Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 25, 2021 | Mar. 10, 2022 | Jun. 25, 2021 | |
Cover [Abstract] | |||
Entity Registrant Name | ENGlobal Corporation | ||
Entity Central Index Key | 0000933738 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-28 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 25, 2021 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Entity Common Stock Shares Outstanding | 35,230,675 | ||
Entity Public Float | $ 62,193,407 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 001-14217 | ||
Entity Incorporation State Country Code | NV | ||
Entity Tax Identification Number | 88-0322261 | ||
Entity Address Address Line 1 | 11740 Katy Fwy - Energy Tower III | ||
Entity Address Address Line 2 | 11th floor | ||
Entity Address City Or Town | Houston | ||
Entity Address State Or Province | TX | ||
Entity Address Postal Zip Code | 77079 | ||
City Area Code | 281 | ||
Icfr Auditor Attestation Flag | false | ||
Local Phone Number | 878-1000 | ||
Security 12b Title | Common Stock, $0.001 par value | ||
Trading Symbol | ENG | ||
Security Exchange Name | NASDAQ | ||
Entity Interactive Data Current | Yes | ||
Auditor Name | Moss Adams LLP | ||
Auditor Location | Houston, Texas | ||
Auditor Firm Id | 659 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 25, 2021 | Dec. 26, 2020 |
Current Assets: | ||
Cash | $ 19,202,000 | $ 13,706,000 |
Trade receivables, net of allowances of $386 and $236 | 7,692,000 | 7,789,000 |
Prepaid expenses and other current assets | 958,000 | 891,000 |
Payroll tax receivable | 3,065,000 | 0 |
Contract assets | 4,177,000 | 4,090,000 |
Total current assets | 35,094,000 | 26,476,000 |
Property and equipment, net | 1,698,000 | 1,263,000 |
Goodwill | 720,000 | 720,000 |
Other assets | ||
Right of use asset | 4,251,000 | 1,628,000 |
Deposits and other assets | 306,000 | 351,000 |
Total other assets | 4,557,000 | 1,979,000 |
Total assets | 42,069,000 | 30,438,000 |
Current Liabilities: | ||
Accounts payable | 2,001,000 | 2,138,000 |
Accrued compensation and benefits | 2,183,000 | 3,048,000 |
Current portion of leases | 1,389,000 | 1,541,000 |
Contract liabilities | 2,054,000 | 1,258,000 |
Current portion of note | 0 | 3,707,000 |
Current portion of deferred payroll tax | 537,000 | 0 |
Other current liabilities | 667,000 | 745,000 |
Total current liabilities | 8,831,000 | 12,437,000 |
Deferred payroll tax | 0 | 1,037,000 |
Long-term debt | 1,035,000 | 2,733,000 |
Long-term leases | 4,012,000 | 608,000 |
Total liabilities | 13,878,000 | 16,815,000 |
Stockholders' Equity: | ||
Common stock - $0.001 par value; 75,000,000 shares authorized; 27,560,686 and 27,413,626 shares issued and outstanding at December 26, 2020 and December 28, 2019, respectively | 35,000 | 28,000 |
Additional paid-in capital | 57,403,000 | 37,157,000 |
Accumulated deficit | (29,247,000) | (23,562,000) |
Total stockholders' equity | 28,191,000 | 13,623,000 |
Total liabilities and stockholders' equity | $ 42,069,000 | $ 30,438,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 25, 2021 | Dec. 26, 2020 |
CONSOLIDATED BALANCE SHEETS | ||
Trade receivables, allowances | $ 1,673 | $ 386 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 35,230,675 | 27,560,686 |
Common stock, shares outstanding | 35,230,675 | 27,560,686 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 25, 2021 | Dec. 26, 2020 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Operating revenues | $ 36,410 | $ 64,449 |
Operating costs | 37,053 | 55,998 |
Gross profit (loss) | (643) | 8,451 |
Operating costs and expenses: | ||
Selling, general and administrative expenses | 12,833 | 8,834 |
Operating loss | (13,476) | (383) |
Other income (expense) | ||
Interest expense, net | (212) | (153) |
Other income, net | 8,063 | 14 |
Loss before income taxes | (5,625) | (522) |
Provision for federal and state income taxes | (60) | (103) |
Net loss | $ (5,685) | $ (625) |
Basic and diluted loss per common share | $ (0.18) | $ (0.02) |
Basic and diluted weighted average shares used in computing loss per share: | 31,888 | 27,474 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY - USD ($) | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Balance, amount at Dec. 28, 2019 | $ 27,000 | $ 36,934 | $ 22,937 | |
Common stock issued | 1,000 | $ 1,000 | 0 | |
Share-based compensation - employee | 223,000 | 223,000 | ||
Net Income (Loss) | (625,000) | 0 | (625,000) | |
Balance, amount at Dec. 26, 2020 | 13,623,000 | 27,000 | 37,157 | (23,562,000) |
Common stock issued | 19,976,000 | 8,000 | 19,976,000 | |
Share-based compensation - employee | 270,000 | 270,000 | ||
Net Income (Loss) | (5,685,000) | (5,685,000) | ||
Balance, amount at Dec. 25, 2021 | $ 28,191,000 | $ 35,000 | $ 57,403,000 | $ (29,247,000) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 25, 2021 | Dec. 26, 2020 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (5,685,000) | $ (625,000) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 561,000 | 449,000 |
Share-based compensation expense | 270,000 | 223,000 |
Forgiveness of PPP Loan | (4,949,000) | 0 |
Changes in current assets and liabilities: | ||
Trade accounts receivable | 97,000 | 3,646,000 |
Contract assets | (87,000) | (228,000) |
Other current assets | (3,087,000) | (46,000) |
Accounts payable | (137,000) | (1,123,000) |
Accrued compensation and benefits | (1,365,000) | 1,301,000 |
Contract liabilities | 796,000 | (4,180,000) |
Income taxes payable | (38,000) | (57,000) |
Other current liabilities, net | (40,000) | 121,000 |
Net cash used in operating activities | (13,664,000) | (519,000) |
Cash Flows from Investing Activities: | ||
Property and equipment acquired | (240,000) | (428,000) |
Net cash used in investing activities | (240,000) | (428,000) |
Cash Flows from Financing Activities: | ||
Issuance of common stock, net | 19,984,000 | 0 |
Payments on finance leases | (129,000) | (93,000) |
Proceeds from PPP loan | 0 | 4,949,000 |
Proceeds (payments) from revolving credit facility | (455,000) | 1,490,000 |
Net cash provided by financing activities | 19,400,000 | 6,346,000 |
Net change in cash | 5,496,000 | 5,399,000 |
Cash at beginning of year | 13,706,000 | 8,307,000 |
Cash at end of year | 19,202,000 | 13,706,000 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the year for interest | 212,000 | 153,000 |
Right of use assets obtained in exchange for new operating lease liability | 4,014,000 | 963,000 |
Leased assets obtained in exchange for new finance lease liabilities | 665,000 | 219,000 |
Cash paid during the year for income taxes (net of refunds) | 151,000 | 86,000 |
Non-cash transaction: PPP loan forgiveness | $ 4,974,000 | $ 0 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 25, 2021 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
ORGANIZATION AND BASIS OF PRESENTATION | NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION Organization and Operations - Basis of Presentation - |
ACCOUNTING POLICIES AND NEW ACC
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 25, 2021 | |
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS | |
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS | NOTE 2 - ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS Consolidation Policy - Fair Value Measurements - Cash and cash equivalents - Receivables - Concentration of Credit Risk - Our businesses or product lines are largely dependent on a few relatively large customers. Although we believe we have an extensive customer base, the loss of one of these large customers or if such customers were to incur a prolonged period of decline in business, our financial condition and results of operations could be adversely affected. Two customers provided more than 10% each of our consolidated operating revenues for the year ended December 25, 2021 (30.5% and 22.6%). For the year ended December 26, 2020, four customers provided more than 10% each of our consolidated operating revenues (25.1%, 17.9%, 13.9%, and 13.8%). Amounts included in trade receivables related to these customers totaled $0.1 million and $1.2 million, respectively, at December 25, 2021 and $0.0 million, $0.6 million, $0.8 million and $1.5 million, respectively, at December 26, 2020. We extend credit to customers in the normal course of business. We have established various procedures to manage our credit exposure, including initial credit approvals, credit limits and terms, letters of credit, and occasionally through rights of offset. We also use prepayments and guarantees to limit credit risk to ensure that our established credit criteria are met. Our most significant exposure to credit risks relates to situations under which we provide services early in the life of a project that is dependent on financing. Risks increase in times of general economic downturns and under conditions that threaten project feasibility. Property and Equipment - Asset Group Years Shop equipment 5 - 10 Furniture and fixtures 5 - 7 Computer equipment; Autos and trucks 3 - 5 Software 3 - 5 Leasehold improvements are amortized over the remaining term of the related lease. See Note 4 for details related to property and equipment and related depreciation. Expenditures for maintenance and repairs are expensed as incurred. Upon disposition or retirement of property and equipment, any gain or loss is charged to operations. Goodwill - The Company compares its fair value of a reporting unit and the carrying value of the reporting unit to measure goodwill impairment. Fair value was determined by applying a historical earnings multiple times the cash flow of the operating unit after allocation of certain corporate overhead. Estimating the cash flow of the operating unit requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates and future market conditions, among others. It is possible that changes in market conditions, economy, facts, circumstances, judgments and assumptions used in estimating the fair value could change, resulting in possible impairment of goodwill in the future. We performed a qualitative assessment of goodwill for each of the years ended December 25, 2021 and December 26, 2020. This assessment indicated that there was no impairment of goodwill for the years ended December 25, 2021 and December 26, 2020. Impairment of Long-Lived Assets - 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 on the labor portion of a project for revenue recognition to measure progress of our contracts because it best depicts the transfer of control to the customer which occurs as we consume the materials on the contracts. Therefore, revenues and estimated profits are recorded proportionally as labor 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 estimated. 