Atlas Technical Consultants, Inc.

23,750,000 Shares of Class A Common Stock Issuable Upon Exercise of Existing Warrants

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27,780,345 Shares of Class A Common Stock

3,750,000 Private Placement Warrants

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This prospectus relates to the issuance by Atlas Technical Consultants, Inc. (formerly known as Boxwood Merger Corp. (prior to the Business Combination (as defined below) “Boxwood”)), a Delaware corporation (the “Company,” “we,” “our” or “us”) of (i) up to 20,000,000 shares of our Class A common stock, par value $0.0001 per share (“Class A common stock”), issuable upon the exercise of warrants (the “Public Warrants”) originally sold as part of the units in our initial public offering (the “IPO”) and (ii) up to 3,750,000 shares of our Class A common stock issuable upon the exercise of warrants originally sold both by themselves and as part of units to Boxwood Sponsor LLC (the “Sponsor”) in private placements that closed concurrently with our IPO (the “Private Placement Warrants,” and together with the Public Warrants, the “Warrants”). Each warrant entitles the holder thereof to purchase upon exercise one share of our Class A common stock for $11.50 per share. We will receive the proceeds from the exercise of the Private Placement Warrants and the Public Warrants, but not from the sale of the underlying shares of Class A common stock.

In addition, this prospectus relates to the resale by the selling security holders named in this prospectus or their permitted transferees of up to (i) 3,750,000 Private Placement Warrants and (ii) 27,780,345 shares of our Class A common stock, 3,805,977 of which represent shares of Class A common stock held by certain selling security holders named in this prospectus and 23,974,368 of which represent shares of Class A common stock that may be issued from time to time, pursuant to the amended and restated limited liability company agreement of Atlas TC Holdings LLC, a subsidiary of the Company (“Holdings”), dated February 14, 2020 (the “LLC Agreement”), to certain members of Holdings, that own units in Holdings (“Holdings Units”), upon exchange of such members’ Holdings Units, together with an equal number of shares of our Class B common stock, par value $0.0001 per share (“Class B common stock”), which were issued to Atlas Technical Consultants Holdings LP, a Delaware limited partnership (the “Seller”), in connection with, and as part of the consideration for, our business combination (the “Business Combination”) with Atlas Intermediate Holdings LLC, a Delaware limited liability company (“Atlas Intermediate”), which we consummated on February 14, 2020.

The selling security holders may offer, sell or distribute warrants or shares of Class A common stock publicly or through private transactions at prevailing market prices or at negotiated prices. We will not receive any of the proceeds from the sale of warrants or the shares of Class A common stock owned by the selling security holders. We will bear all costs, expenses and fees in connection with the registration of these warrants and shares of Class A common stock, including with regard to compliance with state securities or “blue sky” laws. The selling security holders will bear all commissions and discounts, if any, attributable to their sale of the Private Placement Warrants and shares of Class A common stock.

The securities offered pursuant to this prospectus are collectively referred to in this prospectus as the “securities.” This prospectus provides you with a general description of these securities and the general manner in which we or the selling security holders will offer the securities. When securities are offered, we or the selling security holders, as applicable, may provide a prospectus supplement, to the extent appropriate, that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. We provide more information about how we and the selling security holders may sell the securities in the section entitled “Plan of Distribution” beginning on page 81.

Our Class A common stock and Public Warrants are traded on The NASDAQ Stock Market (“NASDAQ”) under the symbols “ATCX” and “ATCXW,” respectively. On May 19, 2020, the last reported sale price of our Class A common stock was $9.22 per share and the last reported sale price of our Public Warrants was $0.45 per warrant. As of May 19, 2020, we had 5,767,342 shares of Class A common stock issued and outstanding, 23,974,368 shares of Class B common stock issued and outstanding, 3,750,000 Private Placement Warrants issued and outstanding and 20,000,000 Public Warrants issued and outstanding.

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Investing in our securities involves risks. See “Risk Factors” beginning on page 5.

We are an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), and are subject to reduced public company reporting requirements. See “Risk Factors.”

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

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The date of this prospectus is           , 2020.

TABLE OF CONTENTS

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Neither we nor the selling security holders have authorized anyone to provide any information or to make any representations other than those contained or incorporated by reference in this prospectus, any accompanying prospectus supplement or any free writing prospectus we have prepared. We and the selling security holders take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the securities offered hereby and only under circumstances and in jurisdictions where it is lawful to do so. The information contained or incorporated by reference in this prospectus is current only as of its date.

This prospectus contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. See “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements.”

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and as amended by Accounting Standards Updates of the Financial Accounting Standards Board (“FASB”).

Industry and Market Data

The market data and certain other statistical information used throughout this prospectus are based on independent industry publications, government publications and other published independent sources. Although we believe these third-party sources are reliable as of their respective dates, neither we nor the selling stockholders have independently verified the accuracy or completeness of this information. Some data is also based on our good faith estimates. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled “Risk Factors.” These and other factors could cause results to differ materially from those expressed in these publications.

Risk Factors

Investing in our securities involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this prospectus, including our consolidated financial statements and related notes, and our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q and any subsequently filed Quarterly Reports on Form 10-Q before deciding whether to purchase any of our securities. Any of these risks may have a material adverse effect on our business, financial condition, results of operations and cash flows and our prospects could be harmed. In that event, the price of our securities could decline and you could lose part or all of your investment.

Additionally, the risks and uncertainties described in this prospectus or any prospectus supplement are not the only risks and uncertainties that we face. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business.

Risks Relating to Our Business and Industry 

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

The success of our business 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 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 need to have appropriate succession plans in place and to successfully implement such plans, which requires devoting time and resources toward identifying and integrating new personnel into leadership roles and other key positions. If we cannot attract and retain qualified personnel or effectively implement appropriate succession plans, it 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:

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

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

•        our ability to manage attrition;

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

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

•        if we over-utilize our workforce, our employees may become disengaged, which will impact employee attrition. If we under-utilize our workforce, our profit margin and profitability could suffer.

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 it 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:

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

•        unanticipated incompatibility of logistics, marketing and administration methods;

•        maintaining employee morale and retaining key employees;

•        integrating the business cultures of both companies;

•        preserving important strategic client relationships;

•        consolidating corporate and administrative infrastructures and eliminating duplicative operations; and

•        coordinating geographically separate organizations.

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

Further, acquisitions may also cause us to:

•        cause our management to expend significant time, effort and resources;

•        issue securities that would dilute our current stockholders;

•        use a substantial portion of our cash resources;

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

•        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;

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

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

•        incur amortization expenses related to certain intangible assets;

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

•        incur large and immediate write-offs; or

•        become subject to litigation.

Construction and maintenance sites are inherently dangerous workplaces. If we, the owner, or others working at the project site fail to maintain safe work sites, 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 with 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 or investigations. 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 implements effective health, safety and environmental (“HSE”) work procedures throughout our organization, including construction sites and maintenance sites, the failure to comply with such regulations could subject it 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 profit in the event 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 it has 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 the 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, many 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 needs. 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, canceled 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 it. As of December 31, 2019, our backlog totaled approximately $601 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 because of 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 affect greatly our gross margins and hence, future profitability.

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 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. Further, 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 it. 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 otherwise are 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.

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 technical, professional and construction 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 the project experiences schedule delays.

As of December 31, 2019, approximately 5% 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 its performance. 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, and 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, costs overruns could have a material adverse impact on our business, financial condition and results of operations.

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 our 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.

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

Third-party subcontractors we hire 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 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.

Third parties may find it difficult to obtain enough financing to help fund their operations. The inability to obtain financing could adversely affect a 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 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.

Negative conditions in the credit and financial markets and delays in receiving client payments could result in liquidity problems, adversely affecting our cost of borrowing and 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 to help fund business acquisitions. Instability in the credit markets in the U.S. or abroad could cause the availability of credit to be relatively difficult or expensive to obtain at competitive rates, on commercially reasonable terms or in sufficient amounts. This situation could make us 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 impact our backlog and 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.

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 try to evaluate companies that we believe will strategically fit into our business and growth objectives, including, for example, our acquisition of ATC Group Services in January 2019 and Long Engineering, Inc. (“LONG”) in February 2020. 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 do not get completed), 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 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 obligations, our business could be materially affected.

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 customers;

•        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 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 will be 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 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 shareholder 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 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 $1.07 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.

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

Because we have grown in part through acquisitions, goodwill and intangible assets represent a substantial portion of our assets. Under U.S. GAAP, we are required to test goodwill carried in our combined balance sheets for possible impairment on an annual basis based upon a fair value approach. As of December 31, 2019, we have $85,125,000 of goodwill, representing 24% of our total assets of $352,773,000. We also are required to test goodwill 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, we 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 5% as of December 31, 2019), 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. 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 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. 

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 engineering and construction activities for large facilities and projects where design, construction or systems failures can result in substantial injury or damage to employees or others, 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 it agreed that a project will achieve certain performance standards or satisfy certain technical requirements and those standards or requirements are 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 it.

Outbreaks of communicable diseases could adversely affect our business, financial condition and results of operations.

Global or national health concerns, including the outbreak of 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 (“COVID-19”) 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 may negatively impact the demand for our services. Furthermore, uncertainty regarding the impact of any outbreak of pandemic or contagious disease, including COVID-19, could lead to increased volatility in the markets in which we operate. The occurrence or continuation of any of these events could lead to decreased revenues and limit our ability to execute on our business plan, which could adversely affect our business, financial condition and results of operations.

Additionally, we have an increased number of employees working remotely. As a result, we may have increased cyber security 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 implement IT controls to reduce the risk of a cyber-security and 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.

At this time we are monitoring, and will continue to monitor, the safety of our employees during the COVID-19 pandemic. We are evaluating the impact of COVID-19 on current projects, but the full effects of COVID-19 on our operations are still unknown. The extension of shelter-in-place orders within the cities and municipalities we operate in could further negatively impact future results as well as the re-designation of infrastructure spending to non-essential services. Disruptions to capital markets due to the uncertainty surrounding the length and severity of COVID-19 could delay the timing of our customers’ capital projects. In addition, the timing of payments from our commercial customers may be impacted.

Risks Relating to Our Common Stock and Warrants

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 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 Business Combination contained an actionable material misstatement or material omission.

To the extent that any shares of Class A common stock are issued pursuant to the terms of the LLC Agreement or upon exercise of any of the warrants, the number of shares eligible for resale in the public market would increase.

Pursuant to the terms of the LLC Agreement, the Seller and its limited partners (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.

Furthermore, we have 20,000,000 outstanding warrants to purchase 20,000,000 shares of Class A common stock at an exercise price of $11.50 per share, which warrants will become exercisable upon the effectiveness if this Registration Statement. In addition, there are 3,750,000 private placement warrants (including the warrants underlying the private placement units) outstanding exercisable for 3,750,000 shares of common stock at an exercise price of $11.50 per share.

To the extent that any shares of Class A common stock are issued pursuant to the terms of the LLC Agreement or upon exercise of any of the warrants to purchase shares of Class A common stock, 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 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 effected.

If we raise capital in the future our then existing stockholders may experience dilution. Our second amended and restated certificate of incorporation (the “Charter”) provides that preferred stock may be issued from time to time in one or more series. Our Board of Directors (the “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 of directors 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. 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. The issuance of any such securities may have the impact of adversely affecting the market price of our common stock.

We may redeem holders’ unexpired warrants prior to their exercise at a time that is disadvantageous to the holder, thereby making such warrants worthless.

We have the ability to redeem outstanding public warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of our Class A common stock equals or exceeds $18.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading-day period ending on the third trading day prior to proper notice of such redemption. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force holders (i) to exercise the warrants and pay the exercise price therefor at a time when it may be disadvantageous to do so, (ii) to sell the warrants at the then-current market price when the holder might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of the warrants. The private placement warrants are not redeemable by us so long as they are held by the Sponsor or its permitted transferees.

We are a “controlled company” within the meaning of NASDAQ listing standards and the rules of the SEC. As a result, we qualify for, and may elect to rely on, exemptions from certain corporate governance requirements that would otherwise provide protection to stockholders of other companies.

