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FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Delaware | 45-3458017 | ||||||
(State or other jurisdiction of |
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incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||
200 South Park Road, | Suite 350 | 33021 | |||||
Hollywood, | Florida | (Zip Code) | |||||
(Address of principal executive offices) | |||||||
(954)
| 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 |
| Large accelerated filer | ☐ | Accelerated |
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Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company |
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PART I – FINANCIAL INFORMATION
September 30, 2017 December 31, 2016 Assets Current assets: Cash and cash equivalents Accounts receivable, net of allowance for doubtful accounts of $3,106 and $1,992 as of September 30, 2017 and December 31, 2016, respectively Prepaid expenses and other current assets Total current assets Property and equipment, net Intangible assets, net Goodwill Other assets Total Assets Liabilities and Stockholders’ Equity Current liabilities: Accounts payable Accrued liabilities Income taxes payable Billings in excess of costs and estimated earnings on uncompleted contracts Client deposits Current portion of contingent consideration Current portion of notes payable and other obligations Total current liabilities Contingent consideration, less current portion Notes payable and other obligations, less current portion Deferred income tax liabilities, net Total liabilities 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 Additional paid-in capital Retained earnings Total stockholders’ equity Total liabilities and stockholders’ equity $ 15,582 $ 35,666 113,004 75,511 2,860 1,874 131,446 113,051 8,009 6,683 68,374 40,861 97,384 59,380 1,042 1,511 $ 306,255 $ 221,486 $ 17,133 $ 13,509 18,173 17,316 855 1,134 1,869 228 173 106 2,653 564 10,821 10,764 51,677 43,621 125 1,875 67,155 21,632 22,084 6,197 141,041 73,325 - - 108 106 122,576 118,026 42,530 30,029 165,214 148,161 $ 306,255 $ 221,486 June 29, 2019 December 29, 2018 Assets Current assets: Cash and cash equivalents $ 44,436 $ 40,739 Billed receivables, net 97,593 98,324 Unbilled receivables, net 49,808 43,411 Prepaid expenses and other current assets 12,215 2,582 Total current assets 204,052 185,056 Property and equipment, net 12,129 11,677 Right-of-use lease asset, net 35,566 — Intangible assets, net 98,941 99,756 Goodwill 151,788 140,930 Other assets 1,971 2,002 Total Assets $ 504,447 $ 439,421 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 19,612 $ 22,588 Accrued liabilities 35,565 20,853 Income taxes payable 360 2,697 Billings in excess of costs and estimated earnings on uncompleted contracts 2,243 7,625 Client deposits 256 208 Current portion of contingent consideration 1,895 1,845 Current portion of notes payable and other obligations 16,687 17,139 Total current liabilities 76,618 72,955 Contingent consideration, less current portion 2,195 2,853 Long-term lease liability 27,736 — Notes payable and other obligations, less current portion 40,189 29,847 Deferred income tax liabilities, net 18,708 16,224 Total liabilities 165,446 121,879 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, 12,657,841 and 12,550,711 shares issued and outstanding as of June 29, 2019 and December 29, 2018, respectively 127 126 Additional paid-in capital 243,646 236,525 Retained earnings 95,228 80,891 Total stockholders’ equity 339,001 317,542 Total liabilities and stockholders’ equity $ 504,447 $ 439,421
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 | Six Months Ended | ||||||||||||||
| June 29, 2019 | June 30, 2018 | June 29, 2019 | June 30, 2018 | ||||||||||||
| Gross revenues | $ | 127,974 | $ | 104,018 | $ | 245,309 | $ | 198,552 | |||||||
Direct costs (excluding depreciation and amortization): | |||||||||||||||
| Salaries and wages | 38,080 | 33,546 | 73,337 | 64,067 | |||||||||||
| Sub-consultant services | 20,044 | 14,900 | 36,996 | 28,360 | |||||||||||
| Other direct costs | 8,410 | 4,870 | 18,106 | 8,792 | |||||||||||
| Total direct costs | 66,534 | 53,316 | 128,439 | 101,219 | |||||||||||
| Gross Profit | 61,440 | 50,702 | 116,870 | 97,333 | |||||||||||
| Operating Expenses: | |||||||||||||||
| Salaries and wages, payroll taxes and benefits | 30,765 | 25,767 | 60,004 | 51,225 | |||||||||||
| General and administrative | 10,896 | 8,258 | 19,758 | 15,792 | |||||||||||
| Facilities and facilities related | 3,937 | 3,520 | 7,743 | 7,062 | |||||||||||
| Depreciation and amortization | 6,245 | 3,807 | 12,357 | 7,603 | |||||||||||
| Total operating expenses | 51,843 | 41,352 | 99,862 | 81,682 | |||||||||||
| Income from operations | 9,597 | 9,350 | 17,008 | 15,651 | |||||||||||
| Interest expense | (457 | ) | (650 | ) | (808 | ) | (1,261 | ) | |||||||
| Income before income tax expense | 9,140 | 8,700 | 16,200 | 14,390 | |||||||||||
| Income tax expense | (346 | ) | (1,080 | ) | (1,863 | ) | (2,478 | ) | |||||||
| Net Income and Comprehensive Income | $ | 8,794 | $ | 7,620 | $ | 14,337 | $ | 11,912 | |||||||
| Earnings per share: | |||||||||||||||
| Basic | $ | 0.73 | $ | 0.73 | $ | 1.19 | $ | 1.15 | |||||||
| Diluted | $ | 0.70 | $ | 0.69 | $ | 1.15 | $ | 1.09 | |||||||
| Weighted average common shares outstanding: | |||||||||||||||
| Basic | 12,106,066 | 10,496,524 | 12,033,906 | 10,395,874 | |||||||||||
| Diluted | 12,521,463 | 11,004,212 | 12,447,248 | 10,953,259 | |||||||||||
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, March 31, 2018 | 10,991,107 | $ | 110 | $ | 128,585 | $ | 58,327 | $ | 187,022 | |||||||||
| Stock compensation | — | — | 1,503 | — | 1,503 | |||||||||||||
| Restricted stock issuance, net | 110,732 | — | — | — | — | |||||||||||||
| Stock issuance for acquisitions | 27,243 | 1 | 1,658 | — | 1,659 | |||||||||||||
| Net income | — | — | — | 7,620 | 7,620 | |||||||||||||
| Balance, June 30, 2018 | 11,129,082 | $ | 111 | $ | 131,746 | $ | 65,947 | $ | 197,804 | |||||||||
| Balance, March 30, 2019 | 12,565,115 | $ | 126 | $ | 239,611 | $ | 86,434 | $ | 326,171 | |||||||||
| Stock compensation | — | — | 2,369 | — | 2,369 | |||||||||||||
| Restricted stock issuance, net | 66,874 | 1 | (1 | ) | — | — | ||||||||||||
| Stock issuance for acquisitions | 25,852 | — | 1,667 | — | 1,667 | |||||||||||||
| Payment of contingent consideration with common stock | — | — | — | — | — | |||||||||||||
| Net income | — | — | — | 8,794 | 8,794 | |||||||||||||
| Balance, June 29, 2019 | 12,657,841 | $ | 127 | $ | 243,646 | $ | 95,228 | $ | 339,001 | |||||||||
| 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 | — | — | 2,639 | — | 2,639 | |||||||||||||
| Restricted stock issuance, net | 118,446 | 1 | (1 | ) | — | — | ||||||||||||
| Stock issuance for acquisitions | 35,866 | 1 | 2,063 | — | 2,064 | |||||||||||||
| Proceeds from exercise of warrants, net of costs | 140,000 | 1 | 1,091 | — | 1,092 | |||||||||||||
| Net income | — | — | — | 11,912 | 11,912 | |||||||||||||
| Balance, June 30, 2018 | 11,129,082 | $ | 111 | $ | 131,746 | $ | 65,947 | $ | 197,804 | |||||||||
| Balance, December 29, 2018 | 12,550,711 | $ | 126 | $ | 236,525 | $ | 80,891 | $ | 317,542 | |||||||||
| Stock compensation | — | — | 4,167 | 4,167 | ||||||||||||||
| Restricted stock issuance, net | 60,124 | 1 | (1 | ) | — | |||||||||||||
| Stock issuance for acquisitions | 35,821 | — | 2,230 | 2,230 | ||||||||||||||
| Payment of contingent consideration with common stock | 11,185 | — | 725 | 725 | ||||||||||||||
| Net income | — | — | — | 14,337 | 14,337 | |||||||||||||
| Balance, June 29, 2019 | 12,657,841 | $ | 127 | $ | 243,646 | $ | 95,228 | $ | 339,001 | |||||||||
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 | ||||
| Six Months Ended | |||||||
| June 29, 2019 | June 30, 2018 | ||||||
| Cash Flows From Operating Activities: | |||||||
| Net income | $ | 14,337 | $ | 11,912 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 12,357 | 7,603 | |||||
| Non-cash lease expense | 4,251 | — | |||||