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. Incremental Costs Income Taxes - A valuation allowance is recorded to reduce previously recorded tax assets when it becomes more-likely-than-not such asset will not be realized. We evaluate the realizability of deferred tax assets based on all available evidence, both positive and negative, regarding historical operating results, including the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. We account for uncertain tax positions in accordance with ASC 740. When uncertain tax positions exist, we recognize the tax benefit of the tax positions to the extent that the benefit will more-likely-than-not be realized. The determination as to whether the tax benefit will more-likely-than-not be realized is based upon technical merits of the tax positions as well as consideration of the available facts and circumstances. The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. Earnings per Share - Treasury Stock - Stock-Based Compensation - The Company accounts for restricted stock awards granted to consultants using the accounting guidance included in ASC 505-50 “Equity-Based Payments to Non-Employees” (“ASC 505-50”). All transactions in which services are received in exchange for share-based awards are accounted for based on the fair value of the consideration received or the fair value of the awards issued, whichever is more reliably measurable. Share-based compensation is measured at fair value at the earlier of the commitment date or the date the services are completed. |
DETAIL OF CERTAIN BALANCE SHEET
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | 12 Months Ended |
Dec. 25, 2021 | |
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | |
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | NOTE 3 - DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS The components of trade receivables, net as of December 25, 2021 and December 26, 2020, are as follows (amounts in thousands): 2021 2020 Amounts billed $ 5,810 $ 5,050 Amounts unbilled 867 1,455 Retainage 2,688 1,670 Less: Allowance for uncollectible accounts (1,673 ) (386 ) Trade receivables, net $ 7,692 $ 7,789 The components of prepaid expense and other current assets are as follows as of December 25, 2021 and December 26, 2020 (amounts in thousands): 2021 2020 Prepaid expenses $ 917 $ 843 Other receivables - employee 41 48 Prepaid expenses and other current assets $ 958 $ 891 The components of other current liabilities are as follows as of December 25, 2021 and December 26, 2020 (amounts in thousands): 2021 2020 Accrual for known contingencies $ 104 $ 215 Customer prepayments 4 4 Gross receipts tax payable 35 23 State income taxes payable 33 83 Insurance payable 491 420 Other current liabilities $ 667 $ 745 Our accrual for known contingencies includes litigation accruals, if any. See “Note 16 - Commitments and Contingencies” for further information. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 25, 2021 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 4 - PROPERTY AND EQUIPMENT Property and equipment consist of the following at December 25, 2021 and December 26, 2020 (amounts in thousands): 2021 2020 Computer equipment and software $ 1,397 $ 1,170 Shop equipment 2,252 1,683 Furniture and fixtures 197 193 Leasehold improvements 836 845 Autos and trucks 83 87 $ 4,765 $ 3,978 Accumulated depreciation and amortization (3,067 ) (2,715 ) Property and equipment, net $ 1,698 $ 1,263 Depreciation expense was $0.5 million and $0.4 million for the years ended December 25, 2021 and December 26, 2020, respectively. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 12 Months Ended |
Dec. 25, 2021 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | NOTE 5 - REVENUE RECOGNITION Our revenue by contract type are as follows (amounts in thousands): For the Years Ended December 25, December 26, 2021 2020 Fixed-price revenue $ 21,205 $ 35,822 Time-and-material revenue 15,205 28,627 Total Revenue 36,410 64,449 |
CONTRACTS
CONTRACTS | 12 Months Ended |
Dec. 25, 2021 | |
CONTRACTS | |
CONTRACTS | NOTE 6 - CONTRACTS Costs, estimated earnings, and billings on uncompleted contracts consist of the following at December 25, 2021 and December 26, 2020 (amounts in thousands): 2021 2020 Costs incurred on uncompleted contracts $ 36,429 $ 39,154 Estimated earnings on uncompleted contracts 4,866 4,388 Earned revenues 41,295 43,542 Less: billings to date 39,172 40,710 Net costs in excess of billings on uncompleted contracts $ 2,123 $ 2,832 Costs and estimated earnings in excess of billings on uncompleted contracts $ 4,177 $ 4,090 Billings in excess of costs and estimated earnings on uncompleted contracts (2,054 ) (1,258 ) Net costs in excess of billings on uncompleted contracts $ 2,123 $ 2,832 Revenue on fixed-price contracts is recorded primarily using the percentage-of-completion (cost-to-cost) method. Revenue and gross margin on fixed-price contracts are subject to revision throughout the lives of the contracts and any required adjustments are made in the period in which the revisions become known. To manage unknown risks, management may use contingency amounts to increase the estimated costs, therefore, lowering the earned revenues until the risks are better identified and quantified or have been mitigated. We had $0.2 million in contingency amounts as of December 25, 2021 and had $0.2 million in contingency amounts as of December 26, 2020. Losses on contracts are recorded in full as they are identified. We recognize service revenue as soon as the services are performed. For clients that we consider higher risk, due to past payment history or history of not providing written work authorizations, we have deferred revenue recognition until we receive either a written authorization or a payment. We had $0.0 million in deferred revenue for the year ended December 25, 2021 and $0.3 million for the year ended December 26, 2020. This deferred revenue represents work on not to exceed contracts that has been performed but has not been billed or been recorded as revenue due to our revenue recognition policies as the work was performed outside the contracted amount without obtaining proper work order changes. It is uncertain as to whether these revenues will eventually be recognized by us or the proceeds collected. The costs associated with these billings have been expensed as incurred. |
DEBT
DEBT | 12 Months Ended |
Dec. 25, 2021 | |
DEBT | |
DEBT | NOTE 7 - DEBT The components of debt are as follows (amounts in thousands): December 25, 2021 December 26, 2020 PPP Loan (1) $ - $ 4,949 Revolving Credit Facility (2) 1,035 1,491 Total debt 1,035 6,440 Amount due within one year - 3,707 Total long-term debt $ 1,035 $ 2,733 (1) On April 13, 2020, the Company was granted an unsecured loan (the “PPP Loan”) from Origin Bank in the aggregate principal amount of $4,915,800 pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”). The PPP Loan was evidenced by a promissory note, dated as of April 13, 2020 (the “Note”), by the Company in favor of Origin Bank, as lender. On November 30, 2020, our lender, Origin Bank, transmitted our PPP Loan forgiveness application to the U.S. Small Business Administration. On July 12, 2021, we received notification from Origin Bank that the PPP Loan was forgiven in full by the U.S. Small Business Administration at which time the Company recognized the extinguishment of debt as other income. (2) On May 21, 2020 (the “Closing Date”), the Company and its wholly owned subsidiaries, ENGlobal U.S., Inc. and ENGlobal Government Services, Inc. (collectively, the “Borrowers”) entered into a Loan and Security Agreement (the “Revolving Credit Facility”) with Pacific Western Bank dba Pacific Western Business Finance, a California state-chartered bank (the “Lender”), pursuant to which the Lender agreed to extend credit to the Borrowers in the form of revolving loans (each a “Loan” and collectively, the “Loans”) in the aggregate amount of up to $6.0 million (the “Maximum Credit Limit”). Set forth below are certain of the material terms of the Revolving Credit Facility: Credit Limit Interest Collateral Maturity: The maturity date is May 20, 2023 and shall be automatically extended for additional periods of one-year each, if written notice of termination is not given by one party to the other at least thirty days prior to the maturity date. Loan Fee Termination Fee Covenants The future scheduled maturities of our debt are (amounts in thousands): Revolving Credit Facility 2022 $ - 2023 1,035 Thereafter - $ 1,035 |
