UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 30, 2022

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

For the transition period from to

Commission file number: 001-38745

ATLAS TECHNICAL CONSULTANTS, INC.

(Exact name of registrant as specified in its charter)

Delaware		83-0808563
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

13215 Bee Cave Parkway, Building B, Suite 230, Austin, TX		78738
(Address of principal executive offices)		(Zip Code)

(512) 851-1501

(Registrant’s telephone number, including area code)

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A common stock, $0.0001 par value per share		ATCX		Nasdaq Stock Market LLC

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

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

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☒

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter was $198,210,597.

As of March 13, 2023, 38,452,047 shares of the registrant’s Class A common stock, par value $0.0001 per share, and 1,268,253 shares of the registrant’s Class B common stock, par value $0.0001 per share, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

None.

ATLAS TECHNICAL CONSULTANTS, INC.

ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

PART I		1
ITEM 1.	BUSINESS	1
ITEM 1A.	RISK FACTORS	13
ITEM 1B.	UNRESOLVED STAFF COMMENTS	32
ITEM 2.	PROPERTIES	32
ITEM 3.	LEGAL PROCEEDINGS	32
ITEM 4.	MINE SAFETY DISCLOSURES	32

PART II		33
ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	33
ITEM 6.	[RESERVED]	33
ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	33
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	46
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	46
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	46
ITEM 9A.	CONTROLS AND PROCEDURES	46
ITEM 9B.	OTHER INFORMATION	47
ITEM 9C.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	47

PART III		48
ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE	48
ITEM 11.	EXECUTIVE COMPENSATION	57
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	65
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	66
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	72

PART IV		74
ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES	74
ITEM 16.	FORM 10-K SUMMARY	77

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The statements contained in this Annual Report on Form 10-K that are not purely historical are forward-looking statements. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

The forward-looking statements contained in this Annual Report on Form 10-K are based on our current expectations and beliefs concerning future developments and their potential effects on us. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Risk Factors” included elsewhere in this report. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to:

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the adequacy of our efforts to mitigate cybersecurity risks and threats, especially with employees working remotely due to the COVID-19 pandemic;

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our ability to raise financing in the future;

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our ability to realize the anticipated benefits of the Merger (as defined below);

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our success in retaining or recruiting, or changes required in, our officers, key employees or directors;

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our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business, as a result of which they would then receive expense reimbursements;

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our public securities’ potential liquidity and trading;

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changes adversely affecting the business in which we are engaged;

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the risks associated with cyclical demand for our services and vulnerability to industry, regional and national downturns;

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fluctuations in our revenue and operating results;

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unfavorable conditions or further disruptions in the capital and credit markets;

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our ability to generate cash, service indebtedness and incur additional indebtedness;

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competition from existing and new competitors;

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our ability to integrate any businesses we acquire and achieve projected synergies;

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our failure to maintain appropriate internal controls over financial reporting and disclosure controls and procedures;

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risks related to legal proceedings or claims, including liability claims;

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our dependence on third-party contractors to provide various services;

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our ability to obtain additional capital on commercially reasonable terms to fund acquisitions, expansions and our working capital needs and our ability to obtain debt or equity financing on satisfactory terms;

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safety and environmental requirements and other governmental regulations that may subject us to unanticipated costs and/or liabilities;

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our contracts with governmental agencies are subject to audit, which could result in adjustments to reimbursable contract costs or, if we are charged with wrongdoing, possible temporary or permanent suspension from participating in government programs;

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general economic conditions and demand for our services; and

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our ability to fulfill our public company obligations.

Should one or more of these risks or uncertainties materialize, they could cause our actual results to differ materially from the forward-looking statements. Forward-looking statements speak only as of the date they were made. 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 should not take any statement regarding past trends or activities as a representation that the trends or activities will continue in the future. Accordingly, you should not put undue reliance on these statements.

This Annual Report on Form 10-K includes market share data, industry data and forecasts that we obtained from internal company surveys (including estimates based on our knowledge and experience in the industry in which we operate), market research, consultant surveys, publicly available information, industry publications and surveys. These sources include, but are not limited to, IBISWorld, FMI, Engineering News Record and the American Society of Civil Engineers. Industry surveys and publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. Although we believe such information is accurate and reliable, we have not independently verified any of the data from third-party sources cited or used for our management’s industry estimates, nor have we ascertained the underlying economic assumptions relied upon therein. Statements as to our position relative to our competitors or as to markets in which we operate refer to the most recent available data.

iii

Risk Factor Summary

Our business is subject to significant risks and uncertainties of which you should be aware before making an investment decision in our business. Below is a bulleted summary of our principal risk factors, however this list does not fully represent all of our known risk factors. You should take time to carefully review and consider the full discussion of our risk factors (See Item 1A. Risk Factors).

Risks Relating to Our Business and Industry

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Outbreaks of diseases, including the COVID-19 global pandemic, have had an adverse effect on our business, financial condition, and our results of operations.

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We may not achieve synergies and cost savings in connection with prior or future acquisitions.

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Our continued success is dependent on hiring and retaining qualified personnel.

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Our profitability may suffer if we fail to maintain adequate utilization of our workforce.

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Our business operations and financial results may be adversely affected if we fail to successfully deliver our growth strategy.

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Failure to maintain a safe work site could expose us to significant financial losses and reputational harm along with civil and criminal liabilities.

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Demand from clients is cyclical and vulnerable to economic downturns, thus a weakened economy may adversely impact our financial results.

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Our results of operations depend on new contracts and the timing of the performance of these contracts.

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Our backlog is not necessarily indicative of our future revenues or earnings.

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Our clients failing to timely pay amounts owed to us could adversely impact our business operations and financial results.

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Our services expose us to significant risks of liability, and our insurance policies may not provide adequate coverage.

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Unavailability or cancellation of third-party insurance coverage would increase our overall risk exposure and disrupt the management of our business operations.

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Catastrophic events may adversely impact our business operations.

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We engage in a highly competitive business and may lose market share, which would adversely impact our business operations.

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The nature of our contracts subject us to risks of cost overruns, which could lead to reduced profits or, in some cases, losses.

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Any disruption in government funding could adversely affect our business.

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Governmental agencies may modify or terminate our contracts at any time prior to completion and failure to replace them may result in a decline in revenue.

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Failure to comply with a variety of complex procurement rules and regulations could damage our reputation and result in our being liable for penalties.

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We are dependent on third parties to complete certain elements of our contracts.

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We may be precluded from providing certain services due to conflicts of interest.

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Failure to maintain an effective system of internal control may affect our ability to accurately report our financial results.

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An impairment charge on our goodwill could have a material adverse impact on our financial position and results of operations.

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Rising inflation, interest rates and/or construction costs could reduce the demand for our services as well as decrease our profit on existing contracts.

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We are subject to professional standards, duties and statutory obligations, all of which could expose us to liability and monetary damages.

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If we fail to meet timing or performance standards on a project, we may incur a loss on that project, which would reduce our overall profitability.

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The outcome of pending and future litigation could have a material adverse impact on our business.

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Judicial determinations in favor of limiting the ability of public agencies to contract with private firms to perform government employee functions could have an adverse impact on our ability to compete for contracts and thus our financial results.

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Our actual business and financial results could differ from the estimates and assumptions that we use to prepare our financial statements, which may significantly reduce or eliminate our profits.

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Our credit agreements contain a number of restrictive covenants which could limit our ability to finance operations, acquisitions or capital needs or engage in other business activities that may be in our interest.

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Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

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We and our clients are subject to environmental, health and safety laws and regulations that may require substantial costs to comply with and may expose us to significant penalties, damages or costs of remediation. Changes in such laws or regulations could also directly or indirectly reduce the demand for our services or make our operations more costly.

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Changes in natural resource management or infrastructure industry laws could reduce the demand for our services or make our operations more costly, which could in turn adversely impact our revenue.

Risks Related to Our Common Stock

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Our quarterly results may fluctuate significantly, which could have a materially adverse effect on the price of our common stock.

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As an “emerging growth company,” we are subject to reduced disclosure requirements which could make our common stock less attractive to investors.

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To the extent that shares of Class A common stock are issued, the number of shares eligible for resale in the public market will increase.

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If we issue additional equity securities, our existing stockholders may experience dilution, such new securities may have rights senior to those of our common stock, and the market price of our common stock may be adversely affected.

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Provisions in our third amended and restated certificate of incorporation and Delaware law may have the effect of discouraging lawsuits against our directors and officers.

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Provisions in our third amended and restated certificate of incorporation may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our common stock.

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Concentration of ownership of our common stock among certain large stockholders may prevent new investors from influencing significant corporate decisions or adversely affect the trading price of our common stock.

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The market price of our common stock may be affected by low trading volume.

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If securities or industry analysts adversely change their recommendations regarding our common stock or if our operating results do not meet their expectations, our stock price could decline.

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There can be no assurance that we will be able to comply with the continued listing standards of NASDAQ.

General Risk Factors

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Negative conditions in the credit and financial markets could result in liquidity problems, or increase our borrowing costs.

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Cybersecurity breaches of our systems could adversely impact our ability to operate.

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Failure to comply with federal, state, and local governmental requirements could adversely affect our business.

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Changes in tax laws could increase our tax rate and materially affect our results of operations.

PART I

ITEM 1. BUSINESS

Overview

Headquartered in Austin, Texas, we are an infrastructure and environmental solutions company and a provider of professional testing, inspection, engineering, environmental, program management and consulting services, offering solutions to public and private sector clients in the transportation, commercial, water, government, education, industrial, healthcare and power markets.

With approximately 126 offices located throughout the United States, we provide a broad range of mission-critical technical services, helping our clients test, inspect, plan, design, certify and manage a wide variety of projects across diverse end markets.

We act as a trusted advisor to our clients, helping our clients design, engineer, inspect, manage and maintain civil and commercial infrastructure, servicing existing structures as well as helping to build new structures. However, we do not perform any construction and do not take any direct construction risk.

Our services range from providing inspection services in small projects to managing significant aspects of large, multi-year projects. For the year ended December 30, 2022, we:

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performed approximately 40,500 projects; and

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delivered approximately 90% of our revenue under “time & materials” and “cost-plus” contracts.

We have long-term relationships with a diverse set of clients, providing a base of repeating clients, projects and revenues. Approximately 90% of our revenues were derived from clients that have used our services at least twice in the past three years and more than 95% of our revenues were generated from client relationships longer than ten years, with greater than 25% of revenues generated from relationships longer than thirty years. Examples of such long-term customers include the Texas and Georgia Departments of Transportation, U.S. Postal Service, Gwinnett County Georgia, New York City Housing Authority, Stanford University, Port of Oakland, United Rentals, Inc., Speedway (7-Eleven), Walmart Inc., Caltrans, Sound Transit, Phillips 66 and Google.

Our services require a high degree of technical expertise, as our clients rely on us to provide testing, inspection and quality assurance services to ensure that structures are designed, engineered, built and maintained in accordance with building codes, regulations and the highest safety standards. As such, our services are delivered by a highly-skilled, technical employee base that includes engineers, inspectors, scientists and other field experts. As of December 30, 2022, our technical staff represented nearly 85% of our approximately 3,450 employees. Our services are typically provided under contracts, some of which are long-term with long lead times between when contracts are signed and when our services are performed. As such, we have a significant amount of contracted backlog, providing for a high degree of visibility with respect to revenues expected to be generated from such backlog. As of December 30, 2022, our contracted backlog was estimated to be approximately $877 million. See “— Backlog” below for additional information relating to our backlog.

For the year ended December 30, 2022, we recognized approximately $604.8 million of gross revenues, ($8.1) million of net loss, and $87.2 million of adjusted EBITDA (non-GAAP). See “—Non-GAAP Financial Measures” below for a reconciliation of adjusted EBITDA to net loss.

Company History

Since our inception, we have strategically strengthened our capabilities and widened our footprint through organic growth and acquisitions of premier national and large regional technical service companies to create an industry-leading platform. Prior to the consummation of the Atlas Business Combination (as defined in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview”), in 2017, we sequentially acquired three regional market leaders in each of Texas (PAVETEX Engineering LLC), Georgia (Moreland Altobelli Associates, LLC), and California (Consolidated Engineering Laboratories ). These businesses established our core services and capabilities. In 2018, we further augmented our core services and regional leadership through the acquisitions of Piedmont Geotechnical Consultants (Georgia) and SCST, Inc. (California). In January 2019, we acquired ATC Group Services LLC, an environmental and engineering consulting services company with over 1,700 employees across North America. In the year ended December 31, 2020, we acquired (i) Long Engineering LLC (“LONG”), a land surveying and engineering company headquartered in Atlanta, Georgia; (ii) Alta Vista Solutions (“Alta Vista”), a key provider of transportation-related testing and inspection services headquartered in Oakland, California; and (iii) WesTest LLC (“WesTest”), a key provider of transportation-related testing and inspection services headquartered in Lakewood, Colorado. In the year ended December 31, 2021, we acquired (i) Atlantic Engineering Laboratories, Inc. and Atlantic Engineering Laboratories of New York, Inc. (“AEL”), a full-service materials testing and inspection firm providing on-site quality control and quality assurance services in New York and New Jersey and (ii) O’Neill Services Group (“O’Neill”), a quality assurance and environmental services firm that services clients throughout the Pacific Northwest. In the year ended December 30, 2022, we acquired (1) TranSmart Technologies Inc. (“TranSmart”) which specializes in Intelligent Transportation Systems (ITS) and engineering for transportation agencies and customers throughout the Midwest and (ii) 1 Alliance Geomatics, LLC (“1 Alliance”), a provider of geospatial services to transportation and water resources clients from its four offices within the Pacific Northwest. As a result of these acquisitions of key providers of technical services, we continue to expand our national platform.

Prior to February 14, 2020, Boxwood was a special purpose acquisition company incorporated in Delaware on June 28, 2017. On February 14, 2020, the Company consummated the Atlas Business Combination pursuant to the Purchase Agreement. Following the consummation of the Atlas Business Combination, the combined company is organized in an “Up-C” structure in which the business of Atlas Intermediate Holdings LLC (“Atlas Intermediate”) and its subsidiaries is held by Atlas TC Holdings LLC (“Holdings”) and will continue to operate through the subsidiaries of Atlas Intermediate, and in which the Company’s only direct assets will consist of Holdings Units. The Company is the sole manager of Holdings in accordance with the terms of the Amended and Restated Limited Liability Company Agreement of Holdings (the “Holdings LLC Agreement”) entered into in connection with the consummation of the Atlas Business Combination.

On January 30, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with GI Apple Midco LLC, a Delaware limited liability company (“Parent”) and GI Apple Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of Parent (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving company in the Merger. Parent and Merger Sub are controlled by investment funds advised by GI Manager L.P. (“GI Partners”).

The Company’s board of directors (the “Board”) has unanimously determined that the Merger Agreement is in the best interests of the Company and its stockholders, and declared it advisable, to enter into the Merger Agreement and consummate the Merger, approved and declared advisable the Merger Agreement and the transactions contemplated thereby, including the Merger, directed that the adoption of the Merger Agreement be submitted for consideration by the Company’s stockholders at a meeting thereof and resolved to recommend that the Company’s stockholders adopt the Merger Agreement.

Our Core Values

We strive to be the most sought-after infrastructure and environmental solutions provider, known for our unique values-driven approach and brought to life by the industry’s most exceptional people.

At Atlas, we apply the following core values in all that we do:

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Life — We enhance quality of life. We value people and safety above all else.

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Heart — As our hallmarks, we act with compassion, empathy and respect.

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Trust — We work together as partners, doing what we say with full accountability.

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Mastery — Always striving for the highest quality, we ensure greatness inspires all our work.

Focus on Sustainability and the Environment

As an infrastructure and environmental solutions provider, we are committed to applying our expertise and values to help our clients improve sustainable infrastructure and ensure a safe and healthy environment through the services we provide. We aim to assist our clients in the effective management of their environmental risks, including those related to climate change, while also minimizing our own environmental footprint.

Through our transportation and infrastructure services, we are committed to the continuous evaluation of opportunities and implementation of solutions to maximize energy efficiency, renewable energy and low-carbon technologies where appropriate. Additionally, we aim to help our clients manage and respond to climate-related impacts through our disaster response and recovery services, while also contributing to community resiliency through our engineering and design services.

Industry Overview

We operate within the broader U.S. infrastructure services market, providing a diversified set of technical services to a variety of end markets. Services include, but are not limited to, testing, inspection and certification, environmental services, engineering and design and program management, construction management and quality management. The relevant addressable market for U.S. infrastructure and construction testing, inspection and certification (“TIC”) and environmental consulting is an estimated $30 billion and growing. Our clients and projects vary in size and scope and come from all sectors including U.S. federal, state, municipal and local governments, quasi-public and private clients from the education, healthcare and utilities industries, and large multinational corporations and others.

Historically, the infrastructure and construction, TIC and environmental consulting industry have exhibited growth corresponding with market tailwinds, including heightened expenditure on public infrastructure, increasing complexity of regulatory requirements, aging transportation, water and utility systems and growing outsourcing trends among public agencies and private entities. In addition to market tailwinds, the industry has additional growth potential as TIC and quality assurance continue to increase as a percentage of overall construction value.

The following key market tailwinds are expected to drive future demand for U.S. infrastructure and construction TIC and environmental consulting:

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Aging infrastructure. The majority of U.S. transportation, water and utility networks are over 50 years old, requiring an estimated $5.9 trillion of spending through 2029. Roughly 43% of public roadways in the United States are in poor or mediocre condition, 7.5% of bridges are structurally deficient (and over 94,000 additional bridges nationwide have inadequate clearances or approaches), 70% of all dams will be over 50 years old by 2030 and the majority of the U.S. electric grid was built in the mid-20^th century, with an intended lifespan of 50 years.

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Shift towards outsourcing. Private and public entities are increasingly outsourcing construction and environmental services in an effort to reduce costs, decrease staffing levels, provide specialized solutions and avoid non-compliance. Approximately 40% of testing and inspection services are outsourced, with the overall market for these services growing at approximately 8% year-over-year.

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Increased public spending. Over the past several years, the U.S. Congress has passed legislation aimed at increasing transportation infrastructure spend in key markets. For example, the Fixing America’s Surface Transportation Act (the “FAST Act”), passed in 2015, will continue to provide near-term funding support, as the Highway Trust Fund has enough funding to cover large outlays through 2021. Approximately $3.5 trillion in infrastructure funding has been approved through 2029, with approximately $1.37 trillion of that total allocated to surface transportation.

Additionally, President Biden signed the Infrastructure Investment and Jobs Act into law on November 15, 2021, which aims to revamp transportation, utilities and broadband. Included in the law is $550 billion of spending over the next five years with emphasis on roads, bridges, other major transportation projects, passenger and freight rail, public transit, airports and improvements to state and local water quality.

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Expanding state & local transportation spend. Combined state and local spending for transportation infrastructure increased from $260 billion in 2014 to a projected $300 billion in 2021 and is expected to grow at a compound annual growth rate (“CAGR”) of approximately 4% through 2023. The top three states in projected transportation infrastructure spend for 2021, California, New York and Texas, account for approximately 33% of all state and local spending nationwide and represents markets where the Company has a presence.

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Rising Environmental Expenditures. Health, safety and environmental (“HSE”) regulations have generally become increasingly stringent and complex over time amid heightened awareness of environmental issues by regulatory bodies and consumers. U.S. environmental consulting expenditures are expected to increase from $31 billion in 2020 to $41 billion in 2026. On a major infrastructure project, our services can range between 3-7% of the total project’s cost.

End Markets

The end markets we serve are characterized by various public and private clients that are faced with deteriorating asset conditions, outdated systems and expanding regulations. We operate across the entire built environment for a variety of end markets including, but not limited to, transportation, commercial, education, industrial, environmental, water, healthcare and power. Each of these end markets are experiencing tailwinds that drive ongoing maintenance and capital investment.

Transportation. The U.S. transportation market has experienced broad increases in federal funding for U.S. Department of Transportation initiatives. Additionally, there is a renewed focus by the current U.S. presidential administration on infrastructure investment and a growing number of government projects focused on roads, bridges and airports. The current installed transportation base is aging and both public and private entities are increasingly outsourcing testing, inspection and program management services for their assets. At the state level, our presence in Georgia, Texas, California and New York positions us to capitalize on the potential increase in infrastructure funding in these states, as these states in particular have historically demonstrated higher than average investment in transportation infrastructure. Illustrative projects in the transportation market include airports, bridges, tollways, railways, highways, waterways, ports, tunnels, pedestrian routes and others.

Commercial. Asset operators are faced with increasing complexity of, and scrutiny around, regulatory requirements, which is driving demand for turnkey solutions and the professionalization of maintenance services. Additionally, corporations are increasing investment in information technology and smart-building features, frequently undergoing corporate relocations, and exhibiting a need for bespoke and unique facilities. The increase in outdated facilities alongside new technological and logistical needs has driven additional spend for warehouse and distribution facilities, as well as development spend across sports, recreation and stadiums. Illustrative projects in the commercial market include healthcare facilities, offices, multi-family properties, retail outlets, data centers, corporate headquarters, parking structures and religious facilities.

Education. Population growth and increasing access to education is driving enrollments and creating a need for new and updated facilities. Academic institutions are placing a growing focus on environmental impacts and sustainability as seen through the implementation of smart- and green-building technologies. Illustrative projects in the education market include colleges, universities, K-12 facilities, service academies, stadiums, athletic facilities, research facilities and theatres.

Industrial and Environmental. New quality, health, safety and environmental regulations are driving demand for compliance systems and services in industrial businesses. Extreme weather requires services such as hurricane, storm and flood clean-up efforts as seen in the Carolinas, Florida and Texas. Illustrative projects in the industrial and environmental markets include manufacturing, refineries, agricultural, utilities, petrochemicals, nuclear, midstream, disaster response and mitigation, and pulp and paper.

Water. Broadening stress on the U.S. water network from outdated systems, population growth and extreme weather patterns has resulted in systems that are approaching the end of their useful lives. The aging water infrastructure must also be renovated to meet expanding government regulations and energy-efficiency standards. Illustrative projects in the water market include dams, levees, recycling facilities, drinking water, storage, inland waterways, wastewater and treatment plants.

Government. Over time, municipalities, local, state and federal governments are increasingly tasked with the mandate to operate on leaner, more efficient budgets. We understand the many challenges associated with development, transportation and land-use for the government sector and we use our in-depth knowledge of social, political, and economic conditions to deliver sustainable projects to the communities that we serve. We partner with our clients and stakeholders to support the cost-effective use of public funds and deliver better public infrastructure projects from concept to completion. Illustrative projects include program, construction and quality management projects for county, state and federal governments, disaster relief coordination and engineering and design of roadways and bridges.

Healthcare. From acute care hospitals to alcohol and drug treatment units, we provide services to assist our clients’ compliance with the Joint Commission Environment of Care, Centers for Disease Control and Prevention (CDC), and other applicable regulatory standards. Our nationwide network enables us to mobilize quickly, often avoiding disruption to our clients’ staff and patient populations. Illustrative projects include asset tagging, compliance assessment and permitting, construction materials testing, and site assessments.

Power. Whether our clients are considering new generation development, movement away from unregulated markets with renewed investment in regulated transmission and distribution, or retirement of older, less efficient generating assets, we understand the complexities of grid improvement and expansion projects and are poised to provide services such as siting and corridor studies, permitting, and real estate/right-of-way acquisition support. We assist our clients in determining where to add capacity, plan for construction, or build a new power plant, solar array, or wind turbine field. After construction, we are positioned to support the long-term safe and regulatory compliant operation of power assets. Illustrative projects include renewable development support services, environmental services, compliance assessment and permitting and construction management.

Service Lines

Testing, Inspection and Certification (“TIC”)

Any time a structure in the built environment is designed, built, repaired, refurbished or sold, our clients require critical path services to ensure infrastructure compliance, quality and integrity. We offer a comprehensive suite of TIC services to support a vast array of assets across different types, stages of life and end markets. In 2022, our TIC services represented approximately 32% of our revenues.

Illustrative services include:

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construction materials testing, including product evaluations and factory quality control services;

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non-destructive testing and evaluations, materials testing and inspection, laboratory services and geophysics;

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construction quality assurance, including quality plan development, construction engineering and inspection, and source and field inspections;

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owner verification & inspection (OVTI);

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forensic & structural investigations; and

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materials laboratory services.

Environmental Services

Safeguarding the environment requires proactively providing sustainable solutions while understanding and assisting our clients in complying with current regulatory demands. We utilize our technical staff, specialized equipment, and long-term relationships to manage a broad range of our clients’ environmental needs and assist our clients in overcoming environmental and regulatory challenges across a wide range of industries. By integrating environmental management into our clients’ business plans and goals, we endeavor to assist them in reducing potential crisis management costs and liabilities, thereby allowing them to focus on their core competencies and improve the health and livability of their communities. We provide comprehensive solutions to our clients’ most challenging ecological issues. Through our highly trained team of engineers, geologists, hydrogeologists, archaeologists, inspectors and other specialty environmental professionals, we have the capability to manage every aspect of a project’s environmental needs. In 2022, environmental services represented roughly 38% of our revenues.

Illustrative services include:

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environmental permitting, compliance assistance, auditing and compliance management system implementation;

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air quality;

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water, hazardous material permitting and registration;

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underground storage tank management;

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leak detection and repair (LDAR) program management;

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water resource management;

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industrial hygiene and building science services; and

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disaster response and recovery.

Engineering and Design (“E&D”)

We offer a full-service suite of civil, transportation, structural and architectural solutions for clients ranging from private developers to large federal agencies. We utilize our specialized expertise across a variety of disciplines to offer technical and project management solutions in order to assist clients in meeting their most demanding, large-scale challenges.

Our service offerings in E&D rest upon a foundation of years of experience in the design of a broad range of transportation and civil infrastructure projects, strong lines of communication, qualified planning and design professionals, and meticulous quality control measures throughout all stages of a project’s development. Our practice of knowledge-sharing among team members promotes continuous improvement of operations and is intended to provide maximum value for the client and reduce the likelihood of unforeseen problems during construction. Our E&D business has likewise been involved in supporting transportation and infrastructure work. In 2022, E&D represented 15% of our revenues.

Illustrative services include:

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civil site, transportation and geotechnical engineering;

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hydrogeology;

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water/wastewater;

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solid waste/landfill;

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land acquisition services;

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subsurface utility engineering (SUE);

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surveying & mapping; and

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geographic information system (GIS) asset inventory & assessments.

Program Management/Construction Management/Quality Management (“PCQM”).

We provide public and private sector clients with comprehensive support in managing large-scale improvement programs. We believe in a strong work ethic of transparency and collaboration between all parties involved and are uniquely connected to the communities we serve.

Our program management experience spans a broad spectrum of industries including hospitality, healthcare, education, industrial and municipal projects throughout the United States for both public and private sector clients. We are involved with projects totaling more than $2 billion of in-place construction, and we manage large and small-scale facility improvement programs and multi-year local option sales tax programs and provide comprehensive program support. We work hand-in-hand with governments and institutions during each stage of a capital improvement program. In 2022, our PCQM service offerings made up roughly 15% of our revenues.

Illustrative services include:

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programmatic planning & phasing;

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contract document preparation;

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bid evaluation & award analysis;

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alternative/value engineering;

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project estimating & scheduling;

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project cost/schedule control;

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contract administration;

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project management;

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community relations/affairs;

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asset management;

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construction management services;

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quality management and assurance; and

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construction engineering & inspection (CEI).

Key Clients and Projects

We currently serve over 10,000 different clients annually. While our ten largest clients accounted for approximately 19% of our consolidated revenue during the fiscal year ended December 30, 2022, no single client accounted for more than 10% during that period. Although we serve a highly diverse client base, approximately 50% of our net revenues were attributable to public and quasi-public sector clients. In this regard, public sector clients include U.S. federal, state and local government departments, agencies, systems and authorities, including Departments of Transportation, educational systems and public housing authorities, while quasi-public sector clients include utility service providers and energy producers. Of our private sector clients, our largest clients are commercial companies and contractors. Although we anticipate public and quasi-public sector clients to represent the majority of our revenues for the foreseeable future, we intend to continue expanding our service offerings to private sector clients.

During our history in the testing and inspection business, we have worked with such clients on such well-known projects as (in alphabetical order):

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Apple Campus II (Cupertino, California)

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Golden Gate Bridge (San Francisco, California)

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Ground Zero Recovery (New York, New York)

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Harbor Bridge (Corpus Christi, Texas)

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The Grand Waikikian by Hilton (Honolulu, Hawaii)

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Hurricane Katrina Recovery (Louisiana)

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Northwest Corridor Express Lanes (Georgia)

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Stanford University Hospital (Stanford, California)

Contracts

We enter into contracts that contain two principal types of pricing provisions: (1) time and materials/cost-reimbursable; and (2) fixed price. For the year ended December 30, 2022, approximately 90% of our revenue was recognized from time and materials/cost-reimbursable contracts, with approximately 10% from fixed price contracts.

Cost-reimbursable contracts. Cost-reimbursable contracts consist of the following:

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“Time & materials” contracts are common for smaller scale professional and technical consulting and certification service 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 an initial not-to-exceed or guaranteed maximum price provision.

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“Cost-plus” contracts are the predominant contracting method used by U.S. federal, state and local governments. Under these types of contracts, we charge clients for our costs, including both direct and indirect costs, plus a negotiated fee. The estimated cost plus the negotiated fee represents the total contract value.

Fixed price. Fixed price contracts consist of the following:

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Fixed price contracts require us to either perform all of the work under the contract for a specified lump sum or to perform an estimated number of units of work at an agreed price per unit, with the total payment determined by the actual number of units performed. Fixed price contracts are subject to price adjustments if the scope of the project changes or unforeseen conditions arise. Fixed price contracts expose us to a number of risks not inherent in “cost-plus” and “time & materials” contracts, including underestimation of costs, ambiguities in specifications, unforeseen costs or difficulties, problems with new technologies, delays beyond our control, failures of subcontractors to perform and economic or other changes that may occur during the contract period. Many of our fixed price contracts relate to small value services, such as individual unit or very small quantity testing or inspection.

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 over time.

Backlog

As of December 30, 2022, we had $877 million of backlog, of which $526 million, or approximately 60%, is expected to be recognized over the next twelve months and the majority of the balance over the next 24 months.

We analyze our backlog, which we define to include the total estimated future revenue streams associated with fully executed contracts as well as an estimate of highly probable revenues from recurring, task order-based contracts. Our contracted backlog includes revenue we expect to record in the future from signed contracts. In order to calculate backlog, we determine the amounts for contracted projects that are fully funded, and then determine the respective revenues expected to be realized upon completion of work. We use backlog to evaluate Company revenue growth as it typically follows growth in backlog. As backlog is not a defined accounting term, our computation of backlog may not be comparable with that of our peers. In addition, project cancellations and scope adjustments may occur from time to time. For example, certain contracts are terminable at the discretion of the client, with or without cause. These types of backlog reductions could adversely affect our revenue and margins. Our backlog for the period beyond the next twelve months may be subject to variation from the prior year as existing contracts are completed, delayed or renewed or new contracts are awarded, delayed or canceled. In addition, our contracts may contain option periods which must be evaluated. Accordingly, our backlog as of any particular date is an uncertain indicator of future earnings.

Offices

Our principal executive offices are located at 13215 Bee Cave Parkway, Building B, Suite 230, Austin, Texas 78738, which we have leased through October 2024 with annual lease terms of $0.4 million plus operating expenses over the life of the lease. We do not own any significant real property. We currently operate out of approximately 126 leased locations. Our lease terms vary from month-to-month to multi-year commitments. We do not consider any of these leased properties to be materially important to our overall operations. While we do believe it is necessary to maintain offices through which our services are coordinated, we feel there are an ample number of available office rental properties that could adequately serve our needs should we need to relocate or expand our operations.

Atlas Geographic Footprint

Human Capital Management

At Atlas, our employees are our assets; they are the very foundation of our success, the heart of our organization and the drivers of our future potential. As of December 30, 2022, we had approximately 3,450 employees, approximately 91% of which were full-time employees and approximately 85% of which represent technical staff with specialized expertise such as engineers, inspectors, scientists and other field experts. We consider our employee relations to be good.

Our employee attrition rate for 2022 among all staff, part-time and full-time, was approximately 23%. To date, we have been able to locate and engage highly qualified employees as needed and we do not expect our growth efforts to be constrained by a lack of qualified personnel. However, our ability to attract, retain, engage and support a diverse and highly qualified workforce is important to our future success. As such, we prioritize diversity within our employee population, proactively seek to foster a culture of inclusion throughout our organization, and prioritize the health, safety and wellbeing of our employees.

Focus on Diversity, Equity and Inclusion

To achieve our vision we seek to hire, develop, and promote a talented and diverse team of professionals nationwide. We believe leveraging the power of our different backgrounds, beliefs, perspectives and capabilities creates value for our Company and our stockholders.

At Atlas, we define diversity, equity and inclusion as follows:

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Diversity is the presence of employees of different gender, race, ethnicity, sexual orientation, age, socio-economic status, and physical/mental abilities.

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Equity is the promotion of impartiality and fairness within procedures, processes, distribution of resources, and access to promotion and development.

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Inclusion is an ongoing commitment to ensure all Atlas employees experience a welcoming work environment that is devoid of discrimination and bias.

We formed the Atlas Diversity, Equity and Inclusion Council (the “DE&I Council”) comprised of employee representatives from varying backgrounds, geographic regions, functional groups and levels of seniority within our organization to focus on diversity, equity and inclusion strategy development, initiative execution and measurement of outcomes. The DE&I Council’s work is streamlined into three targeted programs: Employee Resources, Talent & Training and Community Outreach.

We also appointed Jamie Myers as our Chief Diversity Officer and launched seven employee resource groups (“ERGs”), which are voluntary, employee-led groups that strive to foster a diverse, inclusive workplace aligned with our core values. Our ERGs exist to provide support, career development and networking opportunities as well as create a safe space where employees can be their authentic selves. Each ERG is open to all employees and cross-collaboration across ERGs is encouraged. When we work together to foster an open, diverse workplace, mentoring and support can engender inclusivity in our culture.

