| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounts Receivable and Accrued Billings The Company records its trade accounts receivable
and unbilled receivables at their face amounts less allowances. On a periodic basis, the Company monitors the trade accounts receivable
and unbilled receivables from its customers for any collectability issues. The allowance for doubtful accounts is established based on
reviews of individual customer accounts, recent loss experience, current economic conditions, and other pertinent factors. The Company
writes off accounts after a determination has been made by management that the amounts at issue are no longer likely to be collected,
following the exercise of reasonable collection efforts, and upon management’s determination that the costs of pursuing collection
outweigh the likelihood of recovery. Payments subsequently received on such receivables are credited to the allowance for doubtful accounts. As of July 2, 2021 and December 31, 2020, the allowance
for trade accounts receivable was $2.5 million and $2.2 million, respectively, while the allowance for unbilled receivables was $0.5 million
and $0.4 million, respectively. The allowances reflect the Company’s best estimate of collectability risks on outstanding receivables
and unbilled services. Property and Equipment Purchases of new assets and costs of improvement
to extend the useful life of existing assets are capitalized. Routine maintenance and repairs are charged to expenses as incurred. When
an asset is sold or retired, the costs and related accumulated depreciation are eliminated from the accounts, and the resulting gains
or losses on disposal are recognized in the accompanying Consolidated Statement of Operations. The Company depreciates its assets on a
straight-line basis over the assets’ useful lives, which range from three to ten years. Impairment of Long-Lived Assets The Company assesses long-lived assets for impairment
when events or circumstances indicate that the carrying value of an asset may not be recoverable. The Company recognizes an impairment
if the net book value of such assets exceeds the future undiscounted cash flows attributable to such assets. If an impairment is indicated
based on a comparison of the assets’ carrying amounts and the undiscounted cash flows, the impairment loss is measured as the amount
by which the carrying amounts of the assets exceed the respective fair values of the assets. There were no impairment charges during the
three or six months ended July 2, 2021 and June 30, 2020. Goodwill Goodwill represents the excess of the cost of net
assets acquired over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed in a business
combination. In accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification
(“ASC”) Topic 350, Intangibles – Goodwill and Other, we evaluate goodwill annually for impairment on October 1, or whenever
events or changes in circumstances indicate the asset may be impaired, using the quantitative method. An entity has the option to first
assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely
than not that the fair value of a reporting unit is less than its carrying amount. These qualitative factors include: macroeconomic and
industry conditions, cost factors, overall financial performance and other relevant entity-specific events. If we determine that this
threshold is met, then performing the two-step quantitative impairment test is unnecessary. We may elect to bypass the qualitative assessment
and proceed directly to the quantitative test for any reporting unit. The two-step impairment test requires a comparison of the carrying
value of the assets and liabilities associated with a reporting unit, including goodwill, with the fair value of the reporting unit. We
determine fair value through the discounted cash flow method. We make certain subjective and complex judgments in assessing whether an
event of impairment of goodwill has occurred, including assumptions and estimates used to determine the fair value of our reporting units.
If the carrying value of our reporting unit exceeds the fair value of our reporting unit, we would calculate the implied fair value as
compared to the carrying value to determine the appropriate impairment charge, if any. There were no impairment charges for the three
or six months ended July 2, 2021 and June 30, 2020. Revenue Recognition We adopted ASC Topic 606, Revenue from Contracts
with Customers (“Topic 606”), using the modified retrospective approach to all contracts that were not completed as of the
beginning of fiscal year 2019. We utilize the portfolio method practical expedient, which allows companies to account for multiple contracts
as a portfolio, instead of accounting for them on a contract by contract basis (commonly known as the contract method). For our time and
materials contracts, we apply the as-invoiced practical expedient, which permits us to recognize revenue as the right to invoice for services
performed. The new standard did not materially affect our consolidated net income, financial position, or cash flows. Below is a description of the basic types of contracts
from which the Company may earn revenue: Time and Materials Contracts Under the time and materials (“T&M”)
arrangements, contract fees are based upon time and materials incurred. The contracts may be structured as basic time and materials, cost
plus a margin or time and materials subject to a maximum contract value (the “ceiling”). Due to the potential limitation of
the contract’s ceiling, the economic factors of the contracts subject to a ceiling differ from the economic factors of basic T&M
and cost plus contracts. The majority of the Company’s contracts are
for projects where it bills the client monthly at hourly billing or unit rates. The billing rates are determined by contract terms. Under
cost plus contracts, the Company charges its clients for contract related costs at cost, an agreed upon overhead rate plus a fixed fee
or rate. Under time and materials contracts with a ceiling,
the Company charges the clients for time and materials based upon the work performed however there is a ceiling or a not to exceed value.
