Cover
Cover - shares | 9 Months Ended | |
Sep. 24, 2022 | Nov. 08, 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 | Sep. 24, 2022 | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Entity Common Stock Shares Outstanding | 35,800,617 | |
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, $0.001 par value | |
Trading Symbol | ENG | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 24, 2022 | Sep. 25, 2021 | Sep. 24, 2022 | Sep. 25, 2021 | |
Condensed Consolidated Statements of Operations (Unaudited) | ||||
Operating revenues | $ 13,056 | $ 5,921 | $ 31,777 | $ 29,449 |
Operating costs | 12,392 | 6,735 | 30,439 | 29,177 |
Gross profit (loss) | 664 | (814) | 1,338 | 272 |
Selling, general and administrative expenses | 2,920 | 3,089 | 8,653 | 9,914 |
Operating loss | (2,256) | (3,903) | (7,315) | (9,642) |
Other income (expense): | ||||
Other income, net | 5 | 6,371 | 36 | 8,061 |
Interest expense, net | (63) | (46) | (166) | (161) |
Income (loss) from operations before income taxes | (2,314) | 2,422 | (7,445) | (1,742) |
Provision for federal and state income taxes | 21 | 21 | 43 | 67 |
Net income (loss) | $ (2,335) | $ 2,401 | $ (7,488) | $ (1,809) |
Basic and diluted income (loss) per common share: | $ (0.07) | $ 0.07 | $ (0.21) | $ (0.06) |
Basic and diluted weighted average shares used in computing income (loss) per share: | 35,802 | 35,139 | 35,492 | 30,776 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Sep. 24, 2022 | Dec. 25, 2021 |
Current Assets: | ||
Cash | $ 9,664,000 | $ 19,202,000 |
Trade receivables, net of allowances of $273 and $1,673 | 10,067,000 | 7,692,000 |
Prepaid expenses and other current assets | 659,000 | 958,000 |
Payroll taxes receivable | 1,988,000 | 3,065,000 |
Contract assets | 5,820,000 | 4,177,000 |
Total Current Assets | 28,198,000 | 35,094,000 |
Property and equipment, net | 1,532,000 | 1,698,000 |
Goodwill | 720,000 | 720,000 |
Intangible assets, net of accumulated amortization | 2,674,000 | 0 |
Other assets | ||
Right of use asset | 8,138,000 | 4,251,000 |
Deposits and other assets | 313,000 | 306,000 |
Total Other Assets | 8,451,000 | 4,557,000 |
Total Assets | 41,575,000 | 42,069,000 |
Current Liabilities: | ||
Accounts payable | 3,565,000 | 2,001,000 |
Accrued compensation and benefits | 2,196,000 | 2,183,000 |
Current portion of leases | 1,560,000 | 1,389,000 |
Contract liabilities | 1,220,000 | 2,054,000 |
Current portion of deferred payroll tax | 537,000 | 537,000 |
Other current liabilities | 723,000 | 667,000 |
Short-term contingent consideration | 101,000 | 0 |
Short-term debt | 1,572,000 | 0 |
Total Current Liabilities | 11,474,000 | 8,831,000 |
Long-term contingent consideration | 1,279,000 | 0 |
Long-term debt | 0 | 1,035,000 |
Long-term leases | 7,525,000 | 4,012,000 |
Total Liabilities | 20,278,000 | 13,878,000 |
Stockholders' Equity: | ||
Common stock - $0.001 par value; 75,000,000 shares authorized; 35,800,617 shares issued and outstanding at September 24, 2022 and 35,230,675 shares issued and outstanding at December 25, 2021 | 36,000 | 35,000 |
Additional paid-in capital | 57,996,000 | 57,403,000 |
Accumulated deficit | (36,735,000) | (29,247,000) |
Total Stockholders' Equity | 21,297,000 | 28,191,000 |
Total Liabilities and Stockholders' Equity | $ 41,575,000 | $ 42,069,000 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Sep. 24, 2022 | Dec. 25, 2021 |
Condensed Consolidated Balance Sheets | ||
Trade Receivables, Allowances | $ 273,000 | $ 1,673,000 |
Common Stock, Par Value | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 75,000,000 | 75,000,000 |
Common Stock, Shares Issued | 35,800,617 | 35,230,675 |
Common Stock, Shares Outstanding | 35,800,617 | 35,230,675 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 24, 2022 | Sep. 25, 2021 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (7,488) | $ (1,809) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 691 | 355 |
Share-based compensation expense | 165 | 166 |
Forgiveness of PPP Loan | 0 | (4,974) |
Changes in current assets and liabilities | ||
Trade accounts receivable | (2,375) | 2,479 |
Contract assets | (1,643) | 435 |
Other current assets | 1,369 | (2,415) |
Accounts payable | 1,564 | (699) |
