in ~~a decrease in income tax expense of approximately $974~~calculating basic earnings per share for the nine months ended September ~~30, 2017.~~ ~~ASU 2016-09 requires excess tax benefits be presented within~~28, 2019 and September 29, 2018 exclude 625,687 and 588,430 non-vested restricted shares, respectively. There were 0 potentially anti-dilutive securities during the ~~statement~~three and nine months ended September 28, 2019 and September 29, 2018.

The following table represents a reconciliation of ~~cash flows as an operating activity rather than as a financing activity~~the net income and ~~excess tax benefits to be excluded from the assumed future proceeds in~~weighted average shares outstanding for the calculation of basic and diluted ~~shares.~~

earnings per share:

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	Three Months Ended				Nine Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
Numerator:
Net income – basic and diluted	$	5,843	$	7,285	$	20,180	$	19,197

Denominator:
Basic weighted average shares outstanding	12,191,405		11,256,946		12,086,588		10,686,040
Effect of dilutive non-vested restricted shares and units	308,240		381,250		325,219		396,577
Effect of issuable shares related to acquisitions	67,321		63,198		73,242		88,594
Effect of warrants	—		—		—		34,537
Diluted weighted average shares outstanding	12,566,966		11,701,394		12,485,049		11,205,748

Warrant exercise

In ~~February~~conjunction with our initial public offering on March 26, 2013, the underwriter received a warrant to acquire up to 140,000 units (“Unit Warrant”). On March 23, 2016, ~~FASB issued ASU 2016-02,~~ ~~Leases~~~~. ASU 2016-02 requires lessees~~the underwriter paid us $1,008 to ~~recognize, in~~exercise the ~~balance sheet, a liability~~Unit Warrant. Each of the units delivered upon exercise consisted of 1 share of our common stock and 1 warrant to make lease payments and a right-of-use asset representing the right to use the underlying asset over the lease term. The amendments in this accounting standard update are to be applied using a modified retrospective approach and are effective for fiscal years beginning after December 15, 2018. ~~We are currently evaluating the requirements~~purchase one share of ~~ASU 2016-02 and its impact on the consolidated financial statements.~~

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers.~~ ~~This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to acustomer~~our common stock at an ~~amount that reflects~~exercise price of $7.80 per share (“Warrant”), which warrant expired on March 27, 2018. On March 19, 2018, the ~~consideration it expects~~underwriter paid us $1,092 to ~~receive in exchange for those goods or services. This ASU was originally effective for annual reporting periods beginning after December 15, 2016 and early adoption is permitted as~~exercise the Warrant. On March 21, 2018, we delivered 140,000 shares of common stock to the ~~original effective date. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. In~~underwriter.

Note5– Business Acquisitions

2019 Acquisitions

On July 2015, FASB voted to approve a one-year deferral of the effective date to December 31, 2017 for interim and annual reporting periods beginning after that date and permitted early adoption of the standard, but not before the original effective date of December 15, 2016. As a result, ASU 2014-09 will become effective for us in the first quarter of our fiscal year ending December 31, 2018. The Company has begun its assessment and is evaluating the areas of impact on its consolidated financial statements. The Company has decided to adopt this standard under the modified retrospective approach. Currently,2, 2019, the Company has identified various revenue types by services, contracts, clients and billings. The Company is reviewing its contracts in the various revenue types in order to isolate those that will be significantly impacted as well as to identify the relevant revenue types for disaggregated disclosure. After the assessment is complete, the Company can estimate potential impacts, if any, of the new standard as well as ~~the impact of adopting ASU 2014-09 on the Company's consolidated net income, financial position, cash flows, disclosures, information technology systems and internal controls.~~

~~Note 4~~ ~~– Business Acquisitions~~

~~On September 6, 2017, the Company~~ acquired ~~all of the outstanding interests in Marron and Associates,~~WHPacific, Inc. (“~~Marron”~~WHPacific”), a leading ~~environmental~~provider of design engineering and surveying services firm with offices in Albuquerque and Las Cruces, New Mexico. Marron provides environmental planning, natural and cultural resources, environmental site assessment, and GIS services. Marron primarily serves public and private clients throughout the Southwest, including theserving Washington, Oregon, Idaho, New Mexico, ~~Department of Transportation, Bureau of Land Management, Bureau of Indian Affairs, Federal Highway Administration, U.S. Department of Agriculture, U.S. Fish~~Arizona and ~~Wildlife Service, and U.S. Forest Service. The~~California for a cash purchase price of ~~this acquisition is up~~$9,000. In order to ~~$990 including $400 in cash, $300 in promissory notes (bearing interest at 3.0%), payable in three installments of $100, due on~~determine the first, second and third anniversaries of September 6, 2017, the effective date of the acquisition (see Note 9), $67 of the Company’s common stock (1,510 shares) as of the closing date of the acquisition and $133 in stock or a combination of cash and shares of the Company’s stock, at its discretion, payable in two equal installments, due on the first and second anniversaries of September 6, 2017.The purchase price also included an interest bearing earn-out of $90 promissory note, subject to the achievement of certain agreed upon metrics for calendar year 2017. The Company internally determined the preliminary fair values of tangible and intangible assets acquired and liabilities ~~assumed. We expect~~assumed for WHPacific, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. The Company expects to finalize the purchase price allocation with respect to this transaction by the end of the fourth quarter ~~of 2017. The note and the earn-out are due to a related party individual who became an employee of the Company upon the acquisition.~~

2019.

On ~~June 6, 2017,~~July 1, 2019, the Company acquired ~~all of the outstanding equity interests in Richard D. Kimball Co.,~~GeoDesign, Inc. ~~("RDK"~~(“GeoDesign”), ~~an established leader in the provision of energy efficiency~~a geotechnical, environmental, geological, mining and ~~mechanical, electric~~pavement engineering company with serving Washington, Oregon and ~~plum~~bing (MEP) services based in Boston, Massachusetts. In addition to MEP and fire protection services, RDK offers commissioning services, technology design services, and energy and sustainability services, including Whole Building Energy Modeling and ASHRAE Level Energy Audits, Green Building Certification, Energy Code Consulting, Carbon Emissions Management, and Renewable Energy Management. RDK primarily serves commercial, healthcare, science and technology, education, government, and transportation clients.California. The aggregate purchase price ~~of this acquisition~~ is up to ~~$22,500, subject to customary closing working capital adjustments,~~$12,800, including ~~$15,000 in~~$8,500 of cash, ~~$5,500~~$2,000 in promissory ~~notes~~note (bearing interest at ~~3.0%~~4%), payable in ~~four~~4 equal installments of ~~$1,375,~~$500 due on the first, second, third and fourth anniversaries of ~~June 6, 2017 (see Note 9), $667~~July 1, 2019 and $375 of the Company’s common stock ~~(18,072~~(4,731 shares) ~~as of~~issued at the closing ~~date of the acquisition, and $1,333 in stock or a combination of cash and shares~~date. The purchase price also includes $425 of the Company’s common stock ~~at our discretion,~~ payable ~~in two equal installments, due~~ on the first and second ~~anniversaries~~anniversary of ~~June 6, 2017.~~July 1, 2019. Further, the purchase price includes a $1,500 earn-out of cash, which was recorded at an estimated fair value of $1,456. In order to ~~ultimately~~ determine the fair values of tangible and intangible assets acquired and liabilities assumed for ~~RDK, we~~GeoDesign, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. ~~However, as of the date of this report, the valuation was not final. We expect~~The Company expects to finalize the purchase price allocation with respect to this transaction by the end of the fourth quarter 2019.

On June 3, 2019, the Company acquired Alta Environmental, L.P. (“Alta”), a consulting firm specializing in air quality, environmental building sciences, water resources, site assessment and remediation as well as environmental health and safety compliance services. The aggregate purchase price is up to $6,500, including $4,000 of ~~2017.~~

cash and $2,000 in promissory note (bearing interest at 4%), payable in 4 equal installments of $500 due on the first, second, third and fourth anniversaries of June 3, 2019. Further, the purchase price includes a $500 earn-out of cash, which was recorded at an estimated fair value of $485. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for Alta, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. The Company expects to finalize the purchase price allocation with respect to this transaction by the end of the fourth quarter 2019.

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On ~~May~~June 3, 2019, the Company acquired Page One Consultants (“Page One”), a program management and construction quality assurance firm based in Orlando, Florida. The aggregate purchase price is up to $3,900, including $2,000 of cash, $1,000 in promissory note (bearing interest at 3%), payable in 3 equal installments of $333 due on the first, second and third anniversaries of June 3, 2019 and $200 of the Company’s common stock (2,647 shares) issued at the closing date. The purchase price also includes $200 of the Company’s common stock payable on the first anniversary of June 3, 2019. Further, the purchase price includes a $500 earn-out of cash and stock, which was recorded at an estimated fair value of $448. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for Page One, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. The Company expects to finalize the purchase price allocation with respect to this transaction by the end of the fourth quarter 2019.

On March 22, 2019, the Company acquired The Sextant Group, Inc. (“The Sextant Group”), a national leading provider of audiovisual, information and communications technology, acoustics consulting, and design services headquartered in Pittsburgh, PA. The Sextant Group provides services throughout the U.S. and is well-known for creating integrated technology solutions for a wide range of public and private sector clients. The aggregate purchase price is up to $11,000, including $7,000 of cash and $4,000 in promissory note (bearing interest at 4%), payable in 4 ~~2017,~~equal installments of $1,000 due on the first, second, third and fourth anniversaries of March 22, 2019. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for The Sextant Group, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. The Company expects to finalize the purchase price allocation with respect to this transaction by the end of the fourth quarter 2019.

On December 31, 2018, the Company acquired certain assets of Celtic Energy, Inc. (“Celtic”), a nationally recognized energy consulting firm that specializes in energy project management and oversight. The aggregate purchase price is up to $1,900, including $1,000 in cash, $300 in promissory note (bearing interest at 3%), payable in 3 equal installments of $100 on the first, second and third anniversaries of December 31, 2018 and $200 of the Company’s common stock (3,227 shares) issued at the closing date. The purchase price also includes $200 of the Company’s common stock payable on the first anniversary of December 31, 2018. Further, the purchase price includes a $200 earn-out of cash, which was recorded at an estimated fair value of $181. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for Celtic, the Company performed a purchase price allocation.

2018Acquisitions

On November 2, 2018 the Company acquired CHI Engineering, Inc. (“CHI”), an infrastructure engineering firm based in Portsmouth, New Hampshire. CHI is a leading provider of engineering, procurement, and construction management services to the liquefied natural gas (“LNG”), petroleum gas (“LPG”) and Natural Gas industries. CHI’s client base includes the majority of LNG facility owner/operators in the U.S. The aggregate purchase price of this acquisition is up to $53,000, including $30,000 in cash, $15,000 in promissory notes (bearing interest at 3%), payable in 4 equal installments of $3,750 on the first, second, third and fourth anniversaries of November 2, 2018 and $3,000 of the Company’s common stock (36,729 shares) issued at the closing date. In July 2019, the Company received $2,360 from the sellers of CHI, as a working capital adjustment which was recorded a reduction of the purchase price paid for the acquisition of CHI. The purchase price also includes $3,000 of the Company’s common stock payable in 3 installments of $1,000, due on the first, second and third anniversaries of November 2, 2018. The purchase price also includes a $2,000 earn-out of cash (at a 3% interest rate which begins to accrue on January 1, 2020), which was recorded at its estimated fair value of $1,547, based on a probability-weighted approach valuation technique used to determine the fair value of the contingent consideration on the acquisition date. The note and the earn-out are due to related party individuals who became employees of the Company upon the acquisition. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for CHI, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values.

On August 24, 2018, the Company acquired all of the outstanding equity interests in ~~Holdrege & Kull, Consulting~~CALYX Engineers and ~~Geologists~~Consultants, Inc. (“~~H&K”~~CALYX”), ~~a full-service geotechnical engineering~~an infrastructure and transportation firm based in ~~Northern California. H&K~~Cary, North Carolina. CALYX provides roadway and structure design, transportation planning, water resources, construction services, toutility services, building structure design, land development, traffic services, cultural resources, surveying, and environmental services. CALYX serves both public ~~municipal and special district, industrial,~~ and private ~~sector clients.~~clients, including state departments of transportation, municipalities, developers, higher education, and healthcare systems. The acquisition of CALYX will expand our infrastructure engineering service in the southeast United States. The purchase price of this acquisition is $34,000, subject to customary closing working capital adjustments, including $25,000 in cash, $4,000 in promissory notes (bearing interest at 3.75%), payable in 4 installments of $1,000, due on the first, second, third and fourth

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anniversaries of August 24, 2018 (see Note 10), $3,000 of the Company’s common stock (36,379 shares) as of the closing date of the acquisition, and $2,000 in cash payable within 120 days of the closing date. The note is due to related party individuals who became employees of the Company. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for CALYX, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values.

On February 2, 2018, the Company acquired CSA (M&E) Ltd. (“CSA”), a leading provider of Mechanical, Electrical, and Plumbing (MEP) engineering and sustainability consulting services. CSA provides MEP and sustainability services for the retail, education, healthcare, industrial, corporate, hospitality and infrastructure market sectors with offices in Hong Kong, Macau and the UAE. CSA serves private and public sector clients throughout Asia and the Middle East. The purchase price of this acquisition was up to ~~$2,200~~$4,200, including ~~$1,000~~$2,000 in ~~cash,~~cash; $600 in promissory notes (bearing interest at ~~3.0%~~3%), payable in ~~four~~4 installments of $150, due on the first, second, third and fourth anniversaries of ~~May 4, 2017,~~February 2, 2018, the effective date of the ~~acquisition (see Note 9),~~acquisition; and ~~$100~~$150 of the ~~Company~~’sCompany’s common stock ~~(2,628~~(2,993 shares) issued as of the closing ~~date~~date. The purchase price also includes $250 of the Company’s common stock payable in 2 installments of $125, due on the first and second anniversaries of the acquisition. The purchase price also included ~~an interest~~a non-interest bearing earn-out of ~~$500 promissory note,~~up to $1,200 payable in cash and stock, subject to the achievement of certain agreed upon financial metrics for ~~calendar~~fiscal year ~~2017. The earn-out promissory note is payable in four installments of $125, due on the first, second, third and fourth anniversaries of May 4, 2017.~~2018. The earn-out of ~~$500~~$1,200 is non-interest bearing and was recorded at its estimated fair value of ~~$405,~~$899, based on a probability-weighted approach valuation technique used to determine the fair value of the contingent consideration on the acquisition date. The note and the earn-out are due to a related party ~~individual.~~individual who became an employee of the Company upon the acquisition. In order to ~~ultimately~~ determine the fair values of tangible and intangible assets acquired and liabilities assumed for ~~H&K, we~~CSA, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. ~~However, as of the date of this report, the valuation was not final. We expect to finalize the purchase price allocation with respect to this transaction by the end of the fourth quarter of 2017.~~

On ~~May 1, 2017,~~January 12, 2018, the Company acquired all of the outstanding equity ~~interests~~interest in ~~Lochrane Engineering,~~Butsko Utility Design, Inc. (“~~Lochrane”~~Butsko”)~~, an Orlando, Florida based civil engineering~~ ~~firm, which specializes~~. Butsko is leading provider of utility planning and design services serving both public and private sector clients through its offices in ~~the provision of services on major roadway projects,~~Southern California and ~~its major clients include the Florida Department of Transportation and Florida’s Turnpike Enterprise.~~Washington. The purchase price of this acquisition iswas up to ~~$4,940~~$4,250, including ~~$2,690~~$1,500 in ~~cash, $2,200~~cash; $1,000 in promissory notes (bearing interest at ~~3.0%~~3%), payable in ~~four~~4 installments of ~~$550,~~$250, due on the first, second, third and fourth anniversaries of ~~May 1, 2017,~~January 12, 2018, the effective date of the ~~acquisition (see Note 9), $17~~acquisition; and $300 of the Company’s common stock ~~(441~~(5,630 shares) issued as of the closing ~~date of the acquisition, and $33 in stock or a combination of cash and shares~~date. The purchase price also includes $600 of the Company’s common stock ~~at our discretion,~~ payable in ~~two equal~~2 installments of $300, due on the first and second anniversaries of ~~May 1, 2017. Included in~~ the ~~$2,200 promissory notes, is an~~acquisition. The purchase price also included a non-interest bearing earn-out of ~~$550,~~up to $850 payable in cash and stock, subject to the achievement of certain agreed upon financial metrics for ~~calendar~~fiscal year ~~2017.~~2018. The earn-out of ~~$550~~$850 is ~~interest~~non-interest bearing and was recorded at its estimated fair value of ~~$413,~~$666, based on a probability-weighted approach valuation technique used to determine the fair value of the contingent consideration on the acquisition date. The note and the earn-out are due to a related party ~~individual.~~individual who became an employee of the Company upon the acquisition. In order to ~~ultimately~~ determine the fair values of tangible and intangible assets acquired and liabilities assumed for ~~Lochrane, we~~Butsko, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. ~~However, as of the date of this report, the valuation was not final. We expect to finalize the purchase price allocation with respect to this transaction by the end of the fourth quarter of 2017.~~

On April 14, 2017, the Company acquired all of the outstanding equity interests in Bock & Clark Corporation (“B&C”), an Akron, Ohio based surveying, commercial zoning, and environmental services firm.

The acquisition of B&C will expand our cross-selling opportunities within our infrastructure engineering, surveying, and program management groups and with our financial and transactional real estate clients. The aggregate purchase price consideration paid by the Company in connection with the acquisition was $42,000, subject to customary closing working capital adjustments, funded entirely in cash. In order to ultimately determine the fair values of tangible and intangible assets acquired and liabilities assumed for Bock & Clark, we engaged a third-party independent valuation specialist to assist in the determination~~. However, as of the date of this report, the valuation was not final. We expect to finalize the purchase price allocation with respect to this transaction by the end of the fourth quarter of 2017.~~

~~On September 12, 2016, the Company acquired certain assets of~~ Weir Environmental, L.L.C. (“Weir”), a New Orleans, Louisiana-based emergency remediation and environmental assessment firm. Weir also provides residential and commercial property loss consulting services. The purchase price of this acquisition was $1,000 including $300 in cash, $500 promissory note (bearing interest at 3.0%), payable in four installments of $125, due on the first, second, third and fourth anniversaries of September 12, 2016, the effective date of the acquisition (see Note 9) and $200 of the Company’s common stock (6,140 shares) as of the closing date of the acquisition.

~~NV5 Global, Inc. and Subsidiaries~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(in thousands, except share data)~~

On May 20, 2016, the Company acquired Dade Moeller & Associates, Inc., a North Carolina corporation ("Dade Moeller"). Dade Moeller provides professional services in radiation protection, health physics, and worker safety to government and commercial facilities. Dade Moeller's technical expertise includes radiation protection, industrial hygiene and safety, environmental services and laboratory consulting. This acquisition expanded the Company’s environmental, health and safety services and allows the Company to offer these services on a broader scale within its existing network. The purchase price of this acquisition was $20,000 including $10,000 in cash, $6,000 in promissory notes (bearing interest at 3.5%), payable in four installments of $1,500, due on the first, second, third and fourth anniversaries of May 20, 2016, the effective date of the acquisition (see Note 9), $1,000 of the Company’s common stock (36,261 shares) as of the closing date of the acquisition, and $3,000 in stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in three installments of $1,000, due on the first, second and third anniversaries of May 20, 2016.