There are often instances that a contract is modified to extend the contract value past the original or amended ceiling. As the consideration
is variable depending on the outcome of the contract renegotiation, the Company will estimate the total contract price in accordance with
the variable consideration guidelines and will only include consideration that it expects to receive from the customer. When the Company
is reaching the ceiling, the contract will be renegotiated, or we cease work when the maximum contract value is reached. The Company will
continue to work if it is probable that the contract will be extended. The Company is only entitled to consideration for the work it has
performed, and the ceiling amount is not a guaranteed contract value. The Company earned approximately 90% of its revenues
under T&M contracts during the three and six months ended July 2, 2021 and June 30, 2020, respectively. Fixed Price Contracts Under fixed price contracts, the Company’s
clients pay an agreed amount negotiated in advance for a specified scope of work. The Company is guaranteed to receive the consideration
to the extent that the Company delivers under the contract. The Company assesses contracts quarterly and may recognize any expected future
loss before actually incurring the loss. When the Company is expecting to reach the total consideration under the contract, the Company
will begin to negotiate a change order. Change Orders and Claims Change orders are modifications of an original
contract that effectively change the provisions of the contract without adding new provisions. Either the Company or its client may initiate
change orders. They may include changes in specifications or design, manner of performance, facilities, equipment, materials, sites and
period of completion of the work. Management evaluates when a change order is probable based upon its experience in negotiating change
orders, the customer’s written approval of such changes or separate documentation of change order costs that are identifiable. Change
orders may take time to be formally documented and terms of such change orders are agreed with the client before the work is performed.
Sometimes circumstances require that work progresses before an agreement is reached with the client. If the Company is having difficulties
in renegotiating the change order, the Company will stop work if possible, record all costs incurred to date, and determine, on a project
by project basis, the appropriate final revenue recognition. Claims are amounts in excess of the agreed contract
price that the Company seeks to collect from its clients or others for client-caused delays, errors in specifications and designs, contract
terminations, change orders that are either in dispute or are unapproved as to both scope and price, or other causes of unanticipated
additional contract costs. Costs related to change orders and claims are recognized when they are incurred. The Company evaluates claims
on an individual basis and recognizes revenue it believes is probable to collect. Performance Obligations The majority of our contracts have a single performance
obligation as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts
and, therefore, is not distinct. However, in some instances, we may also promise to provide distinct goods or services within a contract,
resulting in multiple performance obligations. For contracts with multiple performance obligations, we allocate the contract transaction
price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service in the contract.
Typically, we sell a customer a specific service and use the expected cost plus a margin approach to estimate the standalone selling price
of each performance obligation. The Company’s performance obligations are
satisfied as work progresses or at a point in time. Revenue on our cost-reimbursable contracts is recognized over time using direct costs
incurred or direct costs incurred to date as compared to the estimated total direct costs for performance obligations because it best
depicts the transfer of control to the customer. Contract costs include labor, subcontractors’ costs and other direct costs. Gross revenue from services transferred to customers
at a point in time is recognized when the customer obtains control of the asset, which is generally upon delivery and acceptance by the
customer of the reports and/or analysis performed. As of July 2, 2021 and December 31, 2020, we had
$751 million and $628 million of remaining performance obligations, or backlog, respectively, of which $451 million and $377 million,
respectively, or 60% is expected to be recognized over the next 12 months and the majority of the balance over the next 24 months. Project
cancellations or scope adjustments may occur, from time to time, with respect to contracts reflected in backlog. Most of our government
contracts are multi-year contracts for which funding is appropriated 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 extensions that are at
the discretion of the client. For contracts with a not-to-exceed maximum amount, we include revenue from such contracts in backlog to
the extent of the remaining estimated amount. Our backlog for the period beyond 12 months may be subject to variation from year-to-year
as existing contracts are completed, delayed, or renewed or new contracts are awarded, delayed, or cancelled. As a result, we believe
that year-to-year comparisons of the portion of backlog expected to be performed more than one year in the future are difficult to assess
and not necessarily indicative of future revenues or profitability. Contract Assets and Liabilities The timing of revenue recognition, billings and
cash collections results in billed receivables, unbilled receivables (contract assets), and billings in excess of costs and estimated
earnings on uncompleted contracts (contract liabilities). Billed and unbilled receivables are reflected on the face of the Consolidated
Balance Sheet. The liability “Billings in excess of costs and estimated earnings on uncompleted contracts” represents billings
in excess of revenues recognized on these contracts as of the reporting date and is reported within “other current liabilities”
on the Consolidated Balance Sheet. This liability was $0 as of July 2, 2021 and December 31, 2020. Revenue recognized that was included
in the contract liability balance at the beginning of the fiscal year was $0 and $32 thousand for the three months ended July 2, 2021
and June 30, 2020, respectively, and $0 and $64 thousand for the six months ended July 2, 2021 and June 30, 2020, respectively. U.S. Federal Acquisition Regulations The Company has contracts with the U.S. federal,
state and local governments that contain provisions requiring compliance with the U.S. Federal Acquisition Regulations (“FAR”).