Accrued compensation and benefits | 13 | (1,085) |
Contract liabilities | (834) | (594) |
Income taxes payable | (8) | (32) |
Other current liabilities, net | 64 | (458) |
Net cash used in operating activities | (8,482) | (8,631) |
Cash Flows from Investing Activities: | ||
Asset acquisition, net of cash acquired | (971) | 0 |
Property and equipment acquired | (291) | (187) |
Net cash used in investing activities | (1,262) | (187) |
Cash Flows from Financing Activities: | ||
Issuance of common stock, net | 0 | 19,993 |
At-the-market offering costs | (97) | 0 |
Payments on finance leases | (233) | (94) |
Interest on PPP loan | 0 | 25 |
Proceeds from revolving credit facility, net | 536 | (113) |
Net cash provided by financing activities | 206 | 19,811 |
Net change in cash | (9,538) | 10,993 |
Cash at beginning of period | 19,202 | 13,706 |
Cash at end of period | 9,664 | 24,699 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the period for interest | 167 | 155 |
Right of use assets obtained in exchange for new operating lease liability | 4,864 | 2,613 |
Cash paid during the period for income taxes (net of refunds) | 51 | 151 |
Asset acquisition, common stock issued | 525 | 0 |
Asset acquisition, contingent consideration | 1,380 | 0 |
Non-cash transaction: PPP Loan forgiveness | $ 0 | $ 4,974 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders Equity (Unaudited) - USD ($) | Total | Common Stock | Additional Paid in Capital | Accumulated Deficit |
Balance, shares at Dec. 26, 2020 | 0 | |||
Balance, amount at Dec. 26, 2020 | $ 31,973,000 | $ 28,000 | $ 37,157,000 | $ (23,562,000) |
Common stock issued | $ 7,000 | 19,986,000 | 0 | |
At-the-market offering costs | 0 | |||
Share-based compensation - employees | 166,000 | |||
Net Income (Loss) | (1,809,000) | (1,809,000) | ||
Balance, shares at Sep. 25, 2021 | 0 | |||
Balance, amount at Sep. 25, 2021 | 31,973,000 | $ 35,000 | 57,309,000 | (25,371,000) |
Balance, shares at Jun. 26, 2021 | 0 | |||
Balance, amount at Jun. 26, 2021 | $ 28,000 | 57,309,000 | (27,772,000) | |
Common stock issued | $ 7,000 | (59,000) | ||
Share-based compensation - employees | 59,000 | |||
Net Income (Loss) | 2,401,000 | 2,401,000 | ||
Balance, shares at Sep. 25, 2021 | 0 | |||
Balance, amount at Sep. 25, 2021 | 31,973,000 | $ 35,000 | 57,309,000 | (25,371,000) |
Balance, shares at Dec. 25, 2021 | 0 | |||
Balance, amount at Dec. 25, 2021 | 28,191,000 | $ 35,000 | 57,403,000 | (29,247,000) |
Common stock issued | $ 1,000 | 525,000 | ||
At-the-market offering costs | (97,000) | |||
Share-based compensation - employees | 165,000 | |||
Net Income (Loss) | (7,488,000) | (7,488,000) | ||
Balance, shares at Sep. 24, 2022 | 0 | |||
Balance, amount at Sep. 24, 2022 | 21,297,000 | $ 36,000 | 57,996,000 | (36,735,000) |
Balance, shares at Jun. 25, 2022 | 0 | |||
Balance, amount at Jun. 25, 2022 | $ 36,000 | 57,972,000 | (34,400,000) | |
Common stock issued | $ 0 | |||
At-the-market offering costs | (30,000) | |||
Share-based compensation - employees | 54,000 | |||
Net Income (Loss) | (2,335,000) | (2,335,000) | ||
Balance, shares at Sep. 24, 2022 | 0 | |||
Balance, amount at Sep. 24, 2022 | $ 21,297,000 | $ 36,000 | $ 57,996,000 | $ (36,735,000) |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 24, 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 and nine month periods ended September 24, 2022 and September 25, 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 | 9 Months Ended |
Sep. 24, 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. 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 becomes known. 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. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 9 Months Ended |
Sep. 24, 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 For the Nine Months Ended September 24, 2022 September 25, 2021 September 24, 2022 September 25, 2021 Fixed-price revenue $ 10,037 $ 2,743 $ 24,136 $ 17,536 Time-and-material revenue 3,019 3,178 7,641 11,913 Total Revenue 13,056 5,921 31,777 29,449 |
CONTRACT ASSETS AND CONTRACT LI
CONTRACT ASSETS AND CONTRACT LIABILITIES | 9 Months Ended |