On February 1, 2016, the Company acquired Sebesta, Inc. (“Sebesta”), a St. Paul, Minnesota-based mechanical, electrical and plumbing (“MEP”) engineering and energy management company. Primary clients include federal and state governments, power and utility companies, and major educational, healthcare, industrial and commercial property owners throughout the United States. The purchase price of this acquisition was $14,000 paid from cash on hand. This acquisition expanded the Company’s MEP engineering and energy and allows the Company to offer these services on a broader scale within its existing network. In addition, this acquisition strengthens the Company’s geographic diversification and allows the Company to continue expanding its national footprint.

~~NV5 Global, Inc. and Subsidiaries~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(in thousands, except share data)~~

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition ~~dates~~date for the acquisitions closed during ~~2017~~2019 and ~~2016:~~

2017

2016

Acquisitions

Acquisitions

Cash
$ 315 $ 128
Accounts receivable
20,906 20,221
Property and equipment
1,750 4,301
Prepaid expenses
968 1,336
Other assets
337 841
Intangible assets:

Customer relationships
29,998 26,188
Trade name
2,224 1,922
Customer backlog
1,116 3,898
Non-compete
1,703 1,259
Favorable (unfavorable) lease
- (225 )
Total Assets
59,317 59,869
Liabilities
(11,272 ) (12,250 )
Deferred tax liabilities
(15,567 ) (7,892 )
Net assets acquired
32,478 39,727

Consideration paid (Cash, Notes and/or stock)
70,712 76,011
Contingent earn-out liability (Cash and stock)
908 1,417
Total Consideration
71,620 77,428
Excess consideration over the amounts assigned to the net assets acquired (Goodwill)
$ 39,142 $ 37,701

2018:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands, except share data)



	2019			2018
Cash	$	75		$	345
Billed and unbilled receivables, net	19,417			20,999
Property and equipment	1,580			3,122
Prepaid expenses	2,056			589
Other assets	164			83
Intangible assets:
Customer relationships	12,839			32,267
Trade name	910			2,479
Customer backlog	852			8,007
Non-compete	1,647			4,306
Total Assets	39,540			72,197
Liabilities	(9,263		)	(11,589		)
Deferred tax liabilities	(4,495		)	(8,903		)
Net assets acquired	$	25,782		$	51,705

Consideration paid (Cash, Notes and/or stock)	$	42,898		$	90,516
Contingent earn-out liability (Cash and stock)	2,570			3,112
Total Consideration	$	45,468		$	93,628
Excess consideration over the amounts assigned to the net assets acquired (Goodwill)	$	19,686		$	41,923

Goodwill was recorded based on the amount by which the purchase price exceeded the fair value of the net assets acquired and the amount is attributable to the reputation of the business acquired, the workforce in place and the synergies to be achieved from these acquisitions. ~~Goodwill acquired of $2,294~~See Note 8 for further information on goodwill and $0 during the nine months ended September 30, 2017 and 2016, respectively, was assigned to the INF reportable segment. Goodwill acquired of $36,848 and $15,793 during the nine months ended September 30, 2017 and 2016, respectively, was assigned to the Building, Technology, & Sciences (BTS) (formerly known as Building, Energy & Sciences (BES)) reportable segment. Goodwill of approximately $1,077 and $15,199 from acquisitions during the nine months ended September 30, 2017 and 2016, respectively, is expected to be deductible for income tax purposes.

~~The consolidated financial statements of the Company for the~~ three and nine months ended September 30, 2017 include the results of operations from the businesses acquired during 2017 from their respective dates of acquisition to September 30, 2017. For both the three and nine months ended September 30, 2017, the results include gross revenues of $21,316 and $35,524, respectively, and income before income taxes of $3,905 and $6,847, respectively. identified intangibles.

The consolidated financial statements of the Company for the three and nine months ended September ~~30, 2016~~28, 2019 and September 29, 2018 include the results of operations from ~~the businesses~~any business acquired ~~during 2016~~ from their respective dates of acquisition ~~to September 30, 2016. For~~during each of the three and nine months ended September 30, 2016, the results include gross revenues of $12,363 and $27,481, respectively, and income before income taxes of $1,108 and $2,560, respectively. Included in general and administrative expense for the three and nine months ended September 30, 2017 is $315 and $892, respectively, of acquisition-related costs pertaining to the Company’s acquisition activities.

respective period as follows:



	Three Months Ended				Nine Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
Gross Revenues	$	16,537	$	4,984	$	22,229	$	11,374
Income before income taxes	$	1,272	$	1,356	$	2,211	$	2,008

~~NV5 Global, Inc. and Subsidiaries~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(in thousands, except share data)~~

The following table presents the unaudited, pro forma consolidated results of operations (in thousands, except per share amounts) for the three and nine months ended September ~~30, 2017~~28, 2019 and September 29, 2018 as if ~~Dade Moeller, B&C~~the acquisitions of CHI, CALYX, The Sextant Group, Page One, Alta, WHPacific and ~~RDK acquisitions~~GeoDesign had occurred as of January 1, ~~2016.~~2018. The pro forma information provided below is compiled from the pre-acquisition financial ~~statements~~information of ~~Dade Moeller, B&C~~CHI, CALYX, The Sextant Group, Page One, Alta, WHPacific and ~~RDK,~~GeoDesign which includes pro forma adjustments for amortization expense, adjustments to certain expenses, and the income tax impact of these adjustments. The pro forma results are not necessarily indicative of (i) the results of operations that would have occurred had the ~~Dade Moeller, B&C and RDK~~ operations of these acquisitions actually been acquired on January 1, ~~2016;~~2018 or (ii) future results of operations:

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

2017

2016

2017

2016

Gross revenues
$ 91,263 $ 78,481 $ 262,496 $ 222,089
Net income
$ 5,912 $ 4,583 $ 13,541 $ 11,805
Basic earnings per share
$ 0.58 $ 0.45 $ 1.33 $ 1.32
Diluted earnings per share
$ 0.55 $ 0.43 $ 1.26 $ 1.25

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands, except share data)



	Three Months Ended				Nine Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
Gross revenues	$	131,032	$	141,249	$	403,162	$	417,672
Net income	$	5,843	$	9,526	$	19,407	$	24,550
Basic earnings per share	$	0.48	$	0.84	$	1.61	$	2.28
Diluted earnings per share	$	0.46	$	0.81	$	1.55	$	2.18

The Company has determined the supplemental disclosures pursuant to ASC 805-10-50-2h, for the ~~Lochrane, H&K~~Celtic, CSA and ~~Marron~~Butsko acquisitions were not material to the Company’s ~~unaudited interim~~ consolidated financial statements both individually and in the aggregate.

Note5 6– ~~Accounts Receivable, net~~

~~Accounts receivable, net,~~Billed andUnbilled Receivables

Billed and Unbilled Receivables consists of the following:

September 30,

December 31,

2017

2016

Billed
$ 81,399 $ 53,756
Unbilled
34,131 23,237
Contract retentions
580 510

116,110 77,503
Less: allowance for doubtful accounts
(3,106 ) (1,992 )
Accounts receivable, net
$ 113,004 $ 75,511

Billed accounts receivable represents amounts billed to clients that remain uncollected as of the balance sheet date. Unbilled accounts receivable represents recognized amounts pending billing pursuant to contract terms or accounts billed after period end, and are expected to be billed and collected within the next 12 months.



	September 28, 2019			December 29, 2018
Billed receivables	$	114,148		$	101,482
Less: allowance for doubtful accounts	(4,557		)	(3,158		)
Billed receivables, net	$	109,590		$	98,324

Unbilled receivables	$	55,206		$	44,799
Less: allowance for doubtful accounts	(1,388		)	(1,388		)
Unbilled receivables, net	$	53,818		$	43,411

~~NV5 Global, Inc. and Subsidiaries~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(in thousands, except share data)~~

Note 6 7– Property and Equipment, net

Property and equipment, net, consists of the following:

September 30,

December 31,

2017

2016

Office furniture and equipment
$ 1,575 $ 1,329
Computer equipment
8,530 6,808
Survey and field equipment
1,943 1,426
Leasehold improvements
1,670 1,583
13,718 11,146
Accumulated depreciation
(5,709 ) (4,463 )
Property and equipment – net
$ 8,009 $ 6,683



	September 28, 2019			December 29, 2018
Office furniture and equipment	$	2,877		$	2,328
Computer equipment	12,382			11,640
Survey and field equipment	6,388			5,526
Leasehold improvements	3,981			2,541
	25,628			22,035
Accumulated depreciation	(13,279		)	(10,358		)
	$	12,349		$	11,677

Depreciation expense was ~~$760~~$1,317 and ~~$2,014~~$3,591 for the three and nine months ended September ~~30, 2017,~~28, 2019, respectively and ~~$416~~$1,077 and ~~$1,207~~$3,111 for the three and nine months ended September ~~30, 2016,~~29, 2018, respectively.

Note 7 8– Goodwill and Intangible Assets

Goodwill

~~On August 1, 201~~7, the Company conducted its annual impairment tests using the quantitative method of evaluating goodwill. Based on the quantitative analyses the Company determined the fair value of each of the reporting units exceeded its carrying value. Therefore, the goodwill was not impaired and the Company did not recognize an impairment charge relating to goodwill as of August 1, 2017. There were no indicators, events or

The changes in ~~circumstances that would indicate goodwill was impaired during~~ the ~~period from August 2, 2017 through September 30, 2017.~~

~~The table set forth below shows~~carrying value by reportable segment for the ~~change in goodwill during the~~ nine months ended September ~~30, 2017 and year ended December 31, 2016:~~

September 30,

December 31,

2017

2016

Balance as of the beginning of the year
$ 59,380 $ 21,679
Acquisitions
39,142 37,701
Reduction from working capital proceeds
(1,138 ) -
Balance as of the end of the period
$ 97,384 $ 59,380

~~During the~~ ~~nine months ended September 30, 2017, the Company revised its allocation~~28, 2019 were as follows:

Table of ~~purchase price for its JBA acquisition and reduced goodwill by $1,138.~~

Contents

NV5 Global, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands, except share data)

Nine Months Ended
December 29, 2018 2019 Acquisitions Disposed/Adjustments September 28, 2019
INF $ 69,255
$ 13,797
$ (2,193 ) $ 80,859
BTS 71,675
5,889
—
77,564
Total $ 140,930
$ 19,686
$ (2,193 ) $ 158,423

Goodwill of approximately $5,712 and $13,549 from acquisitions during the nine months ended September 28, 2019 and September 29, 2018, respectively, is expected to be deductible for income tax purposes. In July 2019, the Company received $2,360 from the sellers of CHI, as a working capital adjustment which was recorded a reduction of goodwill and the purchase price paid for the acquisition of CHI.

Intangible Assets

Intangible assets, net, as of September ~~30, 2017~~28, 2019 and December ~~31, 2016~~29, 2018 consist of the following:

September 30, 2017

December 31, 2016

Gross
Carrying Amount

Accumulated Amortization

Net
Amount

Gross
Carrying Amount

Accumulated Amortization

Net
Amount

Customer relationships
$ 68,799 $ (9,720 ) $ 59,079 $ 38,801 $ (5,746 ) $ 33,055
Trade name
6,409 (4,477 ) 1,932 4,185 (2,746 ) 1,439
Customer backlog
7,723 (3,509 ) 4,214 6,607 (2,284 ) 4,323
Favorable lease
553 (134 ) 419 553 (158 ) 395
Non-compete
4,249 (1,519 ) 2,730 2,546 (897 ) 1,649
Total
$ 87,733 $ (19,359 ) $ 68,374 $ 52,692 $ (11,831 ) $ 40,861

Trade names are amortized on a straight-line basis over their estimated lives ranging from 1 to 3 years. Customer backlog and customer relationships are amortized on a straight-lines basis over estimated lives ranging from 1 to 9 years. Non-compete agreements are amortized on a straight-line basis over their contractual lives ranging from 4 to 5 years. Favorable lease is amortized on a straight-line basis over the remaining lease term of 9 years.



	September 28, 2019							December 29, 2018
	Gross Carrying Amount		Accumulated Amortization			Net Amount		Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer relationships (1)	$	113,794	$	(26,434	)	$	87,360	$	100,956	$	(18,724	)	$	82,232
Trade name (2)	9,798		(8,084		)	1,714		8,888		(6,469		)	2,419
Customer backlog (1)	16,853		(10,966		)	5,887		16,000		(6,730		)	9,270
Favorable lease (3)	553		(233		)	320		552		(197		)	355
Non-compete (4)	10,201		(4,794		)	5,407		8,554		(3,074		)	5,480
Total	$	151,199	$	(50,511	)	$	100,688	$	134,950	$	(35,194	)	$	99,756


(1)	Amortized on a straight-line basis over estimated lives (1 to 10 years)


(2)	Amortized on a straight-line basis over their estimated lives (1 to 3 years)


(3)	Amortized on a straight-line basis over the remaining lease term of 9 years


(4)	Amortized on a straight-line basis over their contractual lives (4 to 5 years)

Amortization expense was ~~$3,028~~$5,234 and ~~$7,528~~$15,317 for the three and nine months ended September ~~30, 2017,~~28, 2019, respectively and ~~$1,189~~$2,980 and ~~$3,077~~$8,549 for the three and nine months ended September ~~30, 2016,~~29, 2018, respectively.

~~As of~~ ~~September 30, 2017, the future estimated aggregate amortization related to intangible assets is as follows:~~

Period ending September 30,

2018
$ 10,370
2019
9,012
2020
7,461
2021
6,886
2022
6,642
Thereafter
28,003
Total
$ 68,374

Note 8 9– Accrued Liabilities

Accrued liabilities consist of the following:

September 30,

December 31,

2017

2016

Deferred rent
$ 675 $ 696
Payroll and related taxes
3,758 4,518
Professional liability reserve
316 190
Benefits
4,753 1,673
Accrued vacation
6,172 5,327
Unreognized tax benefits
770 770
Other
1,729 4,142
Total
$ 18,173 $ 17,316



	September 28, 2019		December 29, 2018
Accrued lease liability	$	10,768	$	—
Accrued vacation	9,958		7,994
Payroll and related taxes	5,383		8,136
Benefits	1,708		1,598
Unrecognized tax benefits	878		548
Professional liability reserve	1,168		157
Deferred rent	—		779
Other	3,791		1,641
Total	$	33,654	$	20,853

Note10– Notes Payableand Other Obligations

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands, except share data)

~~Note 9 – Notes Payable~~ ~~and Other Obligations~~

Notes payable and other obligations consists of the following:

September 30,

December 31,

2017

2016

Senior Credit Facility
$ 42,000 $ -
Note Payable
- 278
Other Obligations
6,449 6,047
Uncollateralized promisory notes
29,527 26,071
Total Notes Payable and Other Obligations
77,976 32,396
Current portion of notes payable and other obligations
(10,821 ) (10,764 )
Notes payable and other obligations, less current portion
$ 67,155 $ 21,632

September 28, 2019 December 29, 2018
Other obligations $ 3,774
$ 4,893
Uncollateralized promissory notes 41,765
40,001
Senior credit facility 10,000 —
Capital leases 2,676
2,092
Total notes payable and other obligations 58,215
46,986
Current portion of notes payable and other obligations (17,578 ) (17,139 )
Notes payable and other obligations, less current portion 40,638 29,847

As of September 28, 2019 and December 29, 2018, the carrying amount of debt obligations approximates their fair values based on Level 2 inputs as the terms are comparable to terms currently offered by local lending institutions for arrangements with similar terms to industry peers with comparable credit characteristics.

SeniorCredit Facility

On December ~~7, 2016, the Company~~20, 2018, we entered into an amendment to a Credit Agreement (the “Credit Agreement”) dated December 7, 2016 with Bank of America, N.A. (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPFS”). Pursuant to the amended Credit Agreement, Bank of America agreed to be the sole administrative agent for a five-year ~~$80,000~~$125,000 Senior Secured Revolving Credit Facility (“Senior Credit Facility”) to the Company and, together with PNC Bank, National Association and Regions Bank as the other lenders under the Senior Credit Facility, has committed to lend to the Company all of the Senior Credit Facility, subject to certain terms and conditions. The Senior Credit Facility is secured by a first priority lien on substantially all of the assets of the Company. MLPFS has undertaken to act as sole lead arranger and sole book manager for the Senior Credit Facility. In addition, the Senior Credit Facility includes an accordion feature permitting the Company to request an increase in the Senior Credit Facility by an additional amount of up to ~~$60,000.~~$100,000. The Senior Credit Facility includes a ~~$5,000~~$20,000 sublimit for the issuance of standby letters of credit and a $15,000 sublimit for swingline loans. The proceeds of the Senior Credit Facility are intended to be used (i) to finance permitted acquisitions, (ii) for capital expenditures, and (iii) for general corporate purposes.

Borrowings under the Credit Agreement are at variable rates which are, at our option, tied to a Eurocurrency rate equal to LIBOR (London Interbank Offered Rate) plus an applicable rate or a base rate denominated in U.S. dollars. Interest rates are subject to change based on our Consolidated Senior Leverage Ratio (as defined in the Credit Agreement).

The Senior Credit Facility contains certain financial covenants, including a maximum leverage ratio of ~~3.0:~~4.0:1 and a minimum fixed charge coverage ratio of 1.20:1. Furthermore, the Senior Credit Facility also contains financial reporting covenant provisions and other covenants, representations, warranties, indemnities, and events of default that are customary for facilities of this type. As of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, the Company is in compliance with ~~these~~the financial ~~and reporting~~ covenants. As of September ~~30, 2017 and~~28, 2019 there was $10,000 outstanding on the Senior Credit Facility. As of December ~~31, 2016, the~~29, 2018, we had 0 outstanding balance on the Senior Credit ~~Facility was $42,000 and $0, respectively.~~

~~Note Payable~~

Facility.

Other Obligations

On July 1, 2019, the Company acquired GeoDesign. The ~~note held by~~purchase price allowed for the ~~seller~~payment of ~~Nolte Associates Inc. (the “Nolte Note”) matur~~ed on July 29, 2017. The Nolte Note interest rate was prime rate plus 1%, subject to a maximum rate of 7.0%. As of September 30, 2017 and December 31, 2016, the actual interest rate was 4.25%. Under the terms$425 in shares of the ~~Nolte Note, as amended,~~Company’s stock or a combination of cash and shares of the ~~Company paid quarterly principal installments~~Company’s stock, at our discretion, payable on the first and second anniversary of ~~approximately $100 plus interest. The Nolte Note was unsecured and the Company was permitted to make periodic principal and interest payments. As of~~July 1, 2019. At September ~~30, 2017 and December 31, 2016,~~28, 2019, the outstanding balance of this obligation was $382.

On June 3, 2019, the Company acquired Page One. The purchase price allowed for the payment of $200 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable on the ~~Nolte Note~~first anniversary of June 3, 2019. At September 28, 2019, the outstanding balance of this obligation was ~~$0 and $278, respectively.~~

$181.