Bernhard Capital Partners Management LP (“Bernhard Capital Partners”) beneficially owns a majority of the voting power of all outstanding shares of our common stock. Pursuant to NASDAQ listing standards, a company of which more than 50% of the voting power for the election of directors is held by an individual, a group or another company qualifies as a “controlled company” and may elect not to comply with certain corporate governance requirements. Therefore, for so long as Bernhard Capital Partners beneficially owns a majority of the voting power of all outstanding shares of our common stock, we may elect to not be subject to NASDAQ listing standards that would otherwise require us to have: (i) a board of directors comprised of a majority of independent directors; (ii) compensation of our executive officers determined by a majority of the independent directors or a compensation committee comprised solely of independent directors; (iii) a compensation committee charter which, among other things, provides the compensation committee with the authority and funding to retain compensation consultants and other advisors; and (iv) director nominees selected, or recommended for the Board’s selection, either by a majority of the independent directors or a nominating committee comprised solely of independent directors. Accordingly, if we remain a controlled company and if we elect to rely on the exemption and during any transition period following a time when we have made such election and are no longer a controlled company, our stockholders would not have the same protections afforded to stockholders of companies that are subject to all of the NASDAQ corporate governance requirements.

In addition, on June 20, 2012, the SEC passed final rules implementing provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 pertaining to compensation committee independence and the role and disclosure of compensation consultants and other advisers to the compensation committee. The SEC’s rules direct each of the national securities exchanges (including NASDAQ) to develop listing standards requiring, among other things, that: (i) compensation committees be composed of fully independent directors, as determined pursuant to new independence requirements; (ii) compensation committees be explicitly charged with hiring and overseeing compensation consultants, legal counsel and other committee advisors; and (iii) compensation committees be required to consider, when engaging compensation consultants, legal counsel or other advisors, certain independence factors, including factors that examine the relationship between the consultant or advisor’s employer and us. As a “controlled company,” we are not subject to these compensation committee independence requirements.

If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of our securities may decline.

If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of our securities may decline. The market values of our securities may vary significantly from their prices on the date the Purchase Agreement was executed (August 12, 2019), the date of the proxy statement (November 12, 2019), or the date of the Annual Report on Form 10-K (March 16, 2020).

In addition, fluctuations in the price of the company’s securities could contribute to the loss of all or part of your investment. The trading price of our securities could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our securities and our securities may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.

Factors affecting the trading price of our securities may include:

•        actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

•        changes in the market’s expectations about our operating results;

•        success of competitors;

•        our operating results failing to meet the expectation of securities analysts or investors in a particular period;

•        changes in financial estimates and recommendations by securities analysts concerning our company or the industries in which we operate in general;

•        operating and stock price performance of other companies that investors deem comparable to the company;

•        our ability to market new and enhanced products on a timely basis;

•        changes in laws and regulations affecting our business;

•        commencement of, or involvement in, litigation involving our company;

•        changes in our company’s capital structure, such as future issuances of securities or the incurrence of additional debt;

•        the volume of shares of our Class A common stock available for public sale;

•        any major change in our Board or management;

•        sales of substantial amounts of our Class A common stock by our directors, executive officers or significant stockholders or the perception that such sales could occur; and

•        general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.

Broad market and industry factors may materially harm the market price of our securities irrespective of our operating performance. The stock market in general, and NASDAQ, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for the stocks of other companies that investors perceive to be similar to the Company could depress our stock price regardless of our business, prospects, financial conditions, or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

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 being subject to contractual lock-ups and other legal restrictions. Additionally, a large percentage 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. The market price for shares of our Class A common stock may be made more volatile because of the relatively low volume of trading. 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.

There can be no assurance that the warrants will be in the money at the time they become exercisable, and they may expire worthless.

The exercise price for the outstanding warrants is $11.50 per share of common stock. There can be no assurance that the warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the warrants may expire worthless.

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.

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

The 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 the 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, the 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 the 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.

The 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, the controlling provisions of the Nomination Agreement we entered into with the Seller at the consummation of the Business Combination (the “Nomination Agreement”), a supermajority vote required to amend certain provisions of the Charter and the ability of the Board to designate the terms of, and issue new series of, preferred stock, which may make more difficult the removal of management and may discourage transactions that otherwise could involve payment of a premium over prevailing market prices for our securities.

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

1. Basis of Presentation

The unaudited pro forma condensed combined financial information has been prepared in accordance with a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, Boxwood was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Atlas Intermediate issuing stock for the net assets of Boxwood, accompanied by a recapitalization. The net assets of Boxwood were stated at historical cost, with no goodwill or other intangible assets recorded.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2019 and three months ended March 31, 2020 give pro forma effect to the Business Combination, equity financing and debt financing as if they had been completed on January 1, 2019. These periods are presented on the basis of Atlas Intermediate being the accounting acquirer.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2019 has been prepared using, and should be read in conjunction with, the following:

•        the audited condensed statement of operations of Boxwood for the year ended December 31, 2019 and the related notes, included herein; and

•        the audited condensed consolidated and combined statement of operations of Atlas Intermediate Holdings LLC and ATC Group Partners LLC for the year ended December 31, 2019 and the related notes, included herein.

The unaudited pro forma condensed combined statement of operations for the quarter ended March 31, 2020 has been prepared using, and should be read in conjunction with, the following:

•        the unaudited condensed statement of operations of the Company for the quarter ended March 31, 2020 and the related notes, included herein.

Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.

The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings or cost savings that may be associated with the Business Combination or any integration costs or restructuring plans.

The pro forma adjustments reflecting the consummation of the Business Combination, equity financing, and debt financing are based on certain currently available information and certain assumptions and methodologies that we believe are reasonable under the circumstances. The unaudited condensed pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material. We believe that our assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination based on information available to management at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Business Combination taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the post-combination company. They should be read in conjunction with the historical financial statements and notes thereto of the Company, Boxwood and Atlas Intermediate included herein.

2. Accounting Policies

Management is in the process of performing a comprehensive review of the two entities’ accounting policies. As a result of the review, management may identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on the financial statements of the Company. Based on its initial analysis, management did not identify any differences that would have a material impact on the unaudited pro forma condensed combined financial information. As a result, the unaudited pro forma condensed combined financial information does not assume any differences in accounting policies.

3. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Business Combination and has been prepared for informational purposes only.

The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give pro forma effect to events that are (1) directly attributable to the Business Combination, (2) factually supportable, and (3) with respect to the statement of operations, expected to have a continuing impact on the results of the post-combination company. Boxwood and Atlas Intermediate have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

The pro forma combined provision for income taxes does not necessarily reflect the amounts that would have resulted had the post-combination company filed consolidated income tax returns during the periods presented.

The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statement of operations are based upon the number of Boxwood’s shares outstanding, assuming the Business Combination occurred on January 1, 2019.

Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations

The adjustments included in the unaudited pro forma condensed combined statement of operations for the quarter ended March 31, 2020 are as follows:

(A)    Reverse transaction related costs that were recorded in the financial records of Atlas Intermediate on the date the Company consummated the Business Combination (the “Closing Date”).

(B)    Reverse stock compensation expense that was accelerated upon change of control provisions within the incentive plans. These costs were recorded by Atlas Intermediate upon the Closing Date of the Business Combination.

(C)    Reverse change in control payments relating to certain executives due upon the completion of the Business Combination.

(D)    Reverse consulting fees associated with former Boxwood personnel to assist in the Atlas Credit Agreement (as defined in Note 7 of our unaudited financials for the quarterly period ended March 31, 2020) debt syndication process.

(E)   Adjust Board of Directors compensation for a full quarter versus amount recorded in financial records which is only from the completion of the Business Combination through the end of the period.

(F)   Reverse the write-off of the Atlas Credit Facility deferred loan fees that were recorded by Atlas Intermediate upon the closing of the Atlas Credit Agreement.

(G)   Reverse interest expense associated with the old Atlas Credit Facility as the pro-forma income statement assumes that debt would have been extinguished as of January 1, 2020.

(H)   Record interest expense associated with the Term Loan for the Atlas Credit Agreement for the period January 1, 2020 through February 14, 2020.

(I)    Record amortization of deferred financing fees associated with the Term Loan for the Atlas Credit Agreement for the period January 1, 2020 through February 14, 2020.

(J)   Record cash dividends of the redeemable preferred stock at 5% on $145 million for the period January 1, 2020 through February 14, 2020.

(K)   Record PIK dividends of the redeemable preferred stock at 7.25% on $145 million for the period January 1, 2020 through February 14, 2020.

(L)   Record accretion of the 2.18% discount offered on the redeemable preferred stock for the period January 1, 2020 through February 14, 2020.

(M)   Record additional non-controlling interest provision as if the holders of Class B common stock shared in the results of the Company for the quarter based upon pro-forma results.

(N)   Reverse transaction related costs including deferred IPO fees that were recorded in the financial records of Boxwood on the Closing Date of the Business Combination.

(O)   Eliminate interest income on the trust account.

The pro forma adjustments included in the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2019 are as follows:

(AA) Reflects elimination of transaction related costs incurred and recorded by Atlas Intermediate and Boxwood.

(BB) Reflects the elimination of interest expense on the historical debt that is settled, and additional interest expense as a result of the debt financing.

(CC) Elimination of interest income on the trust account.

(DD) Reflects adjustments to income tax expense as a result of the tax impact on the pro forma adjustments to income attributable to Class A stockholders at the estimated statutory tax rate of 26%. Income attributable to non-controlling interests is not subject to taxes.

(EE) Reflects the 80% of interests related to the Class B stockholders.

(FF)  Reflects dividends payable to GSO in cash and PIK as well as the accretion of the 2.18% issuance discount on the preferred shares under the effective interest method, as outlined in the Equity Financing Commitment Letter, for the preferred shares reflected as redeemable non-controlling interests in the pro forma balance sheet.

Use of Proceeds

Unless we inform you otherwise in a prospectus supplement or free writing prospectus, we intend to use the net proceeds from the sale of securities we are offering for general corporate purposes. This may include, among other things, additions to working capital, repayment or refinancing of existing indebtedness or other corporate obligations and acquisitions and investment in existing and future projects. Any specific allocation of the net proceeds of an offering of securities to a specific purpose will be determined at the time of the offering and will be described in an accompanying prospectus supplement or free writing prospectus.

We will not receive any proceeds from the sale of the Private Placement Warrants or shares of Class A common stock to be offered by the selling security holders pursuant to this prospectus. With respect to the issuance of shares of Class A common stock underlying the Warrants, we will not receive any proceeds from the sale of such shares except with respect to amounts received by us due to the exercise of the Warrants to the extent the Warrants are exercised for cash. We will receive up to an aggregate of approximately $273 million from the exercise of Warrants, assuming the exercise in full of all of the Warrants for cash. Unless we inform you otherwise in a prospectus or free writing prospectus, we intend to use the net proceeds from any such exercise of the Warrants for general corporate purposes.

The selling security holders will bear all commissions and discounts and transfer taxes, if any, attributable to their sale of the Securities. We will bear all costs, expenses and fees in connection with the registration of the Securities, including with regard to compliance with state securities or “blue sky” laws.

Dividend Policy

We have not paid any cash dividends to date. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition. The payment of any cash dividends in the future will be within the discretion of our Board at such time. In addition, our Board is not currently contemplating and does not anticipate declaring stock dividends in the foreseeable future. Further, our ability to declare dividends may be limited by restrictive covenants contained in any of our existing or future indebtedness.

Management’s Discussion and Analysis of Financial Condition and
Results of Operations

The following discussion and analysis should be read in conjunction with the financial statements and related notes included elsewhere in this prospectus. This discussion contains “forward-looking statements” reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. 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 discussed below and elsewhere in this prospectus, particularly in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements,” 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.

OVERVIEW

Our Business

Headquartered in Austin, Texas, we are a leading provider of professional and technical testing, inspection engineering and consulting services, offering solutions to public and private sector clients in the transportation, commercial, water, government, education and industrial markets. With approximately 140 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 the existing structures as well as helping to build new structures. However, we do not perform any construction, and do not take construction risk.