LEASES
LEASES | 12 Months Ended |
Dec. 25, 2021 | |
LEASES | |
LEASES | NOTE 8 - 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 are as follows (amounts in thousands): Financial Year ended Year ended Statement December 25, December 26, Classification 2021 2020 Finance leases: Amortization expense SG&A Expense $ 100 $ 92 Interest expense Interest expense, net 17 20 $ 117 $ 112 Operating leases: Operating costs Operating costs 507 633 Selling, general and administrative expenses SG&A Expense 1,728 1,830 $ 2,235 $ 2,463 Total lease expense $ 2,352 $ 2,575 Supplemental balance sheet information related to leases are as follows (amounts in thousands): Financial Statement December 25, December 26, Classification 2021 2020 ROU Assets: Operating leases Right of Use asset $ 4,251 $ 1,628 Finance leases Property and equipment, net 979 442 Total ROU Assets: $ 5,230 $ 2,070 Lease liabilities: Current liabilities Operating leases Current portion of leases $ 1,153 $ 1,421 Finance leases Current portion of leases 236 120 Noncurrent Liabilities: Operating leases Long Term Leases 3,269 286 Finance leases Long Term Leases 743 322 Total lease liabilities $ 5,401 $ 2,149 The weighted average remaining lease term and weighted average discount rate are as follows: December 25, 2021 December 26, 2020 Weighted average remaining lease term (years) Operating leases 4.8 1.2 Finance leases 4.4 4.2 Weighted average discount rate Operating leases 0.8 % 1.7 % Finance leases 2.1 % 5.8 % Maturities of operating lease liabilities as of December 25, 2021 are as follows (dollars in thousands): Year ending: Operating leases Finance leases Total 2022 1,162 248 1,410 2023 803 228 1,031 2024 710 208 918 2025 600 172 772 2026 and thereafter 1,185 142 1,327 Total lease payments 4,460 998 5,458 Less: imputed interest (37 ) (20 ) (57 ) Total lease liabilities $ 4,423 $ 978 $ 5,401 |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 25, 2021 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | NOTE 9 - EMPLOYEE BENEFIT PLANS ENGlobal sponsors a 401(k) plan for its employees. The Company, at the direction of the Board of Directors, may make discretionary contributions. Our employees may elect to make contributions pursuant to a salary reduction agreement upon meeting age and length-of-service requirements. The Company does not currently match employees’ deferrals. The match was suspended beginning December 30, 2018 and no contributions were made during the years ended December 25, 2021 and December 26, 2020. |
STOCK COMPENSATION PLANS
STOCK COMPENSATION PLANS | 12 Months Ended |
Dec. 25, 2021 | |
STOCK COMPENSATION PLANS | |
STOCK COMPENSATION PLANS | NOTE 10 - STOCK COMPENSATION PLANS The Company’s 2021 Long Term Incentive Plan (the “Long Term Incentive Plan”), currently provides for the aggregate issuance of up to 1,500,000 shares of common stock. The Long Term Incentive Plan provides for grants of non-statutory options, incentive stock options, restricted stock awards, performance shares, performance units, restricted stock units and other stock-based awards, in order to enhance the ability of ENGlobal to motivate current employees, to attract employees of outstanding ability and to provide for grants to be made to non-employee directors. At December 25, 2021, 1,399,365 shares of common stock are available to be issued pursuant to the Long Term Incentive Plan. We recognized non-cash stock-based compensation expense related to our Long Term Incentive Plan and the expired Amended and Restated 2009 Equity Incentive Plan of $0.3 million for the year ended December 25, 2021 and $0.2 million for the year ended December 26, 2020. Restricted Stock Awards - th The following is a summary of the status of our restricted stock awards and of changes in restricted stock outstanding for the year ended December 25, 2021: Number of unvested restricted shares Weighted-average grant-date fair value Outstanding at December 26, 2020 145,296 $ 1.05 Granted 140,750 3.09 Vested 130,381 1.24 Forfeited 39,034 1.44 Outstanding at December 25, 2021 116,631 $ 3.07 As of December 25, 2021, there was $0.3 million of total unrecognized compensation cost related to unvested restricted stock awards which is expected to be recognized over a weighted-average period of 2 years. During the year ended December 25, 2021, the Company granted the following restricted stock awards. Date Issued Issued to Number of Shares Market Price Fair Value March 9, 2021 Director (1) 5,656 $ 4.42 $ 25,000 March 9, 2021 Employees (10) 56,557 $ 4.42 $ 250,000 June 1, 2021 Employee (1) 2,778 $ 3.60 $ 10,000 August 26, 2021 Directors (3) 75,759 $ 1.98 $ 150,000 During the year ended December 26, 2020, the Company granted the following restricted stock awards. Date Issued Issued to Number of Shares Market Price Fair Value June 11, 2020 Directors (3) 147,060 $ 1.02 $ 150,000 |
TREASURY STOCK
TREASURY STOCK | 12 Months Ended |
Dec. 25, 2021 | |
TREASURY STOCK | |
TREASURY STOCK | NOTE 11 - TREASURY STOCK On April 21, 2015, we announced that the Board of Directors had authorized the repurchase of up to $2.0 million of our common stock from time to time through open market or privately negotiated transactions, based on prevailing market conditions. We are not obligated to repurchase any dollar amount or specific number of shares of common stock under the repurchase program, which may be suspended, discontinued or reinstated at any time. As of December 25, 2021, the Company had purchased and retired 1,290,460 shares for $1.6 million under this program. The stock repurchase program was suspended from May 16, 2017 and was reinstated on December 19, 2018. No shares were repurchased during the year ended December 25, 2021. Management does not intend to repurchase any shares in the near future. |
REDEEMABLE PREFERRED STOCK
REDEEMABLE PREFERRED STOCK | 12 Months Ended |
Dec. 25, 2021 | |
TREASURY STOCK | |
REDEEMABLE PREFERRED STOCK | NOTE 12 - REDEEMABLE PREFERRED STOCK We are authorized to issue 2,000,000 shares of Preferred Stock, par value $0.001 per share (the “Preferred Stock”). The Board of Directors has the authority to approve the issuance of all or any of these shares of the Preferred Stock in one or more series, to determine the number of shares constituting any series and to determine any voting powers, conversion rights, dividend rights and other designations, preferences, limitations, restrictions and rights relating to such shares. While there are no current plans to issue the Preferred Stock, it was authorized in order to provide the Company with flexibility to take advantage of contingencies such as favorable acquisition opportunities. |
FEDERAL AND STATE INCOME TAXES
FEDERAL AND STATE INCOME TAXES | 12 Months Ended |
Dec. 25, 2021 | |
FEDERAL AND STATE INCOME TAXES | |
FEDERAL AND STATE INCOME TAXES | NOTE 13 - FEDERAL AND STATE INCOME TAXES The components of our income tax expense for the years ended December 25, 2021 and December 26, 2020 are as follows (amounts in thousands): 2021 2020 Current: State 60 103 Total current 60 103 Deferred: Federal (35 ) (25 ) State 35 25 Total deferred - - Total income tax expense $ 60 $ 103 The following is a reconciliation of expected income tax benefit to actual income tax expense for the years ended December 25, 2021 and December 26, 2020 (amounts in thousands): 2021 2020 Federal income tax (benefit) at statutory rate of 21% $ (1,181 ) $ (110 ) State income tax, net of federal income tax effect (43 ) 64 Nondeductible expenses (31 ) 29 Nontaxable PPP Loan Forgiveness (1,044 ) - State RTA (13 ) - Prior year adjustments and true-ups (32 ) 36 Change in valuation allowance 2,404 84 Total tax expense $ 60 $ 103 The components of the deferred tax asset (liability) consisted of the following at December 25, 2021 and December 26, 2020 (amounts in thousands): 2021 2020 Noncurrent Deferred tax assets Federal and state net operating loss carryforward $ 9,503 $ 7,036 Tax credit carryforwards 1,977 1,971 Allowance for uncollectible accounts 380 93 Accruals not yet deductible for tax purposes 488 613 Goodwill 236 364 Depreciation - 3 Lease payable 992 390 Total noncurrent deferred tax assets 13,576 10,470 Less: Valuation allowance (12,419 ) (10,016 ) Total noncurrent deferred tax assets, net $ 1,157 $ 454 Noncurrent deferred tax liabilities: Depreciation (49 ) - Other (126 ) (70 ) Right to use asset (982 ) (384 ) Total noncurrent deferred tax liabilities (1,157 ) (454 ) Net deferred tax assets/deferred tax Liabilities $ - $ - We account for uncertain tax positions in accordance with ASC 740. When uncertain tax positions exist, we recognize the tax benefit of the tax positions to the extent that the benefit will more likely than not be realized. The determination as to whether the tax benefit will more likely than not be realized is based upon technical merits of the tax positions as well as consideration of the available facts and circumstances. We recognize interest and penalties related to unrecognized tax benefits in the provision for income taxes. As of December 25, 2021 and December 26, 2020, we do not have any significant uncertain tax positions. We