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NV5 Global, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands, except share data)

~~Other Obligations~~

On December 31, 2018, the Company acquired certain assets of Celtic. The purchase price allowed for the payment of $200 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable on the first anniversary of December 31, 2018. At September 28, 2019 the outstanding balance of this obligation was $181.

On November 2, 2018, the Company acquired CHI. The purchase price allowed for the payment of $3,000 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in 3 equal annual installments. At September 28, 2019 and December 29, 2018, the outstanding balance of this obligation was $2,631.

On February 2, 2018, the Company acquired CSA. The purchase price allowed for the payment of $250 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in 2 equal annual installments. At September 28, 2019 and December 29, 2018, the outstanding balance of this obligation was $111 and $222, respectively.

On January 12, 2018, the Company acquired all of the outstanding equity interest in Butsko. The purchase price allowed for the payment of $600 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in 2 equal annual installments. At September 28, 2019 and December 29, 2018, the outstanding balance of this obligation was $267 and $534, respectively.

On September 6, 2017, the Company acquired all of the outstanding equity interest in Marron. The purchase price allowed for the payment of ~~$133~~$133 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in ~~two~~2 equal ~~installments, due~~annual installments. There was 0 outstanding balance on ~~the first and second anniversaries~~this obligation as of September ~~6, 2017. The~~28, 2019. At December 29, 2018, the outstanding balance of this obligation was ~~$133 and $0 as of September 30, 2017 and December 31, 2016, respectively.~~

$55.

On June 6, 2017, the Company acquired all of the outstanding equity interest in RDK. The purchase price allowed for the payment of ~~$1,333~~$1,333 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in ~~two~~2 equal ~~installments, due~~annual installments. There was 0 outstanding balance on ~~the first and second anniversaries~~this obligation as of ~~June 6, 2017. The~~September 28, 2019. At December 29, 2018, the outstanding balance of this obligation ~~was $1,333 and $0 as of September 30, 2017 and December 31, 2016, respectively.~~

$504.

On November 30, 2016, the Company acquired all of the outstanding equity interests of Hanna. The purchase price allowed for the payment of $1,200 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in two installments of $600, due on the first and second anniversaries of November 30, 2016. The outstanding balance of this obligation was $1,200 as of September 30, 2017 and December 31, 2016.

On October 26, 2016, the Company acquired all of the outstanding equity interests of JBA. The purchase price allowed for the payment of $2,600 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in two installments of $1,300, due on the first and second anniversaries of October 26, 2016. The outstanding balance of this obligation was $2,600 as of September 30, 2017 and December 31, 2016.

On May 20, 2016, the Company acquired all of the outstanding equity interests of Dade Moeller. The purchase price allowed for the payment of $3,000 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in ~~three~~3 equal annual installments of ~~$1,000, due~~$1,000. There was 0 outstanding balance on ~~the first, second and third anniversaries~~this obligation as of ~~May 20, 2016. The~~September 28, 2019. At December 29, 2018, the outstanding balance of this obligation was $936.

Uncollateralized Promissory Notes

On July 1, 2019, the Company acquired GeoDesign. The purchase price included an uncollateralized $2,000 promissory note bearing interest at 4.0% (“GeoDesign Note”) and ~~$3,000~~payable in 4 equal annual installments. The outstanding balance of the GeoDesign Note was $2,000 as of September ~~30, 2017~~28, 2019.

On June 3, 2019, the Company acquired Alta. The purchase price included an uncollateralized $2,000 promissory note bearing interest at 4.0% (“Alta Note”) and payable in 4 equal annual installments. The outstanding balance of the Alta Note was $2,000 as of September 28, 2019.

On June 3, 2019, the Company acquired Page One. The purchase price included an uncollateralized $1,000 promissory note bearing interest at 3.0% (“Page One Note”) and payable in 3 equal annual installments. The outstanding balance of the Page One Note was $1,000 as of September 28, 2019.

On March 22, 2019, the Company acquired The Sextant Group. The purchase price included an uncollateralized $4,000 promissory note bearing interest at 4.0% (“The Sextant Group Note”) and payable in 4 equal annual installments. The outstanding balance of The Sextant Group Note was $4,000 as of September 28, 2019.

On December 31, 2018, the Company acquired certain assets of Celtic. The purchase price included an uncollateralized $300 promissory note bearing interest at 3.0% (the “Celtic Note”) payable in 3 equal annual installments. The outstanding balance of the Celtic note was $300 as of September 28, 2019.

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NV5 Global, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands, except share data)

On November 2, 2018, the Company acquired CHI. The purchase price included an uncollateralized $15,000 promissory note bearing interest at 3.0% (the “CHI Note”) payable in 4 equal annual installments. The outstanding balance of the CHI Note was $15,000 as of September 28, 2019 and December ~~31, 2016,~~29, 2018.

On August 24, 2018, the Company acquired CALYX. The purchase price included an uncollateralized $4,000 promissory note bearing interest at 3.75% (the “CALYX Note”) payable in 4 equal annual installments. The outstanding balance of the CALYX Note was $3,000 and $4,000 as of September 28, 2019 and December 29, 2018, respectively.

~~Uncollateralized Promissory Notes~~

On February 2, 2018, the Company acquired CSA. The purchase price included an uncollateralized $600 promissory note bearing interest at 3.0% (the “CSA Note”) payable in 4 equal annual installments. The outstanding balance of the CSA Note was $450 and $600 as of September 28, 2019 and December 29, 2018, respectively.

On January 12, 2018, the Company acquired all of the outstanding equity interest in Butsko. The purchase price included an uncollateralized $1,000 promissory note bearing interest at 3.0% (the “Butsko Note”) payable in 4 equal annual installments. The outstanding balance of the Butsko Note was $750 and $1,000 as of September 28, 2019 and December 29, 2018, respectively.

On September 6, 2017, the Company acquired all of the outstanding interests in Marron. The purchase price included an uncollateralized $300 promissory note bearing interest at 3.0% (the “Marron Note”) payable in ~~three installments of $100, due on the first, second and third anniversaries of September 6, 2017.~~3 equal annual installments. The outstanding balance of the Marron Note was ~~$300~~$100 and $0$200 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively.

On June 6, 2017, the Company acquired all of the outstanding equity interest in RDK. The purchase price included an uncollateralized $5,500 promissory note bearing interest at 3.0% (the “RDK Note”) payable in ~~four installments of $1,375, due on the first, second, third and fourth anniversaries of June 6, 2017.~~4 equal annual installments. The outstanding balance of the RDK Note was ~~$5,500~~$2,750 and $0$4,125 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively.

On May 4, 2017, the Company acquired all of the outstanding equity interest in H&K. The purchase price included an uncollateralized $600 promissory note bearing interest at 3.0% (the “H&K Note”) payable in ~~four installments of $150, due on the first, second, third and fourth anniversaries of May~~ 4 ~~2017, the effective date of the acquisition.~~equal annual installments. The outstanding balance of the H&K Note was ~~$600~~$300 and $0$450 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively.

On May 1, 2017, the Company acquired all of the outstanding equity interest in Lochrane. The purchase price included an uncollateralized $1,650 promissory note bearing interest at 3.0% (the “Lochrane Note”) payable in ~~four installments of $413, due on the first, second, third and fourth anniversaries of May 1, 2017, the effective date of the acquisition.~~4 equal annual installments. The outstanding balance of the Lochrane Note was ~~$1,650~~$825 and $0$1,238 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively.

~~NV5 Global, Inc. and Subsidiaries~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(in thousands, except share data)~~

On December 6, 2016, the Company acquired all of the outstanding interests of CivilSource. The purchase price included an uncollateralized $3,500 promissory note bearing interest at 3.0% (the “CivilSource Note”) payable in ~~four installments of $875, due on the first, second, third and fourth anniversaries of December 6, 2016, the effective date of the acquisition.~~4 equal annual installments. The outstanding balance of the CivilSource Note was ~~$3,500~~$1,606 and $2,625 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively.

On November 30, 2016, the Company acquired all of the outstanding interests of ~~Hanna~~.Hanna. The purchase price included an uncollateralized $2,700 promissory note bearing interest at 3.0% (the “Hanna Note”) payable in ~~four installments of $675, due on the first, second, third and fourth anniversaries of November 30, 2016, the effective date of the acquisition.~~4 equal annual installments. The outstanding balance of the Hanna Note was ~~$2,700~~$1,350 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016, respectively.~~

29, 2018.

On October 26, 2016, the Company acquired all of the outstanding interests of ~~JBA~~.JBA. The purchase price included an uncollateralized $7,000 promissory note bearing interest at 3.0% (the “JBA Note”) payable in ~~five installments of $1,400, due on the first, second, third, fourth and fifth anniversaries of October 26, 2016, the effective date of the acquisition.~~5 equal annual installments. The outstanding balance of the JBA Note was ~~$7,000~~$4,200 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016, respectively.~~

29, 2018.

On September 12, 2016, the Company acquired certain assets of Weir. The purchase price included an uncollateralized $500 promissory note bearing interest at 3.0% (the “Weir Note”) payable in ~~four installments of $125, due on the first, second, third and fourth anniversaries of September 12, 2016, the effective date of the acquisition.~~4 equal annual installments. The outstanding balance of the Weir Note was ~~$375~~$125 and ~~$500~~$250 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively.

On May 20, 2016, the Company acquired all of the outstanding equity interests of Dade Moeller. The purchase price included an aggregate of $6,000 of uncollateralized promissory notes bearing interest at 3.0% (the “Dade Moeller Notes”) payable in ~~four~~4 equal ~~payments of $1,500 each due on the first, second, third, and fourth anniversaries of May 20, 2016, the effective date of the acquisition.~~annual installments. The outstanding balance of the Dade Moeller Notes was ~~approximately $4,500~~$1,497 and ~~$6,000~~$3,036 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively.

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NV5 Global, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands, except share data)

On July 1, 2015, the Company acquired all of the outstanding equity interests of RBA. The purchase price included an uncollateralized $4,000 promissory notes bearing interest at 3.0% (the “RBA Note”) payable in ~~four~~4 equal ~~payments of $1,000 each due~~annual installments. There was 0 outstanding balance on the ~~first, second, third, and fourth anniversaries~~RBA Note as of ~~July 1, 2015, the effective date of the acquisition.~~September 28, 2019. The outstanding balance of the RBA Note was ~~$2,000 and $3,000~~$1,000 as of ~~September 30, 2017 and~~ December ~~31, 2016, respectively.~~

On June 24, 2015, the Company acquired certain assets of Allwyn. The purchase price included an uncollateralized $500 promissory note bearing interest at 3.5% (the “Allwyn Note”) that is payable in three equal payments of $167 each due on the first, second and third anniversaries of June 24, 2015, the effective date of the acquisition. The outstanding balance of the Allwyn Note was ~~$166 and $333 as of September 30, 2017 and December 31, 2016, respectively.~~

On April 22, 2015, the Company acquired all of the outstanding equity interests of Mendoza. The purchase price included an uncollateralized $3,000 short-term promissory note, based on the collection of acquired accounts receivable and work in process, payable within one year, and an uncollateralized $500 promissory note bearing interest at 3% (the “Mendoza Note”) that is payable in two equal payments of $250 each due on the first and second anniversaries of April 22, 2015, the effective date of the acquisition. The outstanding balance of the Mendoza Note was ~~$0 and $250 as of September 30, 2017 and December 31, 2016, respectively.~~

29, 2018.

On January 30, 2015, the Company acquired all of the outstanding equity interests of JLA. The purchase price included an uncollateralized $1,250 promissory note bearing interest at 3.5% (the “JLA Note”) ~~that is~~ payable in ~~four~~4 equal ~~payments of $313 each due~~annual installments. There was 0 outstanding balance on the ~~first, second, third, and fourth anniversaries~~JLA Note as of ~~January 30, 2015,~~September 28, 2019. As of December 29, 2018, the ~~effective date of the acquisition. The~~ outstanding balance of the JLA ~~Note~~note was ~~$625 and $938 as of September 30, 2017 and December 31, 2016, respectively.~~

On November 3, 2014, the Company acquired certain assets of the Buric Companies. The purchase price included an uncollateralized, 3% interest bearing promissory note in the aggregate principal amount of $300 (the “Buric Note”). The note is payable in three equal payments of $100 due on the first, second and third anniversaries of November 3, 2014, the effective date of the acquisition. The carrying value of the Buric $313.

Note ~~was approximately~~ ~~$100 as of September 30, 2017 and December 31, 2016.~~

~~NV5 Global, Inc. and Subsidiaries~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(in thousands, except share data)~~

On March 21, 2014, the Company acquired all of the outstanding equity interests of NV5, LLC. The purchase price included an uncollateralized $3,000 promissory note bearing interest at 3.0% (the “AK Note”) that is payable in three equal payments of $1,000 each due on the first, second and third anniversaries of March 21, 2014, the effective date of the acquisition. The outstanding balance of the AK Note was $0 and $1,000 as of September 30, 2017 and December 31, 2016.

~~Future contractual maturities of long-term debt as of September 30, 2017 are as follows:~~

Period ending September 30,

2018
$ 10,821
2019
12,257
2020
6,612
2021
46,886
2022
1,400
Total
$ 77,976

~~As of~~ September 30, 2017 and December 31, 2016, the carrying amount of debt obligations approximates their fair values based on Level 2 inputs as the terms are comparable to terms currently offered by local lending institutions for arrangements with similar terms to industry peers with comparable credit characteristics.

~~Note 10~~ 11– Contingent Consideration

The following table summarizes the changes in the carrying value of estimated contingent consideration:

September 30,

December 31,

2017

2016

Contingent consideration, beginning of the year
$ 2,439 $ 1,279
Additions for acquisitions
908 1,417
Reduction of liability for payments made
(625 ) (458 )
Increase of liability related to re-measurement of fair value
56 201
Total contingent consideration, end of the period
2,778 2,439
Current portion of contingent consideration
(2,653 ) (564 )
Contingent consideration, less current portion
$ 125 $ 1,875

September 28, 2019 December 29, 2018
Contingent consideration, beginning of the year $ 4,698
$ 1,890
Additions for acquisitions 2,737
3,112
Reduction of liability for payments made (1,938 ) (728 )
Increase of liability related to re-measurement of fair value 49
424
Total contingent consideration, end of the period 5,546
4,698
Current portion of contingent consideration (3,351 ) (1,845 )
Contingent consideration, less current portion $ 2,195
$ 2,853

Note 11 12– Commitments and Contingencies

Litigation, Claims and Assessments

~~The Company is~~

We are subject to certain claims and lawsuits typically filed against the engineering, consulting and construction profession, alleging primarily professional errors or omissions. The Company carries professional liability insurance, subject to certain deductibles and policy limits, against such claims. However, in some actions, parties are seeking damages that exceed our insurance coverage or for which we are not insured. While management does not believe that the resolution of these claims will have a material adverse effect, individually or in aggregate, on its financial position, results of operations or cash flows, management acknowledges the uncertainty surrounding the ultimate resolution of these matters.

~~NV5 Global, Inc. and Subsidiaries~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(in thousands, except share data)~~

~~The Com~~pany’s office leases are classified as operating leases and rent expense is included in facilities and facilities related expense in the Company’s Consolidated Statements of Net Income and Comprehensive Income. Some lease terms include rent and other concessions and rent escalation clauses which are included in computing minimum lease payments. Minimum lease payments are recognized on a straight-line basis over the minimum lease term. The variance of rent expense recognized from the amounts contractually due pursuant to the underlying leases is included in accrued liabilities in the Company’s consolidated balance sheets.

Note 12 13– Stock-Based Compensation

In October 2011, ~~the Company~~’sour stockholders approved the 2011 Equity Incentive Plan, which was subsequently amended and restated in March 2013 (as amended, the “2011 Equity Plan”). The 2011 Equity Plan provides directors, executive officers, and other employees of the Company with additional incentives by allowing them to acquire ownership interest in the business and, as a result, encouraging them to contribute to the Company’s success. ~~The Company~~We may provide these incentives through the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units, and other cash-based or stock-based awards. As of September ~~30, 2017, 826,305~~28, 2019, 1,256,403 shares of common stock are authorized and reserved for issuance under the 2011 Equity Plan. This reserve automatically increases on each January 1 from 2014 through 2023, by an amount equal to the smaller of (i) 3.5% of the number of shares issued and outstanding on the immediately preceding December 31, or (ii) an amount determined by ~~the Company’s~~our Board of Directors. The restricted shares of common stock granted generally provide for service-based vesting after two to four years following the grant date. ~~A summary~~

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NV5 Global, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands, except share data)

The following summarizes the ~~changes in unvested shares~~activity of ~~the~~ restricted stock awards during the nine months ended ~~year ended~~ September ~~30, 2017 is presented below.~~

~~The following table summarizes the status of restricted stock awards as of~~ ~~September 30, 2017 and December 31, 2016, and changes during 2017:~~

Number of Unvested
Restricted Shares of
Common Stock and
Restricted Stock
Units

Weighted Average
Grant Date Fair
Value

Unvested shares as of December 31, 2016
502,773 $ 19.35
Granted
186,437 $ 37.76
Vested
(90,305 ) $ 9.48
Forfeited
(25,336 ) $ 28.79
Unvested shares as of September 30, 2017
573,569 $ 26.47

28, 2019:



	Number of Unvested Restricted Shares of Common Stock and Restricted Stock Units	Weighted Average Grant Date Fair Value
December 29, 2018	626,911	$	39.81
Granted	248,694	$	72.98
Vested	(204,655)	$	20.24
Forfeited	(35,263)	$	51.84
September 28, 2019	635,687	$	58.42

Share-based compensation expense relating to restricted stock awards during the three and nine months ended September ~~30, 2017~~28, 2019 was ~~$1,161~~$2,822 and ~~$2,743,~~$6,989, respectively and ~~$655~~$1,902 and ~~$1,704~~$4,541, respectively, for the three and nine months ended September ~~30, 2016, respectively.~~29, 2018. Approximately ~~$9,895~~$19,867 of deferred compensation, which is expected to be recognized over the remaining weighted average vesting period of ~~2.6~~2.33 years, is unrecognized at September ~~30, 2017.~~

28, 2019. The total fair value of restricted shares vested during the nine months ended September 28, 2019 and September 29, 2018 was $14,514 and $7,422, respectively.

Note 13 14– Income Taxes

~~In November 2015, the FASB issued ASU 2015-17,~~ ~~Balance Sheet Classification of Deferred Taxes~~ to simplify the presentation of deferred income taxes. The amendments in this update require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The Company adopted ASU 2015-17 as of January 1, 2017 and retrospectively applied ASU 2015-17 to all periods presented. As of January 1, 2017, the Company reclassified $2,173 of deferred tax assets from "Current assets" to "Non-current liabilities" on the Consolidated Balance Sheets.

As of September ~~30, 2017~~28, 2019 and December ~~31, 2016, the Company~~29, 2018, we had net ~~non-current~~ deferred income tax liabilities of ~~$22,084~~$16,881 and ~~$6,197,~~$16,224, respectively. NoNaN valuation allowance against ~~the Company’s~~our deferred income tax assets is needed as of September ~~30, 2017~~28, 2019 and December ~~31, 2016~~29, 2018 as it is more-likely-than-not that the positions will be realized upon settlement. Deferred income tax liabilities primarily relate to intangible assets and accounting basis adjustments where ~~the Company has~~we have a future obligation for tax purposes. During the nine months ended September 30, 2017, the Company recorded a deferred tax liability of approximately $15,567 in conjunction with the purchase price allocation of B&C, RDK and H&K as a result of the intangibles acquired in the acquisitions.

