Englobal (ENGC) 10-Q 5 May 22 2022 Q1 Quarterly report Financial data

Cover

Cover - shares	3 Months Ended
	Mar. 26, 2022	May 05, 2022
Cover [Abstract]
Entity Registrant Name	ENGlobal Corporation
Entity Central Index Key	0000933738
Document Type	10-Q
Amendment Flag	false
Current Fiscal Year End Date	--12-28
Entity Small Business	true
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Document Period End Date	Mar. 26, 2022
Entity Filer Category	Non-accelerated Filer
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2022
Entity Common Stock Shares Outstanding		35,228,979
Document Quarterly 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
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

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Condensed Consolidated Statements of Operations (Unaudited)
Operating Revenues	$ 7,366	$ 12,449
Operating Costs	8,024	11,445
Gross Profit (loss)	(658)	1,004
Selling, General And Administrative Expenses	2,843	2,561
Operating Loss	(3,501)	(1,557)
Other Income (expense):
Other Income, Net	10	1,684
Interest Expense, Net	(51)	(58)
Income (loss) From Operations Before Income Taxes	(3,542)	69
Provision For Federal And State Income Taxes	78	23
Net Income (loss)	$ (3,620)	$ 46
Basic And Diluted Income (loss) Per Common Share:	$ (0.10)	$ 0
Basic And Diluted Weighted Average Shares Used In Computing Income Per Share:	35,231	27,557

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Mar. 26, 2022	Dec. 25, 2021
Current Assets:
Cash	$ 17,698,000	$ 19,202,000
Trade Receivables, Net Of Allowances Of $1,673 And $1,673	6,688,000	7,692,000
Prepaid Expenses And Other Current Assets	619,000	958,000
Payroll Tax Receivable	2,003,000	3,065,000
Contract Assets	3,161,000	4,177,000
Total Current Assets	30,169,000	35,094,000
Property And Equipment, Net	1,571,000	1,698,000
Goodwill	720,000	720,000
Other Assets
Right Of Use Asset	4,290,000	4,251,000
Deposits And Other Assets	292,000	306,000
Total Other Assets	4,582,000	4,557,000
Total Assets	37,042,000	42,069,000
Current Liabilities:
Accounts Payable	1,574,000	2,001,000
Accrued Compensation And Benefits	1,700,000	2,183,000
Current Portion Of Leases	1,413,000	1,389,000
Contract Liabilities	1,631,000	2,054,000
Current Portion Of Deferred Payroll Tax	537,000	537,000
Other Current Liabilities	533,000	667,000
Total Current Liabilities	7,388,000	8,831,000
Long-term Debt	1,136,000	1,035,000
Long-term Leases	3,943,000	4,012,000
Total Liabilities	12,467,000	13,878,000
Stockholders' Equity:
Common Stock - $0.001 Par Value; 75,000,000 Shares Authorized; 35,230,675 Shares Issued And Outstanding At March 26, 2022 And At December 25, 2021	35,000	35,000
Additional Paid-in Capital	57,407,000	57,403,000
Accumulated Deficit	(32,867,000)	(29,247,000)
Total Stockholders' Equity	24,575,000	28,191,000
Total Stockholders' Equity	24,575,000	28,191,000
Total Liabilities And Stockholders' Equity	$ 37,042,000	$ 42,069,000

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
Condensed Consolidated Balance Sheets
Trade Receivables, Allowances	$ 1,673	$ 1,673
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	35,230,675
Common Stock, Shares Outstanding	35,230,675	35,230,675