record a valuation allowance to reduce the carrying value of our deferred tax assets when it is more likely than not that a portion or all of the deferred tax assets will expire before realization of the benefit or future deductibility is not probable. The ultimate realization of the deferred tax assets depends on the ability to generate sufficient taxable income of the appropriate character and in the related jurisdiction in the future. In evaluating our ability to recover our deferred tax assets, we consider the available positive and negative evidence, including our past operating results, the existence of cumulative losses in the most recent years and our forecast of future taxable income. In estimating future taxable income, we develop assumptions, including the amount of pretax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment. During 2021, after evaluating all available evidence, we recorded a valuation allowance on all net deferred tax assets. For the year ended December 25, 2021, we recognized a total income tax expense of $60 thousand on a pretax book loss of $5.6 million compared to an income tax expense of $103 thousand on a pretax book loss of $0.5 million for the year ended December 26, 2020. As a result of permanent difference add-backs to taxable income related to the PPP Loan forgiveness and stock compensation, the tax expense decreased by $1.0 million and $31 thousand, respectively, which decreased the effective tax rate by 18.6% and 0.6%, respectively. An increase of $2.4 million in the valuation allowance decreased the effective tax rate by 42.8%. State income tax (net of Federal) expense in the amount of $43 thousand decreased the effective tax rate by 0.8% mainly due to Texas margins tax. Federal and state tax true-ups decreased tax expense in the amount of $44 thousand and decreased the effective tax rate by 0.8%. As of December 25, 2021 the Company has a gross federal net operating loss carry-forward of approximately $41.4 million, which will begin to expire in 2032. Under the Tax Cuts and Jobs Act of 2017 (“TCJA”), net operating losses (“NOL’s”) generated in tax year 2018 and forward have an indefinite carryforward but are limited to 80% of taxable income when utilized. For NOL’s incurred in tax year 2017 and prior, the limitation to 80% of taxable income does not apply, but the NOL’s are subject to expiration. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 25, 2021 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 14 - SEGMENT INFORMATION Reporting Segments Our segments are strategic business units that offer our services and products to customers in their respective industry segments. The operating performance of our segments is regularly reviewed with operational leaders in charge 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. We have identified four strategic markets where we have a long history of delivering project solutions and can provide complete project execution. These four targeted markets include: (i) Renewables, (ii) Automation, (iii) Oil, Gas, and Petrochemicals, and (iv) Government Services. Within the Renewables group, our focus is to design and build production facilities for hydrogen and associated products, together with converting existing production facilities to produce products from renewable feedstock sources. These projects often utilize technologies that are more fuel efficient, and therefore reduce the associated carbon footprint of the facility. Our scope of work on these projects will typically include front-end development, engineering, procurement, mechanical fabrication, automation and commissioning services, and may be performed in conjunction with a construction partner. Our Automation group provides the design and programming of automated control systems as well as designs, fabricates, integrates and commissions modular systems that include remote instrumentation control stations, on-line process analytical data, continuous emission monitoring, and electric power distribution. Often these packaged systems are housed in a fabricated metal enclosure, modular building or freestanding metal rack, which are commonly included in our scope of work. We provide automation engineering, procurement, fabrication, systems integration, programing and on-site commissioning services to our clients for both new and existing facilities. Our Oil, Gas, and Petrochemicals group focuses on providing engineering, procurement, construction, and automation services as well as fabricated products to downstream refineries and petrochemical facilities as well as midstream pipeline, storage and other transportation related companies. These services are often applied to small capital improvement and maintenance projects within refineries and petrochemical facilities. For our transportation clients, we work on facilities that include pumping, compression, gas processing, metering, storage terminals, product loading and blending systems. In addition, this group designs, programs and maintains supervisory control and data acquisition (“SCADA”) systems for our transportation clients. This group also provides engineering, fabrication and automation services to clients who have operations in the U.S. oil and gas exploration and development markets. The operations are usually associated with the completion, purification, storage and transmission of the oil and gas from the well head to the terminal or pipeline destination. Our Government Services group provides services related to the engineering, design, installation and maintenance of automated fuel handling and tank gauging systems for the U.S. military across the globe. We have two reportable segments: Commercial and Government Services. Our Renewables, Automation, and Oil, Gas, and Petrochemical groups are aggregated into one reportable segment, Commercial. Our corporate and other expenses that do not individually meet the criteria for segment reporting are reported separately as Corporate expenses. Revenue, operating income, identifiable assets, capital expenditures and depreciation 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 include costs related to business development, executive functions, finance, accounting, safety, human resources and information technology that are not specifically identifiable with the segments. The segment information for the year ended December 26, 2020 has been recast to align with our current reportable segments. Segment information for the years ended December 25, 2021 and December 26, 2020 are as follows (amounts in thousands): For the year ended December 25, 2021: Commercial Government Corporate Consolidated Operating revenues $ 27,986 $ 8,424 $ - $ 36,410 Operating income (loss) (8,599 ) 32 (4,909 ) (13,476 ) Depreciation and amortization 394 14 153 561 Tangible assets 12,516 3,068 25,746 41,330 Goodwill - 720 - 720 Other intangible assets 19 - - 19 Total assets 12,535 3,788 25,746 42,069 Capital expenditures 58 - 182 240 For the year ended December 26, 2020: Commercial Government Corporate Consolidated Operating revenues $ 54,368 $ 10,081 $ - $ 64,449 Operating income (loss) 3,570 885 (4,838 ) (383 ) Depreciation and amortization 320 12 117 449 Tangible assets 11,111 2,431 16,157 29,699 Goodwill - 720 - 720 Other intangible assets 19 - - 19 Total assets 11,130 3,151 16,157 30,438 Capital expenditures 148 12 268 428 |
EMPLOYEE RETENTION CREDIT
EMPLOYEE RETENTION CREDIT | 12 Months Ended |
Dec. 25, 2021 | |
EMPLOYEE RETENTION CREDIT | |
EMPLOYEE RETENTION CREDIT | NOTE 15 - EMPLOYEE RETENTION CREDIT Pursuant to the CARES Act, the Company is eligible for an employee retention credit subject to certain criteria. Since there are no generally accepted accounting principles for for-profit business entities that receive government assistance that is not in the form of a loan, an income tax credit or revenue from a contract with a customer, we determined the appropriate accounting treatment by analogy to other guidance. We accounted for the employee retention credit by analogy to International Accounting Standards (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, of International Financial Reporting Standards (IFRS). Under an IAS 20 analogy, a business entity would recognize the employee retention credit on a systematic basis over the periods in which the entity recognizes the payroll expenses for which the grant (i.e., tax credit) is intended to compensate when there is reasonable assurance (i.e., it is probable) that the entity will comply with any conditions attached to the grant and the grant (i.e., tax credit) will be received. We have accounted for the $1.7 million and $1.4 million employee retention credits in the first and third quarters of 2021, respectively, as other income on the Statement of Operations and as a receivable on the Balance Sheet. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 25, 2021 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 16 - COMMITMENTS AND CONTINGENCIES Employment Agreements We have employment agreements with certain of our executive and other officers with severance terms ranging from six to twelve months. Such agreements provide for minimum salary levels. If employment is terminated for any reason other than 1) termination for cause, 2) voluntary resignation or 3) the employee’s death, we are obligated to provide a severance benefit equal to six months of the employee’s salary, and, at our option, an additional six months at 50% of the employee’s salary in exchange for an extension of a non-competition agreement. The terms of these agreements include evergreen provisions allowing for automatic renewal. No liability is recorded for our obligations under employment agreements as the amounts that will ultimately be paid cannot be reasonably estimated. Litigation From time to time, ENGlobal or one or more of its subsidiaries may be involved in various legal proceedings or may be 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. As of the date of this filing, management is not aware of any such claims against the Company or any subsidiary business entity. Insurance 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. |