~~NV5 Global, Inc. and Subsidiaries~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~(in thousands, except share data)~~

~~The Company~~’sOur consolidated effective income tax rate was ~~29.9%~~22.9% and ~~27.8%~~24.1%, respectively, for the three and nine months ended September ~~30, 2017,~~28, 2019 and 24.5% and 24.8%, respectively, ~~and 36.9% and 36.8%~~ for the three and nine months ended September ~~30, 2016, respectively. The difference between the effective income~~29, 2018. Our tax rate and the combined statutory federal and state income tax rate is principally due to the federal domestic production activities deduction and research and development credits. Furthermore, during the three and nine months ended September 30, 2017, the Company recorded a reduction in income tax expense of $114 and $974, respectively, relating to theprovision includes an income tax benefit ~~received in conjunction with~~related to the vesting of restricted stock ~~during the periods. Also contributing to the decrease in the effective tax rate~~totaling $121 and $2,593, respectively, for the three and nine months ended September ~~30, 2017, is~~28, 2019 and $95 and $1,210, respectively, for the ~~lower effective tax rate applicable to the Asia operations purchased in the JBA acquisition at the end of 2016.~~

~~The Company evaluates~~three and nine months ended September 29, 2018.

We evaluate tax positions for recognition using a more-likely-than-not recognition threshold, and those tax positions eligible for recognition are measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon the effective settlement with a taxing authority that has full knowledge of all relevant information. The California Franchise Tax Board (“CFTB”) ~~is challenging the use of certain~~challenged research and development tax credits generated for the years ~~2005~~2012 to 2014. Fiscal years ~~2005~~2012 through ~~2016~~2018 are considered open tax years in the State of California and ~~2013~~2015 through ~~2016~~2018 in the U.S. federal jurisdiction and other state jurisdictions. ~~During 2016,~~The evaluation by the ~~Internal Revenue Service informed the Company of its interest to examine the income tax return for the tax year 2014.~~

AtCFTB is ongoing and at September ~~30, 2017~~28, 2019 and December ~~31, 2016, the Company~~29, 2018, we had ~~$770 of unrecognized tax benefits. Included in the balance~~$878 and $548, respectively, of unrecognized tax benefits, ~~at September 30, 2017 and December 31, 2016 were $770 of tax benefits that,~~which if recognized would affect our effective tax rate. It is not expected that there will be a significant change in the unrecognized tax benefits in the next 12 months.

Note 1415– Reportable Segments

~~The Company reports~~

We report segment information in accordance with ASC Topic No. 280 “Segment Reporting”(“ (“Topic No. 280”). ~~The Company’s~~Our Chief Executive Officer is the chief operating decision maker and organized the Company into ~~two~~2 operating and reportable segments: Infrastructure (INF), which includes our engineering, civil program management, and construction quality assurance practices; and Building, Technology & Sciences (BTS) ~~(formerly Building, Energy & Sciences (BES))~~, which includes our energy, ~~and~~ environmental practices ~~as well as~~and buildings program ~~management.~~

~~The Company evaluates~~management practices.

We evaluate the performance of these reportable segments based on their respective operating income before the effect of amortization expense related to acquisitions and other unallocated corporate expenses. ~~The Company accounts~~We account for inter-segment revenues and transfers as if the sales and transfers were to third parties. All ~~significant~~ intercompany balances and transactions are eliminated in consolidation.

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NV5 Global, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands, except share data)

The following tables set forth summarized financial information concerning our reportable ~~segments. Prior period segment financial information presented has been recast to reflect the reorganized reporting structure~~ ~~that occurred during the fourth quarter of 2016:~~

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

2017

2016

2017

2016

Gross revenues

INF
$ 49,024 $ 42,713 $ 134,446 $ 118,902
BTS
43,262 18,846 107,997 45,637
Elimination of inter-segment revenues
(1,023 ) (1,468 ) (3,385 ) (3,651 )
Total gross revenues
$ 91,263 $ 60,091 $ 239,058 $ 160,888

Segment income before taxes

INF
$ 9,559 $ 7,065 $ 23,749 $ 19,676
BTS
6,974 2,704 15,065 5,607
Total Segment income before taxes
16,533 9,769 38,814 25,283
Corporate ⁽¹⁾
(8,098 ) (4,375 ) (21,510 ) (12,118 )
Total income before taxes
$ 8,435 $ 5,394 $ 17,304 $ 13,165

segments:



	Three Months Ended						Nine Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018
Gross revenues
INF	$	89,035		$	64,053		$	250,354		$	180,611
BTS	43,060			41,441			128,706			125,344
Elimination of inter- segment revenues	(1,063		)	(1,309		)	(2,720		)	(3,218		)
Total gross revenues	$	131,032		$	104,185		$	376,340		$	302,737


Segment income before taxes
INF	$	14,008		$	11,108		$	41,273		$	28,951
BTS	6,871			7,236			20,287			21,069
Total Segment income before taxes	20,879			18,344			61,560			50,020
Corporate ⁽¹⁾	(13,476		)	(8,821		)	(37,958		)	(26,107		)
Total income before taxes	$	7,403		$	9,523		$	23,602		$	23,913

⁽¹⁾
⁽¹⁾	Includes amortization of intangibles of ~~$3,028~~$5,234 and ~~$1,189~~15,317 for the three and nine months ended September 28, 2019, respectively and $2,980 and $8,549 for the three and nine months ended September 29, 2018, respectively.

Upon adoption of Topic 606, we disaggregate our gross revenues from contracts with customers by geographic location, customer-type and contract-type for each of our reportable segments. Disaggregated revenues include the elimination of inter-segment revenues which has been allocated to each segment. We believe this best depicts how the nature, amount, timing and uncertainty of our revenues and cash flows are affected by economic factors.



	Three Months Ended September 28, 2019						Nine Months Ended September 28, 2019
	INF		BTS		Total		INF		BTS		Total
Gross revenues by Geographic Location
United States	$	87,572	$	41,872	$	129,444	$	247,634	$	121,829	$	369,463
Foreign	—		1,588		1,588		—		6,877		6,877
Total gross revenues	$	87,572	$	43,460	$	131,032	$	247,634	$	128,706	$	376,340

	Three Months Ended September 29, 2018						Nine Months Ended September 29, 2018
	INF		BTS		Total		INF		BTS		Total
Gross revenues by Geographic Location
United States	$	63,514	$	38,678	$	102,192	$	178,531	$	115,371	$	293,902
Foreign	—		1,993		1,993		—		8,835		8,835
Total gross revenues	$	63,514	$	40,671	$	104,185	$	178,531	$	124,206	$	302,737

Table of Contents

NV5 Global, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands, except share data)



	Three Months Ended September 28, 2019						Nine Months Ended September 28, 2019
	INF		BTS		Total		INF		BTS		Total
Gross revenues by Customer
Public and quasi-public sector	$	69,297	$	17,899	$	87,196	$	209,837	$	50,471	$	260,308
Private sector	18,275		25,561		43,836		37,797		78,235		116,032
Total gross revenues	$	87,572	$	43,460	$	131,032	$	247,634	$	128,706	$	376,340

	Three Months Ended September 29, 2018						Nine Months Ended September 29, 2018
	INF		BTS		Total		INF		BTS		Total
Gross revenues by Customer
Public and quasi-public sector	$	58,157	$	15,469	$	73,626	$	162,193	$	49,519	$	211,712
Private sector	5,357		25,202		30,559		16,338		74,687		91,025
Total gross revenues	$	63,514	$	40,671	$	104,185	$	178,531	$	124,206	$	302,737



	Three Months Ended September 28, 2019						Nine Months Ended September 28, 2019
	INF		BTS		Total		INF		BTS		Total
Gross revenues by Contract Type
Cost-reimbursable contracts	$	84,426	$	31,797	$	116,223	$	240,166	$	99,935	$	340,101
Fixed-unit price contracts	3,146		11,663		14,809		7,468		28,771		36,239
Total gross revenues	$	87,572	$	43,460	$	131,032	$	247,634	$	128,706	$	376,340

	Three Months Ended September 29, 2018						Nine Months Ended September 29, 2018
	INF		BTS		Total		INF		BTS		Total
Gross revenues by Contract Type
Cost-reimbursable contracts	$	63,507	$	32,196	$	95,703	$	178,255	$	98,756	$	277,011
Fixed-unit price contracts	7		8,475		8,482		276		25,450		25,726
Total gross revenues	$	63,514	$	40,671	$	104,185	$	178,531	$	124,206	$	302,737

Note 16 – Leases

Our operating leases consist of various office facilities, which we lease from unrelated parties. We use a portfolio approach to account for such leases due to the similarities in characteristics and apply an incremental borrowing rate equal to the interest rate of our existing secured line of credit. Our office leases with an initial term of 12 months or less are not recorded on the balance sheet. We account for lease components (e.g. fixed payments including rent, real estate taxes and common area maintenance costs) as a single lease component. Some of our leases include one or more options to renew the lease term at our sole discretion; however, these are not included in the calculation of our lease liability or ROU lease asset because they are not reasonably certain of exercise.

We also lease vehicles through a fleet leasing program. The payments for the vehicles are based on the terms selected. We have determined that it is reasonably certain that the leased vehicles will be held beyond the period in which the entire capitalized value of the vehicle has been paid to the lessor. As such, the capitalized value is the delivered price of the vehicle. Our vehicle leases are classified as financing leases.

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NV5 Global, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands, except share data)



Leases	Classification	September 28, 2019
Assets
Operating lease assets	Right-of-use lease asset, net (1)	$	42,366
Finance lease assets	Property and equipment, net (1)	2,311
Total leased assets		$	44,677
Liabilities
Current
Operating	Accrued liabilities	$	10,768

Finance	Current portion of notes payable and other obligations	896
Noncurrent
Operating	Long-term lease liability	32,781

Finance	Notes payable and other obligations, less current portion	1,780
Total lease liabilities		$	46,225

(1): At September 28, 2019, operating right of-use lease assets and finance lease assets are recorded net of accumulated amortization of $6,770 and $1,365, respectively.



		Three Months Ended		Nine Months Ended
Lease Cost	Classification	September 28, 2019		September 28, 2019
Operating lease cost	Facilities and facilities related	$	2,995	$	8,237
Finance lease cost
Amortization of financing lease assets	Depreciation and amortization	193		517
Interest on lease liabilities	Interest expense	26		71
Total lease cost		$	3,214	$	8,825



Maturity of Lease Liabilities	Operating Leases		Finance Leases
2019	$	3,257	$	234
2020	11,742		975
2021	10,079		874
2022	7,325		611
2023	5,934		353
Thereafter	9,965		103
Total lease payments	48,302		3,150
Less: Interest	4,753		474
Present value of lease liabilities	$	43,549	$	2,676

Table of Contents

NV5 Global, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands, except share data)


	~~September 30, 2017 and 2016, respectively, and $7,528 and $3,077 for the nine months~~
Weighted - AverageRemainingLeaseTerm (Years)	~~ended~~	September ~~30, 2017 and 2016, respectively.~~ 28, 2019
Operating leases		5.3
Finance leases		2.7
Weighted - AverageDiscountRate
Operating leases		4%
Finance leases		7%



	Nine Months Ended
Supplemental Cash Flow Information	September 28, 2019
Operating cash flows from operating leases	$	7,833
Financing cash flows from finance leases	$	543
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	14,251

Future minimum payments under non-cancelable operating leases as of December 29, 2018 were as follows:



Years Ended	Amount
2019	$	9,506
2020	8,054
2021	7,224
2022	5,364
2023	4,504
Thereafter	7,704
Total minimum lease payments	$	42,356

Table of Contents

NV5 Global, Inc. and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(in thousands, except share data)

Note 17 – Subsequent Events

On November 6, 2019, the Company and one of its direct subsidiaries (“Merger Sub,” and together with NV5, the “NV5 Parties”), and Geospatial Holdings Inc. (“Geospatial”) and Arlington Capital Partners III, L.P., a Delaware limited partnership, solely in its capacity as representative for the stockholders and optionholders of Geospatial, entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provides that, at the effective time and upon the terms and subject to the conditions set forth therein and in accordance with applicable law, Merger Sub will merge with and into Geospatial (the “Merger”) with Geospatial continuing as the surviving entity after the Merger and a direct, wholly-owned subsidiary of the Company. The board of directors of NV5 approved the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement.

The Merger is structured as an all cash transaction, and the Company estimates that its aggregate obligations under the Merger Agreement will be approximately $303 million. In connection with the Merger, the Company entered into a commitment letter (the “Commitment Letter”) with Bank of America, N.A., BofA Securities, Inc., PNC Bank, National Association and PNC Capital Markets LLC (collectively, the “Lead Arrangers”) to amend the Senior Credit Facility to provide additional borrowing facilities (the “Incremental Facility”), including a $150 million term loan tranche and a $90 million increase in the existing $125 million revolving facility, for a total availability of $365 million. The funding of the Incremental Facility provided for in the Commitment Letter is contingent on the satisfaction of customary conditions, including but not limited to (i) execution and delivery of definitive documentation with respect to the Incremental Facility in accordance with the terms set forth in the Commitment Letter, and (ii) consummation of the merger in accordance with the executed merger agreement provided to the Lead Arrangers not earlier than December 20, 2019.

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

The following discussion and analysis of the financial condition and results of operations of NV5 Global, Inc. and its subsidiaries (collectively, the “Company,” “we,” ~~“our”~~ “our,”“us”or “NV5 Global”) should be read in conjunction with the financial statements included elsewhere in this Quarterly Report and the audited financial statements for the year ended December ~~31, 201~~6, 29, 2018, included in our Annual Report on Form ~~10-K (File No. 001-35849).~~10-K. This Quarterly Report contains, in addition to unaudited historical information, forward-looking statements, which involve risk and uncertainties. The words “believe,” “expect,” “estimate,” “may,” “will,” “could,” “plan,” or “continue” and similar expressions are intended to identify forward-looking statements. Our actual results could differ materially from the results those anticipated in such forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, those discussed under the headings “Risk Factors” in our Annual Report on Form 10-K forthe year ended December ~~31, 2016~~29, 2018and this Quarterly Report on Form 10-Q, if any. Readers are urged not to place undue reliance on these forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to (and we expressly disclaim any obligation to) revise or update any forward-looking statement, whether as a result of new information, subsequent events, or otherwise (except as may be required by law), in order to reflect any event or circumstance which may arise after the date of this Quarterly Report on Form 10-Q.Amounts presentedarein thousands, except per share data.

Overview

We are a provider of professional and technical engineering and consulting solutions to public and private sector clients. We focus on the infrastructure, energy, construction, real estate, and environmental markets. We primarily focus on the following business service verticals: construction quality assurance, infrastructure, energy, program management, and environmental solutions. Our primary clients include U.S. federal, state, municipal, and local government agencies, and military and defense clients. We also serve quasi-public and private sector clients from the education, healthcare, energy, and public utilities, including schools, universities, hospitals, health care providers, insurance providers, large utility service providers, and large to small energy producers.

Recent ~~Acquisition, Developments and Challenges~~

~~Acquisition.~~

Acquisitions

On ~~September 6, 2017,~~July 2, 2019, the Company acquired ~~all of the outstanding equity interests in Marron and Associates,~~WHPacific, Inc. (“~~Marron”~~WHPacific”), a leading ~~environmental~~provider of design engineering and surveying services firm with offices in Albuquerque and Las Cruces, New Mexico. Marron provides environmental planning, natural and cultural resources, environmental site assessment, and GIS services. Marron primarily serves public and private clients throughout the Southwest, including theserving Washington, Oregon, Idaho, New Mexico, ~~Department of Transportation, Bureau of Land Management, Bureau of Indian Affairs, Federal Highway Administration, U.S. Department of Agriculture, U.S. Fish~~Arizona and ~~Wildlife Service, and U.S. Forest Service. The~~California for a cash purchase price of $9,000. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for WHPacific, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. The Company expects to finalize the purchase price allocation with respect to this ~~acquisition is up to $990, paid with a combination~~transaction by the end of ~~cash at closing, stock and future note payments.~~

the fourth quarter 2019.

second anniversary of July 1, 2019. Further, the purchase price includes a $1,500 earn-out of cash , which was recorded at an estimated fair value of $1,456. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for GeoDesign, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. The Company expects to finalize the purchase price allocation with respect to this transaction by the end of the fourth quarter 2019.

On ~~May 4, 2017,~~June 3, 2019, the Company acquired ~~all of the outstanding equity interests in Holdrege & Kull, Consulting Engineers and Geologists~~Alta Environmental, L.P. (“~~H&K”~~Alta”), a ~~full-service geotechnical engineering~~consulting firm ~~based~~specializing in ~~Northern California. H&K provides services to public, municipal~~air quality, environmental building sciences, water resources, site assessment and ~~special district, industrial,~~remediation as well as environmental health and ~~private sector clients. The purchase price of this acquisition is up to $2,200, paid with a combination of cash, stock and future note payments.~~

~~On May 1, 2017, we acquired all of the outstanding equity interests in~~ Lochrane Engineering, Inc. (“Lochrane”), an Orlando, Florida based civil engineering firm which specializes in the provision of services on major roadway projects and its major clients include the Florida Department of Transportation and Florida’s Turnpike Enterprise.safety compliance services. The aggregate purchase price ~~paid by us~~ is up to ~~$4,940, paid with a combination~~$6,500, including $4,000 of cash and $2,000 in promissory note (bearing interest at ~~closing~~4%), payable in four equal installments of $500 due on the first, second, third and ~~future note payments.~~

fourth anniversaries of June 3, 2019. Further, the purchase price includes a $500 earn-out of cash, which was recorded at an estimated fair value of $485. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for Alta, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. The Company expects to finalize the purchase price allocation with respect to this transaction by the end of the fourth quarter 2019.

On ~~April 14, 2017,~~June 3, 2019, the Company acquired ~~all of the outstanding equity interests in Bock & Clark Corporation~~Page One Consultants (“~~B&C”~~Page One”), ~~an Akron, Ohio based surveying, commercial zoning, and environmental services firm.~~ We believe that the acquisition of B&C will expand our cross-selling opportunities within our infrastructure engineering, surveying, and program management groups and with our financial and transactional real estate clients. The aggregate purchase price consideration paid by the Company in connection with the acquisition was $42,000, subject to customary closing working capital adjustments, funded entirely in cash.

~~Tax credit~~.

We are currently under examination by the CFTB about certain research and development tax credits generated for the years 2005 to 2014. Fiscal years 2005 through 2016 are considered open tax years in the State of California and 2013 through 2016 in the U.S. federal jurisdiction and other state jurisdictions. At ~~September 30, 2017 and December 31, 2016, we had $770 of unrecognized tax benefits related to this matter.~~

~~Backlog.~~

~~As of~~ September 30, 2017, we had approximately $274,500 of gross revenue backlog expected to be recognized over the next 12 months compared to gross revenue backlog of approximately $220,800 as of December 31, 2016. We include in backlog only those contracts for which funding has been provided and work authorizations have been received. We cannot guarantee that the revenue projected in our backlog will be realized or, if realized, will result in profits. In addition, project cancellations or scope adjustments may occur, from time to time, with respect to contracts reflected in our backlog. For example, certain of our contracts with the U.S. federal government and other clients are terminable at the discretion of the client, with or without cause. These types of backlog reductions could adversely affect our revenue and margins. Accordingly, our backlog as of any particular date is an uncertain indicator of our future earnings.