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Cash Flows From Operating Activities:
Net Income (loss)	$ (3,620)	$ 46
Adjustments To Reconcile Net Income (loss) To Net Cash Provided By (used In) Operating Activities:
Depreciation And Amortization	201	82
Share-based Compensation Expense	56	45
Changes In Current Assets And Liabilities:
Trade Accounts Receivable	1,004	(1,322)
Contract Assets	1,016	2,768
Other Current Assets	1,415	(1,307)
Accounts Payable	(427)	13
Accrued Compensation And Benefits	(483)	(876)
Contract Liabilities	(423)	976
Income Taxes Payable	77	19
Other Current Liabilities, Net	(211)	(167)
Net Cash Provided By (used In) Operating Activities	(1,395)	277
Cash Flows From Investing Activities:
Property And Equipment Acquired	(23)	(57)
Net Cash Used In Investing Activities	(23)	(57)
Cash Flows From Financing Activities:
At-the-market Offering Costs	(52)	0
Payments On Finance Leases	(134)	(36)
Interest On Ppp Loan	0	12
Proceeds From Revolving Credit Facility, Net	100	25
Net Cash Provided By (used In) Financing Activities	(86)	1
Net Change In Cash	(1,504)	221
Cash At Beginning Of Period	19,202	13,706
Cash At End Of Period	17,698	13,927
Supplemental Disclosure Of Cash Flow Information:
Cash Paid During The Period For Interest	51	58
Right Of Use Assets Obtained In Exchange For New Operating Lease Liability	354	256
Cash Paid During The Period For Income Taxes (net Of Refunds)	$ 0	$ 1

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Stockholders Equity (Unaudited) - USD ($)	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit
Balance, Amount at Dec. 26, 2020	$ 13,714,000	$ 28,000	$ 37,157,000	$ (23,562,000)
At-the-market Offering Costs			0
Share-based Compensation - Employees			45,000
Net Income (loss)	46,000			46,000
Balance, Amount at Mar. 27, 2021	13,714,000	28,000	37,202,000	(23,516,000)
Balance, Amount at Dec. 25, 2021	28,191,000	35,000	57,403,000	(29,247,000)
At-the-market Offering Costs			(52,000)
Share-based Compensation - Employees			56,000
Net Income (loss)	(3,620,000)			(3,620,000)
Balance, Amount at Mar. 26, 2022	$ 24,575,000	$ 35,000	$ 57,407,000	$ (32,867,000)

BASIS OF PRESENTATION

BASIS OF PRESENTATION	3 Months Ended
	Mar. 26, 2022
BASIS OF PRESENTATION
Basis Of Presentation	NOTE 1 – BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of ENGlobal Corporation (which may be referred to as “ENGlobal,” the “Company,” “we,” “us,” or “our”) were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, these condensed financial statements do not include all of the information or note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP. These condensed financial statements should be read in conjunction with the audited financial statements for the year ended December 25, 2021, included in the Company’s 2021 Annual Report on Form 10-K filed with the SEC. The condensed financial statements included herein are unaudited for the three month periods ended March 26, 2022 and March 27, 2021, and in the case of the condensed balance sheet as of December 25, 2021 have been derived from the audited financial statements of the Company. These financial statements reflect all adjustments (consisting of normal recurring adjustments), which are, in the opinion of management, necessary to fairly present the results for the periods presented. The Company has assessed subsequent events through the date of filing of these condensed financial statements with the SEC and believes that the disclosures made herein are adequate to make the information presented herein not misleading. We had no items of other comprehensive income in any period presented; therefore, no other components of comprehensive income are presented. For our fiscal year 2022, our first, second, and third quarters will be comprised of 13 weeks each, and our fourth quarter will be comprised of 14 weeks.

ACCOUNTING STANDARDS

ACCOUNTING STANDARDS	3 Months Ended
	Mar. 26, 2022
ACCOUNTING STANDARDS
Accounting Standards	NOTE 2 – ACCOUNTING STANDARDS 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.

REVENUE RECOGNITION

REVENUE RECOGNITION	3 Months Ended
	Mar. 26, 2022
REVENUE RECOGNITION
Revenue Recognition	NOTE 3 – REVENUE RECOGNITION Our revenue by contract type was as follows (dollars in thousands): For the Three Months Ended March 26, 2022 March 27, 2021 Fixed-price revenue $ 5,208 $ 8,265 Time-and-material revenue 2,158 4,184 Total Revenue 7,366 12,449