Atlas Employee Resource Groups

Employee Health, Safety and Wellbeing

We prioritize the health, safety and wellbeing of our employees in our business and operations. We are committed to providing a safe and healthy work environment for our team and aim to reduce risks and hazards throughout all of our offices and operations. We are committed to mitigating risks by providing health and safety training for all employees and communicating our health and safety practices throughout our business. We also strive to comply with all applicable health and safety requirements and regulations at the local, state and national levels throughout all operations and projects.

At Atlas, we continuously emphasize the three underlying principles of safety:

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Think Safe: make safety a thought before starting any activity or job;

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Work Safe: make safety a part of our culture; and

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Live Safe: make safety a lifestyle.

The overall wellbeing, including the mental health, of our employees is of utmost important to us. We provide an Employee Assistance Program free of charge to all employees, through which a third-party provider offers confidential guidance for personal issues that employees may be facing, including substance abuse, mental health, work, familial, financial and legal matters.

Competition

The U.S. infrastructure and construction TIC and environmental consulting market is generally highly fragmented and competitive due to the breadth of services offered and the technical complexity needed to meet increasingly stringent regulatory standards.

Industry participants compete on the strength of client relationships, expertise in local markets, technical capabilities, reputation for quality of service and reliability, and price. The ability to compete effectively also depends on employing highly skilled, qualified personnel to meet technical qualification and staffing requirements.

Barriers to entry in the industry are created by the requirement for technical capabilities, a reputation for expertise and reliability and deep relationships with both clients and prime contractors. Scale and breadth of service offerings can also be a barrier to entry for companies that do not have adequate resources or capacity to complete complex and large-scale projects. Customers are increasingly emphasizing safe work practices by placing a premium on limiting liability, creating an additional barrier to entry for those who cannot demonstrate a safety record at or above industry standards.

The firms operating in our industry range from large, global companies with broad service offerings to small-scale providers that typically service regional markets or offer specialized, niche services. Competitive dynamics in the industry are variable across end markets, localities, geographies and types and scopes of services, among other factors. With respect to engineering and design, we view our principal competitors to be AECOM, Jacobs Engineering Group Inc., NV5 Global, Inc., Parsons Corporation, Stantec Inc., Tetra Tech, Inc. and WSP Global Inc. In the area of testing and inspection, we view our principal competitors to be Applus Services, S.A., ALS Limited, Bureau Veritas S.A., Intertek Group plc and SGS S.A. With respect to professional services, we view our principal competitors to be Accenture plc, Booz Allen Hamilton Inc., CGI Inc., FTI Consulting, Inc., Huron Consulting Group Inc. and ICF International, Inc. In all of the aforementioned industries there are also other small- and mid-sized regional players with whom we compete. Our ability to compete successfully depends upon the effectiveness of our marketing efforts, the strength of our client relationships, our ability to accurately estimate costs, the quality of the work we perform, our ability to hire and train qualified personnel and our ability to obtain insurance on commercially reasonable terms.

Information About Our Executive Officers

This information appears in Item 10 of this Annual Report on Form 10-K and is incorporated herein by reference.

Seasonality

Due primarily to inclement weather conditions, which lead to project delays and slower completion of contracts, and a greater number of holidays in the United States, our operating results during the months of December, January and February are generally lower than our operating results during other months. As a result, our revenue and net income for the first and fourth quarters of a fiscal year may be lower than our results for the second and third quarters of a fiscal year.

Insurance and Risk Management

We maintain insurance covering professional liability and claims involving bodily injury and property damage. We consider our present limits of coverage, deductibles and reserves to be adequate. Wherever possible, we endeavor to eliminate or reduce the risk of loss on a project through the use of quality assurance and control, risk management, workplace safety and similar methods.

Risk management is an integral part of project management. We have a strict project review framework including escalation to senior management for any fixed price contracts above $5 million.

Regulation

We are regulated in a number of fields in which we operate. We contract with various U.S. governmental agencies and entities, and when working with such governmental agencies and entities, we must comply with laws and regulations relating to the formation, administration and performance of contracts. These laws and regulations contain terms that, among other things:

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require certification and disclosure of all costs or pricing data in connection with various contract negotiations;

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impose procurement regulations that define allowable and unallowable costs and otherwise govern our right to reimbursement under various cost-based U.S. government contracts; and

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restrict the use and dissemination of information classified for national security purposes and the exportation of certain products and technical data.

To help ensure compliance with these laws and regulations, employees are sometimes required to complete tailored ethics and other compliance training relevant to their position and our operations.

Legal and Environmental

From time to time, we are subject to various legal proceedings that arise out of our normal course of business or otherwise. We are not currently a party to any legal proceedings that, individually or in the aggregate, are expected to materially impact our business, financial position, results of operations and cash flows, taken as a whole.

We must comply with a number of federal, tribal, state and local laws and regulations that strictly regulate the handling, removal, treatment, transportation and disposal of toxic and hazardous substances, or that otherwise relate to health and safety or the protection of the environment. Liabilities related to environmental contamination or human exposure to hazardous substances, or a failure to comply with applicable regulations, could result in substantial costs, including clean-up costs; fines and administrative, civil or criminal sanctions; third-party claims for property damage or personal injury; or implementation of remediation activities, including investigation, assessment and short- or long-term monitoring activities.

Available Information

We make available free of charge on our website, www.oneatlas.com, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such information with, or furnish it to, the SEC. These documents are also available on the SEC’s website at www.sec.gov. The information on our website is not, and shall not be deemed to be, a part of this Annual Report on Form 10-K or incorporated into any of our other filings with the SEC.

ITEM 1A. RISK FACTORS

RISK FACTORS

You should carefully consider the following risk factors, together with all of the other information included in this Annual Report on Form 10-K, as these risks could have a material adverse effect on our business, results of operations and financial condition.

Additionally, the risks and uncertainties described in this Annual Report on Form 10-K are not the only risks and uncertainties that we may face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business. Furthermore, the ongoing global pandemic related to COVID-19 may amplify many of the risks discussed below to which we are subject and, given the unpredictable, unprecedented and fluid nature of the pandemic, it may materially and adversely affect us in ways that are not anticipated by or known to us or that we do not currently consider to present significant risk. Therefore, at this time, we are unable to estimate the extent to which the pandemic and its related impacts will adversely affect our business, financial condition and results of operations.

Risks Relating to Our Business and Industry

Outbreaks of communicable diseases, including the ongoing global pandemic related to COVID-19, have had an adverse effect on our business, financial condition and results of operations and could in the future have, directly or indirectly, a material adverse effect on our business, financial condition and results of operations. The duration and extent to which this will impact our future financial condition and results of operations remains uncertain.

Global or national health concerns, including the outbreak of a pandemic or contagious disease, can negatively impact the global economy and, therefore, demand and pricing for our services. For example, the outbreak of the COVID-19 pandemic and the measures being taken to address and limit the spread of the virus have adversely affected the U.S. economy and financial markets, resulting in an economic downturn that has negatively impacted the demand for our services. In response to market conditions, during the second quarter of 2020, we reduced our workforce through various actions. The full impact of the COVID-19 outbreak continues to evolve.

Furthermore, the COVID-19 pandemic also raises the possibility of an extended global economic downturn and has caused volatility in financial markets, which could affect demand for our services and impact our financial condition and results of operations even after the pandemic is fully contained. For example, if a client’s financial difficulties become severe, the client may be unwilling or unable to pay our invoices in the ordinary course of business, which could adversely affect collections of both our accounts receivable and unbilled services. We continue to monitor the impact of the COVID-19 pandemic on our cash flows and on the credit and financial markets.

As a safety focused organization, since the outbreak of COVID-19 and continuing throughout 2022, we have encouraged our employees to work from home wherever possible and to honor all shelter in place rules put forth by their state or local governments. As a result, we may have increased cybersecurity and data security risks, due to increased use of home Wi-Fi networks and virtual private networks, as well as increased disbursement of physical machines. While we continue to implement information technology controls to reduce the risk of a cybersecurity or data security breach, there is no guarantee that these measures will be adequate to safeguard all systems with an increased number of employees working remotely.

We are currently monitoring, and will continue to monitor, the safety of our employees during the COVID-19 pandemic. We are evaluating, and will continue to evaluate, the impact of COVID-19 on current projects, but the full effects of COVID-19 on our operations are still unknown. The duration and extent of the impact from the COVID-19 pandemic continues to be evaluated by governments and experts and depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus, the extent and effectiveness of containment actions, the long-term efficacy of COVID-19 vaccines, the emergence of new strains of the virus and the impact of these and other factors on our employees and clients. In the event of a reinstitution of shelter-in-place orders within the cities and municipalities where we operate, our future results could be further negatively impacted and could result in the re-designation of infrastructure spending to other uses. Disruptions to capital markets due to the uncertainty surrounding the length and severity of the COVID-19 pandemic could also delay the timing of our customers’ capital projects.

Our business strategy relies in part on acquisitions to sustain our growth. Acquisitions of other companies present certain risks and uncertainties.

Our business strategy involves growth through, among other things, the acquisition of other companies. We may finance these acquisitions or other strategic investments with cash, the issuance of equity or equity-linked securities or a combination of the foregoing, and therefore any such acquisition or strategic investment could be dilutive to our existing stockholders. We try to acquire companies that we believe will strategically fit into our business and growth objectives, including, for example, our acquisition of ATC Group Services LLC in January 2019, LONG in February 2020, Alta Vista in September 2020, WesTest in December 2020, AEL in April 2021, O’Neill in July 2021, and TranSmart and 1 Alliance in March 2022. We are continuously evaluating multiple acquisition or strategic investment opportunities, some of which may be material to our results of operations and financial condition. If we are unable to successfully integrate and develop acquired businesses, we could fail to achieve anticipated synergies and cost savings, including any expected increases in revenues and operating results, which could have a material adverse effect on our financial results.

We may not be able to identify suitable acquisition or strategic investment opportunities or may be unable to obtain the required consent of our lenders and, therefore, may not be able to complete such acquisitions or strategic investments. We may incur expenses associated with sourcing, evaluating and negotiating acquisitions (including those that we do not complete), and we may also pay fees and expenses associated with financing acquisitions to investment banks and other advisors. Any of these amounts may be substantial, and together with the size, timing and number of acquisitions we pursue, may negatively affect and cause significant volatility in our financial results.

In addition, we have assumed, and may in the future assume, liabilities of the company we are acquiring. While we retain third-party advisors to assist with due diligence and consult on potential liabilities related to these acquisitions, there can be no assurances that all potential liabilities will be identified or known to us. If there are unknown liabilities or other unforeseen obligations, our business could be materially adversely affected.

We cannot assure you that we will achieve synergies and cost savings in connection with prior or future acquisitions.

We actively pursue acquisition opportunities consistent with our growth strategy. We may not achieve anticipated cost savings in connection with prior or future acquisitions within the anticipated time frames or at all. A variety of risks could cause us not to realize some or all of these expected benefits. These risks include, among others, higher than expected standalone overhead expenses, delays in the anticipated timing of activities related to cost saving initiatives and the incurrence of other unexpected costs associated with operating the acquired business. Moreover, our implementation of cost savings initiatives may disrupt our operations and performance, and our estimated cost savings from such initiatives may be based on assumptions that prove to be inaccurate. If, for any reason, the benefits we realize are less than our estimates or our improvement initiatives adversely affect our operations or cost more or take longer to implement than we project, or if our assumptions prove inaccurate, our results of operations may be materially and adversely affected.

In addition, our operating results from these acquisitions could, in the future, result in impairment charges for any of our intangible assets, including goodwill, or other long-lived assets, particularly if economic conditions worsen unexpectedly. These changes could materially adversely affect our results of operations, financial condition, stockholders’ equity, and cash flows.

If we are unable to integrate acquired businesses successfully, our business could be harmed.

As part of our business strategy to pursue accretive acquisitions, we intend to selectively pursue targets that provide complementary, low-risk services and expand our national platform. Our inability to successfully integrate future acquisitions could impede us from realizing all of the benefits of those acquisitions and could weaken our business operations. The integration process of any particular acquisition may disrupt our business and, if implemented ineffectively, may preclude realization of the full benefits expected by us and could harm our results of operations. In addition, the overall integration process may result in unanticipated problems, expenses, liabilities and competitive responses and may cause our stock price to decline.

The difficulties of integrating acquisitions include, among other things:

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

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unanticipated incompatibility of logistics, marketing and administration methods;

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maintaining employee morale and retaining key employees;

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integrating the business cultures of both companies;

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preserving important strategic client relationships;

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consolidating corporate and administrative infrastructures and eliminating duplicative operations; and

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coordinating geographically separate organizations.

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

Further, we have assumed, and may in the future assume, liabilities of the company we are acquiring. While we retain third-party advisors to assist with due diligence and consult on potential liabilities related to these acquisitions, there can be no assurances that all potential liabilities will be identified or known to us. If there are unknown liabilities or other unforeseen obligations, our business could be materially adversely affected. Acquisitions may also cause us to:

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require our management to expend significant time, effort and resources;

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issue securities that would dilute our current stockholders;

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use a substantial portion of our cash resources;

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increase our interest expense, leverage and debt service requirements if we incur additional debt to fund an acquisition;

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assume liabilities, including environmental liabilities, for which we do not have indemnification from the former owners or have indemnification that may be subject to dispute or concerns regarding the creditworthiness of the former owners;

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record goodwill and non-amortizable intangible assets that are subject to impairment testing on a regular basis and potential impairment charges;

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experience volatility in earnings due to changes in contingent consideration related to acquisition liability estimates;

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incur amortization expenses related to certain intangible assets;

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lose existing or potential contracts as a result of conflict of interest issues;

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incur large and immediate write-offs; or

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become subject to litigation.

Our continued success is dependent upon our ability to hire, retain and utilize qualified personnel.

The success of our business and our ability to operate profitably is dependent upon our ability to hire, retain and utilize qualified personnel, including engineers, architects, designers, craft personnel and corporate management professionals who have the required experience and expertise at a reasonable cost. The market for these and other personnel is competitive. From time to time, it may be difficult to attract and retain qualified individuals with the expertise, and in the timeframe, demanded by our clients, or to replace such personnel when needed in a timely manner. In certain geographic areas, for example, we may not be able to satisfy the demand for our services because of our inability to successfully hire and retain a sufficient amount of qualified personnel. Furthermore, some of our personnel hold government-granted clearance that may be required to obtain government projects. If we were to lose some or all of these personnel, they would be difficult to replace. Loss of the services of, or failure to recruit, qualified technical and management personnel could limit our ability to successfully complete existing projects and compete for new projects.

In addition, if any of our key personnel retire or otherwise leave the Company, we must have appropriate succession plans in place and successfully implement such plans, which requires devoting time and resources toward identifying and integrating new personnel into leadership roles and other key positions. Our inability to attract and retain qualified personnel or effectively implement appropriate succession plans could have a material adverse impact on our business, financial condition and results of operations.

The cost of providing our services, including the extent to which we utilize our workforce, affects our profitability. For example, the uncertainty of contract award timing can present difficulties in matching our workforce size with our contracts. If an expected contract award is delayed or not received, we could incur costs resulting from excess staff, reductions in staff, or redundancy of facilities that could have a material adverse impact on our business, financial condition and results of operations.

Our profitability could suffer if we are not able to maintain adequate utilization of our workforce.

The cost of providing our services, including the extent to which we utilize our workforce, affects our profitability. The rate at which we utilize our workforce is affected by several factors, including:

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our ability to transition employees from completed projects to new assignments and to hire and assimilate new employees;

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our ability to forecast demand for our services and thereby maintain an appropriate headcount in each of our geographic areas and workforces;

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our ability to manage attrition;

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our need to devote time and resources to training, business development, professional development and other non-chargeable activities;

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our ability to match the skill sets of our employees to the needs of the marketplace;

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potential disengagement of employees if we overutilize our workforce, which would increase employee attrition; and

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conversely, if we underutilize our workforce, our profit margin and profitability could suffer.

If we are not able to successfully manage our growth strategy, our business operations and financial results may be adversely affected.

Our expected future growth presents numerous managerial, administrative and operational challenges. Our ability to manage the growth of our operations will require us to continue to improve our management information systems and our other internal systems and controls. In addition, our growth will increase our need to attract, develop, motivate, and retain both our management and professional employees. The inability of our management to effectively manage our growth or the inability of our employees to achieve anticipated performance could have a material adverse effect on our business.

Construction and maintenance sites are inherently dangerous workplaces. If we, the owner, or others working at a project site fail to maintain a safe work site, we can be exposed to significant financial losses and reputational harm, as well as civil and criminal liabilities.

Construction and maintenance sites often put our employees and others in proximity to large pieces of mechanized equipment, moving vehicles, chemical and manufacturing processes and highly regulated materials in a challenging environment. If we fail to implement safety procedures, or if the procedures we implement are ineffective, or if others working at the site fail to implement and follow appropriate safety procedures, our employees and others may become injured, disabled or even lose their lives, the completion or commencement of our projects may be delayed and we may be exposed to litigation, investigations, fines, penalties or claims for damages. Unsafe work sites also have the potential to increase employee turnover, increase the cost of a project to our clients and raise our operating and insurance costs. Any of the foregoing could result in financial losses or reputational harm, which could have a material adverse impact on our business, financial condition and results of operations.

In addition, our projects can involve the handling of hazardous and other highly regulated materials, which, if improperly handled or disposed of, could subject us to civil and/or criminal liabilities. We are also subject to regulations dealing with occupational health and safety. Although we maintain functional groups whose primary purpose is to ensure we implement effective HSE work procedures throughout our organization, including construction sites and maintenance sites, the failure to comply with such regulations could subject us to liability. In addition, despite the work of our functional groups, we cannot guarantee the safety of our personnel or that there will be no damage to or loss of our work, equipment or supplies.

Our safety record is critical to our reputation. Many of our clients require that we meet certain safety criteria to be eligible to bid for contracts, and many contracts provide for automatic termination or forfeiture of some or all of our contract fees or profits in the event that we fail to meet certain measures. Accordingly, if we fail to maintain adequate safety standards, we could suffer reduced profitability or the loss of projects or clients, which could have a material adverse impact on our business, financial condition and results of operations.

Demand from clients is cyclical and vulnerable to economic downturns. If the economy weakens or client spending declines, our financial results may be impacted.

Demand for services from our clients is cyclical and vulnerable to economic downturns, which may result in clients delaying, curtailing or canceling proposed and existing projects. Our business traditionally lags the overall recovery in the economy. If the economy weakens or client spending declines, then our revenue, profits and overall financial condition may deteriorate.

In addition, if there is an economic downturn, our existing and potential clients may either postpone entering into new contracts or request price concessions. Difficult financing and economic conditions may cause some of our clients to demand better pricing terms or delay payments for services we perform, thereby increasing the average number of days our receivables are outstanding and the potential of increased credit losses on uncollectible invoices. Further, these conditions may result in the inability of some of our clients to pay us for services that we have already performed. Accordingly, these factors affect our ability to forecast our future revenue and earnings from business areas that may be adversely impacted by market conditions.

Our results of operations depend on the award of new contracts and the timing of the performance of these contracts.

Our revenues are derived from new contract awards. Delays in the timing of awards or cancellations of such prospects as a result of economic conditions, material and equipment pricing and availability or other factors could impact our long-term projected results. It is particularly difficult to predict whether or when we will receive large-scale projects as these contracts frequently involve a lengthy and complex bidding and selection process, which is affected by several factors, such as market conditions or governmental and environmental approvals. Since a significant portion of our revenues is generated from such projects, our results of operations and cash flows can fluctuate significantly from quarter to quarter depending on the timing of our contract awards and the commencement or progress of work under awarded contracts. Furthermore, many of these contracts are subject to financing contingencies and, as a result, we are subject to the risk that the customer will not be able to secure the necessary financing for the project.

In addition, certain contracts require us to satisfy specific progress or performance milestones in order to receive payment from the customer. As a result, we may incur significant costs for engineering, materials, components, equipment, labor or subcontractors prior to receipt of payment from a customer.

The uncertainty of contract award timing can also present difficulties in matching workforce size with contract requirements. In some cases, we maintain and bear the cost of a ready workforce that is larger than necessary under existing contracts in anticipation of future workforce needs for expected contract awards. If an expected contract award is delayed or not received, we may incur additional costs resulting from reductions in staff or redundancy of facilities, which could have a material adverse effect on our business, financial condition and results of operations.

The contracts in our backlog may be adjusted, cancelled or suspended by our clients and, therefore, our backlog is not necessarily indicative of our future revenues or earnings. Additionally, even if fully performed, our backlog is not a good indicator of future gross margins.

Backlog represents the total dollar amount of revenues we expect to record in the future as a result of performing work under contracts that have been awarded to us. As of December 30, 2022, our backlog totaled approximately $877 million. There is no assurance that backlog will be realized as revenues in the amounts reported or, if realized, will result in profits. In accordance with industry practice, substantially all of our contracts are subject to cancellation, termination or suspension at the discretion of the client. In the event of a project cancellation, we would generally have no contractual right to the total revenue reflected in our backlog. Projects can remain in backlog for extended periods of time depending on the nature of the project and the timing of the services required by the project. The risk of contracts in backlog being cancelled or suspended generally increases during periods of widespread economic slowdowns or in response to changes in commodity prices.

The contracts in our backlog are subject to changes in the scope of services to be provided as well as adjustments to the costs relating to the contracts. The revenue for certain contracts included in backlog is based on estimates. Additionally, the way we perform on our individual contracts can greatly affect our gross margins and future profitability.

If our clients delay in paying or fail to pay amounts owed to us, our business operations and financial results may be adversely impacted.

Our accounts receivable are a significant asset on our balance sheet. While we take steps to evaluate and manage the credit risks relating to our clients, economic downturns or other events can adversely affect the markets we serve and our clients’ ability to pay, which could reduce our ability to collect amounts due from clients. We may be unable to collect amounts due or damages we are awarded from certain clients, and our efforts to collect such amounts may damage our client relationships. The disruptions caused by the COVID-19 pandemic have heightened the risk that we may not receive payment for services performed. If our clients delay in paying or fail to pay us a significant amount of our outstanding receivables, it could have a material adverse effect on our liquidity, results of operations, and financial condition.

Our services expose us to significant risks of liability, and our insurance policies may not provide adequate coverage.

If we fail to provide our services in accordance with applicable professional standards or contractual requirements, we could be exposed to significant monetary damages or even criminal violations. Our engineering practice, for example, involves professional judgments regarding the planning, design, development, construction, operations and management of industrial facilities and public infrastructure projects. While we do not generally accept liability for consequential damages in our contracts, and although we have adopted a range of insurance, risk management and risk avoidance programs designed to reduce potential liabilities, a catastrophic event at one of our project sites or completed projects resulting from the services we have performed could result in significant professional or product liability, and warranty or other claims against us as well as reputational harm, especially if public safety is negatively impacted. These liabilities could exceed our insurance limits or the fees we generate, may not be covered by insurance at all due to various exclusions in our coverage and self-insured retention amounts, and could impact our ability to obtain insurance in the future or increase the cost of obtaining such insurance. Further, we do not have insurance against all foreseeable risks, either because insurance is not available or because of the high premium cost. Even where coverage applies, the policies have deductibles, which result in our assumption of exposure for certain amounts with respect to any claim filed against us. In addition, clients or subcontractors who have agreed to indemnify us against any such liabilities or losses might refuse or be unable to pay us. An uninsured claim, either in part or in whole, as well as any claim covered by insurance but subject to a high deductible, if successful and of a material magnitude, could have a material adverse impact on our business, financial condition and results of operations.

Unavailability or cancellation of third-party insurance coverage would increase our overall risk exposure as well as disrupt the management of our business operations.

We maintain insurance coverage from third-party insurers as part of our overall risk management strategy, and some of our contracts require us to maintain specific insurance coverage limits. If any of our third-party insurers fail, suddenly cancel coverage or are otherwise unable to provide us with adequate insurance coverage, our overall risk exposure and operational expenses would increase and the management of our business operations would be disrupted. In addition, there can be no assurance that any of our existing insurance coverage will be renewable upon the expiration of the coverage period or that future coverage will be affordable at the required limits.

Catastrophic events may adversely impact our business operations.

Our business operations may be adversely impacted by force majeure or extraordinary events beyond the control of the contracting parties, such as natural and man-made disasters as well as terrorist attacks. Such events could result in the closure of offices, interruption of projects and the relocation of employees. We typically remain obligated to perform our services after a terrorist attack or natural disaster unless the contract contains a force majeure clause that relieves us of our contractual obligations. If we are not able to react quickly to a force majeure event, our operations may be affected significantly, which would have a negative impact on our business operations.

Further, we rely on our network and third-party infrastructure and enterprise applications, internal technology systems and our website for our development, marketing, operational, support, hosted services and sales activities. Despite our implementation of network security measures, we are vulnerable to disruption, infiltration or failure of these systems or third-party hosted services in the event of a major earthquake, fire, power loss, telecommunications failure, cyberattack, war, terrorist attack or other catastrophic event, and any such occurrence could cause system interruptions, reputational harm, loss of intellectual property, lengthy interruptions in our services, breaches of data security and loss of critical data and could harm our future operating results.

We engage in a highly competitive business. If we are unable to compete effectively, we could lose market share and our business and results of operations could be negatively impacted.

We face intense competition to provide testing, inspection, engineering, environmental, program management and consulting services to clients. The markets we serve are highly competitive and we compete against many regional, national and multinational companies.

The extent of our competition varies by industry, geographic area and project type. Our projects are frequently awarded through a competitive bidding process, which is standard in our industry. We are constantly competing for project awards based on pricing, schedule and the breadth and technical sophistication of our services. Competition can place downward pressure on our contract prices and profit margins and may force us to accept contractual terms and conditions that are less favorable to us, thereby increasing the risk that, among other things, we may not realize profit margins at the same rates as we have seen in the past or may become responsible for costs or other liabilities we have not accepted in the past. If we are unable to compete effectively, we may experience a loss of market share or reduced profitability or both, which, if significant, could have a material adverse impact on our business, financial condition and results of operations.

The nature of our contracts, particularly those that are fixed price, subject us to risks of cost overruns. We may experience reduced profits or, in some cases, losses if costs increase above budgets or estimates or if projects experience schedule delays.

As of December 30, 2022, approximately 10% of our revenues were earned under fixed price contracts. Fixed price contracts require us to estimate the total cost of the project in advance of performing it. For fixed price contracts, we may benefit from any cost savings, but we bear greater risk of paying some, if not all, of any cost overruns. Fixed price contracts are established in part on partial or incomplete designs, cost and scheduling estimates that are based on several assumptions, including those about future economic conditions, commodity and other materials pricing and availability of labor, equipment and materials, in addition to other exigencies. If the design or the estimates prove inaccurate or if circumstances change due to, among other things, unanticipated technical problems, difficulties in obtaining permits or approvals, changes in local laws or labor conditions, weather or other delays beyond our control, changes in the costs of equipment or raw materials, our vendors’ or subcontractors’ inability or failure to perform or changes in general economic conditions, then cost overruns may occur and we could experience reduced profits or, in some cases, a loss for that project. These risks are exacerbated for projects with long-term durations because there is an increased risk that the circumstances on which we based our original estimates will change in a manner that increases costs. If the project is significant, or there are one or more issues that impact multiple projects, cost overruns could have a material adverse impact on our business, financial condition and results of operations.

We derive a large portion of our gross revenues from government agencies, and any disruption in government funding or in our relationship with those agencies could adversely affect our business.

During fiscal 2022, approximately 50% of our gross revenues was derived from federal, state and local government related projects. The demand for our government-related services is generally driven by the level of government program funding. Each year, client funding for some of our U.S. government contracts may directly or indirectly rely on government appropriations or public-supported financing. Legislatures may appropriate funds for a given project on a year-by-year basis, even though the project may take more than one year to perform. In addition, public-supported financing such as U.S. state and local municipal bonds may be only partially raised to support existing projects. Similarly, an economic downturn may make it more difficult for U.S. state and local governments to fund projects. In addition to the state of the economy and competing political priorities, public funds and the timing of payment of these funds may be influenced by:

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changes in and delays or cancellations of government programs, requirements, or appropriations;

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re-competes of government contracts;

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curtailment in the use of government contracting firms;

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increases in raw material costs;

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delays associated with insufficient numbers of government staff to oversee contracts;

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the timing and amount of tax revenue received by federal, state, and local governments, and the overall level of government expenditures;

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competing political priorities and changes in the political climate with regard to the funding or operation of the services we provide;

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the adoption of new laws or regulations affecting our contracting relationships with the federal, state, or local governments;

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a dispute with, or improper activity by, any of our subcontractors; and

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general economic or political conditions.

These and other factors could cause government agencies to delay or cancel programs, to reduce their orders under existing contracts, to exercise their rights to terminate contracts, or not to exercise contract options for renewals or extensions. Any of these actions could have a material adverse effect on our revenue or timing of contract payments from these agencies.

Governmental agencies may modify, curtail or terminate our contracts at any time prior to their completion and, if we do not replace them, we may suffer a decline in revenue.

Most government contracts may be modified, curtailed or terminated by the government either at their discretion or upon the default of the contractor. If the government terminates a contract at its discretion, then we typically can recover only costs incurred or committed, settlement expenses and profit on work completed prior to termination, which could prevent us from recognizing all our potential revenue and profits from that contract. In addition, for some assignments, the U.S. government may attempt to “insource” the services to government employees rather than outsource to a contractor. If a government terminates a contract due to our default, we could be liable for excess costs incurred by the government in obtaining services from another source.

Our failure to comply with a variety of complex procurement rules and regulations could damage our reputation and result in our being liable for penalties, including termination of our government contracts, disqualification from bidding on future government contracts and suspension or debarment from government contracting.

We must comply with laws and regulations relating to government contracts, which affect how we do business with our customers and may impose added costs on our business. Some significant laws and regulations that affect us include:

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federal, state, and local laws and regulations (including the Federal Acquisition Regulation or “FAR”) regarding the formation, administration, and performance of government contracts;

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the Civil False Claims Act, which provides for substantial civil penalties for violations, including for submission of a false or fraudulent claim to the U.S. government for payment or approval; and

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federal, state and local laws and regulations regarding procurement integrity including gratuity, bribery and anti-corruption requirements as well as limitations on political contributions and lobbying.

Government agencies routinely audit and review a contractor’s performance on government contracts, indirect cost rates and pricing practices, and compliance with applicable contracting and procurement laws, regulations and standards. Any failure to comply with applicable laws and regulations could result in civil or criminal penalties or administrative sanctions such as contract termination, forfeiture of profits, damage to our reputation, price or fee reductions or suspension or debarment from contracting with the government, each of which could materially adversely affect our business, results of operations and financial condition.

In addition, federal, state and local government entities may revise existing contract rules and regulations or adopt new contract rules and regulations at any time and may also face restrictions or pressure regarding the type and amount of services that they may obtain from private contractors. Any of these changes could impair our ability to obtain new contracts or renew contracts under which we currently perform when those contracts are eligible for recompetition.

We are dependent on third parties to complete certain elements of our contracts.

We hire third-party subcontractors to perform certain work under our contracts. We also rely on third-party equipment manufacturers or suppliers to provide equipment and materials used for certain of our projects. If we are unable to hire qualified subcontractors or find qualified equipment manufacturers or suppliers, our ability to successfully complete certain projects could be impaired. If we are not able to locate qualified third-party subcontractors, or the amount we are required to pay for subcontractors or equipment and supplies exceeds what we have estimated, especially in a lump sum or a fixed price contract, we may suffer losses on these contracts. If a subcontractor, supplier or manufacturer fails to provide services, supplies or equipment as required under a contract for any reason, we may be required to source these services, equipment or supplies to other third parties on a delayed basis or on less favorable terms, which could negatively impact contract profitability. There is a risk that we may have disputes with our subcontractors relating to, among other things, the quality and timeliness of work performed, customer concerns about a subcontractor or our failure to extend existing task orders or issue new task orders under a contract. In addition, faulty workmanship, equipment or materials could impact the overall project, resulting in claims against us for failure to meet required project specifications, imposition of financial penalties or requirements to provide additional services to ensure the adequate performance and delivery of the contracted services. We may be jointly and severally liable for the third party’s actions or contract performance.

Third parties may find it difficult to obtain sufficient financing to fund their operations, and such inability could adversely affect such third party’s ability to provide materials, equipment or services, which could have a material adverse impact on our business, financial condition and results of operations. In addition, a failure by a third-party subcontractor, supplier or manufacturer to comply with applicable laws, regulations or client requirements could negatively impact our business and, for government clients, could result in fines, penalties, suspension or even debarment being imposed on us, which could have a material adverse impact on our business, financial condition and results of operations.

We may be precluded from providing certain services due to conflict of interest issues.

Many of our clients are concerned about potential or actual conflicts of interest in retaining management consultants. U.S. federal government agencies have formal policies against continuing or awarding contracts that would create actual or potential conflicts of interest with other activities of a contractor. These policies may prevent us from bidding for or performing government contracts resulting from or relating to certain work we have performed. In addition, services performed for a commercial or government client may create a conflict of interest that precludes or limits our ability to obtain work from other public or private organizations. Any conflicts of interest that preclude us from providing certain services could have a material adverse impact on our business, financial condition and results of operations.

If we fail to comply with federal, state and local governmental requirements, our business may be adversely affected.

We are subject to U.S. federal, state and local laws and regulations that affect our business. Although we have policies and procedures to comply with U.S. trade laws, the violation of such laws could subject us and our employees to civil or criminal penalties, including substantial monetary fines, or other adverse actions including debarment from participation in U.S. government contracts and could damage our reputation and our ability to do business.

If we fail to maintain an effective system of internal control, we may not be able to accurately report our financial results.

We are required to comply with Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), which requires, among other things, a company to evaluate annually the effectiveness of its internal control over financial reporting as of the end of each fiscal year and to include a management report assessing the effectiveness of its internal control over financial reporting in its Annual Report on Form 10-K. Effective internal control over financial reporting is necessary to provide reliable financial reports and to help prevent fraud. The Company’s management team and other personnel are required to devote a substantial amount of time to these compliance requirements. Moreover, these rules and regulations increase legal and financial compliance costs and make some activities more time-consuming and costly. Despite best efforts, we cannot be certain that we will be able to maintain adequate internal controls over our financial processes and reporting in the future or that we will be able to comply with our obligations under Section 404 of Sarbanes-Oxley.

An impairment charge on our goodwill or intangible assets could have a material adverse impact on our financial position and results of operations.