~~Segments~~.

~~Our Chief Executive Officer is the chief operating decision maker and~~ ~~organized the Company into two operating and reportable segments: Infrastructure (INF), which includes our engineering, civil~~a program management and construction quality assurance ~~practices;~~firm based in Orlando, Florida. The aggregate purchase price is up to $3,900, including $2,000 of cash, $1,000 in promissory note (bearing interest at 3%), payable in three equal installments of $333 due on the first, second and ~~Building, Technology & Sciences (BTS) (formerly known as Building, Energy & Sciences (BES)), which includes our energy~~third anniversaries of June 3, 2019 and ~~environmental practices as well as buildings program management.~~

~~Components of Income and Expense~~

~~Revenues~~

We enter into contracts with our clients that contain two principal types of pricing provisions: cost-reimbursable and fixed-price. The majority of our contracts are cost-reimbursable contracts that fall under the relatively low-risk subcategory of time and materials contracts.

~~Cost-reimbursable contracts~~~~. Cost-reimbursable contracts consist~~$200 of the ~~following:~~

•

Time and materials contracts are common for smaller scale professional and technical consulting and certification services projects. Under these types of contracts, there is no predetermined fee. Instead, we negotiate hourly billing rates and charge our clients based upon actual hours expended on a project. In addition, any direct project expenditures are passed through to the client and are typically reimbursed. These contracts may have a fixed-price element in the form of an initial not-to-exceed or guaranteed maximum price provision.

~~Cost-plus contracts are~~Company’s common stock (2,647 shares) issued at the ~~predominant contracting method used by U.S. federal, state, and local governments. These contracts provide for reimbursement~~closing date. The purchase price also includes $200 of the ~~actual costs~~Company’s common stock payable on the first anniversary of June 3, 2019. Further, the purchase price includes a $500 earn-out of cash, which was recorded at an estimated fair value of $448. In order to determine the fair values of tangible and ~~overhead (predetermined rates) we incur, plus~~intangible assets acquired and liabilities assumed for Page One, the Company engaged a ~~predetermined fee.~~

•

Fixed-unit contracts typically require the performance of an estimated number of units of work at an agreed price per unit, with the total payment under the contract determined by the actual number of units performed, over a fixed construction schedule. In most cases, we can bill additional fees if the schedule is modified and lengthened.

~~For~~third-party independent valuation specialist to assist in the ~~nine months ended September 30, 2017 and 2016, cost-reimbursable contracts represented approximately 95% and 96%, respectively,~~determination of ~~our total revenues.~~

~~Fixed-price contracts~~~~. Fixed-price contracts also consist~~fair values. The Company expects to finalize the purchase price allocation with respect to this transaction by the end of the ~~following:~~

•

Lump-sum contracts typically require the performance of all of the work under the contract for a specified lump-sum fee, subject to price adjustments if the scope of the project changes or unforeseen conditions arise. Many of our lump-sum contracts are negotiated and arise in the design of projects with a specified scope and project deliverables.

~~For~~fourth quarter 2019.

On March 22, 2019, the ~~nine months ended September 30, 2017~~Company acquired The Sextant Group, Inc. (“The Sextant Group”), a national leading provider of audiovisual, information and ~~2016, lump-sum contracts represented approximately 5%~~communications technology, acoustics consulting, and design services headquartered in Pittsburgh, PA. The Sextant Group provides services throughout the U.S. and is well-known for creating integrated technology solutions for a wide range of public and private sector clients. The aggregate purchase price is up to $11,000, including $7,000 of cash and $4,000 in promissory note (bearing interest at 4%), ~~respectively,~~payable in four equal installments of ~~our total revenues.~~

~~Revenues from engineering services are recognized in accordance with the accrual basis of accounting. Revenues under cost-reimbursable contracts are recognized when services are performed~~ or$1,000 due on the ~~percentage-of-completion method. Revenues from fixed-price contracts are~~first, second, third and fourth anniversaries of March 22, 2019. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for The Sextant Group, the Company engaged a third-party independent valuation specialist to assist in the determination of fair values. The Company expects to finalize the purchase price allocation with respect to this transaction by the end of the fourth quarter 2019.

On December 31, 2018, the Company acquired certain assets of Celtic Energy, Inc. (“Celtic”), a nationally recognized energy consulting firm that specializes in energy project management and oversight. The aggregate purchase price is up to $1,900, including $1,000 in cash, $300 in promissory note (bearing interest at 3%), payable in three equal installments of $100 on the ~~percentage-of-completion method. Revenues recognized~~first, second and third anniversaries of December 31, 2018 and $200 of the Company’s common stock (3,227 shares) issued at the closing date. The purchase price also includes $200 of the Company’s common stock payable on the ~~percentage-of-completion method~~first anniversary of December 31, 2018. Further, the purchase price includes a $200 earn-out of cash, which was recorded at an estimated fair value of $181. In order to determine the fair values of tangible and intangible assets acquired and liabilities assumed for Celtic, the Company performed a purchase price allocation.

Segments

Our operations are generally measured by the direct costs incurred to date as compared to estimated costs incurred which represents approximately 24% and 14% of revenues recognized during the nine months ended September 30, 2017 and 2016, respectively.

~~Direct Costs of Revenues (excluding depreciation and amortization)~~

Direct costs of revenues consist primarily of that portion of technical and non-technical salaries and wages incurred in connection with fee generating projects. Direct costs of revenues also include production expenses, sub-consultant services, and other expenses that are incurred in connection withorganized into two reportable segments:


•	Infrastructure (INF) - includes our engineering, civil program management, and construction quality assurance, testing and inspection practices


•	Building, Technology & Sciences (BTS)– includes our energy, environmental and buildings program management practices

For additional information regarding our fee generating projects. Direct costs of revenues exclude that portion of technical and non-technical salaries and wages related to marketing efforts, vacations, holidays, and other time not spent directly generating fees under existing contracts. Such costs are included in operating expenses. Additionally, payroll taxes, bonuses, and employee benefit costs for all of our personnel, facilities costs, and depreciation and amortization are included in operating expenses since no allocation of these costs is made to direct costs of revenues. We expense direct costs of revenues when incurred.

~~Operating Expenses~~

~~Operating expenses include the costs~~reportable segments, see "Reportable Segments" of the marketing and support staffs, other marketing expenses, management and administrative personnel costs, payroll taxes, bonuses and employee benefits for all of our employees and the portion of salaries and wages not allocated"Notes to direct costs of revenues for those employees who provide our services. Operating expenses also include facility costs, depreciation and amortization, professional services, legal and accounting fees, and administrative operating costs. We expense operating costs when incurred.

~~Jumpstart Our Business Startups Act of 2012~~

We are an emerging growth company within the meaning of the rules under the Securities Act, and we utilize certain exemptions from various reporting requirements that are applicable to public companies that are not emerging growth companies. For example, we did not have to provide an auditor’s attestation report on our internal controls in our Annual Report on Form 10-K for the year ended December 31, 2016 as otherwise required by Section 404(b) of the Sarbanes-Oxley Act. The JOBS Act also permits us, as an “emerging growth company,” to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have chosen to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards when they are required to be adopted by issuers. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

Consolidated Financial Statements" included elsewhere herein.

Critical Accounting Policies and Estimates

~~The~~

For a discussion of our ~~financial condition~~critical accounting estimates, see “Management’s Discussion and ~~results~~Analysis of ~~operations~~Financial Condition and Results of Operations” that is based upon our financial statements, which have been prepared in accordance with GAAP. During the preparation of these financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. The results of our analysis form the basis for making assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and the impact of such differences may be material to our financial statements. The more significant estimates affecting amounts reportedincluded in the consolidated financial statements relate to the fair value estimates used in accounting for business combinations (including the valuation of identifiable intangible assets) and contingent consideration, fair value estimates in determining the fair value of the Company’s reporting units for goodwill impairment assessment, revenue recognition on the percentage-of-completion method, allowances for uncollectible accounts and provision for income taxes.

~~During the~~ nine months ended September 30, 2017, we did not experience any significant changes in estimates or judgments inherent in the preparation of our consolidated financial statements. A summary of our significant accounting policies is contained in Note 2 to our consolidated financial statements included in our Annual Report on2018 Form ~~10-K for the year ended December 31, 2016.~~

10-K.

Results of Operations

Consolidated Results of Operations

The following table represents our condensed results of operations for the periods indicated (dollars in thousands):

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

2017

2016

2017

2016

Gross revenues
$ 91,263 $ 60,091 $ 239,058 $ 160,888
Less sub-consultant services and other direct costs
(16,298 ) (12,161 ) (43,995 ) (30,455 )

Net revenues ⁽¹⁾
74,965 47,930 195,063 130,433
Direct salary and wages costs
(28,219 ) (20,274 ) (75,235 ) (53,744 )

Gross profit
46,746 27,656 119,828 76,689

Operating expenses
37,787 22,181 101,482 63,303

Income from operations
8,959 5,475 18,346 13,386

Interest expense
(524 ) (81 ) (1,042 ) (221 )

Income tax expense
(2,523 ) (1,990 ) (4,803 ) (4,847 )

Net income
$ 5,912 $ 3,404 $ 12,501 $ 8,318



	Three Months Ended						Nine Months Ended
	September 28, 2019			September 29, 2018			September 28, 2019			September 29, 2018

Gross revenues	$	131,032		$	104,185		$	376,340		$	302,737
Less sub-consultant services and other direct costs	(27,111		)	(19,736		)	(82,213		)	(56,888		)

Net revenues ⁽¹⁾	103,921			84,449			294,127			245,849
Direct salary and wages costs	40,426			34,475			113,762			98,542

Gross profit	63,496			49,974			180,365			147,307

Operating expenses	55,671			40,000			155,533			121,682

Income from operations	7,825			9,974			24,832			25,625

Interest expense	(421		)	(451		)	(1,230		)	(1,712		)

Income tax expense	(1,560		)	(2,238		)	(3,422		)	(4,716		)

Net income	$	5,843		$	7,285		$	20,180		$	19,197

⁽¹⁾

Net Revenues is not a measure of financial performance under GAAP. G~~ross~~Gross revenues include sub-consultant costs and other direct costs which are generally pass-through costs. The Company believes that Net Revenues, which is a non-U.S. GAAP financial measure commonly used in our industry, enhances investors’ ability to analyze our business trends and performance because it substantially measures the work performed by our employees.

Three ~~and~~ ~~Nine~~ M~~onths~~Months Ended September30~~, 2017~~ ~~compared~~ 28, 2019 Compared to the Three ~~and~~ ~~Nine~~M~~onths~~Months Ended September30~~, 2016~~

29, 2018.

Gross and Net Revenues.

Our consolidated gross revenues increased ~~approximately $31,172 and $78,170~~by $26,847, or ~~approximately 51.9% and 48.6%, for~~26% in the three ~~and nine~~ months ended September ~~30, 2017~~28, 2019 compared to the three ~~and nine~~ months ended September ~~30, 2016.~~29, 2018. Our consolidated net revenues increased ~~approximately $27,035 and $64,630~~by $19,472, or ~~approximately 56.4% and 49.6% for~~23% in the three ~~and nine~~ months ended September ~~30, 2017~~28, 2019 compared to the three ~~and nine~~ months ended September ~~30, 2016.~~29, 2018. The ~~increases~~increase in gross and net revenues ~~are~~was primarily due ~~primarily~~ to ~~organic growth from our existing platform as well as~~ the contribution from ~~various~~ acquisitions completed ~~during~~since the third quarter of 2018. The growth in revenues was attributable to increases in the following:

•Energy distribution services

Infrastructure engineering services

Energy and environmental services

Civil and building program management services

Gross Profit

As a percentage of gross revenues, our gross profit margin was 48.5% and 48.0% for the three months ended September 28, 2019 and September 29, 2018, respectively.

Operating expenses

Our operating expenses increased $15,671, or 39% for the three months ended September 28, 2019 compared to the three months ended September 29, 2018. The increases in operating expenses were primarily due to increases in payroll related costs of $8,531, general and administrative costs of $3,472 and depreciation and amortization of $2,494. The increases in costs support our increases in revenues and are related primarily to the operating expenses of our acquired entities.

Income taxes

Our consolidated effective income tax rate was 22.9% and 24.5% for the three months ended September 28, 2019 and September 29, 2018, respectively. Our tax provision includes an income tax benefit related to the vesting of restricted stock totaling $121 and $95 for the three months ended September 28, 2019 and September 29, 2018, respectively.

Nine Months Ended September 28, 2019 Compared to the Nine Months Ended September 29, 2018.

Gross and Net Revenues

Our consolidated gross revenues increased by $73,603, or 24% in the nine months ended September ~~30, 2017. The increases in gross revenues for~~28, 2019 compared to the ~~three and~~ nine months ended September ~~30, 2017, includes gross revenues of $21,316 and $35,524, respectively, related to acquisitions closed during 2017. The increase in~~29, 2018. Our consolidated net revenues ~~for~~increased by $48,278, or 20% in the ~~three and~~ nine months ended September ~~30, 2017, includes~~28, 2019 compared to the nine months ended September 29, 2018. The increase in gross and net revenues ~~of $17,164 and $27,223, respectively, related to acquisitions closed during 2017. Also contributing~~was primarily due to the contribution from acquisitions completed since the second quarter of 2018. The growth in revenues was attributable to increases in ~~net~~the following:

•Energy distribution services

Infrastructure engineering services

Energy and environmental services

Civil and building program management services

Gross Profit

As a percentage of gross revenues, our gross profit margin was 47.9% and 48.7% for the nine months ended September ~~30, 2017 is~~28, 2019 and September 29, 2018, respectively. The decrease in gross profit margin was due to an increased ~~utilization of our billable employees and reduction~~use of sub-consultants ~~used~~as well as higher other direct costs in 2019 compared to perform services in 2017. The growth in revenues was primarily attributable to increases in energy distribution services; construction materials testing and engineering services; and program and construction management services. However,2018.

Operating expenses

Our operating expenses increased $33,851, or 28% for the ~~increases in gross and net revenues during the three and~~ nine months ended September ~~30, 2017 were partially offset by reductions in revenues related~~28, 2019 compared to project delays due to record rainfall and hurricanes affecting our California, Florida and Texas projects. We are currently unaware of any long-term delays in current projects and therefore are not anticipating such to influence future revenues. Such revenues could be affected by changes in economic conditions and the ~~impact thereof on our public and quasi-public sector funded projects.~~

~~Gross Profit.~~

~~As a percentage of gross revenues,~~ ~~our gross profit margin was 51.2% and 50.1% for the three and~~ nine months ended September 30, 2017, respectively, compared to 46.0% and 47.7% for the three and nine months ended September 30, 2016, respectively. Gross profit includes direct costs of contracts such as direct labor and all costs incurred in connection with and directly for the benefit of client contracts.29, 2018. The level of direct costs of contracts may fluctuate between reporting periods due to a variety of factors, including the amount of sub-consultant costs we incur during a period. On those projects where we are responsible for subcontract labor or third-party materials and equipment, we reflect the amounts of such items in both gross revenues and costs. To the extent that we incur a significant amount of pass-through costs in a period, our direct costs of contracts are likely to increase as well.

~~Operating expenses~~.

~~Our operating expenses increased approximately $15,606 and $38,179, or 70.4% and 60.3% for the three and nine months ended September 30, 2017, respectively, compared to the three and nine months ended September 30, 2016. The increase~~increases in operating expenses ~~for~~were primarily a result of increases in payroll related costs of $17,309, general and administrative costs of $7,438 and depreciation and amortization of $7,248. The increases in costs support our increases in revenues and are related primarily to the ~~three and nine months ended September 30, 2017 include~~ operating expenses of $17,410 and $28,677, respectively, related to acquisitions closed during 2017. During the three and nine months ended September 30, 2017, acquisition related expenses were approximately $315 and $892, respectively, compared to approximately $8 and $439 during the three and nine months ended September 30, 2016. Also contributing to the increase in operating costs is the increased amortization of intangible assets. During the three and nine months ended September 30, 2017, amortization of intangible assets was approximately $3,022 and $7,522, respectively, compared to $1,189 and $3,077 during the three and nine months ended September 30, 2016, respectively. Operating expenses typically fluctuate as a result of changes in headcount (both corporate and field locations) and the amount of spending required to support our ~~professional services activities, which normally require additional overhead costs.~~

~~Interest~~ ~~expense~~.

Our interest expense increased $443 and $821 for the three and nine months ended September 30, 2017, respectively, comparted to the three and nine months ended September 30, 2016. The increase in interest expense is due primarily to the increase in outstanding borrowings during these periods.

acquired entities.

Income ~~taxes.~~

taxes

Our consolidated effective income tax rate was ~~29.9%~~24.1% and ~~27.8%~~25.0% for the ~~three and~~ nine months ended September ~~30, 2017, respectively, compared to a consolidated effective income~~28, 2019 and September 29, 2018, respectively. Our tax rate of 36.9% and 36.8% for the three and nine months ended September 30, 2016, respectively. The difference between the effective income tax rate and the combined statutory federal and state income tax rate is principally due to the federal domestic production activities deduction and research and development credits. Furthermore, during the three and nine months ended September 30, 2017, we recorded a reduction in income tax expense of $114 and $974 relating to theprovision includes an income tax benefit ~~received in conjunction with~~related to the vesting of restricted stock ~~during the period. Also contributing to the decrease in the effective tax rate~~totaling $2,592 and $1,210 for the ~~three and~~ nine months ended September ~~30, 2017, is the lower effective tax rate applicable to the Asia operations purchased in the JBA acquisition at the end of 2016.~~

28, 2019 and September 29, 2018, respectively.

Segment Results of Operations

The following tables set forth summarized financial information concerning our reportable segments ~~(dollars~~(dollars in thousands):

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

2017

2016

2017

2016

Gross revenues

INF
$ 49,024 $ 42,713 $ 134,446 $ 118,902
BTS
$ 43,262 $ 18,846 $ 107,997 $ 45,637

Segment income before taxes

INF
$ 9,559 $ 7,065 $ 23,749 $ 19,676
BTS
$ 6,974 $ 2,704 $ 15,065 $ 5,607



	Three Months Ended				Nine Months Ended
	September 28, 2019		September 29, 2018		September 28, 2019		September 29, 2018
Gross revenues
INF	$	89,035	$	64,053	$	250,354	$	180,611
BTS	$	43,060	$	41,441	$	128,706	$	125,344
Segment income before taxes
INF	$	14,008	$	11,108	$	41,273	$	28,951
BTS	$	6,871	$	7,236	$	20,287	$	21,069

For additional information regarding our reportable segments, see Note 1~~4 - "Reportable Segments"~~15 of the ~~"Notes~~notes to ~~Consolidated Financial Statements”.~~

the unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Three ~~and~~ ~~Nine~~ M~~onths ended~~ Months EndedSeptember30~~, 2017 c~~~~ompared~~ 28, 2019 Compared to ~~the~~ Three ~~and~~ ~~Nine~~M~~onths ended~~ Months Ended September ~~30, 2016~~

29, 2018

INF Segment

Our gross revenues from INF reportable segment increased ~~approximately $6,311 and $15,544,~~$24,982, or ~~14.7% and 13.1%, respectively,~~39% during the three months ended September 28, 2019 compared to the three months ended September 29, 2018. The increase in gross revenues is due to the contribution from acquisitions completed since thethird quarter of 2018. The growth in revenues was attributable to increases in:

Energy distribution services

Infrastructure engineering services

Civil program management services

Segment Income before Taxes from INF increased $2,900, or 26% during the three months ended September 28, 2019 compared to the three months ended September 29, 2018. The increase was primarily due to acquisitions completed since the third quarter of 2018.