CONTRACT ASSETS AND CONTRACT LI

CONTRACT ASSETS AND CONTRACT LIABILITIES	3 Months Ended
	Mar. 26, 2022
CONTRACT ASSETS AND CONTRACT LIABILITIES
Contract Assets And Contract Liabilities	NOTE 4 – CONTRACT ASSETS AND CONTRACT LIABILITIES Our contract assets consist of unbilled amounts typically resulting from sales under long-term contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. Our contract liabilities consist of advance payments and billings in excess of costs incurred. Costs, estimated earnings and billings on uncompleted contracts consisted of the following (dollars in thousands): March 26, 2022 December 25, 2021 Costs incurred on uncompleted contracts $ 40,464 $ 36,429 Estimated earnings on uncompleted contracts 4,847 4,866 Earned revenues 45,311 41,295 Less: billings to date 43,781 39,172 Net costs and estimated earnings in excess of billings (billings in excess of costs) on uncompleted contracts $ 1,530 $ 2,123 Contract assets $ 3,161 $ 4,177 Contract liabilities (1,631 ) (2,054 ) Net contract assets $ 1,530 $ 2,123

DEBT

DEBT	3 Months Ended
	Mar. 26, 2022
DEBT
Debt	NOTE 5 – DEBT The components of debt were as follows (dollars in thousands): March 26, 2022 December 25, 2021 Revolving Credit Facility (1) $ 1,136 $ 1,035 Amount due within one year — — Total long-term debt $ 1,136 $ 1,035 (1) 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 Loan Fee Termination Fee Covenants The future scheduled maturities of our debt are (in thousands): Revolving Credit Facility 2022 $ - 2023 1,136 2024 and thereafter — $ 1,136

SEGMENT INFORMATION

SEGMENT INFORMATION	3 Months Ended
	Mar. 26, 2022
SEGMENT INFORMATION
Segment Information	NOTE 6 – SEGMENT INFORMATION 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) Energy & Renewables, (ii) Automation, (iii) Oil, Gas, and Petrochemicals, and (iv) Government Services. Within the Energy & 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 Energy & Renewables, Automation, and Oil, Gas, and Petrochemical groups are aggregated into one reportable segment, Commercial. Revenues, operating income, and identifiable assets for each segment are set forth in the following table. The amount identified as Corporate includes those activities that are not allocated to the operating segments and includes costs related to business development, executive functions, finance, accounting, safety, human resources and information technology. Segment information is as follows (dollars in thousands): Commercial Government Services Corporate Consolidated For the three months ended March 26, 2022: Revenue $ 5,403 $ 1,963 $ - $ 7,366 Gross profit (loss) (924 ) 266 - (658 ) Gross profit (loss) margin (17.1 )% 13.6 % (8.9 )% SG&A 1,491 218 1,134 2,843 Operating income (loss) (2,415 ) 48 (1,134 ) (3,501 ) Other income, net 10 Interest expense, net (51 ) Tax expense (78 ) Net loss (3,620 ) Commercial Government Services Corporate Consolidated For the three months ended March 27, 2021: Revenue $ 10,048 $ 2,401 $ - $ 12,449 Gross profit 915 89 - 1,004 Gross profit margin 9.1 % 3.7 % 8.1 % SG&A 1,294 209 1,058 2,561 Operating loss (379 ) (120 ) (1,058 ) (1,557 ) Other income, net 1,684 Interest expense, net (58 ) Tax expense (23 ) Net income 46 Total assets by segment are as follows (dollars in thousands): Total Assets by Segment As of March 26, 2022 As of December 25, 2021 (dollars in thousands) Commercial $ 12,153 $ 12,535 Government Services 2,287 3,788 Corporate 22,602 25,746 Consolidated $ 37,042 $ 42,069