| Provision for doubtful accounts | 1,456 | 831 | |||||
| Stock based compensation | 4,167 | 2,639 | |||||
| Change in fair value of contingent consideration | 49 | 107 | |||||
| Gain on disposals of property and equipment | (48 | ) | — | ||||
| Deferred income taxes | 477 | 521 | |||||
| Changes in operating assets and liabilities, net of impact of acquisitions: | |||||||
| Billed receivables | 5,511 | (7,834 | ) | ||||
| Unbilled receivables | (5,188 | ) | (1,796 | ) | |||
| Prepaid expenses and other assets | (9,413 | ) | 253 | ||||
| Accounts payable | (3,816 | ) | 1,157 | ||||
| Accrued liabilities | 968 | 2,700 | |||||
| Income taxes payable | (2,338 | ) | (7,869 | ) | |||
| Billings in excess of costs and estimated earnings on uncompleted contracts | (5,383 | ) | 602 | ||||
| Deposits | 47 | 11 | |||||
| Net cash provided by operating activities | 17,434 | 10,837 | |||||
| Cash Flows From Investing Activities: | |||||||
| Cash paid for acquisitions (net of cash received from acquisitions) | (14,160 | ) | (3,473 | ) | |||
| Purchase of property and equipment | (1,626 | ) | (1,462 | ) | |||
| Net cash used in investing activities | (15,786 | ) | (4,935 | ) | |||
| Cash Flows From Financing Activities: | |||||||
| Borrowings from Senior Credit Facility | 10,000 | — | |||||
| Payments on notes payable | (6,738 | ) | (6,482 | ) | |||
| Payments of contingent consideration | (1,213 | ) | (728 | ) | |||
| Proceeds from exercise of unit warrant | — | 1,092 | |||||
| Payments of borrowings from Senior Credit Facility | — | (2,500 | ) | ||||
| Net cash provided by (used in) financing activities | 2,049 | (8,618 | ) | ||||
| Net increase (decrease) in Cash and Cash Equivalents | 3,697 | (2,716 | ) | ||||
| Cash and cash equivalents – beginning of period | 40,739 | 18,751 | |||||
| Cash and cash equivalents – end of period | $ | 44,436 | $ | 16,035 | |||
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 | ||||
See accompanying notes to consolidated financial statements (unaudited).
NV5 Global, Inc. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
to: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2017 2016 2017 2016 Numerator: Net income – basic and diluted Denominator: Basic weighted average shares outstanding Effect of dilutive non-vested restricted shares and units Effect of issuable shares related to acquisitions Effect of warrants Diluted weighted average shares outstanding Subsidiaries cash, $300 in promissory note (bearing interest at 3%), payable in three 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. 2017 2016 Acquisitions Acquisitions Cash Accounts receivable Property and equipment Prepaid expenses Other assets Intangible assets: Customer relationships Trade name Customer backlog Non-compete Favorable (unfavorable) lease Total Assets Liabilities Deferred tax liabilities Net assets acquired Consideration paid (Cash, Notes and/or stock) Contingent earn-out liability (Cash and stock) Total Consideration Excess consideration over the amounts assigned to the net assets acquired (Goodwill) 2018: Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2017 2016 2017 2016 Gross revenues Net income Basic earnings per share Diluted earnings per share September 30, December 31, 2017 2016 Billed Unbilled Contract retentions Less: allowance for doubtful accounts Accounts receivable, net September 30, December 31, 2017 2016 Office furniture and equipment Computer equipment Survey and field equipment Leasehold improvements Accumulated depreciation Property and equipment – net September 30, December 31, 2017 2016 Balance as of the beginning of the year Acquisitions Reduction from working capital proceeds Balance as of the end of the period NV5 Global, Inc. and Subsidiaries September 30, 2017 December 31, 2016 Gross Carrying Amount Accumulated Amortization Net Amount Gross Carrying Amount Accumulated Amortization Net Amount Customer relationships Trade name Customer backlog Favorable lease Non-compete Total Period ending September 30, 2018 2019 2020 2021 2022 Thereafter Total September 30, December 31, 2017 2016 Deferred rent Payroll and related taxes Professional liability reserve Benefits Accrued vacation Unreognized tax benefits Other Total September 30, December 31, 2017 2016 Senior Credit Facility Note Payable Other Obligations Uncollateralized promisory notes Total Notes Payable and Other Obligations Current portion of notes payable and other obligations Notes payable and other obligations, less current portion Other Obligations $504. 29, 2018. 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 29, 2018. 29, 2018. 29, 2018. 29, 2018. Period ending September 30, 2018 2019 2020 2021 2022 Total September 30, December 31, 2017 2016 Contingent consideration, beginning of the year Additions for acquisitions Reduction of liability for payments made Increase of liability related to re-measurement of fair value Total contingent consideration, end of the period Current portion of contingent consideration Contingent consideration, less current portion Note 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 Granted Vested Forfeited Unvested shares as of September 30, 2017 the six months ended June 29, 2019: 2018 was $13,649 and $6,802, respectively. The following tables set forth summarized financial information concerning our reportable Acquisitions 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. Critical Accounting Policies and Estimates 10-K. Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2017 2016 2017 2016 Gross revenues Less sub-consultant services and other direct costs Net revenues (1) Direct salary and wages costs Gross profit Operating expenses Income from operations Interest expense Income tax expense Net income Net Revenues is not a measure of financial performance under GAAP. Three June 30, 2018. services Profit 2018. Income taxes 2018. Three Months Ended Nine Months Ended September 30, September 30, September 30, September 30, 2017 2016 2017 2016 Gross revenues INF BTS Segment income before taxes INF BTS the unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. 2018 2018. Segment Income before Taxes from increased acquisition activity. June 28, 2018. Facility. $55. $504. 29, 2018. 29, 2018. 29, 2018. 29, 2018. On July 1, 2015, 29, 2018. $313. June 29, 2019. Cautionary Statement about Forward-Looking Statements PART II – OTHER INFORMATION 29, 2018. 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 **“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.● 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 NV5 Global, Inc.the Company and those of its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.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 20172019 fiscal year.Fiscal Year Effective March 7, 2017,Audit Committee of our Board of Directors andadopted new accounting standards below, in the Board of Directors approved a changeCompany’s accounting policies from those disclosed 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)2018 Form 10-K.with interim calendar quarters ending on the Saturday closest to the endas 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, andday of the fiscal year will end on December 30, 2017.Use2019 using the modified retrospective approach and elected not to adjust comparative periods. In addition, we elected the package of EstimatesThe preparationpractical 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 financial statements12 months or less off the balance sheet and the practical expedient to account for non-lease components in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amountsa 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 financial statementsnet earnings and accompanying notes. These estimates and assumptions are basedhad no impact on management’s most recent assessmentcash flows. Additionally, there was no cumulative effect of underlying facts and circumstances usingadoption on retained earnings in the most recent information available. Actual results could differ significantly from these estimates and assumptions, and the differences could be material.