BTSSegment

Our gross revenues from BTS increased $1,619, or 4% during the three months ended September 28, 2019 compared to the three months ended September 29, 2018. The increase in gross revenues was primarily due to the contribution from acquisitions completed since the third quarter of 2018, partially offset by lower revenues from our international operations.

Segment Income before Taxes from BTS decreased $365, or 5% during the three months ended September 28, 2019 compared to the three months ended September 29, 2018. The decrease was primarily the result of lower earnings from our international operations.

Nine Months EndedSeptember 28, 2019 Compared to Nine Months Ended September 29, 2018

INF Segment

Our gross revenues from INF reportable segment increased $69,743, or 39% during the nine months ended September ~~30, 2017~~28, 2019 compared to the ~~three and~~ nine months ended September ~~30, 2016.~~29, 2018. The increase in gross revenues is due to the contribution from acquisitions completed since the third quarter of 2018. The growth in revenues was attributable to increases in:

Energy distribution services

Infrastructure engineering services

Civil program management services

Segment Income before Taxes from INF increased $12,322, or 43% during the ~~three and~~ nine months ended September ~~30, 2017 includes approximately $4,507 and $7,583 related~~28, 2019 compared to ~~acquisitions closed during both~~ the ~~three and~~ nine months ended September ~~30, 2017.~~29, 2018. The increase inwas primarily due to contributions from acquisitions completed since the third quarter of 2018.

BTSSegment

Our gross revenues ~~for~~from BTS increased $3,362, or 3% during the ~~three and~~ nine months ended September ~~30, 2017 reflects increases in energy distribution services, construction materials testing and transportation services, partially offset by reductions~~28, 2019 compared to the nine months ended September 29, 2018. The increase in gross revenues ~~related to project delays~~is due to ~~record rainfall and hurricanes affecting our California, Florida and Texas projects.~~

the contribution from acquisitions completed since the third quarter of 2018.

Segment Income before Taxes from ~~INF increased $2,494 and $4,073,~~BTS decreased $782, or ~~35.3% and 20.7%, respectively,~~4% during the ~~three and~~ nine months ended September ~~30, 2017~~28, 2019 compared to the ~~three and~~ nine months ended September ~~30, 2016.~~29, 2018. The ~~increases were~~decrease was primarily ~~due to increased revenues from organic growth, contributions from acquisitions completed~~a result of a slowdown in ~~2017 as well as a reduction of sub-consultants used to perform services.~~

~~Our gross revenues from~~ the ~~BTS reportable segment increased approximately $24,416~~gaming industry and ~~$62,360, or 129.6% and 136.6% during the three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016. The~~our international operations, partially offset by increases during the three and nine months ended September 30, 2017 includes approximately $16,808 and $27,941 related to acquisitions closed during both the three and nine months ended September 30, 2017. The growth in revenues ~~from BTS was primarily attributable to increases in facilities~~associated with building program management and ~~environmental~~mechanical, electrical and plumbing services.

~~Segment Income before Taxes~~ from BTS increased $4,270 and $9,458, or 157.9% and 168.7%, respectively, during the three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016. The increases were primarily due to increased revenues from organic growth, contributions from acquisitions completed in 2017 as well as a reduction of sub-consultants used to perform services.

Liquidity and Capital Resources

Our

Our principal sources of liquidity are our cash and cash equivalents balances, cash ~~flow~~flows from operations, ~~lines of credit,~~borrowing capacity under our Senior Credit Facility, and access to financial markets. Our principal uses of cash are operating expenses, working capital requirements, capital expenditures, repayment of debt, and acquisition expenditures. We believe our sources of liquidity, including cash ~~flow~~flows from operations, existing cash and cash equivalents and borrowing capacity under our Senior Credit Facility (as proposed to be amended) will be sufficient to meet our projected cash requirements for at least the next twelve months. We will monitor our capital requirements thereafter to ensure our needs are in line with available capital resources.

We believe our experienced employees and management team are our most valuable resources. Attracting, training, and retaining key personnel have been and will remain critical to our success. To achieve our human capital goals, we intend to remain focused on providing our personnel with entrepreneurial opportunities to increase client contact within their areas

Operating activities

Our business provided $21,557 of ~~expertise and to expand our business within our service offerings.~~

~~Cash Flows~~

~~As of~~ ~~September 30, 2017, our~~net cash and cash equivalents totaled $15,582 and accounts receivable, net of allowance for doubtful accounts, totaled $113,004, compared to $35,666 and $75,511, respectively, on December 31, 2016. As of September 30, 2017, our accounts payable and accrued liabilities were $17,133 and $18,173, respectively, compared to $13,509 and $17,316, respectively, on December 31, 2016. In addition, as of September 30, 2017, we had notes payable and other obligations and contingent consideration of $77,976 and $2,778, respectively, compared to $32,396 and $2,439, respectively, on December 31, 2016.

~~Operating activities~~

~~For~~from operations during the nine months ended September 30, 2017, net cash provided by operating activities amounted to $5,671, primarily attributable to net income of $12,501, which included non-cash charges of $12,285 from stock based compensation and depreciation and amortization, and decreases of $5,078 in accounts payable and accrued liabilities offset by28, 2019, an increase of ~~$17,031 in accounts receivable. During 2017, we made income tax payments of approximately $4,962.~~

~~For~~$3,987, or 23% compared to $17,570 during the nine months ended September ~~30, 2016, net cash provided by operating activities amounted~~29, 2018. The change was primarily due to ~~$10,686, primarily attributable to net income of $8,318,~~higher earnings after adding back non-cash adjustments, which ~~included non-cash charges of $5,989 from stock based compensation and depreciation and amortization, and increases of $3,368 in accounts payable and accrued liabilities~~totaled $17,997, partially offset by ~~an increase of $7,795~~a $14,010 change in ~~accounts receivable. During 2016, we made income tax payments of approximately $4,642.~~

~~Investing activities~~

~~For~~working capital compared to the nine months ended September ~~30, 2017,~~29, 2018.

Investing activities

During the nine months ended September 28, 2019 and September 29, 2018, net cash used in investing activities ~~amounted to $61,832, primarily resulting from cash used for our acquisitions (net of cash acquired) during 2017 of $60,241~~totaled $31,175 and ~~the purchase of property and equipment of $1,591 for our ongoing operations.~~

~~For the~~ ~~nine months ended September 30, 2016, net~~$30,042, respectively. The increase in cash used in investing activities ~~amounted to $24,954,~~was primarily ~~resulting from cash used for our acquisitions (net~~a result of ~~cash acquired)~~increased acquisition activity.

Financing activities

Cash flows provided by financing activities during ~~2016 of $24,388 and~~ the ~~purchase of property and equipment of $566 for our ongoing operations.~~

~~Financing activities~~

~~For the~~ nine months ended September ~~30, 2017,~~28, 2019 totaled $304 compared to net cash provided by financing activities ~~amounted to $36,077, primarily due to proceeds from borrowing under~~of $49,923 during the ~~Senior Credit Facility of $42,000 offset by principal repayments of $5,360 towards long-term debt and $563 towards contingent consideration.~~

~~For the~~ nine months ended September ~~30, 2016, net cash provided by financing activities amounted to $43,858,~~29, 2018. The decrease was primarily due to the net proceeds from the ~~secondary~~August 2018 public offering of ~~$47,147 and the unit warrant exercise of $1,008~~$93,469 offset by principal repayments of ~~$4,156~~$43,910 towards ~~long-term debt and $296 towards contingent consideration.~~

~~Financing~~

the Senior Credit Facility

and notes payable during the nine months ended September 29, 2018.

Financing

SeniorCredit Facility

On December ~~7, 2016,~~20, 2018, we entered into an amendment to a Credit Agreement (the “Credit Agreement”) dated December 7, 2016 with Bank of America, N.A. (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPFS”). Pursuant to the amended Credit Agreement, Bank of America agreed to be the sole administrative agent for a five-year ~~$80,000~~$125,000 Senior Secured Revolving Credit Facility (“Senior Credit Facility”) to usthe Company and, together with PNC Bank, National Association and Regions Bank as the other lenders under the Senior Credit Facility, has committed to lend to usthe Company all of the Senior Credit Facility, subject to certain terms and conditions. The Senior Credit Facility is secured by a first priority lien on substantially all of the assets of the Company. MLPFS has undertaken to act as sole lead arranger and sole book manager for the Senior Credit Facility. In addition, the Senior Credit Facility includes an accordion feature permitting usthe Company to request an increase in the Senior Credit Facility by an additional amount of up to ~~$60,000.~~$100,000. The Senior Credit Facility includes a ~~$5,000~~$20,000 sublimit for the issuance of standby letters of credit and a $15,000 sublimit for swingline loans. The proceeds of the Senior Credit Facility are intended to be used (i) to finance permitted acquisitions, (ii) for capital expenditures, and (iii) for general corporate purposes.

The Senior Credit Facility contains certain financial covenants, including a maximum leverage ratio of ~~3.0:1 and~~4.0:1and a minimum fixed charge coverage ratio of 1.20:1. Furthermore, the Senior Credit Facility also contains financial reporting covenant provisions and other covenants, representations, warranties, indemnities, and events of default that are customary for facilities of this type. As of September ~~30, 2017~~28, 2019 and December ~~31, 2016, we are~~29, 2018, the Company is in compliance with ~~these~~the financial ~~and reporting~~ covenants. As of September ~~30, 2017 and~~28, 2019, there was $10,000 outstanding on the Senior Credit Facility. As of December ~~31, 2016, the~~29, 2018, we had no outstanding balance on the Senior Credit Facility.

In connection with a pending acquisition, the Company entered into a commitment letter (the “Commitment Letter”) with Bank of America, N.A., BofA Securities, Inc., PNC Bank, National Association and PNC Capital Markets LLC (collectively, the “Lead Arrangers”) to amend the Senior Credit Facility ~~was $42,000~~to provide additional borrowing facilities (the “Incremental Facility”), including a $150 million term loan tranche and ~~$0, respectively.~~

~~Note Payable~~

a $90 million increase in the existing $125 million revolving facility, for a total availability of $365 million. The ~~note held by~~funding of the ~~seller~~Incremental Facility provided for in the Commitment Letter is contingent on the satisfaction of ~~Nolte Associates Inc. (the “Nolte Note”)~~ ~~matured on July 29, 2017. The Nolte Note interest rate was prime rate plus 1%, subject~~customary conditions, including but not limited to ~~a maximum rate~~(i) execution and delivery of ~~7.0%. As of September 30, 2017 and December 31, 2016,~~definitive documentation with respect to the ~~actual interest rate was 4.25%. Under~~Incremental Facility in accordance with the terms set forth in the Commitment Letter, and (ii) consummation of the ~~Nolte Note, as amended, we paid quarterly principal installments~~merger in accordance with the executed merger agreement provided to the Lead Arrangers not earlier than December 20, 2019.

Other Obligations

On July 1, 2019, the Company acquired GeoDesign. The purchase price allowed for the payment of ~~approximately $100 plus interest. The Nolte Note was unsecured~~$425 in shares of the Company’s stock or a combination of cash and ~~we were permitted to make periodic principal~~shares of the Company’s stock, at our discretion, payable on the first and ~~interest payments. As~~second anniversary of July 1, 2019. At September ~~30, 2017 and December 31, 2016,~~28, 2019, the outstanding balance of this obligation was $382.

On December 31, 2018, the Company acquired certain assets of Celtic. The purchase price allowed for the payment of $200 in shares of the Company’s stock or a combination of cash and ~~$278,~~shares of the Company’s stock, at our discretion, payable on the first anniversary of December 31, 2018. At September 28, 2019, the outstanding balance of this obligation was $181.

On November 2, 2018, the Company acquired CHI. The purchase price allowed for the payment of $3,000 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in three equal annual installments. At September 28, 2019 and December 29, 2018, the outstanding balance of this obligation was $2,631.

On February 2, 2018, the Company acquired CSA. The purchase price allowed for the payment of $250 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in two equal annual installments. At September 28, 2019 and December 29, 2018, the outstanding balance of this obligation was $111 and $222, respectively.

~~Other Obligations~~

On January 12, 2018, the Company acquired all of the outstanding equity interest in Butsko. The purchase price allowed for the payment of $600 in shares of the Company’s stock or a combination of cash and shares of the Company’s stock, at our discretion, payable in two equal annual installments. At September 28, 2019 and December 29, 2018, the outstanding balance of this obligation was $267 and $534, respectively.

On September 6, 2017, wethe Company acquired all of the outstanding equity interest in Marron. The purchase price allowed for the payment of $133 in shares of ~~our common~~the Company’s stock or a combination of cash and shares of ~~our common~~the Company’s stock, at our discretion, payable in two equal ~~installments, due~~annual installments. There was no outstanding balance on ~~the first and second anniversaries~~this obligation as of September ~~6, 2017. The~~28, 2019. At December 29, 2018, the outstanding balance of this obligation was ~~$133 and $0 as of September 30, 2017 and December 31, 2016, respectively.~~

$55.

On June 6, 2017, wethe Company acquired all of the outstanding equity interest in RDK. The purchase price allowed for the payment of $1,333 in shares of ~~our common~~the Company’s stock or a combination of cash and shares of ~~our common~~the Company’s stock, at our discretion, payable in two equal ~~installments, due~~annual installments. There was no outstanding balance on ~~the first and second anniversaries~~this obligation as of ~~June 6, 2017. The~~September 28, 2019. At December 29, 2018, the outstanding balance of this obligation ~~was $1,333 and $0 as of September 30, 2017 and December 31, 2016, respectively.~~

$504.

On November 30, 2016, we acquired all of the outstanding equity interests of Hanna. The purchase price allowed for the payment of $1,200 in shares of our common stock or a combination of cash and shares of our common stock, at our discretion, payable in two installments of $600, due on the first and second anniversaries of November 30, 2016. The outstanding balance of this obligation was $1,200 as of September 30, 2017 and December 31, 2016.

On October 26, 2016, we acquired all of the outstanding equity interests of JBA. The purchase price allowed for the payment of $2,600 in shares of our common stock or a combination of cash and shares of our common stock, at our discretion, payable in two installments of $1,300, due on the first and second anniversaries of October 26, 2016. The outstanding balance of this obligation was $2,600 as of September 30, 2017 and December 31, 2016.

On May 20, 2016, the Company acquired all of the outstanding equity interests of Dade Moeller. The purchase price allowed for the payment of $3,000 in shares of ~~our common~~the Company’s stock or a combination of cash and shares of ~~our common~~the Company’s stock, at our discretion, payable in three equal annual installments of ~~$1,000, due~~$1,000. There was no outstanding balance on ~~the first, second and third anniversaries~~this obligation as of ~~May 20, 2016. The~~September 28, 2019. At December 29, 2018, the outstanding balance of this obligation was $936.

Uncollateralized Promissory Notes

On July 1, 2019, the Company acquired GeoDesign. The purchase price included an uncollateralized $2,000 promissory note bearing interest at 4.0% (“GeoDesign Note”) and ~~$3,000~~payable in four equal annual installments. The outstanding balance of the GeoDesign Note was $2,000 as of September ~~30, 2017~~28, 2019.

On June 3, 2019, the Company acquired Alta. The purchase price included an uncollateralized $2,000 promissory note bearing interest at 4.0% (“Alta Note”) and payable in four equal annual installments. The outstanding balance of the Alta Note was $2,000 as of September 28, 2019.

On June 3, 2019, the Company acquired Page One. The purchase price included an uncollateralized $1,000 promissory note bearing interest at 3.0% (“Page One Note”) and payable in three equal annual installments. The outstanding balance of the Page One Note was $1,000 as of September 28, 2019.

On March 22, 2019, we acquired The Sextant Group. The purchase price included an uncollateralized $4,000 promissory note bearing interest at 4% (“The Sextant Group Note”) and payable in four equal annual installments. The outstanding balance of The Sextant Group Note was $4,000 as of September 28, 2019.

On December 31, 2018, we acquired certain assets of Celtic. The purchase price included an uncollateralized $300 promissory note bearing interest at 3% (the “Celtic Note”) payable in three equal annual installments. The outstanding balance of the Celtic note was $300 as of September 28, 2019.

On November 2, 2018, we acquired CHI. The purchase price included an uncollateralized $15,000 promissory note bearing interest at 3% (the “CHI Note”) payable in four equal annual installments. The outstanding balance of the CHI Note was $15,000 as of September 28, 2019 and December ~~31, 2016,~~29, 2018.

On August 24, 2018, the Company acquired CALYX. The purchase price included an uncollateralized $4,000 promissory note bearing interest at 3.75% (the “CALYX Note”) payable in four equal annual installments of $1,000. The outstanding balance of the CALYX Note was $3,000 and $4,000 as of September 28, 2019 and December 29, 2018, respectively.

~~Uncollateralized Promissory Notes~~

On February 2, 2018, the Company acquired CSA. The purchase price included an uncollateralized $600 promissory note bearing interest at 3.0% (the “CSA Note”) payable in four equal annual installments of $150. The outstanding balance of the CSA Note was $450 and $600 as of September 28, 2019 and December 29, 2018, respectively.

On January 12, 2018, the Company acquired all of the outstanding equity interest in Butsko. The purchase price included an uncollateralized $1,000 promissory note bearing interest at 3.0% (the “Butsko Note”) payable in four equal annual installments of $250. The outstanding balance of the Butsko Note was $750 and $1,000 as of September 28, 2019 and December 29, 2018, respectively.

On September 6, 2017, we the Company acquired all of the outstanding interests in ~~Marron and Associates, Inc. (“Marron”), a leading environmental services firm in Albuquerque and Las Cruces, New Mexico.~~Marron. The purchase price included an uncollateralized $300 promissory note bearing interest at 3.0% (the “Marron Note”) payable in three equal annual installments of ~~$100, due on the first, second and third anniversaries of September 6, 2017.~~$100. The outstanding balance of the Marron Note was ~~$300~~$100 and $0$200 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively.

On June 6, 2017, wethe Company acquired all of the outstanding equity interest in RDK. The purchase price included an uncollateralized $5,500 promissory note bearing interest at 3.0% (the “RDK Note”) payable in four equal annual installments of ~~$1,375, due on the first, second, third and fourth anniversaries of June 6, 2017.~~$1,375. The outstanding balance of the RDK Note was ~~$5,500~~$2,750 and $0$4,125 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively.