FEDERAL AND STATE INCOME TAXES

FEDERAL AND STATE INCOME TAXES	3 Months Ended
	Mar. 26, 2022
FEDERAL AND STATE INCOME TAXES
Federal And State Income Taxes	NOTE 7 – FEDERAL AND STATE INCOME TAXES The Company accounts for income taxes in accordance with FASB Accounting Standards Codification 740, “Income Taxes” (“ASC 740”). Under ASC 740-270 we estimate an annual effective tax rate based on year-to-date operating results and our projection of operating results for the remainder of the year. We apply this annual effective tax rate to the year-to-date operating results. If our actual results differ from the estimated annual projection, our estimated annual effective tax rate can change affecting the tax expense for successive interim results as well as the estimated annual tax expense results. Certain states are not included in the calculation of the estimated annual effective tax rate because the underlying basis for the tax is related to revenues and not taxable income. Amounts for Texas margin taxes are reported as income tax expense. The Company applies a more likely than not recognition threshold for all tax uncertainties. The FASB guidance for uncertain tax positions only allows the recognition of those tax benefits, based on their technical merits that are greater than 50 percent likelihood of being sustained upon examination by the taxing authorities. Management has reviewed the Company’s tax positions and determined there are no uncertain tax positions requiring recognition in the financial statements. U.S. federal tax returns prior to 2017 and Texas margins tax returns prior to 2017 are closed. Generally, the applicable statues of limitations are three to four years from their filings. The Company recorded income tax expense of $78 thousand for the three months ended March 26, 2022 as compared to income tax expense of $23 thousand for the three months ended March 27, 2021. The effective income tax rate for the three months ended March 26, 2022 was (2.2)% as compared to 33.3% for the three months ended March 27, 2021. The effective tax rate differed from the federal statutory rate of 21% primarily due to the effect of the valuation allowances related to the expected unrealized deferred tax asset generated by the current year benefit.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	3 Months Ended
	Mar. 26, 2022
COMMITMENTS AND CONTINGENCIES
Commitments And Contingencies	NOTE 8 – COMMITMENTS AND CONTINGENCIES From time to time, ENGlobal or one or more of its subsidiaries is involved in various legal proceedings or is subject to claims that arise in the ordinary course of business alleging, among other things, claims of breach of contract or negligence in connection with the performance or delivery of goods and/or services. The outcome of any such claims or proceedings cannot be predicted with certainty. Management is not aware of any pending or threatened lawsuits or proceedings that are expected to have a material effect on our financial position, results of operations or liquidity. We carry a broad range of insurance coverage, including general and business automobile liability, commercial property, professional errors and omissions, workers’ compensation insurance, directors’ and officers’ liability insurance and a general umbrella policy, all with standard self-insured retentions/deductibles. We also provide health insurance to our employees (including vision and dental) which is partially self-funded for these claims. Provisions for expected future payments are accrued based on our experience, and specific stop loss levels provide protection for the Company. We believe we have adequate reserves for the self-funded portion of our insurance policies. We are not aware of any material litigation or claims that are not covered by these policies or which are likely to materially exceed the Company’s insurance limits.

LEASES

LEASES	3 Months Ended
	Mar. 26, 2022
LEASES
Leases	NOTE 9 – LEASES The components of lease expense were as follows (dollars in thousands): Financial Statement Three Months Ended Classification March 26, 2022 March 27, 2021 Finance leases: Amortization expense SG&A Expense $ 53 $ 19 Interest expense Interest expense, net 11 4 Total finance lease expense 64 23 Operating leases: Operating costs Operating costs 45 152 Selling, general and administrative expenses SG&A Expense 411 449 Total operating lease expense 456 601 Total lease expense $ 520 $ 624 Supplemental balance sheet information related to leases was as follows (dollars in thousands): Financial Statement Classification March 26, 2022 December 25, 2021 ROU Assets: Operating leases Right of use asset $ 4,290 $ 4,251 Finance leases Property and equipment, net 854 979 Total ROU Assets: $ 5,144 $ 5,230 Lease liabilities: Current liabilities Operating leases Current portion of leases $ 1,206 $ 1,153 Finance leases Current portion of leases 207 236 Noncurrent Liabilities: Operating leases Long-term leases 3,296 3,269 Finance leases Long-term leases 647 743 Total lease liabilities $ 5,356 $ 5,401 The weighted average remaining lease term and weighted average discount rate were as follows: At March 26, 2022 Weighted average remaining lease term (years) Operating leases 4.9 Finance leases 4.2 Weighted average discount rate Operating leases 0.9 % Finance leases 8.5 % Maturities of operating lease liabilities as of March 26, 2022 are as follows (dollars in thousands): Years ending: Operating leases Finance leases Total 2022 (remaining months) 994 181 1,175 2023 921 228 1,149 2024 828 208 1,036 2025 618 173 791 2026 370 144 514 2027 and thereafter 815 - 815 Total lease payments 4,546 934 5,480 Less: imputed interest (44 ) (80 ) (124 ) Total lease liabilities $ 4,502 $ 854 $ 5,356

EMPLOYEE RETENTION CREDIT

EMPLOYEE RETENTION CREDIT	3 Months Ended
	Mar. 26, 2022
EMPLOYEE RETENTION CREDIT
Employee Retention Credit	NOTE 10 – EMPLOYEE RETENTION CREDIT Pursuant to the CARES Act, the Company is eligible for an employee retention credit subject to certain criteria. Since there is no US GAAP guidance 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. During the first quarter of 2022, we received a partial refund for the 2021 first quarter employee retention credit for our ENGlobal U.S., Inc. subsidiary.

