Englobal (ENGC) 10-Q 12 Nov 19 2019 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 28, 2019	Nov. 12, 2019
Document And Entity Information
Entity Registrant Name	ENGLOBAL CORP
Entity Central Index Key	0000933738
Document Type	10-Q
Document Period End Date	Sep. 28, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-28
Entity's Reporting Status Current	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	false
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		27,413,626
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2019

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018	Sep. 28, 2019	Sep. 29, 2018
Income Statement [Abstract]
Operating revenues	$ 13,974	$ 14,255	$ 39,758	$ 41,314
Operating costs	12,299	11,962	34,803	35,355
Gross profit	1,675	2,293	4,955	5,959
Selling, general and administrative expenses	2,371	2,483	7,125	7,935
Operating loss	(696)	(190)	(2,170)	(1,976)
Other income (expense):
Other income (expense), net	7	11	48	(367)
Interest expense, net	(5)	(1)	(12)	(14)
Loss from operations before income taxes	(694)	(180)	(2,134)	(2,357)
Provision for federal and state income taxes	22	17	73	31
Net loss	$ (716)	$ (197)	$ (2,207)	$ (2,388)
Basic and diluted loss per common share:	$ (0.03)	$ (0.01)	$ (0.08)	$ (0.09)
Basic and diluted weighted average shares used in computing loss per share:	27,410	27,509	27,417	27,511

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 28, 2019	Dec. 29, 2018
Current Assets:
Cash and cash equivalents	$ 6,088	$ 6,060
Trade receivables, net of allowances of $202 and $202	7,463	10,211
Prepaid expenses and other current assets	184	1,096
Contract assets	4,128	3,175
Total Current Assets	17,863	20,542
Property and equipment, net	878	677
Goodwill	720	720
Other assets
Right of use asset	2,377
Deposits and other assets	300	367
Total Other Assets	2,677	367
Total Assets	22,138	22,306
Current Liabilities:
Accounts payable	2,944	3,172
Accrued compensation and benefits	2,175	2,301
Current portion of leases	994
Contract liabilities	813	604
Other current liabilities	293	740
Total Current Liabilities	7,219	6,817
Long Term Leases	1,652
Total Liabilities	8,871	6,817
Commitments and Contingencies (Note 8)
Stockholders' Equity:
Common stock - $0.001 par value; 75,000,000 shares authorized; 27,413,626 and 27,487,594 shares issued and outstanding at September 28, 2019 and December 29, 2018, respectively	27	27
Additional paid-in capital	36,918	36,934
Accumulated deficit	(23,678)	(21,472)
Total Stockholders' Equity	13,267	15,489
Total Liabilities and Stockholders' Equity	$ 22,138	$ 22,306

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 28, 2019	Dec. 29, 2018
Statement of Financial Position [Abstract]
Trade receivables, allowances	$ 202	$ 202
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares issued	27,413,626	27,487,594
Common stock, shares outstanding	27,413,626	27,487,594

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018
Cash Flows from Operating Activities:
Net loss	$ (2,207)	$ (2,388)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	258	386
Share-based compensation expense	45	171
Gain on sale of asset		(2)
Changes in current assets and liabilities:
Trade accounts receivable	2,748	(1,379)
Contract assets	(953)	982
Other current assets	956	678
Accounts payable	(229)	(445)
Accrued compensation and benefits	(126)	(453)
Contract liabilities	209	(1,048)
Income taxes payable	16	(58)
Other current liabilities, net	(460)	(708)
Net cash provided by (used in) operating activities	257	(4,264)
Cash Flows from Investing Activities:
Proceeds from notes receivable	24	19
Property and equipment acquired	(191)	(89)
Net cash used in investing activities	(167)	(70)
Cash Flows from Financing Activities:
Purchase of treasury stock	(61)
Payments on finance leases	(1)	(62)
Net cash used in financing activities	(62)	(62)
Net change in cash, cash equivalents and restricted cash	28	(4,396)
Cash, cash equivalents and restricted cash, at beginning of period	6,060	9,648
Cash, cash equivalents and restricted cash, at end of period	6,088	5,252
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	12	15
Right of use assets obtained in exchange for new operating lease liability	2,377
Leased assets obtained in exchange for new finance lease liabilities	236
Cash paid (received) during the period for income taxes (net of refunds)		$ 96