On May 4, 2017, we the Company acquired all of the outstanding equity interest in H&K. The purchase price included an uncollateralized $600 promissory note bearing interest at 3.0% (the “H&K Note”) payable in four equal annual installments of ~~$150, due on the first, second, third and fourth anniversaries of May 4, 2017, the effective date of the acquisition.~~$150. The outstanding balance of the H&K Note was ~~$600~~$300 and $0$450 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively.

On May 1, 2017, wethe Company acquired all of the outstanding equity interest in Lochrane. The purchase price included an uncollateralized $1,650 promissory note bearing interest at 3.0% (the “Lochrane Note”) payable in four equal annual installments of ~~$413, due on the first, second, third and fourth anniversaries of May 1, 2017, the effective date of the acquisition.~~$413. The outstanding balance of the Lochrane Note was ~~$1,650~~$825 and $0$1,238 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively.

On December 6, 2016, wethe Company acquired all of the outstanding interests of ~~CivilSource~~.CivilSource. The purchase price included an uncollateralized $3,500 promissory note bearing interest at 3.0% (the “CivilSource Note”) payable in four equal annual

installments of ~~$875, due on the first, second, third and fourth anniversaries of December 6, 2016, the effective date of the acquisition.~~$875. The outstanding balance of the CivilSource Note was ~~$3,500~~$1,606 and $2,625 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively.

On November 30, 2016, wethe Company acquired all of the outstanding interests of ~~Hanna~~.Hanna. The purchase price included an uncollateralized $2,700 promissory note bearing interest at 3.0% (the “Hanna Note”) payable in four equal annual installments of ~~$675, due on the first, second, third and fourth anniversaries of November 30, 2016, the effective date of the acquisition.~~$675. The outstanding balance of the Hanna Note was ~~$2,700~~$1,350 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016, respectively.~~

29, 2018.

On October 26, 2016, wethe Company acquired all of the outstanding interests of ~~JBA~~.JBA. The purchase price included an uncollateralized $7,000 promissory note bearing interest at 3.0% (the “JBA Note”) payable in five equal annual installments of ~~$1,400, due on the first, second, third, fourth and fifth anniversaries of October 26, 2016, the effective date of the acquisition.~~$1,400. The outstanding balance of the JBA Note was ~~$7,000~~$4,200 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016, respectively.~~

29, 2018.

On September 12, 2016, wethe Company acquired certain assets of Weir. The purchase price included an uncollateralized $500 promissory note bearing interest at 3.0% (the “Weir Note”) payable in four equal annual installments of ~~$125, due on the first, second, third and fourth anniversaries of September 12, 2016, the effective date of the acquisition.~~$125. The outstanding balance of the Weir Note was ~~$375~~$125 and ~~$500~~$250 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively.

On May 20, 2016, wethe Company acquired all of the outstanding equity interests of Dade Moeller. The purchase price included an aggregate of $6,000 of uncollateralized promissory notes bearing interest at 3.0% (the “Dade Moeller Notes”) payable in four equal ~~payments~~annual installments of ~~$1,500 each due on the first, second, third, and fourth anniversaries of May 20, 2016, the effective date of the acquisition.~~$1,500. The outstanding balance of the Dade Moeller Notes was ~~approximately $4,500~~$1,497 and ~~$6,000~~$3,036 as of September ~~30, 2017~~28, 2019 and December ~~31, 2016,~~29, 2018, respectively.

On July 1, 2015, wethe Company acquired all of the outstanding equity interests of RBA. The purchase price included an uncollateralized $4,000 promissory notes bearing interest at 3.0% (the “RBA Note”) payable in four equal ~~payments of $1,000 each due~~annual installments. There was no outstanding balance on the ~~first, second, third, and fourth anniversaries~~RBA Note as of ~~July 1, 2015, the effective date of the acquisition.~~September 28, 2019. The outstanding balance of the RBA Note was ~~$2,000 and $3,000~~$1,000 as of ~~September 30, 2017 and~~ December ~~31, 2016, respectively.~~

~~On June 24, 2015,~~ we acquired certain assets of Allwyn. The purchase price included an uncollateralized $500 promissory note bearing interest at 3.5% (the “Allwyn Note”) that is payable in three equal payments of $167 each due on the first, second and third anniversaries of June 24, 2015, the effective date of the acquisition. The outstanding balance of the Allwyn Note was $166 and $333 as of September 30, 2017 and December 31, 2016, respectively.

~~On April 22, 2015,~~ we acquired all of the outstanding equity interests of Mendoza. The purchase price included an uncollateralized $3,000 short-term promissory note, based on the collection of acquired accounts receivable and work in process, payable within one year, and an uncollateralized $500 promissory note bearing interest at 3% (the “Mendoza Note”) that is payable in two equal payments of $250 each due on the first and second anniversaries of April 22, 2015, the effective date of the acquisition. The outstanding balance of the Mendoza Note was $0 and $250 as of September 30, 2017 and December 31, 2016, respectively.

29, 2018.

On January 30, 2015, wethe Company acquired all of the outstanding equity interests of JLA. The purchase price included an uncollateralized $1,250 promissory note bearing interest at 3.5% (the “JLA Note”) ~~that is~~ payable in four equal ~~payments~~annual installments of ~~$313 each due~~$313. There was no outstanding balance on the ~~first, second, third, and fourth anniversaries~~JLA Note as of ~~January 30, 2015,~~September 28, 2019. As of December 29, 2018, the ~~effective date of the acquisition. The~~ outstanding balance of the JLA ~~Note~~note was ~~$625 and $938 of September 30, 2017 and December 31, 2016, respectively.~~

~~On November 3, 2014,~~ we acquired certain assets of the Buric Companies. The purchase price included an uncollateralized, 3% interest bearing promissory note in the aggregate principal amount of $300 (the “Buric Note”). The note is payable in three equal payments of $100 due on the first, second and third anniversaries of November 3, 2014, the effective date of the acquisition. The carrying value of the Buric Note was $100 as of September 30, 2017 and December 31, 2016.

On March 21, 2014, we acquired all of the outstanding equity interests of NV5, LLC. The purchase price included an uncollateralized $3,000 promissory note bearing interest at 3.0% (the “AK Note”) that is payable in three equal payments of $1,000 each due on the first, second and third anniversaries of March 21, 2014, the effective date of the acquisition. The outstanding balance of the AK Note was $0 and $1,000 as of September 30, 2017 and December 31, 2016, respectively.

$313.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of September ~~30, 2017.~~

28, 2019.

Effects of Inflation

Based on our analysis of the periods presented, we believe that inflation has not had a material effect on our operating results. There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition.

Recently Issued Accounting Pronouncements

For information on recently issued accounting pronouncements, see Note 13 of the notes to the unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Cautionary Statement about Forward-Looking Statements

Our disclosure and analysis in this Quarterly Report on Form 10-Q, contain “forward-looking” statements within the meaning of Section 27A of the Securities Act Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995. From time to time, we also provide forward-looking statements in other materials we release to the public, as well as oral forward-looking statements. Forward-looking statements include, statements regarding our “expectations,” “hopes,” “beliefs,” “intentions,” or “strategies” regarding the future. In addition, any statements that refer to projections, forecasts, or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “believe,” “expect,” “intend,” “estimate,” “predict,” “project,” “may,” “might,” “should,” “would,” “will,” “likely,” “will likely result,” “continue,” “could,” “future,” “plan,” “possible,” “potential,” “target,” “forecast,” “goal,” “observe,” “seek,” “strategy” and other words and terms of similar meaning, but the absence of these words does not mean that a statement is not forward looking. The forward-looking statements in this Current Report on Form 10-Q reflect the Company’s current views with respect to future events and financial performance.

Forward-looking statements are not historical factors and should not be read as a guarantee or assurance of future performance or results, and will not necessarily be accurate indications of the times at, or by, or if such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made or ~~management~~’smanagement’s good faith beliefs, expectations and assumptions as of that time with respect to future events. Because forward-looking statements relate to the future, they are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include:

●

~~our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;~~

●

~~changes in demand from the local and state government and private clients that we serve;~~

●

~~general economic conditions, nationally and globally, and their effect on the demand and market for our services;~~

●

~~fluctuations in our results of operations;~~

●

~~the government’s funding and budgetary approval process;~~

●

~~the possibility that our contracts may be terminated by our clients;~~

●

~~our ability to win new contracts and renew existing contracts;~~

●

~~our dependence on a limited number of clients;~~

●

~~our ability to complete projects timely, in accordance with our customers’ expectations, or profitability;~~

●

~~our ability to successfully execute our mergers and acquisitions strategy, including the integration of new companies into our business;~~

●

~~our ability to successfully manage our growth strategy;~~

●

~~our ability to raise capital in the future;~~

●

~~competitive pressures and trends in our industry and our ability to successfully compete with our competitors;~~

●

~~our ability to avoid losses under fixed-price contracts;~~

●

~~the credit and collection risks associated with our clients;~~

our ability to retain the continued service of our key professionals and to identify, hire and retain additional qualified professionals;

●

~~our ability to comply with procurement laws and regulations;~~

●

~~changes in laws, regulations, or policies;~~

●

~~the enactment of legislation that could limit the ability of local, state and federal agencies to contract for our privatized services;~~

●

~~our ability to complete our backlog of uncompleted projects as currently projected;~~

●

~~the risk of employee misconduct or our failure to comply with laws and regulations;~~

	●	~~our ability to control, and operational issues pertaining to, business activities that we conduct with business partners and other third parties;~~

	●	~~our need to comply with a number of restrictive covenants and similar provisions in our~~ Senior Credit Facility that generally limit our ability to (among other things) incur additional indebtedness, create liens, make acquisitions, pay dividends and undergo certain changes in control, which could affect our ability to finance future operations, acquisitions or capital needs;

●

~~significant influence by our principal stockholder and the existence of certain anti-takeover measures in our governing documents; and~~

●

~~other factors identified throughout this~~ Current Report on Form 10-Q, including those discussed under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business.”

changes in demand from the local and state government and private clients that we serve;

general economic conditions, nationally and globally, and their effect on the demand and market for our services;

fluctuations in our results of operations;

the government’s funding and budgetary approval process;

the possibility that our contracts may be terminated by our clients;

our ability to win new contracts and renew existing contracts;

our dependence on a limited number of clients;

our ability to complete projects timely, in accordance with our customers’ expectations, or profitability;

our ability to successfully execute our mergers and acquisitions strategy, including the integration of new companies into our business;

our ability to successfully manage our growth strategy;

our ability to raise capital in the future;

competitive pressures and trends in our industry and our ability to successfully compete with our competitors;

our ability to avoid losses under fixed-price contracts;

the credit and collection risks associated with our clients;

our ability to comply with procurement laws and regulations;

changes in laws, regulations, or policies;

the enactment of legislation that could limit the ability of local, state and federal agencies to contract for our privatized services;

our ability to complete our backlog of uncompleted projects as currently projected;

the risk of employee misconduct or our failure to comply with laws and regulations;

our ability to control, and operational issues pertaining to, business activities that we conduct with business partners and other third parties;

our need to comply with a number of restrictive covenants and similar provisions in our senior credit facility that generally limit our ability to (among other things) incur additional indebtedness, create liens, make acquisitions, pay dividends and undergo certain changes in control, which could affect our ability to finance future operations, acquisitions or capital needs;

significant influence by our principal stockholder and the existence of certain anti-takeover measures in our governing documents; and

other factors identified throughout this Current Report on Form 10-Q, including those discussed under the headings “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business.”

The forward-looking statements contained in this report are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties, or assumptions, many of which are beyond our control, which may cause actual results or performance to be materially different from those expressed or

implied by these forward-looking statements. These risks and uncertainties include, those factors described in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December ~~31, 2016.~~29, 2018. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities laws. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-Q, 8-K and 10-K reports filed with the SEC. Our Annual Report on Form 10-K filing for the fiscal year ended December ~~31, 2016~~29, 2018 listed various important factors that could cause actual results to differ materially from expected and historic results. We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995, as amended. Readers can find them in “Item 1A. Risk Factors” of that filing and under the same heading of this filing. You may obtain a copy of our Annual Report on Form 10-K through our website, www.nv5.com. Information contained on our website is not incorporated into this report. In addition to visiting our website, you may read and copy any document we file with the SEC at ~~the SEC’s Public Reference Room at 100 F. Street, NE, Washington, D.C. 20549 or at~~ www.sec.gov. ~~Please call the SEC at 1-800-SEC-0330 for information on the Public Reference Room.~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to certain market risks from transactions that are entered into during the normal course of business. We have not entered into derivative financial instruments for trading purposes. We have no significant market risk exposure to interest rate changes related to the promissory notes related to ~~acquisition~~acquisitions since these contain fixed interestrates. Our only debt subject to interest rate risk is the Senior Credit Facility which rates are variable, at our option, tied to a Eurocurrency rate equal to LIBOR (London Interbank Offered Rate) plus an applicable rate or a base rate denominated in U.S. dollars. Interest rates are subject to change based on our Consolidated Senior Leverage Ratio (as defined in the Credit Agreement). As of September ~~30, 2017, the~~28, 2019, there was $10,000 outstanding ~~balance~~ on the Senior Credit ~~Facility was $42,000.~~Facility. A one percentage point change in the assumed interest rate of the Senior Credit Facility would ~~change~~not have a material impact on our ~~annual interest expense by approximately $420 in 2017.~~

market risk.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

In connection with management’s evaluation of the effectiveness of our internal control over financial reporting as of December 29, 2018, we identified a material weakness in our internal control over financial reporting related to revenues. This material weakness related solely to internal control deficiencies over the initial set up of project contracts in our project management system and adequate documentation to support the analysis of certain percentage of completion projects. The material weakness described herein did not result in a material misstatement to the Company’s previously issued consolidated financial statements, nor in the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 29, 2018.

The Company has made progress toward remediating this material weakness (as described below under “Remediation Status of Reported Material Weakness”). As of September 28, 2019, the Company had not completed its remediation.

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). ~~Based on that evaluation,~~Although our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, the Company’s disclosure controls and procedures were not effective such that the information relating to the Company required to be disclosed in our SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to the Company’s management, including our Chief Executive Officer and Chief Financial Officer, as ~~appropriate, to allow timely decisions regarding required disclosure.~~

~~Changes in Internal Control Over Financial Reporting~~

~~Under the supervision and with the participation~~a result of ~~our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of any changes~~a material weakness in our internal control over financial reporting, ~~(as such term is defined~~remedial steps have been taken in ~~Rules~~ ~~13a-15(f)~~the to address the weakness and ~~15d-15(f)~~improve the process. The material weakness described herein did not result in a material misstatement to the Company’s previously issued consolidated financial statements, nor in the condensed consolidated unaudited financial statements included in this Quarterly Report on Form 10-Q.

Remediation Status of Reported Material Weakness

Management continues to execute its plan to remediate the material weakness. As of September 28, 2019, management had performed the following activities:

The Company completed its examination and analysis of the facts and circumstances giving rise to the material weakness under the ~~Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our Chief Executive Officer~~supervision of the Chairman of the Audit Committee. The Company is addressing the examination findings through ongoing remediation. The Company continues to believe the remediation plan remains appropriate;

The Company has enhanced its processes over the initial set up of project contracts and ~~Chief~~adequate documentation to support the analysis of percentage of completion projects and has made system enhancements to its project management system; and

The Company has enhanced its processes for analyzing trends in margins in order to strengthen controls for the proper recognition of revenue.

The remediation steps outlined above are expected to strengthen the Company’s internal control over financial reporting. Management has begun testing the ongoing operating effectiveness of all new and modified controls and will consider the material weakness remediated after the applicable controls operate effectively for a sufficient period.

Changes in Internal Control Over Financial ~~Officer concluded that there have not been any~~Reporting

There were no changes ~~in our~~to the Company’s internal control over financial reporting as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) that occurred during ~~our most recently completed fiscal~~the quarter ended September 28, 2019 that ~~has~~have materially affected, or isare reasonably likely to materially affect, ~~our~~the Company’s internal control over financial ~~reporting.~~

reporting other than as described above.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

From time to time, we are subject to various legal proceedings that arise in the normal course of our business activities. As of the date of this Quarterly Report on Form 10-Q, we are not a party to any litigation the outcome of which, if determined adversely to us, would individually or in the aggregate be reasonably expected to have a material adverse effect on our results of operations or financial position.

ITEM 1A.RISK FACTORS.

~~During the~~ ~~nine months ended September 30, 2017, there~~

There have been no material changes to any of the principal risks that we believe are material to our business, results of operations and financial condition, from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December ~~31, 2016 filed~~29, 2018, except as set forth below:

Risks Related to our Pending Acquisition of Geospatial Holdings Inc.

The failure to successfully integrate Geospatial’s business and operations in the expected time frame may adversely affect the combined company’s future results.

On November 6, 2019, NV5 and one of its direct subsidiaries (“Merger Sub,” and together with NV5, the “NV5 Parties”), and Geospatial Holdings Inc. (“Geospatial”) and Arlington Capital Partners III, L.P., a Delaware limited partnership, solely in its capacity as representative for the stockholders and optionholders of Geospatial, entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) providing for the merger of Merger Sub with and into Geospatial (the “Merger”). NV5 believes that the acquisition of Geospatial will result in certain benefits, including certain cost synergies, significant new service offerings and operational efficiencies. However, to realize these anticipated benefits, the businesses of NV5 and Geospatial must be successfully combined. The success of the Merger will depend on the combined company’s ability to realize these anticipated benefits from combining the businesses of NV5 and Geospatial. The combined company may fail to realize the anticipated benefits of the Merger for a variety of reasons, including the following:

unanticipated issues in integration of information, communications, and other systems;

unanticipated incompatibility of logistics, marketing, and administration methods;

maintaining employee morale and retaining key employees;

integrating the business cultures of both companies;

preserving important strategic client relationships;

consolidating corporate and administrative infrastructures and eliminating duplicative operations; and

coordinating geographically separate organizations

In addition, even if the operations of Geospatial are integrated successfully, we may not realize the full benefits of the acquisition, including the synergies, cost savings, or growth opportunities that we expect. These benefits may not be achieved within the anticipated time frame, or at all.

We expect to fund the Geospatial acquisition with significant additional indebtedness, which may not be available when we are obligated to consummate the Merger. In addition, if we are unable to generate or borrow sufficient cash to make payments on

our indebtedness, our financial condition would be materially harmed, our business could fail, and shareholders may lose all of their investment.

In connection with the ~~SEC.~~

pending Merger, NV5 obtained a financing commitment to provide an incremental loan facility in the original principal amount of $240 million (the “Incremental Facility”) to fund the Merger under its existing credit facility, pursuant to a commitment letter (the “Commitment Letter”) from Bank of America, N.A., BofA Securities, Inc., PNC Bank, National Association and PNC Capital Markets LLC. The funding of the Incremental Facility provided for in the Commitment Letter is contingent on the satisfaction of customary conditions, including but not limited to (i) execution and delivery of definitive documentation with respect to the Incremental Facility in accordance with the terms set forth in the Commitment Letter, and (ii) consummation of the Merger in accordance with the Merger Agreement not earlier than December 20, 2019. The actual documentation governing the Incremental Facility has not been finalized, and accordingly, the actual terms may differ from the description of such terms in the Commitment Letter. Additionally, pursuant to the Merger Agreement, we may become obligated to consummate the Merger as soon as December 6, 2019, which may result in our inability to close such acquisition unless we obtain relevant waivers from either Geospatial or the Lead Arrangers. While we believe the risk of such a timing issue is low, it is possible we will be obligated to complete the Merger prior to the availability of financing pursuant to the Commitment Letter.