Because we have grown in large part through acquisitions, goodwill and intangible assets represent a substantial portion of our assets. Under U.S. GAAP, we are required to test goodwill and intangible assets carried in our consolidated balance sheet for possible impairment on an annual basis based upon a fair value approach. As of December 30, 2022, we have $241.2 million of goodwill and intangible assets, representing 49% of our total assets of $487.4 million. We also are required to test goodwill and intangible assets for impairment between annual tests if events occur or circumstances change that would more likely than not reduce our enterprise fair value below our book value. These events or circumstances could include a significant change in the business climate, including a significant sustained decline in a reporting unit’s market value, legal factors, operating performance indicators, competition, sale or disposition of a significant portion of our business, potential government actions toward our facilities, and other factors.

If our market capitalization drops significantly below the amount of net equity recorded on our balance sheet, this might indicate a decline in our fair value and would require us to further evaluate whether our goodwill has been impaired. If the fair value of our reporting units is less than their carrying value, we could be required to record an impairment charge. The amount of any impairment could be significant and could have a material adverse impact on our financial position and results of operations for the period in which the charge is taken.

Rising inflation, interest rates and/or construction costs could reduce the demand for our services as well as decrease our profit on our existing contracts, in particular with respect to our fixed price contracts.

Rising inflation, interest rates, or construction costs could reduce the demand for our services. In addition, we bear all the risk of rising inflation with respect to those contracts that are fixed price. Because a portion of our revenues are earned from fixed price contracts (approximately 10% as of December 30, 2022), the effects of inflation on our financial condition and results of operations over the past few years have been generally minor. However, if we expand our business into markets and geographic areas where fixed price and lump sum work is more prevalent, inflation may have a larger impact on our results of operations in the future. In addition, there is a time lag in recovering labor cost increases from our clients on time and materials/cost reimbursable contracts. Therefore, increases in inflation, interest rates or construction costs could have a material adverse impact on our business, financial condition and results of operations.

We are subject to professional standards, duties and statutory obligations on professional reports and opinions we issue, which could subject us to liability and monetary damages.

We issue reports and opinions to clients based on our professional engineering expertise as well as our other professional credentials that subject us to professional standards, duties and obligations regulating the performance of our services. If a client or another third party alleges that our report or opinion is incorrect or it is improperly relied upon and we are held responsible, we could be subject to significant liability or claims for damages. In addition, our reports and other work product may need to comply with professional standards, licensing requirements, securities regulations and other laws and rules governing the performance of professional services in the jurisdiction where the services are performed. We could be liable to third parties who use or rely upon our reports and other work product even if we are not contractually bound to those third parties. These events could in turn result in monetary damages and penalties.

Certain of our services involve assisting our clients’ compliance with environmental, health, and safety laws and regulations that may require substantial costs to comply with, and our failure to effectively assist our client’s compliance with such laws and regulations may expose us to significant penalties, damages, or costs of remediation. Changes in such laws or regulations could also directly or indirectly reduce the demand for our services or make our operations more costly.

Our operations and our clients’ projects are subject to federal, tribal, regional, state, and local laws and regulations relating to protection of natural resources and the environment, health and safety of our employees and the public, and waste management. These laws and regulations impose numerous obligations, including the acquisition of permits to conduct regulated activities, the incurrence of capital or other substantial expenditures to prevent releases of regulated materials, the imposition of substantial liabilities for pollution or other harm to species or the environment resulting from our clients’ operations or other harm to species or the environment, and the applicability of specific health and safety protections for our employees, our clients’ employees and the public.

Examples of laws and regulations that govern the environmental aspects of our clients’ businesses, and our provision of environmental compliance services to our clients, include the following:

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The federal Clean Air Act (“CAA”) and comparable state laws and regulations impose obligations related to the emission of air pollutants. Both existing federal CAA and state laws and regulations, and any future regulations, may require pre-approval for the construction, expansion, or modification of certain facilities that produce, or which are expected to produce, air emissions. Such regulations may also impose stringent air permit requirements and require the use of specific equipment or technologies to control emissions.

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The federal Clean Water Act (“CWA”) and comparable state laws and regulations impose strict obligations related to discharges of pollutants and fill material into regulated bodies of water, including some wetlands. The discharge of pollutants and fill material into regulated waters is prohibited except in accordance with a permit issued by the Environmental Protection Agency, the United States Army Corps of Engineers, or state agency or tribe with a delegated CWA permit program. The CWA and its implementing regulations also require construction activities to establish authorization for the discharge of stormwater, which may require the development and implementation of a Stormwater Pollution Prevention Plan to describe the construction activities and the pollution prevention practices that will be implemented in connection with those activities.

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The federal Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA” or the “Superfund” law) and comparable state statutes impose strict liability, and in some cases joint and several liability, on classes of persons who are considered to be responsible for the release of a hazardous substance into the environment, including current owners or operators, past owners or operators at the time of the release, and persons who generate, transport, dispose, or arrange for transportation or disposal of hazardous substances. Such persons may be responsible for the costs of investigating and remediating releases of hazardous substances, remediating releases of hazardous substances, compensating for damages to natural resources, and for certain health studies. In the ordinary course of our clients’ operations, industrial wastes may be regulated as hazardous substances under CERCLA. In addition, neighboring landowners and other third parties may file claims for personal injury and property damage allegedly caused by hazardous substances or other pollutants released into the environment.

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The federal Resource Conservation and Recovery Act and comparable state laws regulate the generation, transportation, treatment, processing, storage, disposal, and cleanup of hazardous and non-hazardous wastes. Certain of the services we provide to our clients involve the management and handling of toxic or hazardous substances. In addition, our clients’ operations may generate some amounts of ordinary construction and industrial wastes that may be regulated and/or must be managed as hazardous wastes if such wastes are listed as hazardous wastes or have hazardous characteristics.

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The federal Endangered Species Act, implementing regulations, and analogous state laws prohibit the unauthorized “take” of certain species listed as endangered or threatened. Courts have construed the term “take” broadly to include the destruction or alteration of endangered species habitat. Similar protections are afforded to migratory birds under the Migratory Bird Treaty Act and bald and golden eagles under the Bald and Golden Eagle Protection Act. Should our clients’ projects be developed or constructed in protected species habitat, compliance with such laws could result in increased operational costs or project delays, including delays in providing our services in connection with such projects.

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The purpose of the Occupational Safety and Health Act (“OSHA”), comparable state statutes, and each of their implementing regulations is to protect the health and safety of workers. In addition, the OSHA hazard communication standard, the Emergency Planning and Community Right-to-Know Act , and comparable state statutes and any implementing regulations thereof may require disclosure of information about hazardous materials stored, used, or produced in our or our clients’ operations, and that such information be provided to employees, state and local governmental authorities, and/or citizens, as applicable.

Any failure on our part to comply with laws and regulations such as those listed above, or to effectively assist our clients’ compliance with such laws and regulations, may result in increases in operational costs or project delays to our clients and could ultimately lead to claims against us. In addition, environmental laws and regulations have been subject to frequent changes over the years and tend to become more stringent over time, and the imposition of more stringent or complex laws and regulations could increase the likelihood that we may fail to comply with, or to effectively assist our clients’ compliance with, such laws and regulations. Our failure to comply with applicable environmental, health, and safety laws and regulations, our failure to effectively assist our clients’ compliance with such laws and regulations in connection with projects, or the failure of any of our subcontractors to comply with such laws and regulations could trigger a variety of administrative, civil, and criminal enforcement measures, including investigations, the assessment of monetary penalties, the imposition of remedial requirements or other corrective measures, and the issuance of directives or orders enjoining existing or future operations or projects, any of which could have a material adverse effect on the financial condition of our business.

Changes in natural resource management, climate change or infrastructure industry laws, regulations, and programs could directly or indirectly reduce the demand for our services, or could make our operations more costly, which could in turn negatively impact our revenue.

Our business and results of operations could be adversely affected by the passage of climate change, defense, environmental, infrastructure and other legislation, policies and regulations. Growing concerns about climate change may result in the imposition of additional environmental regulations. For example, legislation, international protocols, regulation or other restrictions on emissions could increase the costs of projects for our clients or, in some cases, prevent a project from going forward, thereby potentially reducing the need for our services. Furthermore, compliance with these laws and regulations may, from time to time, increase the costs associated with our operations; delay our clients’ projects or operations; or result in liabilities for personal injuries, property damage, discharge of hazardous materials, remediation and clean-up costs, and other environmental damages. In addition, relaxation or repeal of laws and regulations, or changes in governmental policies regarding environmental, defense, infrastructure or other industries we serve could result in a decline in demand for our services, which could in turn negatively impact our revenues. We cannot predict when or whether any of these various proposals may be enacted or what their effect will be on us or on our clients.

Finally, environmental, social, and governance (“ESG”) goals and programs, which typically include extra legal targets related to environmental stewardship, social responsibility, and corporate governance, have become an increasing focus of investors, stockholders and activists across many industries. Access to capital and investors is likely to favor companies with robust ESG programs in place.

To the extent we become subject to legal requirements to calculate ESG metrics and/or conduct ESG reporting in the future or are subject to stakeholder pressure to conduct such activities, our costs of planning, designing, measuring and monitoring, and reporting on our operations could increase and we could be exposed to greater reputational, regulatory, and litigation risk. Further, if we do not adapt to or meet evolving investor or other stakeholder expectations and standards or meet the goals and targets we have set with respect to ESG matters such as climate change, regardless of whether there is a regulatory or legal requirement to do so, we may suffer from an erosion of stakeholder trust, reputational damage and/or material and adverse effects to our business, financial condition and/or stock price.

If we fail to complete a project in a timely manner, miss a required performance standard, or otherwise fail to adequately perform on a project, then we may incur a loss on that project, which may reduce or eliminate our overall profitability.

Our engagements often involve large-scale, complex projects. The quality of our performance on such projects depends in large part upon our ability to manage the relationship with our clients and our ability to effectively manage the project and deploy appropriate resources, including third-party contractors and our own personnel, in a timely manner. We may commit to a client that we will complete a project by a scheduled date. We may also commit that a project, when completed, will achieve specified performance standards. If the project is not completed by the scheduled date or fails to meet required performance standards, we may either incur significant additional costs or be held responsible for the costs incurred by the client to rectify damages due to late completion or failure to achieve the required performance standards. The uncertainty of the timing of a project can present difficulties in planning the amount of personnel needed for the project. If the project is delayed or canceled, we may bear the cost of an underutilized workforce that was dedicated to fulfilling the project. In addition, performance of projects can be affected by a number of factors beyond our control, including:

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unavoidable delays from government inaction;

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public opposition;

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inability to obtain financing;

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weather conditions, including conditions and severe weather events influenced by climate change;

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unavailability of vendor materials;

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changes in the project scope of services requested by our clients;

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industrial accidents;

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environmental hazards; and

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labor disruptions.

To the extent these events occur, the total costs of the project could exceed our estimates, and we could experience reduced profits or, in some cases, incur a loss on a project, which may reduce or eliminate our overall profitability. Further, any defects or errors, or failures to meet our clients’ expectations, could result in claims for damages against us. Failure to meet performance standards or complete performance on a timely basis could also adversely affect our reputation.

The outcome of pending and future claims and litigation could have a material adverse impact on our business, financial condition and results of operations.

We are a party to claims and litigation in the normal course of business. Since we engage in testing, inspection, engineering and other activities for large facilities and projects where design, construction or systems failures can result in substantial injury or death of employees or others or in damage to property, we are exposed to claims and litigation and investigations if there is a failure at any such facility or project. Such claims could relate to, among other things, personal injury, loss of life, business interruption, property damage, pollution and environmental damage and be brought by our clients or third parties, such as those who use or reside near our clients’ projects. We can also be exposed to claims if we agreed that a project will achieve certain performance standards or satisfy certain technical requirements and those standards or requirements are ultimately not met. In many of our contracts with clients, subcontractors and vendors, we agree to retain or assume potential liabilities for damages, penalties, losses and other exposures relating to projects that could result in claims that greatly exceed the anticipated profits relating to those contracts. In addition, while clients and subcontractors may agree to indemnify us against certain liabilities, such third parties may refuse or be unable to pay us if such indemnification obligations arise.

State and other public employee unions may bring litigation that seeks to limit the ability of public agencies to contract with private firms to perform government employee functions in the area of public improvements. Judicial determinations in favor of these unions could affect our ability to compete for contracts and may have an adverse effect on our financial results.

State and other public employee unions have challenged the validity of propositions, legislation, charters, and other government regulations that allow public agencies to contract with private firms to provide services in the fields of engineering, design, and construction of public improvements that might otherwise be provided by public employees. These challenges could have the effect of eliminating or severely restricting the ability of municipalities to hire private firms and otherwise require them to use union employees to perform the services. If a state or other public employee union is successful in its challenge, this may result in additional litigation which could affect our ability to compete for contracts.

Our credit agreements contain a number of restrictive covenants which could limit our ability to finance future operations, acquisitions or capital needs or engage in other business activities that may be in our interest.

In the first quarter of 2021, Atlas Intermediate, as the borrower, entered into two new credit facilities, as described further in Note 6 “Long-Term Debt” within the Consolidated Financial Statements. The credit agreements include a number of customary negative covenants. Such covenants, among other things, limit or restrict the ability of each of Holdings, Atlas Intermediate and all of their direct and indirect subsidiaries to:

	●	incur additional indebtedness and make guarantees;

	●	incur liens on assets;

	●	engage in mergers or consolidations or fundamental changes;

	●	dispose of assets;

	●	pay dividends and distributions or repurchase capital stock;

	●	make investments, loans and advances, including acquisitions;

	●	amend organizational documents and other material contracts;

	●	enter into certain agreements that would restrict the ability to incur liens on assets;

	●	repay certain junior indebtedness and, in the case of the ABL Revolver Agreement, make certain payments on the Term Loans;

	●	enter into certain transactions with affiliates;

	●	amend certain documents governing indebtedness;

	●	enter into sale leaseback transactions;

	●	change fiscal periods; and

	●	change the conduct of its business.

These restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends and distributions, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and/or certain other conditions and (ii) a number of other traditional exceptions that grant the Company continued flexibility to operate and develop its business.

In addition, the credit agreements also require Holdings, Atlas Intermediate and all of their direct and indirect subsidiaries on a consolidated basis to comply with certain financial ratio covenants, including a total net leverage ratio, which is tested on a quarterly basis, and a fixed charge coverage ratio, which is tested on a quarterly basis if our revolving loan balance is greater than $0 or our outstanding letters of credit are $5.0 million or more. Our ability to comply with these ratios may be affected by events beyond our control. These restrictions could limit our ability to plan for or react to market or economic conditions or meet capital needs or otherwise restrict our activities or business plans, and could adversely affect our ability to finance our operations, acquisitions, investments or strategic alliances or other capital needs or to engage in other business activities that would otherwise be in our interest. A breach of any of these covenants or our inability to comply with the required financial ratios could result in a default under our debt instruments. If an event of default occurs, our creditors could elect to declare all borrowings outstanding, together with accrued and unpaid interest, to be immediately due and payable, terminate any existing commitments to lend and foreclose on any of our assets securing their loans. Any such acceleration or termination of commitments could have a material adverse effect on our financial position and ability to conduct our business.

Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under the Credit Agreements (described further in Note 6 “Long-Term Debt” within the Consolidated Financial Statements) bear interest at variable rates, exposing us to interest rate risk. If the interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed would remain the same, and our results of operations and cash flows for servicing our indebtedness would decrease.

Risks Related to Our Common Stock

Our quarterly results may fluctuate significantly, which could have a material negative effect on the price of our Class A common stock.

Our quarterly operating results may fluctuate due to several factors, including:

●

fluctuations in the spending patterns of our clients;

●

the number and significance of projects executed during a quarter;

●

unanticipated changes in contract performance, particularly with contracts that have funding limits;

●

the timing of resolving change orders, requests for equitable adjustments and other contract adjustments;

●

project delays;

●

changes in prices of commodities or other supplies;

●

weather conditions, including conditions and severe weather events influenced by climate change that delay work at project sites;

●

the timing of expenses incurred in connection with acquisitions or other corporate initiatives;

●

natural disasters or other crises;

●

staff levels and utilization rates;

●

changes in prices of services offered by our competitors; and

●

general economic and political conditions.

If our quarterly operating results fluctuate significantly, causing our operating results to fall below the expectations of securities analysts, the price of our Class A common stock may decrease substantially, which could have a material negative impact on our financial condition and results of operations.

We are an “emerging growth company” and are thus able to avail ourselves of reduced disclosure requirements applicable to emerging growth companies, which could make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including not being required to comply with the auditor attestation requirements of Section 404(b) of Sarbanes-Oxley, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, pursuant to Section 107 of the JOBS Act, as an “emerging growth company” we intend to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”) for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.

We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.” We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of our initial public offering; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.

Although we conducted due diligence prior to the Atlas Business Combination, we cannot assure you that this diligence revealed all material issues that may be present in our business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of our control will not later arise. As a result, the Company may be forced to later write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in losses. Even if the due diligence successfully identified certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that the Company reports charges of this nature could contribute to negative market perceptions about the Company or our securities. In addition, charges of this nature may cause the Company to violate net worth or other covenants to which we may be subject. Accordingly, our stockholders could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by our officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation or tender offer materials, as applicable, relating to the Atlas Business Combination contained an actionable material misstatement or material omission.

To the extent that shares of Class A common stock are issued pursuant to the terms of the Holdings LLC Agreement, the number of shares eligible for resale in the public market will increase.

Pursuant to the terms of the Holdings LLC Agreement, the Continuing Members may redeem any or all of the shares of Class B common stock issued to them along with a corresponding number of Holdings Units, for an equal number of shares of Class A common stock.

To the extent that any shares of Class A common stock are issued pursuant to the terms of the Holdings LLC Agreement, there will be an increase in the number of shares of Class A common stock eligible for resale in the public market. Sales of a substantial number of such shares in the public market could adversely affect the market price of our Class A common stock.

If we raise capital in the future by issuing shares of common or preferred stock or other equity or equity-linked securities, convertible debt or other hybrid equity securities, our then existing stockholders may experience dilution, such new securities may have rights senior to those of our common stock, and the market price of our common stock may be adversely affected.

If we raise capital in the future our then existing stockholders may experience dilution. Our third amended and restated certificate of incorporation (our “Charter”) provides that preferred stock may be issued from time to time in one or more series. Our board of directors (“Board”) is authorized to fix the voting rights, if any, designations, powers, preferences, the relative, participating, optional or other special rights and any qualifications, limitations and restrictions thereof, applicable to the shares of each series. Our Board may, without stockholder approval, issue preferred stock with voting and other rights that could adversely affect the voting power and other rights of the holders of the shares of common stock and could have anti-takeover effects. For example, the Board might grant holders of a class or series of our preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. The ability of our Board to issue preferred stock without stockholder approval could have the effect of delaying, deferring or preventing a change of control of us or the removal of existing management. Similarly, the repurchase or redemption rights or liquidation preferences the Board might assign to holders of our preferred stock could affect the residual value of our common stock. The issuance of any such securities may have the impact of adversely affecting the market price of our common stock.

The issuance of additional stock as consideration for acquisitions will dilute existing stockholdings and may have an adverse effect on the market price of our common stock.

In March 2022, we acquired TranSmart and 1 Alliance. The purchase price for the acquisitions included an equity component pursuant to which we issued 872,752 and 355,649 shares of Class A common stock, respectively, to the former owners and certain former employees. The issuance of our Class A common stock as consideration for the acquisitions of TranSmart and 1 Alliance, or any future acquisition, result in dilution of our existing stockholders and may adversely affect the market price of our common stock.

Provisions in our Charter and Delaware law may have the effect of discouraging lawsuits against our directors and officers.

Our Charter requires, unless we consent in writing to the selection of an alternative forum, that (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee to us or our stockholders, (iii) any action asserting a claim against us, our directors, officers or employees arising pursuant to any provision of the DGCL or our Charter or our second amended and restated bylaws, or (iv) any action asserting a claim against us, our directors, officers or employees governed by the internal affairs doctrine may be brought only in the Court of Chancery in the State of Delaware, except any claim (A) as to which the Court of Chancery of the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) any action arising under the Securities Act, as to which the Court of Chancery and the federal district court for the District of Delaware shall have concurrent jurisdiction. If an action is brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.

Notwithstanding the foregoing, our Charter provides that the exclusive forum provision will not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.

Provisions in our Charter may inhibit a takeover of us, which could limit the price investors might be willing to pay in the future for our Class A common stock and could entrench management.

Our Charter contains provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. These provisions include a staggered board of directors and the controlling provisions of the Nomination Agreement we entered into with Bernhard Capital Partners in connection with the Atlas Business Combination (the “Nomination Agreement”)

Holders of our common stock vote together as a single class on all matters presented to our stockholders for their vote or approval, except as otherwise required by applicable law or our Charter. Certain of our stockholders own large portions of the voting power of our common stock and as a result exercise significant influence over the outcome of certain matters requiring stockholder approval, including mergers and other material transactions, the composition of our Board or a change in control of the Company that could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of the Company. The existence of significant stockholders may also have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management, or limiting the ability of our other stockholders to approve transactions that they may deem to be in the best interests of the Company.

So long as a small number of stockholders continues to control a significant amount of our common stock, they will continue to be able to strongly influence all matters requiring stockholder approval, regardless of whether or not other stockholders believe that a potential transaction is in their own best interests. In any of these matters, the interests of such stockholders may differ or conflict with the interests of our other stockholders. In addition, our significant stockholders and their affiliates, as well as members of our Board, may, from time to time, acquire interests in businesses that directly or indirectly compete with our business, as well as businesses that are significant existing or potential customers. Moreover, this concentration of stock ownership may also adversely affect the trading price of our common stock to the extent investors perceive a disadvantage in owning stock of a company with a concentrated stock ownership.

The market price of our common stock may be affected by low trading volume.

Although a trading market for our Class A common stock exists on the NASDAQ, the trading volume has not been significant, due in part to a substantial number of our outstanding shares of our common stock either being held by a single stockholder or subject to contractual lock-ups and other legal restrictions. Additionally, a portion of our common stock is currently made up of Class B common stock, which is not listed on a public exchange but is exchangeable (along with Holdings Units) for shares of Class A common stock. When trading volume is low, significant price movement can be caused by the trading in a relatively small number of shares. Low volume can also reduce liquidity, which could adversely affect the market price of our shares of common stock.

If securities or industry analysts adversely change their recommendations regarding our Class A common stock or if our operating results do not meet their expectations, our stock price could decline.

The trading market for our Class A common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of the Company or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover the Company downgrades our Class A common stock, or if our operating results do not meet their expectations, our stock price could decline.

There can be no assurance that we will be able to comply with the continued listing standards of NASDAQ.

Our continued eligibility for listing on NASDAQ depends on a number of factors. If NASDAQ delists the Class A common stock from trading on its exchange for failure to meet the listing standards, we and our stockholders could face significant material adverse consequences including:

●

a limited availability of market quotations for our securities;

●

a determination that our Class A common stock is a “penny stock,” which will require brokers trading in our Class A common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our Class A common stock;

●

a limited amount of analyst coverage; and

●

a decreased ability to issue additional securities or obtain additional financing in the future.

We are a holding company, and we depend on the ability of our subsidiaries to distribute funds to us in order to satisfy certain of our financial obligations and to make dividend payments.

We are a holding company and our subsidiaries conduct all of our operations and own all of our operating assets. We have no significant assets other than the equity interests in our subsidiaries. As a result, our ability to satisfy our financial obligations and to make dividend payments in the future depends on our subsidiaries and their ability to distribute funds to us. If we are unable to obtain funds from our subsidiaries, we may be unable to satisfy certain of our financial obligations or our board of directors may exercise its discretion not to declare or pay dividends. We do not intend to obtain funds from other sources to pay dividends.

In addition, the declaration and payment of dividends, if any, will always be subject to the discretion of the board of directors, and restrictions contained in our existing debt agreements. The timing and amount of any dividends declared will depend on, among other things, the Company’s earnings, financial condition and cash requirements and availability, the ability to obtain debt and equity financing on acceptable terms, the terms of its outstanding indebtedness and the ability of the Company’s subsidiaries to distribute funds to it.

General Risk Factors

Negative conditions in the credit and financial markets and delays in receiving client payments could result in liquidity problems, increasing our cost of borrowing and adversely affecting our business.

Although we finance much of our operations using cash provided by operations, at times we depend on the availability of credit to grow our business and help fund acquisitions. Instability in the credit markets in the U.S. or abroad could cause credit to be relatively difficult or expensive to obtain at competitive rates, on commercially reasonable terms or in sufficient amounts. This situation could make it more difficult or more expensive for us to access funds, refinance our existing indebtedness, enter into agreements for new indebtedness or obtain funding through the issuance of securities, or such additional capital may not be available on terms acceptable to us or at all. We may also enter into business acquisition agreements that require us to access credit, which if not available at the closing of the acquisition could result in a breach of the acquisition agreement and a resulting claim for damages by the sellers of such business. In addition, market conditions could negatively impact our clients’ ability to fund their projects and, therefore, utilize our services, which could have a material adverse impact on our business, financial condition and results of operations.

Some of our customers, suppliers and subcontractors depend on access to commercial financing and capital markets to fund their operations. Disruptions in the credit or capital markets could adversely affect our clients’ ability to finance projects and could result in contract cancellations or suspensions, project delays and payment delays or defaults by our clients. In addition, clients may be unable to fund new projects, may choose to make fewer capital expenditures or otherwise slow their spending on our services or to seek contract terms more favorable to them. Our government clients may face budget deficits that prohibit them from funding proposed and existing projects or that cause them to exercise their right to terminate our contracts with little or no prior notice. In addition, any financial difficulties suffered by our subcontractors or suppliers could increase our cost or adversely impact project schedules. These disruptions could materially negatively impact our backlog and have a material adverse impact on our business, financial condition and results of operations.

Cybersecurity breaches of our systems and information technology could adversely impact our ability to operate.

We need to protect our own and our clients’ internal trade secrets and other confidential business information from disclosure. We face the threat to our computer systems of unauthorized access, computer hackers, computer viruses, malicious code, organized cyberattacks and other security problems and system disruptions, including possible unauthorized access to our and our clients’ proprietary, classified or confidential information. We rely on industry-accepted security measures and technology to securely maintain all confidential and proprietary information on our information systems. We have devoted and will continue to devote significant resources to the security of our computer systems, but they are still vulnerable to these threats. A user who circumvents security measures can misappropriate confidential or proprietary information, including information regarding us, our personnel and/or our clients, or cause interruptions or malfunctions in operations. As a result, we can be required to expend significant resources to protect against the threat of these system disruptions and security breaches or to alleviate problems caused by these disruptions and breaches. There has been an overall increase in the frequency and sophistication of the cyber and security threats we face, with attacks ranging from those common to businesses generally to those that are more advanced and persistent, which may target us because we hold sensitive information. As a result, we and our vendors face a heightened risk of a security breach or disruption resulting from an attack by computer hackers, foreign governments, and cyber terrorists. While we put in place policies, controls and technologies to help detect and protect against such attacks, we cannot guarantee that future incidents will not occur, and if an incident does occur, we may not be able to successfully mitigate the impact. We have been the target of these types of attacks in the past and future attacks are likely to occur. If successful, these types of attacks on our network or other systems or service failures could have a material adverse effect on our business, financial condition and results of operations, due to, among other things, the loss of client or proprietary data, interruptions or delays in our clients’ businesses and damage to our reputation. In addition, the failure or disruption of our systems, communications, vendors, or utilities could cause us to interrupt or suspend our operations, which could have a material adverse effect on our business, financial condition and results of operations. In addition, if our employees inadvertently do not adhere to appropriate information security protocols, our protocols are inadequate, or our employees intentionally avoid these protocols, our or our clients’ sensitive information may be released, thereby causing significant negative impacts to our reputation and exposing us or our clients to liability. Any of these events can damage our reputation and have a material adverse effect on our business, financial condition, results of operations and cash flows.

We rely on third-party internal and outsourced software to run our critical accounting, project management and financial information systems. As a result, any sudden loss, disruption or unexpected costs to maintain these systems could significantly increase our operational expense and disrupt the management of our business operations.

We rely on third-party software to run our critical accounting, project management and financial information systems. We also depend on our software vendors to provide long-term software maintenance support for our information systems. Software vendors may decide to discontinue further development, integration or long-term software maintenance support for our information systems, in which case we may need to abandon one or more of our current information systems and migrate some or all of our accounting, project management and financial information to other systems, thus increasing our operational expense as well as disrupting the management of our business operations.

Changes in tax laws could increase our tax rate and materially affect our results of operations.

We are subject to tax laws in the U.S. It is not currently known what changes Congress, working with the President, may make to existing tax laws and how those changes (if any) will affect the economy, our business, results of operations, financial condition and cash flows. These and other changes in tax laws and regulations could increase our effective tax rate and harm our results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our principal executive office, which is leased, is located at 13215 Bee Cave Parkway, Building B, Suite 230, Austin, Texas 78738. We do not own any significant real property. We currently operate out of approximately 126 leased locations. Our lease terms vary from month-to-month to multi-year commitments. We do not consider any of these leased properties to be materially important to our overall operations.

ITEM 3. LEGAL PROCEEDINGS

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our Class A common stock is listed on the Nasdaq under the symbol “ATCX.”. On March 13, 2023, the closing price per share of our Common Stock as reported on the Nasdaq was $12.12.

Holders of Record

As of March 13, 2023, there were approximately 44 holders of record of our Class A common stock and 56 holders of record of our Class B common stock.

Dividends

We have not paid any cash or stock dividends on our Class A common stock to date. The payment of dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition. The payment of any dividends will be within the discretion of the Board at such time and the Board is not currently contemplating and does not anticipate declaring stock dividends in the foreseeable future. Further, under the terms of our debt agreements, our ability to declare dividends is restricted.

Unregistered Sales of Equity Securities

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Neither we, nor any affiliated purchaser, purchased any of our equity securities during the quarter ended December 30, 2022.

ITEM 6. [reserved]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our audited financial statements and accompanying notes included herein. This discussion contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Annual Report on Form 10-K other than statements of historical fact, including statements regarding our future operating results or financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors. Factors that could cause or contribute to such differences include, but are not limited to, economic and competitive conditions, regulatory changes and other uncertainties, as well as those factors included in this Annual Report on Form 10-K, all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We assume no obligation to update any of these forward-looking statements.

For purposes of this section, “we,” “us,” “our,” the “Company” and “Atlas” refers to Atlas Technical Consultants, Inc. (formerly named Boxwood Merger Corp.) and its subsidiaries. The Atlas Business Combination (as defined below) was accounted for as a reverse recapitalization where the Company was the legal acquirer but treated as the accounting acquiree. All references to operations prior to the Atlas Business Combination reflect the results of Atlas Intermediate Holdings LLC, a Delaware limited liability company (“Atlas Intermediate”) and its subsidiaries. Since Atlas Intermediate was determined to be the accounting acquirer, the information included below will include the results of Atlas Intermediate and its subsidiaries through the Atlas Business Combination and will include the Company, including Atlas Intermediate, for transactions occurring after the Atlas Business Combination.

This section of this Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021. Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

OVERVIEW

Atlas Technical Consultants, Inc. (the “Company”, “We”, or “Atlas” and formerly named Boxwood Merger Corp. (“Boxwood”)) was a blank check company, incorporated in Delaware on June 28, 2017. The Company was formed for the purpose of acquiring, through a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, recapitalization, or other similar business transaction, one or more operating businesses or assets.

On February 14, 2020 (the “Closing Date”), the Company consummated its acquisition of Atlas Intermediate pursuant to the Unit Purchase Agreement, dated as of August 12, 2019, as amended on January 22, 2020 (the “Purchase Agreement”), by and among the Company, Atlas TC Holdings LLC, a wholly-owned subsidiary of the Company and a Delaware limited liability company (“Holdings”), Atlas TC Buyer LLC, a wholly-owned subsidiary of Holdings and a Delaware limited liability company, Atlas Intermediate and Atlas Technical Consultants Holdings LP, a Delaware limited partnership (the “Seller”). The acquisition of Atlas Intermediate pursuant to the Purchase Agreement together with the other transactions contemplated by the Purchase Agreement is referred to herein as the “Atlas Business Combination.”

Following the consummation of the Atlas Business Combination, we are organized in an “Up-C” structure in which the business of Atlas Intermediate and its subsidiaries is held by Holdings and continues to operate through the subsidiaries of Atlas Intermediate, and in which our only direct assets consist of common units of Holdings (the “Holdings Units”). We are the sole manager of Holdings in accordance with the terms of the Amended and Restated Limited Liability Company Agreement of Holdings entered into in connection with the consummation of the Atlas Business Combination.

We provide a broad range of mission-critical technical services, ranging from providing inspection services in small projects to managing significant aspects of large, multi-year projects. For the year ended December 30, 2022, we:

●

performed approximately 40,500 projects; and

●

delivered approximately 90% of our revenue under “time & materials” and “cost-plus” contracts.

Recent Accounting Pronouncements

See Note 2 “Summary of Significant Accounting Policies,” to the Consolidated Financial Statements for a description of the recent accounting pronouncements.

HOW WE EVALUATE OUR OPERATIONS

We use a variety of financial and other information in monitoring the financial condition and operating performance of our business. Some of this information is financial information that is prepared in accordance with generally accepted accounting principles (“GAAP”), while other information may be financial in nature and may not be prepared in accordance with GAAP. Historical information is periodically compared to budgets, as well as against industry-wide information. We use this information for planning and monitoring our business, as well as in determining management and employee compensation.

We evaluate our overall business performance based primarily on a combination of four financial metrics: revenue, backlog, adjusted EBITDA and liquidity measures. These are key measures used by our management team and Board to understand and evaluate our operational performance, to establish budgets and to develop short and long-term operational goals.

Revenue

Revenues for services are derived from billings under contracts (which are typically of short duration) that provide for specific time, material and equipment charges, or lump sum payments and are reported net of any taxes collected from customers. We recognize revenue as it is earned at estimated collectible amounts.