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Earnings (Deficit) [Member]	Total
Balance at beginning of year at Dec. 30, 2017	$ 27	$ 36,843	$ (15,801)	$ 21,069
Treasury stock retired
Share-based compensation - employee		170		170
Net loss			(2,388)	(2,388)
Balance at end of year at Sep. 29, 2018	27	37,013	(18,189)	18,851
Balance at beginning of year at Jun. 30, 2018	27	36,965	(17,992)	19,000
Treasury stock retired
Share-based compensation - employee		48		48
Net loss			(197)	(197)
Balance at end of year at Sep. 29, 2018	27	37,013	(18,189)	18,851
Balance at beginning of year at Dec. 29, 2018	27	36,934	(21,471)	15,489
Treasury stock retired		(61)		(61)
Share-based compensation - employee		45		45
Net loss			(2,207)	(2,207)
Balance at end of year at Sep. 28, 2019	27	36,918	(23,678)	13,267
Balance at beginning of year at Jun. 29, 2019	27	36,906	(22,962)	13,267
Treasury stock retired
Share-based compensation - employee		12		12
Net loss			(716)	(716)
Balance at end of year at Sep. 28, 2019	$ 27	$ 36,918	$ (23,678)	$ 13,267

Basis of Presentation

Basis of Presentation	9 Months Ended
	Sep. 28, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation	NOTE 1 – BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of ENGlobal Corporation (which may be referred to as “ENGlobal,” the “Company,” “we,” “us,” or “our”) were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission. Accordingly, these condensed financial statements do not include all of the information or note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP. These condensed financial statements should be read in conjunction with the audited financial statements for the year ended December 29, 2018, included in the Company’s 2018 Annual Report on Form 10-K filed with the Securities and Exchange Commission. The condensed financial statements included herein are unaudited for the three and nine month periods ended September 28, 2019 and September 29, 2018, and in the case of the condensed balance sheet as of December 29, 2018 have been derived from the audited financial statements of the Company. These financial statements reflect all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary to fairly present the results for the periods presented. The Company has assessed subsequent events through the date of filing of these condensed financial statements with the Securities and Exchange Commission and believes that the disclosures made herein are adequate to make the information presented herein not misleading. We had no items of other comprehensive income in any period presented; therefore, no other components of comprehensive income are presented. Each of our quarters is comprised of 13 weeks.

Accounting Standards

Accounting Standards	9 Months Ended
	Sep. 28, 2019
New Accounting Pronouncements and Changes in Accounting Principles [Abstract]
Accounting Standards	NOTE 2 – ACCOUNTING STANDARDS In February 2016, the Financial Statements Accounting Board (“FASB”) issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 842): Targeted Improvements