Sep. 24, 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): September 24, 2022 December 25, 2021 Costs incurred on uncompleted contracts $ 55,872 $ 36,429 Estimated earnings on uncompleted contracts 7,411 4,866 Earned revenues 63,283 41,295 Less: billings to date 58,683 39,172 Net costs and estimated earnings in excess of billings (billings in excess of costs) on uncompleted contracts $ 4,600 $ 2,123 Contract assets $ 5,820 $ 4,177 Contract liabilities (1,220 ) (2,054 ) Net contract assets $ 4,600 $ 2,123 |
DEBT
DEBT | 9 Months Ended |
Sep. 24, 2022 | |
DEBT | |
DEBT | NOTE 5 – DEBT The components of debt were as follows (dollars in thousands): September 24, 2022 December 25, 2021 Revolving Credit Facility (1) $ 1,572 $ 1,035 Amount due within one year (1,572 ) — Total long-term debt $ — $ 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 1,572 2024 and thereafter — $ 1,572 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 24, 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, field services, 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 September 24, 2022: Revenue $ 10,229 $ 2,827 $ — $ 13,056 Gross profit (loss) (368 ) 1,032 — 664 Gross profit (loss) margin (3.6 )% 36.5 % 5.1 % SG&A 1,572 164 1,184 2,920 Operating income (loss) (1,940 ) 868 (1,184 ) (2,256 ) Other income, net 5 Interest expense, net (63 ) Tax expense (21 ) Net loss (2,335 ) Commercial Government Services Corporate Consolidated For the three months ended September 25, 2021: Revenue $ 3,935 $ 1,986 $ — $ 5,921 Gross profit (loss) (1,089 ) 275 — (814 ) Gross profit (loss) margin (27.7 )% 13.8 % (13.7 )% SG&A 1,534 280 1,275 3,089 Operating loss (2,623 ) (5 ) (1,275 ) (3,903 ) Other income, net 6,371 Interest expense, net (46 ) Tax expense (21 ) Net income 2,401 Commercial Government Services Corporate Consolidated For the nine months ended September 24, 2022: Revenue $ 24,835 $ 6,942 $ — $ 31,777 Gross profit (loss) (591 ) 1,929 — 1,338 Gross profit (loss) margin (2.4 )% 27.8 % 4.2 % SG&A 4,668 554 3,431 8,653 Operating income (loss) (5,259 ) 1,375 (3,431 ) (7,315 ) Other income, net 36 Interest expense, net (166 ) Tax expense (43 ) Net loss (7,488 ) Commercial Government Services Corporate Consolidated For the nine months ended September 25, 2021: Revenue $ 23,141 $ 6,308 $ — $ 29,449 Gross profit (loss) (375 ) 647 — 272 Gross profit (loss) margin (1.6 )% 10.3 % 0.9 % SG&A 5,643 677 3,594 9,914 Operating loss (6,018 ) (30 ) (3,594 ) (9,642 ) Other income, net 8,061 Interest expense, net (161 ) Tax expense (67 ) Net loss (1,809 ) |
FEDERAL AND STATE INCOME TAXES
FEDERAL AND STATE INCOME TAXES | 9 Months Ended |
Sep. 24, 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 $21 thousand for the three months ended September 24, 2022 as compared to income tax expense of $21 thousand for the three months ended September 25, 2021. The effective income tax rate for the three months ended September 24, 2022 was (0.9)% as compared to 0.9% for the three months ended September 25, 2021. The Company recorded income tax expense of $43 thousand for the nine months ended September 24, 2022 as compared to income tax expense of $67 thousand for the nine months ended September 25, 2021. The effective income tax rate for the nine months ended September 24, 2022 was (0.6)% as compared to (3.8)% for the nine months ended September 25, 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 | 9 Months Ended |
Sep. 24, 2022 | |
Commitments and Contingencies (Note 8) | |
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 | 9 Months Ended |
Sep. 24, 2022 | |
LEASES | |
LEASES | NOTE 9 – LEASES The Company leases land, office and shop space, and equipment. Arrangements are assessed at inception to determine if a lease exists and, with the adoption of ASC 842, “Leases,” right-of-use (“ROU”) assets and lease liabilities are recognized based on the present value of lease payments over the lease term. Because the Company’s leases do not provide an implicit rate of return, the Company uses its incremental borrowing rate at the inception of a lease to calculate the present value of lease payments. The Company has elected to apply the short-term lease exception for all asset classes, excluding lease liabilities from