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 31, 2019, Atlas:

•        performed more than 50,000 projects, with average revenue per project of less than $10,000; and

•        delivered more than 95% of our projects under “time & material” 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 are derived from projects that have used our services at least twice in the past three years and more than 95% of our revenues are generated from client relationships longer than 10 years, with greater than 25% of revenues generated from relationships longer than 30 years. Examples of such long-term customers include the Texas Department of Transportation, US Postal Service, Gwinnett County Georgia, New York City Housing Authority, San Francisco International Airport, Stanford University, Port of Oakland, United Rentals, Inc., The Coca-Cola Company and Apple Inc.

Our broad base of customers spans a diverse set of end markets including the transportation, commercial, water, government, education and industrial sectors. Our customers include government agencies, quasi-public entities, schools, hospitals, utilities and airports, as well as private sector clients across many industries.

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 scientists, engineers, inspectors and other field experts. As of March 31, 2020, our technical staff represented 75% out of our 3,265 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 March 31, 2020, our contracted backlog was estimated to be approximately $607 million. See “— Backlog” below for additional information relating to our backlog.

For the three months ended March 30, 2020 and year ended December 31, 2019, we recognized approximately $109.3 million and $471 million of gross revenues, ($1.5) million and $8 million of net income, and $12.9 million and $66 million of Adjusted EBITDA, respectively, (which does not take into account $7 million of pro forma cost synergies reflecting the impact of cost savings arising from the merger between Atlas Intermediate and ATC Group in 2019 by eliminating duplicate costs including those relating to labor, rent, sourcing and information technology). For a definition of Adjusted EBITDA and a reconciliation of Adjusted EBITDA to historical combined net income (loss), see “— Non-GAAP Financial Measures” below.

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 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 three financial metrics: revenue, backlog and Adjusted EBITDA. 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 a fixed fee or hourly rates. 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 analyze our backlog, which we define as fully awarded and contracted work or revenue we expect to realize for work completed, to evaluate operations and future revenue potential. 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 we typically follow growth in backlog.

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, adjustments for certain one-time or non-recurring items and other pro forma adjustments, including expected public company costs. 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 & 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. We generally utilizes a cost-to-cost approach in applying the percentage-of-completion method of revenue recognition. Under this approach, revenue is earned in proportion to total costs incurred, divided by total costs expected to be incurred.

Cost of Revenue

Cost of revenue reflects the cost of personnel and specifically identifiable costs associated with revenue.

Operating Expense

Operating expense includes corporate expenses, including personnel, occupancy, and administrative expenses, including depreciation and amortization.

Interest Expense

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

Other Income (Expense)

Other income or expense reflects the gains or losses, including the costs and related accumulated depreciation recapture, resulting from the disposal of an asset when such asset is sold or retired.

Income Tax Expense

Following the consummation of the 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 the our only direct assets will consist of common units of Holdings Units. 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 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 for us or our subsidiaries have been provided for in the accompanying consolidated financial statements except as disclosed below.

The State of Texas imposes a margin tax, with an effective rate of 0.7%, based on the prior year’s Texas-sourced gross receipts. This tax is treated as an income tax and accrued in the accounting period in which the taxable gross receipts are recognized. The State of Texas margin tax was insignificant in 2019 and 2018. In addition, there are two C-Corp subsidiaries for which we account for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, we determine deferred tax assets and liabilities on the basis of the differences between the financial statement and tax bases of assets and liabilities by using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The results of operations prior to the Business Combination were treated consistently in this manner.

Subsequent to the Business Combination, the Up-C structure allowed the holders of our Class B common stock to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or “pass through” entity, for U.S. federal income (and certain state and local) tax purposes following the Business Combination.

One of these benefits is that, for U.S. federal income (and certain state and local) purposes, our future taxable income that is allocated to Seller and its limited partners will be taxed on a flow-through basis and therefore will not be subject to corporate taxes at the entity level.

Income tax relating to the C-Corps is not considered in the provision for non-controlling interest calculation as it is solely the responsibility of the holders of our Class A common stock. The Texas margin tax is considered within the provision of non-controlling interest as it generated through the results of Atlas Intermediate and its subsidiaries.

Although the majority of our wholly-owned subsidiaries are structured as limited liability companies and considered pass through entities for federal and state income tax purposes, we do have two entities that are registered as C-Corps under federal income tax law. For those C-Corp entities, we are subject to income tax assessments within their jurisdictions on their current operations. Additionally, our Texas domiciled subsidiaries are subject to the Texas Franchise Tax.

Income tax expense and our effective tax rates can be affected by many factors, including changes in our mix of pre-tax losses/earnings, the effect of non-controlling interest in income of consolidated subsidiaries, our acquisition strategy, available tax incentives and credits, changes in judgment regarding the realizability of our deferred tax assets, changes in existing tax laws and our assessment of uncertain tax positions. Our tax returns are routinely audited by the taxing authorities and settlements of issues raised in these audits may affect our effective tax rate.

Net Income (loss) From Continuing Operations

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.

Loss From Discontinued Operations

Loss from discontinued operations includes our non-recurring gains or losses realized in connection with the disposition of an asset or component of the business that results in discontinued operations.

Provision for Non-controlling Interest

Our ownership and voting structure is comprised of holders of our Class A common stock that participate 100% in the results of Atlas Technical Consultants, Inc. and 19.4% 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 80.6% of Atlas Intermediate and its subsidiaries. In connection with the 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 includes earnings attributable to both the shareholders and the non-controlling interests.

The provision for non-controlling interest relates to pre-tax income subsequent to the Business Combination and does not include a pro-rata share of taxes as federal and state income taxes are attributable only to the holders of our Class A common stock under the Up-C structure.

Redeemable Preferred Stock Dividends

On February 14, 2020, in connection with the consummation of the Business Combination, Holdings and GSO COF III AIX-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 represents 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, and/or Regulation D promulgated thereunder.

The Preferred Units rank senior in priority to all other existing and future equity securities of Holdings with respect to liquidation preference and distribution rights.

The Preferred Units have a liquidation preference of $1,000 per Preferred Unit (the “Liquidation Preference”).

Subject to any limitations set forth in the Atlas Credit Agreement, the Preferred Units pay a dividend of 5% per annum, plus either an additional 6.25% per annum in cash or 7.25% per annum in additional Preferred Units, at Holdings’ option, payable quarterly in arrears.

If a cash dividend is not able to be made because of a limitation under the Atlas Credit Agreement, then the Liquidation Preference with respect to any Unit shall increase to 3.5625% in any quarter until a cash dividend can be made.

The Preferred Units do not possess voting rights and are not convertible into any other security of Holdings.

Holdings may redeem the Preferred Units beginning on the second anniversary of the Closing Date at a price of 103% of the Liquidation Preference (the “Redemption Premium”), and on the third anniversary of their issuance at the Liquidation Preference, in each case plus accrued and unpaid dividends. The Preferred Units may only be redeemed by Holdings within the first two years of the Closing Date upon a change of control as described below, in which case such Preferred Units will be redeemed at a customary make-whole amount as if the Preferred Units were redeemed on the second anniversary.

Subject to the terms of Holdings’ and its subsidiaries’ senior credit agreements, Holdings will be required to redeem the Preferred Units at the Redemption Premium, plus accrued and unpaid dividends, in the event of (i) a change of control, (ii) sales or other dispositions of all or substantially all of Holdings’ assets and (iii) the insolvency or bankruptcy of Holdings or any of its material subsidiaries.

Finally, holders of the Preferred Units may require Holdings to redeem their Preferred Units at the Liquidation Preference, plus accrued and unpaid dividends, beginning on the eighth anniversary of the Closing Date, subject to certain customary limitations.

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 Business Combination, and dividends due on redeemable preferred stock.

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

RESULTS OF OPERATIONS

Consolidated Results of Operations for the three months ended March 31, 2020

Comparison of the three months ended March 31, 2020 to the three months ended March 31, 2019:

Overview of Financial Results

This quarter, we saw an increase in our Backlog to $607.4 million or 6% compared to March 31, 2019. Revenues were higher this quarter in comparison to the comparable prior quarter due to our business strategy of responsible acquisitions that complement our platform and our investment in prior year within the Texas market.

Gross margins improved slightly in comparison to the comparable quarter while operating costs were higher due to the costs of completing the Business Combination. Interest expense was higher due to the higher borrowings associated with Business Combination and the dividends on redeemable preferred stock were a result of the Business Combination.

Revenue

Revenue for the three months ended March 31, 2020 increased $3.7 million, or 3%, to $109.3 million as compared to $105.6 million for the corresponding prior year period.

The increase in revenue for the three months ended March 31, 2020 was primarily attributable to acquisition of LONG in February 2020 as well as net organic growth from our existing platform in the amounts of $2.0 million and $1.7 million respectively. Our existing operations benefited from our expansion into new markets in Texas.

Cost of Revenue

Cost of revenue for the three months ended March 31, 2020 increased $1.7 million, or 3%, to $58.9 million as compared to $57.2 million for the corresponding prior year period. The increase in cost of revenues was due solely to the increase in revenues.

For the three months ended March 31, 2020, cost of revenue, as a percentage of revenue, remained fairly unchanged at 53.9% and 54.1% for the three months ended March 31, 2019.

Operating Expense

Operating expense for the three months ended March 31, 2020 increased $23.5 million, or 52%, to $68.4 million as compared to $44.9 million for the corresponding prior year period. For the three months ended March 31, 2020, operating expense, as a percentage of revenue, increased to 62.5% from 42.5% for the three months ended March 31, 2019.

The increase in operating expense for the three months ended March 31, 2020 was primarily attributable to the consummation of the Business Combination as the Company expensed $7.0 million of acquisition related costs associated with the Business Combination and $12.0 million of costs incurred with change of control provisions contained within employment agreements and our former Management Incentive Plan. These transaction-related items comprised 17.4% of the 20.0% change in operating expenses as a percentage of revenues when comparing the quarter ended March 31, 2020 to March 31, 2019. The remainder of the change was primarily associated with public company costs.

Interest Expense

Interest expense for the three months ended March 31, 2020 increased $3.2 million or 136%, to $5.6 million as compared to $2.4 million for the corresponding prior year period. The increase in interest expense is due to higher borrowings and interest rates in comparison to the prior year and the write-off of deferred financing fees associated with the former Atlas Credit Facility.

Other Income (Expense)

Other income (expense) for the three months ended March 31, 2020 and 2019 was $0.0 million and ($0.3) million, respectively. We recorded settlements with former owners of an acquired company in 2019, this did not repeat in 2020.

Loss From Discontinued Operations

Other loss from discontinued operations for the three months ended March 31, 2020 decreased ($0.1) million, or 100%, to $0.0 million as compared to $0.1 million for the corresponding prior year period.

The decrease in loss from discontinued operations for the three months ended March 31, 2020 was attributable to the closure of the Power & Industrial business unit in late 2018 with some closing transactions recorded in 2019.

Provision for Non-controlling Interest

The provision for non-controlling interest for the three months ended March 31, 2020 increased by $3.3 million or 100% to $3.3 million from $0.0 million for the corresponding period. This increase is due to reverse recapitalization created by the Business Combination whereby the holders of our Class B common stock only share in the results of Atlas Intermediate and its subsidiaries based upon their ownership percentage in relation to total common stockholders. This treatment is effective from the Business Combination until the exchange of Class B common stock to Class A common stock.

Redeemable Preferred Stock Dividends

Redeemable preferred stock dividends for the three months ended March 31, 2020 was $2.2 million as a result of the $141.8 million of redeemable preferred stock that we issued in connection with the Business Combination.

Consolidated Results of Operations for the year ended December 31, 2019

Comparison of the year ended December 31, 2019 to the year ended December 31, 2018.

Revenue

Revenue for the year ended December 31, 2019 increased $44.6 million, or 10%, to $471.0 million as compared to $426.4 million for the corresponding prior year period.

The increase in revenue for the year ended December 31, 2019 was primarily attributable to the contribution from various acquisitions completed in late 2018 as well as organic growth from our existing platform in the amounts of $24.6 million and $20.0 million, respectively. Our existing operations benefited from new scope of work for an existing client serviced across our nationwide platform and our expansion into new markets in Texas.