Critical Accounting Policies Up

Critical Accounting Policies Update	9 Months Ended
	Sep. 28, 2019
Accounting Policies [Abstract]
Critical Accounting Policies Update	NOTE 3 – CRITICAL ACCOUNTING POLICIES UPDATE Our critical accounting policies are detailed in “Note 2 – Accounting Policies and New Accounting Pronouncements” within Item 8 of our Annual Report on Form 10-K for the year ended December 29, 2018 . Significant changes to our accounting policies as a result of adopting Topic 606 are discussed below: Revenue Recognition A majority of sales of fabrication and assembled systems are under fixed-price contracts. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. We generally recognize revenue over time as we perform because of continuous transfer of control to the customer. Our customer typically controls the work in process as evidenced either by contractual termination clauses or by our rights to payment for work performed to date plus a reasonable profit to deliver products or services that do not have an alternative use to the Company. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or service to be provided, which measures the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. We generally use the cost-to-cost method of revenue recognition to measure progress for our contracts because it best depicts the transfer of control to the customer which occurs as we consume the costs on the contracts. Therefore, revenues and estimated profits are recorded proportionally as costs are incurred. Under the typical payment terms of our fixed-price contracts, the customer pays us progress payments. These progress payments are based on quantifiable measures of performance or on the achievement of specified events or milestones. The customer may retain a small portion of the contract price until completion of the contract. Revenue recognized in excess of billings is recorded as a contract asset on the balance sheet. Amounts billed and due from our customers are classified as receivables on the balance sheet. The portion of the payments retained by the customer until final contract settlement is not considered a significant financing component because the intent is to protect the customer should we fail to adequately complete some or all of our obligations under the contract. For some contracts we may receive advance payments from the customer. We record a liability for these advance payments in contract liabilities on the balance sheet. The advance payment typically is not considered a significant financing component because it is used to meet working capital demand that can be higher in the early stages of a contract and to protect us from the other party failing to adequately complete some or all of its obligations under the contract. To determine proper revenue recognition for contracts, we evaluate whether two or more contracts should be combined and accounted for as one single performance obligation or whether a single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate a single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. For most of our contracts, we provide a significant service of integrating a complex set of tasks and components into a single project. Hence, the entire contract is accounted for as one performance obligation. Less commonly, we may provide distinct goods or services within a contract in which case we separate the contract into more than one performance obligation. If a contract is separated into more than one performance obligation, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling price of the promised goods or services underlying each performance obligation and use the expected cost plus margin approach to estimate the standalone selling price of each performance obligation. Due to the nature of the work required to be performed on many of our performance obligations, the estimation of total revenue and cost at completion is complex, subject to variables and requires significant judgment. We estimate variable consideration at the most likely amount to which we expect to be entitled. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. Contracts are often modified to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of our contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase or a reduction of revenue) on a cumulative catch-up basis. We have a standard, monthly process in which management reviews the progress and execution of our performance obligations. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenues and costs. The risks and opportunities include management’s judgment about the ability and cost to achieve the schedule, technical requirements, and other contractual requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the availability of materials, the length of time to complete the performance obligation, execution by our subcontractors, the availability and timing of funding from our customer and overhead cost rates, among other variables. Based on this analysis, any adjustments to revenue, operating costs and the related impact to operating income are recognized as necessary in the period they become known. These adjustments may result from positive performance and may result in an increase in operating income during the performance of individual performance obligations if we determine we will be successful in mitigating risks surrounding the technical, schedule and cost aspects of those performance obligations or realizing related opportunities. When estimates of total costs to be incurred exceed total estimates to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is recorded. Likewise, these adjustments may result in a decrease in operating income if we determine we will not be successful in mitigating these risks or realizing related opportunities. Changes in estimates of net revenue, operating costs and the related impact to operating income are recognized monthly on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation’s percentage of completion. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations. See Note 6 – Segment Information for disaggregated revenue information. Incremental Costs

Revenue Recognition

Revenue Recognition	9 Months Ended
	Sep. 28, 2019
Revenue from Contract with Customer [Abstract]
Revenue Recognition	NOTE 4 – REVENUE RECOGNITION Our revenue by contract type was as follows: For the Three Months Ended For the Nine Months Ended September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Fixed-price revenue $ 5,334 $ 5,425 $ 14,418 $ 17,370 Time-and-material revenue 8,640 8,830 25,340 23,944 Total Revenue 13,974 14,255 39,758 41,314

Contract Assets and Contract Li

Contract Assets and Contract Liabilities	9 Months Ended
	Sep. 28, 2019
Contractors [Abstract]
Contract Assets and Contract Liabilities	NOTE 5 – CONTRACT ASSETS AND CONTRACT LIABILITIES Our contract assets consist of unbilled amounts typically resulting from sales under long-term contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. Our contract liabilities consist of advance payments and billings in excess of costs incurred and deferred revenue. The noncurrent portion of deferred revenue is included in other long-term liabilities in our consolidated balance sheets. Costs, estimated earnings and billings on uncompleted contracts consisted of the following at September 28, 2019 and December 29, 2018: September 28, 2019 December 29, 2018 (dollars in thousands) Costs incurred on uncompleted contracts $ 24,451 $ 34,800 Estimated earnings on uncompleted contracts 4,843 6,921 Earned revenues 29,294 41,721 Less: billings to date 25,979 39,150 Net costs and estimated earnings in excess of billings (billings in excess of costs) on uncompleted contracts $ 3,315 $ 2,571 Contract assets $ 4,128 $ 3,175 Contract liabilities (813 ) (604 ) Net contract assets $ 3,315 $ 2,571