the balance sheet and recognizing the lease payments in the period they are incurred. The components of lease expense were as follows (dollars in thousands): Three Months Ended Nine Months Ended Financial Statement Classification September 24, 2022 September 25, 2021 September 24, 2022 September 25, 2021 Finance leases: Amortization expense SG&A Expense $ 53 $ 19 $ 159 $ 61 Interest expense Interest expense, net 11 4 33 13 Total finance lease expense 64 23 192 74 Operating leases: Operating costs Operating costs 86 131 189 391 Selling, general and administrative expenses SG&A Expense 543 462 1,420 1,327 Total operating lease expense 629 593 1,609 1,718 Total lease expense $ 693 $ 616 $ 1,801 $ 1,792 Supplemental balance sheet information related to leases was as follows (dollars in thousands): Financial Statement Classification September 24, 2022 December 25, 2021 ROU Assets: Operating leases Right of use asset $ 8,138 $ 4,251 Finance leases Property and equipment, net 744 979 Total ROU Assets: $ 8,882 $ 5,230 Lease liabilities: Current liabilities Operating leases Current portion of leases $ 1,360 $ 1,153 Finance leases Current portion of leases 200 236 Noncurrent Liabilities: Operating leases Long-term leases 6,978 3,269 Finance leases Long-term leases 547 743 Total lease liabilities $ 9,085 $ 5,401 The weighted average remaining lease term and weighted average discount rate were as follows: At September 24, 2022 Weighted average remaining lease term (years) Operating leases 7.7 Finance leases 3.8 Weighted average discount rate Operating leases 11.3 % Finance leases 7.7 % Maturities of operating lease liabilities as of September 24, 2022 are as follows (dollars in thousands): Years ending: Operating leases Finance leases Total 2022 (remaining months) 442 58 500 2023 1,464 228 1,692 2024 1,323 208 1,531 2025 1,140 173 1,313 2026 919 144 1,063 2027 and thereafter 4,114 — 4,114 Total lease payments 9,402 811 10,213 Less: imputed interest (1,064 ) (64 ) (1,128 ) Total lease liabilities $ 8,338 $ 747 $ 9,085 |
EMPLOYEE RETENTION CREDIT
EMPLOYEE RETENTION CREDIT | 9 Months Ended |
Sep. 24, 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 | 9 Months Ended |
Sep. 24, 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 three quarters of 2022, $0.1 million in direct costs related to the ATM Agreement were recorded as a reduction of equity. |
LIQUIDITY
LIQUIDITY | 9 Months Ended |
Sep. 24, 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, and borrowings under the Revolving Credit Facility. As of September 24, 2022, the credit limit under the Revolving Credit Facility was $2.0 million and outstanding borrowings were $1.6 million, which yields enough interest to cover our minimum monthly interest charge. As of September 24, 2022, we were in compliance with all of the covenants under the Revolving Credit Facility. For additional information on the Revolving Credit Facility, see Note 5 – Debt On January 11, 2022, we entered into the ATM Agreement 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. For additional information on the ATM Agreement, see Note 11 – Stockholders’ Equity 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. |
ACQUISTION
ACQUISTION | 9 Months Ended |
Sep. 24, 2022 | |
ACQUISTION | |
ACQUISTION | NOTE 13 – ACQUISTION On May 18, 2022, ENG Calvert Holdings Ltd. (the “Purchaser”), a wholly owned subsidiary of the Company, completed the acquisition of Calvert Group Belgium NV (“Calvert”), a business that licenses small-scale gas to liquids (“GTL”) technology for flare gas and stranded gas applications for specific territories including the Middle East and North Africa. The Company expects to utilize Calvert’s basic designs incorporating the GTL technology into small scale GTL plants to be manufactured by the Company in the United States and subsequently shipped internationally. Pursuant to the accounting guidance in ASC 805, we determined that the acquisition of Calvert did not meet the criteria necessary to constitute a business combination and was accounted for as an asset acquisition which occurs when substantially all of the fair value of gross assets acquired is concentrated in a single identifiable asset or a group of similar identified assets. The determination was based on the gross fair value of the acquisition being concentrated in the license agreement acquired. The consideration transferred on the acquisition date included $0.8 million cash, net of cash acquired, and $0.5 million in common stock issued. In addition, we may pay up to approximately $1.4 million in cash and issue approximately $0.6 million in common stock if certain benchmarks are achieved. The Company capitalized $0.2 million in costs associated with the transaction. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 9 Months Ended |