These regulations are generally applicable to all of its contracts that are directly funded or partially funded by pass through funds
from the U.S. federal government. These provisions limit the recovery of certain specified indirect costs on contracts subject to the
FAR. Cost-plus contracts covered by the FAR provide for upward or downward adjustments if actual recoverable costs differ from the estimate
billed under forward pricing arrangements. Most of the Company’s government contracts are subject to termination at the convenience
of the government. Contracts typically provide for reimbursement of costs incurred and payment of fees earned through the date of such
termination. Government contracts that are subject to the FAR
are subject to audits performed by the Defense Contract Audit Agency (“DCAA”) and many other state governmental agencies.
As such, the Company’s overhead rates, cost proposals, incurred government contract costs and internal control systems are subject
to review. During the course of its audits, the DCAA or a state agency may question incurred costs if it believes the Company has accounted
for such costs in a manner inconsistent with the requirements of the FAR or Cost Accounting Standards and recommend that the applicable
contracting officer disallow such costs. Historically, the Company has not incurred significant disallowed costs because of such audits.
However, the Company can provide no assurance that the rate audits will not result in material disallowances of incurred costs in the
future. The Company provides for a refund liability to the extent that it expects to refund some of the consideration received from a
customer. The liability at July 2, 2021 and December 31, 2020 was $0, respectively. Disaggregation of Revenues As described further in Note 2 – Summary
of Significant Accounting Policies, the Company has one operating segment, Engineering, Testing, Inspection and Other Consultative Services,
which reflects how the Company is being managed. The Company provides public and private sector clients with comprehensive support in
managing large-scale infrastructure improvement programs including engineering, design, program development/management, compliance services,
acquisition and project control services, as well as construction engineering and inspection and materials testing. Approximately 50%
of the Company’s revenues in each reporting period presented are derived from federal, state and local government related projects. All services performed by the Company are rendered
in the United States and its territories via two contract types, time and materials or fixed price contracts. The Company derives 90%
of its revenues from T&M contracts, the remainder are earned under fixed price contracts. Cash Flows The Company has presented its cash flows using
the indirect method and considers all highly liquid investments with original maturities of three months or less at acquisition to be
cash equivalents. At times, our cash and cash equivalents may be uninsured or in deposit accounts that exceed the Federal Deposit Insurance
limit. Comprehensive Income There are no other components of comprehensive
income other than net income and the provision for non-controlling interest associated with Holdings Units. Use of Estimates The preparation of financial statements in conformity
with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from these estimates. Concentration of Credit Risk Financial instruments, which potentially subject
the Company to concentrations of credit risk, consist principally of trade accounts receivable. These risks primarily relate to the concentration
of customers who are large, governmental customers and regional governmental customers. The Company performs ongoing credit evaluations
of its customers’ financial condition and generally requires no collateral. Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurements (“ASC
820”), establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs
to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets
for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under
ASC 820 are described as follows: Level 1 — Inputs utilize quoted prices (unadjusted)
in active markets for identical assets or liabilities that management has the ability to access. Level 2 — Inputs utilize data points that are observable
such as quoted prices, interest rates and yield curves. Level 3 — Inputs are unobservable data points for the
asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The asset or liability’s fair value measurement
level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation
techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The Company has various financial instruments,
including cash and cash equivalents, accounts receivable and payable, accrued liabilities, and long-term debt. The carrying value of the
Company’s cash and cash equivalents, accounts receivable, and payable and accrued liabilities approximate their fair value due to
their short-term nature. The Company believes that the aggregate fair values of its long-term debt approximates their carrying amounts
as the interest rates on the debt are either reset on a frequent basis or reflect current market rates. The Company applies the provisions of ASC 805,
Business Combinations, in the accounting for its acquisitions, which requires recognition of the assets acquired and the liabilities assumed