Revenue is recognized as services are performed and amounts are earned in accordance with the terms of a contract. We generally contract for services to customers based on either hourly rates or a fixed fee. In such contracts, our efforts, measured by time incurred, typically are provided in less than a year and represent the contractual milestones or output measure, which is the contractual earnings pattern. For contracts with fixed fees, we recognize revenues as amounts become billable in accordance with contract terms, provided the billable amounts are consistent with the services delivered and are earned. Expenses associated with performance of work may be reimbursed with a markup depending on contractual terms. Revenues include the markup, if any, earned on reimbursable expenses. Reimbursements include billings for travel and other out-of-pocket expenses and third-party costs, such as equipment rentals, materials, subcontractor costs and outside laboratories, which is included in cost of revenues in the accompanying combined statement of income.

Backlog

We define backlog to include the total estimated future revenue streams associated with fully executed contracts as well as an estimate of highly probable revenues from recurring, task order-based contracts.

We use backlog to evaluate Company revenue growth as it typically follows growth in backlog. As backlog is not a defined accounting term, our computation of backlog may not be comparable with that of our peers.

Adjusted EBITDA

We view adjusted EBITDA, which is a non-GAAP financial measure, as an important indicator of performance. We define adjusted EBITDA as net income before interest expense, income taxes, depreciation and amortization and adjustments for certain one- time or non-recurring items adjustments. For more information on adjusted EBITDA, as well as a reconciliation to the most directly comparable GAAP measure, please see “—Non-GAAP Financial Measures” below.

COMPONENTS AND FACTORS AFFECTING OUR OPERATING RESULTS

Revenue

We generate revenue primarily by providing infrastructure-based testing, inspection, certification, engineering, and compliance services to a wide range of public- and private-sector clients. Our revenue consists of both services provided by our employees and pass-through fees from subcontractors and other direct costs.

Subcontractor Costs and Other Costs of Revenues

Total costs of revenues reflects subcontractor costs, the cost of personnel and specifically identifiable costs associated with revenue, and other direct costs.

Operating Expense

Total operating expense includes corporate expenses, including personnel, occupancy, and administrative expenses, including depreciation and amortization and changes in fair value of contingent consideration.

Interest Expense

Interest expense consists of contractual interest expense on outstanding debt obligations including amortization of deferred financing costs and other related financing expenses.

Income Tax Expense

Following the consummation of the Atlas Business Combination, we are organized in an “Up-C” structure in which the business of Atlas Intermediate and its subsidiaries is held by Holdings and will continue to operate through the subsidiaries of Atlas Intermediate, and in which our only direct assets consist of common units of Holdings. We are the sole manager of Holdings in accordance with the terms of the Holdings LLC Agreement entered into in connection with the consummation of the Atlas Business Combination.

Previously, Atlas Intermediate was treated as a partnership for federal and state income tax purposes with all income tax liabilities and/or benefits of the Company being passed through to the partners and members. As such, no recognition of federal or state income taxes have been provided for in the accompanying consolidated financial statements with the exception of income taxes relating to the C-Corp subsidiaries directly owned by Atlas Intermediate and the State of Texas Margin tax.

Subsequent to the Atlas Business Combination, income taxes relating to the C-Corps owned directly by Atlas Intermediate and the State of Texas Margin tax are considered within the provision of non-controlling interest as it is generated through the results of Atlas Intermediate and its subsidiaries.

Net Income (loss)

Net income from continuing operations reflects our operating income after taking into account costs and expenses for a given period, while excluding any gain or loss from discontinued operations.

Provision for Non-controlling Interest

Our ownership and voting structure are comprised of holders of our Class A common stock that participate 100% in the results of Atlas Technical Consultants, Inc. and 96.6% in Atlas Intermediate and its subsidiaries and holders of our Class B common stock that participate in the results of Atlas Intermediate and its subsidiaries until their Class B common stock is converted to Class A common stock. In connection with the Atlas Business Combination, it was determined that the results of Atlas Intermediate and its subsidiaries would be fully consolidated within the results of the Company.

Due to the participation of the holders of our Class B common stock in the results of Atlas Intermediate and subsidiaries, a non-controlling interest was deemed to exist. Consolidated net income (loss) includes earnings attributable to both the stockholders and the non-controlling interests.

The provision for non-controlling interest relates to pre-tax income subsequent to the Atlas Business Combination and includes a pro-rata share of taxes as federal and state income taxes relating to the C-Corps directly owned by Atlas Intermediate and the State of Texas Margin tax as it is generated through the results of Atlas Intermediate and its subsidiaries.

Upon the close of the Atlas Business Combination, the holders of our Class B common stock participated in 80.6% of the results of Atlas Intermediate and its subsidiaries. This percentage has declined since the Atlas Business Combination due to the exchange of Atlas Intermediate units, together with Class B common shares, for Class A common stock as contractual lock-ups have expired and the exchange of our public and private placement warrants for Class A common stock during November and December 2020 because of our tender offer and warrant exchange.

Redeemable Preferred Stock Dividends

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 (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.

On February 25, 2021, the Company, in its capacity as the managing member of Holdings, entered into Amendment No. 1 to the Holdings LLC Agreement to allow Holdings, at the direction of the Board, to redeem all of the Preferred Units at any time using the proceeds from the refinancing of the Atlas Credit Agreement (as defined below) and entry into the Credit Agreements (as defined below).

On February 25, 2021, following the execution of Amendment No. 1 to the Holdings LLC Agreement, Holdings elected to redeem all of the 145,000 Preferred Units then outstanding and held by GSO AIV-2 for $1,084.96 per Preferred Unit for a total redemption price of $157.4 million which included dividends accrued for as of December 31, 2020 (the “Redemption”). Following the Redemption, (i) the Preferred Units are no longer deemed outstanding, (ii) all dividends on the Preferred Units ceased to accrue, and (iii) all rights of the holders thereof as holders of Preferred Units ceased and terminated, except for the right to receive payment under the Redemption.

Net Income (loss) Attributable to Class A Common Stock (Previously Members)

Net income (loss) attribution to holders of our Class A common stock represents our results after the provision for non-controlling interest, the effect of all taxes under the Up-C structure for the period subsequent to the Atlas Business Combination, and dividends due on redeemable preferred stock.

Net income (loss) for the historical results of Atlas Intermediate prior to the Atlas Business Combination are also reported within this line item.

RESULTS OF OPERATIONS

Overview of Financial Results

During the year ended December 30, 2022, we continued to execute on our growth strategy increasing revenues by 12% compared to the year ended December 31, 2021. Organic growth was 7% as we capitalize on strong market demand for infrastructure and environmental professional services, continue to win larger projects and benefit from our expanded service capabilities with two new acquisitions in 2022. We also maintained our gross margins rates compared to the prior year. As the Company grows, we continue to see economies of scale with our efficient overhead structure which has resulted in significantly higher operating income compared to the prior year.

We are focusing on providing infrastructure and environmental professional services without undertaking direct construction risk. Our environmental technical expertise continues to position us to assist our clients in addressing their ongoing Environmental, Social and Governance (“ESG”) objectives and maintaining compliance with local laws and regulations.

Backlog has grown to a record $877 million driven by key transportation, government and power contracts.

Merger Agreement

On January 30, 2023, the Company entered into the Merger Agreement with Parent and the Merger Sub. Pursuant to the Merger Agreement, Merger Sub will be merged with and into the Company, with the Company continuing as the surviving company in the Merger. Parent and Merger Sub are controlled by investment funds advised by GI Partners.

Solicitation

From and after January 30, 2023, the Company must comply with customary non-solicitation restrictions, except that the Company may engage in discussions, negotiations and other otherwise prohibited activities with any party from which the Company receives an unsolicited competing acquisition proposal that the Board determines constitutes, or would reasonably likely lead to, a Superior Proposal (as defined in the Merger Agreement) and if the failure to take such action would reasonably be expected to be inconsistent with the directors’ fiduciary duties.

Subject to certain exceptions, the Board is required to recommend that the Company’s stockholders adopt the Merger Agreement and may not withhold, withdraw, amend, qualify or modify in a manner adverse to Parent such recommendation or take certain similar actions that are referred to in the Merger Agreement as a “Company Board Recommendation Change”. However, the Board may, before the adoption of the Merger Agreement by the Company’s stockholders, make a Company Board Recommendation Change in connection with a Superior Proposal or Intervening Event (as defined in the Merger Agreement) if the Company complies with certain notice and other requirements set forth in the Merger Agreement. Upon closing, the Company will no longer be a publicly traded company.

Financing

Funds advised by GI Partners each committed to provide capital to Parent with an equity contribution of $1,068,000,000, subject to the terms and conditions set forth in the equity commitment letter, and have each agreed to fund certain other obligations of Parent and Merger Sub in connection with the Merger, including payment of a termination fee of $45,750,000 from Parent, subject to the terms and conditions set forth in that certain limited guarantee agreement in favor of the Company. The net proceeds contemplated by the equity commitment letter will in the aggregate be sufficient for Parent and Merger Sub to pay the aggregate Per Share Price, the equity award consideration and any other amount (including fees or expenses) required to be paid by Parent or Merger Sub in connection with the consummation of the Merger and the transactions contemplated by the Merger Agreement.

Consolidated Results of Operations

The following table represents our selected results of operations for the periods indicated (in thousands, except per share data).

	For the Year Ended
	December 30,			December 31,
	2022			2021
Revenues	$	604,765		$	538,799
Subcontractor costs		(127,691	)		(102,035	)
Other costs of revenues		(198,332	)		(181,967	)

Gross Profit		278,742			254,797

Operating expenses:
Personnel costs and benefits		(137,130	)		(128,612	)
Selling, general and administrative		(70,912	)		(72,026	)
Change in fair value of earnouts		1,518			(2,823	)
Depreciation and amortization		(32,177	)		(23,700	)

Total Operating expenses		(238,701	)		(227,161	)

Operating income (loss)		40,041			27,636

Interest expense		(46,363	)		(54,817	)

Loss before income taxes		(6,322	)		(27,181	)
Income tax expense		(1,748	)		(2,524	)

Net loss		(8,070	)		(29,705	)

Provision for non-controlling interest		565			13,216

Redeemable preferred stock dividends		-			(5,899	)

Net loss attributable to Class A common stock shareholders/members	$	(7,505	)	$	(22,388	)

(Loss) Per Class A common share	$	(0.21	)	$	(0.81	)

Weighted average of shares outstanding:
Class A common shares (basic and diluted)		36,308,926			27,799,511

Comparison of the Year Ended December 30, 2022 to the Year Ended December 31, 2021:

Revenue

Revenue for the year ended December 30, 2022 increased by $66.0 million, or 12.2%, to $604.8 million as compared to $538.8 million for the corresponding prior year period. The acquisitions of TranSmart and 1 Alliance contributed $27.0 million to the Company’s revenues for the year ended December 30, 2022. Additionally, we have experienced growth in revenues in transportation projects as we expand our services across new geographies and expand our range of services to existing customers and have been successful in updating and increasing our pricing with customers to mitigate greater U.S. labor issues.

Subcontractor Costs

Subcontractor costs for the year ended December 30, 2022 increased $25.7 million, or 25.1%, to $127.7 million, as compared to $102.0 million for the corresponding prior year period. The increase is due to the increase in revenues and the timing of work where subcontractor costs are required. During the year ended December 30, 2022, there was an increase in the percentage of subcontractor costs compared to revenues from 18.9% in the prior year to 21.1% in the current year. This percentage varies from period to period based on the timing of large projects that require higher percentage subcontractor use but has historically been 20% over a number of periods.

Other Costs of Revenues and Gross Profit

Other costs of revenue for the year ended December 30, 2022 increased $16.4 million, or 9.0%, to $198.3 million, as compared to $182.0 million for the corresponding prior year period. The increase in other cost of revenues was due to the increase in revenues and was consistent as a percentage of revenues for each year. The company has been able to achieve consistent gross margins with a significant amount of work done on a cost reimbursable basis along with other projects where pricing increases have been achieved.

Operating Expense

Operating expense for the year ended December 30, 2022 increased by $11.5 million, or 5.1%, to $238.7 million as compared to $227.2 million for the corresponding prior year period. For the year ended December 30, 2022, operating expense, as a percentage of revenue, decreased to 39.5% from 42.2% for the year ended December 31, 2021 as the Company has been able to scale the business and manage costs. Depreciation and amortization expense increased due to the additional intangible assets recorded in connection with the acquisitions completed since December 31, 2021.

Interest Expense

Interest expense for the year ended December 30, 2022 decreased by $8.5 million, or -15.4%, to $46.4 million, as compared to $54.8 million for the corresponding prior year period. The prior year period included a write-off of deferred financing costs of $15.2 million in connection with the Atlas 2021 Credit Agreement, which were completed in 2021. Excluding this from the prior period results in interest expense increasing $6.7 million from the additional debt related to the costs of the acquisitions completed since December 31, 2021 as well as an approximate 2% increase in the average borrowing rate as the Company’s debt is partly based on LIBOR rates which have increased over the prior period.

Income Tax Expense

Income tax expense for the year ended December 30, 2022 was $1.7 million, compared to income tax expense of $2.5 million for the year ended December 31, 2021. The Company’s overall effective tax rate is low as the Company is in a loss position and does not have prior year income taxes to apply the losses to and recover prior taxes.

Provision for Non-controlling Interest

The provision for non-controlling interest for the year ended December 30, 2022 decreased by $12.6 million or -95.7% to $0.6 million from $13.2 million for the corresponding period as a function of the level of participation of the non-controlling interests which was 5.9% in the current period compared to 22.7% in the prior period.

Redeemable Preferred Stock Dividends

We redeemed the Preferred Units in February 2021 and therefore had no redeemable preferred stock dividends for the year ended December 30, 2022. Redeemable preferred stock dividends for the year ended December 31, 2021 were $5.9 million.

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA

We view adjusted EBITDA, which is a non-GAAP financial measure, as an important indicator of performance. We define adjusted EBITDA as net income before interest expense, provision for income taxes, depreciation, and amortization, further adjusted to reflect non-cash equity compensation as well as certain one-time or non-recurring items.

We believe adjusted EBITDA is a useful performance measure because it allows for an effective evaluation of our operating performance when compared to our peers, without regard to our financing methods or capital structure. We exclude the items listed above from net income in arriving at adjusted EBITDA because these amounts are either non-recurring or can vary substantially within the industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net income determined in accordance with GAAP. Certain items excluded from adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are reflected in adjusted EBITDA. Our presentation of adjusted EBITDA should not be construed as an indication that results will be unaffected by the items excluded from adjusted EBITDA. Our computations of adjusted EBITDA may not be identical to other similarly titled measures of other companies.

The following table presents reconciliations of adjusted EBITDA to net income, our most directly comparable financial measure calculated and presented in accordance with GAAP.

	For the Year Ended
	December 30,			December 31,
	2022			2021
	(in millions)
Net (loss) income	$	(8.1	)	$	(29.7	)
Interest⁽¹⁾		46.4			54.8
Taxes		1.7			2.5
Depreciation and amortization		33.0			23.7
EBITDA		73.0			51.3

One time legal/transaction costs and other non-recurring charges⁽²⁾		4.2			10.3
Non-cash change in fair value of contingent consideration		1.5			5.8
Non-cash equity compensation⁽³⁾		8.5			5.8
Adjusted EBITDA	$	87.2		$	73.2

(1)	Includes $15.2 million of write-offs relating to deferred financing fees for the year ended December 31, 2021.

(2)

Includes costs associated with lease accruals related to moving to a hybrid workforce, employee separation charges, professional service-related fees such as legal, accounting, tax, valuation and other consulting as well as other M&A activity. Additionally, it includes costs related to the COVID-19 pandemic and other non-recurring expenses.

(3)	Includes the amortization of unvested restricted share units, performance share units and stock options granted in 2020, 2021 and 2022 to key management personnel and our compensation to our Board of Directors.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity and capital resources are our cash and cash equivalents balances, cash flow from operations, borrowings under the Credit Agreements (as defined below), and access to financial markets. Our principal uses of cash are operating expenses, working capital requirements, capital expenditures, repayment of debt and acquisition expenditures. We believe our sources of liquidity, including cash flow from operations, existing cash and cash equivalents and borrowing capacity under the Credit Agreements will be sufficient to meet projected cash requirements for at least the next twelve months.

As of December 30, 2022, we had total liquidity of $52.8 million compared to liquidity of $50.7 million as of December 31, 2021.

The Company has experienced increased working capital outflows relating to the increase in interest charges and from overall growth in operations.

On June 6, 2022, we entered into an interest rate cap as described in “Note 6 — Long-Term Debt” to the consolidated financial statements to hedge against the risk of Adjusted LIBOR exceeding 3%.

On August 4, 2022, we entered into an agreement to amend the ABL Revolver Agreement to increase the revolving credit facility to $60.0 million as described in “Note 6 — Long-Term Debt” to the consolidated financial statements.

Cash Flows

The following table sets forth our cash flows for the periods indicated.

	For the Year Ended
	December 30,			December 31,
	2022			2021
	(in thousands)
Net cash provided by operating activities	$	2,198		$	29,104
Net cash used in investing activities		(38,120	)		(36,547	)
Net cash provided by financing activities		31,024			4,078
Net decrease in cash and cash equivalents	$	(4,898	)	$	(3,365	)

Comparison of the Year Ended December 30, 2022 to the Year Ended December 31, 2021

Cash and Cash Equivalents.

At December 30, 2022 and December 31, 2021, we had $5.8 million and $10.7 million of cash and cash equivalents, respectively.

Operating Activities

Cash flow from operating activities is primarily generated from operating income from our professional and technical testing, inspection, engineering and consulting services.

Net cash provided by operating activities was $2.2 million for the year ended December 30, 2022, compared to $29.1 million for the year ended December 31, 2021. The decrease of $26.9 million was primarily due to higher interest expense and a higher use of cash related to working capital.

Investing Activities

Net cash used in investing activities was ($38.1) million for the year ended December 30, 2022, compared to ($36.5) million for the year ended December 31, 2021. The usage of cash was related to our acquisitions of TranSmart and 1 Alliance in March 2022 and other capital expenditures. The prior year period included the cash cost of the AEL and O’Neill acquisitions which were slightly higher cash outflows compared to the current period acquisitions.

Financing Activities

Net cash provided by financing activities was $31.0 million for the year ended December 30, 2022, compared to $4.1 million provided by during the year ended December 31, 2021. The $26.9 million increase to net cash provided by financing activities was due to borrowings on the Term Loan and Line of Credit to fund the 2022 acquisitions described above and to fund operations.

Working Capital

Working capital, or current assets less current liabilities, increased by $20.9 million, or 25.6%, to $102.2 million at December 30, 2022 from $81.3 million at December 31, 2021. This increase was due primarily to the acquisitions in 2022.

Debt Arrangements

On February 25, 2021, Atlas Intermediate, as the borrower, entered into two new credit facilities consisting of (i) a $432.0 million senior secured term loan at closing and, subject to the satisfaction of certain terms and conditions, a committed delayed draw term loan facility to be used for future acquisitions, within 18 months of February 25, 2021 and subject to certain conditions, in an aggregate principal amount of up to $75.0 million, of which $61 million was used (no remaining amounts are available as the 18 month period has expired), and an uncommitted incremental term loan facility that may be incurred after closing (the “Term Loan”) pursuant to a Credit Agreement dated February 25, 2021, by and among Holdings, Atlas Intermediate, Wilmington Trust, National Association, as administrative agent and collateral agent, and certain lenders thereto, including certain Blackstone entities, which may include, Blackstone Alternative Credit Advisors LP, and its managed funds and accounts, and its affiliates, Blackstone Holdings Finance Co. L.L.C. and its affiliates, and/or certain other of their respective funds, accounts, clients managed, advised or sub-advised, or any of their respective affiliates (the “Term Loan Agreement”) and (ii) a $40.0 million senior secured revolver which aggregate principal amount may be increased, subject to the satisfaction of certain terms and conditions, including obtaining commitments therefor, by up to $20.0 million (the “Revolver”) pursuant to the Credit Agreement dated February 25, 2021, by and among Holdings, Intermediate, JPMorgan Chase Bank, N.A., as administrative agent, swingline lender, issuing bank, lender, sole bookrunner and sole lead arranger (the “ABL Revolver Agreement,” and together with the Term Loan Agreement, collectively the “Credit Agreements”). The Term Loan Agreement refinances the Credit Agreement dated as of February 14, 2020, with Macquarie Capital Funding LLC, as administrative agent and certain lenders (“Atlas Credit Agreement”), which repayment was effectuated partially in cash and partially by way of a cashless exchange of existing term loans and preferred equity for Term Loans.

The Term Loan Agreement and ABL Revolver Agreement are collectively referred to as the “Credit Agreements” by the Company.

The initial Term Loan will mature on February 25, 2028 and the Revolver will mature on February 25, 2026.

On August 4, 2022, Holdings, Intermediate, certain subsidiaries of Holdings (collectively with Holdings and Intermediate, the “Loan Parties”) and the Administrative Agent (as defined below) entered into the First Amendment to Credit Agreement (the “Credit Agreement Amendment”), which amends that certain Credit Agreement, dated as of February 25, 2021 by and among the Loan Parties and JPMorgan Chase Bank, N.A., as administrative agent, swingline lender, issuing bank, lender, sole bookrunner and sole lead arranger (the “Administrative Agent”). The Credit Agreement Amendment amended the Credit Agreement to, among other matters, increase the revolving credit facility thereunder by $20.0 million to an aggregate principal amount of $60.0 million.

Interest on any outstanding borrowings is payable monthly under the ABL Revolver Agreement, quarterly under the Term Loan Agreement or, in each case, at the end of the applicable interest period in arrears. The cash interest rates under the Term Loan Agreement will be equal to either (i) the Adjusted LIBO Rate (as defined in the Term Loan Agreement), plus 5.50%, or (ii) an Alternate Base Rate (as defined in the Term Loan Agreement), plus 4.50%. In addition, the term loan requires an additional 2.0% interest that can be made at the option of the Company in cash or payment-in-kind (PIK). The interest rates under the ABL Revolver Agreement will be equal to either (i) the Adjusted LIBO Rate (as defined in the ABL Revolver Agreement), plus 2.50%, or (ii) the ABR (as defined in the ABL Revolver Agreement), plus 1.50%.

The Credit Agreements are guaranteed by Holdings and secured by (i) in the case of the ABL Revolver Agreement, a first priority security interest in the current assets, including accounts receivable, of Holdings, Intermediate and its subsidiaries and (ii) in the case of the Term Loan Agreement, a pledge of the equity interests of the subsidiaries of Holdings and Intermediate, and subject to the first lien security interest on current assets under the Revolver, a first priority lien on substantially all other assets of Holdings, Intermediate and all of their direct and indirect subsidiaries.

The Term Loan Agreement contains a financial covenant which requires Holdings, Atlas Intermediate and all of their direct and indirect subsidiaries on a consolidated basis to maintain a Total Net Leverage Ratio (as defined in each of the Credit Agreements) tested on a quarterly basis that does not exceed (i) 8.25 to 1.00 with respect to the fiscal quarters ending on April 2, 2021 and July 2, 2021, (ii) 8.00 to 1.00 for the fiscal quarters ending October 1, 2021 and December 31, 2021, (iii) 7.50 to 1.00 for the fiscal quarters ending April 1, 2022 and July 1, 2022, (iv) 7.25 to 1.00 for the fiscal quarters ending September 30, 2022 and December 30, 2022, (v) 7.00 to 1.00 for the fiscal quarters ending March 31, 2023 and June 30, 2023, (vi) 6.75 to 1.00 for the fiscal quarters ending September 29, 2023 and December 29, 2023, and (vii) 6.50 to 1.00 for March 29, 2024 and each fiscal quarter ending thereafter.

The ABL Revolver Agreement contains a “springing” financial covenant which requires Holdings, Intermediate and all their direct and indirect subsidiaries on a consolidated basis to maintain a Fixed Charge Coverage Ratio (as defined in the ABL Revolver Agreement) of no less than 1.10 to 1.00 when the outstanding principal amount of loans under the Revolver exceeds $0 or the aggregate exposure for letters of credit under the Revolver exceeds $5.0 million.

The Company has been in compliance with the terms of the Credit Agreements as of December 30, 2022 and December 31, 2021, respectively.

Our debt balances are summarized as follows:

	December 30, 2022			December 31, 2021
	(in thousands)
Credit Agreements	$	511,218		$	473,392
Less: Loan costs, net		(6,951	)		(7,593	)
Less current maturities of long-term debt		(4,930	)		(3,606	)
Long-term debt	$	499,337		$	462,193

The following table presents, in thousands, scheduled maturities of the Company’s debt as of December 30, 2022:

2023	$	4,930
2024		4,930
2025		4,930
2026		4,930
2027		4,930
Thereafter		486,568
	$	511,218

The Credit Agreements require annual amortization of principal amounts of 1% or 2.5% depending on certain ratios. The Company is currently within the ratio that requires 1% annual amortization. Principal repayments commenced during the second quarter 2022.

Effective Interest Rate

Our average effective interest rate on our total debt, exclusive of amortization of deferred debt issuance costs, during the year ended December 30, 2022 and December 31, 2021 was 9.4% and 8.2%, respectively.

Interest expense, inclusive of amortization of deferred debt issuance costs, in the consolidated statements for the year ended December 30, 2022 and December 31, 2021 was $46.4 million and $54.8 million, respectively. If the amortization of deferred debt issuance costs were excluded, interest expense would be $44.9 million and $39.6 million for the years ended December 30, 2022 and December 31, 2021, respectively.

Interest Rate Cap

In June 2022, the Company entered into a deferred premium interest rate cap which limits the Adjusted LIBOR rate noted above to 3%. The interest rate cap hedges $500.0 million of debt and has a three-year term and will be paid for monthly at an annual rate of 0.69% or approximately $10.5 million over the three-year period. As a result, the Company initially recorded an asset and a corresponding liability for $10.5 million. Six monthly payments have been made as of December 30, 2022. The Company applies hedge accounting and records any change in fair value as a component of stockholders’ equity. The fair value of the interest rate cap as of December 30, 2022 increased $9.1 million and therefore there was a gain of $11.5 million recorded in OCI for the year ended December 30, 2022. The asset is included in other long-term assets and the liability is recorded as an other current liability of $3.4 million and an other long-term liability of $4.9 million as of December 30, 2022. The interest rate cap has already provided benefit to the Company with LIBOR rates exceeding 3% as of December 30, 2022.

Other Commitments and Contingencies

In connection with our acquisitions, we may be required to pay earnout bonuses upon the achievement of certain performance targets. This amount may be paid in installments over the first, second and third anniversaries of the acquisitions and may be paid in cash or stock. We have currently accrued $23.1 million as the fair value of that liability within our Consolidated Balance Sheet at December 30, 2022. Actual payouts may vary based on achievement of future results.

As part of our self-insurance policies, we are required to furnish standby letters of credit to our reinsurers. We had $3.7 million of standby letters of credit in effect as of December 30, 2022.

The Company enters into operating leases relating to office space and equipment leases in the ordinary course of business. Remaining amounts due, in thousands, as of December 30, 2022 are as follows:

2023	$	12,164
2024		8,069
2025		4,085
2026		2,654
2027		1,334
Thereafter		2,513
	$	30,819

During 2020, the Company entered into an agreement with its fleet management company pursuant to which it would receive rebates of $1.3 million to be repaid over three years at an interest rate of 2.85% per annum. The rebates were secured by title to selected vehicles within the Company’s owned fleet of vehicles in Georgia and California.

During the fourth quarter of the year ended December 31, 2021, the Company entered into a similar agreement with its fleet management company in which it would receive $1.6 million secured by vehicles owned by O’Neill. Financial terms for the O’Neill transaction were similar to the agreement entered into during 2020.

Remaining payments are as follows (in millions):

2023	$	0.7
2024		0.5
	$	1.2

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:

Revenue Recognition

Our accounting policies establish principles for recognizing revenue upon the transfer of control of promised goods or services to customers. We generally recognize revenues over time as performance obligations are satisfied. In the course of providing these services, we may subcontract for services and incur other direct costs on behalf of our clients. These costs are passed through to clients, and in accordance with accounting rules, are included in our revenue and cost of revenue. Please refer to Note 2 “Summary of Significant Accounting Policies,” to the Consolidated Financial Statements for further information.

Recent accounting pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.

Off-Balance Sheet Arrangements

As of December 30, 2022, we had no material off-balance sheet arrangements.

Effects of Inflation

Based on the analysis of the periods presented, we believe that inflation has not had a material effect on our operating results for the year ended December 30, 2022. However, interest rates have continued to rise and the additional interest expense expected to be paid over the next twelve months will be higher than the previous twelve months. For every 1% increase in LIBOR, we would experience $5 million in additional interest (see disclosures related to the interest rate cap entered into during the second quarter of 2022). In addition, the Company has experienced higher costs to replace comparable employees as certain labor markets have tightened and for employees opting to return to work post COVID-19.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements and related notes required by this item are included in Part IV of this Annual Report on Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 30, 2022, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of December 30, 2022, our disclosure controls and procedures were effective.

We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Management’s Report on Internal Controls Over Financial Reporting

As required by SEC rules and regulations implementing Section 404 of the Sarbanes-Oxley Act, our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes in accordance with GAAP. Our internal control over financial reporting includes those policies and procedures that:

(1)

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of our company,

(2)

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors, and

(3)

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect errors or misstatements in our financial statements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of our internal control over financial reporting at December 30, 2022. In making these assessments, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013). Based on our assessments and those criteria, management determined that we maintained effective internal control over financial reporting as of December 30, 2022.

This Annual Report on Form 10-K does not include an attestation report of internal controls from our independent registered public accounting firm due to our status as an emerging growth company under the JOBS Act.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

As of the date of this Annual Report on Form 10-K, our directors and officers are as follows:

Name	Age	Position
Brian K. Ferraioli	67	Executive Chairman and Director
L. Joe Boyer	59	Chief Executive Officer and Director
R. Foster Duncan	68	Director
Leonard K. Lemoine	67	Director
Daniel G. Weiss	55	Director
Thomas H. Henley	57	Director
Raquel G. Richmond	49	Director
Collis Temple III	43	Director
David D. Quinn Sr.	51	Chief Financial Officer
Kenneth J. Burns, Jr.	58	Chief Operating Officer
Harshal B. Desai	44	Chief Growth Officer
Walter G. Powell	51	Chief Accounting Officer
John Alex Mollere	51	Chief Administrative Officer
Jonathan M. Parnell	37	Chief Strategy Officer

Brian K. Ferraioli has served as Executive Chairman of the Board, and as a director of the Company, since February 2020. Mr. Ferraioli is also an Operating Partner at Bernhard Capital Partners, and has worked with the firm since 2019. Mr. Ferraioli served as Executive Vice President and Chief Financial Officer of KBR, Inc., an engineering, construction and professional services company, from 2013 to 2017. Prior to KBR, Mr. Ferraioli was Executive Vice President and Chief Financial Officer at The Shaw Group, Inc. (“The Shaw Group”), an engineering, technology and services company, from July 2007 to February 2013, when the company was acquired by another public company which is now part of McDermott International, Ltd.. Prior to joining The Shaw Group, Mr. Ferraioli served as Vice President and Controller of Foster Wheeler, AG, a global engineering conglomerate which is now part of John Wood Group, PLC. Mr. Ferraioli is a director and former chair of the audit committee of Vistra Corp. a leading Fortune 275 integrated retail electricity and power generation company. Mr. Ferraioli also previously served as a director and chair of the audit committee for Team, Inc., Charah Solutions, Inc., and Babcok & Wilcox Enterprises. Mr. Ferraioli has approximately 40 years of experience in senior finance and accounting roles in the engineering and technical services industries and is also a National Association of Corporate Directors Governance Fellow. Mr. Ferraioli received his B.S. in accounting from Seton Hall University and his M.B.A. from Columbia University. The Board believes Mr. Ferraioli’s extensive leadership experience as both an executive and director of engineering and technical services companies, in addition to his wealth of knowledge pertaining to public company corporate governance, provides significant contributions to the Board.

L. Joe Boyer has served as a director since February 2020 and as the Company’s Chief Executive Officer since October 2017. Prior to becoming the Company’s Chief Executive Officer, Mr. Boyer served as a consultant to Bernhard Capital Partners in connection with its infrastructure delivery services business from August 2016 to October 2017. From March 2013 to February 2016, Mr. Boyer was Chief Executive Officer of Atkins’ North American arm. From 2003 to 2013, Mr. Boyer held several senior management positions at Shaw Environmental & Infrastructure, most notably as President for its Federal Division. Mr. Boyer served on the Board of Directors and Compensation Committee of Municipal Utility District 5 in Austin from 2016 to 2017. Mr. Boyer holds an M.B.A. from Pepperdine University and a B.S. in Architectural Engineering from The University of Texas at Austin. The Board believes Mr. Boyer’s leadership roles within our Company and his extensive industry experience provide an exceptional breadth and depth of knowledge and understanding of both our Company and the professional testing, inspection, engineering, environmental and consulting industry as a whole.

R. Foster Duncan has served as a director of the Company since February 2020. Mr. Duncan joined Bernhard Capital Partners as an Operating Partner in December 2013. Mr. Duncan has more than 30 years of senior corporate, private equity and investment banking experience. Previously, Mr. Duncan held various positions in the private equity industry, including Managing Member of KD Capital L.L.C., an affiliate of Kohlberg Kravis Roberts & Co. L.P. (“KKR”), a global investment firm. Mr. Duncan was located in KKR’s New York office and worked exclusively with KKR and its portfolio companies in connection with creating value and identifying and investing in the energy, utility, natural resources and infrastructure sectors. Previously, Mr. Duncan was Executive Vice President and CFO of Cinergy Corporation (“Cinergy”), a Fortune 250 energy and utility company, Chairman of Cinergy’s Investment Committee and CEO and President of Cinergy’s Commercial Business Unit. Prior to his time at Cinergy, he held senior management positions with LG&E Energy Corp., a utilities company, as a member of the Office of the Chairman and Executive Vice President and CFO. Mr. Duncan serves on the board of directors of Atlantic Power Corporation in Boston, Massachusetts where he is chairman of the audit committee, and is also a member of the compensation, operating and nominating and governance committees. He also previously served as a director of Essential Power, LLC, a portfolio company of Industry Funds Management (US), LLC and the Advisory Council of Greentech Capital Advisors in New York. Mr. Duncan graduated with distinction from the University of Virginia and received his M.B.A. from the A.B. Freeman Graduate School of Business at Tulane University. The Board believes Mr. Duncan’s extensive financial and executive leadership experience brings invaluable expertise and skill to the Board.