STOCKHOLDERS EQUITY

STOCKHOLDERS EQUITY	3 Months Ended
	Mar. 26, 2022
Stockholders' Equity:
Stockholders Equity	NOTE 11 – STOCKHOLDERS’ EQUITY On January 29, 2021, the Company entered into an at market issuance sales agreement (the “At Market Issuance Sales Agreement”) with B. Riley Securities, Inc. (“B. Riley”) pursuant to which the Company could 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 At Market Issuance Sales Agreement, the Company paid B. Riley an aggregate commission of 3% of the gross sales price per share of common stock sold under the agreement. The Company was not obligated to make any sales under the At Market Issuance Sales Agreement. In April 2021, 400,538 shares of the Company’s common stock were issued and sold pursuant to the At Market Issuance Sales Agreement for net proceeds of approximately $1.4 million. On January 7, 2022, the At Market Issuance Sales Agreement was terminated pursuant to its terms. On June 1, 2021, the Company entered into a securities purchase agreement (the “Purchase Agreement”) pursuant to which the Company issued and sold 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. On January 11, 2022, the Company entered into a sales agreement (the “ATM Agreement”) with Lake Street Capital Markets, LLC (“Lake Street”) pursuant to which the Company may offer and sell shares of its 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. Upon the filing with the SEC on March 11, 2022 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2021, the Company’s 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”, became subject to the provisions of General Instruction I.B.6 of Form S-3, which provides that the Company may not sell securities in a public primary offering with a value exceeding one-third of its public float in any twelve-month period unless its 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 the Company’s 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 the Company’s public float meets or exceeds $75 million at any time, the Company 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 its next Section 10(a)(3) update as required under the Securities Act. During the first quarter of 2022, $0.1 million in direct costs related to ATM agreement were recorded as a reduction of equity.

LIQUIDITY

LIQUIDITY	3 Months Ended
	Mar. 26, 2022
LIQUIDITY
Liquidity	NOTE 12 – 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. As of March 26, 2022, the credit limit under the Revolving Credit Facility was $1.1 million and outstanding borrowings were $1.1 million, which yields enough interest to cover our minimum monthly interest charge. As of March 26, 2022, we were in compliance with all of the covenants under the Revolving Credit Facility. For additional information on the Revolving Credit Facility, see Part I, Item 1, Note 5 – Debt 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. Upon the filing with the SEC on March 11, 2022 of our Annual Report on Form 10-K for the fiscal year ended December 25, 2021, 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”, became 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. 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.

REVENUE RECOGNITION (Tables)

REVENUE RECOGNITION (Tables)	3 Months Ended
	Mar. 26, 2022
REVENUE RECOGNITION
Revenue By Contract Type	For the Three Months Ended March 26, 2022 March 27, 2021 Fixed-price revenue $ 5,208 $ 8,265 Time-and-material revenue 2,158 4,184 Total Revenue 7,366 12,449

CONTRACTS (Tables)

CONTRACTS (Tables)	3 Months Ended
	Mar. 26, 2022
CONTRACT ASSETS AND CONTRACT LIABILITIES
Costs, Estimated Earnings And Billings On Uncompleted Contracts	March 26, 2022 December 25, 2021 Costs incurred on uncompleted contracts $ 40,464 $ 36,429 Estimated earnings on uncompleted contracts 4,847 4,866 Earned revenues 45,311 41,295 Less: billings to date 43,781 39,172 Net costs and estimated earnings in excess of billings (billings in excess of costs) on uncompleted contracts $ 1,530 $ 2,123 Contract assets $ 3,161 $ 4,177 Contract liabilities (1,631 ) (2,054 ) Net contract assets $ 1,530 $ 2,123