Segment Information

Segment Information	9 Months Ended
	Sep. 28, 2019
Segment Reporting [Abstract]
Segment Information	NOTE 6 – SEGMENT INFORMATION Our segments are strategic business units that offer different services and products and therefore require different marketing and management strategies. The operating performance is regularly reviewed with two operational leaders in charge of our engineering offices and automation offices of these segments, the chief executive officer (“CEO”), the chief financial officer (“CFO”) and others. This group represents the chief operating decision maker (“CODM”) for ENGlobal. The Engineering, Procurement and Construction Management (“EPCM”) segment provides services relating to the development, management and execution of projects requiring professional engineering and related project services primarily to the energy industry throughout the United States. The Automation segment provides services related to the design, integration and implementation of advanced automation, information technology, process distributed control systems, analyzer systems, and electrical projects primarily to the upstream and downstream sectors throughout the United States. The Automation segment includes the government services group, which provides engineering, design, installation and operation and maintenance of various government, public sector and international facilities and the fabrication operation. Revenues, operating income, and identifiable assets for each segment are set forth in the following table. The amount identified as Corporate includes those activities that are not allocated to the operating segments and includes costs related to business development, executive functions, finance, accounting, safety, human resources and information technology that are not specifically identifiable with the segments. Segment information for the three months ended September 28, 2019 and September 29, 2018 is as follows (dollars in thousands): For the three months ended September 28, 2019: EPCM Automation Corporate Consolidated Revenue $ 4,256 $ 9,718 $ — $ 13,974 Gross profit 75 1,600 — 1,675 Gross Profit Margin 1.8 % 16.5 % 12.0 % SG&A 651 427 1,293 2,371 Operating income (loss) (576 ) 1,173 (1,293 ) (696 ) Other income, net 7 Interest expense, net (5 ) Tax expense (22 ) Net loss $ (716 ) For the three months ended September 29, 2018: EPCM Automation Corporate Consolidated Revenue $ 6,821 $ 7,434 $ — $ 14,255 Gross profit 1,133 1,160 — 2,293 Gross Profit Margin 16.6 % 15.6 % 16.1 % SG&A 469 633 1,381 2,483 Operating income (loss) 664 527 (1,381 ) (190 ) Other income, net 11 Interest expense, net (1 ) Tax expense (17 ) Net loss $ (197 ) Segment information for the nine months ended September 28, 2019 and September 29, 2018 is as follows (dollars in thousands): For the nine months ended September 28, 2019: EPCM Automation Corporate Consolidated Revenue $ 15,548 $ 24,210 $ — $ 39,758 Gross profit 1,574 3,381 — 4,955 Gross Profit Margin 10.1 % 14.0 % 12.5 % SG&A 1,826 1,246 4,053 7,125 Operating income (loss) (252 ) 2,135 (4,053 ) (2,170 ) Other income, net 48 Interest expense, net (12 ) Tax expense (73 ) Net loss $ (2,207 ) For the nine months ended September 29, 2018: EPCM Automation Corporate Consolidated Revenue $ 18,568 $ 22,746 $ — $ 41,314 Gross profit 2,879 3,080 — 5,959 Gross Profit Margin 15.5 % 13.5 % 14.4 % SG&A 1,426 2,001 4,508 7,935 Operating income (loss) 1,453 1,079 (4,508 ) (1,976 ) Other expense, net (367 ) Interest expense, net (14 ) Tax expense (31 ) Net loss $ (2,388 ) Total Assets by Segment As of September 28, 2019 As of December 29, 2018 (dollars in thousands) EPCM $ 6,276 $ 4,792 Automation 9,906 10,550 Corporate 5,956 6,964 Consolidated $ 22,138 $ 22,306

Federal and State Income Taxes

Federal and State Income Taxes	9 Months Ended
	Sep. 28, 2019
Income Tax Disclosure [Abstract]
Federal and State Income Taxes	NOTE 7 – FEDERAL AND STATE INCOME TAXES The Company accounts for income taxes in accordance with FASB Accounting Standards Codification 740, “Income Taxes” (“ASC 740”). Under ASC 740-270 we estimate an annual effective tax rate based on year-to-date operating results and our projection of operating results for the remainder of the year. We apply this annual effective tax rate to the year-to-date operating results. If our actual results differ from the estimated annual projection, our estimated annual effective tax rate can change affecting the tax expense for successive interim results as well as the estimated annual tax expense results. Certain states are not included in the calculation of the estimated annual effective tax rate because the underlying basis for the tax is related to revenues and not taxable income. Amounts for Texas margin taxes are reported as income tax expense. The Company applies a more likely than not recognition threshold for all tax uncertainties. The FASB guidance for uncertain tax positions only allows the recognition of those tax benefits, based on their technical merits that are greater than 50 percent likelihood of being sustained upon examination by the taxing authorities. Management has reviewed the Company’s tax positions and determined there are no uncertain tax positions requiring recognition in the financial statements. U.S. federal tax returns prior to 2014 and Texas margins tax returns prior to 2014 are closed. Generally, the applicable statues of limitations are three to four years from their filings. The Company recorded income tax expense of $22 thousand and $73 thousand for the three and nine months ended September 28, 2019, respectively, as compared to income tax expense of $17 thousand and $31 thousand for the three and nine months ended September 29, 2018, respectively. The effective income tax rate for the three and nine months ended September 28, 2019 was (3.2)% and (3.4)%, respectively, as compared to (9.3)% and (1.3)% for the three and nine months ended September 29, 2018. The effective tax rate differed from the federal statutory rate of 21% primarily due to the effect of the valuation allowances related to the unrealized deferred tax asset generated by the current year benefit.