Sep. 24, 2022 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 14 – INTANGIBLE ASSETS The Company has recognized a $2.9 million intangible asset for the license acquired. Supplemental balance sheet information related to intangible assets is as follows (dollars in thousands): September 24, 2022 December 25, 2021 Licenses $ 2,875 $ — Accumulated amortization (201 ) — Intangible assets, net of accumulated depreciation $ 2,674 $ — The components of amortization expense were as follows (in thousands): Three Months Ended Nine Months Ended Financial Statement Classification September 24, 2022 September 25, 2021 September 24, 2022 September 25, 2021 License: Amortization expense Operating costs 132 — 201 — Total intangible asset amortization expense 132 — 201 — The weighted-average amortization period remaining is 4.92 years. The future scheduled amortization of our intangible asset is as follows (in thousands): Intangible Asset Amortization 2022 (remaining months) $ 136 2023 543 2024 543 2025 543 2026 543 2027 366 $ 2,674 We may pay contingent consideration over the next five years based on the achievement of certain revenue benchmarks. The purchase price includes the original estimated fair value of the contingent consideration recorded at the present value of approximately $1.4 million. The estimated fair value of the contingent consideration was determined using a probability-weighted discounted cash flow model. We determined the fair value of the contingent consideration obligations by calculating the probability-weighted contingent consideration payments based on our assessment of the likelihood that the benchmarks will be achieved. The probability-weighted contingent consideration payments were then discounted using a discount rate based on the risk free rate of return (10 year treasury rate) plus a risk premium using the probability-weighted cash flows. The fair value measurement is a Level 3 measurement. The fair value of the contingent consideration is reviewed quarterly. The following tables summarize the Company's assets and liabilities that are measured at fair value on a recurring basis (in thousands): Fair Value Measurement at September 24, 2022 Level 1 Level 2 Level 3 Liabilities Contingent consideration — — 1,380 The following table provides a roll-forward of the fair value of the contingent consideration categorized as Level 3 for the periods ending September 24, 2022 and December 25, 2021 (in thousands): Nine Months Ended September 24, 2022 Year Ended December 25, 2021 Opening balance $ — $ — Contingent consideration in connection with acquisition 1,380 — Ending balance $ 1,380 $ — |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 9 Months Ended |
Sep. 24, 2022 | |
REVENUE RECOGNITION | |
Revenue By Contract Type | For the Three Months Ended For the Nine Months Ended September 24, 2022 September 25, 2021 September 24, 2022 September 25, 2021 Fixed-price revenue $ 10,037 $ 2,743 $ 24,136 $ 17,536 Time-and-material revenue 3,019 3,178 7,641 11,913 Total Revenue 13,056 5,921 31,777 29,449 |
CONTRACTS ASSETS AND CONTRACT L
CONTRACTS ASSETS AND CONTRACT LIABILITIES (Tables) | 9 Months Ended |
Sep. 24, 2022 | |
CONTRACT ASSETS AND CONTRACT LIABILITIES | |
Costs, Estimated Earnings And Billings On Uncompleted Contracts | September 24, 2022 December 25, 2021 Costs incurred on uncompleted contracts $ 55,872 $ 36,429 Estimated earnings on uncompleted contracts 7,411 4,866 Earned revenues 63,283 41,295 Less: billings to date 58,683 39,172 Net costs and estimated earnings in excess of billings (billings in excess of costs) on uncompleted contracts $ 4,600 $ 2,123 Contract assets $ 5,820 $ 4,177 Contract liabilities (1,220 ) (2,054 ) Net contract assets $ 4,600 $ 2,123 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 24, 2022 | |