DEBT (Tables)

DEBT (Tables)	3 Months Ended
	Mar. 26, 2022
DEBT
Debt	March 26, 2022 December 25, 2021 Revolving Credit Facility (1) $ 1,136 $ 1,035 Amount due within one year — — Total long-term debt $ 1,136 $ 1,035
Maturities Of Debt	Revolving Credit Facility 2022 $ - 2023 1,136 2024 and thereafter — $ 1,136

SEGMENT INFORMATION (Tables)

SEGMENT INFORMATION (Tables)	3 Months Ended
	Mar. 26, 2022
SEGMENT INFORMATION
Segment Information	Commercial Government Services Corporate Consolidated For the three months ended March 26, 2022: Revenue $ 5,403 $ 1,963 $ - $ 7,366 Gross profit (loss) (924 ) 266 - (658 ) Gross profit (loss) margin (17.1 )% 13.6 % (8.9 )% SG&A 1,491 218 1,134 2,843 Operating income (loss) (2,415 ) 48 (1,134 ) (3,501 ) Other income, net 10 Interest expense, net (51 ) Tax expense (78 ) Net loss (3,620 ) Commercial Government Services Corporate Consolidated For the three months ended March 27, 2021: Revenue $ 10,048 $ 2,401 $ - $ 12,449 Gross profit 915 89 - 1,004 Gross profit margin 9.1 % 3.7 % 8.1 % SG&A 1,294 209 1,058 2,561 Operating loss (379 ) (120 ) (1,058 ) (1,557 ) Other income, net 1,684 Interest expense, net (58 ) Tax expense (23 ) Net income 46 Total Assets by Segment As of March 26, 2022 As of December 25, 2021 (dollars in thousands) Commercial $ 12,153 $ 12,535 Government Services 2,287 3,788 Corporate 22,602 25,746 Consolidated $ 37,042 $ 42,069

LEASES (Tables)

LEASES (Tables)	3 Months Ended
	Mar. 26, 2022
LEASES
Lease Expense	Financial Statement Three Months Ended Classification March 26, 2022 March 27, 2021 Finance leases: Amortization expense SG&A Expense $ 53 $ 19 Interest expense Interest expense, net 11 4 Total finance lease expense 64 23 Operating leases: Operating costs Operating costs 45 152 Selling, general and administrative expenses SG&A Expense 411 449 Total operating lease expense 456 601 Total lease expense $ 520 $ 624
Supplemental Balance Sheet Information Related To Leases	Financial Statement Classification March 26, 2022 December 25, 2021 ROU Assets: Operating leases Right of use asset $ 4,290 $ 4,251 Finance leases Property and equipment, net 854 979 Total ROU Assets: $ 5,144 $ 5,230 Lease liabilities: Current liabilities Operating leases Current portion of leases $ 1,206 $ 1,153 Finance leases Current portion of leases 207 236 Noncurrent Liabilities: Operating leases Long-term leases 3,296 3,269 Finance leases Long-term leases 647 743 Total lease liabilities $ 5,356 $ 5,401
Weighted Average Remaining Lease Term And Weighted Average Discount Rate	At March 26, 2022 Weighted average remaining lease term (years) Operating leases 4.9 Finance leases 4.2 Weighted average discount rate Operating leases 0.9 % Finance leases 8.5 %
Maturities Of Operating Lease Liabilities	Years ending: Operating leases Finance leases Total 2022 (remaining months) 994 181 1,175 2023 921 228 1,149 2024 828 208 1,036 2025 618 173 791 2026 370 144 514 2027 and thereafter 815 - 815 Total lease payments 4,546 934 5,480 Less: imputed interest (44 ) (80 ) (124 ) Total lease liabilities $ 4,502 $ 854 $ 5,356

REVENUE RECOGNITION (Details)

REVENUE RECOGNITION (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Total Revenue	$ 7,366	$ 12,449
Fixed-Price Revenue
Total Revenue	5,208	8,265
Time-and-Material Revenue
Total Revenue	$ 2,158	$ 4,184