Commitments and Contingencies

Commitments and Contingencies	9 Months Ended
	Sep. 28, 2019
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	NOTE 8 – COMMITMENTS AND CONTINGENCIES From time to time, ENGlobal or one or more of its subsidiaries is involved in various legal proceedings or is subject to claims that arise in the ordinary course of business alleging, among other things, claims of breach of contract or negligence in connection with the performance or delivery of goods and/or services. The outcome of any such claims or proceedings cannot be predicted with certainty. Management is not aware of any pending or threatened lawsuits or proceedings that are expected to have a material effect on our financial position, results of operations or liquidity. We carry a broad range of insurance coverage, including general and business automobile liability, commercial property, professional errors and omissions, workers’ compensation insurance, directors’ and officers’ liability insurance and a general umbrella policy, all with standard self-insured retentions/deductibles. We also provide health insurance to our employees (including vision and dental), and are partially self-funded for these claims. Provisions for expected future payments are accrued based on our experience, and specific stop loss levels provide protection for the Company. We believe we have adequate reserves for the self-funded portion of our insurance policies. We are not aware of any material litigation or claims that are not covered by these policies or which are likely to materially exceed the Company’s insurance limits.

Leases

Leases	9 Months Ended
	Sep. 28, 2019
Leases [Abstract]
Leases	NOTE 9 – LEASES The Company leases land, office space and equipment. Arrangements are assessed at inception to determine if a lease exists and, with the adoption of ASC 842, “Leases,” right-of-use (“ROU”) assets and lease liabilities are recognized based on the present value of lease payments over the lease term. Because the Company’s leases do not provide an implicit rate of return, the Company uses its incremental borrowing rate at the inception of a lease to calculate the present value of lease payments. The Company has elected to apply the short-term lease exception for all asset classes, excluding lease liabilities from the balance sheet and recognizing the lease payments in the period they are incurred. The components of lease expense were as follows (dollars in thousands): Financial Statement Classification Three months ended September 28, 2019 Nine months ended September 28, 2019 Finance leases: Amortization expense SG&A Expense $ 4 $ 4 Interest expense Interest expense, net 2 2 6 6 Operating leases: Operating costs Operating costs 427 845 Selling, general and administrative expenses SG&A Expense 476 1,398 903 2,243 Total lease expense $ 909 $ 2,249 Supplemental balance sheet information related to leases was as follows (dollars in thousands): Financial Statement Classification September 28, 2019 ROU Assets: Operating leases Right of Use asset $ 2,377 Finance leases Property and equipment, net 232 Total ROU Assets: $ 2,609 Lease liabilities: Current liabilities Operating leases Current portion of leases $ 947 Finance leases Current portion of leases 47 Noncurrent Liabilities: Operating leases Long Term Leases 1,467 Finance leases Long Term Leases 185 Total lease liabilities $ 2,646 The weighted average remaining lease term and weighted average discount rate were as follows: At September 28, 2019 Weighted average remaining lease term (years) Operating leases 2.4 Finance leases 4.9 Weighted average discount rate Operating leases 3.7 % Finance leases 14.5 % Maturities of operating lease liabilities as of September 28, 2019 are as follows (dollars in thousands): Year ending: Operating leases Finance leases Total 2019 (remaining months) $ 249 $ 14 $ 263 2020 1,012 55 1,067 2021 957 55 1,012 2022 289 55 344 2023 - 55 55 2024 - 36 36 Total lease payments 2,507 270 2,777 Less: imputed interest (92 ) (39 ) (131 ) Total lease liabilities $ 2,415 $ 231 $ 2,646

