6.	ACQUISITIONS

The purchase method of accounting in accordance with FASB ASC

805,

“Business Combination,” was applied for all acquisitions. This requires the cost of an acquisition to be allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair values at the date of acquisition with the excess cost accounted for as goodwill. Goodwill arising from the acquisitions is attributable to expected sales synergies from combining the operations of the acquired business with those of the Company.

Future Contingent Payments

As of

January 2, 2021,

the Company had

two

active acquisition agreements whereby additional contingent consideration

may

be earned by the former shareholders:

) effective

October 1, 2017,

the Company acquired all of the stock of PSR Engineering Solutions d.o.o. Beograd (Voždovac) (“PSR”) and

) effective

September 30, 2018,

the Company acquired certain assets of Thermal Kinetics Engineering, PLLC and Thermal Kinetics Systems, LLC (together, “TKE”). The Company estimates future contingent payments at

January 2, 2021

as follows:

Fiscal Year Ending	Total
January 1, 2022		500
December 31, 2022		2,358
Estimated future contingent consideration payments	$	2,858

Estimates of future contingent payments are subject to significant judgment and actual payments

may

materially differ from estimates. Potential future contingent payments to be made to all active acquisitions after

January 2, 2021

are capped at a cumulative maximum of

$3.1

million. The Company estimates future contingent consideration payments based on forecasted performance and recorded the fair value of those expected payments as of

January 2, 2021.

During the

fifty-three

week period ended

January 2, 2021,

the Company measured contingent consideration at fair value on a non-recurring basis. Contingent consideration related to acquisitions are recorded at fair value level

due to the lack of observable market inputs. Changes in fair value are recorded in other (expense) income, net.

For acquisitions that involve contingent consideration, the Company records a liability equal to the fair value of the estimated contingent consideration obligation as of the acquisition date. The Company determines the acquisition date fair value of the contingent consideration based on the likelihood of paying the additional consideration. The fair value is estimated using projected future operating results and the corresponding future earn-out payments that can be earned upon the achievement of specified operating objectives and financial results by acquired companies using Level

inputs and the amounts are then discounted to present value. These liabilities are measured quarterly at fair value, and any change in the fair value of the contingent consideration liability is recognized in the consolidated statements of comprehensive (loss) income. During the measurement period, which

may

be up to

one

year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding adjustment to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recognized in the consolidated statements of comprehensive (loss) income.

The Company paid contingent consideration of

$0.3

million and

$0.6

million during the

fifty-three

week period ended

January 2, 2021

and the

fifty-two

week period ended

December 28, 2019,

respectively.

The changes in the liability for contingent consideration from acquisitions for the

fifty-three

week period ended

January 2, 2021

and the

fifty-two

week period ended

December 28, 2019

are as follows:

Balance as of December 29, 2018	$	4,773

Contingent payments made		(598	)
Increase to contingent payment estimates		(1,178	)
Changes in fair value of contingent payments		61

Balance as of December 28, 2019	$	3,058

Contingent payments made		(345	)
Changes in fair value of contingent consideration		145

Balance as of January 2, 2021	$	2,858