Our ability to make scheduled payments on or to refinance our obligations under our amended Senior Credit Facility will depend on our financial and operating performance, which will be affected by economic, financial, competitive, business, and other factors, some of which are beyond our control. We cannot assure you that our business will generate sufficient cash flow from operations to service our indebtedness or to fund our other liquidity needs. If we are unable to meet our debt obligations or fund our other liquidity needs, we may need to restructure or refinance all or a portion of our indebtedness on or before maturity or sell certain of our assets. We cannot assure you that we will be able to restructure or refinance any of our indebtedness on commercially reasonable terms, if at all, which could cause us to default on our debt obligations and impair our liquidity. Any refinancing of our indebtedness could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations.

Unavailability or cancellation of third-party insurance representation and warranty coverage regarding the Merger Agreement would increase our overall risk exposure as well as result in the unavailability of the Incremental Facility.

One of the conditions to the closing of the Merger is NV5 having secured representation and warranty insurance coverage regarding the Merger Agreement, which is our only recourse in the event the representations and warranties in the Merger Agreement prove to be inaccurate subsequent to the Merger. Pursuant to the Commitment Letter, we are obligated to consummate the Merger on the terms set forth in the Merger Agreement, without certain waivers that would adversely affect the interests of the lenders under the Incremental Facility. If we are unable to obtain such insurance coverage from third-party insurers as part consummating the Merger, Geospatial may seek our waiver of such condition, which if granted would result in the unavailability of the Incremental Facility. In addition, such representation and warranty insurance will likely include certain deductibles and exclusions, which may result in our being directly subject to the risk associated with any such inaccuracies in the Merger Agreement. If the third-party insurer providing the coverage fails, suddenly cancels our coverage, or is otherwise unable to provide us with adequate insurance coverage, our overall risk exposure and our operational expenses would increase and the management of our business operations would be disrupted.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Recent Sales of Unregistered Securities

During the three months ended September ~~30, 2017,~~28, 2019, we issued the following securities that were not registered under the Securities Act:

In September ~~2017,~~2019, we issued ~~1,510~~4,731 shares of our common stock as partial consideration for our ~~acquisition~~acqusition of ~~Marron.~~ GeoDesign.

These shares were issued in reliance upon Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering. For a description of these acquisitions, see Note 4,5, Business Acquisitions, to the consolidated interim financial statements appearing under Part I of this Quarterly Report on Form 10-Q.

Issuer Purchase of Equity Securities

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

~~None.~~

Agreement and Plan of Merger

On November 6, 2019, we and one of our direct subsidiaries (“Merger Sub,” and together with NV5, the “NV5 Parties”), and Geospatial Holdings Inc. (“Geospatial”) and Arlington Capital Partners III, L.P., a Delaware limited partnership, solely in its capacity as representative for the stockholders and optionholders of Geospatial, entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”). The Merger Agreement provides that, at the effective time and upon the terms and subject to the conditions set forth therein and in accordance with applicable law, Merger Sub will merge with and into Geospatial (the “Merger”) with Geospatial continuing as the surviving entity after the Merger. The board of directors of NV5 approved the Merger Agreement, the Merger and the other transactions contemplated by the Merger Agreement.

Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, immediately prior to the effective time of the Merger, each issued and outstanding share of Series A preferred stock of Geospatial shall be automatically converted into Geospatial Common Shares (as defined below) and be entitled to the payment of certain accrued or declared but unpaid dividends as provided in Geospatial’s current certificate of incorporation.

~~ITEM~~ 6.~~EXHIBITS.~~

~~Number~~
	~~Description~~
		Immediately thereafter, at the effective time of the Merger, each issued and outstanding share of common stock, par value $0.01 per share, of Geospatial (“Geospatial Common Shares”) (other than shares as to which the holder shall have exercised appraisal rights in accordance with Delaware law, any such shares being “Dissenting Shares”) will be converted into the right to receive a pro rata portion (the “Per Share Merger Consideration”) of the aggregate of (i) $302.5 million in cash, plus (ii) the aggregate exercise price of all in-the-money options (based on the Per Share Merger Consideration) to purchase Geospatial Common Shares as of the closing date (the “Closing Date”), plus (iii) the amount of cash held by Geospatial as of the Closing Date, less (iv) the aggregate indebtedness of Geospatial as of the Closing Date, less (v) transaction expenses of both NV5 and Geospatial (together with certain working capital adjustments as of the Closing Date and escrowed expense amounts, collectively, the “Merger Consideration”); and



			Immediately prior to the effective time of the Merger, each vested in-the-money option to purchase Geospatial Common Shares granted under the Geospatial equity incentive plan will be automatically cancelled and replaced with the right to receive at the closing of the Merger the excess, if any, of the Per Share Merger Consideration over the exercise price of each such in-the-money option and all vested out-of-the-money options and unvested options of Geospatial Common Shares granted under the Geospatial equity incentive plan will be cancelled and forfeited for no consideration.

The NV5 Parties and Geospatial have made certain customary representations and warranties in the Merger Agreement and have agreed to customary covenants, including, among others, a representation by NV5 that it will have at the Closing Date sufficient cash available to pay the Merger Consideration and all related fees and expenses in connection with the Merger and certain related transactions, covenants by Geospatial with respect to the conduct of its business during the period between execution of the Merger Agreement and the closing of the Merger, a covenant by NV5 to obtain a customary representation and warranty insurance policy, and covenants by both parties regarding regulatory clearance of the Merger by appropriate anti-trust authorities, including. (in the case of NV5) divesting entities, facilities or assets, terminating, amending or assigning existing contractual rights, obligations or relationships or terminating, amending or assigning existing licenses or other agreements and entering into new licenses or other agreements as is necessary or reasonably advisable as a condition to obtaining such regulatory clearance.

The completion of the Merger is subject to various customary closing conditions, including, among others: (i) clearance by appropriate anti-trust authorities; (ii) the absence of a material adverse effect on Geospatial between signing and closing of the Merger; and (iii) that no more than 5% of Geospatial’s Common Shares shall be Dissenting Shares.

The Merger Agreement may be terminated under certain circumstances, including by either party (i) if the Merger has not been consummated on or before February 6, 2020 (unless the terminating party is in material breach of the Merger Agreement that is the cause of, or results in the failure of the Merger to close), (ii) if a final and non-appealable order, decree or ruling is entered prohibiting or restraining the Merger, or (iii) upon a material uncured breach by the other party that would cause the closing conditions not to be satisfied.

A copy of the Merger Agreement is filed herewith as Exhibit 2.1 and is incorporated herein by reference. The foregoing description of the Merger Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Merger Agreement. The Merger Agreement has been filed to provide investors with information regarding its terms. It is not intended to provide any other factual information about the NV5 Parties or Geospatial. In particular, the assertions embodied in the representations and warranties in the Merger Agreement were made as of a specified date, are modified or qualified by information in confidential disclosure letters provided by each party to the other in connection with the signing of the Merger Agreement, may be subject to a contractual standard of materiality different from what might be viewed as material to stockholders, or may have been used for the purpose of allocating risk between the parties. Accordingly, the representations and warranties in the Merger Agreement are not necessarily characterizations of the actual state of facts about the NV5 Parties or Geospatial at the time they were made or otherwise and should only be read in conjunction with the other information that NV5 makes publicly available in reports, statements and other documents filed with the SEC.

Commitment Letter

In connection with the pending Merger, NV5 obtained a financing commitment to provide an incremental loan facility in the original principal amount of $240 million (the “Incremental Facility”) to fund the Merger under its existing credit facility, pursuant to a commitment letter (the “Commitment Letter”) from Bank of America, N.A., BofA Securities, Inc., PNC Bank, National Association and PNC Capital Markets LLC. The Incremental Facility includes a $150 million term loan tranche and a $90 million increase in NV5’s existing $125 million revolving facility, for a total availability of $365 million. The funding of the Incremental Facility provided for in the Commitment Letter is contingent on the satisfaction of customary conditions, including but not limited to (i) execution and delivery of definitive documentation with respect to the Incremental Facility in accordance with the terms set forth in the Commitment Letter, and (ii) consummation of the Merger in accordance with the Merger Agreement not earlier than December 20, 2019. The actual documentation governing the Incremental Facility has not been finalized, and accordingly, the actual terms may differ from the description of such terms in the Commitment Letter.

A copy of the Commitment Letter is filed herewith as Exhibit 10.1 and is incorporated herein by reference. The foregoing description of the Commitment Letter does not purport to be complete and it is qualified in its entirety by reference to the full text of the Commitment Letter.

ITEM 6.EXHIBITS.



Number		Description

~~31.1~~* 2.1		Agreement and Plan of Merger by and among NV5 Global, Inc., NV5 Merger Sub Corp., Geospatial Holdings Inc. and Arlington Capital Partners III, L.P., dated as of November 6, 2019. *

10.1		Commitment Letter, dated as of November 6, 2019, by and among NV5 Global, Inc., Bank of America, N.A., BofA Securities, Inc., PNC Bank, National Association and PNC Capital Markets LLC.

31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to § 302 of the Sarbanes-Oxley Act of 2002

32.1**		Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 **

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

*	~~Filed herewith.~~
*	Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request.

Furnished herewith. This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filings of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

			~~NV5~~ ~~GLOBAL~~~~, INC.~~

		~~By:~~ ~~/s/ Michael P. Rama~~ NV5GLOBAL, INC.

	By: /s/ Edward Codispoti
Date: November ~~8, 2017~~ 7, 2019		~~Michael P. Rama~~ ~~Vice President and~~ Edward Codispoti Chief Financial Officer (Principal Financial and Accounting Officer)

	September 30, 2017		December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	15,582	$	35,666
Accounts receivable, net of allowance for doubtful accounts of $3,106 and $1,992 as of September 30, 2017 and December 31, 2016, respectively		113,004		75,511
Prepaid expenses and other current assets		2,860		1,874
Total current assets		131,446		113,051
Property and equipment, net		8,009		6,683
Intangible assets, net		68,374		40,861
Goodwill		97,384		59,380
Other assets		1,042		1,511
Total Assets	$	306,255	$	221,486

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	17,133	$	13,509
Accrued liabilities		18,173		17,316
Income taxes payable		855		1,134
Billings in excess of costs and estimated earnings on uncompleted contracts		1,869		228
Client deposits		173		106
Current portion of contingent consideration		2,653		564
Current portion of notes payable and other obligations		10,821		10,764
Total current liabilities		51,677		43,621
Contingent consideration, less current portion		125		1,875
Notes payable and other obligations, less current portion		67,155		21,632
Deferred income tax liabilities, net		22,084		6,197
Total liabilities		141,041		73,325

Commitments and contingencies

Stockholders’ equity:
Preferred stock, $0.01 par value; 5,000,000 shares authorized, no shares issued and outstanding		-		-
Common stock, $0.01 par value; 45,000,000 shares authorized, 10,779,246 and 10,566,528 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively		108		106
Additional paid-in capital		122,576		118,026
Retained earnings		42,530		30,029
Total stockholders’ equity		165,214		148,161
Total liabilities and stockholders’ equity	$	306,255	$	221,486

	Three Months Ended						Nine Months Ended
	September 30,			September 30,			September 30,			September 30,
	2017			2016			2017			2016

Gross revenues	$	91,263		$	60,091		$	239,058		$	160,888

Direct costs (excluding depreciation and amortization):
Salaries and wages		28,219			20,274			75,235			53,744
Sub-consultant services		12,663			8,854			33,719			22,246
Other direct costs		3,635			3,307			10,276			8,209
Total direct costs		44,517			32,435			119,230			84,199

Gross Profit		46,746			27,656			119,828			76,689

Operating Expenses:
Salaries and wages, payroll taxes and benefits		23,090			14,096			62,847			40,575
General and administrative		7,362			4,415			19,931			12,640
Facilities and facilities related		3,547			2,066			9,162			5,803
Depreciation and amortization		3,788			1,604			9,542			4,285
Total operating expenses		37,787			22,181			101,482			63,303

Income from operations		8,959			5,475			18,346			13,386


Interest expense		(524	)		(81	)		(1,042	)		(221	)

Income before income tax expense		8,435			5,394			17,304			13,165
Income tax expense		(2,523	)		(1,990	)		(4,803	)		(4,847	)
Net Income and Comprehensive Income	$	5,912		$	3,404		$	12,501		$	8,318

Earnings per share:
Basic	$	0.58		$	0.34		$	1.23		$	0.94
Diluted	$	0.55		$	0.33		$	1.16		$	0.90

Weighted average common shares outstanding:
Basic		10,211,114			9,941,517			10,155,751			8,826,090
Diluted		10,785,630			10,353,793			10,744,619			9,215,365

	Common Stock				Additional Paid-In			Retained
	Shares		Amount		Capital			Earnings		Total
Balance, December 31, 2016		10,566,528	$	106	$	118,026		$	30,029	$	148,161

Stock compensation		-		-		2,743			-		2,743
Restricted stock issuance, net		163,016		2		(2	)		-		-
Stock issuance for acquisitions		47,982		-		1,746			-		1,746
Payment of contingent consideration with common stock		1,720		-		63			-		63
Net income		-		-		-			12,501		12,501
Balance, September 30, 2017		10,779,246	$	108	$	122,576		$	42,530	$	165,214



	Common Stock			Additional Paid-In Capital			Retained Earnings
	Shares	Amount		Additional Paid-In Capital			Retained Earnings		Total
Balance, June 30, 2018	11,129,082	$	111	$	131,746		$	65,947	$	197,804
Stock compensation	—	—		1,902			—		1,902
Restricted stock issuance, net	25,672	—		(1		)	—		—
Stock issuance for acquisitions	37,146	—		2,886			—		2,886
Proceeds from secondary offering, net of costs	1,270,000	13		93,456			—		93,469
Net income	—	—		—			7,285		7,285
Balance, September 29, 2018	12,461,900	$	125	$	229,989		$	73,232	$	303,346

Balance, June 29, 2019	12,657,841	$	127	$	243,646		$	95,228	$	339,001
Stock compensation	—	—		2,819			—		2,819
Restricted stock issuance, net	155,307	1		—			—		1
Stock issuance for acquisitions	5,771	—		403			—		403
Net income	—	—		—			5,843		5,843
Balance, September 28, 2019	12,818,919	$	128	$	246,869		$	101,070	$	348,067

	Nine Months Ended
	September 30, 2017			September 30, 2016
Cash Flows From Operating Activities:
Net income	$	12,501		$	8,318
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,542			4,285
Provision for doubtful accounts		445			246
Stock compensation		2,743			1,704
Change in fair value of contingent consideration		56			88
Loss on disposal property and equipment		2			2
Excess tax benefit from stock based compensation		-			(155	)
Deferred income taxes		320			88
Changes in operating assets and liabilities, net of impact of acquisitions:
Accounts receivable		(17,031	)		(7,795	)
Prepaid expenses and other assets		(13	)		372
Accounts payable		(1,827	)		2,892
Accrued liabilities		(3,251	)		476
Income taxes payable		(279	)		96
Billings in excess of costs and estimated earnings on uncompleted contracts		1,641			(78	)
Client deposits		822			147
Net cash provided by operating activities		5,671			10,686

Cash Flows From Investing Activities:
Cash paid for acquisitions (net of cash received from acquisitions)		(60,241	)		(24,388	)
Purchase of property and equipment		(1,591	)		(566	)
Net cash used in investing activities		(61,832	)		(24,954	)

Cash Flows From Financing Activities:
Proceeds from borrowings from Senior Credit Facility		47,000			-
Proceeds from secondary offering		-			51,319
Payments of borrowings from Senior Credit Facility		(5,000	)		-
Payments of secondary offering costs		-			(4,172	)
Payments on notes payable		(5,360	)		(4,156	)
Payments of contingent consideration		(563	)		(296	)
Excess tax benefit from stock based compensation		-			155
Proceeds from exercise of unit warrant		-			1,008
Net cash provided by financing activities		36,077			43,858


Net (decrease) increase in Cash and Cash Equivalents		(20,084	)		29,590
Cash and cash equivalents – beginning of period		35,666			23,476
Cash and cash equivalents – end of period	$	15,582		$	53,066

	2017			2016
	Acquisitions			Acquisitions

Cash	$	315		$	128
Accounts receivable		20,906			20,221
Property and equipment		1,750			4,301
Prepaid expenses		968			1,336
Other assets		337			841
Intangible assets:
Customer relationships		29,998			26,188
Trade name		2,224			1,922
Customer backlog		1,116			3,898
Non-compete		1,703			1,259
Favorable (unfavorable) lease		-			(225	)
Total Assets		59,317			59,869
Liabilities		(11,272	)		(12,250	)
Deferred tax liabilities		(15,567	)		(7,892	)
Net assets acquired		32,478			39,727

Consideration paid (Cash, Notes and/or stock)		70,712			76,011
Contingent earn-out liability (Cash and stock)		908			1,417
Total Consideration		71,620			77,428
Excess consideration over the amounts assigned to the net assets acquired (Goodwill)	$	39,142		$	37,701

	September 30,			December 31,
	2017			2016

Billed	$	81,399		$	53,756
Unbilled		34,131			23,237
Contract retentions		580			510

		116,110			77,503
Less: allowance for doubtful accounts		(3,106	)		(1,992	)
Accounts receivable, net	$	113,004		$	75,511

	September 30, 2017							December 31, 2016
	Gross Carrying Amount		Accumulated Amortization			Net Amount		Gross Carrying Amount		Accumulated Amortization			Net Amount
Customer relationships	$	68,799	$	(9,720	)	$	59,079	$	38,801	$	(5,746	)	$	33,055
Trade name		6,409		(4,477	)		1,932		4,185		(2,746	)		1,439
Customer backlog		7,723		(3,509	)		4,214		6,607		(2,284	)		4,323
Favorable lease		553		(134	)		419		553		(158	)		395
Non-compete		4,249		(1,519	)		2,730		2,546		(897	)		1,649
Total	$	87,733	$	(19,359	)	$	68,374	$	52,692	$	(11,831	)	$	40,861

Period ending September 30,

2018	$	10,370
2019		9,012
2020		7,461
2021		6,886
2022		6,642
Thereafter		28,003
Total	$	68,374



	September 28, 2019			December 29, 2018
Contingent consideration, beginning of the year	$	4,698		$	1,890
Additions for acquisitions	2,737			3,112
Reduction of liability for payments made	(1,938		)	(728		)
Increase of liability related to re-measurement of fair value	49			424
Total contingent consideration, end of the period	5,546			4,698
Current portion of contingent consideration	(3,351		)	(1,845		)
Contingent consideration, less current portion	$	2,195		$	2,853

	Number of Unvested Restricted Shares of Common Stock and Restricted Stock Units			Weighted Average Grant Date Fair Value

Unvested shares as of December 31, 2016		502,773		$	19.35
Granted		186,437		$	37.76
Vested		(90,305	)	$	9.48
Forfeited		(25,336	)	$	28.79
Unvested shares as of September 30, 2017		573,569		$	26.47

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