Cost of Revenue

Cost of revenue for the year ended December 31, 2019 increased $10.2 million, or 4%, to $259.7 million as compared to $249.5 million for the corresponding prior year period. The increase in cost of revenues was due to the increase in revenues, however it was not commensurate with the revenue increase due to a reclassification in the current year of benefits from cost of revenues to operating expenses. Without this reclassification, cost of revenues would have increased 10% comparing the year ended December 31, 2019 to 2018.

For the year ended December 31, 2019, cost of revenue, as a percentage of revenue, decreased to 55.1% from 58.5% for the year ended December 31, 2018. The decrease in cost of revenue as a percentage of revenue for the year ended December 31, 2019 was primarily due to a change in presentation of benefits expense relating to those employees servicing projects from cost of revenues to operating expenses for one of our acquired companies to conform with the existing platform. This represented 3.0% of our revenues for the year ended December 31, 2019.

Operating Expense

Operating expense for the year ended December 31, 2019 increased $34.6 million, or 22%, to $192.1 million as compared to $157.5 million for the corresponding prior year period. For the year ended December 31, 2019, operating expense, as a percentage of revenue, increased to 40.8% from 36.9% for the year ended December 31, 2018.

The increase in operating expense for the year ended December 31, 2019 was primarily attributable to the increase in revenues for the period as we incurred additional personnel related and vehicle costs associated with the direct labor hires required to support those additional revenues, non-recurring transaction related costs associated with our then-proposed acquisition by Boxwood Merger Corp, which we completed on February 14, 2020, and the change in presentation of benefits associated with direct employees at one of our acquired companies to operating expense from cost of revenue. The presentation change represented 3.0% of our revenues for the year ended December 31, 2019 and an increase to operating expenses of 9% when comparing the year ended December 31, 2019 to 2018.

Interest Expense

Interest expense for the year ended December 31, 2019 increased $3.1 million, or 45%, to $9.9 million as compared to $6.8 million for the corresponding prior year period. The increase in interest expense is due to the increase in average outstanding borrowings for 2019 compared to the average outstanding borrowings during 2018.

Other Income

Other income for the year ended December 31, 2019 and 2018 was consistent at $0.1 million.

Income Tax Expense

Income tax expense for the year ended December 31, 2019 was $1.3 million compared to income tax expense of $0.3 million for the year ended December 31, 2018. The increase in taxes is due to the growth of our Texas operations as well as work performed in the Commonwealth of Puerto Rico.

Prior to the Business Combination and reorganization as an Up-C structure for income tax purposes, we were 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 for the Company or our subsidiaries has been provided for in the accompanying combined financial statements, except for margin taxes in the State of Texas and a few of our subsidiary C-Corp entities. The margin taxes are treated as income taxes, with an effective rate of 0.7%, based on the prior year’s Texas-sourced gross receipts. The effective rate of the C-Corp for the year ended December 31, 2019 was 30%.

Loss From Discontinued Operations

Other loss from discontinued operations for the year ended December 31, 2019 decreased by approximately ($0.2) million, or (63%), to approximately $0.2 million as compared to approximately $0.4 million for the corresponding prior year period.

The decrease in loss from discontinued operations for the year ended December 31, 2019 was primarily due to the wind-down of our Power and Industrial (P&I) operation. We entered into a purchase agreement with a third-party in December 2017, and the sale was completed during 2018, resulting in an immaterial gain. The 2019 amounts represented the final wind-down of the operations that took place at the beginning of the year.

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity and capital resources are our cash and cash equivalents balances, cash flow from operations, borrowings capacity under our Atlas Credit Facility (as defined below), Atlas Loan Agreement (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 have been in compliance with the terms of our credit agreement and we believe our sources of liquidity, including cash flow from operations, existing cash and cash equivalents and borrowing capacity under our Atlas Credit Facility and Atlas Loan Agreement will be sufficient to meet projected cash requirements for at least the next twelve months. We are assessing our business operations and the impact that COVID-19 may have on our financial results and liquidity. We will continue to monitor our capital requirements thereafter to ensure our needs are in line with available capital resources and we will continue to monitor the impact of COVID-19 to our liquidity.

Cash Flows

for the three months ended March 31, 2020

Comparison of the three months ended March 31, 2020 to the three months ended March 31, 2019

Cash and Cash Equivalents.

At March 31, 2020 and 2019 we had $18.9 million and $20.2 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 used in operating activities was ($12.6) million for the three months ended March 31, 2020, compared to net cash provided of $0.6 million for the three months ended March 31, 2019. The decrease of ($13.2) million was primarily due to the increase this quarter in unbilled receivables in the amount of ($6.6) million relating to a system conversion in one of our operating companies and the payment of ($6.8) million accounts payable and accrued expenses mainly relating to costs associated with the Business Combination.

Investing Activities

Net cash used in investing activities was ($11.6) million for the three months ended March 31, 2020, compared to ($1.4) million for the three months ended March 31, 2019. The $10.2 million increase in cash used was related to our acquisition of LONG in February 2020.

Financing Activities

Net cash provided by financing activities was $22.9 million for the three months ended March 31, 2020, compared $56.5 million for the three months ended March 31, 2019. The ($33.6) million decrease to net cash provided by financing activities was due to the timing of the financing received in the quarter ended March 31, 2019 for the shareholder distributions paid subsequent to that quarter in comparison to the issuance of $20.7 million of common stock from new stockholders relating the Business Combination during the quarter ended March 31, 2020.

The Company did raise additional money this quarter through the Atlas Credit Agreement, described herein, and the issuance of redeemable preferred stock which was used to pay a distribution to the former owners of Atlas Intermediate, acquire LONG and pay off the Atlas Credit Facility.

Working Capital

Working capital, or current assets less current liabilities, decreased ($45.3) million, or 31%, to $98.8 million at March 31, 2020 from $144.1 million at March 31, 2019. This decrease in working capital resulted from the timing of a Member distribution in the amount of $52.8 million that was financed as of March 31, 2019 but paid subsequent to the balance sheet date, partially offset by a $9.2 million increase in unbilled receivables due to a system conversion for one of our operating companies.

Cash Flows for the year ended December 31, 2019

Comparison of the year ended December 31, 2019 to the year ended December 31, 2018

Cash and Cash Equivalents

At December 31, 2019 and 2018 we had $20.2 million and $6.5 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 $31.5 million for the year ended December 31, 2019, compared to $36.9 million for the year ended December 31, 2018. The decrease of ($5.4) million was primarily due to the timing of working capital payments and receipts.

Investing Activities

Net cash used in investing activities was $9.6 million for the year ended December 31, 2019, compared to $14.1 million for the year ended December 31, 2018. The ($4.5) million decrease in cash used was primarily due to an acquisition in the previous period offset by higher capital expenditure to support our growth.

Financing Activities

Net cash used for financing activities was $8.2 million for the year ended December 31, 2019, compared to cash used by financing activities of $26.9 million for the year ended December 31, 2018. The ($18.7) million decrease to net cash used in financing activities was primarily due to additional funds received through the debt financing offset by distributions to stockholders.

Working Capital

Working capital, or current assets less current liabilities, increased $5.2 million, or 6%, to $92.1 million at December 31, 2019 from $86.9 million at December 31, 2018. This increase in working capital resulted from our increased revenues and continued emphasis on billing and collections metrics.

Debt Arrangements

In October 2017, concurrent with the closing of the acquisition of Moreland Altobelli Associates (“Moreland”), we obtained a bridge loan from Regions Bank in the amount of $42.0 million. In November 2017, concurrent with the closing of the acquisition of the Engineering Testing Services family of companies (“ETS”), we entered into a credit agreement with a group led by Regions Bank providing a term loan of $95.0 million and a revolving credit facility of $30.0 million secured by some of our assets (the “Atlas Loan Agreement”). Proceeds from the Atlas Loan Agreement were used to fund the acquisition of ETS, repayment of the bridge loan, and for a redemption of $15.2 million of initial equity contributions made by the initial members once overall leverage amounts were determined. The Atlas Loan Agreement provided for a scheduled maturity date in November 2022 and quarterly principal payments beginning in December 2017, with interest compounded based on the variable rate in effect.

ATC was party to a business loan agreement (the “ATC Loan Agreement”) which provided for a scheduled maturity date of January 29, 2020. The ATC Loan Agreement included a revolving credit facility of $45.0 million. Security for the loan was provided by a first-priority interest in substantially all of ATC’s assets and a promissory note. Borrowings under the ATC Loan Agreement bore interest at the one-month London Interbank Offered Rate (“LIBOR”) plus a margin based on the total leverage ratio as defined in the ATC Loan Agreement.

In March 2019, subsequent to the merger with ATC, the outstanding balances of the Atlas Loan Agreement and the ATC Loan Agreement were paid in full and the ATC Loan Agreement was terminated. The Atlas Loan Agreement was amended to provide in the amount of $145.0 million and a revolving credit facility of $50.0 million, of which $31.8 million was funded at closing (collectively, the “Atlas Credit Facility”). Proceeds of the Atlas Credit Facility were used to repay existing debt of $123.9 million and fund a stockholder distribution of $52.8 million made in April 2019. The Atlas Credit Facility required quarterly principal payments of $2.719 million through March 31, 2023,

Highly visible revenue through a robust backlog.    Our significant backlog growth and robust pipeline provides visibility into our near-term revenue forecast. Our backlog, consisting of only contracted and fully funded work, has seen significant organic growth of 8.7% from 2018 to 2019. Due to our robust $601 million gross revenue backlog as of December 31, 2019, we had 114% coverage of our estimated gross revenue projections for the fiscal year ended December 31, 2020.

Strong margins and free cash flow.    We maintain strong margins and have achieved significant margin expansion since 2015. This attractive margin profile, coupled with a capital-light business model, enables us to maintain strong free cash flow.

Proven and experienced management team.    Our management team has deep industry expertise. We are led by our Chief Executive Officer, L. Joe Boyer, who has more than 30 years of experience in the technical services industry and is supported by an executive leadership team which also has an average of over 30 years of experience. Our management team has a long track record of achieving organic growth, high employee retention and executing on both accretive acquisitions and cross-selling opportunities.

Growth Strategy

We focus on a multi-pronged growth strategy, with a clear path to achieving our strategic plan driven by a unique inflection point in our evolution following recent acquisitions.

We intend to pursue the following growth strategies as we seek to expand our market share and position as a preferred provider of professional and technical services:

•        capitalize on key market tailwinds;

•        continue to expand cross-selling and national accounts;

•        pursue larger, premier infrastructure opportunities; and

•        maintain a disciplined approach to mergers and acquisitions.

Capitalize on Key Market Tailwinds

We were established to take advantage of multiple independent, positive, macroeconomic trends that underpin momentum in target-end markets. Demands for our technical services are driven by aging infrastructure, increasing complexity and scrutiny of regulatory requirements, and continued inspection and quality assurance outsourcing trends. We have strategically established operations in states with large, predictable transportation budgets, and are primed to capitalize on the strong demand for repair and maintenance of aging infrastructure.

Cross-Selling and National Accounts

We intend to leverage our expanded platform to cross-sell our diverse services to existing customers. As the platform integration continues, we expect the number of cross-selling opportunities to drive increasing and above market organic revenue growth. We had previously ceded opportunities to subcontractors that can now be performed under our expanded, unified platform. We have already demonstrated success in our cross-selling initiatives through our long-term relationship with Walmart Inc.

Pursue Larger, Premier Infrastructure Opportunities

We intend to use our expanded geographic reach and service capabilities to pursue and win premier infrastructure opportunities that require complex infrastructure delivery services. We have already begun to execute on this blueprint, as illustrated by an increase in the number of backlog projects greater than $5 million from ten, as of December 31, 2018, to twenty, as of December 31, 2019. As of December 31, 2019, our sales team is pursuing 23 opportunities of greater than $5 million for 2020 and beyond.

Disciplined Approach to Mergers and Acquisitions

We maintain a rigorous and highly disciplined approach in our pursuit of accretive acquisitions. We intend to selectively pursue targets that provide complementary, low-risk services and expand our national platform. These

strategic acquisitions represent a highly attractive opportunity for us to continue diversifying and expanding our customer base, geographic footprint, and service offering across the platform. We intend to deploy this strategy within the highly fragmented technical services market which is largely comprised of regional service providers. We have a demonstrated track record of successfully identifying target companies and integrating them at highly accretive valuations, having completed six such acquisitions since 2017.