Leonard K. Lemoine has served as a director of the Company since February 2020. Mr. Lemoine is the President and Chief Executive Officer of the Lemoine Company, LLC (“Lemoine”), a position he has held since January 2011. Mr. Lemoine founded Lemoine in 1975 and the company has steadily grown from a small construction company to one of the most respected, full-service contracting and construction management firms in the Southeastern United States. Lemoine constructs and manages projects ranging from minor interior renovations to some of the most complex healthcare facilities, commercial public and industrial landmarks in the Southeastern United States. Mr. Lemoine received his B.S. from Louisiana State University in 1979. The Board believes Mr. Lemoine provides valuable insights to the Board due to his extensive expertise and understanding of the construction management industry built through decades of industry experience.

Daniel G. Weiss has served as a director of the Company since February 2020. Mr. Weiss has been co-founder and Managing Partner of Angeleno Group LLC (“AG”), a Los Angeles-based private equity firm with a global platform focused on high growth investments in next generation clean energy and climate solutions technology companies, since AG’s founding in 2001. In addition to his firm management responsibilities, Mr. Weiss leads investments and serves on boards of multiple AG portfolio companies. Prior to the formation of AG, Mr. Weiss was an attorney at O’Melveny & Myers in Los Angeles from 1998 to 1999. Mr. Weiss has served as a member of the board of directors of TPI Composites, Inc., a renewable energy manufacturing company, since 2009. Currently, Mr. Weiss serves on boards or public commissions for a number of non-profit and government organizations including the California Community Foundation, World Resources Institute, and the UCLA Institute of the Environment and Sustainability (where he serves as co-Chair). Mr. Weiss holds a J.D. from Stanford Law School, an M.A. from Stanford University and a B.A. with high honors from U.C. Berkeley. The Board believes Mr. Weiss brings to the Board a deep understanding of both the private and public sectors in which the Company operates, as well as unique and valuable expertise in the environmental and sustainability space.

Thomas H. Henley has served as a director of the Company since March 2020. Mr. Henley joined Bernhard Capital Partners as a member of the firm’s Investment Committee in February 2019. Prior to Bernhard Capital Partners, Mr. Henley served as the Senior Managing Director of Strategic Opportunities for the UAW Retiree Medical Benefits Trust, a purchaser of retiree healthcare benefits, from March 2016 to February 2019. Mr. Henley currently serves as a member of the board of directors for Lazarus Energy Holdings, an investment holding company, and has served in such capacity since 2006. Mr. Henley received his B.S. in Petroleum Engineering from Stanford University and his M.B.A. from the Anderson Graduate School of Management at UCLA. The Board believes Mr. Henley’s advisory and investment experience and business acumen brings important insight to the Board.

Raquel G. Richmond has served as a director of the Company since November 2020. Ms. Richmond has been a Senior Account Manager at Greenup Industries, LLC since January 2019 and has been a realtor for Greenup & Associates, LLC in New Orleans since June 2015. Ms. Richmond previously served as the President of Rock Consulting Services, LLC in New Orleans and as Project Manager at the U.S. Army Corps of Engineers on the Hurricane Storm Damage Risk Reduction System (HSDRRS), a $14 billion infrastructure system in Southern Louisiana. Ms. Richmond has over fifteen years of experience working on federal, state and local infrastructure projects and over twenty years of experience in the professional services sector. She holds an M.A. in Education Administration and a B.A. in Psychology, both from the University of New Orleans. The Board believes Ms. Richmond’s extensive experience in the professional services sector and experience with federal, state and local infrastructure projects brings significant contributions to the Board.

Collis Temple, III has served as a director of the Company since April 2021. Mr. Temple is a National Sales Director and agency owner with Primerica, an international financial and insurance services organization, where he has held various leadership positions of increasing responsibility since joining in 2004. Mr. Temple has served on the Louisiana Board of Regents since 2015, on the board of directors of the Knock Knock Children’s Museum since 2018 and on the 100 Black Men of Metro Baton Rouge and Career Compass since 2010. He also served on the board of directors of Mary Bird Perkins Cancer Center from 2018 to 2020. Mr. Temple received a B.S. in General Business and a M.S. in Sports Management from Louisiana State University. The Board believes Mr. Temple brings significant leadership experience and financial acumen to the Board, as well as a strong network of long-standing professional relationships built on decades spent in the Southeastern United States.

David D. Quinn Sr. has served as the Company’s Chief Financial Officer since May 2020. Prior to becoming Chief Financial Officer, Mr. Quinn served as the Company’s Executive Vice President, Corporate Affairs beginning in September 2019. Prior to joining the Company, Mr. Quinn held multiple executive level financial, administrative and operational roles. Mr. Quinn spent much of his early career, nearly 18 years, working within The Shaw Group family of companies, beginning in September 1996 with the OHM Corporation. Mr. Quinn held the role of Vice President of Business Management with The Shaw Group when ultimately acquired by Chicago Bridge and Iron in February 2013. In July 2013, Mr. Quinn joined Atkins North America where he served in the Chief Financial Officer, Chief Operating Officer and Chief Executive Officer capacities. Mr. Quinn served on the Board of Directors of Atkins North America from 2014 to 2019. Mr. Quinn obtained a B.A. in political science and economics from the University of Massachusetts, an M.B.A. from Norwich University, an executive certificate in management and leadership from the MIT Sloan School of Management, and a leadership certificate from the University of Oxford Saïd Business School.

Kenneth J. Burns, Jr. has served as the Company’s Chief Operating Officer since July 2021. Mr. Burns has more than 33 years of delivery experience that includes business operations, program and project delivery expertise, and strategy and sales for transportation and infrastructure businesses. Prior to joining the Company, Mr. Burns served as Chief Operating Officer for Atkins, NA (“Atkins”) from June 2019 to June 2021 and as DOT Business Unit Director for Atkins from 2016 to June 2019. In overseeing Atkins’ business units, Mr. Burns established a strong operational and financial performance matrix and ensured compliance with safety, quality, commercial and operational protocols. Mr. Burns is a proven leader with extensive management and operational experience delivering for diverse clients including private, local, state, and federal agencies. Before becoming Chief Operating Officer at Atkins, Mr. Burns managed the two largest national business for Atkins spanning the transportation and municipal infrastructure industries. A graduate of the University of Tennessee, he holds a B.S. in civil engineering and is registered as a professional engineer in seven states and the territory of Guam.

Harshal B. Desai has served as the Company’s Chief Growth Officer since March 2023 and is responsible for driving organic growth by focusing on major accounts and marquee projects in key end markets. Mr. Desai brings over 20 years of experience in the architectural engineering and construction industry and has been involved with major infrastructure projects in U.S. and beyond, with end markets including transportation, water, federal, and power. Prior to joining the Company, he served as Building Business Development and Strategy Director for Atkins’ beginning in 2015. Mr. Desai is a registered professional engineer with a B.S. in Civil Engineering from Gujarat University, and a Master’s in Civil Engineering from Purdue University.

Walter G. Powell has served as the Company’s Chief Accounting Officer since May 2020. Prior to becoming Chief Accounting Officer, Mr. Powell served as the Company’s Chief Financial Officer beginning in November 2017. Prior to becoming Chief Financial Officer of the Company, Mr. Powell served as an audit partner with Deloitte & Touche LLP for ten years, responsible for audits of public and private companies ranging in size from $20 million in revenue to $40 billion in revenue. Mr. Powell holds a B.S. in accounting from the University of New Orleans. He is a Certified Public Accountant and a member of the American Institute of CPAs.

John A. Mollere has served as the Company’s Chief Administrative Officer since January 2019. Mr. Mollere brings over 25 years of experience and leadership in corporate administration. Prior to joining the Company, Mr. Mollere served most recently as Chief Administrative Officer of ATC Group Services, a leading environmental consulting and engineering firm with locations across the United States which merged with the Company in 2019, from September 2005 to January 2019. There, Mr. Mollere led a diverse team of administrative professionals including legal, risk management, health and safety, procurement, information technology, and marketing communications. Prior to joining ATC Group Services, Mr. Mollere held a leadership position for over a decade in the risk management division of Fortune 500 company, The Shaw Group (now part of McDermott International, Inc.), where he served in multiple management roles from August 1994 to September 2005. Mr. Mollere has a B.S. in Toxicology from Northeast Louisiana University and is a Certified Safety Professional.

Jonathan M. Parnell has served as the Company’s Chief Strategy Officer since February 2021. Prior to that, Mr. Parnell was Vice President — Mergers and Acquisitions since February 2020 and Director of M&A and Integration from January 2019 to February 2020. Under both roles, Mr. Parnell led the Company’s Mergers & Acquisitions department. Prior to joining the Company, Mr. Parnell was the Director of Mergers & Acquisitions and Integration with ATC Group Services from April 2018 to January 2019 and Integration Manager for ATC from July 2016 to April 2018. Prior to ATC, he was the Commercial Manager for ARMS Reliability from May 2015 to July 2016. Mr. Parnell holds a B.S. in Business Administration from Louisiana State University and an M.B.A. from the McCombs School of Business at the University of Texas at Austin.

Information Concerning the Board, Committees and Governance

The Board is divided into three classes with only one class of directors being elected each year. The term of office of the Class I directors, consisting of Ms. Richmond and Messrs. Boyer and Ferraioli, will expire at the 2023 annual meeting. The term of office of the Class II directors, consisting of Messrs. Duncan and Weiss, will expire at the 2024 annual meeting. The term of the Class III directors, consisting of Messrs. Henley, Lemoine and Temple, will expire at the 2025 annual meeting. The NASDAQ listing standards require that a majority of the Board be independent. The Board has determined that each of Ms. Richmond and Messrs. Duncan, Ferraioli, Henley, Lemoine, Temple and Weiss are independent within the meaning of NASDAQ Listing Rule 5605(a)(2). In addition, the Board determined Mr. Boyer is not independent due to his service as our Chief Executive Officer.

We have adopted corporate governance guidelines and charters for the Audit, Compensation and Nominating, Corporate Governance and Sustainability Committees of the Board intended to satisfy NASDAQ listing standards. We have also adopted a code of business conduct and ethics for our directors, officers and employees intended to satisfy NASDAQ listing standards and the definition of a “code of ethics” set forth in applicable SEC rules. Our corporate governance guidelines, code of business conduct and ethics and committee charters are available on our website at www.oneatlas.com under the “Investors” tab. The information on our website is not part of or incorporated by reference into this Annual Report.

The Board held eight meetings during 2022. During 2022, each of our incumbent directors attended at least 75% of the meetings of the Board held during the period in which such incumbent director served on the Board. During 2022, Mr. Duncan served as the Chair of the Audit Committee of the Board (the “Audit Committee”). Mr. Weiss served as the Chair of the Compensation Committee. Mr. Henley served as the Chair of the Nominating, Corporate Governance and Sustainability Committee. We have a policy that all directors of the Board must attend the annual meeting, absent unusual circumstances. In 2022, all of the then-current directors of the Board attended the annual meeting.

Committees of the Board

Members of our Audit, Compensation, and Nominating, Corporate Governance and Sustainability Committees serve on these committees until their resignation or until otherwise determined by the Board.

Audit Committee

The NASDAQ rules and Section 10A of the Exchange Act require that the audit committee of a listed company be comprised solely of independent directors. We have established the Audit Committee, which consisted of Messrs. Duncan, Ferraioli and Temple, with Mr. Duncan serving as the Chair of the Audit Committee. The Board has determined that each of Messrs. Duncan, Ferraioli and Temple meets the independent director standards under NASDAQ listing standards and under Rule 10A-3(b)(1) of the Exchange Act. The Company also believes that each of Messrs. Duncan and Ferraioli qualifies as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation S-K promulgated by the SEC. The Audit Committee held four meetings during 2022. During 2022, each member of the Audit Committee attended at least 75% of the meetings occurring during such member’s tenure on the Audit Committee.

The principal functions of the Audit Committee are detailed in the Audit Committee charter, which is available on the Company’s website at www.oneatlas.com, under the “Investors” tab and include, among others:

●

appointing the Company’s independent registered public accounting firm;

●

evaluating the independent registered public accounting firm’s qualifications, independence and performance;

●

determining the engagement of the independent registered public accounting firm;

●

reviewing and approving the scope of the annual audit and the audit fee;

●

discussing with management and the independent registered public accounting firm the results of the annual audit and reviewing the Company’s quarterly financial statements;

●

reviewing the scope and effectiveness of the Company’s internal audit function and internal audit plan;

●

overseeing the Company’s processes relating to risk management and the conduct and systems of internal control over financial reporting and disclosure controls and procedures;

●

approving the retention of the independent registered public accounting firm to perform any proposed permissible non-audit services;

●

monitoring the rotation of partners of the independent registered public accounting firm on the Company’s engagement team in accordance with requirements established by the SEC;

●

being responsible for reviewing the Company’s financial statements and the Company’s management’s discussion and analysis of financial condition and results of operations to be included in the Company’s annual and quarterly reports to be filed with the SEC; and

●

reviewing the Company’s critical accounting policies and estimates.

Compensation Committee

We have established the Compensation Committee, which during 2022 consisted of Messrs. Duncan, Lemoine and Weiss, with Mr. Weiss serving as the Chair of the Compensation Committee. The Board has determined that Messrs. Duncan, Lemoine and Weiss meet the independent director standards under NASDAQ listing standards, including the heightened standards that apply to compensation committee members. The Compensation Committee held five meetings during 2022. During 2022, each member of the Compensation Committee attended at least 75% of the meetings occurring during such member’s tenure on the Compensation Committee.

The principal functions of the Compensation Committee are detailed in the Compensation Committee charter, which is available on the Company’s website at www.oneatlas.com, under the “Investors” tab and include, among others:

●

reviewing and approving the compensation of the executive officers of the Company and such other employees of the Company as are assigned thereto by the Board;

●

making recommendations to the Board with respect to standards for setting compensation levels; and

●

making recommendations to the Board with respect to the incentive compensation plans and equity-based plans of the Company.

The charter also provides that the Compensation Committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other advisor and will be directly responsible for the appointment, compensation and oversight of the work of any such advisor. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other advisor, the Compensation Committee will consider the independence of each such advisor, including the factors required by NASDAQ and the SEC.

Nominating, Corporate Governance and Sustainability Committee

We have established the Nominating, Corporate Governance and Sustainability Committee, which during 2022 consisted of Ms. Richmond and Messrs. Henley and Weiss, with Mr. Henley serving as the Chair of the Nominating, Corporate Governance and Sustainability Committee. The Board has determined that each of Ms. Richmond and Messrs. Henley and Weiss meet the independent director standard under NASDAQ listing standards. The Nominating, Corporate Governance and Sustainability Committee held three meetings in 2022, and each member of the Nominating, Corporate Governance and Sustainability Committee during 2022 attended at least 75% of those meetings during such member’s tenure on the Nominating, Corporate Governance and Sustainability Committee.

The principal functions of the Nominating, Corporate Governance and Sustainability Committee are detailed in the Nominating, Corporate Governance and Sustainability Committee charter, which is available on the Company’s website at www.oneatlas.com, under the “Investors” tab and include, among others:

●

identifying potential qualified nominees for director and nominate candidates for the Board;

●

developing the Company’s corporate governance guidelines and additional corporate governance policies; and

●

reviewing and monitoring the Company’s approach to sustainability, including related policies and other disclosures, and overseeing strategy and performance for material environmental and social topics, including climate change and human capital.

The Nominating, Corporate Governance and Sustainability Committee also develops and recommends to the Board corporate governance principles and practices and assists in implementing them, including conducting a regular review of our corporate governance principles and practices.

The Nominating, Corporate Governance and Sustainability Committee has not established any minimum qualifications for non-employee director candidates that it recommends for nomination. Subject to the Nomination Agreement discussed under Item 13 in this Annual Report, which provides certain of our stockholders with rights to designate director nominees, the Nominating, Corporate Governance and Sustainability Committee expects to use a variety of methods for identifying and evaluating nominees for director. In recommending director nominees to the Board apart from those nominees designated pursuant to the Nomination Agreement, the Nominating, Corporate Governance and Sustainability Committee will identify and screen director candidates (including incumbent directors for potential re-nomination and candidates recommended by stockholders in accordance with the Company’s policies as set forth in its proxy statement) consistent with criteria approved by the Board.

The Nominating, Corporate Governance and Sustainability Committee may also engage the services and pay the fees of external counsel and expert advisors, at the Company’s expense, to assist it in identifying potential director nominees or otherwise carrying out its duties and responsibilities. Subject to the Nomination Agreement, the Nominating, Corporate Governance and Sustainability Committee will assess the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise. If vacancies are anticipated, or otherwise arise, and the designation provisions of the Nomination Agreement do not apply, the Nominating, Corporate Governance and Sustainability Committee will consider whether and how to fill those vacancies and, if applicable, will consider various potential director candidates. Since the Atlas Business Combination, the Nominating, Corporate Governance and Sustainability has nominated, and the Board has approved, the appointment of two directors to the Board who are not affiliated with our sponsor, Boxwood Sponsor, LLC ( “Boxwood Sponsor”), thus increasing the number of independent directors on the Board under SEC and NASDAQ rules. Each of Messrs. Duncan, Henley, Ferraioli and Lemoine was appointed to the Board pursuant to the Nomination Agreement.

The Nominating, Corporate Governance and Sustainability Committee has not adopted specific, minimum qualifications or specific qualities or skills that must be met by a Nominating, Corporate Governance and Sustainability Committee-recommended nominee. The Nominating, Corporate Governance and Sustainability Committee will seek to ensure that the membership of the Board and each committee of the Board satisfies all relevant NASDAQ listing standard requirements and applicable laws and regulations and all requirements of our governance documents. The nature of the specific qualifications, qualities, experience or skills (including international versus domestic background, diversity, age, and legal and regulatory requirements) that the Nominating, Corporate Governance and Sustainability Committee may look for in any particular director nominee who is not a designee under the Nomination Agreement will depend on the qualifications, qualities and skills of the rest of the directors at the time of any vacancy on the Board. The Nominating, Corporate Governance and Sustainability Committee does not have a formal policy regarding the consideration of diversity in identifying director nominees beyond being seeking to establish a board that contains a diversity of viewpoints, backgrounds and experiences.

The Nominating, Corporate Governance and Sustainability Committee will also consider director candidates recommended for nomination by our stockholders during such times as they are seeking proposed nominees to stand for election at the next annual meeting. Our stockholders that wish to nominate a director for election to the Board should follow the procedures set forth in our certificate of incorporation and bylaws.

Code of Business Conduct and Ethics

We have adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. The code of business conduct and ethics is available on our website at www.oneatlas.com, under the “Investors” tab. The Company intends to satisfy the disclosure requirement under Item 5.05 of Form 8-K relating to amendments to or waivers from any provision of the code of business conduct and ethics applicable to the principal executive officer, principal financial officer, principal accounting officer and other persons performing similar functions by posting such information in the “Investors” subsection of the Company’s website at www.oneatlas.com.

Insider Trading and Policy on Hedging or Pledging of Stock

We have adopted an insider trading policy that contains stringent restrictions on transactions in Company stock by executive officers, directors and certain other Company personnel. All trades by executive officers and directors must be pre-cleared and may only occur during a quarterly permitted period based on the timing of the release of the Company’s quarterly or annual financial results. Senior personnel of the Company are prohibited from selling any equity security of the Company if such person either (a) does not own the security sold or (b) does not deliver the security against such sale within twenty days thereafter or does not within five days after such sale deposit the security in the mails or other usual channels of transportation. Further, senior personnel of the Company are prohibited from purchasing, selling or engaging in any other transaction involving any derivative securities related to any equity securities of the Company. A “derivative security” includes any option, warrant, convertible security, stock appreciation right or similar security with an exercise or conversion price or other value related to the value of any equity security of the Company.

Board Leadership Structure and Role in Risk Oversight

Brian Ferraioli serves as the Chairman of the Board and L. Joe Boyer serves as our Chief Executive Officer. We believe that the most effective leadership structure at the present time is to have separate Chairman and Chief Executive Officer positions because this allows the Board to benefit from having two strong voices bringing separate views and perspectives to meetings. The Board periodically reviews the leadership structure and may make changes in the future.

The Board is responsible for overseeing the overall risk management process of the Company. Risk management is considered a strategic activity within the Company and responsibility for managing risk currently rests with executive management, while the Board participates in the oversight of the process. The oversight responsibility of the Board is enabled by management reporting processes designed to provide visibility to the Board about the identification, assessment and management of critical risks. Those areas of focus include strategic, operational, financial and reporting, compliance and other risks. The Audit Committee enhances the Board’s oversight of risk management and discusses with management, the independent auditor and the internal auditor policies with respect to risk assessment and risk management, including significant operating and financial risk exposures and the steps management has taken to monitor, control and report such exposures. Further, the Compensation Committee enhances the Board’s oversight of risk management by considering the impact of the Company’s compensation plans, and the incentives created by the Company’s compensation plans, on the Company’s risk profile.

Stockholder and Interested Party Communications

Stockholders are invited to communicate to the Board or its committees by writing to: Atlas Technical Consultants, Inc., Attention: Board of Directors, c/o L. Joe Boyer, Chief Executive Officer and Director, 13215 Bee Cave Parkway, Building B, Suite 230, Austin, Texas 78738. In addition, interested parties may communicate with the Chairman of the Board or with the non-management and independent directors of the Board as a group by writing to: Atlas Technical Consultants, Inc., Attention: Chairman of the Board of Directors, c/o Brian Ferraioli, Chairman of the Board, 13215 Bee Cave Parkway, Building B, Suite 230, Austin, Texas 78738.

Executive Sessions of Non-Management Directors

The Board has a practice of holding executive sessions of the independent directors. In addition, in order to comply with the listing requirements of NASDAQ and promote good governance, our governance guidelines require that the Board hold regular executive sessions in which the non-management directors meet without any members of management present, no less frequently than twice annually, and provide that in the event that the non-management directors include directors who are not independent under the listing requirements of NASDAQ, then at least once a year, there will be an executive session including only independent directors. Each year, the Company consistently holds a number of executive sessions of independent directors at most meetings exceeding the minimum required under our governance guidelines. The purpose of these executive sessions is to promote open and candid discussion among the independent and non-management directors.

Committee Reports

Audit Committee Report

The principal purposes of the Audit Committee are to (i) oversee (a) the quality and integrity of the financial statements of the Company; (b) the Company’s financial reporting processes and financial statement audits; (c) the independent registered public accounting firm’s qualifications and independence; (d) the performance of the Company’s internal audit function and independent registered public accounting firm; (e) the Company’s system of internal controls over financial reporting, accounting, legal and regulatory compliance, and ethics, including the effectiveness of disclosure controls and controls over processes that could have a significant impact on the Company’s financial statements; and (f) the systems of disclosure controls and procedures; (ii) foster open communications among the independent registered public accounting firm, financial and senior management, internal audit and the Board; and (iii) encourage continuous improvement and foster adherence to the Company’s policies, procedures and practices at all levels. The role and responsibilities of the Audit Committee are fully set forth in the Audit Committee’s written charter, which was approved by the Board and is available on the Company’s website at www.oneatlas.com, under the “Investors” tab.

2022 Committee Engagement

In addition to the matters discussed below, the Audit Committee engages proactively with Grant Thornton and management as needed to understand the status and strategy of the Company’s audit and to discuss new accounting standards or potentially significant events that may impact the Company’s financial reporting.

Committee Composition

The Audit Committee consists of Company directors who satisfy the requirements of independence, financial literacy and other qualifications under applicable law and regulations of the SEC and the NASDAQ and is chaired by R. Foster Duncan. The Board annually reviews these standards and has determined that each of Messrs. Duncan and Ferraioli is an “audit committee financial expert” as defined by SEC and NASDAQ rules. The Audit Committee has directed the preparation of this audit committee report and has approved its content and submission to the stockholders.

Required Communications with Grant Thornton

The Audit Committee has discussed with Grant Thornton, the independent registered public accounting firm for the Company, the matters that are required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) Auditing Standards. The Audit Committee has received the written disclosures and letter from Grant Thornton, as required by the PCAOB, regarding Grant Thornton’s communications with the Audit Committee concerning independence and has discussed with Grant Thornton its independence. The Audit Committee has received reports from Grant Thornton and Company management relating to services provided by Grant Thornton and associated fees. In this regard, the Audit Committee has considered whether or not the provision of non-audit services by Grant Thornton for the year 2022 is compatible with maintaining the independence of the firm.

Committee Oversight and Assessment of Grant Thornton

In connection with the evaluation, appointment and retention of the independent registered public accounting firm, each year the Audit Committee reviews and evaluates the qualifications, performance and independence of the independent registered public accounting firm and lead partner, including consideration of input from management. In doing so, the Audit Committee considers various factors including, but not limited to: the quality of services provided; technical expertise and knowledge of the industry and the Company’s business and operations; effective communication; objectivity; independence; and the potential impact of changing the independent registered public accounting firm.

Committee Oversight of Financial Statements

The Audit Committee reviewed and discussed with Company management and Grant Thornton the audited consolidated financial statements of the Company for 2022. The Audit Committee also discussed with Grant Thornton those matters required to be discussed by the applicable requirements of the PCAOB and SEC concerning the quality of the Company’s accounting principles as applied in our financial statements. In general, these auditing standards require the independent registered public accounting firm to communicate to the Audit Committee certain matters that are incidental to the audit, such as any initiation of, or changes to, significant accounting policies, management judgments, accounting estimates and audit adjustments; disagreements with management; the independent registered public accounting firm’s judgment about the quality of our accounting principles; significant audit risks identified and any changes from planned audit strategy; the use of specialists on the audit team; and issues for which the independent registered public accounting firm have consulted outside the engagement team.

Based on the review and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

		The Audit Committee of the Board of Directors:

		R. Foster Duncan, Chair
		Brian K. Ferraioli
		Collis Temple III

Compensation Committee Report

As an emerging growth company, the Company is not required to include a Compensation Discussion and Analysis section or the related Compensation Committee Report in this Annual Report. We have elected to comply with these reduced compensation disclosure requirements, as permitted under the Jumpstart our Business Startups Act of 2012, as amended.

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee serves, or served during the fiscal year ended December 31, 2022, as a member of the board of directors or compensation committee of a company that has one or more executive officers serving as a member of the Board or Compensation Committee.

ITEM 11. EXECUTIVE COMPENSATION

The following disclosure describes the material components of the compensation for the Company’s three most highly compensated executive officers, who are referred to in this section as “Named Executive Officers,” for the fiscal year ended December 31, 2022. The Company is an “emerging growth company” as defined under the Jumpstart Our Business Startups (JOBS) Act. As such, the Company meets the disclosure requirements of Item 402 of Regulation S-K by providing the reduced disclosures required of a “smaller reporting company.”

Named Executive Officers

For the fiscal year ended December 31, 2022, the Company’s Named Executive Officers were as follows:

L. Joe Boyer, Chief Executive Officer;

David D. Quinn, Sr., Chief Financial Officer; and

Ken Burns, Jr., Chief Operating Officer.

The Named Executive Officers and their titles listed in this section are as of the fiscal year ended December 31, 2022. The Named Executive Officers are employed by Atlas Technical Consultants LLC (formerly Atlas Technical Consultants Intermediate Holdco LLC), an indirect, wholly-owned subsidiary of Atlas Intermediate Holdings LLC (“Atlas Intermediate”).

Summary Compensation Table

The following table presents summary information regarding the total compensation paid to, earned by and awarded to each of the Named Executive Officers during the fiscal years ended December 31, 2022 and 2021.

Name and Principal Position⁽¹⁾	Year	Salary ($)		Stock Awards ($)⁽²⁾		Option Awards ($)⁽³⁾	Non-Equity Incentive Plan Compensation ($)⁽⁴⁾		All Other Compensation ($)⁽⁵⁾		Total ($)
L. Joe Boyer, Chief Executive Officer	2022 2021		611,769 582,692		1,387,992 1,484,864	⸺ 1,000,000		408,170 429,088		56,201 56,148		2,464,132 3,552,792

David D. Quinn, Sr., Chief Financial Officer	2022 2021		396,121 382,096		452,232 479,138	⸺ 300,000		193,375 208,376		67,298 50,135		1,109,026 1,419,745

Ken Burns, Jr., Chief Operating Officer⁽⁶⁾	2022		369,773		452,232	⸺		223,125		38,849		1,083,979

(1)

The Named Executive Officers are employed by Atlas Technical Consultants LLC (formerly Atlas Technical Consultants Intermediate Holdco LLC), which is an indirect wholly owned subsidiary of Atlas Intermediate.

(2)

Reflects the aggregate grant date fair value of awards of restricted stock units (“RSUs”) and performance stock units (“PSUs”) in 2021 and 2022, computed in accordance with FASB ASC Topic 718. The assumptions used in calculating the grant date fair value of the RSUs and PSUs are incorporated by reference to Note 9 to the consolidated financial statements appearing in this Annual Report on Form 10-K. The value of the PSUs reported in the Stock Awards column is based on the probable outcome of the performance conditions (at the award date) in accordance with ASC Topic 718 assuming no forfeitures. For PSUs awarded in 2021, the values assuming the highest level of performance conditions will be achieved are: $2,338,414 for Mr. Boyer, $649,608 for Mr. Quinn, and $165,104 for Mr. Burns. For PSUs awarded in 2022, the values assuming the highest level of performance conditions will be achieved are: $1,815,986 for Mr. Boyer, $504,453 for Mr. Quinn, and $504,453 for Mr. Burns. These amounts do not necessarily correspond to the actual value that will be realized by our Named Executive Officers.

(3)

Reflects aggregate grant date fair value of performance stock options (“PSOs”), computed in accordance with ASC Topic 718. The grant date fair value of PSOs was determined using a Monte Carlo with Geometric Brown Motion simulation, since the awards included a market condition in addition to a service condition. The assumptions used in calculating the grant date fair value of the PSOs are incorporated by reference to Note 9 to the consolidated financial statements appearing in this Annual Report on Form 10-K. These amounts do not necessarily correspond to the actual value that will be realized by our Named Executive Officers.

(4)

Reflects awards under the Company’s annual cash incentive plan for the 2022 and 2021 performance years. Awards relating to the 2022 performance period were based on two performance metrics approved by the Compensation Committee in 2022: (i) Adjusted EBITDA, accounting for 75% of the target award; and (ii) Cashflow, accounting for 25% of the target award. Please see the section entitled “Narrative Disclosure to Summary Compensation Table—Annual Cash Incentive Plan” below for additional details.

(5)

Amounts reported in the “All Other Compensation” column include Company contributions to the Named Executive Officers’ 401(k) plan retirement accounts, car allowance amounts, amounts reimbursed through the Company’s medical reimbursement plan and with respect to Mr. Boyer only, employer-paid life insurance premiums. Please see the section entitled “Narrative Disclosure to Summary Compensation Table—Health and Retirement Benefits” below for additional details.

(6)

Mr. Burns was not a Named Executive Officer in 2021, and thus, no compensation information is reported for him in this table for such year.

Narrative Disclosure to Summary Compensation Table

Base Salary

Each Named Executive Officer’s base salary is a fixed component of annual compensation for performing specific job duties and functions. The Board has established the annual base salary for each of the Named Executive Officers at a level necessary to retain the individual’s services. For each Named Executive Officer other than the Chief Executive Officer, the Board reviews base salaries on an annual basis in consultation with the Chief Executive Officer. Subject to provisions of their respective employment agreements, as applicable, the Board has the ability to make adjustments to the base salary rates of the Named Executive Officers upon consideration of any factors that it deems relevant, including but not limited to: (a) any increase or decrease in the executive’s responsibilities, (b) the executive’s job performance and (c) the level of compensation paid to executives of other companies with which the Company competes for executive talent, as estimated based on publicly available information and the experience of members of the Board and the Chief Executive Officer. In March 2022, the Board determined to provide for base salary rate increases for the Named Executive Officers based on cost-of-living adjustments and merit. The increases were as follows: Mr. Boyer’s base salary rate increased from $600,000 to $618,000, Mr. Quinn’s base salary rate increased from $388,500 to $400,155 and Mr. Burns’s base salary rate increased from $365,000 to $372,300.

Annual Cash Incentive Plan

The Company’s annual cash incentive plan bonuses have historically been of a discretionary nature and subject to performance targets established annually by the Compensation Committee. To be eligible to receive their bonus, our Named Executive Officers must generally be employed on the last day of the applicable performance period. For 2022, each Named Executive Officer was eligible to receive a target annual bonus of the following percentage of the executive’s base salary if all performance targets were met or exceeded: 100% for Mr. Boyer, 75% for Mr. Quinn, 75% for Mr. Burns.

The amounts of the annual cash incentive plan bonuses for 2022 were determined and paid in February 2023 following the Compensation Committee’s year-end review of the applicable performance criteria. The actual amounts paid to each Named Executive Officer for service in 2022 were as follows:

	2022 Bonus Award
L. Joe Boyer	$	408,170
David D. Quinn, Sr.	$	193,375
Ken Burns, Jr.	$	223,125

Long Term Incentive Compensation

LTI Awards. On February 14, 2020, the Board adopted the Atlas Technical Consultants, Inc. 2019 Omnibus Incentive Plan (the “Incentive Plan”) previously approved by the stockholders of the Company at the Company’s special meeting of stockholders held on February 11, 2020, effective upon the consummation of the Atlas Business Combination. The Company began offering long-term incentives to the Named Executive Officers in 2020 through grants of RSUs under the Incentive Plan.

For 2022, each of our Named Executive Officers were eligible to receive a mix of RSUs and PSUs (with Mr. Boyer receiving a mix of 40% and 60%, respectively, and the Messrs. Quinn and Burns receiving a mix of 50% and 50%, respectively) as part of their long-term incentive awards. The number of RSUs and the target number of PSUs were determined by taking each Named Executive Officer’s 2022 long-term incentive target value and dividing it by the 20-day volume weighted average price of the Company’s Class A common stock for each of the 20 trading days prior to the grant date. The resulting number of shares was then used to determine the number of RSUs and target PSUs granted to each Named Executive Officer.

Restricted Stock Unit (RSU) Awards.