Revenue Recognition (Tables)

Revenue Recognition (Tables)	9 Months Ended
	Sep. 28, 2019
Revenue from Contract with Customer [Abstract]
Schedule of Revenue by Contract Type	Our revenue by contract type was as follows: For the Three Months Ended For the Nine Months Ended September 28, 2019 September 29, 2018 September 28, 2019 September 29, 2018 Fixed-price revenue $ 5,334 $ 5,425 $ 14,418 $ 17,370 Time-and-material revenue 8,640 8,830 25,340 23,944 Total Revenue 13,974 14,255 39,758 41,314

Contract Assets and Contract _2

Contract Assets and Contract Liabilities (Tables)	9 Months Ended
	Sep. 28, 2019
Contractors [Abstract]
Schedule of Costs Estimated Earnings and Billings on Uncompleted Contracts	Costs, estimated earnings and billings on uncompleted contracts consisted of the following at September 28, 2019 and December 29, 2018: September 28, 2019 December 29, 2018 (dollars in thousands) Costs incurred on uncompleted contracts $ 24,451 $ 34,800 Estimated earnings on uncompleted contracts 4,843 6,921 Earned revenues 29,294 41,721 Less: billings to date 25,979 39,150 Net costs and estimated earnings in excess of billings (billings in excess of costs) on uncompleted contracts $ 3,315 $ 2,571 Contract assets $ 4,128 $ 3,175 Contract liabilities (813 ) (604 ) Net contract assets $ 3,315 $ 2,571

Segment Information (Tables)

Segment Information (Tables)	9 Months Ended
	Sep. 28, 2019
Segment Reporting [Abstract]
Schedule of Segment Information for Operation Statement	Segment information for the three months ended September 28, 2019 and September 29, 2018 is as follows (dollars in thousands): For the three months ended September 28, 2019: EPCM Automation Corporate Consolidated Revenue $ 4,256 $ 9,718 $ — $ 13,974 Gross profit 75 1,600 — 1,675 Gross Profit Margin 1.8 % 16.5 % 12.0 % SG&A 651 427 1,293 2,371 Operating income (loss) (576 ) 1,173 (1,293 ) (696 ) Other income, net 7 Interest expense, net (5 ) Tax expense (22 ) Net loss $ (716 ) For the three months ended September 29, 2018: EPCM Automation Corporate Consolidated Revenue $ 6,821 $ 7,434 $ — $ 14,255 Gross profit 1,133 1,160 — 2,293 Gross Profit Margin 16.6 % 15.6 % 16.1 % SG&A 469 633 1,381 2,483 Operating income (loss) 664 527 (1,381 ) (190 ) Other income, net 11 Interest expense, net (1 ) Tax expense (17 ) Net loss $ (197 ) Segment information for the nine months ended September 28, 2019 and September 29, 2018 is as follows (dollars in thousands): For the nine months ended September 28, 2019: EPCM Automation Corporate Consolidated Revenue $ 15,548 $ 24,210 $ — $ 39,758 Gross profit 1,574 3,381 — 4,955 Gross Profit Margin 10.1 % 14.0 % 12.5 % SG&A 1,826 1,246 4,053 7,125 Operating income (loss) (252 ) 2,135 (4,053 ) (2,170 ) Other income, net 48 Interest expense, net (12 ) Tax expense (73 ) Net loss $ (2,207 ) For the nine months ended September 29, 2018: EPCM Automation Corporate Consolidated Revenue $ 18,568 $ 22,746 $ — $ 41,314 Gross profit 2,879 3,080 — 5,959 Gross Profit Margin 15.5 % 13.5 % 14.4 % SG&A 1,426 2,001 4,508 7,935 Operating income (loss) 1,453 1,079 (4,508 ) (1,976 ) Other expense, net (367 ) Interest expense, net (14 ) Tax expense (31 ) Net loss $ (2,388 ) Total Assets by Segment As of September 28, 2019 As of December 29, 2018 (dollars in thousands) EPCM $ 6,276 $ 4,792 Automation 9,906 10,550 Corporate 5,956 6,964 Consolidated $ 22,138 $ 22,306

Leases (Tables)