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, quality assurance (“QA”), engineering, environmental and technical services. 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 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 a 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 QA continue to increase as a percentage of overall construction value.

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

•        Aging infrastructure.    The majority of U.S. transportation, water and utility networks are over 50 years old, requiring an estimated $4.6 trillion of spending through 2025. Roughly 32% of major roads are in poor or mediocre condition, 25% of bridges are functionally or structurally deficient, 70% of all dams will be defective by 2025 and the majority of the U.S. electric grid was built in the mid-20th century, with an intended lifespan of 50 years.

•        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. Around 40% of testing inspection services are outsourced, with the overall market for these services growing at approximately 8% year-over-year.

•        Increased public spending.    The United States Congress recently passed legislation aimed at increasing transportation infrastructure spend in key markets. For example, the Fixing America’s Surface Transportation Act (the “FAST Act”) will continue to provide near-term funding support, as the Highway Trust Fund has enough funding to cover large outlays through 2021. More than $900 billion in infrastructure funding has been approved through 2020.

•        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 2020 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 2020, California, New York and Texas, account for approximately 33% of all state and local spending nationwide.

•        Rising Environmental Expenditures.    HSE regulations continue to become increasingly tight and complex amid heightened awareness of environmental issues by regulatory bodies and consumers. U.S. environmental consulting expenditures are expected to increase from $31 billion in 2019 to $41 billion in 2025.

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 and water. 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. As such, there are a growing number of government projects focused on roads, bridges and airports, including the FAST Act and the Federal Aviation Administration’s Modernization & Reform Act. 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. Illustrative projects in the transportation market include airports, bridges, tolls, railways, highways, waterways, ports, tunnels, pedestrian routes and others.

The following geographic areas have demonstrated expanding legislation and higher-than-average investment in transportation infrastructure.

•        Texas — The Texas Department of Transportation budget grew to $30 billion in 2018-2019, a 70% increase since 2010-2011, while staff headcount decreased 15% over the same period. The 2019 United Transportation Program approved $75 billion in infrastructure projects through 2028.

•        California — The California Department of Transportation budget was $14 billion in 2019 and has increased at a CAGR of 22% since 2016. The estimated backlog for road and bridge repairs is over $130 billion.

•        New York — The New York Department of Transportation budget was $12 billion in 2019 and there is a constant public effort to improve New York’s transportation infrastructure such as the New York Department of Transportation.

•        Georgia — Georgia’s Transportation Funding Act of 2015 provides $10 billion for infrastructure funding and the state’s Major Mobility Investment Program has secured $11 billion for large scale projects through 2030.

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 growth 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 impact 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.

Service Lines

Testing, Inspection and Consulting

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 testing, inspection and consulting services to support a vast array of assets across different types, stages of life and end markets.

The testing, inspection and consulting services we offer fall into four categories: (1) materials, testing and engineering; (2) construction quality assurance; (3) environmental services; and (4) disaster response and recovery.

Materials, Testing & Engineering.    We perform testing and inspection work to identify and assess any risks posed by site conditions to a project and to meet rigorous industry standards. Through professional engineers, geologists, environmental specialists, laboratory managers and ACI, RTT and NICET-certified technicians, we offer full-service site assessment for clients ranging from small residential developers to large municipalities. Illustrative services include:

•        product evaluations;

•        factory QC services;

•        non-destructive testing and evaluations;

•        materials testing and inspection;

•        laboratory services; and

•        geophysics.

Construction Quality Assurance.    We offer a full suite of quality assurance and control services for construction projects of various magnitudes. We possess the technical expertise to observe, inspect and test construction material for compliance with approved construction documents and clients’ expectations. Illustrative services include:

•        construction quality assurance;

•        quality plan development;

•        construction engineering and inspection;

•        special inspections and testing;

•        source and field inspections; and

•        construction materials engineering and testing.

Environmental Services.    We provide comprehensive solutions to our clients’ most challenging ecological issues. Through implementing our highly trained team of engineers, geologists, hydrogeologists, archeologists, inspectors and other specialty environmental professionals, we have the capability to manage every aspect of a project’s environmental needs while remaining on time and on budget. Illustrative services include:

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

•        air quality;

•        water, hazardous material permitting and registration;

•        underground storage tank management; and

•        leak detection and repair (LDAR) program management.

Disaster Response and Recovery.    We support response and recovery efforts for federal, state, local governments and agencies, as well as private sector clients across the U.S. Leveraging our vast portfolio of capabilities across transportation, water, industrial and commercial market sectors, we can expeditiously manage disaster response and recovery missions of any magnitude. Illustrative services include:

•        terrestrial, coastal and maritime response and recovery services;

•        implement and refine disaster assessments;

•        develop and manage sheltering and temporary essential power (STEP) programs;

•        develop temporary housing, refugee and migrant populations; and

•        implement and manage temporary repair and essential power programs for federal and commercial customers.

Engineering, Planning and Design

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 broad specialized expertise to offer technical and project management solutions in order to help clients meet their most demanding, large-scale challenges.

The specific engineering, planning and design services we offer fall into three categories: (1) engineering and design services; (2) program management; and (3) construction support services.

Engineering and Design Services.    Years of experience in design and construction of a broad range of transportation and civil infrastructure projects gives us unique expertise in the fields of engineering and planning. Our success in engineering and design services has been built on strong lines of communication, best in class planning and design professionals, meticulous quality control measures throughout all stages of a project’s development and fluid participation and direct input of all team members. This process of knowledge sharing among team members and continuous improvement of operations is a proven strategy ensuring maximum value for the owner and fewer unforeseen problems during construction. Illustrative services include:

•        civil engineering;

•        hydraulic studies;

•        transportation engineering and planning;

•        landscape architecture;

•        land acquisition services; and

•        geotechnical services.

Program Management.    We provide public and private sector clients with comprehensive support in managing the planning, funding, design and construction process of large-scale improvement programs. Illustrative services include:

•        constructability review, observation and monitoring;

•        plan and drawing review;

•        bid evaluation and award analysis;

•        progress documentation and payment review; and

•        dispute resolution.

Construction Support Services.    We offer a full suite of comprehensive construction support services for challenging large scale sites and structures. Services cover construction management, construction engineering and inspection, material testing, project oversight and documentation and comprehensive audit support. Illustrative services include:

•        construction management;

•        contract documents preparation and administration;

•        project cost and schedule control;

•        construction observation and monitoring;

•        utility coordination; and

•        subsurface utility engineering.

Key Clients and Projects

We currently serve over 9,000 different clients annually. While our ten largest clients accounted for approximately 25% of our consolidated net revenue during the fiscal year ended December 31, 2019, no single client accounted for more than 10% during this period. Although we serve a highly diverse client base, for the year ended December 31, 2019, approximately 40% 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 the 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):

•        Apple Campus II (Cupertino, California)

•        Golden Gate Bridge (San Francisco, California)

•        Ground Zero Recovery (New York, New York)

•        Harbor Bridge (Corpus Christi, Texas)

•        The Grand Waikikian by Hilton (Honolulu, Hawaii)

•        Hurricane Katrina Recovery (Louisiana)

•        Northwest Corridor Express Lanes (Georgia)

•        San Francisco International Airport (San Francisco, California)

•        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 31, 2019, 95% of our revenue was recognized as time and materials/cost-reimbursable contracts, with 5% from fixed price contracts.

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

•        “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 charges 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.

•        “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:

•        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 & material” 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 on the percentage-of-completion method. Revenues recognized on the percentage-of-completion method are generally measured by the direct costs incurred to date as compared to estimated costs incurred. Less than 3% of our revenues were recognized on the percentage-of-completion method.

Backlog

As of December 31, 2019, we had approximately $601 million of backlog, of which $361 million, or 60%, is expected to be recognized over the next 12 months and the remaining over the following 30 months.

Growth of our backlog has been accelerating since the establishment of our national platform. On a pro forma basis, our platform companies experienced 1.4% year-over-year growth from fiscal year ended December 31, 2017 to 2018 benefiting from the integration and cross-selling of the acquisitions of PAVETEX, Moreland and CEL in 2017. We realized 8.7% backlog growth from fiscal year ended December 31, 2017 to 2018 as the business transitioned from independent regional providers to a national platform of scale.

Note: Backlog is presented on a pro forma basis as if all acquisitions were consummated at the beginning of the relevant period with certain purchased companies estimated by our management.

Our backlog includes only amounts from fully funded projects for which work authorizations have been received and does not reflect the full amounts we may receive over the term of such contracts. Backlog is expressed in terms of gross revenue and therefore may include significant estimated amounts of third-party or pass-through costs to subcontractors and other parties. We cannot guarantee that the remaining revenue projected in the backlog will be realized in its entirety, or if realized, will result in profits. 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 12 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. Accordingly, our backlog as of any particular date is an uncertain indicator of future earnings. As backlog is not a defined accounting term, our computation of backlog may not be comparable to that of our industry peers.

Offices

Our principal executive offices are located at 13215 Bee Cave Parkway, Building B, Suite 230, Austin, Texas 78738 which we lease under a five-year commitment with annual lease terms of $0.2 million plus operating expenses over the life of the lease. We do not own any significant real property. We currently operate out of more than 140 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. 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 needs should we need to relocate or expand our operations.

Employees

As of March 31, 2020, we had more than 3,200 employees, approximately 85% of which are full-time employees and approximately 75% of which represent our technical staff. Our employee attrition rate for 2019 among all staff, part-time and full-time, was approximately 10%. To date, however, we have been able to locate and engage highly qualified employees as needed and does not expect our growth efforts to be constrained by a lack of qualified personnel. We consider our employee relations to be good.

Executive Officers

Our executive officers are L. Joe Boyer, Chief Executive Officer; David Quinn, Chief Financial Officer; David Miller, Chief Strategy Officer; John Mollere, Chief Administrative Officer; Gary Cappa, Chief Operating Officer and Walter Powell, Chief Accounting Officer. See the section entitled “Management — Information about Executive Officers, Directors and Nominees” included in this Registration Statement, below.

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 pass as a barrier for 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 above industry standards.

The firms operating in the industry range from large, global companies with broad service offerings to small-scale specialized providers that typically service regional markets or specialized niches. Competitive dynamics in the industry are variable across end markets, localities, geographies, types and scopes of services, among other factors. We view our principal competitors as NV5 Global, Inc., Intertek Group plc, Tetra Tech, Inc., Jacobs Engineering Group Inc., Bureau Veritas S.A., Terracon Consultants Inc., WS Atkins PLC, WSP Global Inc., TRC Companies, Inc. and other small- and mid-sized regional players. Our ability to compete successfully will depend 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.

Seasonality

Due primarily to inclement weather conditions, which lead to project delays and slower completion of contracts, and a higher number of holidays, 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 the project management approach. 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 it operates. We contract with various U.S. governmental agencies and entities. When working with U.S. 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:

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

•        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

•        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 laws that strictly regulate the handling, removal, treatment, transportation and disposal of toxic and hazardous substances. 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 civil or criminal sanctions, third-party claims for property damage or personal injury, or cessation of remediation activities.

Management

Information About Executive Officers, Directors and Nominees

Set forth below are the names, age and positions of each of our directors and officers:

____________

(1)      Mr. Quinn was appointed Chief Financial Officer of Atlas in May of 2020.

(2)      Mr. Powell was appointed Chief Accounting Officer of Atlas in May of 2020.

(3)      Member of the Audit Committee

(4)      Member of the Nominating Committee

(5)      Member of the Compensation Committee

L. Joe Boyer has served as Atlas Intermediate’s Chief Executive Officer since October 2017. Prior to becoming Chief Executive Officer of Atlas Intermediate, 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 holds a Masters of Business Administration from Pepperdine University and a Bachelor of Science in Architectural Engineering from The University of Texas at Austin.

David D. Quinn Sr. has served as Atlas’ Chief Financial Officer since May 2020. Prior to becoming Chief Financial Officer, Mr. Quinn served as Atlas’ Executive Vice President, Corporate Affairs since September 2019. Prior to joining Atlas, 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 of 2013, Mr. Quinn joined Atkins North America where he served in Chief Financial Officer, Chief Operating Officer and Chief Executive Officer capacities. Mr. Quinn obtained a Bachelor of Arts in Political Science and Economics from the University of Massachusetts, a Master of Business Administration 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.