The Named Executive Officers received an award of RSUs, which vest in equal increments over a three-year period on first three anniversaries of the grant date, subject to the executive’s continued service through each applicable vesting date. For 2022, the Named Executive Officers received an award of RSUs in the following amounts: 44,077 for Mr. Boyer, 18,366 for Mr. Quinn and 18,366 for Mr. Burns. Each RSU represents the right to receive one share of Class A common stock of the Company.

Performance Stock Unit (PSU) Awards.

For 2022, the Named Executive Officers received an award of PSUs, which vest subject to performance measures over a three-year period, in the following target amounts: 66,116 for Mr. Boyer, 18,365 for Mr. Quinn and 18,365 for Mr. Burns. The number of shares of class A common stock that will be delivered to the executive will range between 0-200% of the target number of PSUs provided in the executive’s award agreement and will be based on three performance measures over the award’s performance period, each accounting for one-third of the total number of shares (if any) to be delivered following the end of the performance period: (1) Total StockholderReturn (TSR) spread vs. TMI index; (2) Revenue (actual vs. target); and (3) Adjusted EBITDA (actual vs. target). The applicable performance period for each of the Named Executive Officers is January 1, 2022 through January 3, 2025. The executive must generally be employed on the date of settlement in order to receive their award.

Performance Stock Options.

For 2021, Messrs. Boyer and Quinn received PSOs in the following amounts: 324,465 PSOs for Mr. Boyer and 102,739 PSOs for Mr. Quinn. These PSOs are subject to both service- and performance-based vesting conditions. Generally, the award will vest in four equal installments, in each case on the later of (i) the award’s second, third, fourth and fifth anniversary or (ii) if the Threshold Stock Price equals or exceeds $20, $25, $30 or $35, respectively; provided, that in each case, the Named Executive Officer must remain in continued service through the applicable vesting date. Any portion of the award that remains unvested or unexercised as of August 18, 2027 shall be forfeited. For purposes of this award, “Threshold Stock Price” means the average closing price per share of the Company’s common stock over any preceding 60 calendar days. No PSOs were granted to the Named Executive Officers during 2022.

Health and Retirement Benefits

The Company provides medical, dental, vision, life insurance and disability benefits to all eligible employees. The Named Executive Officers are eligible to participate in these benefits on the same basis as all other employees. The Company also maintains an executive medical reimbursement plan for certain members of senior management, including the Named Executive Officers, which provides up to 100% reimbursement for specified medical, prescription, dental and vision expenses, up to a maximum of $20,000 per year per Named Executive Officer.

The Company maintains a 401(k) savings plan that allows participants, including the Named Executive Officers, to defer cash compensation (subject to applicable Internal Revenue Service (“IRS”) guidelines). All of the Company’s employees are eligible participants. The Named Executive Officers are eligible to participate in the 401(k) plan on the same basis as all other employees. The Company may provide employer matching contributions under the 401(k) plan. In 2022, the Company’s matching contributions were equal to 100% of the first 3% of eligible compensation deferred by an employee and 50% of the next 2% of eligible compensation deferred, up to the annual allowable IRS limits. Matching contributions are 100% vested when made. In addition, the Company provides certain other perquisites to certain of the Named Executive Officers, including a car allowance and employer-paid life insurance premiums.

Employment Agreements

The Company has entered into employment agreements with each of the Named Executive Officers, the relevant terms of which are summarized below. Capitalized terms appearing in the following descriptions but not defined therein are as defined in the applicable employment agreement. The below summary is qualified in all respects by reference to the underlying employment agreement.

L. Joe Boyer. Mr. Boyer is party to an amended and restated employment agreement with Atlas Technical Consultants LLC, effective December 17, 2021 (the “Boyer Agreement”), pursuant to which Mr. Boyer serves as Chief Executive Officer of the Company. The initial term of the Boyer Agreement is three years, with automatic one-year renewals thereafter unless either party provides at least 90 days’ prior notice of nonrenewal or otherwise terminates the agreement. Under the terms of the Boyer Agreement, Mr. Boyer initially was entitled to an annual base salary of $550,000 and an annual bonus target opportunity of 100% of Mr. Boyer’s then-current base salary (up to a maximum of 200% of Mr. Boyer’s then-current base salary), with the amount payable to be determined based on financial metrics decided by the Compensation Committee in good faith consultation with Mr. Boyer. Mr. Boyer is also eligible to receive, pursuant to the Incentive Plan, annual equity grants with a target grant date value of no less than 100% of Mr. Boyer’s then-current base salary, subject to such terms and conditions as the Compensation Committee decides. In addition to being eligible to participate in the Company’s employee benefit plans, Mr. Boyer is also eligible to receive a Company-paid life insurance policy and a monthly car allowance of no less than $1,400. Under the Boyer Agreement, Mr. Boyer is subject to certain restrictive covenants, including indefinite confidentiality and non-disparagement provisions and a 24-month post-termination non-competition and non-solicitation provisions.

David D. Quinn, Sr. Mr. Quinn is party to an amended and restated employment agreement with Atlas Technical Consultants LLC, effective December 17, 2021 (the “Quinn Agreement”), pursuant to which Mr. Quinn serves as Chief Financial Officer. The initial term of the Quinn Agreement is three years, with automatic one-year renewals thereafter unless either party provides notice of nonrenewal or otherwise terminates the agreement. Under the terms of the Quinn Agreement, Mr. Quinn initially was eligible for an annual base salary of $370,000, an annual bonus target opportunity of 75% of Mr. Quinn’s then-current base salary and an annual equity grant pursuant to the Incentive Plan. In addition to being eligible for the Company’s employee benefit plans, Mr. Quinn is also eligible for a monthly car allowance of $1,400. Under the Quinn Agreement, Mr. Quinn is subject to certain restrictive covenants, including indefinite confidentiality and non-disparagement provisions and a 12-month post-termination non-competition and non-interference provisions; provided, that upon a termination without Cause, the non-competition covenant shall not apply and upon a termination that occurs within the 90-day period prior to or the two year period immediately following a Change in Control, the non-interference covenant shall apply for 24 months instead of 12 months.

Ken Burns, Jr. Mr. Burns is party to an employment agreement with Atlas Technical Consultants LLC, effective December 17, 2021 (the “Burns Agreement”), pursuant to which Mr. Burns serves as Chief Operating Officer. The initial term of the Burns Agreement is three years, with automatic one-year renewals thereafter unless either party provides notice of nonrenewal or otherwise terminates the agreement. Under the terms of the Burns Agreement, Mr. Burns initially was eligible for an annual base salary of $365,000, an annual bonus target opportunity of 50-75% of Mr. Burns’ then-current base salary and an annual equity grant pursuant to the Incentive Plan. In addition to being eligible for the Company’s employee benefit plans, Mr. Burns is also eligible for a monthly car allowance of $1,400. Under the Burns Agreement, Mr. Burns is also subject to the same restrictive covenants as those described above under the Quinn Agreement.

Outstanding Equity Awards at Fiscal Year-End

The following table summarizes, for each of the Named Executive Officers, the number of PSOs, RSUs, and PSUs in the Company held as of December 31, 2022.

	Option Awards					Stock Awards
Name	Equity Incentive plan awards: Number of Securities Underlying Unexercised Unearned Options (#)⁽¹⁾		Option Exercise Price ($)		Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)			Market Value of Shares or Units of Stock That Have Not Vested ($)⁽⁶⁾		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
L. Joe Boyer		324,465	$	10.50	8/18/2027		44,077 36,036 35,689	⁽²⁾ ⁽³⁾ ⁽⁵⁾		226,997 185,585 183,798		22,039 40,541	^{(8) (7)}	$	113,501 208,786
David D. Quinn, Sr.		102,739	$	10.50	8/18/2027		18,366 15,015 8,922	⁽²⁾ ⁽³⁾ ⁽⁵⁾		94,585 77,327 45,948		6,12211,262	^{(7) (8)}		31,528 57,999
Ken Burns, Jr.		⸺		⸺	⸺		18,366 4,440	⁽²⁾ ⁽⁴⁾		94,585 22,866		6,122	⁽⁷⁾		31,528

(1)

Represents PSOs granted on August 18, 2021, which will vest as described under “— Long-Term Incentive Compensation” above.

(2)

Represents RSUs granted on March 18, 2022, which vest in equal installments on first three anniversaries of the grant date, subject to the executive’s continued service through each applicable vesting date.

(3)

Represents RSUs granted on May 6, 2021, which vest in equal installments on first three anniversaries of the grant date, subject to the executive’s continued service through each applicable vesting date.

(4)

Represents RSUs granted on June 17, 2021, which vest in equal installments on first three anniversaries of the grant date, subject to the executive’s continued service through each applicable vesting date.

(5)

Represents RSUs granted on May 15, 2020, which vest in equal installments on first three anniversaries of the grant date, subject to the executive’s continued service through each applicable vesting date.

(6)

Valuations are based on $5.15 per share, which was the last trading price for a share of the Company’s Class A Common Stock on the NASDAQ on December 30, 2022.

(7)

Represents PSUs granted to the Named Executive Officers on March 18, 2022, subject to performance-based vesting over the three-year period beginning on January 1, 2022 and ending on January 3, 2025. We have reported the number of shares that would be earned assuming the award was earned based on achieving threshold performance goals.

(8)

Represents PSUs granted to Messrs. Boyer and Quinn on May 6, 2021, subject to performance-based vesting over the three-year period beginning on January 1, 2021 and ending on December 29, 2023. We have reported the number of shares that would be earned assuming the award was earned based on achieving target performance goals.

Potential Payments Upon Termination or Change in Control

Each Named Executive Officer is eligible for certain payments and benefits at, following, or in connection with the resignation, severance, retirement or other termination of the Named Executive Officer, or a change in control of the Company. These benefits are in addition to benefits generally available to salaried employees. The Company does not provide any of its executives with change in control excise tax gross-ups.

L. Joe Boyer. Under the Boyer Agreement, if Mr. Boyer’s employment is terminated due to Mr. Boyer’s death, disability, termination by the Company through non-renewal at the end of the then-current term or termination without cause, or by Mr. Boyer for good reason (each, an “Involuntary Termination”), Mr. Boyer will be entitled to (i) a lump sum payment equal to (a) 2x then-current base salary; (b) 1x bonus target; and (c) a pro-rated bonus based on actual performance (determined as of the end of the performance period); (ii) accelerated vesting of all outstanding equity awards (with any unvested performance-based awards vesting (1) based on actual performance (determined as of Mr. Boyer’s termination date) in the event of termination due to death or Permanent Disability or (2) at the greater of (x) the target or (y) actual performance (determined as of Mr. Boyer’s termination date) in the event of any other Involuntary Termination); and (iii) continuation of health benefits at the Company’s expense for up to two years.

If Mr. Boyer incurs an Involuntary Termination in the 90-day period prior to, or the during the two-year period following, a change in control, Mr. Boyer will be entitled to receive (i) a lump sum payment equal to (a) 2.5x then-current base salary; (b) 1.5x target bonus; and (c) a pro-rated bonus based on actual performance (determined as of the end of the performance period); (ii) accelerated vesting of all outstanding equity awards (with any unvested performance-based awards vesting at the greater of (x) the target or (y) actual performance (determined as of the change in control date); and (iii) continuation of health benefits at the Company’s expense for up to 30 months.

If Mr. Boyer incurs a termination for cause, Mr. Boyer will be entitled to receive only the accrued benefits as set forth in the Boyer Agreement.

All severance benefits under the Boyer Agreement are contingent on Mr. Boyer signing and not revoking a release of claims as well as Mr. Boyer’s compliance with all other terms of the Boyer Agreement.

In addition to the equity vesting provisions set forth in the Boyer Agreement, Mr. Boyer’s PSO agreement provides that (i) upon an Involuntary Termination, PSOs that have attained the performance-vesting condition will vest regardless of whether their service-vesting condition has lapsed, (ii) upon a change in control, all performance-vested PSOs must be exchanged for cash or substituted or replaced by the Company’s acquirer and (iii) if upon a change in control the PSOs are substituted and replaced and Mr. Boyer incurs an Involuntary Termination in the two years thereafter, any remaining service-vesting conditions shall lapse.

David D. Quinn, Sr. Under the Quinn Agreement, if Mr. Quinn is terminated by the Company without cause or by Mr. Quinn for good reason, Mr. Quinn will be entitled to (i) 12-months’ then-current base salary continuation; (ii) a pro-rated bonus based on actual performance (determined as of the end of the performance period); (iii) 12 months of COBRA premiums (capped at the employer-portion of active employee premiums); and (iv) accelerated vesting of equity awards of (a) all unvested time-based equity awards if the termination occurs within the one year of the effective date of the Quinn Agreement; (b) 2/3 of any unvested time-based equity awards if the termination occurs within two years of the effective date of the Quinn Agreement; and (c) 1/3 of any unvested time-based equity awards if the termination occurs after two years of the effective date of the Quinn Agreement (items (i) and (ii), collectively, the “Quinn Severance”). In the event of Mr. Quinn’s termination due to Mr. Quinn’s death or disability, Mr. Quinn will be entitled to the Quinn Severance.

If the Quinn Agreement is terminated by the Company without cause or by Mr. Quinn for good reason within the 90 days prior to, or during the two-year period following, a change in control, Mr. Quinn will be entitled to receive (i) the Quinn Severance; and (ii) accelerated vesting of all outstanding equity awards (with any unvested performance-based awards vesting at the greater of (x) the target or (y) actual performance (determined as of the change in control date).

If the Quinn Agreement is terminated due to non-renewal by the Company, Mr. Quinn will receive accelerated vesting of equity awards that would have vested in the one-year period immediately following the date of such termination (with any unvested performance-based awards deemed achieved based on the greater of actual and target performance).

If Mr. Quinn incurs a termination by the Company for cause or if the Quinn Agreement is terminated due to non-renewal by Mr. Quinn, Mr. Quinn will be entitled to receive only the accrued benefits as set forth in the Boyer Agreement.

All severance benefits under the Quinn Agreement are contingent on Mr. Quinn signing and not revoking a release of claims as well as Mr. Quinn’s compliance with the terms of the Quinn Agreement.

Mr. Quinn’s PSOs are eligible for the same treatment as Mr. Boyer’s PSOs.

Ken Burns, Jr. The potential payments upon termination or a change in control under the Burns Agreement and Mr. Burns’ outstanding equity award agreements are identical to those described immediately above for Mr. Quinn (except with respect to Mr. Quinn’s PSOs, as Mr. Burns did not receive a PSO grant).

Director Compensation

Under the Company’s non-employee director compensation program, the Company’s non-employee directors (other than the Board chairman) are eligible to receive (a) an annual cash retainer of $55,000, (b) an annual award of RSUs having an aggregate grant date fair value of $100,000 (rounded up to the nearest share) and (c) an additional $10,000 in cash fees related to service as chair of a committee. In addition, under the program, the chairman of the Board is eligible to receive an annual cash retainer of $120,000 and an annual award of RSUs having an aggregate grant date fair value equal to $180,000 (rounded up to the nearest share). Awards of RSUs granted to non-employee directors in connection with the directors’ 2022 service vest on the first anniversary of the grant date. Our non-employee directors are eligible to elect to receive their cash fees in unrestricted shares of Class A common stock.

The following table shows the total compensation paid to the Company’s non-employee directors during the fiscal year ended December 31, 2022.

Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)⁽¹⁾		Total
R. Foster Duncan⁽²⁾⁽⁵⁾	$	32,500	$	132,500	$	165,000
Brian K. Ferraioli⁽⁵⁾	$	60,000	$	240,000	$	300,000
Thomas Henley⁽³⁾	$	-	$	-	$	-
Leonard K. Lemoine⁽⁵⁾	$	27,500	$	127,500	$	155,000
Raquel G. Richmond⁽⁴⁾	$	155,000	$	-	$	155,000
Collis Temple, III	$	55,000	$	100,000	$	155,000
Daniel G. Weiss⁽²⁾⁽⁵⁾	$	32,500	$	132,500	$	165,000

(1)	Reflects the aggregate grant date fair value of RSUs computed in accordance with FASB ASC Topic 718. Messrs. Duncan, Lemoine, Temple and Weiss each had 9,183 outstanding RSUs, and Mr. Ferraioli had 16,529 outstanding RSUs as of December 31, 2022.

(2)	Each of Messrs. Duncan and Weiss received $10,000 of additional cash compensation for their responsibilities as Chair of the Audit Committee and the Compensation Committee, respectively.

(3)	Mr. Henley was ineligible to receive any director compensation in 2022, pursuant to the internal policies of Bernhard Capital Partners.

(4)	Due to a familial relationship with a Senior Advisor to the President of the United States which prevents her from receiving equity compensation, Ms. Richmond receives solely cash compensation for her service on the Board.

(5)

Messrs. Duncan, Ferraioli, Lemoine and Weiss each elected to receive their first and second quarter cash fees for their Board service in unrestricted shares of the Company’s Class A common stock as follows: (i) 4,410 shares for Mr. Duncan, (ii) 8,141 shares for Mr. Ferraioli, (iii) 3,732 shares for Mr. Lemoine, and (iv) 3,938 shares for Mr. Weiss. Since director fees are paid in arrears, the shares were delivered on April 29, 2022 and July 8, 2022.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS

The following table sets forth the beneficial ownership of the Company Common Stock as of March 13, 2023 by:

●

each person or group of affiliated persons, who we know to beneficially own more than 5% of the Company Common Stock;

●

each of our executive officers;

●

each of our directors; and

●

all of our current executive officers and directors as a group.

The beneficial ownership of shares of Company Common Stock is based on 39,720,300 shares of Company Common Stock, consisting of (i) 38,452,047 shares of Class A Common Stock and (ii) 1,268,253 shares of Class B Common Stock, in each case issued and outstanding as of March 13, 2023.

Unless otherwise noted below, the address of each of the individuals and entities named in the table below is c/o Atlas Technical Consultants, Inc., 13215 Bee Cave Parkway, Building B, Suite 230, Austin, Texas 78738. The information provided in the table is based on our records, information filed with the SEC and information provided to us, except where otherwise noted.

Name and Address of Beneficial Owner	Number of shares of Class A Common Stock		Number of shares of Class B Common Stock		Class A %			Class B %		Total Company Common Stock %
Directors, Named Executive Officers
L. Joe Boyer⁽¹⁾		997,336		—		2.58	%		—		2.50	%
David D. Quinn Sr.⁽²⁾		192,181		—		*			—		*
Ken Burns, Jr.⁽³⁾		92,569		—		*			—		*
Brian K. Ferraioli⁽⁴⁾		116,585		—		*			—		*
Leonard K. Lemoine⁽⁵⁾		111,252		—		*			—		*
Thomas H. Henley		—		—		—			—		—
Collis Temple III⁽⁵⁾		17,775		—		*			—		*
R. Foster Duncan⁽⁵⁾		45,441		—		*			—		*
Daniel G. Weiss⁽⁵⁾		46,958		—		*			—		*
Raquel G. Richmond		—		—		—			—		—
All Directors and Executive Officers as a Group (Thirteen Individuals)		2,204,659		—		5.67	%		—		5.49	%
Five Percent Holders:
Bernhard Capital Partners⁽⁶⁾		16,883,244		—		30.51	%		—		29.83	%
GSO Entity⁽⁷⁾		2,200,000		—		5.41	%		—		5.24	%

*	Represents beneficial ownership of less than 1% of Class A Common Stock or Company Common Stock outstanding, as applicable.

(1)

Includes shares of Class A Common Stock underlying 35,689 unvested RSUs granted on May 15, 2020, which are scheduled to vest on May 15, 2023, 36,036 unvested RSUs granted on May 6, 2021, which 1/2 are scheduled to vest on May 6, 2023 and 1/2 are scheduled to vest on May 6, 2024, 44,077 unvested RSUs granted on March 18, 2022 of which 1/3 are scheduled to vest on March 18, 2023, 1/3 are scheduled to vest on March 18, 2024 and 1/3 are scheduled to vest on March 18, 2025, 52,619 unvested RSUs granted on February 24, 2023, which are scheduled to vest on August 24, 2023, and 44,190 unvested RSUs granted on March 10, 2023 of which 1/3 are scheduled to vest on March 10, 2024, 1/3 are scheduled to vest on March 10, 2025 and 1/3 are scheduled to vest on March 10, 2026.

(2)

Includes shares of Class A Common Stock underlying 8,922 unvested RSUs granted on May 15, 2020, which are scheduled to vest on May 15, 2022, 15,014 unvested RSUs granted on May 6, 2021 which 1/2 are scheduled to vest on May 6, 2023 and 1/2 are scheduled to vest on May 6, 2024, 18,366 unvested RSUs granted on March 18, 2022, of which 1/3 are scheduled to vest on March 18, 2023, 1/3 are scheduled to vest on March 18, 2024 and 1/3 are scheduled to vest on March 18, 2025, 24,929 unvested RSUs granted on February 24, 2023, which are scheduled to vest on August 24, 2023, and 16,367 unvested RSUs granted on March 10, 2023 of which 1/3 are scheduled to vest on March 10, 2024, 1/3 are scheduled to vest on March 10, 2025 and 1/3 are scheduled to vest on March 10, 2026.

(3)

Includes shares of Class A Common Stock underlying 4,461 unvested RSUs granted on May 15, 2020, which are scheduled to vest on May 15, 2023, 7,507 unvested RSUs granted on May 6, 2021, which 1/2 are scheduled to vest on May 6, 2023 and 1/2 are scheduled to vest on May 6, 2024, 13,774 unvested RSUs granted on March 18, 2022, of which 1/3 are scheduled to vest on March 18, 2023, 1/3 are scheduled to vest on March 18, 2024 and 1/3 are scheduled to vest on March 18, 2025, 28,764 unvested RSUs granted on February 24, 2023, which are scheduled to vest on August 24, 2023, and 20,459 unvested RSUs granted on March 10, 2023 of which 1/3 are scheduled to vest on March 10, 2024, 1/3 are scheduled to vest on March 10, 2025 and 1/3 are scheduled to vest on March 10, 2026.

(4)

Includes shares of Class A Common Stock underlying 16,529 unvested RSUs granted on March 18, 2022, which are scheduled to vest on March 18, 2023, 14,730 unvested RSUs granted on March 10, 2023, which are scheduled to vest on March 10, 2024, and 85,326 shares of Class A Common Stock held by Brian K. Ferraioli Revocable Trust.

(5)

Includes shares of Class A Common Stock underlying 9,183 unvested RSUs granted on March 18, 2022, which are scheduled to vest on March 18, 2023 and 8,592 unvested RSUs granted on March 10, 2023, which are scheduled to vest on March 10, 2024.

(6)

Based on the Schedule 13D/A filed with the Securities and Exchange Commission on February 9, 2021. Comprised of 8,971,339 shares of Class A Common Stock held by AS&M SPV, LLC (“AS&M SPV”) and 7,911,905 shares of Class A Common Stock held by Arrow Environmental SPV, LLC (“Arrow SPV”), all of which are owned indirectly by the BCP Energy Services Funds (as defined below). Each of AS&M SPV and Arrow SPV is a limited partner of AS&M Holdings LP (“AS&M Holdings”). The general partner of AS&M Holding is AS&M Holdings GP LLC, which is indirectly wholly owned by BCP Energy Services Fund, LP, BCP Energy Services Fund-A, LP and BCP Energy Services Executive Fund, LP (collectively, the “BCP Energy Services Funds”). The general partner of all three BCP Energy Services Funds is BCP Energy Services Fund GP, LP. The general partner of BCP Energy Services Fund GP, LP is BCP Energy Services Fund UGP, LLC. BCP Energy Services Fund UGP, LLC is managed by J. M. Bernhard, Jr. and Jeff Jenkins. Each of the BCP entities and Messrs. Bernhard and Jenkins may be deemed to beneficially own such shares directly or indirectly controlled, but each disclaims beneficial ownership of such shares in excess of its or their pecuniary interest therein. The address of each of the BCP entities and Messrs. Bernhard and Jenkins is 400 Convention Street, Suite 1010, Baton Rouge, Louisiana 70802.

(7)

GSO Capital Opportunities Fund III LP (the “GSO Entity”) directly holds the reported shares shown above. GSO Capital Opportunities Associates III LLC is the general partner of GSO Capital Opportunities Fund III LP. GSO Holdings I L.L.C. is the managing member of GSO Capital Opportunities Associates III LLC. Blackstone Holdings II L.P. is the managing member of GSO Holdings I L.L.C. with respect to securities beneficially owned by the GSO Entity. Blackstone Holdings I/II GP L.L.C. is the general partner of each of Blackstone Holdings I L.P. and Blackstone Holdings II L.P. Blackstone Inc. is the sole member of Blackstone Holdings I/II GP L.L.C. The sole holder of the Series II preferred stock of Blackstone Inc. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly owned by Blackstone Inc.’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. Each of the foregoing entities and individuals disclaims beneficial ownership of the securities held directly by the GSO Entity (other than the GSO Entity to the extent of its direct holdings). The principal business address of this stockholder is c/o GSO Capital Partners LP, 345 Park Avenue, 31^st Floor, New York, New York 10154.

Changes in Control

On January 30, 2023, the Company entered into an Agreement and Plan of Merger (the “GI Merger Agreement”) with GI Apple Midco LLC, a Delaware limited liability company (“GI Parent”) and GI Apple Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of GI Parent (“GI Merger Sub”). Pursuant to the GI Merger Agreement, GI Merger Sub will be merged with and into the Company (the “GI Merger”), with the Company continuing as the surviving company in the GI Merger. GI Parent and GI Merger Sub are controlled by investment funds advised by GI Partners.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Founder Shares

Following the completion of the Atlas Business Combination, the Seller and its limited partners (the “Continuing Members”) owned an aggregate of 23,974,368 Holdings Units redeemable on a one-for-one basis for shares of Class A common stock. Upon the redemption by any Continuing Member of Holdings Units for shares of Class A common stock, a corresponding number of shares of our Class B common stock held by such Continuing Member will be cancelled. Prior to the Atlas Business Combination, the initial stockholders held all 5,000,000 shares of the Company’s issued and outstanding Class F common stock. Following the conversion of each outstanding share of our Class F common stock to one share of Class A common stock in connection with the Atlas Business Combination, Boxwood LLC owned an aggregate 2,225,000 shares of Class A common stock and 3,750,000 private placement warrants. See “Tender Offer and Warrant Exchange” below regarding the exchange of the private placement warrants for the Company’s Class A common stock.

Tender Offer and Warrant Exchange

Public Warrants

In November 2018, the Company consummated its initial public offering of units, each consisting of one share of Class A common stock and one Public Warrant. At the commencement of the Atlas Business Combination, there were 20,000,000 public warrants outstanding. Each public warrant entitled the holder to purchase one share of Class A common stock at a price of $11.50 per share. The public warrants were set to expire five years after the closing of the Atlas Business Combination or earlier upon redemption or liquidation.

In October 2020, the Company offered each holder of its outstanding warrants, including the public warrants and the private placement warrants the opportunity to exchange their warrants for shares of the Company’s Class A common stock, par value $0.0001 per share. Each holder was to receive 0.1665 or 0.185 shares of Class A common stock in exchange for each outstanding warrant tendered by the holder and exchanged pursuant to the terms of the offer. The redemption rate was dependent upon whether the warrant holder tendered their warrants prior to the offer deadline. Warrant holders who tendered their warrants for exchange prior to the expiration of the tender offer period received the 0.185 conversion rate, and any warrant holders who did not tender their warrants by the appropriate deadline received the 0.1665 conversion rate. The Company concluded the offer in November 2020 and all Warrants were converted to Class A common stock by December 31, 2020.

Private Placement Warrants

Upon closing of the Boxwood initial public offering, Boxwood Sponsor purchased an aggregate of 3,750,000 private placement warrants s. Each private placement warrants was exercisable for one share of Class A common stock at a price of $11.50. The private placement warrants were identical to the public warrants discussed above, except (i) they would not be redeemable by the Company so long as they were held by Boxwood Sponsor and (ii) they were not exercisable by the holders on a cashless basis.

In connection with the October 2020 offer to the warrant holders to exchange their warrants for the Company’s Class A common stock, Boxwood Sponsor opted to fully exchange their private placement warrants for Class A common stock. As of December 31, 2020, there were no remaining private placement warrants issued or outstanding.

Continuing Members Registration Rights Agreement

On February 14, 2020, in connection with the consummation of the Atlas Business Combination, the Company entered into a registration rights agreement (the “Continuing Members RRA”) with the Continuing Members. Under the Continuing Members RRA, the Company has certain obligations to register for resale under the Securities Act all or any portion of the shares of the Class A common stock that the Continuing Members hold as of the date of the Continuing Members RRA and that they may acquire thereafter, including upon the exchange or redemption of any other security therefor (collectively, the “Continuing Member Registrable Securities”).

Under the Continuing Members RRA, Atlas Technical Consultants SPV, LLC and Arrow Environmental SPV LLC (together, “BCP”) may demand an unlimited number of underwritten offerings for all or part of the Continuing Member Registrable Securities held by BCP and the other Continuing Members.

Holders of the Continuing Member Registrable Securities have certain “piggy-back” registration rights with respect to registration statements. The Company will bear the expenses incurred in connection with the preparation and filing of any such registration statements.

Restrictive Covenant Agreement

In connection with the consummation of the Atlas Business Combination, Holdings and BCP entered into a restrictive covenant agreement (the “Restrictive Covenant Agreement”) pursuant to which the BCP parties agreed not to (i) for a period of two years, induce or attempt to induce any of the executives named therein or any other executive officer of Atlas Intermediate to leave the employ of Atlas Intermediate, (ii) for a period of two years, hire any executive who was employed by Atlas Intermediate at any time during the 12 month period prior to the consummation of the Atlas Business Combination, (iii) for a period of two years, induce or attempt to induce any person that is a customer, supplier or material business relation of Atlas Intermediate to cease doing business with Atlas Intermediate, (iv) make certain types of disparaging or false statements and (v) disclose certain confidential information, subject to the terms and conditions therein.

GSO Registration Rights Agreement

In connection with the consummation of the Atlas Business Combination, the Company entered into a registration rights agreement (the “GSO RRA”) with the GSO Entity and the other holders party thereto (together, “GSO”). Under the GSO RRA, we have certain obligations to register for resale under the Securities Act all or any portion of the shares of the Class A common stock that the Continuing Members (as defined in the Amended and Restated Limited Liability Company Agreement of Holdings) hold[s] as of the date of the GSO RRA and that they may acquire thereafter, including upon the exchange or redemption of any other security therefor (collectively, the “GSO Registrable Securities”).

We are required to file a registration statement registering the resale of the GSO Registrable Securities. Additionally, GSO may demand up to two underwritten offerings for all or part of the GSO Registrable Securities held by GSO under the GSO RRA.

Holders of the GSO Registrable Securities have certain “piggy-back” registration rights with respect to registration statements and rights to require us to register for resale the GSO Registrable Securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred in connection with the preparation and filing of any such registration statements.

The GSO RRA does not contemplate the payment of penalties or liquidated damages to GSO as a result of a failure to register, or delays with respect to the registration of, the GSO Registrable Securities.

Nomination Agreement

In connection with the consummation of the Atlas Business Combination, the Company entered into the nomination agreement (the “Nomination Agreement”), which provides BCP (“our Sponsor”) (through the Seller) the right to designate a certain number of individuals for nomination by the Board to be elected by the Company’s stockholders based on the percentage of the voting power of the outstanding Class A common stock and Class B common stock beneficially owned by our Sponsor and its affiliates, in the aggregate, as follows: (i) for so long as our Sponsor beneficially owns at least 50% of the aggregate voting power of the Company, our Sponsor will have the right to nominate at least a majority of all directors of the Board; (ii) for so long as our Sponsor beneficially owns less than 50% and equal to or greater than 35% of the aggregate voting power of the Company, our Sponsor will have the right to designate three directors (and the size of the Board will be fixed at eight directors); (iii) for so long as our Sponsor beneficially owns less than 35% and equal to or greater than 15% of the aggregate voting power of the Company, our Sponsor will have the right to designate two directors (and the size of the Board will be fixed at seven directors); and (iv) for so long as our Sponsor beneficially owns less than 15% and equal to or greater than 5% of the aggregate voting power of the Company, our Sponsor will have the right to designate one director.

Under the Nomination Agreement, once our Sponsor’s beneficial ownership of the aggregate voting power of the Company falls below one of the percentage thresholds set forth above, such that our Sponsor is entitled to nominate a lesser number of directors, our Sponsor must identify such excess directors than the number of directors serving on the Board at such time that were BCP nominees, BCP shall identify such excess director(s) who are BCP Directors (as defined in the Nomination Agreement) and who shall be required to immediately offer their resignation from the Board for consideration by the independent (as such independence is defined in the Nomination Agreement, the “Nomination Independent Directors”) directors of the Board for their consideration. The Nomination Independent Directors must then consider such offers of resignation and determine whether to accept or reject any or all of them. As previously discussed, our Sponsor’s beneficial ownership of the Company’s aggregate voting power dropped below 50% in February 2021. Pursuant to the terms of the Nomination Agreement, two directors identified by our Sponsor offered their resignations to the Nomination Independent Directors. The Nomination Independent Directors held a special meeting to consider the offers of resignation and ultimately rejected both such offers and as a result the size of the Board has remained unchanged.

Credit Agreements

On February 25, 2021, Atlas Intermediate, as the borrower, entered into two new credit facilities consisting of (i) a $432.0 million senior secured term loan at closing and, subject to the satisfaction of certain terms and conditions, a committed delayed draw term loan facility in an aggregate principal amount of up to $75.0 million and an uncommitted incremental term loan facility that may be incurred after closing (the “Term Loan”) pursuant to a Credit Agreement dated February 25, 2021, by and among Holdings, Atlas Intermediate, Wilmington Trust, National Association, as administrative agent and collateral agent, and certain lenders thereto, including certain Blackstone entities, which may include, Blackstone Alternative Credit Advisors LP, and its managed funds and accounts, and its affiliates, Blackstone Holdings Finance Co. L.L.C. and its affiliates, and/or certain other of their respective funds, accounts, clients managed, advised or sub-advised, or any of their respective affiliates (the “Term Loan Agreement”) and (ii) a $40.0 million senior secured revolver which aggregate principal amount may be increased, subject to the satisfaction of certain terms and conditions, including obtaining commitments therefor, by up to $20,000,000 (the “Revolver”) pursuant to that certain Credit Agreement dated February 25, 2021, by and among Holdings, Atlas Intermediate, JPMorgan Chase Bank, N.A., as administrative agent, swingline lender, issuing bank, lender, sole bookrunner and sole lead arranger (the “ABL Revolver Agreement,” and together with the Term Loan Agreement, the “Credit Agreements”). The Term Loan Agreement refinanced the 2020 Credit Agreement with Macquarie Capital Funding LLC, as administrative agent and certain lenders, which repayment was effectuated partially in cash and partially by way of a cashless exchange of existing term loans and preferred equity for the Term Loan.