DEBT | |
Debt | September 24, 2022 December 25, 2021 Revolving Credit Facility (1) $ 1,572 $ 1,035 Amount due within one year (1,572 ) — Total long-term debt $ — $ 1,035 |
Maturities Of Debt | Revolving Credit Facility 2022 $ — 2023 1,572 2024 and thereafter — $ 1,572 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 24, 2022 | |
Schedule of total assets by segment | Total Assets by Segment As of September 24, 2022 As of December 25, 2021 (dollars in thousands) Commercial $ 24,344 $ 12,535 Government Services 3,614 3,788 Corporate 13,617 25,746 Consolidated $ 41,575 $ 42,069 |
Calvert Group Belgium [Member] | |
Segment Information | Segment information is as follows (dollars in thousands): Commercial Government Services Corporate Consolidated For the three months ended September 24, 2022: Revenue $ 10,229 $ 2,827 $ — $ 13,056 Gross profit (loss) (368 ) 1,032 — 664 Gross profit (loss) margin (3.6 )% 36.5 % 5.1 % SG&A 1,572 164 1,184 2,920 Operating income (loss) (1,940 ) 868 (1,184 ) (2,256 ) Other income, net 5 Interest expense, net (63 ) Tax expense (21 ) Net loss (2,335 ) Commercial Government Services Corporate Consolidated For the three months ended September 25, 2021: Revenue $ 3,935 $ 1,986 $ — $ 5,921 Gross profit (loss) (1,089 ) 275 — (814 ) Gross profit (loss) margin (27.7 )% 13.8 % (13.7 )% SG&A 1,534 280 1,275 3,089 Operating loss (2,623 ) (5 ) (1,275 ) (3,903 ) Other income, net 6,371 Interest expense, net (46 ) Tax expense (21 ) Net income 2,401 Commercial Government Services Corporate Consolidated For the nine months ended September 24, 2022: Revenue $ 24,835 $ 6,942 $ — $ 31,777 Gross profit (loss) (591 ) 1,929 — 1,338 Gross profit (loss) margin (2.4 )% 27.8 % 4.2 % SG&A 4,668 554 3,431 8,653 Operating income (loss) (5,259 ) 1,375 (3,431 ) (7,315 ) Other income, net 36 Interest expense, net (166 ) Tax expense (43 ) Net loss (7,488 ) Commercial Government Services Corporate Consolidated For the nine months ended September 25, 2021: Revenue $ 23,141 $ 6,308 $ — $ 29,449 Gross profit (loss) (375 ) 647 — 272 Gross profit (loss) margin (1.6 )% 10.3 % 0.9 % SG&A 5,643 677 3,594 9,914 Operating loss (6,018 ) (30 ) (3,594 ) (9,642 ) Other income, net 8,061 Interest expense, net (161 ) Tax expense (67 ) Net loss (1,809 ) |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 24, 2022 | |
LEASES | |
Lease Expense | Three Months Ended Nine Months Ended Financial Statement Classification September 24, 2022 September 25, 2021 September 24, 2022 September 25, 2021 Finance leases: Amortization expense SG&A Expense $ 53 $ 19 $ 159 $ 61 Interest expense Interest expense, net 11 4 33 13 Total finance lease expense 64 23 192 74 Operating leases: Operating costs Operating costs 86 131 189 391 Selling, general and administrative expenses SG&A Expense 543 462 1,420 1,327 Total operating lease expense 629 593 1,609 1,718 Total lease expense $ 693 $ 616 $ 1,801 $ 1,792 |
Supplemental Balance Sheet Information Related To Leases | Financial Statement Classification September 24, 2022 December 25, 2021 ROU Assets: Operating leases Right of use asset $ 8,138 $ 4,251 Finance leases Property and equipment, net 744 979 Total ROU Assets: $ 8,882 $ 5,230 Lease liabilities: Current liabilities Operating leases Current portion of leases $ 1,360 $ 1,153 Finance leases Current portion of leases 200 236 Noncurrent Liabilities: Operating leases Long-term leases 6,978 3,269 Finance leases Long-term leases 547 743 Total lease liabilities $ 9,085 $ 5,401 |
Weighted Average Remaining Lease Term And Weighted Average Discount Rate | At September 24, 2022 Weighted average remaining lease term (years) Operating leases 7.7 Finance leases 3.8 Weighted average discount rate Operating leases 11.3 % Finance leases 7.7 % |