5Estimates and assumptions are evaluated periodically and adjusted when necessary. The more significant estimates affecting amounts reported inconsolidated financial statements relatefirst day of fiscal year 2018, we adopted ASC Topic 606, Revenue from Contracts with Customers (“Topic 606”), using the modified retrospective approach 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 RiskTrade receivable balances carried by the Company are comprised of accounts from a diverse client base across a broad range of industries and areall contracts that were 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 InstrumentsA 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. Goodwillcompleted as of the acquisition date is measuredbeginning 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 excesscontract 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.considerationour 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 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.netmajority of the acquisition date fair values ofbalance over 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 paymentsnext 24 months. Contracts for which work authorizations have been received are included in General and Administrative expenses on the Consolidated Statementsbacklog. Project cancellations or scope adjustments may occur, from time to time, with respect to contracts reflected in backlog. Most of Net Income and Comprehensive Income.NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)Several factorsour government contracts are considered when determining contingent consideration liabilities as part of the purchase price, including whether (i) the valuation of the acquisitionsmulti-year contracts for which funding 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 AssetsGoodwill 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’s tangible and identifiable intangible assets and liabilities.Goodwill is required to be evaluated for impairmentappropriated on an annual basis, therefore backlog 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, backlog includes future revenue at contract rates, excluding contract renewals or whenever events or changesextensions that are at the discretion of the client. For contracts with a not-to-exceed maximum amount, we include revenue from such contracts in circumstances indicatebacklog to the assetextent of the remaining estimated amount. Our backlog for the period beyond 12 months may be impaired. An entity has the optionsubject to first assess qualitative factors to determine whether the existence of eventsvariation from year-to-year as existing contracts are completed, delayed, or circumstances leads torenewed or new contracts are awarded, delayed, or cancelled. As a determinationresult, we believe 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 comparisonyear-to-year comparisons of the carrying valueportion of backlog expected to be performed more than one year in the assetsfuture are difficult to assess and liabilities associated with a reporting unit, including goodwill, withnot necessarily indicative of future revenues or profitability.fair valueConsolidated 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 unit. The Company determines fair value through multiple valuation techniques, and weightsdate. This liability is generally classified as current. Revenue recognized that was included in 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 determinecontract liability balance at the fair value of its reporting units. If the carrying value of a reporting unit exceeds the fair valuebeginning 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 namesfiscal year was $2,013 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.See Note 7 for further information on goodwill and identified intangibles.NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)Earnings per ShareBasic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings 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 share$6,435 for the ninesix months ended September 30, 2017June 29, 2019, respectively and 2016 exclude 560,689$19 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$212 for the three and ninesix months ended SeptemberJune 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: $ 5,912 $ 3,404 $ 12,501 $ 8,318 10,211,114 9,941,517 10,155,751 8,826,090 311,677 203,997 305,392 209,032 146,958 102,810 170,768 55,551 115,881 105,469 112,708 124,692 10,785,630 10,353,793 10,744,619 9,215,365 shallwill be applied on a prospective basis. Early adoption is permitted for goodwill impairment tests performed on testing dates after January 1, 2017. The Company doesWe will adopt this ASU at the beginning of fiscal year 2020. We do not expect the impact of this ASU to be material to itsour consolidated financial statements.In August 2016, the FASB issued ASU 2016-15, StatementIn February 2016, FASB issued ASU 2016-02, Leases. ASU 2016-02 requires lesseesrecognize,issue common stock were exercised or converted into common stock or resulted in the balance sheet,issuance of common stock that then shared in the earnings of the Company. The effect of potentially dilutive securities is not considered during periods of loss or if the effect is anti-dilutive.liabilityreconciliation of the net income and weighted average shares outstanding for the calculation of basic and diluted earnings per share: Three Months Ended Six Months Ended June 29,
2019 June 30,
2018 June 29,
2019 June 30,
2018Numerator: Net income – basic and diluted $ 8,794 $ 7,620 $ 14,337 $ 11,912 Denominator: Basic weighted average shares outstanding 12,106,066 10,496,524 12,033,906 10,395,874 Effect of dilutive non-vested restricted shares and units 351,110 421,760 334,029 404,240 Effect of issuable shares related to acquisitions 64,287 85,928 79,313 101,340 Effect of warrants — — — 51,805 Diluted weighted average shares outstanding 12,521,463 11,004,212 12,447,248 10,953,259 make lease paymentsacquire up to 140,000 units (“Unit Warrant”). On March 23, 2016, the underwriter paid us $1,008 to exercise the Unit Warrant. Each of the units delivered upon exercise consisted of one share of our common stock and a right-of-use asset representing the rightone warrant 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 requirementspurchase 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 acustomerour common stock at an amount that reflectsexercise price of $7.80 per share (“Warrant”), which warrant expired on March 27, 2018. On March 19, 2018, the consideration it expectsunderwriter paid us $1,092 to receiveexercise the Warrant. On March 21, 2018, we delivered 140,000 shares of common stock to the underwriter.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 of the original effective date. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. In 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 itsair quality, environmental building sciences, water resources, site 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, 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 impactedremediation 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 systemsenvironmental health and internal controls.Note 4 – Business AcquisitionsOn September 6, 2017, the Company acquired all of the outstanding interests in Marron and Associates, Inc. (“Marron”), a leading environmental services firm with offices in Albuquerque and Las Cruces, New Mexico. Marron provides environmental planning, natural and cultural resources, environmental site assessment, and GISsafety compliance services. Marron primarily serves public and private clients throughout the Southwest, including the New Mexico Department of Transportation, Bureau of Land Management, Bureau of Indian Affairs, Federal Highway Administration, U.S. Department of Agriculture, U.S. Fish and Wildlife Service, and U.S. Forest Service. The aggregate purchase price of this acquisition is up to $990$6,500, including $400 in$4,000 of cash $300and $2,000 in promissory notesnote (bearing interest at 3.0%4%), payable in threefour equal installments of $100,$500 due on the first, second, third and thirdfourth anniversaries of September 6, 2017,June 3, 2019. Further, 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 orpurchase price includes a combination$500 earn-out of cash, and shareswhich was recorded at an estimated fair value 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$485. In order to determine 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 expectassumed 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.the earn-out are due to a related party individual who became an employee of the Company upon the acquisition.6, 2017,3, 2019, the Company acquired all of the outstanding equity interests in Richard D. Kimball Co., Inc. ("RDK"Page One Consultants (“Page One”), an established leader in the provision of energy efficiencya program management and mechanical, electric and plumbing (MEP) servicesconstruction quality assurance firm 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.Orlando, Florida. The aggregate purchase price of this acquisition is up to $22,500, subject to customary closing working capital adjustments,$3,900, including $15,000 in$2,000 of cash, $5,500$1,000 in promissory notesnote (bearing interest at 3.0%3%), payable in fourthree equal installments of $1,375,$333 due on the first, second third and fourththird anniversaries of June 6, 2017 (see Note 9), $6673, 2019 and $200 of the Company’s common stock (18,072(2,647 shares) asissued at the closing date. The purchase price also includes $200 of the closing dateCompany’s common stock payable on the first anniversary of June 3, 2019. Further, the acquisition, and $1,333 in stock orpurchase price includes a combination$500 earn-out of cash and sharesstock, which was recorded at an estimated fair value of the Company’s stock, at our discretion, payable in two equal installments, due on the first and second anniversaries of June 6, 2017.