Gary M. Cappa has served with the Company since November 2019. Prior to joining the Company, Mr. Cappa served as the President and Chief Executive Officer of Consolidated Engineering Laboratories (“CEL”) from September 1985 to November 2019. While at CEL, Mr. Cappa successfully lead and stimulated its growth from one to eight facilities in California, Utah, Nevada, and Hawaii. He has been in the testing and inspection industry for 38 years and is committed to upholding the highest standards of quality in testing and inspection. With strong expertise in problem resolution, serving as liaison between the owner and contractor, expediting project completion, and quality control,

Mr. Cappa has been instrumental in developing successful programs to improve the services of testing agencies and their interaction with local jurisdictions. Mr. Cappa holds a B.A. in Geology and Earth Science from the University of California, Santa Barbara.

Walter G. Powell has served as Atlas Intermediate’s Chief Accounting Officer since May of 2020. Prior to becoming Chief Accounting Officer, Mr. Powell served as Atlas’s Chief Financial Officer since November 2017. Prior to becoming Chief Financial Officer of Atlas Intermediate, Mr. Powell served as an Audit Partner with Deloitte & Touche, LLP for 10 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 Bachelor of Science in Accounting from The University of New Orleans. He is a Certified Public Accountant and a member of the American Institute of CPA’s.

John A. Mollere has served as Atlas Intermediate’s Chief Administrative Officer since January 2019. Mr. Mollere brings over 25 years of experience and leadership in corporate administration. Prior to joining Atlas Intermediate, 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 Atlas 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, where he served in multiple management roles from August 1994 to September 2005. Mr. Mollere has a Bachelor of Science in Toxicology from Northeast Louisiana University and is a Certified Safety Professional.

David Miller has served as Atlas Intermediate’s Chief Strategy Officer since January 2019. Prior to joining Atlas, Mr. Miller served as the Chief Executive Officer for PAVETEX, a respected and rapidly growing construction engineering and testing firm in Texas, from August 2016 until January 2019. Prior to joining PAVETEX, Mr. Miller was the Chief Executive Officer of Truno Retail Technology Solutions, a technology services provider with operations in thirty-six states, from July 2015 to August 2016. Mr. Miller previously served as Presiding Officer of the Texas Emerging Technology Fund from July 2015 to August 2016, Chief Operating Officer of Flat Wireless from November 2011 to June 2015 and Vice Chancellor of the Texas Emerging Technology Fund from November 2011 to January 2015. Mr. Miller earned his Juris Doctor and Masters of Business Administration from Texas Tech University.

Brian Ferraioli has served as Chairman of the Board since February 2020. Mr. Ferraioli is also is an operating partner at Bernhard Capital Partners, and has worked with the firm since 2017. Mr. Ferraioli served as Executive Vice President and Chief Financial Officer of KBR, Inc., an engineering, construction and services company, from 2013 to 2017. Prior to KBR, Mr. Ferraioli was Executive Vice President and Chief Financial Officer at The Shaw Group, Inc. (now part of McDermott International, Inc.) from July 2007 to February 2013, when the company was acquired by Chicago Bridge & Iron Company N.V. Prior to joining The Shaw Group, Mr. Ferraioli served as Vice President and Controller of Foster Wheeler, AG. Mr. Ferraioli is a Director and Chairman of the Audit Committee of Vistra Energy Corp, is a Director, Chair of the Audit Committee and on the Compensation Committee of Charah Solutions, Inc. and is a Director and Chair of the Audit Committee of Team, Inc. Mr. Ferraioli has approximately 40 years of experience in senior finance and accounting roles in the engineering and construction industries and is also a National Association of Corporate Directors Governance Fellow. Previously, Mr. Ferraioli served as a director and chairman of the audit committee of Babcock & Wilcox Enterprises and its predecessor company Babcock & Wilcox, Inc. He also previously served on the board of directors of Adolfson & Peterson, a privately owned construction company. Mr. Ferraioli received his B.S. in accounting from Seton Hall University and his Masters of Business Administration from Columbia University.

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”). 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, a Fortune 250 Energy and Utility Company, Chairman of Cinergy’s Investment Committee and CEO and President of Cinergy’s Commercial Business Unit. Earlier, he held senior management positions with LG&E Energy Corp. (NYSE: LGE) 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 a member of the

Compensation, Operating and Nominating and Governance Committees. Earlier, he also 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 Masters of Business Administration from the A.B. Freeman Graduate School of Business at Tulane University.

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 Masters of Business Administration from the Anderson Graduate School of Management at UCLA.

Jeff Jenkins has served as a director of the Company since February 2020. Mr. Jenkins is a founder and partner of Bernhard Capital Partners, and has been with the firm since its inception in 2013. He serves as a member of the Investment Committee and the Portfolio Committee and is involved in all areas of the firm’s investment activities. Mr. Jenkins serves on the Board of Directors for Brown & Root, Bernhard LLC and Epic Piping. Prior to founding Bernhard Capital, Mr. Jenkins spent ten years working for The Shaw Group where he served many vital positions. During his tenure at Shaw, Mr. Jenkins served as Chief Operating Officer of Shaw Environmental and Infrastructure, where he was responsible for operations and business development. Prior to this role, he served as President of the Commercial, State, and Local group within the Environmental and Infrastructure division. Before moving into his operating roles, Mr. Jenkins served as Vice President of the Office of the Chairman where he led overall corporate development and placed a special emphasis on mergers and acquisitions, joint ventures and business development efforts. Prior to joining Shaw, Mr. Jenkins was a Corporate and Securities Attorney at Vinson & Elkins LLP where his practice focused primarily on mergers and acquisitions, private equity and venture capital, and public securities work in a broad range of industries. Mr. Jenkins received his B.A. from Louisiana State University and his J.D. from Louisiana State University after attending law school at the University of Texas.

Stephen M. Kadenacy served as our Chief Executive Officer and Chairman since Boxwood’s initial public offering in 2018 until the consummation of the Business Combination. Immediately following the consummation of the Business Combination, Mr. Kadenacy became a director of the Company and has served in such capacity since. Mr. Kadenacy served as President of AECOM from October 2014 until June 2017 and as Chief Operating Officer from October 2016 until June 2017. Prior to that, he served as AECOM’s Chief Financial Officer from October 2011 until October 2015 and as Senior Vice President, Corporate Finance from May 2008 to September 2011. Prior to joining AECOM, Mr. Kadenacy was with the accounting firm KPMG LLP in San Francisco since 1996. Mr. Kadenacy previously served on the Board of Directors and Audit Committee of ABM Industries Inc. Mr. Kadenacy holds a Bachelor’s degree in economics from the University of California at Los Angeles and a Masters of Business Administration from the University of Southern California.

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 of 2011. Lemoine was founded in 1975 and 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 our region. Mr. Lemoine received his B.S. from Louisiana State University in 1979.

Joseph Reece has served as an independent director of the Company since November 2018 and has more than 30 years of experience advising public and private corporations, boards, financial sponsors and institutional investors on strategy, financing, and mergers and acquisitions. Since October 2019, Mr. Reece has been a Partner and Head of Advisory Services at BDT & Company, LLC, a merchant bank based in Chicago with offices in New York, Los Angeles, London and Frankfurt. From October 2018 to October 2019 and from April 2015 to January 2017, Mr. Reece served as the Founder and Chief Executive Officer of Helena Advisors. Previously, Mr. Reece was also the Executive Vice Chairman of UBS Securities, LLC (“UBS”) from 2017 through October 2018, and served as the Head of Corporate Client Solutions for the Americas from October 2017 through March 2018. Prior to that, he spent 18 years with Credit Suisse where he held a number of senior management positions, including the Global Head of Equity Capital Markets, the Global Head of the Industrials Group and served on both the Global Equities Management Committee and the Investment Banking Management Committee. Mr. Reece began his career at the SEC as Staff

Counsel ultimately rising to become Special Counsel for the SEC’s Division of Corporation Finance and subsequently practiced law with Skadden Arps in the Corporate Practice Group. Mr. Reece holds a Bachelor of Science, a Masters of Business Administration and a Juris Doctor from the University of Akron and a LL.M from the Georgetown University Law Center. Mr. Reece currently serves as a member of the board of directors of Compass Minerals International, Inc., the Georgetown University Law Center, the Foundation of the University of Akron and Chair-ity. Previously, Mr. Reece also served on the board of directors of UBS Securities, LLC, CST Brands, Inc., LSB Industries, Inc., RumbleOn, Inc. and Del Frisco’s Restaurant Group.

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 energy and natural resource-related companies, since AG’s founding in 2001. AG makes investments in the United States and internationally. 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. (NASDAQ: TPIC) 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, the UCLA Institute of the Environment and Sustainability (where he serves as co-Chair) and the Federal Reserve Bank’s 12th District Economic Advisory Council (effective January 2020). 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.

Independence of Directors

NASDAQ listing standards require that a majority of our Board be independent. An “independent director” is defined generally as a person other than an officer or employee of a listed company or its subsidiaries or any other individual having a relationship which in the opinion of a listed company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. The Board has determined that each of Messrs. Duncan, Henley, Weiss, Lemoine, Jenkins, Ferraioli and Reece are independent within the meaning of NASDAQ Listing Rule 5605(a)(2). The Company’s independent directors have regularly scheduled meetings at which only independent directors are present.

Board Leadership Structure and Role in Risk Oversight

The Board recognizes that the leadership structure and combination or separation of the Chief Executive Officer and Chairman roles is driven by the needs of the Company at any point in time. As a result, no policy exists requiring combination or separation of leadership roles and the Company’s governing documents do not mandate a particular structure. This has allowed the Board the flexibility to establish the most appropriate structure for the Company at any given time.

The Board oversees the risk management activities designed and implemented by our management. The Board executes its oversight responsibility both directly and through our committees. The Board also considers specific risk topics, including risks associated with our strategic initiatives, business plans and capital structure. Our management, including our executive officers, is primarily responsible for managing the risks associated with operation and business of the company and provides appropriate updates to the Board and the audit committee of the Board (the “Audit Committee”), as established by the Board following the Business Combination. The Board delegates to the Audit Committee oversight of our risk management process, and the Company’s other committees also consider risk as they perform their respective committee responsibilities. The Audit Committee reports to the board of directors as appropriate, including when a matter rises to the level of material or enterprise risk.

Board Committees

Following the Business Combination, the Board established the Audit Committee and, subsequently, the compensation committee (the “Compensation Committee”) and nomination and corporate governance committee (the “Nomination and Corporate Governance Committee”). Members will serve on these committees until their resignation or until otherwise determined by the Board.

Audit Committee Information

The principal functions of the Audit Committee are detailed in the Audit Committee charter, which is available on the Company’s website, 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;

•        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;

•        reviewing the Company’s critical accounting policies and estimates; and

•        reviewing the Audit Committee charter and the committee’s performance at least annually.

The members of the Audit Committee are Messrs. Duncan, Lemoine and Weiss, with Mr. Duncan serving as the chair of the committee. Under the rules of the SEC, members of the Audit Committee must also meet heightened independence standards. The company believes that all of the members of the Audit Committee qualify as independent directors as defined under the applicable rules and regulations of the SEC and NASDAQ with respect to audit committee membership. The company also believes that Mr. Duncan qualifies as our “audit committee financial expert,” as such term is defined in Item 401(h) of Regulation S-K.

Compensation Committee Information

The principal functions of the Compensation Committee are detailed in the Compensation Committee charter, which is available on the company’s website, 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;

•        administering the incentive compensation plans (including equity-based plans and non-equity based plans) of the Company; and

•        exercising such other powers and authority as are set forth in a charter of the Compensation Committee of the Board, substantially in the form as provided to the Board, with such minor modifications, amendments or changes therein as the Compensation Committee may approve.

The members of the Compensation Committee are Messrs. Kadenacy, Lemoine and Reece, with Mr. Kadenacy serving as the chair of the committee.