STOCKHOLDERS EQUITY
STOCKHOLDERS EQUITY | 12 Months Ended |
Dec. 25, 2021 | |
Stockholders' Equity: | |
STOCKHOLDERS EQUITY | NOTE 17 - STOCKHOLDERS’ EQUITY On January 29, 2021, the Company entered into an at market issuance sales agreement (the “Prior ATM Agreement”) with B. Riley Securities, Inc. pursuant to which the Company may offer and sell shares of the Company’s common stock having an aggregate offering price of up to $25 million to or through B. Riley, as sales agent, from time to time, in an “at the market offering”. Under the Prior ATM Agreement, the Company will pay B. Riley an aggregate commission of 3% of the gross sales price per share of common stock sold under the Prior ATM Agreement. The Company is not obligated to make any sales under the Prior ATM Agreement and any determination by the Company to do so will be dependent, among other things, on market conditions and the Company’s capital raising needs. In April 2021, 400,538 shares of common stock were issued pursuant to the Prior ATM Agreement for net proceeds of approximately $1.4 million. On June 1, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) pursuant to which the Company sold and issued an aggregate of 7,142,859 shares of the Company’s common stock to certain institutional investors at an offering price of $2.80 per share in a registered direct offering priced at-the-market under NASDAQ rules for net proceeds of approximately $18.7 million after deducting the fees of A.G.P./Alliance Global Partners, the placement agent, and related offering expenses of approximately $1.3 million. |
LIQUIDITY
LIQUIDITY | Jan. 11, 2022 |
LIQUIDITY | |
LIQUIDITY | NOTE 18 – LIQUIDITY We define liquidity as our ability to pay liabilities as they become due, fund business operations and meet monetary contractual obligations. Our primary sources of liquidity are cash on hand, internally generated funds, sales of common stock pursuant to the ATM Agreement (defined below), and borrowings under the Revolving Credit Facility. On May 21, 2020, we entered into the Revolving Credit Facility pursuant to which the Lender agreed to extend credit of up to $6.0 million, subject to a credit limit. As of December 25, 2021, the credit limit under the Revolving Credit Facility was $2.4 million and outstanding borrowings were $1.0 million, which yields enough interest to cover our minimum monthly interest charge. As of December 25, 2021, we were in compliance with all of the covenants under the Revolving Credit Facility. On April 13, 2020, we obtained the PPP Loan, and on July 12, 2021, we received notification from our lender that the PPP Loan was forgiven in full by the U.S. Small Business Administration. For additional information on the Revolving Credit Facility and PPP Loan, see Note 7 – Debt In addition, on January 29, 2021, we filed a shelf registration statement on Form S-3 (the “Registration Statement”) with the SEC, pursuant to which we may offer and sell, at our option, securities having an aggregate offering price of up to $100 million. On January 29, 2021, we entered into an at market issuance sales agreement with B. Riley Securities, Inc., which was subsequently terminated pursuant to its terms on January 7, 2022. On June 1, 2021, sales and issuance of shares pursuant to Purchase Agreement provided net proceeds of approximately $18.7 million after deducting the fees of A.G.P./Alliance Global Partners, the placement agent, and related offering expenses. We believe our cash on hand, internally generated funds, availability under the Revolving Credit Facility and sales of common stock pursuant to the ATM Agreement, along with other working capital will be sufficient to fund our current operations and expected activity for the next twelve months. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 25, 2021 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 19 - SUBSEQUENT EVENTS Sales Agreement On January 7, 2022, the Company’s At Market Issuance Sales Agreement with B. Riley Securities, Inc. was terminated pursuant to its terms. On January 11, 2022, we entered into a sales agreement (the “ATM Agreement”) with Lake Street Capital Markets, LLC (“Lake Street”) pursuant to which we may offer and sell shares of our common stock having an aggregate offering price of up to $30 million to or through Lake Street, as sales agent, from time to time, in an “at the market offering”. The Company is not obligated to make any sales under the agreement and any determination by the Company to do so will be dependent, among other things, on market conditions and the Company’s capital raising needs. The Company is not obligated to make any sales under the agreement and any determination by the Company to do so will be dependent, among other things, on market conditions and the Company’s capital raising needs. Upon the filing of this Annual Report on Form 10-K, our registration statement on Form S-3 (File No. 333-252572), including the accompanying prospectus and related prospectus supplements related to the “at the market offering”, is subject to the provisions of General Instruction I.B.6 of Form S-3, which provides that we may not sell securities in a public primary offering with a value exceeding one-third of our public float in any twelve-month period unless our public float is at least $75 million. As of March 7, 2022, the Company’s public float (i.e., the aggregate market value of its outstanding equity securities held by non-affiliates) was approximately $56.1 million, based on the closing price per share of our common stock as reported on the Nasdaq Capital Market on March 7, 2022, as calculated in accordance with General Instruction I.B.6 of Form S-3. If our public float meets or exceeds $75 million at any time, we will no longer be subject to the restrictions set forth in General Instruction I.B.6 of Form S-3, at least until the filing of our next Section 10(a)(3) update as required under the Securities Act. |
ACCOUNTING POLICIES AND NEW A_2
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS (Policies) | 12 Months Ended |
Dec. 25, 2021 | |
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS | |
Consolidation Policy | Consolidation Policy - |
Fair Value Measurements | Fair Value Measurements - |
Cash and Cash Equivalents | Cash and cash equivalents - |
Receivables | Receivables - |
Concentration of Credit Risk | Concentration of Credit Risk - Our businesses or product lines are largely dependent on a few relatively large customers. Although we believe we have an extensive customer base, the loss of one of these large customers or if such customers were to incur a prolonged period of decline in business, our financial condition and results of operations could be adversely affected. Two customers provided more than 10% each of our consolidated operating revenues for the year ended December 25, 2021 (30.5% and 22.6%). For the year ended December 26, 2020, four customers provided more than 10% each of our consolidated operating revenues (25.1%, 17.9%, 13.9%, and 13.8%). Amounts included in trade receivables related to these customers totaled $0.1 million and $1.2 million, respectively, at December 25, 2021 and $0.0 million, $0.6 million, $0.8 million and $1.5 million, respectively, at December 26, 2020. We extend credit to customers in the normal course of business. We have established various procedures to manage our credit exposure, including initial credit approvals, credit limits and terms, letters of credit, and occasionally through rights of offset. We also use prepayments and guarantees to limit credit risk to ensure that our established credit criteria are met. Our most significant exposure to credit risks relates to situations under which we provide services early in the life of a project that is dependent on financing. Risks increase in times of general economic downturns and under conditions that threaten project feasibility. |
Property and Equipment | Property and Equipment - Asset Group Years Shop equipment 5 - 10 Furniture and fixtures 5 - 7 Computer equipment; Autos and trucks 3 - 5 Software 3 - 5 Leasehold improvements are amortized over the remaining term of the related lease. See Note 4 for details related to property and equipment and related depreciation. Expenditures for maintenance and repairs are expensed as incurred. Upon disposition or retirement of property and equipment, any gain or loss is charged to operations. |