$448. In order to ultimately determine the fair values of tangible and intangible assets acquired and liabilities assumed for RDK, wePage One, 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 expectThe Company expects to finalize the purchase price allocation with respect to this transaction by the end of the fourth quarter 2019.2017.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 four 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.NV5 Global,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 SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(oversight. The aggregate purchase price is up to $1,900, including $1,000 in thousands, except share data)May 4, 2017,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 four 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. The purchase price also includes $3,000 of the Company’s common stock payable in three 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. The Company expects to finalize the purchase price allocation with respect to this transaction by the end of the third quarter of 2019.Holdrege & Kull, ConsultingCALYX Engineers and GeologistsConsultants, Inc. (“H&K”CALYX”), a full-service geotechnical engineeringan infrastructure and transportation firm based in Northern California. H&KCary, 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 four installments of $1,000, due on the first, second, third and fourth 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$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 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 datedate. The purchase price also includes $250 of the Company’s common stock payable in two installments of $125, due on the first and second anniversaries of the acquisition. The purchase price also included an interesta 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 calendarfiscal 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, weCSA, 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.May 1, 2017,January 12, 2018, the Company acquired all of the outstanding equity interestsinterest 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, $2,200cash; $1,000 in promissory notes (bearing interest at 3.0%3%), payable in four 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), $17acquisition; 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 sharesdate. The purchase price also includes $600 of the Company’s common stock at our discretion, payable in two equal installments of $300, due on the first and second anniversaries of May 1, 2017. Included in the $2,200 promissory notes, is anacquisition. 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 calendarfiscal year 2017.2018. The earn-out of $550$850 is interestnon-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, weButsko, 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. 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 SubsidiariesNOTES 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 SubsidiariesNOTES 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 datesdate for the acquisitions closed during 20172019 and 2016: $ 315 $ 128 20,906 20,221 1,750 4,301 968 1,336 337 841 29,998 26,188 2,224 1,922 1,116 3,898 1,703 1,259 - (225 ) 59,317 59,869 (11,272 ) (12,250 ) (15,567 ) (7,892 ) 32,478 39,727 70,712 76,011 908 1,417 71,620 77,428 $ 39,142 $ 37,701 2019 2018 Cash $ 140 $ 345 Billed and unbilled receivables, net 7,445 20,999 Property and equipment 743 3,122 Prepaid expenses 152 589 Other assets 12 83 Intangible assets: Customer relationships 7,401 32,267 Trade name 506 2,479 Customer backlog 446 8,007 Non-compete 916 4,306 Total Assets 17,761 72,197 Liabilities (2,689 ) (11,589 ) Deferred tax liabilities (2,007 ) (8,903 ) Net assets acquired $ 13,065 $ 51,705 Consideration paid (Cash, Notes and/or stock) $ 22,643 $ 90,516 Contingent earn-out liability (Cash and stock) 1,114 3,112 Total Consideration $ 23,757 $ 93,628 Excess consideration over the amounts assigned to the net assets acquired (Goodwill) $ 10,692 $ 41,923 Goodwill acquired of $2,294See 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.ninesix months ended SeptemberJune 29, 2019 and June 30, 20162018 include the results of operations from the businessesany business acquired during 2016 from their respective dates of acquisition to September 30, 2016. Forduring 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 Six Months Ended June 30, 2018 June 30, 2018 Gross Revenues $ 4,926 $ 2,841 $ 5,692 $ 4,517 Income before income taxes $ 891 $ 497 $ 939 $ 652 NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)ninesix months ended SeptemberJune 29, 2019 and June 30, 20172018 as if Dade Moeller, B&Cthe acquisitions of CHI, CALYX, The Sextant Group, Page One and RDK acquisitionsAlta had occurred as of January 1, 2016.2018. The pro forma information provided below is compiled from the pre-acquisition financial statementsinformation of Dade Moeller, B&CCHI, CALYX, The Sextant Group, Page One and RDK,Alta, 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: $ 91,263 $ 78,481 $ 262,496 $ 222,089 $ 5,912 $ 4,583 $ 13,541 $ 11,805 $ 0.58 $ 0.45 $ 1.33 $ 1.32 $ 0.55 $ 0.43 $ 1.26 $ 1.25 Three Months Ended Six Months Ended June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018 Gross revenues $ 130,500 $ 136,264 $ 255,063 $ 254,226 Net income $ 8,847 $ 10,257 $ 14,615 $ 15,639 Basic earnings per share $ 0.73 $ 0.97 $ 1.21 $ 1.49 Diluted earnings per share $ 0.71 $ 0.93 $ 1.17 $ 1.42 Lochrane, H&KCeltic, CSA and MarronButsko acquisitions were not material to the Company’s unaudited interim consolidated financial statements both individually and in the aggregate.5 6– Accounts Receivable, netAccounts receivable, net, $ 81,399 $ 53,756 34,131 23,237 580 510 116,110 77,503 (3,106 ) (1,992 ) $ 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. June 29, 2019 December 29, 2018 Billed receivables $ 101,957 $ 101,482 Less: allowance for doubtful accounts (4,364 ) (3,158 ) Billed receivables, net $ 97,593 $ 98,324 Unbilled receivables $ 51,196 $ 44,799 Less: allowance for doubtful accounts (1,388 ) (1,388 ) Unbilled receivables, net $ 49,808 $ 43,411 NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data) 6 7– Property and Equipment, net $ 1,575 $ 1,329 8,530 6,808 1,943 1,426 1,670 1,583 13,718 11,146 (5,709 ) (4,463 ) $ 8,009 $ 6,683 June 29, 2019 December 29, 2018 Office furniture and equipment $ 2,753 $ 2,328 Computer equipment 12,560 11,640 Survey and field equipment 5,856 5,526 Leasehold improvements 3,779 2,541 24,948 22,035 Accumulated depreciation (12,819 ) (10,358 ) $ 12,129 $ 11,677 $760$1,161 and $2,014$2,274 for the three and ninesix months ended September 30, 2017,June 29, 2019, respectively and $416$1,016 and $1,207$2,034 for the three and ninesix months ended SeptemberJune 30, 2016,2018, respectively. 7 8– Goodwill and Intangible AssetsOn August 1, 2017, 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 orcircumstances that would indicate goodwill was impaired during the period from August 2, 2017 through September 30, 2017.The table set forth below showscarrying value by reportable segment for the change in goodwill during the ninesix months ended September 30, 2017 and year ended December 31, 2016: $ 59,380 $ 21,679 39,142 37,701 (1,138 ) - $ 97,384 $ 59,380 During the nine months ended September 30, 2017, the Company revised its allocationJune 29, 2019 were as follows: Six Months Ended December 29, 2018 Acquisitions Disposed/Adjustments June 29, 2019 INF $ 69,255 $ 4,803 $ 166 $ 74,224 BTS 71,675 5,889 — 77,564 Total $ 140,930 $ 10,692 $ 166 $ 151,788 September 30, 2017June 29, 2019 and December 31, 201629, 2018 consist of the following: $ 68,799 $ (9,720 ) $ 59,079 $ 38,801 $ (5,746 ) $ 33,055 6,409 (4,477 ) 1,932 4,185 (2,746 ) 1,439 7,723 (3,509 ) 4,214 6,607 (2,284 ) 4,323 553 (134 ) 419 553 (158 ) 395 4,249 (1,519 ) 2,730 2,546 (897 ) 1,649 $ 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. June 29, 2019 December 29, 2018 Accumulated Amortization Accumulated Amortization Customer relationships (1) $ 108,355 $ (23,697 ) $ 84,658 $ 100,956 $ (18,724 ) $ 82,232 Trade name (2) 9,394 (7,609 ) 1,785 8,888 (6,469 ) 2,419 Customer backlog (1) 16,446 (9,630 ) 6,816 16,000 (6,730 ) 9,270 Favorable lease (3) 553 (221 ) 332 552 (197 ) 355 Non-compete (4) 9,470 (4,120 ) 5,350 8,554 (3,074 ) 5,480 Total $ 144,218 $ (45,277 ) $ 98,941 $ 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) (4) Amortized on a straight-line basis over their contractual lives (4 to 5 years) $3,028$5,083 and $7,528$10,083 for the three and ninesix months ended September 30, 2017,June 29, 2019, respectively and $1,189$2,791 and $3,077$5,569 for the three and ninesix months ended SeptemberJune 30, 2016,2018, respectively.As of September 30, 2017, the future estimated aggregate amortization related to intangible assets is as follows: $ 10,370 9,012 7,461 6,886 6,642 28,003 $ 68,374 8 9– Accrued Liabilities $ 675 $ 696 3,758 4,518 316 190 4,753 1,673 6,172 5,327 770 770 1,729 4,142 $ 18,173 $ 17,316 June 29, 2019 December 29, 2018 Accrued lease liability $ 8,899 $ — Accrued vacation 10,134 7,994 Payroll and related taxes 10,142 8,136 Benefits 2,670 1,598 Unrecognized tax benefits 878 548 Professional liability reserve 171 157 Deferred rent — 779 Other 2,671 1,641 Total $ 35,565 $ 20,853 NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data) 9 10– Notes Payableand Other Obligations $ 42,000 $ - - 278 6,449 6,047 29,527 26,071 77,976 32,396 (10,821 ) (10,764 ) $ 67,155 $ 21,632 June 29, 2019 December 29, 2018 Other Obligations $ 3,460 $ 4,893 Uncollateralized promissory notes 40,975 40,001 Senior credit facility 10,000 — Capital leases 2,441 2,092 Total Notes Payable and Other Obligations 56,876 46,986 Current portion of notes payable and other obligations (16,687 ) (17,139 ) Notes payable and other obligations, less current portion $ 40,189 $ 29,847 7, 2016, the Company20, 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.