CONTRACT ASSETS AND CONTRACT _2

CONTRACT ASSETS AND CONTRACT LIABILITIES (Details) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
CONTRACT ASSETS AND CONTRACT LIABILITIES
Costs Incurred On Uncompleted Contracts	$ 40,464	$ 36,429
Estimated Earnings On Uncompleted Contracts	4,847	4,866
Earned Revenues	45,311	41,295
Less: Billings To Date	43,781	39,172
Net Costs And Estimated Earnings In Excess Of Billings (billings In Excess Of Costs) On Uncompleted Contracts	1,530	2,123
Contract Assets	3,161	4,177
Contract Liabilities	(1,631)	(2,054)
Net Contract Assets	$ 1,530	$ 2,123

DEBT (Details)

DEBT (Details) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
DEBT (Details)
Revolving Credit Facility	$ 1,136	$ 1,035
Amount Due Within One Year	0	0
Total Long-term Debt	$ 1,136	$ 1,035

DEBT (Details 1)

DEBT (Details 1) - Revolving Credit Facility $ in Thousands	Mar. 26, 2022USD ($)
2022	$ 0
2023	1,136
2024 And Thereafter	0
Long-term Debt	$ 1,136

DEBT (Details Narrative)

DEBT (Details Narrative) - USD ($)	3 Months Ended
	Mar. 26, 2022	Dec. 25, 2021	May 21, 2020
Interest Rate Per Annum	2.00%
Interest Per Month	$ 7,500
Loan Fee Percentage	1.00%
Credit Limit Under Revolving Credit Facility	$ 1,136,000	$ 1,035,000
Revolving Credit Facility
Borrowers Accounts Percentage			85.00%
Borrowering Unbilled Account Percentage			75.00%
Borrowers Unbilled Accounts			$ 3,000,000
Borrowers Fixed Price Accounts Percentages			20.00%
Borrowers Fixed Price Accounts Amount			$ 250,000
Credit Limit Under Revolving Credit Facility	$ 1,100,000
Maturity Date	May 20, 2023
Termination First Anniversary Rate	1.00%
Termination Fee Percentage	2.00%
Termination Second Anniversary Rate	0.05%
ENGlobal U S [Member]
Borrowers Of Revolving Loan			$ 6,000,000

SEGMENT INFORMATION (Details)

SEGMENT INFORMATION (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021	Dec. 25, 2021
Revenue	$ 7,366	$ 12,449
Gross Profit (loss)	$ (658)	$ 1,004
Gross Profit Margin	(8.90%)	8.10%
Sg&a	$ 2,843	$ 2,561
Operating Income (loss)	(3,501)	(1,557)
Other Income, Net	10	1,684
Interest Expense, Net	(51)	(58)
Tax Expense	(78)	(23)
Net Income (loss)	(3,620)	46
Total Assets	37,042		$ 42,069
Commercial
Revenue	5,403	10,048
Gross Profit (loss)	$ (924)	$ 915
Gross Profit Margin	(17.10%)	9.10%
Sg&a	$ 1,491	$ 1,294
Operating Income (loss)	(2,415)	(379)
Total Assets	12,153		12,535
Government Services
Revenue	1,963	2,401
Gross Profit (loss)	$ 266	$ 89
Gross Profit Margin	13.60%	3.70%
Sg&a	$ 218	$ 209
Operating Income (loss)	48	(120)
Total Assets	2,287		3,788
Corporate
Revenue	0	0
Gross Profit (loss)	0	0
Sg&a	1,134	1,058
Operating Income (loss)	(1,134)	$ (1,058)
Total Assets	$ 22,602		$ 25,746

SEGMENT INFORMATION (Details Na

SEGMENT INFORMATION (Details Narrative)	3 Months Ended
	Mar. 26, 2022integer
SEGMENT INFORMATION
Number Of Reportable Segments	2

FEDERAL AND STATE INCOME TAXES

FEDERAL AND STATE INCOME TAXES (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021	Mar. 27, 2021
FEDERAL AND STATE INCOME TAXES
Effective Income Tax Rate	(2.20%)	33.30%
Effective Income Tax Rate, At Federal Statutory Income Tax Rate	21.00%
Description Of Taxable Income	tax returns prior to 2017 and Texas margins tax returns prior to 2017 are closed. Generally, the applicable statues of limitations are three to four years from their filings
Income Tax Expense	$ 78	$ 23	$ 23