Goodwill | Goodwill - The Company compares its fair value of a reporting unit and the carrying value of the reporting unit to measure goodwill impairment. Fair value was determined by applying a historical earnings multiple times the cash flow of the operating unit after allocation of certain corporate overhead. Estimating the cash flow of the operating unit requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates and future market conditions, among others. It is possible that changes in market conditions, economy, facts, circumstances, judgments and assumptions used in estimating the fair value could change, resulting in possible impairment of goodwill in the future. We performed a qualitative assessment of goodwill for each of the years ended December 25, 2021 and December 26, 2020. This assessment indicated that there was no impairment of goodwill for the years ended December 25, 2021 and December 26, 2020. |
Impairment of Long-lived Assets | Impairment of Long-Lived Assets - |
Revenue Recognition | 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 on the labor portion of a project for revenue recognition to measure progress of our contracts because it best depicts the transfer of control to the customer which occurs as we consume the materials on the contracts. Therefore, revenues and estimated profits are recorded proportionally as labor 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 estimated. 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. |
Incremental Costs | Incremental Costs |
Income Taxes | Income Taxes - A valuation allowance is recorded to reduce previously recorded tax assets when it becomes more-likely-than-not such asset will not be realized. We evaluate the realizability of deferred tax assets based on all available evidence, both positive and negative, regarding historical operating results, including the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. We account for uncertain tax positions in accordance with ASC 740. When uncertain tax positions exist, we recognize the tax benefit of the tax positions to the extent that the benefit will more-likely-than-not be realized. The determination as to whether the tax benefit will more-likely-than-not be realized is based upon technical merits of the tax positions as well as consideration of the available facts and circumstances. The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. |
Earnings Per Share | Earnings per Share - |
Treasury Stock | Treasury Stock - |
Stock-Based Compensation | Stock-Based Compensation - The Company accounts for restricted stock awards granted to consultants using the accounting guidance included in ASC 505-50 “Equity-Based Payments to Non-Employees” (“ASC 505-50”). All transactions in which services are received in exchange for share-based awards are accounted for based on the fair value of the consideration received or the fair value of the awards issued, whichever is more reliably measurable. Share-based compensation is measured at fair value at the earlier of the commitment date or the date the services are completed. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 25, 2021 | |
PROPERTY AND EQUIPMENT | |
Property and equipment | 2021 2020 Computer equipment and software $ 1,397 $ 1,170 Shop equipment 2,252 1,683 Furniture and fixtures 197 193 Leasehold improvements 836 845 Autos and trucks 83 87 $ 4,765 $ 3,978 Accumulated depreciation and amortization (3,067 ) (2,715 ) Property and equipment, net $ 1,698 $ 1,263 |
ACCOUNTING POLICIES AND NEW A_3
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS (Tables) | 12 Months Ended |
Dec. 25, 2021 | |
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS | |
Estimated useful lives of assets | Asset Group Years Shop equipment 5 - 10 Furniture and fixtures 5 - 7 Computer equipment; Autos and trucks 3 - 5 Software 3 - 5 |
DETAIL OF CERTAIN BALANCE SHE_2
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (Tables) | 12 Months Ended |
Dec. 25, 2021 | |
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | |
Trade receivables | 2021 2020 Amounts billed $ 5,810 $ 5,050 Amounts unbilled 867 1,455 Retainage 2,688 1,670 Less: Allowance for uncollectible accounts (1,673 ) (386 ) Trade receivables, net $ 7,692 $ 7,789 |
Prepaid expenses and other current assets | 2021 2020 Prepaid expenses $ 917 $ 843 Other receivables - employee 41 48 Prepaid expenses and other current assets $ 958 $ 891 |
Other current liabilities | 2021 2020 Accrual for known contingencies $ 104 $ 215 Customer prepayments 4 4 Gross receipts tax payable 35 23 State income taxes payable 33 83 Insurance payable 491 420 Other current liabilities $ 667 $ 745 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 12 Months Ended |
Dec. 25, 2021 | |
REVENUE RECOGNITION | |
Revenue by contract type | For the Years Ended December 25, December 26, 2021 2020 Fixed-price revenue $ 21,205 $ 35,822 Time-and-material revenue 15,205 28,627 Total Revenue 36,410 64,449 |
CONTRACTS (Tables)
CONTRACTS (Tables) | 12 Months Ended |
Dec. 25, 2021 | |
CONTRACTS | |
Costs, estimated earnings and billings on uncompleted contracts | 2021 2020 Costs incurred on uncompleted contracts $ 36,429 $ 39,154 Estimated earnings on uncompleted contracts 4,866 4,388 Earned revenues 41,295 43,542 Less: billings to date 39,172 40,710 Net costs in excess of billings on uncompleted contracts $ 2,123 $ 2,832 Costs and estimated earnings in excess of billings on uncompleted contracts $ 4,177 $ 4,090 Billings in excess of costs and estimated earnings on uncompleted contracts (2,054 ) (1,258 ) Net costs in excess of billings on uncompleted contracts $ 2,123 $ 2,832 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 25, 2021 | |
DEBT | |
Debt | December 25, 2021 December 26, 2020 PPP Loan (1) $ - $ 4,949 Revolving Credit Facility (2) 1,035 1,491 Total debt 1,035 6,440 Amount due within one year - 3,707 Total long-term debt $ 1,035 $ 2,733 |
Maturities of debt | Revolving Credit Facility 2022 $ - 2023 1,035 Thereafter - $ 1,035 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 25, 2021 | |
LEASES | |
Lease expense | Financial Year ended Year ended Statement December 25, December 26, Classification 2021 2020 Finance leases: Amortization expense SG&A Expense $ 100 $ 92 Interest expense Interest expense, net 17 20 $ 117 $ 112 Operating leases: Operating costs Operating costs 507 633 Selling, general and administrative expenses SG&A Expense 1,728 1,830 $ 2,235 $ 2,463 Total lease expense $ 2,352 $ 2,575 |
Supplemental balance sheet information related to leases | Financial Statement December 25, December 26, Classification 2021 2020 ROU Assets: Operating leases Right of Use asset $ 4,251 $ 1,628 Finance leases Property and equipment, net 979 442 Total ROU Assets: $ 5,230 $ 2,070 Lease liabilities: Current liabilities Operating leases Current portion of leases $ 1,153 $ 1,421 Finance leases Current portion of leases 236 120 Noncurrent Liabilities: Operating leases Long Term Leases 3,269 286 Finance leases Long Term Leases 743 322 Total lease liabilities $ 5,401 $ 2,149 |
Weighted average remaining lease term and weighted average discount rate | December 25, 2021 December 26, 2020 Weighted average remaining lease term (years) Operating leases 4.8 1.2 Finance leases 4.4 4.2 Weighted average discount rate Operating leases 0.8 % 1.7 % Finance leases 2.1 % 5.8 % |
Maturities of operating lease liabilities |
STOCK COMPENSATION PLANS (Table
STOCK COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 25, 2021 | |
STOCK COMPENSATION PLANS | |
Nonvested restricted stock activity | Number of unvested restricted shares Weighted-average grant-date fair value Outstanding at December 26, 2020 145,296 $ 1.05 Granted 140,750 3.09 Vested 130,381 1.24 Forfeited 39,034 1.44 Outstanding at December 25, 2021 116,631 $ 3.07 |
Restricted stock and restricted stock units activity | Date Issued Issued to Number of Shares Market Price Fair Value March 9, 2021 Director (1) 5,656 $ 4.42 $ 25,000 March 9, 2021 Employees (10) 56,557 $ 4.42 $ 250,000 June 1, 2021 Employee (1) 2,778 $ 3.60 $ 10,000 August 26, 2021 Directors (3) 75,759 $ 1.98 $ 150,000 Date Issued Issued to Number of Shares Market Price Fair Value June 11, 2020 Directors (3) 147,060 $ 1.02 $ 150,000 |
FEDERAL AND STATE INCOME TAXES
FEDERAL AND STATE INCOME TAXES (Tables) | 12 Months Ended |
Dec. 25, 2021 | |
FEDERAL AND STATE INCOME TAXES | |
Components of our income tax expense | 2021 2020 Current: State 60 103 Total current 60 103 Deferred: Federal (35 ) (25 ) State 35 25 Total deferred - - Total income tax expense $ 60 $ 103 |
Effective income tax rate reconciliation | 2021 2020 Federal income tax (benefit) at statutory rate of 21% $ (1,181 ) $ (110 ) State income tax, net of federal income tax effect (43 ) 64 Nondeductible expenses (31 ) 29 Nontaxable PPP Loan Forgiveness (1,044 ) - State RTA (13 ) - Prior year adjustments and true-ups (32 ) 36 Change in valuation allowance 2,404 84 Total tax expense $ 60 $ 103 |
Deferred tax assets and (liabilities) | 2021 2020 Noncurrent Deferred tax assets Federal and state net operating loss carryforward $ 9,503 $ 7,036 Tax credit carryforwards 1,977 1,971 Allowance for uncollectible accounts 380 93 Accruals not yet deductible for tax purposes 488 613 Goodwill 236 364 Depreciation - 3 Lease payable 992 390 Total noncurrent deferred tax assets 13,576 10,470 Less: Valuation allowance (12,419 ) (10,016 ) Total noncurrent deferred tax assets, net $ 1,157 $ 454 Noncurrent deferred tax liabilities: Depreciation (49 ) - Other (126 ) (70 ) Right to use asset (982 ) (384 ) Total noncurrent deferred tax liabilities (1,157 ) (454 ) Net deferred tax assets/deferred tax Liabilities $ - $ - |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 25, 2021 | |