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, 2017June 29, 2019 and December 31, 2016,29, 2018, the Company is in compliance with thesethe financial and reporting covenants. As of September 30, 2017 andJune 29, 2019 there was $10,000 outstanding on the Senior Credit Facility. As of December 31, 2016, the29, 2018, we had no outstanding balance on the Senior Credit Facility was $42,000 and $0, respectively.Note PayableThe note held by the seller of Nolte Associates Inc. (the “Nolte Note”) matured 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 of the Nolte Note, as amended, the Company paid quarterly principal installments of approximately $100 plus interest. The Nolte Note was unsecured and the Company was permitted to make periodic principal and interest payments. As of September 30, 2017 and December 31, 2016, the outstanding balance on the Nolte Note was $0 and $278, respectively.NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)September 6, 2017,June 3, 2019, the Company acquired all of the outstanding equity interest in Marron.Page One. The purchase price allowed for the payment of $133$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 June 3, 2019. At June 29, 2019, the outstanding balance of this obligation was $181.installments, due onannual installments. At June 29, 2019 and December 29, 2018, the first and second anniversaries of September 6, 2017. The outstanding balance of this obligation was $133$111 and $0 as of September 30, 2017 and December 31, 2016,$222, respectively.June 6, 2017,January 12, 2018, the Company acquired all of the outstanding equity interest in RDK.Butsko. The purchase price allowed for the payment of $1,333$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 installments, due onannual installments. At June 29, 2019 and December 29, 2018, the first and second anniversaries of June 6, 2017. The outstanding balance of this obligation was $1,333$267 and $0 as of$534, respectively.30,6, 2017, and December 31, 2016, respectively.On November 30, 2016, the Company acquired all of the outstanding equity interests of Hanna.interest in Marron. The purchase price allowed for the payment of $1,200$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 installments of $600, due onequal annual installments. At June 29, 2019 and December 29, 2018, the first and second anniversaries of November 30, 2016. The outstanding balance of this obligation was $1,200 as of September 30,$55. and December 31, 2016.On October 26, 2016, the Company acquired all of the outstanding equity interests of JBA.interest in RDK. The purchase price allowed for the payment of $2,600$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 installmentsequal annual installments. There was no outstanding balance on this obligation as of $1,300, due onJune 29, 2019. At December 29, 2018, 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.$1,000, due$1,000. There was no outstanding balance on the first, second and third anniversariesthis obligation as of May 20, 2016. TheJune 29, 2019. At December 29, 2018, the outstanding balance of this obligation was $936.$3,000payable in four equal annual installments. The outstanding balance of the Alta Note was $2,000 as of September 30, 2017June 29, 2019.31, 2016,29, 2018.Uncollateralized Promissory Notesinstallments of $100, due on the first, second and third anniversaries of September 6, 2017.equal annual installments. The outstanding balance of the Marron Note was $300 and $0$200 as of September 30, 2017June 29, 2019 and December 31, 2016, respectively.installments of $1,375, due on the first, second, third and fourth anniversaries of June 6, 2017.equal annual installments. The outstanding balance of the RDK Note was $5,500$2,750 and $0$4,125 as of September 30, 2017June 29, 2019 and December 31, 2016,29, 2018, respectively.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, 2017June 29, 2019 and December 31, 2016,29, 2018, respectively.installments of $413, due on the first, second, third and fourth anniversaries of May 1, 2017, the effective date of the acquisition.equal annual installments. The outstanding balance of the Lochrane Note was $1,650$825 and $0$1,238 as of September 30, 2017June 29, 2019 and December 31, 2016,29, 2018, respectively.NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)installments of $875, due on the first, second, third and fourth anniversaries of December 6, 2016, the effective date of the acquisition.equal annual installments. The outstanding balance of the CivilSource Note was $3,500$1,606 and $2,625 as of September 30, 2017June 29, 2019 and December 31, 2016,29, 2018, respectively.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.equal annual installments. The outstanding balance of the Hanna Note was $2,700$1,350 as of September 30, 2017June 29, 2019 and December 31, 2016, respectively.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.equal annual installments. The outstanding balance of the JBA Note was $7,000$4,200 as of September 30, 2017June 29, 2019 and December 31, 2016, respectively.installments of $125, due on the first, second, third and fourth anniversaries of September 12, 2016, the effective date of the acquisition.equal annual installments. The outstanding balance of the Weir Note was $375 and $500$250 as of September 30, 2017June 29, 2019 and December 31, 2016, respectively.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, 2017June 29, 2019 and December 31, 2016,29, 2018, respectively.payments of $1,000 each dueannual installments. There was no outstanding balance on the first, second, third, and fourth anniversariesRBA Note as of July 1, 2015, the effective date of the acquisition.June 29, 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.that is payable in four equal payments of $313 each dueannual installments. There was no outstanding balance on the first, second, third, and fourth anniversariesJLA Note as of January 30, 2015,June 29, 2019. As of December 29, 2018, the effective date of the acquisition. The outstanding balance of the JLA Notenote 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. was approximately $100 as of September 30, 2017 and December 31, 2016.NV5 Global, Inc. and SubsidiariesNOTES 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: $ 10,821 12,257 6,612 46,886 1,400 $ 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 $ 2,439 $ 1,279 908 1,417 (625 ) (458 ) 56 201 2,778 2,439 (2,653 ) (564 ) $ 125 $ 1,875 June 29, 2019 December 29, 2018 Contingent consideration, beginning of the year $ 4,698 $ 1,890 Additions for acquisitions 1,281 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 4,090 4,698 Current portion of contingent consideration (1,895 ) (1,845 ) Contingent consideration, less current portion $ 2,195 $ 2,853 11 12– Commitments and ContingenciesThe Company isNV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)The Company’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. 12 13– Stock-Based Compensationthe 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 CompanyWe 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, 826,305June 29, 2019, 1,399,663 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’sour 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 of the changes in unvested shares of the restricted stock during the nine months ended year ended September 30, 2017 is presented below.table summarizes the statusactivity of restricted stock awards as of September 30, 2017 and December 31, 2016, and changes during 2017: 502,773 $ 19.35 186,437 $ 37.76 (90,305 ) $ 9.48 (25,336 ) $ 28.79 573,569 $ 26.47 Number of Unvested Restricted Shares of Common Stock and Restricted Stock Units December 29, 2018 626,911 $ 39.81 Granted 80,627 $ 61.69 Vested (194,341) $ 19.46 Forfeited (20,503) $ 47.81 June 29, 2019 492,694 $ 51.09 ninesix months ended September 30, 2017June 29, 2019 was $1,161$2,369 and $2,743,$4,167, respectively and $655$1,503 and $1,704$2,639, respectively, for the three and ninesix months ended SeptemberJune 30, 2016, respectively.2018. Approximately $9,895$12,270 of deferred compensation, which is expected to be recognized over the remaining weighted average2.62.0 years, is unrecognized at SeptemberJune 29, 2019. The total fair value of restricted shares vested during the six months ended June 29, 2019 and June 30, 2017. 13 14– Income TaxesIn 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. 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, 2017June 29, 2019 and December 31, 2016, the Company29, 2018, we had net non-current deferred income tax liabilities of $22,084$18,708 and $6,197,$16,224, respectively. No valuation allowance against the Company’sour deferred income tax assets is needed as of September 30, 2017June 29, 2019 and December 31, 201629, 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 haswe 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 SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)The Company’sOur consolidated effective income tax rate was 29.9%25.3% and 27.8%24.7%, respectively, for the three and ninesix months ended September 30, 2017,June 29, 2019 and 24.6% and 25.0%, respectively, and 36.9% and 36.8% for the three and ninesix months ended SeptemberJune 30, 2016, respectively. The difference between the effective income2018. 