Maturities Of Operating Lease Liabilities | Years ending: Operating leases Finance leases Total 2022 (remaining months) 442 58 500 2023 1,464 228 1,692 2024 1,323 208 1,531 2025 1,140 173 1,313 2026 919 144 1,063 2027 and thereafter 4,114 — 4,114 Total lease payments 9,402 811 10,213 Less: imputed interest (1,064 ) (64 ) (1,128 ) Total lease liabilities $ 8,338 $ 747 $ 9,085 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 24, 2022 | |
INTANGIBLE ASSETS (Tables) | |
Schedule Of supplemental balance sheet information | September 24, 2022 December 25, 2021 Licenses $ 2,875 $ — Accumulated amortization (201 ) — Intangible assets, net of accumulated depreciation $ 2,674 $ — |
Schedule Of component of amortization expense | Three Months Ended Nine Months Ended Financial Statement Classification September 24, 2022 September 25, 2021 September 24, 2022 September 25, 2021 License: Amortization expense Operating costs 132 — 201 — Total intangible asset amortization expense 132 — 201 — |
Schedule Of amortization of our intangible asset | Intangible Asset Amortization 2022 (remaining months) $ 136 2023 543 2024 543 2025 543 2026 543 2027 366 $ 2,674 |
Schedule of summary of company assets and liabilities | Fair Value Measurement at September 24, 2022 Level 1 Level 2 Level 3 Liabilities Contingent consideration — — 1,380 |
Schedule of fair value of contingent consideration | Nine Months Ended September 24, 2022 Year Ended December 25, 2021 Opening balance $ — $ — Contingent consideration in connection with acquisition 1,380 — Ending balance $ 1,380 $ — |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 24, 2022 | Sep. 25, 2021 | Sep. 24, 2022 | Sep. 25, 2021 | |
Total Revenue | $ 13,056 | $ 5,921 | $ 31,777 | $ 29,449 |
Total Revenue | 13,056 | 5,921 | 31,777 | 29,449 |
Fixed-Price Revenue | ||||
Total Revenue | 10,037 | 2,743 | 24,136 | 17,536 |
Time-and-Material Revenue | ||||
Total Revenue | $ 3,019 | $ 3,178 | $ 7,641 | $ 11,913 |
CONTRACT ASSETS AND CONTRACT _2
CONTRACT ASSETS AND CONTRACT LIABILITIES (Details) - USD ($) $ in Thousands | Sep. 24, 2022 | Dec. 25, 2021 |
CONTRACT ASSETS AND CONTRACT LIABILITIES | ||
Costs Incurred On Uncompleted Contracts | $ 55,872 | $ 36,429 |
Estimated Earnings On Uncompleted Contracts | 7,411 | 4,866 |
Earned Revenues | 63,283 | 41,295 |
Less: Billings To Date | 58,683 | 39,172 |
Net Costs And Estimated Earnings In Excess Of Billings (billings In Excess Of Costs) On Uncompleted Contracts | 4,600 | 2,123 |
Contract Assets | 5,820 | 4,177 |
Contract Liabilities | 1,220 | 2,054 |
Net Contract Assets | $ 4,600 | $ 2,123 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | Sep. 24, 2022 | Dec. 25, 2021 |
DEBT (Details) | ||
Revolving Credit Facility | $ 1,572 | $ 1,035 |
Amount Due Within One Year | (1,572) | 0 |
Total Long-term Debt | $ 0 | $ 1,035 |
DEBT (Details 1)
DEBT (Details 1) - Revolving Credit Facility $ in Thousands | Sep. 24, 2022 USD ($) |
2022 | $ 0 |
2023 | 1,572 |
2024 And Thereafter | 0 |
Long term debt | $ 1,572 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) | 9 Months Ended | ||
Sep. 24, 2022 | Dec. 25, 2021 | May 21, 2020 | |
Interest Rate Per Annum | 2% | ||
Interest Per Month | $ 7,500 | ||
Loan Fee Percentage | 1% | ||
Credit Limit Under Revolving Credit Facility | $ 1,572,000 | $ 1,035,000 | |
ENGlobal U S [Member] | |||
Borrowers Of Revolving Loan | $ 6,000,000 | ||
Revolving Credit Facility | |||
Borrowers Accounts Percentage | 85% | ||
Borrowering Unbilled Account Percentage | 75% | ||
Borrowers Unbilled Accounts | $ 3,000,000 | ||
Borrowers Fixed Price Accounts Percentages | 20% | ||
Borrowers Fixed Price Accounts Amount | $ 250,000 | ||
Credit Limit Under Revolving Credit Facility | $ 2,000,000 | ||
Maturity Date | May 20, 2023 | ||
Termination First Anniversary Rate | 1% | ||
Termination Fee Percentage | 2% | ||
Termination Second Anniversary Rate | 0.05% |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 24, 2022 | Sep. 25, 2021 | Sep. 24, 2022 | Sep. 25, 2021 | Dec. 25, 2021 | |
Revenue | $ 13,056 | $ 5,921 | $ 31,777 | $ 29,449 | |
Gross profit | $ 664 | $ (814) | $ 1,338 | $ 272 | |
Gross Profit Margin | 5.10% | (13.70%) | 4.20% | 0.90% | |
SG&A | $ 2,920 | $ 3,089 | $ 8,653 | $ 9,914 | |
Operating loss | (2,256) | (3,903) | (7,315) | (9,642) | |
Other Income, Net | 5 | 6,371 | 36 | 8,061 | |
Interest expense, net | (63) | (46) | (166) | (161) | |