SEGMENT INFORMATION | |
Segment information | For the year ended December 25, 2021: Commercial Government Corporate Consolidated Operating revenues $ 27,986 $ 8,424 $ - $ 36,410 Operating income (loss) (8,599 ) 32 (4,909 ) (13,476 ) Depreciation and amortization 394 14 153 561 Tangible assets 12,516 3,068 25,746 41,330 Goodwill - 720 - 720 Other intangible assets 19 - - 19 Total assets 12,535 3,788 25,746 42,069 Capital expenditures 58 - 182 240 For the year ended December 26, 2020: Commercial Government Corporate Consolidated Operating revenues $ 54,368 $ 10,081 $ - $ 64,449 Operating income (loss) 3,570 885 (4,838 ) (383 ) Depreciation and amortization 320 12 117 449 Tangible assets 11,111 2,431 16,157 29,699 Goodwill - 720 - 720 Other intangible assets 19 - - 19 Total assets 11,130 3,151 16,157 30,438 Capital expenditures 148 12 268 428 |
ACCOUNTING POLICIES AND NEW A_4
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS (Details) | 12 Months Ended |
Dec. 25, 2021 | |
Shop Equipment | |
Estimated useful lives | 5 - 10 |
Furniture and Fixtures | |
Estimated useful lives | 5 - 7 |
Computer Equipment | |
Estimated useful lives | 3 - 5 |
Autos And Trucks | |
Estimated useful lives | 3 - 5 Years |
Software | |
Estimated useful lives | 3 - 5 |
ACCOUNTING POLICIES AND NEW A_5
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 25, 2021 | Dec. 26, 2020 | |
Concentration risk | 10.00% | 10.00% |
Trade receivables | $ 7,692,000 | $ 7,789,000 |
Revenue | Customer 1 | ||
Concentration risk | 30.50% | 25.10% |
Revenue | Customer 2 | ||
Concentration risk | 22.60% | 17.90% |
Revenue | Customer 3 | ||
Concentration risk | 13.90% | |
Revenue | Customer 4 | ||
Concentration risk | 13.80% | |
Trade Receivables | Customer 1 | ||
Trade receivables | $ 100,000 | $ 0 |
Trade Receivables | Customer 2 | ||
Trade receivables | $ 1,200 | 600,000 |
Trade Receivables | Customer 3 | ||
Trade receivables | 800,000 | |
Trade Receivables | Customer 4 | ||
Trade receivables | $ 1,500,000 |
DETAIL OF CERTAIN BALANCE SHE_3
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (Details) - USD ($) $ in Thousands | Dec. 25, 2021 | Dec. 26, 2020 |
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | ||
Amounts billed | $ 5,810 | $ 5,050 |
Amounts unbilled | 867 | 1,455 |
Retainage | 2,688 | 1,670 |
Less: allowance for uncollectible accounts | (1,673) | (386) |
Trade receivables, net | $ 7,692 | $ 7,789 |
DETAIL OF CERTAIN BALANCE SHE_4
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (Details 1) - USD ($) $ in Thousands | Dec. 25, 2021 | Dec. 26, 2020 |
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | ||
Prepaid expenses | $ 917 | $ 843 |
Other receivables - employee | 41 | 48 |
Prepaid expenses and other current assets | $ 958 | $ 891 |
DETAIL OF CERTAIN BALANCE SHE_5
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (Details 2) - USD ($) $ in Thousands | Dec. 25, 2021 | Dec. 26, 2020 |
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | ||
Accrual for known contingencies | $ 104 | $ 215 |
Customer prepayments | 4 | 4 |
Gross receipts tax payable | 35 | 23 |
State income taxes payable | 33 | 83 |
Insurance payable | 491 | 420 |
Other current liabilities | $ 667 | $ 745 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Dec. 25, 2021 | Dec. 26, 2020 |
Property and equipment, gross | $ 4,765 | $ 3,978 |
Accumulated depreciation and amortization | (3,067) | (2,715) |
Property and equipment, net | 1,698 | 1,263 |
Computer Equipment and Software | ||
Property and equipment, gross | 1,397 | 1,170 |
Shop Equipment | ||
Property and equipment, gross | 2,252 | 1,683 |
Furniture and Fixtures | ||
Property and equipment, gross | 197 | 193 |
Autos And Trucks | ||
Property and equipment, gross | 83 | 87 |
Leasehold Improvements | ||
Property and equipment, gross | $ 836 | $ 845 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 25, 2021 | Dec. 26, 2020 | |
PROPERTY AND EQUIPMENT | ||
Depreciation expense | $ 0.5 | $ 0.4 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 25, 2021 | Dec. 26, 2020 | |
Total revenue | $ 36,410 | $ 64,449 |
Fixed-Price Revenue | ||
Total revenue | 21,205 | 35,822 |
Time-and-Material Revenue | ||
Total revenue | $ 15,205 | $ 28,627 |
CONTRACTS (Details)
CONTRACTS (Details) - USD ($) $ in Thousands | Dec. 25, 2021 | Dec. 26, 2020 |
CONTRACTS | ||
Costs incurred on uncompleted contracts | $ 36,429 | $ 39,154 |
Estimated earnings on uncompleted contracts | 4,866 | 4,388 |
Earned revenues | 41,295 | 43,542 |
Less: billings to date | 39,172 | 40,710 |
Net costs and estimated earnings in excess of billings | 2,123 | 2,832 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 4,177 | 4,090 |
Billings in excess of costs and estimated earnings on uncompleted contracts | (2,054) | (1,258) |
Net costs in excess of billings on uncompleted contracts | $ 2,123 | $ 2,832 |
CONTRACTS (Details Narrative)
CONTRACTS (Details Narrative) - USD ($) $ in Millions | Dec. 25, 2021 | Dec. 26, 2020 |
CONTRACTS | ||
Deferred revenue | $ 0 | $ 0.3 |
Contingency amounts | $ 0.2 | $ 0.2 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | Dec. 25, 2021 | Dec. 26, 2020 |
DEBT | ||
PPP loan | $ 0 | $ 4,949 |
Revolving credit facility | 1,035 | 1,491 |
Total debt | 1,035 | 6,440 |
Amount due within one year | 0 | 3,707 |
Total long-term debt | $ 1,035 | $ 2,733 |
DEBT (Details 1)
DEBT (Details 1) - USD ($) $ in Thousands | Dec. 25, 2021 | Dec. 26, 2020 |
Long-term debt | $ 1,035 | $ 6,440 |
Revolving Credit Facility | ||
2022 | 0 | |
2023 | 1,035 | |
Thereafter | 0 | |
Long-term debt | $ 1,035 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) | Apr. 13, 2020 | May 21, 2020 | Dec. 25, 2021 | Dec. 26, 2020 |
Credit limit | $ 1,035,000 | $ 1,491,000 | ||
Revolving Credit Facility | ||||
Aggregate amount | $ 6,000,000 | |||
Credit limit | $ 2,000,000 | |||
Credit limit, Description | The credit limit is an amount equal to the lesser of (a) the Maximum Credit Limit and (b) the sum of (i) 85% of the Borrowers’ Eligible Accounts (as defined in the Revolving Credit Facility), plus (ii) the lesser of (A) 75% of the Borrowers’ Eligible Unbilled Accounts (as defined in the Revolving Credit Facility), or (B) $3,000,000 plus (iii) the lesser of (A) 20% of Borrowers’ Eligible Fixed Price Accounts, or (B) $250,000 | |||
Maturity Date | May 20, 2023 | |||
Interest Rate | 2.00% | |||
Loan Fee | 1.00% | |||
Termination Fee, Description | (i) 2.00% of the Maximum Credit Limit, if the termination occurs on or prior to the first anniversary of the Closing Date, (ii) 1.00% of the Maximum Credit Limit, if the termination occurs after the first anniversary of the Closing Date and on or prior to the second anniversary of the Closing Date and (iii) 0.05% of the Maximum Credit Limit, if the termination occurs after the second anniversary of the Closing Date | |||
P P P Loan And Revolving Credit Facility [Member] | ||||
Aggregate principal amount | $ 4,915,800 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 25, 2021 | Dec. 26, 2020 | |
Total finance lease expense | $ 117 | $ 112 |
Total operating lease expense | 2,235 | 2,463 |
Total lease expense | 2,352 | 2,575 |
SG&A Expense | ||
Total finance lease expense | 100 | 92 |
Total operating lease expense | 1,728 | 1,830 |
Interest Expense, Net | ||
Total finance lease expense | 17 | 20 |
Operating Costs | ||
Total operating lease expense | $ 507 | $ 633 |
LEASES (Details 1)
LEASES (Details 1) - USD ($) $ in Thousands | Dec. 25, 2021 | Dec. 26, 2020 |
ROU assets | $ 5,230 | $ 2,070 |
Current lease liabilities - operating leases | 1,153 | 1,421 |
Current lease liabilities - finance leases | 236 | 120 |
Noncurrent lease liabilities - operating leases | 3,269 | 286 |
Noncurrent lease liabilities - finance leases | 743 | 322 |
Total lease liabilities | 5,401 | 2,149 |
ROU assets - operating leases | 4,251 | 1,628 |
Property and Equipment, Net | ||
ROU assets - finance leases | 979 | 442 |
Right of Use Asset | ||
ROU assets - operating leases | $ 4,251 | $ 1,628 |
LEASES (Details 2)
LEASES (Details 2) | 12 Months Ended | |
Dec. 25, 2021 | Dec. 26, 2020 | |
LEASES | ||
Weighted average remaining lease term (years) - operating leases | 4 years 9 months 18 days | 1 year 2 months 12 days |
Weighted average discount rate - operating leases | 0.80% | 1.70% |
Weighted average remaining lease term (years) - finance leases | 4 years 4 months 24 days | 4 years 2 months 12 days |
Weighted average discount rate - finance leases | 2.10% | 5.80% |
LEASES (Details 3)
LEASES (Details 3) - USD ($) $ in Thousands | Dec. 25, 2021 | Dec. 26, 2020 |
Operating Leases | ||
2022 | $ 1,162 | |
2023 | 803 | |
2024 | 710 | |
2025 | 600 | |
2026 and thereafter | 1,185 | |
Total lease payments | 4,460 | |
Less: imputed interest | (37) | |
Total lease liabilities | 4,423 | |
Finance Leases | ||
2022 | 248 | |
2023 | 228 | |
2024 | 208 | |
2025 | 172 | |
2026 and thereafter | 142 | |
Total lease payments | 998 | |
Less: imputed interest | (20) | |
Total lease liabilities | 978 | |
Total | ||
2022 | 1,410 | |
2023 | 1,031 | |
2024 | 918 | |
2025 | 772 | |
2026 and thereafter | 1,327 | |
Total lease payments | 5,458 | |
Less: imputed interest | 57 | |
Total lease liabilities | $ 5,401 | $ 2,149 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 25, 2021 | Dec. 26, 2020 | |
EMPLOYEE BENEFIT PLANS | ||
Contributions by employer | $ 0 | $ 0 |
STOCK COMPENSATION PLANS (Detai
STOCK COMPENSATION PLANS (Details) | 12 Months Ended |
Dec. 25, 2021$ / sharesshares | |