The initial Term Loan will mature on February 25, 2028 and the Revolver will mature on February 25, 2026.

Interest on any outstanding borrowings is payable monthly under the ABL Revolver Agreement, quarterly under the Term Loan Agreement or, in each case, at the end of the applicable interest period in arrears. The cash interest rates under the Term Loan Agreement will be equal to either (i) the Adjusted LIBO Rate (as defined in the Term Loan Agreement), plus 5.50%, or (ii) an Alternate Base Rate (as defined in the Term Loan Agreement), plus 4.50%. The interest rates under the ABL Revolver Agreement will be equal to either (i) the Adjusted LIBO Rate (as defined in the ABL Revolver Agreement), plus 2.50%, or (ii) the ABR (as defined in the ABL Revolver Agreement), plus 1.50%.

The Credit Agreements are guaranteed by Holdings and secured by (i) in the case of the ABL Revolver Agreement, a first priority security interest in the current assets, including accounts receivable, of Holdings, Atlas Intermediate and its subsidiaries and (ii) in the case of the Term Loan Agreement, a pledge of the equity interests of the subsidiaries of Holdings and Atlas Intermediate, and subject to the first lien security interest on current assets under the Revolver, a first priority lien on substantially all other assets of Holdings, Atlas Intermediate and all of their direct and indirect subsidiaries.

The ABL Revolver Agreement contains a “springing” financial covenant which requires Holdings, Atlas Intermediate and all of their direct and indirect subsidiaries on a consolidated basis to maintain a Fixed Charge Coverage Ratio (as defined in the ABL Revolver Agreement) of no less than 1.10 to 1.00 when the outstanding principal amount of loans under the Revolver exceeds $0 or the aggregate exposure for letters of credit under the Revolver exceeds $5 million.

The Credit Agreements also include a number of customary negative covenants. Such covenants, among other things, limit or restrict the ability of each of Holdings, Atlas Intermediate and all of their direct and indirect subsidiaries to:

●

incur additional indebtedness and make guarantees;

●

incur liens on assets;

●

engage in mergers or consolidations or fundamental changes;

●

dispose of assets;

●

pay dividends and distributions or repurchase capital stock;

●

make investments, loans and advances, including acquisitions;

●

amend organizational documents and other material contracts;

●

enter into certain agreements that would restrict the ability to incur liens on assets;

●

repay certain junior indebtedness, and in the case of the ABL Revolver Agreement, make certain payments on the Term Loans;

●

enter into certain transactions with affiliates;

●

amend certain documents governing indebtedness;

●

enter into sale leaseback transactions;

●

change fiscal periods; and

●

change the conduct of its business.

The aforementioned restrictions are subject to certain exceptions including (i) the ability to incur additional indebtedness, liens, investments, dividends and distributions, and prepayments of junior indebtedness subject, in each case, to compliance with certain financial metrics and/or certain other conditions and (ii) a number of other traditional exceptions that grant the Company continued flexibility to operate and develop its business.

The Credit Agreements also include customary affirmative covenants, representations and warranties and events of default.

The representations, warranties and covenants contained in the Credit Agreements were made only for the purpose of the Credit Agreements and as of specific dates, were solely for the benefit of the parties to the Credit Agreements, and may be subject to limitations agreed upon by the parties, including being qualified by disclosures for the purpose of allocating contractual risk between the parties instead of establishing matters as facts; and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to investors or security holders. Accordingly, investors should not rely on the representations, warranties, and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company.

On August 4, 2022, Holdings, Intermediate, certain subsidiaries of Holdings and the administrative agent entered into the First Amendment to Credit Agreement (the “Credit Agreement Amendment”), which amended the ABL Revolver Agreement. The Credit Agreement Amendment amended the Credit Agreement to, among other matters, increase the revolving credit facility thereunder by $20,000,000 to an aggregate principal amount of $60,000,000.

Amended and Restated Limited Liability Company Agreement of Holdings

We operate our business through Holdings. In connection with the consummation of the Atlas Business Combination, we and other member parties thereto entered into the Holdings LLC Agreement. The Holdings LLC Agreement sets forth, among other things, the rights and obligations of the holders of Holdings Units.

Managing Member. Under the Holdings LLC Agreement, we are the sole managing member of Holdings. As the sole managing member, we are able to control all of the day-to-day business affairs and decision-making of Holdings without the approval of any other member, unless otherwise stated in the Holdings LLC Agreement. As such, we, through our officers and directors, are responsible for all operational and administrative decisions of Holdings and the day-to-day management of Holdings’ business. Pursuant to the terms of the Holdings LLC Agreement, we may not resign or cease to be the managing member of Holdings unless proper provision is made, in compliance with the Holdings LLC Agreement, so that our obligations, our successor (if applicable) and any new managing member and the rights of all members under the Holdings LLC Agreement and applicable law remain in full force and effect.

Compensation; Reimbursement. We are not entitled to compensation for our services as managing member. We, as managing member, and other members of Holdings will be entitled to reimbursement by Holdings for all costs, fees, operating expenses and other expenses of Holdings (including the costs, fees and expenses of attorneys, accountants or other professionals and the compensation of all personnel providing services to Holdings) incurred in pursuing and conducting, or otherwise related to, the activities of Holdings.

Distributions. Distributions to Holdings’ equity holders may be declared by the managing member out of funds legally available therefor in such amounts and on such terms (including the payment dates of such distributions) as the managing member shall determine (in its sole discretion in accordance with the fiduciary duties as provided in the Holdings LLC Agreement) using such record date as the managing member may designate; provided that, so long as the Preferred Units remained outstanding, such distributions were only allowed to be declared at the end of a quarter so long as there remained funds legally available therefor after the cash payments required to be paid to the Preferred Unitholders in such quarter. As previously discussed, the Preferred Units were redeemed in full on February 25, 2021. Any distribution to Holdings’ equity holders shall be made as of the close of business on the applicable record date on a pro rata basis (subject to certain exceptions) in accordance with the number of Holdings Units owned by each member as of the close of business on such record date.

Common Unit Redemption Right. The Holdings LLC Agreement provides that BCP, and following the date that was six months from the consummation of the Atlas Business Combination, each of the other members of Holdings (other than we and our subsidiaries) has a right to cause Holdings to redeem from time to time, all or a portion of such member’s Holdings Units (together with an equal number of shares of Class B common stock) for either (x) the delivery by Holdings of a number of shares of Class A common stock equal to the number of Holdings Units surrendered or (y) at Holdings’ election made in accordance with the Holdings LLC Agreement, the delivery by Holdings of cash equal to the Cash Election Amount (as defined in the Holdings LLC Agreement) calculated with respect to such redemption.

If (i) there is any reclassification, reorganization, recapitalization or other similar transaction pursuant to which the shares of Class A common stock are converted or changed into another security, securities or other property, or (ii) we, by dividend or otherwise, distribute to all holders of the shares of Class A common stock evidences of our indebtedness or assets, including securities (including shares of Class A common stock and any rights, options or warrants to all holders of the shares of Class A common stock to subscribe for, to purchase or to otherwise acquire shares of Class A common stock, or other securities or rights convertible into, or exchangeable or exercisable for, shares of Class A common stock) but excluding any cash dividend or distribution as well as any such distribution of indebtedness or assets received by us from Holdings in respect of the Holdings Units, then upon any subsequent redemption, in addition to the shares of Class A common stock or the Cash Election Amount, as applicable, each member of Holdings shall be entitled to receive the amount of such security, securities or other property that such member would have received if such redemption had occurred immediately prior to the effective date of such reclassification, reorganization, recapitalization, other similar transaction, dividend or other distribution, taking into account any adjustment as a result of any subdivision (by any split, distribution or dividend, reclassification, reorganization, recapitalization or otherwise) or combination (by reverse split, reclassification, recapitalization or otherwise) of such security, securities or other property that occurs after the effective time of such reclassification, reorganization, recapitalization or other similar transaction.

Amendment No. 1 to the Holdings LLC Agreement

Voting and Support Agreement

As an inducement to GI Parent and the Company entering into the GI Merger Agreement, on January 30, 2023, AS&M SPV, LLC, a Delaware limited liability company, and Arrow Environmental SPV, LLC, a Delaware limited liability company (together, the “Holders”), which collectively beneficially own, in the aggregate, approximately 43% of the Company’s outstanding common stock entered into a Voting and Support Agreement with the Company (the “Voting Agreement”), by and among the Company, GI Parent, GI Merger Sub and the Holders, pursuant to which each Holder has agreed to vote its shares in favor of the matters to be submitted to the Company’s stockholders in connection with the GI Merger, subject to the terms and conditions set forth in the Voting Agreement.

The Voting Agreement provides that if the Board changes its recommendation with regard to the Company’s stockholders’ approval of the GI Merger Agreement, then the number of the Holders’ shares of the Company’s common stock subject to the obligations under the Voting Agreement will be reduced such that the aggregate number of shares required to vote in favor of the GI Merger will be equal to at least the percentage of aggregate voting power with respect to all outstanding shares of the Company’s common stock held by stockholders of the Company (excluding the Holder) voting in favor of approving the GI Merger Agreement, and transactions contemplated thereby, multiplied by such Holder’s shares of the Company’s common stock subject to the obligations under the Voting Agreement.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following is a summary of fees paid to Grant Thornton LLP (“Grant Thornton”), Houston, TX (Auditor Firm ID: 36-6055558), our independent registered public accounting firm, for services rendered.

Audit Fees and Services

On March 9, 2022, the Audit Committee approved the appointment of Grant Thornton to serve as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022.

The following is a summary of fees paid to Grant Thornton for services rendered.

Audit Fees

Audit fees consist of fees billed by Grant Thornton for professional services rendered for the audit of Atlas Intermediate and ATC Group’s (and the Company’s following the Atlas Business Combination) annual financial statements, review of the financial information included in the Company’s Forms 10-Q for the respective periods and other required filings with the SEC for services rendered in the years ended December 31, 2022 and December 31, 2021 amounted to $1,124,919 and $1,071,660, respectively. The above amounts include interim procedures and audit fees, as well as attendance at Audit Committee meetings.

Audit-Related Fees

Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards.

Fees billed by Grant Thornton for professional services rendered, for assurance and related services that are reasonably related to performance of the audit or review of the financial statements for the Company for services rendered in the years ended December 31, 2022 and December 31, 2021 amounted to $0 and $0, respectively.

Tax Fees

We did not pay Grant Thornton for tax compliance services in the years ended December 31, 2022 or December 31, 2021.

All Other Fees

Grant Thornton rendered no other services and we did not pay Grant Thornton any other fees for the years ended December 31, 2022 or December 31, 2021.

Audit Committee Pre-Approval Policies and Procedures

The Audit Committee, on at least an annual basis, reviews audit and non-audit services performed by our independent registered public accounting firm as well as the fees charged for such services. Our policy is that all audit and non-audit services must be pre-approved by the Audit Committee. All of such services and fees were pre-approved during the fiscal year ended December 31, 2022 by the Audit Committee.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this report:

(1)

Financial Statements

The consolidated financial statements filed as part of this report are listed on the Index to Consolidated Financial Statements of this Annual Report on Form 10-K.

(2)

Financial Statement Schedules

None.

(3)

Exhibits

We hereby file as part of this report the exhibits listed in the below Exhibit Index.

Exhibit No.		Description
2.1		Unit Purchase Agreement, dated August 12, 2019, by and among the Company, Atlas TC Holdings LLC, Atlas TC Buyer LLC, Atlas Intermediate Holdings LLC and Atlas Technical Consultants Holdings LP (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 13, 2019).
2.2		Amendment No. 1 to Unit Purchase Agreement, dated as of January 23, 2020, by and among the Company, Atlas TC Holdings LLC, Atlas TC Buyer LLC, Atlas Intermediate Holdings LLC and Atlas Technical Consultants LP (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2020).
2.3		Agreement and Plan of Merger, dated January 30, 2023, by and among the Company, GI Apple Midco LLC, and GI Apple Merger Sub LLC. (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 1, 2023).
3.1		Third Amended and Restated Certificate of Incorporation of Atlas Technical Consultants, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the SEC on June 22, 2022).
3.2		Amended and Restated Bylaws of Atlas Technical Consultants, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the SEC on June 22, 2022).
4.1		Warrant Agreement, dated November 15, 2018, between the Company and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 21, 2018).
4.2		Amendment No. 1 to Warrant Agreement, dated as of November 17, 2020, by and among the Company and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 17, 2020).
4.3*		Description of Securities.
4.4		Specimen Class A common stock Certificate (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1 (File No. 333-228018), filed with the SEC on November 15, 2018).
4.5		Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-1 (File No. 333-228018), filed with the SEC on November 15, 2018).
10.1		Subscription Agreement, dated as of February 14, 2020 between Atlas TC Holdings LLC and GSO COF III AIV-2 LP (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 14, 2020).
10.2		Support Letter, dated as of February 14, 2020, between Boxwood Merger Corp. and GSO Capital Partners LP (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on February 14, 2020).
10.3		Credit Agreement, dated as of February 14, 2020, by and among Atlas TC Holdings LLC, Atlas TC Buyer LLC, Atlas Intermediate Holdings LLC, the lenders and issuing banks from time to time party thereto, and Macquarie Capital Funding LLC, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on February 14, 2020).
10.4		Amendment No. 1 to the Credit Agreement, dated March 30, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 3, 2020).
10.5		Amendment No. 2 to the Credit Agreement, dated March 31, 2020 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on April 3, 2020).
10.6		Credit Agreement, dated as of February 25, 2021, by and among Atlas TC Holdings LLC, Atlas Intermediate Holdings LLC, the lenders and issuing banks from time to time party thereto, and Wilmington Trust, National Association, as administrative agent and collateral agent (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on February 26, 2021).
10.7		Credit Agreement, dated as of February 25, 2021, by Atlas TC Holdings LLC, Atlas Intermediate Holdings LLC, JPMorgan Chase Bank, N.A., as administrative agent, swingline lender, an issuing bank and lender and the other lenders from time to time thereto (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on February 26, 2021).
10.8		First Amendment to the Credit Agreement, dated August 4, 2022 (incorporated by reference to Exhibit 1.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 5, 2022).
10.9		Nomination Agreement dated as of February 14, 2020, by and among Atlas Technical Consultants, Inc., BCP Energy Services Fund, LP, BCP Energy Services Fund-A, LP and BCP Energy Services Executive Fund, LP (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on February 14, 2020).
10.10		Registration Rights Agreement, dated as of February 14, 2020, by and among Atlas Technical Consultants, Inc. and Atlas Technical Consultants Holdings LP and its limited partners (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the SEC on February 14, 2020).
10.11		Registration Rights Agreement, dated as of February 14, 2020, by and among Boxwood Merger Corp. and GSO Capital Opportunities Fund III LP (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the SEC on February 14, 2020).

10.12		Voting Agreement, dated as of February 14, 2020, by and between Atlas Technical Consultants, Inc. and Boxwood Sponsor LLC (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed with the SEC on February 14, 2020).
10.13		Lockup Agreement, dated as of February 14, 2020, by and between Atlas Technical Consultants, Inc. and Boxwood Sponsor LLC (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed with the SEC on February 14, 2020).
10.14		Amended and Restated Limited Liability Company Agreement of Atlas TC Holdings LLC, dated as of February 14, 2020 (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed with the SEC on February 14, 2020).
10.15		Amendment No. 1 to the Amended and Restated Limited Liability Company Agreement of Atlas TC Holdings LLC, dated as of February 25, 2021, by Atlas Technical Consultants, Inc. (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on February 26, 2020).
10.16		Restrictive Covenant Agreement, dated February 14, 2020, by and among Atlas Technical Consultants Holdings LP, Atlas Technical Consultants, SPV, LLC and Arrow Environmental SPV, LLC (incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed with the SEC on February 14, 2020).
10.17†		Atlas Technical Consultants, Inc. 2019 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.11 to the Company’s Current Report on Form 8-K filed with the SEC on February 14, 2020).
10.18		Commitment Letter, dated as of January 23, 2020, by and among Boxwood Merger Corp., Atlas TC Holdings LLC and GSO Capital Partners LP (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2020).
10.19		Closing Payment Letter, dated as of January 23, 2020, by and among Boxwood Merger Corp., Atlas TC Holdings LLC and GSO Capital Partners LP (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2020).
10.20		Forfeiture Agreement, dated as of January 23, 2020, by and among Boxwood Sponsor, LLC and Atlas Technical Consultants Holdings LP (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2020).
10.21		Amendment No. 1 to Commitment Letter, dated as of January 23, 2020, by and among Boxwood Merger Corp., Macquarie Capital Funding LLC, Macquarie Capital (USA) Inc. and Natixis, New York Branch (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the SEC on January 23, 2020).
10.22		Debt Commitment Letter, dated August 12, 2019, by and among Boxwood Merger Corp., Macquarie Capital Funding LLC, Macquarie Capital (USA) Inc. and Natixis, New York Branch (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on August 13, 2019).
10.23†		Employment Agreement, dated as of August 12, 2019, by and between Boxwood Merger Corp. and L. Joe Boyer (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on August 13, 2019).
10.24		Stockholder Support Agreement, dated as of August 12, 2019, by and between Atlas Technical Consultants Holdings LP, Boxwood Sponsor LLC, MIHI Boxwood Sponsor LLC, MIHI LLC, Boxwood Management Company, LLC and the Company’s officers and directors (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on August 13, 2019).
10.25		Letter Agreement, dated November 15, 2018, among the Company, Boxwood Sponsor, LLC, and each of the officers and directors of the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on November 21, 2018).
10.26		Investment Management Trust Agreement, dated November 15, 2018, between the Company and Continental Stock Transfer & Trust Company (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the SEC on November 21, 2018).
10.27		Registration Rights Agreement, dated November 15, 2018, among the Company, Boxwood Sponsor, LLC and initial stockholders party thereto (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the SEC on November 21, 2018).
10.28		Securities Purchase Agreement, dated November 15, 2018, between the Company and Boxwood Sponsor, LLC (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the SEC on November 21, 2018).
10.29†		Expense Advancement Agreement, dated November 15, 2018, between the Company and Boxwood (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the SEC on November 21, 2018).

10.30		Letter Agreement, dated November 15, 2018, between the Company and Macquarie Capital (USA) Inc. (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the SEC on November 21, 2018).
10.31		Letter Agreement, dated November 15, 2018, among the Company, MIHI LLC and Boxwood Management Company, LLC (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed with the SEC on November 21, 2018).
10.32		Promissory Note, Dated August 22, 2018, issued to Boxwood Sponsor LLC (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form S-1 filed with the SEC on October 26, 2018).
10.33		Securities Subscription Agreement, dated June 28, 2017, between the Registrant and MIHI LLC (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 filed with the SEC on October 26, 2018).
10.34†		Form of Indemnification Agreement (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-1 filed with the SEC on October 26, 2018).
10.35		Securities Assignment Agreement, dated as of October 22, 2018, between Boxwood Sponsor LLC and the independent director nominees (incorporated by reference to Exhibit 10.11 to the Company’s Registration Statement on Form S-1 filed with the SEC on October 26, 2018).
10.36†		Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on March 09, 2020).
10.37†		Form of RSU Award Agreement (Director) (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form S-8 filed with the SEC on April 17, 2020).
10.38†		Employment Agreement, dated as of May 11, 2020, by and between Atlas Technical Consultants, Inc. and David Quinn (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2020).
10.39†		Employment Agreement, dated as of May 11, 2020, by and between Atlas Technical Consultants, Inc. and Gary Cappa (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2020).
10.40†		Employment Agreement, dated as of May 11, 2020, by and between Atlas Technical Consultants, Inc. and Walter Powell (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2020).
10.41†		Form of RSU Award Agreement (Employee) (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 10, 2020).
10.42†		Form of RSU Award Agreement (Current Executive) (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 17, 2021).
10.43†		Form of RSU Award Agreement (Future Executive) (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 17, 2021).
10.44†		Form of PSU Award Agreement (Employee) (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 17, 2021).
10.45†		Form of PSU Award Agreement (Executive) (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 17, 2021).
10.46		Form of RSU Award Agreement (Executive) (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 11, 2022).
10.47		Form of PSU Award Agreement (Executive) (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 11, 2022).
10.48†		Amendment No. 1 to Employment Agreement, dated as of December 17, 2021, by and between Atlas Technical Consultants LLC and L. Joe Boyer (incorporated by reference to Exhibit 10.45 to the Company's Annual Report filed March 15, 2022).
10.49†		Amended and Restated Employment Agreement, dated as of December 17, 2021, by and between Atlas Technical Consultants LLC and David D. Quinn, Sr. (incorporated by reference to Exhibit 10.46 to the Company's Annual Report filed March 15, 2022).
10.50†		Amended and Restated Employment Agreement, dated as of December 31, 2021, by and between Atlas Technical Consultants LLC and Jonathan Parnell (incorporated by referenced to Exhibit 10.3 of the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 11, 2022).
10.51		Voting Agreement, dated January 30, 2023, by and among Parent, AS&M SPV, LLC, Arrow Environmental SPV LLC, and, for the purposes specified therein, the Company (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 31, 2023).
21.1*		Subsidiaries of the Company.
23.1*		Consent of Independent Registered Public Accounting Firm.
31.1*		Certification of the Principal Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).
31.2*		Certification of the Principal Financial and Accounting Officer required by Rule 13a-14(a) or Rule 15d-14(a).
32.1**		Certification of the Principal Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
32.2**		Certification of the Principal Financial and Accounting Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.
101.INS*		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*		Inline XBRL Taxonomy Extension Schema Document.
101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

Filed herewith.

Furnished herewith.

†

Indicates management contract or compensatory plan or arrangement.

ITEM 16. FORM 10-K SUMMARY

None.

ATLAS TECHNICAL CONSULTANTS, INC.

INDEX TO FINANCIAL STATEMENTS

		Page
Report of Independent Registered Public Accounting Firm (PCAOB #248)		F-2
Financial Statements:
Consolidated Balance Sheets		F-3
Consolidated Statements of Operations		F-4
Consolidated Statements of Other Comprehensive Income		F-5
Consolidated Statements of Changes in Stockholders’ Equity (Deficit)		F-6
Consolidated Statements of Cash Flows		F-7
Notes to Consolidated Financial Statements		F-8 to F-29

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Atlas Technical Consultants, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Atlas Technical Consultants, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 30, 2022, and December 31, 2021, the related consolidated statements of operations, other comprehensive income, shareholders’ deficit, and cash flows for each of the two years in the period ended December 30, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 30, 2022, and December 31, 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Emphasis of Matter

As discussed in Note 2 to the consolidated financial statements, the Company adopted ASC 842, Leases, effective January 1, 2022. Our opinion is not modified with respect to this matter.

GRANT THORNTON LLP

We have served as the Company’s auditor since 2017.

Houston, Texas

March 15, 2023

F-2

ATLAS TECHNICAL CONSULTANTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

	December 30,			December 31,
	2022			2021
ASSETS
Current assets:
Cash and equivalents	$	5,799		$	10,697
Accounts receivable, net		103,442			105,362
Unbilled receivables, net		57,178			45,924
Prepaid expenses		8,510			5,061
Other current assets		5,826			4,039

Total current assets		180,755			171,083

Property and equipment, net		15,028			13,757
Intangible assets, net		114,478			107,314
Goodwill		126,693			124,348
Other long-term assets		50,406			4,015

TOTAL ASSETS	$	487,360		$	420,517

LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities:
Trade accounts payable	$	29,758		$	42,521
Accrued liabilities		7,617			17,124
Current maturities of long-term debt		4,930			3,606
Other current liabilities		36,251			26,489

Total current liabilities		78,556			89,740

Long-term debt, net of current maturities and loan costs		499,337			462,193
Other long-term liabilities		35,827			20,074

Total liabilities		613,720			572,007

COMMITMENTS AND CONTINGENCIES (NOTE 12)

Class A common stock, $0.0001 par value, 400,000,000 shares authorized, 37,832,336 and 33,645,212 shares issued and outstanding at December 30, 2022 and December 31, 2021, respectively		4			3
Class B common stock, $0.0001 par value, 100,000,000 shares authorized, 1,346,212 and 3,328,101 shares issued and outstanding at December 30, 2022 and December 31, 2021, respectively		-			-
Additional paid in capital		(80,140	)		(102,692	)
Non-controlling interest		(21,597	)		(20,210	)
Accumulated other comprehensive income		11,469			-
Retained deficit		(36,096	)		(28,591	)

Total shareholders’ deficit		(126,360	)		(151,490	)

TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT	$	487,360		$	420,517

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-3

ATLAS TECHNICAL CONSULTANTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

	For the Year Ended
	December 30,			December 31,
	2022			2021
Revenues	$	604,765		$	538,799
Subcontractor costs		(127,691	)		(102,035	)
Other costs of revenues		(198,332	)		(181,967	)

Gross Profit		278,742			254,797

Operating expenses:
Personnel costs and benefits		(137,130	)		(128,612	)
Selling, general and administrative		(70,912	)		(72,026	)
Change in fair value of earnouts		1,518			(2,823	)
Depreciation and amortization		(32,177	)		(23,700	)

Total Operating expenses		(238,701	)		(227,161	)

Operating income		40,041			27,636

Interest expense		(46,363	)		(54,817	)

Loss before income taxes		(6,322	)		(27,181	)
Income tax expense		(1,748	)		(2,524	)

Net loss		(8,070	)		(29,705	)

Provision for non-controlling interest		565			13,216

Redeemable preferred stock dividends		-			(5,899	)

Net loss attributable to Class A common stock shareholders/members	$	(7,505	)	$	(22,388	)

Loss per Class A common share	$	(0.21	)		(0.81	)

Weighted average of shares outstanding:
Class A common shares (basic and diluted)		36,308,926			27,799,511

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-4

ATLAS TECHNICAL CONSULTANTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME

(in thousands)

	Year Ended
	December 30, 2022			December 31, 2021

Net loss	$	(8,070	)	$	(29,705	)
Other comprehensive income, net of tax effects:
Change in fair value of derivative instruments		11,469			-
Total other comprehensive income		11,469			-
Comprehensive income (loss)		3,399			(29,705	)
Comprehensive income attributable to non-controlling interest		491			13,216
Comprehensive income (loss) attributable to Atlas	$	3,890		$	(16,489	)

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-5

ATLAS TECHNICAL CONSULTANTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ DEFICIT

(in thousands)

	Class A Common Stock				Class B Common Stock						Additional Paid in			Accumulated Other Comprehensive		Non- Controlling			Retained
	Shares		Amount		Shares			Amount			Capital			Income		Interests			Deficit			Total
Balance at December 31, 2020		12,842	$	1		22,439		$	2		$	(37,382	)	$	-	$	(90,566	)	$	(6,203	)	$	(134,148	)
Equity based compensation, net of share withheld for taxes												3,042											3,042
Net loss																	(9,701	)		(20,004	)		(29,705	)
Issuance of Common Stock		1,693		-								16,007											16,007
Conversion of shares		19,111		2		(19,111	)		(2	)		(84,359	)				84,359						-
Distribution to Noncontrolling Interests																	(787	)					(787	)
Dividends on redeemable preferred stock																	(3,515	)		(2,384	)		(5,899	)
Balance at December 31, 2021		33,646	$	3		3,328		$	-		$	(102,692	)	$	-	$	(20,210	)	$	(28,591	)	$	(151,490	)

Balance at December 31, 2021		33,646	$	3		3,328		$	-		$	(102,692	)	$	-	$	(20,210	)	$	(28,591	)	$	(151,490	)
Equity based compensation, net of share withheld for taxes												6,275											6,275
Net loss																	(565	)		(7,505	)		(8,070	)
Issuance of Common Stock		2,018		1		186						16,277											16,278
Conversion of shares		2,168		-		(2,168	)		-														-
Distributions to Partners																	(822	)					(822	)
Other Comprehensive Income															11,469								11,469
Balance at December 30, 2022		37,832	$	4		1,346		$	-		$	(80,140	)	$	11,469	$	(21,597	)	$	(36,096	)	$	(126,360	)

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-6

ATLAS TECHNICAL CONSULTANTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands; continued next page)

	For the Year Ended
	December 30,			December 31,
	2022			2021
Cash flows from operating activities:
Net loss	$	(8,070	)	$	(29,705	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		32,177			23,679
Equity based compensation expense		7,404			3,627
Interest expense, paid in kind		2,460			6,392
Gain on sale of property and equipment		(365	)		(21	)
Write-off of deferred financing costs related to debt extinguishment		-			15,197
Amortization of deferred financing costs		1,292			1,248
Provision for bad debts		1,014			36
Changes in assets & liabilities:
Decrease (increase) in accounts receivable and unbilled receivable		2,539			(2,629	)
(Increase) in prepaid expenses		(7,057	)		(1,523	)
(Increase) in other current assets		(1,480	)		(187	)
(Decrease) increase in trade accounts payable		(13,330	)		13,261
(Decrease) in accrued liabilities		(12,741	)		(3,320	)
(Decrease) increase in other current and long-term liabilities		(1,468	)		2,806
(Increase) decrease in other long-term assets		(177	)		243
Net cash provided by operating activities		2,198			29,104

Cash flows from investing activities:
Purchases of property and equipment		(8,410	)		(3,956	)
Proceeds from disposal of property and equipment		440			78
Purchases of business, net of cash acquired		(30,150	)		(32,669	)
Net cash used in investing activities		(38,120	)		(36,547	)

Cash flows from financing activities:
Proceeds from issuance of debt		26,000			496,754
Payment of loan acquisition costs		(650	)		(8,589	)
Repayments of debt		(3,632	)		(294,463	)
Net payments (proceeds) on revolving line of credit		12,998			(29,760	)
Payment of contingent earn-out		(2,870	)		(1,706	)
Distributions to non-controlling interests		(822	)		(787	)
Payments of redeemable preferred stock dividends		-			(1,185	)
Repayment of redeemable preferred stock		-			(156,186	)
Net cash provided by financing activities		31,024			4,078

Net change in cash and equivalents		(4,898	)		(3,365	)
Cash and equivalents - beginning of period		10,697			14,062
Cash and equivalents - end of period	$	5,799		$	10,697

Supplemental information:
Cash paid during the period for:
Interest	$	48,653		$	24,927
Taxes		2,034			906
Capital assets financed		339			6
Contingent consideration, share settled		2,778			2,000
Payroll taxes, share settled		1,129			585

The accompanying notes are an integral part of these Consolidated Financial Statements.

F-7

ATLAS TECHNICAL CONSULTANTS, INC. AND SUBSIDIARIES

NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Organization

On February 14, 2020 (the “Closing Date”), the Company consummated its acquisition of Atlas Intermediate Holdings LLC, a Delaware limited liability company (“Atlas Intermediate”), pursuant to the Unit Purchase Agreement, dated as of August 12, 2019, as amended on January 22, 2020 (the “Purchase Agreement”), by and among the Company, Atlas TC Holdings LLC, a wholly-owned subsidiary of the Company and a Delaware limited liability company (“Holdings”), Atlas TC Buyer LLC, a wholly-owned subsidiary of Holdings and a Delaware limited liability company (the “Buyer”), Atlas Intermediate and Atlas Technical Consultants Holdings LP, a Delaware limited partnership (the “Seller”). The acquisition of Atlas Intermediate pursuant to the Purchase Agreement, together with the other transactions contemplated by the Purchase Agreement is referred to herein as the “Atlas Business Combination.”

Following the consummation of the Atlas Business Combination, the combined company is organized in an “Up-C” structure in which the business of Atlas Intermediate and its subsidiaries is held by Holdings and will continue to operate through the subsidiaries of Atlas Intermediate, and in which the Company’s only direct assets will consist of common units of Holdings (“Holdings Units”). The Company is the sole manager of Holdings in accordance with the terms of the Amended and Restated Limited Liability Company Agreement of Holdings (the “Holdings LLC Agreement”) entered into in connection with the consummation of the Atlas Business Combination.

The Company has approximately 126 offices in 41 states, employs approximately 3,450 employees, and is headquartered in Austin, Texas.

Services are provided throughout the United States and its territories to a broad base of clients, with no single client representing 10% or more of our revenues for either the years ended December 30, 2022 or December 31, 2021.

Basis of Presentation

The acquisition of Atlas Intermediate has been accounted for as a reverse recapitalization. Under this method of accounting, Atlas is treated as the acquired company and Atlas Intermediate is treated as the acquirer for financial reporting purposes. Therefore, the consolidated financial results include information regarding Atlas Intermediate as the Company’s predecessor entity. Thus, the financial statements included in this report reflect (i) the historical operating results of Atlas Intermediate prior to the Atlas Business Combination; (ii) the combined results of the Company, which does not have any operating results and includes only certain costs such as the compensation for the Company’s board of directors (the “Board”), certain legal fees and taxes, and Atlas Intermediate following the Atlas Business Combination; (iii) the assets, liabilities and members’ capital of Atlas Intermediate at their historical costs; and (iv) the Company’s equity and earnings per share presented for the period from the Closing Date.

F-8

Emerging Growth Company

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act (as defined herein), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

The Company will no longer be an emerging growth company at the end of fiscal year 2023 based on five years since the date of our initial public offering.

Reclassification

Certain amounts reported in prior years in the financial statements have been reclassified to conform to the current year’s presentation. On the Consolidated Statements of Operations, certain expense-related financial statement captions were disaggregated in order to provide more transparency in the financial statements. Cost of revenues was broken out into Subtractor costs and Other costs of revenues. Operating expenses was broken out into Personnel costs and benefits, Selling general and administrative, and Depreciation and amortization. This reclassification did not have any impact to our reported net income or cash flows for the year ended December 31, 2021.

Fiscal Year

The Company’s fiscal year ends on the Friday closest to December 31 with fiscal quarters based on thirteen-week periods ending on the Friday closest to March 31, June 30 and September 30.