at their acquisition date fair values, separately from goodwill. Goodwill as of the acquisition date is measured as the excess of consideration
transferred and the net of the acquisition date fair values of the tangible and identifiable intangible assets acquired and liabilities
assumed. The allocation of the purchase price to identifiable intangible assets is based on valuations performed to determine the fair
values of such assets as of the acquisition dates. Depending on the size and complexity of the acquisition, the Company may engage 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 earnout payments are included in operating expenses in the accompanying Consolidated Statements of
Operations. Several factors are considered when determining
contingent consideration liabilities as part of the purchase price, including whether (i) the valuation of the acquisitions is not supported
solely by the initial consideration paid, and the contingent earn-out formula is a critical and material component of the valuation approach
to determining the purchase price; and (ii) the former owners of the acquired companies that remain as key employees receive compensation
other than contingent earn-out payments at a reasonable level compared with the compensation of other key employees. The contingent earn-out
payments are not affected by employment termination. The Company reviews and re-assesses 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 as Level 3 inputs. 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. The Company records the current portion of contingent
consideration liability within other current liabilities and the noncurrent portion of contingent consideration liability within other
long-term liabilities within its Consolidated Balance Sheet. The following table summarizes the changes in the
fair value of estimated contingent consideration:
Contingent consideration, as of December 31, 2020 $ 18,200
Additions for acquisitions 9,993
Adjustment to liability for changes in fair value (6,538 )
Reduction of liability for payment made (3,706 )
Total contingent consideration, as of July 2, 2021 17,949
Current portion of contingent consideration (8,378 )
Contingent consideration, less current portion $ 9,571 The Company may at its discretion settle the contingent
consideration with cash, common shares or a combination of cash and common shares. During the three months ended July 2, 2021, we settled
a portion of the $3.7 million payment with 192,090 shares of Class A common stock. The Company incurred a non-cash charge of $2.8
million during the three months ended July 2, 2021 to reflect the change in fair value of the contingent consideration liability relating
to an acquisition that had finalized its purchase price allocation. Equity Based Compensation The Company recognizes the cost of services received
in an equity based payment transaction with an employee as services are received and records either a corresponding increase in equity
or a liability, depending on whether the instruments granted satisfy the equity or liability classification criteria. The measurement objective for these equity awards
is the estimated fair value at the grant date of the equity instruments that the Company is obligated to issue when employees have rendered
the requisite service and satisfied any other conditions necessary to earn the right to benefit from the instruments. The compensation
cost for an award classified as an equity instrument is recognized ratably over the requisite service period, including an estimate of
forfeitures. The requisite service period is the period during which an employee is required to provide service in exchange for an award. Consistent with the change in control provisions
within the applicable agreements, the Company fully expensed the remaining unamortized value of the stock awards that vested upon the
completion of the Atlas Business Combination during the quarter ended March 31, 2020. The Company granted restricted stock units (“RSUs”)
during the second quarters of 2021 and 2020 as a means to reward and retain selected management personnel. Please refer to Note 10 –
Equity Based Compensation for further information. An additional grant of RSUs was made to a member
of the Company’s leadership team on December 31, 2020. During the second quarter of 2021, the Company granted certain members
of its leadership team performance share units (“PSUs”) with both performance and market conditions that may affect the ultimate
vesting of shares and also granted to its Board of Directors RSUs during the first quarter of 2021. Equity compensation was $805 thousand and $190
thousand for the three months ended July 2, 2021 and June 30, 2020, respectively, and $1,251 thousand and $10,035 thousand for the six
months ended July 2, 2021 and June 30, 2020, respectively. Income Taxes The Company accounts for income taxes in accordance
with the FASB ASC Topic 740, Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income
taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets
and liabilities that will result in future taxable or deductible amounts based on enacted tax laws and rates applicable to the periods
in which the differences are expected to affect taxable income. In determining the need for a valuation allowance, management reviews
both positive and negative evidence, including current and historical results of operations, future income projections, scheduled reversals