Nomination and Corporate Governance Committee Information

The principal functions of the Nomination and Corporate Governance Committee are detailed in the Nomination and Corporate Governance Committee charter, which is available on the company’s website, 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

•        exercising such other powers and authority as are set forth in a charter of the Nominating and Corporate Governance Committee of the Board, substantially in the form as provided to the Board, with such minor modifications, amendments or changes therein as the Nominating and Corporate Governance Committee may approve.

The members of the Nomination and Corporate Governance Committee are Messrs. Henley, Jenkins and Weiss, with Mr. Jenkins serving as the chair of the committee.

Code of Ethics

In February 2020, we adopted a code of ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. The code of ethics codifies the business and ethical principles that govern all aspects of the Company’s business. The Company will provide, without charge, upon request, copies of our code of ethics. Requests for copies of our code of ethics should be sent in writing to Atlas Technical Consultants, Inc., 13215 Bee Cave Parkway, Building B, Suite 230, Austin, Texas 78738.

Compensation Committee Interlocks and Insider Participation

As a “controlled company,” we are exempt from NASDAQ Listing Rule 5605(d), which requires the compensation committee of the board of directors to be comprised solely of independent directors. Other than Mr. Kadenacy, who is no longer one of our officers, none of the members of the compensation committee is currently, or has been at any time, one of our officers or employees. None of the Company’s executive officers currently serves, or has served during the last year, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of the Company’s board of directors or compensation committee.

Executive Compensation

The following disclosure describes the material components of the compensation for Atlas Intermediate’s principal executive officer and its next two most highly compensated executive officers, who are referred to in this section as “Named Executive Officers,” for the fiscal year ended December 31, 2019 (i.e., pre-Business Combination). This section provides information in accordance with the scaled SEC disclosure rules available to “emerging growth companies.”

Named Executive Officers

For the fiscal year ended December 31, 2019, Atlas Intermediate had three Named Executive Officers, as follows:

•        L. Joe Boyer, Chief Executive Officer;

•        Walter Powell, Chief Financial Officer; and

•        David D. Quinn Sr., Executive Vice President, Corporate Affairs.

The Named Executive Officers and their titles listed in this section are as of the fiscal year ended December 31, 2019. In May of 2020, our Board appointed David D. Quinn to serve as the Chief Financial Officer of the Company and Walter Powell to serve as Chief Accounting Officer of the Company.

Summary Compensation Table

The following table presents summary information regarding the total compensation paid to, earned by and awarded to each of our named executive officers during the fiscal years ended December 31, 2019 and 2018.

____________

(1)      Our 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 Technical Consultants Holdings LP (“Atlas Holdings”).

(2)      Reflects performance-based, discretionary cash bonuses earned for the 2019 and 2018 performance years. In determining bonus amounts for 2019 and 2018, Atlas relied on its judgment after a comprehensive review of company and individual performance, as well as consideration of qualitative and other factors, without being tied to any formulas or pre-established weightings.

(3)      Reflects the grant date fair value of awards of Class A Units of Atlas Holdings. These amounts were determined as of the grant date in accordance with FASB ASC Topic 718.

(4)      Amounts reported in the “All Other Compensation” column include company contributions to the named executive officers’ 401(k) plan retirement accounts, car allowance amounts, and employer-paid life insurance premiums, as reflected below.

(5)      Mr. Quinn commenced employment with Atlas on September 1, 2019 and was not eligible to receive any Company 401(k) plan contributions or a car allowance during 2019. In 2020, Mr. Quinn is eligible to receive Company 401(k) plan contributions and is receiving a car allowance.

Base Salary

Each named executive officer’s base salary is a fixed component of annual compensation for performing specific job duties and functions. Our board of directors has established the annual base salary for each of the named executive officers at a level necessary to retain the individual’s services, and reviewed 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 of directors 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 we compete for executive talent, as estimated based on publicly available information and the experience of members of our board of directors and our Chief Executive Officer.

Annual Bonus

Our annual bonus awards have historically been of a discretionary nature and subject to performance targets established annually by our board of directors. For 2019, each named executive officer was eligible to receive an annual bonus up to 75% or 100%, as applicable, of the executive’s base salary if all performance targets were met or exceeded.

The bonuses for 2019 were paid following a year-end review of the applicable performance criteria. The actual bonus amounts paid to each named executive officer for 2019 are as follows:

The named executive officers must generally be employed on the last day of the applicable performance period in order to receive payment of an annual bonus.

Health and Retirement Benefits

We provide medical, dental, vision, life insurance and disability benefits to all eligible employees. Our named executive officers are eligible to participate in these benefits on the same basis as all other employees.

We maintain a 401(k) savings plan that allows participants, including our named executive officers, to defer up to 60% of cash compensation (subject to applicable IRS guidelines). All of our employees are eligible participants. Our named executive officers are eligible to participate in the 401(k) plan on the same basis as all other employees. We may provide employer matching contributions under the 401(k) plan. In addition, certain other perquisites have historically been provided to certain of our named executive officers, including a car allowance and employer-paid life insurance premiums.

Long Term Incentive Compensation

Class A Unit Incentive Plan.    Prior to the consummation of the Business Combination, pursuant to the Atlas Technical Consultants Holdings LP Class A Unit Incentive Plan, as amended (the “Class A Equity Plan”), Atlas Holdings established the ability to grant equity interests in the form of Class A Units of Atlas Holdings (the “Class A Units”). Atlas Holdings reserved 1,644.09 Class A Units for issuance under the Class A Equity Plan. The Class A Units were reserved for issuance by Atlas Holdings for incentive purposes at the discretion of the board of managers of the general partner of Atlas Holdings. Class A Units were awarded to Messrs. Boyer and Powell in 2017. The Class A Units generally vest over a four-year period, with 25% of the Class A Units vesting on each of the first four anniversaries of the grant date, subject to the participant not experiencing a termination before the applicable vesting date. The Class A Equity Plan contains provisions for accelerated vesting upon a change of control and upon the participant’s death or permanent disability. Upon termination of employment of the respective holder for cause or without good reason (excluding death or permanent disability), all Class A Units will be automatically cancelled and forfeited without payment. Upon termination of employment of the respective holder without cause, with good reason, or due to death or permanent disability, all unvested Class A Units will be cancelled and forfeited without payment, and any

vested Class A Units will be subject to repurchase at the fair market value of such units as of the date of termination in accordance with the provisions in the Amended and Restated Limited Partnership Agreement of Atlas Technical Consultants Holdings LP, as amended (the “LP Agreement”).

The Class A Units are intended to be “profits interests” within the meaning of Revenue Procedures 93-27 and 2001-43 and IRS Notice 2005-43, and to provide economic incentives to service providers of Atlas Holdings in order to align their interests with equity holders of Atlas Holdings. The determination of participants and the number and series of Class A Units is within the sole discretion and authority of the board of managers of the general partner of Atlas Holdings. Pursuant to the LP Agreement, the general partner of Atlas Holdings may (i) establish a threshold amount that must be distributed to existing Class A Units before newly issued Class A Units may receive any distributions or (ii) authorize a new series of Class A Units and establish a participation threshold applicable to all Class A Units issued as part of such series. Distributions will be made first to the Common Partners (as defined in the LP Agreement) until those partners have received a full return on their capital contributions plus a specified yield in accordance with the LP Agreement. Once the Common Partners have received those amounts, distributions will then be made to the holders of vested Class A Units (pro rata in proportion to their ownership of the issued and outstanding vested Class A Units) in an amount calculated in accordance with the provisions of the LP Agreement. The remainder will be distributed to the Common Partners pro rata in accordance with their respective Common Percentage Interest (as defined in the LP Agreement).

Class A Unit Awards. During 2019, Mr. Boyer and Mr. Powell each held Class A Units under Class A Unit Award Agreements with Atlas Holdings. These agreements, together with the Class A Equity Plan, provide as follows:

•        Mr. Boyer was granted 100 Class A Units of Atlas Holdings in 2017 and 210 Class A Units of Atlas Holdings in 2019. The units granted in 2017 vest in 25% increments on each of the first four anniversaries of the grant date, provided that Mr. Boyer has not experienced a termination of employment before the applicable vesting date. The units granted in 2019 vest in 25% increments on each of the first four anniversaries of the grant date, subject to Mr. Boyer’s continued employment through each applicable vesting date, provided that 50 of the units shall be forfeited if, in connection with a change of control of Atlas Holdings, a specified EBITDA threshold is not achieved. Any Class A Units that remain unvested as of a change of control will automatically vest upon the change of control. If Mr. Boyer is terminated by reason of death or permanent disability, he will vest in the number of Class A Units that would have otherwise vested on the next scheduled vesting date had no such termination occurred. Any Class A Units that have not vested before Mr. Boyer’s termination will be cancelled and forfeited without further payment. Following any termination, any vested Class A Units that have not otherwise been forfeited will be subject to the repurchase and cancellation provisions of the LP Agreement.

•        Mr. Powell was granted 45 Class A Units of Atlas Holdings in 2017 and 100 Class A Units of Atlas Holdings in 2019. These units vest in 25% increments on each of the first four anniversaries of the grant date, provided that Mr. Powell has not experienced a termination of employment before the applicable vesting date. Any Class A Units that remain unvested as of a change of control will automatically vest upon the change of control. If Mr. Powell is terminated by reason of death or permanent disability, he will vest in the number of Class A Units that would have otherwise vested on the next scheduled vesting date had no such termination occurred. Any Class A Units that have not vested before Mr. Powell’s termination will be canceled and forfeited without further payment. Following any termination, any vested Class A Units that have not otherwise been forfeited will be subject to the repurchase and cancellation provisions of the LP Agreement.

Atlas Technical Consultants, Inc. 2019 Incentive Plan.    On February 14, 2020, the Board adopted the Incentive Plan previously approved by the stockholders of the Company at the Company’s special meeting of stockholders held on February 11, 2020 (the “Special Meeting”), effective upon the consummation of the Business Combination. The Company anticipates that it will offer long-term incentives to our named executive officers in 2020 through grants of restricted stock units and performance stock units under the Incentive Plan, which are intended to align the interests of service providers (including the named executive officers) with those of our stockholders, although no decisions regarding the terms of these awards have been made at this time. The material terms of the Incentive Plan are described in the section entitled “The Incentive Plan Proposal” in the Company’s Definitive Proxy Statement, as amended, originally filed on November 12, 2019, which is incorporated herein by reference.

Outstanding Equity Awards at Fiscal Year-End

The following table summarizes, for each of our named executive officers, the number of Class A Units of Atlas Holdings held as of the fiscal year ended December 31, 2019.

____________

(1)      Represents Class A Units of Atlas Holdings.

(2)      There is no established public trading market for the Class A Units of Atlas Holdings. The value of the Class A Units at December 31, 2019 and 2018 was $10,805 and $1,593, respectively, per Class A Unit based on a valuation analysis of the fair market value of such units.

(3)      Mr. Boyer’s 210 Class A Units of Atlas Holdings granted in 2019 are subject to time- and performance-based vesting conditions and are scheduled to vest as follows: 52.5 units vest on each of April 8, 2020, April 8, 2021, April 8, 2022, and April 8, 2023 provided that 50 of the units shall be forfeited if, upon a change of control of Atlas Holdings, a certain EBITDA threshold is not achieved.

(4)      Mr. Boyer’s 100 Class A Units of Atlas Holdings granted in 2017 are subject to time-based vesting conditions; 50% are vested and the remaining 50% are scheduled to vest as follows: 25 units vest on October 23, 2020 and 25 units vest on October 23, 2021.

(5)      Mr. Powell’s 100 Class A Units of Atlas Holdings granted in 2019 are subject to time-based vesting conditions and are scheduled to vest as follows: 25 units vest on each of April 8, 2020, April 8, 2021, April 8, 2022, and April 8, 2023.

(6)      Mr. Powell’s 45 Class A Units of Atlas Holdings granted in 2017 are subject to time-based vesting conditions; 50% are vested and the remaining 50% are scheduled to vest as follows: 11.25 units vest on December 18, 2020 and 11.25 units vest on December 18, 2021.

Employment Agreements and Potential Payments Upon Termination or Change in Control

Atlas has entered into employment agreements with each of Messrs. Boyer, Powell and Quinn.