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 withrelated to the vesting of restricted stock during the periods. Also contributing to the decrease in the effective tax ratetotaling $2,294 and $2,472, respectively, for the three and ninesix months ended SeptemberJune 29, 2019 and $1,064 and $1,114, respectively, for the three and six months ended June 30, 2017, is the lower effective tax rate applicable to the Asia operations purchased in the JBA acquisition at the end of 2016.The Company evaluates2018.is challenging the use of certainchallenged research and development tax credits generated for the years 20052012 to 2014. Fiscal years 20052012 through 20162018 are considered open tax years in the State of California and 20132015 through 20162018 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. At September 30, 2017CFTB is ongoing and at June 29, 2019 and December 31, 2016, the Company29, 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. 1415– Reportable SegmentsThe Company reports(“ (“Topic No. 280”). The Company’sOur 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 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 asand buildings program management. The Company evaluatesmanagement practices. The Company accountsWe 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.NV5 Global, Inc. and SubsidiariesNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)(in thousands, except share data)segments. Prior period segment financial information presented has been recast to reflect the reorganized reporting structure that occurred during the fourth quartersegments: Three Months Ended Six Months Ended June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018 Gross revenues INF $ 83,547 $ 61,721 $ 161,319 $ 116,527 BTS 45,372 43,284 85,646 83,934 Elimination of inter- segment revenues (945 ) (987 ) (1,656 ) (1,909 ) Total gross revenues $ 127,974 $ 104,018 $ 245,309 $ 198,552 Segment income before taxes INF $ 14,691 $ 10,169 $ 27,265 $ 17,841 BTS 7,499 7,419 13,416 13,802 Total Segment income before taxes 22,190 17,588 40,681 31,643 (13,050 ) (8,888 ) (24,481 ) (17,253 ) Total income before taxes $ 9,140 $ 8,700 $ 16,200 $ 14,390 (1) Includes amortization of intangibles of $3,028$5,083 and $1,18910,083 for the three and six months ended June 29, 2019, respectively and $2,791 and $5,569 for the three and six months ended June 30, 2018, respectively. Three Months Ended June 29, 2019 Six Months Ended June 29, 2019 INF BTS Total INF BTS Total Gross revenues by Geographic Location United States $ 82,790 $ 42,676 $ 125,466 $ 160,062 $ 80,013 $ 240,075 Foreign — 2,508 2,508 — 5,234 5,234 Total gross revenues $ 82,790 $ 45,184 $ 127,974 $ 160,062 $ 85,247 $ 245,309 Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 INF BTS Total INF BTS Total Gross revenues by Geographic Location United States $ 61,087 $ 39,127 $ 100,214 $ 104,036 $ 34,050 $ 138,086 Foreign — 3,804 3,804 10,981 49,485 60,466 Total gross revenues $ 61,087 $ 42,931 $ 104,018 $ 115,017 $ 83,535 $ 198,552 Three Months Ended June 29, 2019 Six Months Ended June 29, 2019 INF BTS Total INF BTS Total Gross revenues by Customer Public and quasi-public sector $ 72,415 $ 17,404 $ 89,819 $ 140,540 $ 32,573 $ 173,113 Private sector 10,375 27,780 38,155 19,522 52,674 72,196 Total gross revenues $ 82,790 $ 45,184 $ 127,974 $ 160,062 $ 85,247 $ 245,309 Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 INF BTS Total INF BTS Total Gross revenues by Customer Public and quasi-public sector $ 55,244 $ 16,974 $ 72,218 $ 104,036 $ 34,050 $ 138,086 Private sector 5,843 25,957 31,800 10,981 49,485 60,466 Total gross revenues $ 61,087 $ 42,931 $ 104,018 $ 115,017 $ 83,535 $ 198,552 Three Months Ended June 29, 2019 Six Months Ended June 29, 2019 INF BTS Total INF BTS Total Gross revenues by Contract Type Cost-reimbursable contracts $ 79,974 $ 35,995 $ 115,969 $ 155,740 $ 68,139 $ 223,879 Fixed-unit price contracts 2,816 9,189 12,005 4,322 17,108 21,430 Total gross revenues $ 82,790 $ 45,184 $ 127,974 $ 160,062 $ 85,247 $ 245,309 Three Months Ended June 30, 2018 Six Months Ended June 30, 2018 INF BTS Total INF BTS Total Gross revenues by Contract Type Cost-reimbursable contracts $ 60,954 $ 33,404 $ 94,358 $ 114,748 $ 66,560 $ 181,308 Fixed-unit price contracts 133 9,527 9,660 269 16,975 17,244 Total gross revenues $ 61,087 $ 42,931 $ 104,018 $ 115,017 $ 83,535 $ 198,552 Leases Classification June 29, 2019 Assets Operating lease assets Right-of-use lease asset, net (1) $ 35,566 Finance lease assets Property and equipment, net (1) 2,011 Total leased assets $ 37,577 Liabilities Current Operating Accrued liabilities $ 8,899 Finance Current portion of notes payable and other obligations 791 Noncurrent Operating Long-term lease liability 27,736 Finance Notes payable and other obligations, less current portion 1,650 Total lease liabilities $ 39,076 Three Months Ended Six Months Ended Lease Cost Classification June 29, 2019 June 29, 2019 Operating lease cost Facilities and facilities related $ 2,790 $ 5,242 Finance lease cost Amortization of financing lease assets Depreciation and amortization 161 324 Interest on lease liabilities Interest expense 20 45 Total lease cost $ 2,971 $ 5,611 Maturity of Lease Liabilities Operating Leases Finance Leases 2019 $ 5,284 $ 425 2020 9,326 870 2021 8,017 774 2022 5,616 502 2023 4,516 229 Thereafter 8,046 30 Total lease payments 40,805 2,830 Less: Interest 4,170 389 Present value of lease liabilities $ 36,635 $ 2,441 September 30, 2017 and 2016, respectively, and $7,528 and $3,077 for the nine months ended September 30, 2017 and 2016, respectively.June 29, 2019 Operating leases 5.4 Finance leases 2.7 Operating leases 4% Finance leases 7% Six Months Ended Supplemental Cash Flow Information June 29, 2019 Operating cash flows from operating leases $ 4,951 Financing cash flows from finance leases $ 325 Right-of-use assets obtained in exchange for lease obligations Operating leases $ 6,236 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 “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, 2016, 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, 201629, 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.Acquisition, Developments and ChallengesAcquisition.September 6, 2017,June 3, 2019, the Company acquired all of the outstanding equity interests in Marron and Associates, Inc.Alta Environmental, L.P. (“Marron”Alta”), a leadingconsulting firm specializing in air quality, environmental services firm with offices in Albuquerque and Las Cruces, New Mexico. Marron provides environmental planning, natural and culturalbuilding sciences, water resources, environmental site assessment and GISremediation as well as environmental health and safety compliance services. Marron primarily servesThe aggregate purchase price is up to $6,500, including $4,000 of cash and $2,000 in promissory note (bearing interest at 4%), payable in four 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.clients throughout the Southwest, including the New Mexico Department of Transportation, Bureau of Land Management, Bureau of Indian Affairs, Federal Highway Administration, U.S. Department of Agriculture, U.S. Fish and Wildlife Service, and U.S. Forest Service. The purchase price of this acquisition is up to $990, paid with a combination of cash at closing, stock and future note payments.On June 6, 2017, the Company acquired all of the outstanding equity interests in Richard D. Kimball Co., Inc. ("RDK"), an established leader in the provision of energy efficiency and mechanical, electric and pluming (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 transportationsector clients. The aggregate purchase price paid by us is up to $22,500, paid with a combination$11,000, including $7,000 of cash and $4,000 in promissory note (bearing interest at closing, stock4%), payable in four equal installments of $1,000 due on the first, second, third and future note payments.May 4, 2017,December 31, 2018, the Company acquired allcertain assets of the outstanding equity interests in Holdrege & Kull, Consulting Engineers and GeologistsCeltic Energy, Inc. (“H&K”Celtic”), a full-service geotechnical engineeringnationally recognized energy consulting firm based in Northern California. H&K provides services to public, municipal and special district, industrial, 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 whichthat specializes in the provision of services on major roadway projectsenergy project management and its major clients include the Florida Department of Transportation and Florida’s Turnpike Enterprise.oversight. The aggregate purchase price paid by us is up to $4,940, paid with$1,900, including $1,000 in cash, $300 in promissory note (bearing interest at 3%), payable in three 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 combination$200 earn-out of cash, which was recorded at closingan estimated fair value of $181. In order to determine the fair values of tangible and future note payments.On April 14, 2017,intangible assets acquired and liabilities assumed for Celtic, 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. 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 aggregateperformed a 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 Stateallocation. California and 2013 through 2016 in the U.S. federal jurisdiction and other state jurisdictions. At September 30, 2017 and December 31, 2016,June 29, 2019, we had $770$563,797 of unrecognized tax benefits related to this matter.Backlog. Asremaining performance obligations, or backlog, of September 30, 2017, we had approximately $274,500 of gross revenue backlogwhich $450,889 or 80% is expected to be recognized over the next 12 months compared to gross revenue backlogand the majority of approximately $220,800 as of December 31, 2016.the balance over the next 24 months. 