of deferred tax amounts, availability of carrybacks, and potential tax planning strategies. Based on our assessment, we have concluded
that a portion of the deferred tax assets will not be realized. According to the authoritative guidance on accounting
for uncertainty in income taxes, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that
the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits
recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than 50%
likelihood of being realized upon ultimate settlement. This guidance also addresses de-recognition, classification, interest and penalties
on income taxes, accounting in interim periods and disclosure requirements for uncertain tax positions. Redeemable Preferred Stock On February 14, 2020, in connection with the consummation
of the Atlas Business Combination, Holdings and GSO COF III AIV-2 LP (“GSO AIV-2”) entered into a subscription agreement,
dated February 14, 2020 (the “Subscription Agreement”) pursuant to which, GSO AIV-2 purchased 145,000 units of a new class
of Series A Senior Preferred Units of Holdings (the “Preferred Units”) at a price per Preferred Unit of $978.21 for an aggregate
cash purchase price of $141,840,450, which represented a 2.179% original issue discount on the Preferred Units (such purchase, the “GSO
Placement”). The GSO Placement was made pursuant to the exemption
from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and/or Regulation
D promulgated thereunder. The Preferred Units ranked senior in priority to
all other existing and future equity securities of Holdings with respect to liquidation preference and distribution rights. The Preferred Units had a liquidation preference
of $1,000 per Preferred Unit (the “Liquidation Preference”). Subject to any limitations set forth in the Atlas
Credit Agreement (as defined in Note 7 – Long-Term Debt), the Preferred Units were paid a dividend of 5% per annum, plus either
an additional 6.25% per annum in cash or 7.25% per annum in additional Preferred Units, at Holdings’ option, payable quarterly in
arrears. If a cash dividend was not able to be made because
of a limitation under the Atlas Credit Agreement, then the Liquidation Preference with respect to any Preferred Unit would have increased
to 3.5625% in any quarter until a cash dividend could be made. The Preferred Units did not possess voting rights
and were not convertible into any other security of Holdings. Holdings was permitted to redeem the Preferred
Units beginning on the second anniversary of the Closing Date at a price of 103% of the Liquidation Preference (the “Redemption
Premium”), and on the third anniversary of their issuance at the Liquidation Preference, in each case plus accrued and unpaid dividends.
The Preferred Units could only be redeemed by Holdings within the first two years of the Closing Date upon a change of control as described
below, in which case such Preferred Units would have been redeemed at a customary make-whole amount as if the Preferred Units were redeemed
on the second anniversary. Subject to the terms of Holdings’ and its
subsidiaries’ senior credit agreements, Holdings was required to redeem the Preferred Units at the Redemption Premium, plus accrued
and unpaid dividends, in the event of (i) a change of control, (ii) sales or other dispositions of all or substantially all of Holdings’
assets and (iii) the insolvency or bankruptcy of Holdings or any of its material subsidiaries. Finally, holders of the Preferred Units were permitted
to require Holdings to redeem their Preferred Units at the Liquidation Preference, plus accrued and unpaid dividends, beginning on the
eighth anniversary of the Closing Date, subject to certain customary limitations. The Preferred Units were redeemed in full at par
without a premium on February 25, 2021.
Redeemable preferred stock, as of December 31, 2020 $ 151,391
Accrued paid in-kind dividends 1,718
Accretion of discount 3,077
Redemption (156,186 )
Redeemable preferred stock, as of July 2, 2021 $ - Segment The Company has one operating and reporting segment,
Engineering, Testing, Inspection and Other Consultative Services. This financial information is reviewed regularly by our chief operating
decision maker to assess performance and make decisions regarding the allocation of resources and is equivalent to our consolidated information.
Our chief operating decision maker does not review below the consolidated level. Our chief operating decision maker is our Chief Executive
Officer. Recent Accounting Pronouncements In February 2016, FASB issued ASU 2016-02, Leases.
ASU 2016-02 requires lessees to recognize, in the balance sheet, a liability to make lease payments and a right-of-use asset representing
the right to use the underlying asset over the lease term. The amendments in this accounting standard update are to be applied using a
modified retrospective approach and are effective for fiscal years beginning after December 15, 2021. The Company is currently evaluating
the requirements of ASU 2016-02 and its impact on the consolidated and combined financial statements. In June 2016, the FASB issued ASU 2016-13, Financial
Instruments (Topic 326) - Credit Losses: Measurement of Credit Losses on Financial Instruments, which provides guidance regarding the
measurement of credit losses on financial instruments. The new guidance replaces the incurred loss impairment methodology in the current
guidance with a methodology that reflect |