L. Joe Boyer.    On August 12, 2019, Boxwood entered into an employment agreement with Mr. Boyer (the “New Boyer Agreement”), which replaced his previous employment agreement (the “Prior Boyer Agreement”) with Atlas Technical Consultants LLC dated as of October 23, 2017, pursuant to which he became Chief Executive Officer of the Company, effective as of the consummation of the Business Combination. The New Boyer Agreement supersedes the Prior Boyer Agreement. The initial term of the New Boyer Agreement is three years, with automatic one-year renewals thereafter. Under the terms of the agreement, Mr. Boyer is (i) entitled to an initial annual base salary of $550,000; (ii) eligible to receive an annual bonus with a target opportunity of 100% of his then-current base salary (the “Target Bonus”) and a maximum of 200% of his then-current base salary, with the amount payable to be determined based on financial metrics to be decided by the compensation committee of the Company’s board of directors (the “Compensation Committee”) in good faith consultation with Mr. Boyer; (iii) eligible to receive, pursuant to the Incentive Plan, annual equity grants with a target grant date value of no less than 100% of his then-current base salary, in an amount and pursuant to such terms and conditions as the Compensation Committee decides; (iv) entitled to participate in Boxwood’s health, insurance, retirement and other employee benefits; (v) entitled to maintenance, at Boxwood’s cost, of his life insurance policy; and (vi) entitled to a monthly car allowance of no less than $1,400. The Company is also obligated to use commercially reasonable efforts to support Mr. Boyer’s nomination to serve as a member of the Company’s board of directors.

Under the New Boyer Agreement, if Mr. Boyer’s employment is terminated due to his death or permanent disability, by the Company through non-renewal, by the Company without cause or by Mr. Boyer for good reason, he will be entitled to (i) a lump sum payment of 200% of his then-current base salary; (ii) a lump sum payment equal to the Target Bonus; (iii) a pro-rata bonus, calculated based on actual performance as if Mr. Boyer had remained employed through the remainder of the applicable performance period; (iv) accelerated vesting of all outstanding equity awards (with any unvested performance-based awards deemed achieved based on actual performance); and (v) continuation of health benefits at the Company’s expense for up to two years. If Mr. Boyer’s employment is terminated within the 90-day period before or the two-year period after a change in control, he will be entitled to receive (i) a lump sum

payment equal to 250% of his then-current base salary; (ii) a lump sum payment equal to 150% of the Target Bonus; (iii) a pro-rata bonus, calculated based on actual performance as if Mr. Boyer had remained employed through the remainder of the applicable performance period; (iv) accelerated vesting of all outstanding equity awards (with any unvested performance-based awards deemed achieved based on actual performance); and (v) continuation of health benefits at the Company’s expense for up to 30 months. All severance benefits under the New Boyer Agreement are contingent on Mr. Boyer signing and not revoking a release of claims and compliance with the terms of the New Boyer Agreement.

Mr. Boyer has also agreed to certain confidentiality, non-competition, non-solicitation and non-disparagement covenants under the New Boyer Agreement. The confidentiality covenants apply during the term of the agreement and at all times thereafter. The non-competition and non-solicitation covenants apply during the term of the agreement and for two years following the officer’s termination of employment. The non-disparagement covenant is mutual and applies at all times during employment and thereafter. In the event of Mr. Boyer’s breach of a restrictive covenant during his employment with us, Mr. Boyer could be terminated for “cause” (provided that the breach constituted a material violation of the employment agreement). The employment agreements do not prohibit us from waiving a breach of a restrictive covenant.

Walter Powell.    On February 25, 2019, we entered into an employment agreement with Walter Powell to serve as our Chief Financial Officer. Under the agreement, Mr. Powell’s base salary was initially set at $320,000 (with potential adjustments to be approved by the board of managers of Holdco GP). Mr. Powell is eligible under the agreement to (i) earn a discretionary annual bonus, in an amount up to 75% of his base salary, (ii) receive discretionary grants of incentive equity interests in Atlas Holdings, (iii) participate in applicable benefit plans and other benefits provided generally to similarly situated employees and (iv) receive reimbursement for reasonable business expenses. Severance benefits provided under Mr. Powell’s employment agreement are described below in the section titled “— Employment Agreements and Potential Payments Upon Termination or Change in Control.” In addition, Mr. Powell also executed a Confidentiality, Non-Interference, and Invention Assignment Agreement, which is also described in the section titled “— Employment Agreements and Potential Payments Upon Termination or Change in Control.”

Under his employment agreement, if Mr. Powell’s employment is terminated by Atlas Technical Consultants LLC without cause or by Mr. Powell for good reason, he will be entitled to receive, subject to his execution and non-revocation of a release of claims, (i) his annual bonus, to the extent earned, pro-rated for any fractional years, (ii) a severance payment equal to 50% of his then-applicable base salary, payable in ratable installments over the six months following his termination and (iii) continuation of health benefits for the six months following his termination. Upon his death or permanent disability, Mr. Powell will be entitled to receive (i) his annual bonus, to the extent earned, pro-rated for any fractional years and (ii) a severance payment equal to 50% of his then-applicable base salary, payable in ratable installments over the six months following his termination.

In addition to his employment agreement, and as a condition to his employment, Mr. Powell also entered into a Confidentiality, Non-Interference, and Invention Assignment Agreement on February 25, 2019, with Atlas Technical Consultants LLC. The agreement contains customary confidentiality, assignment of developments, non-competition, non-interference, non-solicitation and non-disparagement provisions. The non-competition, non-interference and non-solicitation provisions generally extend for six months after termination of Mr. Powell’s employment, while the confidentiality and non-disparagement provisions extend indefinitely.

Effective as of May 11, 2020, the Company entered into an amended and restated employment agreement with Mr. Powell in his capacity as Chief Accounting Officer (the “Powell Employment Agreement”). The term of Mr. Powell’s employment under the Powell Employment Agreement commenced on May 11, 2020 and continues until May 11, 2023 unless otherwise terminated. After the initial three-year term, the term of Mr. Powell’s employment is automatically extended for subsequent one-year periods unless either party provides written notice of non-renewal at least 60 days prior to the expiration of the then-current initial term or renewal term.

Under the terms of the Powell Employment Agreement, Mr. Powell (i) receives an annualized base salary of $330,000 (the “Powell Base Salary”); (ii) is eligible to receive an annual bonus with a target opportunity of 50% of the then-current Powell Base Salary (the “Powell Target Bonus”), with the actual amount to be determined based on financial metrics to be decided by the Board; (iii) is eligible to receive annual equity grants pursuant to the Company’s long term incentive plan; and (iv) is entitled to a monthly car allowance of $1,400.

If Mr. Powell’s employment under the Powell Employment Agreement is terminated due to his death or permanent disability, by the Company without “Cause” or by Mr. Powell for “Good Reason” (both terms as defined in the Powell Employment Agreement), he will be entitled to (i) all accrued but unpaid Powell Base Salary, unreimbursed expenses and other accrued obligations under the Company’s employee plans through the date of termination (the “Powell Accrued Obligations”); (ii) an amount equal to 100% of the then-current Powell Base Salary, payable in equal installments over twelve months in accordance with the Company’s payroll practices; (iii) a pro-rata bonus for the year of termination, calculated based on actual performance; and (iv) in the case of a termination by the Company without “Cause” or by Mr. Powell for “Good Reason” only, (x) continuation of health benefits under COBRA at the same cost applicable to active employees of the Company for up to 12 months and (y) 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) (items (i) through (iv), collectively, the “Powell Severance”). If the Powell Employment Agreement is terminated by the Company without “Cause” or by Mr. Powell for “Good Reason” within the 90 days prior to, or two-year period following, a Change in Control (as defined in the Powell Employment Agreement), he will be entitled to receive (i) the Powell Severance; and (ii) accelerated vesting of all outstanding equity awards (with any unvested performance-based awards deemed achieved based on the greater of actual and target performance). If the Powell Employment Agreement is terminated by Mr. Powell without Good Reason or by the Company for Cause, he will be entitled to only the Powell Accrued Obligations, and if the agreement is terminated due to non-renewal by either party, Mr. Powell will receive the Powell Accrued Obligations and 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). Notwithstanding the above, any payments to Mr. Powell following the termination of the Employment Agreement are contingent on Mr. Powell signing and not revoking a release of claims and compliance with the terms of the Powell Employment Agreement.

The Powell Employment Agreement also includes perpetual confidentiality, work product and non-disparagement covenants, as well as non-competition and non-interference covenants that apply during employment and for a period of 12 months following the termination of Mr. Powell’s employment, except for certain terminations following a Change in Control (as defined in the Powell Employment Agreement), in which case the non-interference covenants continue to apply for 24 months following the termination of Mr. Powell’s employment.

David D. Quinn Sr.    Effective as of May 11, 2020, the Company entered into an employment agreement with Mr. Quinn in his capacity as Chief Financial Officer (the “Quinn Employment Agreement”). The term of Mr. Quinn’s employment under the Quinn Employment Agreement commenced on May 11, 2020 and continues until May 11, 2023 unless otherwise terminated. After the initial three-year term, the term of Mr. Quinn’s employment is automatically extended for subsequent one-year periods unless either party provides written notice of non-renewal at least 60 days prior to the expiration of the then-current initial term or renewal term.

Under the terms of the Quinn Employment Agreement, Mr. Quinn (i) receives an annualized base salary of $370,000 (the “Quinn Base Salary”); (ii) is eligible to receive an annual bonus with a target opportunity of 75% of the then-current Quinn Base Salary (the “Quinn Target Bonus”), with the actual amount to be determined based on financial metrics to be decided by the Board; (iii) is eligible to receive annual equity grants pursuant to the Company’s long term incentive plan; and (iv) is entitled to a monthly car allowance of $1,400.

If Mr. Quinn’s Employment Agreement is terminated due to his death or permanent disability, by the Company without “Cause” or by him for “Good Reason” (both terms as defined in the Quinn Employment Agreement), he will be entitled to (i) all accrued but unpaid Quinn Base Salary, unreimbursed expenses and other accrued obligations under the Company’s employee plans through the date of termination (the “Quinn Accrued Obligations”); (ii) an amount equal to 100% of the then-current Quinn Base Salary, payable in equal installments over twelve months in accordance with the Company’s payroll practices; (iii) a pro-rata bonus for the year of termination, calculated based on actual performance; and (iv) in the case of a termination by the Company without “Cause” or by Mr. Quinn for “Good Reason” only, (x) continuation of health benefits under COBRA at the same cost applicable to active employees of the Company for up to 12 months and (y) 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) (items (i) through (iv), collectively, the “Quinn Severance”). If the Quinn Employment Agreement is terminated by the Company without “Cause” or by Mr. Quinn for “Good Reason” within the 90 days prior to, or two-year period following, a Change in Control (as defined in the Quinn Employment Agreement), he will be entitled to receive (i) the Quinn Severance; and (ii) accelerated

vesting of all outstanding equity awards (with any unvested performance-based awards deemed achieved based on the greater of actual and target performance). If the Quinn Employment Agreement is terminated by Mr. Quinn without Good Reason or by the Company for Cause, he will be entitled to only the Quinn Accrued Obligations, and if the agreement is terminated due to non-renewal by either party, Mr. Quinn will receive the Quinn Accrued Obligations and 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). Notwithstanding the above, any payments to Mr. Quinn following the termination of the Quinn Employment Agreement are contingent on Mr. Quinn signing and not revoking a release of claims and compliance with the terms of the Quinn Employment Agreement.

The Quinn Employment Agreement also includes perpetual confidentiality, work product and non-disparagement covenants, as well as non-competition and non-interference covenants that apply during employment and for a period of 12 months following the termination of Mr. Quinn’s employment, except for certain terminations following a Change in Control (as defined in the Quinn Employment Agreement), in which case the non-interference covenants continue to apply for 24 months following the termination of Mr. Quinn’s employment.

Director Compensation

For our non-employee directors who are not employed by or affiliated with Bernhard Capital Partners, the board of directors has approved a compensation program for 2020 consists of a combination of restricted stock units and cash awards (with the exception of one director, who only received entirely restricted stock units). No compensation was provided to non-employee directors for 2019.