Leases (Tables)	9 Months Ended
	Sep. 28, 2019
Leases [Abstract]
Schedule of Components of Lease Expense	The components of lease expense were as follows (dollars in thousands): Financial Statement Classification Three months ended September 28, 2019 Nine months ended September 28, 2019 Finance leases: Amortization expense SG&A Expense $ 4 $ 4 Interest expense Interest expense, net 2 2 6 6 Operating leases: Operating costs Operating costs 427 845 Selling, general and administrative expenses SG&A Expense 476 1,398 903 2,243 Total lease expense $ 909 $ 2,249
Schedule of Supplemental Balance Sheet Information Related to Leases	Supplemental balance sheet information related to leases was as follows (dollars in thousands): Financial Statement Classification September 28, 2019 ROU Assets: Operating leases Right of Use asset $ 2,377 Finance leases Property and equipment, net 232 Total ROU Assets: $ 2,609 Lease liabilities: Current liabilities Operating leases Current portion of leases $ 947 Finance leases Current portion of leases 47 Noncurrent Liabilities: Operating leases Long Term Leases 1,467 Finance leases Long Term Leases 185 Total lease liabilities $ 2,646
Schedule of Weighted Average Remaining Lease Term and Weighted Average Discount Rate	The weighted average remaining lease term and weighted average discount rate were as follows: At September 28, 2019 Weighted average remaining lease term (years) Operating leases 2.4 Finance leases 4.9 Weighted average discount rate Operating leases 3.7 % Finance leases 14.5 %
Schedule of Maturities of Operating Lease Liabilities	Maturities of operating lease liabilities as of September 28, 2019 are as follows (dollars in thousands): Year ending: Operating leases Finance leases Total 2019 (remaining months) $ 249 $ 14 $ 263 2020 1,012 55 1,067 2021 957 55 1,012 2022 289 55 344 2023 - 55 55 2024 - 36 36 Total lease payments 2,507 270 2,777 Less: imputed interest (92 ) (39 ) (131 ) Total lease liabilities $ 2,415 $ 231 $ 2,646

Accounting Standards (Details N

Accounting Standards (Details Narrative) - USD ($) $ in Thousands	Sep. 28, 2019	Dec. 29, 2018
Right of use assets, value	$ 2,377
Lease Liabilities	$ 2,415
Accounting Standards Update 2016-02 [Member]
Right of use assets, value		1,300
Lease Liabilities		$ 1,300

Revenue Recognition - Schedule

Revenue Recognition - Schedule of Revenue by Contract Type (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018	Sep. 28, 2019	Sep. 29, 2018
Total Revenue	$ 13,974	$ 14,255	$ 39,758	$ 41,314
Fixed-Price Revenue [Member]
Total Revenue	5,334	5,425	14,418	17,370
Time-and-Material Revenue [Member]
Total Revenue	$ 8,640	$ 8,830	$ 25,340	$ 23,944

Contract Assets and Contract _3

Contract Assets and Contract Liabilities - Schedule of Costs Estimated Earnings and Billings on Uncompleted Contracts (Details) - USD ($) $ in Thousands	Sep. 28, 2019	Dec. 29, 2018
Contractors [Abstract]
Costs incurred on uncompleted contracts	$ 24,451	$ 34,800
Estimated earnings on uncompleted contracts	4,843	6,921
Earned revenues	29,294	41,721
Less: billings to date	25,979	39,150
Net costs and estimated earnings in excess of billings (billings in excess of costs) on uncompleted contracts	3,315	2,571
Contract assets	4,128	3,175
Contract liabilities	(813)	(604)
Net contract assets	$ 3,315	$ 2,571

Segment Information (Details Na

Segment Information (Details Narrative)	9 Months Ended
	Sep. 28, 2019Number
Segment Reporting [Abstract]
Number of Reportable Segments	2