F-9

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 December 30, 2022 and December 31, 2021, the allowance for trade accounts receivable was $3.0 million and $3.3 million, respectively, while the allowance for unbilled receivables was $0.5 million and $0.6 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 and amortization 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 and amortizes 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 for the years ended December 30, 2022 and December 31, 2021.

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 years ended December 30, 2022 and December 31, 2021.

F-10

Revenue Recognition

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.

Fixed Price Contracts

Under fixed price contracts, the Company’s clients may 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 or the scope of work changes, the Company will attempt 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 or changes in the amount of our compensation. 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.

F-11

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.

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 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 December 30, 2022 and December 31, 2021 was $0, respectively.

F-12

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.

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.

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.

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.

F-13

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. See Note 6 for a discussion of interest rate cap fair value.

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, 2021	$	31,461
Additions for acquisitions		1,611
Adjustment to liability for changes in fair value		(1,518	)
Reduction of liability for payment made		(8,426	)
Total contingent consideration, as of December 30, 2022		23,128
Current portion of contingent consideration		(14,158	)
Contingent consideration, less current portion	$	8,970

The Company may at its discretion settle the contingent consideration with cash, common shares or a combination of cash and common shares. During the year ended December 30, 2022, we settled a portion of the $8.4 million payment with shares of Class A common stock.

F-14

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.

Equity compensation was $7.4 million and $3.6 million for years ended December 30, 2022 and December 31, 2021, 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.

F-15

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, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU No. 2018-01, Land Easement Practical Expedient for Transition to Topic 842; ASU No. 2018-10, Codification Improvements to Topic 842, Leases; and ASU No. 2018-11, Targeted Improvements. The new standard establishes a right-of-use model (ROU) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The new standard was effective and we adopted and implemented the standard on January 1, 2022 with a modified retrospective transition approach, as permitted, applying the new standard to all leases existing at the date of initial application. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2022. The new standard provides a number of optional practical expedients in transition. We elected the ‘package of practical expedients’, which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs. The adoption of this standard had a material effect on our balance sheet, the most significant effects relating to (1) the recognition of new ROU assets and lease liabilities on our balance sheet for our office, vehicles and equipment operating leases and; (2) providing significant new disclosures about our leasing activities. See Note 14 for further information.

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 reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. This ASU will be effective for the Company commencing after December 15, 2022. The Company is in the process of assessing the impact of this ASU on our consolidated financial statements and disclosures.

NOTE 3 – BUSINESS ACQUISITIONS

In April 2021, the Company acquired Atlantic Engineering Laboratories, Inc. and Atlantic Engineering Laboratories of New York, Inc. (collectively, “AEL”) for cash and an amount of equity consideration totaling $24.5 million, plus an earnout of up to $13.5 million. The Company issued 738,566 shares of Class A common stock to the former owner of AEL, which represented $7.5 million of the total consideration paid. AEL is a materials testing and inspection firm based in Avenel, New Jersey, and provides steel, concrete, soil and other testing and inspection services to a diverse mix of public and private clients primarily in New York and New Jersey. AEL added approximately 290 professionals to the Company’s workforce and is expected to strengthen the Company’s materials testing and inspection services in the Northeast. Total consideration may also be increased or decreased based on results in future years. Final value will be subject to the resolution of certain contingencies.

In July 2021, the Company acquired O’Neill Services Group (“O’Neill), a quality assurance and environmental services firm that services clients throughout the Pacific Northwest. O’Neill, headquartered in Redmond, Washington, employs 90 people and received $24.4 million in the form of cash and stock consideration, plus an earnout of up to $16.0 million. The Company issued 653,728 shares of Class A common stock which represented $6.5 million of the total consideration received. Total consideration may also be increased or decreased based on results in future years. Final value will be subject to the resolution of certain contingencies.

F-16

In March 2022, the Company acquired TranSmart Technologies, Inc. (“TranSmart”) for an initial purchase price of $26.3 million which was paid in a combination of cash and shares of our Class A common stock, plus an earnout of up to $7.0 million. TranSmart specializes in Intelligent Transportation Systems (ITS) and engineering for transportation agencies and customers throughout the Midwest. TranSmart was founded in 1986 and is headquartered in Chicago, Illinois employs approximately 100 employees specializing in ITS, engineering, design and construction/program management services. The Company issued 872,752 of Class A common stock which represented $9.5 million of the total consideration received. Total consideration may also be increased or decreased based on results in future years. Final value will be subject to the resolution of certain contingencies.

In March 2022, the Company acquired 1 Alliance Geomatics, LLC (“1 Alliance”) for an initial purchase price of $17.5 million which was paid in a combination of cash and shares of our Class A common stock, plus an earnout of up to $8.3 million. 1 Alliance is a provider of geospatial services to transportation and water resources clients from its four offices within the Pacific Northwest. 1 Alliance, based in Bellevue, Washington, was founded in 2012 and employs approximately 70 people. The Company issued 355,649 of Class A common stock which represented $4.0 million of the total consideration received. Total consideration may also be increased or decreased based on results in future years. Final value will be subject to the resolution of certain contingencies.

Acquisition costs of approximately $0.5 million and $1.1 million have been expensed in the years ended December 30, 2022 and December 31, 2021, respectively, in the Consolidated Statement of Operations within operating expenses.

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition (in thousands):

	AEL			O’Neill			TranSmart			1 Alliance
Cash	$	684		$	1,608			1,199			1,396
Accounts receivable		6,026			4,201			6,072			2,374
Unbilled receivable		858			-			2,229			2,212
Property and equipment		52			1,049			304			1,692
Other current and long-term assets		130			-			143			166
Intangible assets		13,816			22,735			18,063			8,608
Liabilities		(3,065	)		(1,546	)		(1,961	)		(806	)

Net assets acquired	$	18,501			28,047			26,049			15,642

Consideration paid (cash and equity consideration)	$	24,502		$	24,369			25,857			16,332
Contingent earnout liability at fair value (cash)		7,045			7,106			477			1,134
Total Consideration		31,547			31,475			26,334			17,466
Excess consideration over the amounts assigned to the net assets acquired (goodwill)	$	13,046			3,428			285			1,824

F-17

NOTE 4 – PROPERTY AND EQUIPMENT, NET

The Company depreciates and amortizes its assets on a straight-line basis over the assets’ useful lives, which range from three to ten years. Property and equipment consist of the following:

	December 30,			December 31,			Average
	2022			2021			Life
Furniture and fixtures	$	4,748		$	3,914		3-5 years
Equipment and vehicles		42,878			39,222		3-10 years
Computers		23,885			21,055		3-7 years
Leasehold improvements		6,179			5,925		3-5 years
Construction in progress		1,912			980
Accumulated depreciation and amortization		(64,574	)		(57,339	)
	$	15,028		$	13,757

Depreciation and amortization expense, related to property and equipment, was $8.9 million and $6.0 million for the years ended December 30, 2022 and December 31, 2021, respectively.

F-18

NOTE 5 – GOODWILL AND INTANGIBLES

The carrying amount, including changes therein, of goodwill was as follows:

Balance as of December 31, 2021	$	124,348
Acquisitions		2,109
Measurement period adjustments		236
Balance as of December 30, 2022	$	126,693

The Company did not recognize any impairments of goodwill during the years ended December 30, 2022 or December 31, 2021.

Intangible assets as of December 30, 2022 and December 31, 2021 consist of the following:

	December 30, 2022							December 31, 2021							Remaining
	Gross amount		Accumulated amortization			Net book value		Gross amount		Accumulated amortization			Net book value		useful life (in years)
Definite life intangible assets:
Customer relationships	$	174,026	$	(63,713	)	$	110,313	$	149,917	$	(47,310	)	$	102,607		7.1
Tradenames		28,143		(23,978	)		4,165		25,580		(20,890	)		4,690		1.7
Non-competes		600		(600	)		-		600		(583	)		17		0.0
Total intangibles	$	202,769	$	(88,291	)	$	114,478	$	176,097	$	(68,783	)	$	107,314

Amortization expense was $19.5 million and $15.2 million for the years ended December 30, 2022 and December 31, 2021, respectively.

Amortization of intangible assets for the next five years and thereafter is expected to be as follows:

2023	$	19,574
2024		18,224
2025		17,083
2026		16,905
2027		15,247
Thereafter		27,445
	$	114,478

F-19

NOTE 6 – LONG-TERM DEBT

On February 25, 2021, Atlas Intermediate, as the borrower, entered into two new credit facilities consisting of (i) a $432.0 million senior secured term loan at closing and, subject to the satisfaction of certain terms and conditions, a committed delayed draw term loan facility to be used for future acquisitions, within 18 month of February 25, 2021 and subject to certain conditions, in an aggregate principal amount of up to $75.0 million, of which $61 million has been used ($26.0 million in connection with the acquisitions in the first quarter of 2022) and the remaining $14 million is unavailable as the 18 month period has expired, and an uncommitted incremental term loan facility that may be incurred after closing (the “Term Loan”) pursuant to a Credit Agreement dated February 25, 2021, by and among Holdings, Atlas Intermediate, Wilmington Trust, National Association, as administrative agent and collateral agent, and certain lenders thereto, including certain Blackstone entities, which may include, Blackstone Alternative Credit Advisors LP, and its managed funds and accounts, and its affiliates, Blackstone Holdings Finance Co. L.L.C. and its affiliates, and/or certain other of their respective funds, accounts, clients managed, advised or sub-advised, or any of their respective affiliates (the “Term Loan Agreement”) and (ii) a $40.0 million senior secured revolver which aggregate principal amount may be increased, subject to the satisfaction of certain terms and conditions, including obtaining commitments therefor, by up to $20.0 million (the “Revolver”) pursuant to the Credit Agreement dated February 25, 2021, by and among Holdings, Intermediate, JPMorgan Chase Bank, N.A., as administrative agent, swingline lender, issuing bank, lender, sole bookrunner and sole lead arranger (the “ABL Revolver Agreement,” and together with the Term Loan Agreement, collectively the “Credit Agreements”). The Term Loan Agreement refinances the Atlas Credit Agreement dated as of February 14, 2020, with Macquarie Capital Funding LLC, as administrative agent and certain lenders, which repayment was effectuated partially in cash and partially by way of a cashless exchange of existing term loans and preferred equity for Term Loans.

The Term Loan Agreement and ABL Revolver Agreement are collectively referred to as the “Credit Agreements” by the Company.

The initial Term Loan will mature on February 25, 2028 and the Revolver will mature on February 25, 2026.

The Term Loan Agreement contains a financial covenant which requires Holdings, Atlas Intermediate and all of their direct and indirect subsidiaries on a consolidated basis to maintain a Total Net Leverage Ratio (as defined in each Credit Agreement) tested on a quarterly basis that does not exceed (i) 8.25 to 1.00 with respect to the fiscal quarters ending on April 2, 2021 and July 2, 2021, (ii) 8.00 to 1.00 for the fiscal quarters ending October 1, 2021 and December 31, 2021, (iii) 7.50 to 1.00 for the fiscal quarters ending April 1, 2022 and July 1, 2022, (iv) 7.25 to 1.00 for the fiscal quarters ending September 30, 2022 and December 30, 2022, (v) 7.00 to 1.00 for the fiscal quarters ending March 31, 2023 and June 30, 2023, (vi) 6.75 to 1.00 for the fiscal quarters ending September 29, 2023 and December 29, 2023, and (vii) 6.50 to 1.00 for March 29, 2024 and each fiscal quarter ending thereafter.

F-20

The Company has been in compliance with the terms of the Atlas Credit Facility and Atlas Credit Agreement as of December 30, 2022 and December 31, 2021, respectively.

Long-term debt consisted of the following:

	December 30, 2022			December 31, 2021
Atlas 2021 credit agreement - term loan	$	489,368		$	467,000
Atlas 2021 credit agreement – revolving		12,998			-
Atlas 2021 credit agreement – PIK		8,852			6,392
Subtotal		511,218			473,392
Less: Loan costs, net		(6,951	)		(7,593	)
Less current maturities of long-term debt		(4,930	)		(3,606	)
Long-term debt	$	499,337		$	462,193

Aggregate principal payments on debt subsequent to December 30, 2022, are as follows (amounts in thousands):

2023	$	4,930
2024		4,930
2025		4,930
2026		4,930
2027		4,930
Thereafter		486,568
	$	511,218

The 2021 Atlas Credit agreement requires annual amortization of principal and interest amounts of 1% or 2.5% depending on certain ratios. The Company is currently within the ratio that requires 1% annual amortization and expects to remain at the 1% level. Principal repayments commenced during the Company’s second quarter 2022.

Interest Rate Cap

The Company is exposed to fluctuations in interest rates on its senior secured credit facilities. Changes in interest rates will not affect the market value of such debt but will affect the Company’s interest payments over the term of the loans. Likewise, an increase in interest rates could have a material impact on the Company’s cash flow. The Company hedges the interest rate fluctuations on debt obligations through an interest rate cap agreement. The Company records this agreement at fair value as an asset in its consolidated balance sheet. Based on the inherent nature of an interest rate cap, the instrument can never result in a liability to the Company. As the derivative is designated and qualifies as a cash flow hedge, the gains or losses on the interest rate cap agreement are recorded in stockholders’ equity as a component of OCI, net of tax. Reclassifications of the gains and losses on the interest rate cap agreement into earnings are recorded as part of interest expense in the consolidated statements of operations as the Company makes its interest payments on the hedged portion of its senior secured credit facilities. Fair value is determined based on estimated amounts that would be received or paid to terminate the contracts at the reporting date based on quoted market prices.

F-21

By using derivative financial instruments to hedge exposures to changes in interest rates, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is an asset, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is a liability, the Company owes the counterparty and therefore, the Company is not exposed to the counterparty’s credit risk in those circumstances. The Company minimizes counterparty credit risk in derivative instruments by entering into transactions with high quality counterparties. The derivative instruments entered into by the Company do not contain credit-risk-related contingent features.

Market risk is the adverse effect on the value of a derivative instrument that results from a change in interest rates. The market risk associated with the Company’s derivative instruments is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.

As a result, the Company initially recorded an asset and a corresponding liability of $10.5 million representing the fair value of the interest rate cap and the remaining payments of the deferred premium. Six monthly payments have been made as of December 30, 2022. The fair value of the interest rate cap as of December 30, 2022 increased by $9.1 million and therefore there was a gain of $11.5 million recorded in OCI for the year ended December 30, 2022. The asset is included in other long-term assets and the liability is recorded as an other current liability of $3.4 million and an other long-term liability of $4.9 million as of December 30, 2022.

NOTE 7 – SHAREHOLDERS’ DEFICIT

Shares Outstanding

The following table summarizes the changes in the outstanding stock from December 31, 2021 through December 30, 2022:

	Class A Common Stock		Class B Common Stock
Beginning balance at December 31, 2021		33,645,212		3,328,101
Issuances		2,018,867		186,368
Transfers to Class A from Class B		2,168,257		(2,168,257	)
Shares Outstanding at December 30, 2022		37,832,336		1,346,212

Class A Common Stock – At December 30, 2022 and December 31, 2021, there were 37,832,336 and 33,645,212 shares of Class A common stock issued and outstanding, respectively. Holders of the Company’s Class A common stock are entitled to one vote for each share. The Company is authorized to issue 400,000,000 shares of Class A common stock with a par value of $0.0001 per share.

Class B Common Stock – At December 30, 2022 and December 31, 2021, there were 1,346,212 and 3,328,101 shares of Class B common stock issued and outstanding, respectively. Class B common stock was initially issued to the holders of Holdings Units in Atlas Intermediate in connection with the Atlas Business Combination and are non-economic but entitle the holder to one vote per share and may be converted to Class A shares at any time by the holder. Conversion to Class A shares may result in a taxable event for the holder at the time of conversion. Subsequent to the Atlas Business Combination, the Company has issued Class B common stock to certain acquisitions. The Company is authorized to issue up to 100,000,000 shares of Class B common stock with a par value of $0.0001 per share but it is not allowed to issue any Class B common stock to the public.

F-22

Non-controlling Interest

As of December 30, 2022 and December 31, 2021, the Company ownership and voting structure was comprised of holders of our Class A common stock that participate 100% in the results of Atlas Technical Consultants, Inc. and 96.6% and 91.0%, respectively, in Atlas Intermediate and its subsidiaries and holders of our Class B common stock that participate in the results of Atlas Intermediate and its subsidiaries until their Class B common stock is converted to Class A common stock. The holders of our Class B common stock participate in 3.4% and 9.0% as of December 30, 2022 and December 31, 2021, respectively, of Atlas Intermediate and its subsidiaries.

Due to the participation of the holders of our Class B common stock in the results of Atlas Intermediate and subsidiaries, a non-controlling interest was deemed to exist. Non-controlling ownership interests in Atlas Intermediate and its subsidiaries are presented in the Consolidated Balance Sheet within shareholders’ equity as a separate component. In addition, consolidated net income includes earnings attributable to both the shareholders and the non-controlling interests.

We have distributed $0.8 million and $0.8 million during the years ended December 30, 2022 and December 31, 2021, respectively.

NOTE 8 – LOSS PER SHARE

Loss per share was calculated as follows:

	For the Year Ended
	December 30, 2022			December 31, 2021
Numerator:
Net loss	$	(8,070	)	$	(29,705	)
Provision for non-controlling interest		565			13,216
Redeemable preferred stock dividends		-			(5,899	)
Net loss attributable to Class A common shares - basic and diluted	$	(7,505	)	$	(22,388	)

Denominator:
Weighted average shares outstanding - basic and diluted		36,308,926			27,799,511

Net loss per Class A common share, basic and diluted	$	(0.21	)	$	(0.81	)

The Class B common shares are excluded as these shareholders do not share in the income of Atlas Technical Consultants, Inc. and represent a non-controlling interest in the results of Atlas Intermediate and its subsidiaries. Please refer to Note 7 “Shareholders’ Deficit” for further information.

NOTE 9 – EQUITY BASED COMPENSATION

Equity based compensation was $7.4 million and $3.6 million for the years ended December 30, 2022 and December 31, 2021, respectively.

The Company granted restricted stock units (“RSUs”) and performance stock units (“PSUs”) during 2022 and 2021 to reward, motivate and retain selected management personnel.

An additional grant of RSUs was made to a member of the Company’s leadership team on December 31, 2020 to reflect an increase in responsibility.

The Company granted its Board of Directors RSUs during 2022 and 2021 as part of their annual board compensation packages.

The Company estimates forfeitures of its stock awards. Actual forfeitures may differ from those estimates. The Company currently estimates its forfeitures as 3% of the RSUs awards granted each year but will continue to reassess its estimate on a quarterly basis.

F-23

Restricted and Performance Share Units

During the second quarters of 2021 and 2020, the Company awarded 378,353 and 510,136 restricted share units (“RSUs”) to approximately ninety employees at a grant day fair market value of $11.42 and $8.95 per share, respectively. The Company estimates the fair value of the RSUs as the closing price of the Company’s Class A common stock on the grant date of the award, which is expensed over the applicable vesting period. The fair market value on the date of issuance was $4.3 million and $4.6 million for the 2021 and 2020 grants, respectively. The vesting period for these RSUs is equal annual tranches, pro-ratably over three years, and there is no performance requirement attached to the RSUs other than continued service to the Company.

During the first and second quarters of 2022, the Company awarded grants of 92,649, 483,025, 3,851, and 74,189 restricted share units (“RSUs”) at a grant day fair market value of $11.32, $12.21, $6.43 and $5.26 per share, respectively. The Company estimates the fair value of the RSUs as the closing price of the Company’s Class A common stock on the grant date of the award, which is expensed over the applicable vesting period. The fair market value on the date of issuance was $7.1 million for the 2022 grants. The vesting period for these RSUs is equal annual tranches, pro-ratably over three years, and there is no performance requirement attached to the RSUs other than continued service to the Company.

On January 29, 2021, the Company granted to a member of its executive team 75,000 RSUs of the Company’s Class A common stock, par value $0.0001, retroactive to December 31, 2020. The value of these RSUs approximated $0.5 million and is set to cliff vest on December 31, 2022.

On March 3, 2021, the Company granted to its Board of Directors 54,053 RSUs with a one-year vesting period and a grant date fair market value of $9.00 per share. There are no performance requirements to these RSUs other than continued service to the Company throughout the one-year vesting period. The value of this grant was $0.5 million.

On March 18, 2022, the Company granted to its Board of Directors 53,261 RSUs with a one-year vesting period and a grant date fair market value of $12.21 per share. There are no performance requirements to these RSUs other than continued service to the Company throughout the one-year vesting period. The value of this grant was $0.7 million.

During the second quarter of 2021, the Company awarded 182,763 performance share units (“PSUs”) to its leadership team. The PSUs have both performance and market conditions that are required to be met for the shares to vest. The split between performance and market conditions is approximately 66.7% and 33.3%, respectively. If the conditions are met, the shares will cliff vest on the third anniversary of the award date. The Company has accounted for the portion of the award tied to the achievement of performance conditions based upon share price of $11.38 on the date of issuance and the probable number of shares anticipated to vest and accounted for the shares tied to market conditions based upon the fair market value as calculated in a Monte Carlo simulation. The Company will assess the probability of the performance conditions being achieved each quarter and adjust recorded stock compensation expense as appropriate. The fair market value as of the grant date was $1.4 million and $1.2 million for the performance and market based share units, respectively.

On March 18, 2022, the Company awarded 170,570 performance share units (“PSUs”) to its leadership team. The PSUs have both performance and market conditions that are required to be met for the shares to vest. The split between performance and market conditions is approximately 66.7% and 33.3%, respectively. If the conditions are met, the shares will cliff vest on the third anniversary of the award date. The Company has accounted for the portion of the award tied to the achievement of performance conditions based upon share price of $12.21 on the date of issuance and the probable number of shares anticipated to vest and accounted for the shares tied to market conditions based upon the fair market value as calculated in a Monte Carlo simulation. The Company will assess the probability of the performance conditions being achieved each quarter and adjust recorded stock compensation expense as appropriate. The fair market value as of the grant date was $1.4 million and $1.1 million for the performance and market based share units, respectively.

A summary of our RSU and PSU activity is as follows:

	RSU					PSU
	Number of Shares (in thousands)			Weighted-Average Grant Date Fair Value Per Share		Number of Shares (in thousands)			Weighted-Average Grant Date Fair Value Per Share
Nonvested balance as of December 31, 2020		585			8.70		-			-
Granted		432			11.12		183			14.06
Vested		(159	)		8.95		-
Forfeited		(12	)		8.95		-
Estimated forfeiture		(27	)		10.00		-
Nonvested balance as of December 31, 2021		819		$	9.88		183		$	14.06
Granted		746			11.26		171			14.61
Vested		(412	)		9.53		(5	)		14.09
Forfeited		(104	)		10.97		(27	)		14.27
Estimated forfeiture		(22	)		-		-			-
Nonvested balance as of December 30, 2022		1,027		$	11.13		322		$	14.33

F-24

Price-Vested Stock Options

During the third quarter of 2021, the Company awarded 547,943 of price-vested stock options (the “options” or “stock options”) in aggregate to its Chief Executive, Chief Financial, and Chief Strategy Officers (collectively the “option awardees”). These options vested equally in four tranches on the second, third, fourth and fifth anniversary of the option grant date and is dependent upon the option awardees remaining employed by the Company and the stock price on the applicable tranche anniversary to be equal to or exceed a prescribed share price within the stock option agreement. The strike price of each option for each tranche is $10.50, which was the Company’s closing stock price on the option grant date. The Company has valued the options at fair market value based upon a Monte Carlo with Geometric Brown Motion simulation and will recognize the compensation cost for each tranche over a range of 5.17 to 5.93 years with values per option ranging from $2.29 to $3.55. The fair market value of the options as of the grant date was $1.6 million.

NOTE 10 – RELATED-PARTY TRANSACTIONS

During the years ended December 30, 2022 and December 31, 2021, the Company leased office space at fair value from former owners of acquired companies that became shareholders and/or officers of the Company. The Company recognized lease expenses under these leases within the Consolidated Statements of Operations in the amount of $0.8 million and $0.9 million for the years ended December 30, 2022 and December 31, 2021, respectively.

During the years ended December 30, 2022 and December 31, 2021, the Company performed certain environmental consulting work for an affiliate of one of its principal shareholders or members and collected fees related to these services in the amount of $0.1 million and $0.1 million, respectively.

NOTE 11 – EMPLOYEE BENEFIT PLANS

The Company maintains employee savings plans which allow for voluntary contributions into designated investment funds by eligible employees. The Company may, at the discretion of the Board, make additional contributions to these plans. The Company has made total contributions of $6.7 million and $7.6 million for the years ended December 30, 2022 and December 31, 2021, respectively.

NOTE 12 – COMMITMENTS AND CONTINGENCIES

The Company is subject to certain claims and lawsuits typically filed against engineering companies, alleging primarily professional errors or omissions. The Company carries professional liability insurance, subject to certain deductibles and policy limits, against such claims. While management does not believe that the resolution of these claims will have a material adverse effect, individually or in aggregate, on its financial position, results of operations or cash flows, management acknowledges the uncertainty surrounding the ultimate resolution of these matters.

F-25

NOTE 13 – INCOME TAXES

We are organized as an umbrella partnership C-Corporation structure also known as an “Up-C” structure in which the business of Atlas Intermediate and its subsidiaries is held by Holdings and will continue to operate through the subsidiaries of Atlas Intermediate, and in which our only direct assets consist of common units of Holdings. We are the sole manager of Holdings in accordance with the terms of the Holdings LLC Agreement.

Previously, Atlas Intermediate was treated as a partnership for federal and state income tax purposes with all income tax liabilities and/or benefits of the Company being passed through to the partners and members. As such, no recognition of federal or state income taxes have been provided for in the accompanying consolidated financial statements except for income taxes relating to the C-Corp subsidiaries directly owned by Atlas Intermediate and the State of Texas Margin tax.

Income taxes relating to Atlas Technical Consulting, Inc, the C-Corps owned directly by Atlas Intermediate and the State of Texas Margin tax are considered within the provision of non-controlling interest as it is generated through the results of Atlas Intermediate and its subsidiaries.

(Loss) before income taxes was follows:

	For the Year Ended
	December 30,			December 31,
	2022			2021
United States	$	(6,322	)	$	(27,181	)

Income tax expense (benefit) consisted of the following:

	For the Year Ended
	December 30,		December 31,
	2022		2021
Current:
Federal	$	579	$	854
State		790		1,095
Total current income tax expense		1,369		1,949

Deferred:
Federal		295		(2,571	)
State		84		3,146
Total deferred income tax expense		379		575

Total income tax expense	$	1,748	$	2,524

F-26

Temporary differences comprising the net deferred income tax asset shown on the accompanying consolidated balance sheets were as follows:

	December 30, 2022			December 31, 2021
Deferred Tax Assets:
Basis difference in flow-through entity	$	88,355		$	83,744
Transaction costs		4,568			4,568
Accruals and reserves		10,493			458
Loss carryforwards		2,113			6,535
Valuation allowance		(104,790	)		(94,517	)
Total deferred tax assets		739			788

Deferred Tax Liabilities:
Basis difference in flow-through entity		(2,657	)		(2,511	)
Goodwill		(721	)		(537	)
Total deferred tax liabilities		(3,378	)		(3,048	)

Net deferred tax liabilities	$	(2,639	)	$	(2,260	)

Our effective tax rate from continuing operations was (27.6%) and (9.3%) for the periods ending December 30, 2022 and December 31, 2021, respectively. Reconciliation between the amount determined by applying the U.S. federal income tax rate of 21% to pretax income from continuing operations and income tax expense is attributable to changes in our mix of pre-tax losses/earnings, valuation allowance and the effect of non-controlling interest in income of consolidated subsidiaries.

The Company provides a valuation allowance when it is more likely than not that some portion of the deferred tax assets will not be realized. Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize the existing deferred tax assets. Based on this evaluation, as of December 30, 2022 and December 31, 2021, it is more likely than not that a portion of the existing deferred tax assets will not be realized. As such, the Company has recorded valuation allowances of approximately $104.8 million and $94.5 million, as of December 30, 2022 and December 31, 2021, respectively, to reduce net deferred tax assets to an amount that management believes is more than likely to be realized.

The Company had no unrecognized tax benefits as of December 30, 2022 or December 31, 2021. Interest and, if applicable, penalties are recognized related to unrecognized tax benefits in income tax expense. There are no accruals for interest and penalties as of December 30, 2022 or December 31, 2021.

The Company is subject to income taxation by both federal and state taxing authorities. Income tax returns for the years ended December 31, 2021, 2020, 2019, 2018 and 2017 are open to audit by federal and state taxing authorities.

At December 30, 2022 and December 31, 2021, the Company had federal net operating loss carry-forwards (“NOLs”) of approximately $6.4 million and $24.6 million, respectively. A portion of the federal net operating loss carryforward was incurred prior to the enactment of the 2017 Tax Cuts and Jobs Act and is therefore subject to expiration. Federal net operating loss carryforwards subject to expiration will begin to expire in 2026. The remaining federal net operating loss carryforwards incurred after the enactment of the 2017 Tax Cuts and Jobs Act carryforward indefinitely.

NOTE 14 – LEASES

The Company determines whether contractual arrangements contain a lease by evaluating whether those arrangements either implicitly or explicitly identify an asset, whether the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the term of the arrangement, and whether the Company has the right to direct the use of the asset.

The Company has entered into various operating leases primarily for office space, vehicles and office equipment. The office space leases generally have fixed payments with expiration dates ranging from 2022 to 2026, some of which have options to extend the leases from 5 to 10 years and some have options to terminate at the Company’s discretion. The Company’s vehicle and office equipment leases generally have fixed payments with expiration dates ranging from 2022 to 2026. Renewal options are included in the lease term if it is reasonably certain that the Company will exercise those options. Periods for which the Company is reasonably certain not to exercise termination options are also included in the lease term. For leases with a term of 12 months or less, the Company has made an accounting policy election to not recognize right-of-use (ROU) assets or lease liabilities for qualifying leases. For these leases, the Company recognizes lease expense on a straight-line basis over the lease term.

F-27

The Company has certain agreements with lease and non-lease components, such as office space leases, which are combined as a single lease component based on the Company’s practical expedient election. The Company’s real estate leases require that it pay maintenance in addition to rent. Additionally, the real estate leases generally require payment of real estate taxes and insurance. Maintenance, real estate taxes, and insurance payments are generally variable and based on actual costs incurred by the lessor. Therefore, these amounts are not included in the consideration of the contract when determining the ROU asset and lease liability.

Discount Rate

The discount rate for a lease is the rate implicit in the lease unless that rate cannot be readily determined. In that case, the Company is required to use its incremental borrowing rate, which is the rate the Registrants would have to pay to borrow, on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. The Company determines its incremental borrowing rate by obtaining interest rates from various external financing sources and makes certain adjustments to reflect the terms of the lease and type of the asset leased. The Company uses the secured rate which corresponds with the term of the applicable lease.

The following table provides the components of lease cost for the Company’s operating leases for the year ended December 30 (in thousands):

	2022
Lease cost:
Operating lease cost	$	12,745
Short-term lease cost		690
Total lease cost	$	13,435

The following table provides other key information related to the Company’s operating leases at December 30 (in thousands):

	2022
Cash paid for amounts included in the measurement of lease liabilities	$	-
Operating cash flows from operating leases		12,462
Right-of-use asset obtained in exchange for new operating lease liabilities	$	12,462

The following table provides the total future minimum rental payments for operating leases, as well as a reconciliation of these undiscounted cash flows to the lease liabilities recognized on the Balance Sheets as of December 30, 2022 (in thousands).

	Operating Leases
2023	$	12,164
2024		8,069
2025		4,085
2026		2,654
2027		1,334
Thereafter		2,513
Total	$	30,819
Less: Present value discount		(3,049	)
Lease liability	$	27,770

Weighted-average discount rate		5.48	%
Weighted-average remaining lease term (in years)		3.58
Current lease liabilities (included in other current liabilities)	$	10,969
Non-current lease liabilities (included in other long-term liabilities)	$	16,801
Right-of-use assets (included in other long-term assets)	$	26,158

F-28

NOTE 15 – SUBSEQUENT EVENTS

Merger Agreement

On January 30, 2023, Atlas Technical Consultants, Inc., a Delaware corporation (“Atlas” or the “Company”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with GI Apple Midco LLC, a Delaware limited liability company (“Parent”) and GI Apple Merger Sub LLC, a Delaware limited liability company and a wholly owned subsidiary of Parent (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger”), with the Company continuing as the surviving company in the Merger. Parent and Merger Sub are controlled by investment funds advised by GI Manager L.P. (“GI Partners”).

Solicitation

Financing

F-29

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	ATLAS TECHNICAL CONSULTANTS, INC.

	/s/ L. Joe Boyer
	Name:	L. Joe Boyer
	Title:	Chief Executive Officer
		(Principal Executive Officer)

Date: March 15, 2023

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below appoints L. Joe Boyer, David D. Quinn, Sr. and Walter Powell, jointly and severally, his attorney-in-fact, each with the full power of substitution, for such person, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might do or could do in person hereby ratifying and confirming all that each of said attorneys-in-fact and agents, or his substitute, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Signature	Title	Date

/s/ L. Joe Boyer	Chief Executive Officer	March 15, 2023
L. Joe Boyer	(Principal Executive Officer)

/s/ David D. Quinn, Sr.	Chief Financial Officer	March 15, 2023
David D. Quinn, Sr.	(Principal Financial Officer)

/s/ Walter G. Powell	Chief Accounting Officer	March 15, 2023
Walter G. Powell	(Principal Accounting Officer)

/s/ R. Foster Duncan	Director	March 15, 2023
R. Foster Duncan

/s/ Brian Ferraioli	Executive Chairman and Director	March 15, 2023
Brian Ferraioli

/s/ Thomas Henley	Director	March 15, 2023
Thomas Henley

/s/ Leonard K. Lemoine	Director	March 15, 2023
Leonard K. Lemoine

/s/ Raquel G. Richmond	Director	March 15, 2023
Raquel G. Richmond

/s/ Collis Temple	Director	March 15, 2023
Collis Temple

/s/ Daniel G. Weiss	Director	March 15, 2023
Daniel G. Weiss

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