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.. Chief Executive Officer is the chief operating decision maker and operations are organized the Company into two operating and reportable segments: Infrastructure (INF), which• • engineering, civil program management, and construction quality assurance practices; and Building, Technology & Sciences (BTS) (formerly known as Building, Energy & Sciences (BES)), which includes our energy and environmental practices as well as buildings program management. Components of Income and ExpenseRevenuesWe 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 consistreportable segments, see "Reportable Segments" 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 the predominant contracting method used by U.S. federal, state, and local governments. These contracts provide for reimbursement of the actual costs and overhead (predetermined rates) we incur, plus 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 the nine months ended September 30, 2017 and 2016, cost-reimbursable contracts represented approximately 95% and 96%, respectively, of our total revenues.Fixed-price contracts. Fixed-price contracts also consist 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 the nine months ended September 30, 2017 and 2016, lump-sum contracts represented approximately 5% and 4%, respectively, 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 on the percentage-of-completion method. Revenues from fixed-price contracts are recognized on the percentage-of-completion method. Revenues recognized on the percentage-of-completion method are generally measured by the direct costs incurred"Notes 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 with 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 areConsolidated Financial Statements" 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 ExpensesOperating expenses include the costs 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 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 2012We 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.Thefinancial conditioncritical accounting estimates, see “Management’s Discussion and resultsAnalysis of operationsFinancial 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. $ 91,263 $ 60,091 $ 239,058 $ 160,888 (16,298 ) (12,161 ) (43,995 ) (30,455 ) 74,965 47,930 195,063 130,433 (28,219 ) (20,274 ) (75,235 ) (53,744 ) 46,746 27,656 119,828 76,689 37,787 22,181 101,482 63,303 8,959 5,475 18,346 13,386 (524 ) (81 ) (1,042 ) (221 ) (2,523 ) (1,990 ) (4,803 ) (4,847 ) $ 5,912 $ 3,404 $ 12,501 $ 8,318 Three Months Ended Six Months Ended June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018 Gross revenues $ 127,974 $ 104,018 $ 245,309 $ 198,552 Less sub-consultant services and other direct costs (28,454 ) (19,770 ) (55,102 ) (37,152 ) 99,520 84,248 190,207 161,400 Direct salary and wages costs 38,080 33,546 73,337 64,067 Gross profit 61,440 50,702 116,870 97,333 Operating expenses 51,843 41,352 99,862 81,682 Income from operations 9,597 9,350 17,008 15,651 Interest expense (457 ) (650 ) (808 ) (1,261 ) Income tax expense (346 ) (1,080 ) (1,863 ) (2,478 ) Net income $ 8,794 $ 7,620 $ 14,337 $ 11,912 GrossGross 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.and Nine MonthsMonths Ended September30, 2017 comparedJune 29, 2019 Compared to the Three and NineMonthsMonths Ended September30, 2016.approximately $31,172 and $78,170by $23,956, or approximately 51.9% and 48.6%, for23% in the three and nine months ended September 30, 2017June 29, 2019 compared to the three and nine months ended SeptemberJune 30, 2016.2018. Our consolidated net revenues increased approximately $27,035 and $64,630by $15,272, or approximately 56.4% and 49.6% for18% in the three and nine months ended September 30, 2017June 29, 2019 compared to the three and nine months ended SeptemberJune 30, 2016.2018. The increasesincrease in gross and net revenues arewas primarily due primarily to organic growth from our existing platform as well as the contribution from various acquisitions completed during the nine months ended September 30, 2017. The increases in gross revenues for 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 net revenues for the three and nine months ended September 30, 2017, includes net revenues of $17,164 and $27,223, respectively, related to acquisitions closed during 2017. Also contributingsubsequent to the increases in net revenues for the nine months ended September 30, 2017 is an increased utilizationsecond quarter of our billable employees and reduction of sub-consultants used to perform services in 2017.2018. The growth in revenues was primarily attributable to increases in energythe following:services; construction materials testingservicesengineering services;environmental servicesand construction management services. However, 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 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.Profit.51.2%48% and 50.1%49% for the three and nine months ended SeptemberJune 29, 2019 and June 30, 2017, respectively,2018, respectively. The decrease in gross profit margin was due to an increased use of sub-consultants as well as higher other direct costs in 2019 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. 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..approximately $15,606 and $38,179,$10,491, or 70.4% and 60.3%25% for the three and nine months ended September 30, 2017, respectively,June 29, 2019 compared to the three and nine months ended SeptemberJune 30, 2016.2018. The increaseincreases in operating expenses forwere primarily due to increases in payroll related costs of 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.taxes.29.9%25.3% and 27.8%24.6% for the three and nine months ended SeptemberJune 29, 2019 and June 30, 2017, respectively,2018, respectively. Our tax provision includes an income tax benefit related to the vesting of restricted stock totaling $2,294 for the three months ended June 29, 2019 and $1,064 for the three months ended June 30, 2018.of 36.9%was 24.7% and 36.8%25.0% for the three and ninesix months ended SeptemberJune 29, 2019 and June 30, 2016,2018, respectively. The difference between the effective incomeOur 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 withrelated to the vesting of restricted stock during the period. Also contributing to the decrease in the effective tax ratetotaling $2,472 for the three and ninesix months ended SeptemberJune 29, 2019 and $1,114 for the six months ended June 30, 2017, is the lower effective tax rate applicable to the Asia operations purchased in the JBA acquisition at the end of 2016.(dollars(dollars in thousands): $ 49,024 $ 42,713 $ 134,446 $ 118,902 $ 43,262 $ 18,846 $ 107,997 $ 45,637 $ 9,559 $ 7,065 $ 23,749 $ 19,676 $ 6,974 $ 2,704 $ 15,065 $ 5,607 Three Months Ended Six Months Ended June 29, 2019 June 30, 2018 June 29, 2019 June 30, 2018 Gross revenues INF $ 83,547 $ 61,721 $ 161,319 $ 116,527 BTS $ 45,372 $ 43,284 $ 85,646 $ 83,934 Segment income before taxes INF $ 14,691 $ 10,169 $ 27,265 $ 17,841 BTS $ 7,499 $ 7,419 $ 13,416 $ 13,802 14 - "Reportable Segments"15 of the "Notesnotes to Consolidated Financial Statements”.and Nine Months ended September30, 2017 comparedMonths EndedJune 29, 2019 Compared to the Three and NineMonths ended SeptemberMonths Ended June 30, 2016approximately $6,311 and $15,544,$21,826, or 14.7% and 13.1%, respectively,35% during the three nine months ended September 30, 2017June 29, 2019 compared to the three and nine months ended SeptemberJune 30, 2016. The increases during the three and nine months ended September 30, 2017 includes approximately $4,507 and $7,583 related to acquisitions closed during both the three and nine months ended September 30, 2017.2018. The increase in gross revenues foris due to the three and nine months ended September 30, 2017 reflectscontribution from various acquisitions completed subsequent to the second quarter of 2018. The growth in revenues was attributable to increases in energyin: construction materials testing and transportation partially offset by reductions in gross revenues related to project delays due to record rainfall and hurricanes affecting our California, Florida and Texas projects.$2,494 and $4,073,$4,522, or 35.3% and 20.7%, respectively,44% during the three and nine months ended September 30, 2017June 29, 2019 compared to the three and nine months ended SeptemberJune 30, 2016.2018. The increases wereincrease was primarily due to increased revenues from organic growth, contributions from acquisitions completed in 2017 as well as a reductionsubsequent to the second quarter of sub-consultants used to perform services.the BTS reportable segment increased approximately $24,416 and $62,360,$2,088, or 129.6% and 136.6%5% during the three and nine months ended September 30, 2017June 29, 2019 compared to the three and nine months ended SeptemberJune 30, 2016.2018. The increasesincrease in gross revenues was primarily due to the contribution from various acquisitions completed subsequent to the second quarter of 2018.and nine months ended September 30, 2017 includes approximately $16,808 and $27,941 relatedJune 29, 2019 compared to acquisitions closed during both the three and nine months ended SeptemberJune 30, 2017.2018. The increase was primarily due to contributions from acquisitions completed subsequent to the second quarter of 2018.from BTS was primarily attributable to increases in facilitiesin:and environmental services.servicesBTSINF increased $4,270 and $9,458,$9,424, or 157.9% and 168.7%, respectively,53% during the three and ninesix months ended September 30, 2017June 29, 2019 compared to the three and ninesix months ended SeptemberJune 30, 2016.2018. The increases wereincrease was primarily due to increased revenues from organic growth, contributions from acquisitions completed subsequent to the second quarter of 2018.2017 as well asgross revenues is due to the contribution from various acquisitions completed subsequent to the second quarter of 2018.reductionresult of sub-consultants used to performa slowdown in the gaming industry and our international operations, partially offset by increases in revenues associated with building program management and mechanical, electrical and plumbing services.Ourflowflows 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,flowflows from operations, existing cash and cash equivalents and borrowing capacity under our Senior Credit Facility 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 areasexpertise and to expand our business within our service offerings.Cash FlowsAs of September 30, 2017, ournet 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 activitiesForfrom operations during the ninesix 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 byJune 29, 2019, an increase of $17,031 in accounts receivable. During 2017, we made income tax payments of approximately $4,962. For$6,597, or 61% compared to $10,837 during the ninesix months ended SeptemberJune 30, 2016, net cash provided by operating activities amounted2018. 