Segment Information - Schedule

Segment Information - Schedule of Segment Information for Operation Statement (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018	Sep. 28, 2019	Sep. 29, 2018	Dec. 29, 2018
Revenue	$ 13,974	$ 14,255	$ 39,758	$ 41,314
Gross profit	$ 1,675	$ 2,293	$ 4,955	$ 5,959
Gross Profit Margin	12.00%	16.10%	12.50%	14.40%
SG&A	$ 2,371	$ 2,483	$ 7,125	$ 7,935
Operating income (loss)	(696)	(190)	(2,170)	(1,976)
Other income (expense), net	7	11	48	(367)
Interest expense, net	(5)	(1)	(12)	(14)
Tax expense	(22)	(17)	(73)	(31)
Net loss	(716)	(197)	(2,207)	(2,388)
Total Assets	22,138		22,138		$ 22,306
EPCM [Member]
Revenue	4,256	6,821	15,548	18,568
Gross profit	$ 75	$ 1,133	$ 1,574	$ 2,879
Gross Profit Margin	1.80%	16.60%	10.10%	15.50%
SG&A	$ 651	$ 469	$ 1,826	$ 1,426
Operating income (loss)	(576)	664	(252)	1,453
Total Assets	6,276		6,276		4,792
Automation [Member]
Revenue	9,718	7,434	24,210	22,746
Gross profit	$ 1,600	$ 1,160	$ 3,381	$ 3,080
Gross Profit Margin	16.50%	15.60%	14.00%	13.50%
SG&A	$ 427	$ 633	$ 1,246	$ 2,001
Operating income (loss)	1,173	527	2,135	1,079
Total Assets	9,906		9,906		10,550
Corporate [Member]
Revenue
Gross profit
Gross Profit Margin
SG&A	$ 1,293	$ 1,381	$ 4,053	$ 4,508
Operating income (loss)	(1,293)	$ (1,381)	(4,053)	$ (4,508)
Total Assets	$ 5,956		$ 5,956		$ 6,964

Federal and State Income Taxes

Federal and State Income Taxes (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 28, 2019	Sep. 29, 2018	Sep. 28, 2019	Sep. 29, 2018
Income Tax Disclosure [Abstract]
Income tax likelihood, description			greater than 50 percent
Income tax expense	$ 22	$ 17	$ 73	$ 31
Effective income tax rate	(3.20%)	(9.30%)	(3.40%)	(1.30%)
Effective federal tax rate			21.00%

Leases - Schedule of Components

Leases - Schedule of Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 28, 2019	Sep. 28, 2019
Finance lease cost, total	$ 6	$ 6
Operating costs, total	903	2,243
Total lease expense	909	2,249
Selling, General and Administrative Expenses [Member]
Finance lease cost, total	4	4
Operating costs, total	476	1,398
Interest Expense [Member]
Finance lease cost, total	2	2
Operating Costs [Member]
Operating costs, total	$ 427	$ 845

Leases - Schedule of Supplement

Leases - Schedule of Supplemental Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands	Sep. 28, 2019	Dec. 29, 2018
ROU Assets: Operating leases	$ 2,377
ROU Assets	2,609
Lease liabilities (Current): Operating leases	947
Lease liabilities (Current): Finance leases	47
Lease liabilities (Non-Current): Operating leases	1,467
Lease liabilities (Non-Current): Finance leases	185
Total lease liabilities	2,646
Property, Plant and Equipment [Member]
ROU Assets: Finance leases	232
Right of Use Asset [Member]
ROU Assets: Operating leases	$ 2,377

Leases - Schedule of Weighted A

Leases - Schedule of Weighted Average Remaining Lease Term and Weighted Average Discount Rate (Details)	Sep. 28, 2019
Operating Leases [Member]
Weighted average remaining lease term (years)	2 years 4 months 24 days
Weighted average discount rate	3.70%
Finance Leases [Member]
Weighted average remaining lease term (years)	4 years 10 months 25 days
Weighted average discount rate	14.50%

Leases - Schedule of Maturities

Leases - Schedule of Maturities of Operating Lease Liabilities (Details) $ in Thousands	Sep. 28, 2019USD ($)
Leases [Abstract]
Operating leases: 2019 (remaining months)	$ 249
Operating leases: 2020	1,012
Operating leases: 2021	957
Operating leases: 2022	289
Operating leases: 2023
Operating leases: 2024
Operating leases: Total lease payments	(2,507)
Operating leases: Less: imputed interest	(92)
Operating leases: Total lease liabilities	2,415
Finance leases: 2019 (remaining months)	14
Finance leases: 2020	55
Finance leases: 2021	55
Finance leases: 2022	55
Finance leases: 2023	55
Finance leases: 2024	36
Finance leases: Total lease payments	270
Finance leases: Less: imputed interest	(39)
Finance leases: Total lease liabilities	231
2019 (remaining months)	263
2020	1,067
2021	1,012
2022	344
2023	55
2024	36
Total lease payments	2,777
Less: imputed interest	(131)
Total lease liabilities	$ 2,646