STOCK COMPENSATION PLANS | |
Number of unvested restricted shares, beginning balance | 145,296 |
Number of unvested restricted shares, ending | 116,631 |
Number of unvested restricted shares, granted | 140,750 |
Number of unvested restricted shares, vested | (130,381) |
Number of unvested restricted shares, forfeited | (39,034) |
Weighted-average grant-date fair value, ending | $ / shares | $ 1.05 |
Weighted-average grant-date fair value, granted | $ / shares | 3.09 |
Weighted-average grant-date fair value, vested | $ / shares | 1.24 |
Weighted-average grant-date fair value, forfeited | $ / shares | $ 1.44 |
STOCK COMPENSATION PLANS (Det_2
STOCK COMPENSATION PLANS (Details 1) - USD ($) | 12 Months Ended | |
Dec. 25, 2021 | Dec. 26, 2020 | |
Restricted Stock | August 26, 2021 [Member] | ||
Shares issued to | Directors | |
Number of shares | 75,759 | |
Market price | $ 1.98 | |
Fair value | $ 150,000 | |
Restricted Stock | March 9, 2021 [Member] | ||
Shares issued to | Director | |
Number of shares | 5,656 | |
Market price | $ 4.42 | |
Fair value | $ 25,000 | |
Restricted Stock | June 1, 2021 [Member] | ||
Shares issued to | Employee | |
Number of shares | 2,778 | |
Market price | $ 3.60 | |
Fair value | $ 10,000 | |
Restricted Stock | June 11, 2020 [Member] | ||
Shares issued to | Directors | |
Number of shares | 147,060 | |
Market price | $ 1.02 | |
Fair value | $ 150,000 | |
Restricted Stock One [Member] | March 9, 2021 [Member] | ||
Shares issued to | Employees | |
Number of shares | 56,557 | |
Market price | $ 4.42 | |
Fair value | $ 250,000 |
STOCK COMPENSATION PLANS (Det_3
STOCK COMPENSATION PLANS (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 25, 2021 | Dec. 26, 2020 | |
Number of shares available to be issued pursuant to the Equity Plan | 1,399,365 | |
Non-cash stock-based compensation expense | $ 0.3 | $ 0.2 |
Unrecognized compensation cost related to unvested restricted stock awards | $ 0.3 | |
Unrecognized compensation cost related to unvested restricted stock awards, period of recognition | 2 years | |
Common stock shares | 35,230,675 | 27,560,686 |
Stock Compensation [Member] | ||
Common stock shares | 1,500,000 |
TREASURY STOCK (Details Narrati
TREASURY STOCK (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 25, 2021 | Apr. 21, 2015 | |
TREASURY STOCK | ||
Shares authorized | $ 2 | |
Purchased shares | 1,290,460 | |
Stock retired | $ (1,600,000) |
REDEEMABLE PREFERRED STOCK (Det
REDEEMABLE PREFERRED STOCK (Details Narrative) | Dec. 25, 2021$ / sharesshares |
TREASURY STOCK | |
Preferred stock, shares authorized | shares | 2,000,000 |
Preferred stock, par value | $ / shares | $ 0.001 |
FEDERAL AND STATE INCOME TAXE_2
FEDERAL AND STATE INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 25, 2021 | Dec. 26, 2020 | |
Current: | ||
State | $ 60 | $ 103 |
Total current | 60 | 103 |
Deferred: | ||
Federal | (35) | (25) |
State | 35 | 25 |
Total deferred | 0 | 0 |
Total income tax benefit | $ 60 | $ 103 |
FEDERAL AND STATE INCOME TAXE_3
FEDERAL AND STATE INCOME TAXES (Details 1) - USD ($) | 12 Months Ended | |
Dec. 25, 2021 | Dec. 26, 2020 | |
Federal income tax (benefit) at statutory rate of 21% | $ (1,181,000) | $ (110,000) |
Nondeductible expenses | (31,000) | 29,000 |
State RTA | (13,000) | 0 |
Prior year adjustments and true-ups | (32,000) | 36,000 |
Change in valuation allowance | 2,404,000 | 84,000 |
Total tax expenses | 60,000 | 103,000 |
State income tax, net of federal income tax effect | (43,000) | 44,000 |
Nontaxable PPP Loan Forgiveness | 4,949,000 | 0 |
Federal And State Income Taxes [Member] | ||
State income tax, net of federal income tax effect | (43,000) | 64,000 |
Nontaxable PPP Loan Forgiveness | $ (1,044,000) | $ 0 |
FEDERAL AND STATE INCOME TAXE_4
FEDERAL AND STATE INCOME TAXES (Details 2) - USD ($) | Dec. 25, 2021 | Dec. 26, 2020 |
FEDERAL AND STATE INCOME TAXES | ||
Federal and state net operating loss carryforward | $ 9,503,000 | $ 7,036,000 |
Tax credit carryforwards | 1,977,000 | 1,971,000 |
Allowance for uncollectible accounts | 380,000 | 93,000 |
Accruals not yet deductible for tax purposes | 488,000 | 613,000 |
Goodwill | 236,000 | 364,000 |
Depreciation | 0 | 3,000 |
Lease payable | 992,000 | 390,000 |
Total noncurrent deferred tax assets | 13,576,000 | 10,470,000 |
Less: valuation allowance | (12,419,000) | (10,016,000) |
Depreciation | 49 | 0 |
Total noncurrent deferred tax assets, net | 1,157,000 | 454,000 |
Other | (126,000) | (70,000) |
Right to use asset | (982,000) | (384,000) |
Total noncurrent deferred tax liabilities | (1,157,000) | (454,000) |
Net deferred tax assets/deferred tax liabilities | $ 0 | $ 0 |
FEDERAL AND STATE INCOME TAXE_5
FEDERAL AND STATE INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 25, 2021 | Dec. 26, 2020 | |
Provision for federal and state income taxes | $ (43) | $ 44 |
Effective income tax rate | 0.80% | 0.80% |
Valuation allowance | $ 2,400 | |
Decrease in effective tax rate | 42.80% | |
Description of taxable income | 80% of taxable income when utilized. For NOL’s incurred in tax year 2017 and prior, the limitation to 80% of taxable income does not apply, but the NOL’s are subject to expiration | |
Income tax expense | $ 60 | $ 103 |
Description of expire | expire in 2032 | |
Federal net operating loss carry-forward | $ 41,400 | |
Net loss | (5,685) | (625) |
Federal And State Income Taxes [Member] | ||
Provision for federal and state income taxes | (43) | 64 |
Net loss | $ 5,600 | $ 500 |
P P P Loan Forgiveness And Stock Compensation [Member] | ||
Effective income tax rate | 18.60% | 0.60% |
Tax expenses | $ 1,000 | $ 31 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 25, 2021 | Dec. 26, 2020 | |
Operating revenues | $ 36,410 | $ 64,449 |
Operating loss | (13,476) | (383) |
Depreciation and amortization | 561 | 449 |
Tangible assets | 41,330 | 29,699 |
Goodwill | 720 | 720 |
Other intangible assets | 19 | 19 |
Total assets | 42,069 | 30,438 |
Property and equipment acquired | 240 | 428 |
Commercial [Member] | ||
Operating revenues | 27,986 | 54,368 |
Operating loss | (8,599) | 3,570 |
Depreciation and amortization | 394 | 320 |
Tangible assets | 12,516 | 11,111 |
Goodwill | 0 | 0 |
Other intangible assets | 19 | 19 |
Total assets | 12,535 | 11,130 |
Property and equipment acquired | 58 | 148 |
Corporate | ||
Operating revenues | 0 | 0 |
Operating loss | (4,909) | (4,838) |
Depreciation and amortization | 153 | 117 |
Tangible assets | 25,746 | 16,157 |
Goodwill | 0 | 0 |
Other intangible assets | 0 | 0 |
Total assets | 25,746 | 16,157 |
Property and equipment acquired | 182 | 268 |
Government [Member] | ||
Operating revenues | 8,424 | 10,081 |
Operating loss | 32 | 885 |
Depreciation and amortization | 14 | 12 |
Tangible assets | 3,068 | 2,431 |
Goodwill | 720 | 720 |
Other intangible assets | 0 | 0 |
Total assets | 3,788 | 3,151 |
Property and equipment acquired | $ 0 | $ 12 |
EMPLOYEE RETENTION CREDIT (Deta
EMPLOYEE RETENTION CREDIT (Details Narrative) - USD ($) $ in Thousands | Sep. 25, 2021 | Mar. 27, 2021 |
EMPLOYEE RETENTION CREDIT (Details Narrative) | ||
Employee retention credit | $ 140 | $ 170 |
STOCKHOLDERS EQUITY (Details Na
STOCKHOLDERS EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Dec. 25, 2021 | Jun. 01, 2021 | Apr. 30, 2021 | Jan. 29, 2021 | |
ATM Agreement [Member] | ||||
Stock issued | 400,538 | |||
Proceeds from stock issued | $ 1.4 | |||
ATM Agreement [Member] | B. Riley Securities [Member] | ||||
Maximum offering price of common stock | $ 25 | |||
Percentage of gross sale price commission | 3.00% | |||
Purchase Agreement [Member] | ||||
Stock issued | 7,142,859 | |||
Proceeds from stock issued | 18.7 | |||
Offering price | $ 2.80 | |||
Proffessional fees | $ 1.3 |
LIQUIDITY (Details Narrative)
LIQUIDITY (Details Narrative) - USD ($) $ in Millions | Dec. 25, 2021 | Jun. 01, 2021 | Jan. 29, 2021 | May 21, 2020 |
LIQUIDITY (Details Narrative) | ||||
Revolving credit facility amount | $ 2.4 | $ 6 | ||
Outstanding borrowings amount | $ 1 | |||
Securities aggregate offering price | $ 100 | |||
Sales and issuance of shares pursuant to Purchase Agreement | $ 18.7 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | Jan. 11, 2022USD ($) |
SUBSEQUENT EVENTS | |
Aggregate offering price | $ 30,000,000 |
Public float value | $ 56,100,000 |
Sales agreement description | Upon the filing of this Annual Report on Form 10-K, our registration statement on Form S-3 (File No. 333-252572), including the accompanying prospectus and related prospectus supplements related to the “at the market offering”, is subject to the provisions of General Instruction I.B.6 of Form S-3, which provides that we may not sell securities in a public primary offering with a value exceeding one-third of our public float in any twelve-month period unless our public float is at least $75 million. As of March 7, 2022, the Company’s public float (i.e., the aggregate market value of its outstanding equity securities held by non-affiliates) was approximately $56.1 million, based on the closing price per share of our common stock as reported on the Nasdaq Capital Market on March 7, 2022, as calculated in accordance with General Instruction I.B.6 of Form S-3. If our public float meets or exceeds $75 million at any time, we will no longer be subject to the restrictions set forth in General Instruction I.B.6 of Form S-3, at least until the filing of our next Section 10(a)(3) update as required under the Securities Act. |