LEASES (Details)

LEASES (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Mar. 27, 2021
Total Finance Lease Expense	$ 64	$ 23
Total Operating Lease Expense	456	601
Total Lease Expense	520	624
SG&A Expense
Total Finance Lease Expense	53	19
Total Operating Lease Expense	411	449
Interest Expense, Net
Total Finance Lease Expense	11	4
Operating Costs
Total Operating Lease Expense	$ 45	$ 152

LEASES (Details 1)

LEASES (Details 1) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
Rou Assets	$ 5,144	$ 5,230
Current Lease Liabilities - Operating Leases	1,206	1,153
Current Lease Liabilities - Finance Leases	207	236
Noncurrent Lease Liabilities - Operating Leases	3,296	3,269
Noncurrent Lease Liabilities - Finance Leases	647	743
Total Lease Liabilities	5,356	5,401
Rou Assets - Operating Leases	4,290	4,251
Property and Equipment, Net
Rou Assets - Finance Leases	854	979
Right of Use Asset
Rou Assets - Operating Leases	$ 4,290	$ 4,251

LEASES (Details 2)

LEASES (Details 2)	3 Months Ended
	Mar. 26, 2022
LEASES
Weighted Average Remaining Lease Term (years) - Operating Leases	4 years 10 months 24 days
Weighted Average Discount Rate - Operating Leases	0.90%
Weighted Average Remaining Lease Term (years) - Finance Leases	4 years 2 months 12 days
Weighted Average Discount Rate - Finance Leases	8.50%

LEASES (Details 3)

LEASES (Details 3) - USD ($) $ in Thousands	Mar. 26, 2022	Dec. 25, 2021
Operating Leases
2022	$ 994
2023	921
2024	828
2025	618
2026	370
2027 And Thereafter	815
Total Lease Payments	4,546
Less: Imputed Interest	(44)
Total Lease Liabilities	4,502
Finance Leases
2022	181
2023	228
2024	208
2025	173
2026	144
2027 And Thereafter	0
Total Lease Payments	934
Less: Imputed Interest	(80)
Total Lease Liabilities	854
Total
2022	1,175
2023	1,149
2024	1,036
2025	791
2026	514
2027 And Thereafter	815
Total Lease Payments	5,480
Less: Imputed Interest	(124)
Total Lease Liabilities	$ 5,356	$ 5,401

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 ($)	Jun. 01, 2021	Apr. 30, 2021	Mar. 26, 2022	Mar. 27, 2021	Mar. 07, 2022	Jan. 11, 2022	Jan. 29, 2021
Direct Costs			$ 8,024,000	$ 11,445,000
ATM Agreement [Member]
Direct Costs			$ 100,000
Stock Issued		400,538
Proceeds From Stock Issued		$ 1,400,000
ATM Agreement [Member] | Lake Street Capital Markets, LLC [Member]
Stock Issued						30,000,000
Public Float					$ 56.1
Public Primary Offering Term			the Company may not sell securities in a public primary offering with a value exceeding one-third of its public float in any twelve-month period unless its public float is at least $75 million
ATM Agreement [Member] | B. Riley Securities [Member]
Maximum Offering Price Of Common Stock							$ 25,000,000
Percentage Of Gross Sale Price Commission							3.00%
Purchase Agreement [Member]
Stock Issued	7,142,859
Proceeds From Stock Issued	$ 1,870,000
Offering Price	$ 2.80
Proffessional Fees			$ 1,300,000

LIQUIDITY (Details Narrative)

LIQUIDITY (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 26, 2022	Jan. 11, 2022	Dec. 25, 2021	Apr. 30, 2021
Outstanding Borrowings	$ 1,100
Credit Limit Under Revolving Credit Facility	$ 1,136		$ 1,035
ATM Agreement [Member]
Stock Issued				400,538
ATM Agreement [Member] | Lake Street Capital Markets, LLC [Member]
Stock Issued		30,000,000
Public Primary Offering Term	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
Revolving Credit Facility
Credit Limit Under Revolving Credit Facility	$ 1,100