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 liabilitiestotaled $13,433, partially offset by an increase of $7,795a $6,836 change in accounts receivable. During 2016, we made income tax payments of approximately $4,642. Investing activitiesForworking capital compared to the ninesix months ended SeptemberJune 30, 2017,2018.amounted to $61,832, primarily resulting from cash used for our acquisitions (net of cash acquired) during 2017 of $60,241totaled $15,786 and the purchase of property and equipment of $1,591 for our ongoing operations.For the nine months ended September 30, 2016, net$4,935, respectively. The increase in cash used in investing activities amounted to $24,954, primarily resulting from cash used for our acquisitions (netwas a result of cash acquired) during 2016 of $24,388 and the purchase of property and equipment of $566 for our ongoing operations.For the nine months ended September 30, 2017, net cashamountedduring the six months ended June 29, 2019 totaled $2,049 compared to $36,077, primarily due to proceedsnet cash used in financing activities of $8,618 during the six months ended June 30, 2018. The increase was a result of $10,000 in borrowings from borrowing underour Senior Credit Facility during the six months ended June 29, 2019, partially offset by $2,500 in payments of borrowings from the Senior Credit Facility of $42,000 offset by principal repayments of $5,360 towards long-term debt and $563 towards contingent consideration.Forduring the ninesix months ended September 30, 2016, net cash provided by financing activities amounted to $43,858, primarily due to the net proceeds from the secondary offering of $47,147 and the unit warrant exercise of $1,008 offset by principal repayments of $4,156 towards long-term debt and $296 towards contingent consideration.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.3.0:1 and4.0:1and 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, 2017June 29, 2019 and December 31, 2016, we are29, 2018, the Company is in compliance with thesethe financial and reporting covenants. As of September 30, 2017 andJune 29, 2019, there was $10,000 outstanding on the Senior Credit Facility. As of December 31, 2016, the29, 2018, we had no outstanding balance on the Senior Credit Facility was $42,000 and $0, respectively.Note Payablenote held bypurchase price allowed for the sellerpayment of Nolte Associates Inc. (the “Nolte Note”) matured 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$200 in shares of the Nolte Note, as amended, we paid quarterly principal installmentsCompany’s stock or a combination of approximately $100 plus interest. The Nolte Note was unsecuredcash and we were permitted to make periodic principal and interest payments. Asshares of September 30, 2017 and December 31, 2016,the Company’s stock, at our discretion, payable on the first anniversary of June 3, 2019. At June 29, 2019, the outstanding balance of this obligation was $181.Nolte Notefirst anniversary of December 31, 2018. At June 29, 2019, the outstanding balance of this obligation was $0$181.$278,shares of the Company’s stock, at our discretion, payable in three equal annual installments. At June 29, 2019 and December 29, 2018, the outstanding balance of this obligation was $2,631.Other Obligationswethe Company acquired all of the outstanding equity interest in Marron. The purchase price allowed for the payment of $133 in shares of our commonthe Company’s stock or a combination of cash and shares of our commonthe Company’s stock, at our discretion, payable in two equal installments, due onannual installments. At June 29, 2019 and December 29, 2018, the first and second anniversaries of September 6, 2017. The outstanding balance of this obligation was $133 and $0 as of September 30, 2017 and December 31, 2016, respectively.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 commonthe Company’s stock or a combination of cash and shares of our commonthe Company’s stock, at our discretion, payable in two equal installments, dueannual installments. There was no outstanding balance on the first and second anniversariesthis obligation as of June 6, 2017. The29, 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.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 commonthe Company’s stock or a combination of cash and shares of our commonthe 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 anniversariesthis obligation as of May 20, 2016. TheJune 29, 2019. At December 29, 2018, the outstanding balance of this obligation was $936.$3,000payable in four equal annual installments. The outstanding balance of the Alta Note was $2,000 as of September 30, 2017June 29, 2019.31, 2016,29, 2018.Uncollateralized Promissory Noteswe 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 and $0$200 as of September 30, 2017June 29, 2019 and December 31, 2016, respectively.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, 2017June 29, 2019 and December 31, 2016,29, 2018, respectively.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, 2017June 29, 2019 and December 31, 2016,29, 2018, respectively.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, 2017June 29, 2019 and December 31, 2016,29, 2018, respectively.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, 2017June 29, 2019 and December 31, 2016,29, 2018, respectively.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, 2017June 29, 2019 and December 31, 2016, respectively.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, 2017June 29, 2019 and December 31, 2016, respectively.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 and $500$250 as of September 30, 2017June 29, 2019 and December 31, 2016, respectively.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 paymentsannual 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, 2017June 29, 2019 and December 31, 2016,29, 2018, respectively.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 dueannual installments. There was no outstanding balance on the first, second, third, and fourth anniversariesRBA Note as of July 1, 2015, the effective date of the acquisition.June 29, 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.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 paymentsannual installments of $313 each due$313. There was no outstanding balance on the first, second, third, and fourth anniversariesJLA Note as of January 30, 2015,June 29, 2019. As of December 29, 2018, the effective date of the acquisition. The outstanding balance of the JLA Notenote 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.September 30, 2017.13 of the notes to the unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.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 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.”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, 201629, 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 isacquisitionacquisitions 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, theJune 29, 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 changenot have a material impact on our annual interest expense by approximately $420 in 2017.market risk.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 ReportingUnder the supervision and with the participationa result of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of any changesa material weakness in our internal control over financial reporting, (as such term is definedremedial 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.Exchange Act) that occurred during our most recently completed fiscal quarter. Based on that evaluation, our Chief Executive Officersupervision 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;Chiefadequate documentation to support the analysis of percentage of completion projects and has made system enhancements to its project management system; andOfficer concluded that there have not been anyReportingin ourto 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 fiscalthe quarter ended June 29, 2019 that hashave materially affected, or isare reasonably likely to materially affect, ourthe Company’s internal control over financial reporting.reporting other than as described above.During the nine months ended September 30, 2017, there31, 2016 filed with the SEC.September 30, 2017,June 29, 2019, we issued the following securities that were not registered under the Securities Act:September 2017,May 2019, we issued 1,51014,523 shares of our common stock as partial consideration of our acquisitions of Lochrane Engineering Inc. and Dade Moeller & Associates, Inc. In June 2019, we issued 11,329 shares of our common stock as partial consideration for our acquisitionacquisitions of Marron. Page One Consultants and Richard D. Kimball Co.4,5, Business Acquisitions, to the consolidated interim financial statements appearing under Part I of this Quarterly Report on Form 10-Q.ITEM 6.EXHIBITS.NumberNumber Description *Filed herewith.* Filed herewith. SIGNATURESNV5 GLOBAL, INC.By: /s/ Michael P. RamaDate: November 8, 2017August 7, 2019Michael P. RamaVice President and 39