Tax Expense | (21) | (21) | (43) | (67) | |
Net Income (loss) | (2,335) | 2,401 | (7,488) | (1,809) | |
Total Assets | 41,575 | 41,575 | $ 42,069 | ||
Commercial | |||||
Revenue | 10,229 | 3,935 | 24,835 | 23,141 | |
Gross profit | $ (368) | $ (1,089) | $ (591) | $ (375) | |
Gross Profit Margin | (3.60%) | (27.70%) | (2.40%) | (1.60%) | |
SG&A | $ 1,572 | $ 1,534 | $ 4,668 | $ 5,643 | |
Operating loss | (1,940) | (2,623) | (5,259) | (6,018) | |
Total Assets | 24,344 | 24,344 | 12,535 | ||
Government Services | |||||
Revenue | 2,827 | 1,986 | 6,942 | 6,308 | |
Gross profit | $ 1,032 | $ 275 | $ 1,929 | $ 647 | |
Gross Profit Margin | 36.50% | 13.80% | 27.80% | 10.30% | |
SG&A | $ 164 | $ 280 | $ 554 | $ 677 | |
Operating loss | 868 | (5) | 1,375 | (30) | |
Total Assets | 3,614 | 3,614 | 3,788 | ||
Corporate | |||||
Revenue | 0 | 0 | 0 | 0 | |
Gross profit | 0 | 0 | 0 | 0 | |
SG&A | 1,184 | 1,275 | 3,431 | 3,594 | |
Operating loss | (1,184) | $ (1,275) | (3,431) | $ (3,594) | |
Total Assets | $ 13,617 | $ 13,617 | $ 25,746 |
FEDERAL AND STATE INCOME TAXES
FEDERAL AND STATE INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||
Sep. 24, 2022 | Sep. 25, 2021 | Sep. 24, 2022 | Sep. 25, 2021 | Sep. 24, 2022 | Sep. 25, 2021 | Sep. 25, 2021 | |
Valuation allowance | $ 2,100 | ||||||
Effective Income Tax Rate | 0.90% | 0.50% | |||||
Income tax expense | $ 21 | $ 21 | $ 21 | $ 21 | $ 43 | $ 67 | |
P P P Loan Forgiveness And Stock Compensation [Member] | |||||||
Effective Income Tax Rate | 0.60% | 3.80% | |||||
Federal And State Income Taxes [Member] | |||||||
Provision for federal and state income taxes | $ 43 | $ 67 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 24, 2022 | Sep. 25, 2021 | Sep. 25, 2022 | Sep. 24, 2022 | Sep. 25, 2021 | |
Total finance lease expense | $ 64 | $ 23 | $ 192 | $ 74 | |
Total operating lease expense | 629 | 593 | 1,609 | 1,718 | |
Total lease expense | 693 | 616 | 1,801 | 1,792 | |
Selling, general and administrative expenses | 2,920 | 3,089 | $ 8,653 | 9,914 | |
SG&A Expense | |||||
Total finance lease expense | 53 | 19 | 159 | 61 | |
Selling, general and administrative expenses | 543 | 462 | 1,420 | 1,327 | |
Interest Expense, Net | |||||
Total finance lease expense | 11 | 4 | 33 | 13 | |
Operating Costs | |||||
Total operating lease expense | $ 86 | $ 131 | $ 189 | $ 391 |
LEASES (Details 1)
LEASES (Details 1) - USD ($) $ in Thousands | Sep. 24, 2022 | Dec. 25, 2021 |
Rou Assets | $ 8,882 | $ 5,230 |
Current Lease Liabilities - Operating Leases | 1,360 | 1,153 |
Current Lease Liabilities - Finance Leases | 200 | 236 |
Noncurrent Lease Liabilities - Operating Leases | 6,978 | 3,269 |
Noncurrent Lease Liabilities - Finance Leases | 547 | 743 |
Total Lease Liabilities | 9,085 | 5,401 |
Rou Assets - Operating Leases | 8,138 | 4,251 |
Property and Equipment, Net | ||
Rou Assets - Finance Leases | $ 744 | $ 979 |
LEASES (Details 2)
LEASES (Details 2) | 9 Months Ended |
Sep. 24, 2022 | |
LEASES | |
Weighted Average Remaining Lease Term (years) - Operating Leases | 7 years 8 months 12 days |
Weighted Average Discount Rate - Operating Leases | 11.30% |
Weighted Average Remaining Lease Term (years) - Finance Leases | 3 years 9 months 18 days |
Weighted Average Discount Rate - Finance Leases | 7.70% |
LEASES (Details 3)
LEASES (Details 3) - USD ($) $ in Thousands | Sep. 24, 2022 | Dec. 25, 2021 |
Operating Leases | ||
2022 | $ 442 | |
2023 | 1,464 | |
2024 | 1,323 | |
2025 | 1,140 | |
2026 | 919 | |
2027 And Thereafter | 4,114 | |
Total Lease Payments | 9,402 | |
Less: Imputed Interest | (1,064) | |
Total Lease Liabilities | 8,338 | |
Finance Leases | ||
2022 | 58 | |
2023 | 228 | |
2024 | 208 | |
2025 | 173 | |
2026 | 144 | |
2027 And Thereafter | 0 | |
Total Lease Payments | 811 | |
Less: Imputed Interest | (64) | |
Total Lease Liabilities | 747 | |
Total | ||
2022 | 500 | |
2023 | 1,692 | |
2024 | 1,531 | |
2025 | 1,313 | |
2026 | 1,063 | |
2027 And Thereafter | 4,114 | |
Total Lease Payments | 10,213 | |
Less: Imputed Interest | (1,128) | |
Total Lease Liabilities | $ 9,085 | $ 5,401 |
EMPLOYEE RETENTION CREDIT (Deta
EMPLOYEE RETENTION CREDIT (Details Narrative) - USD ($) $ in Thousands | Sep. 24, 2022 | Jun. 25, 2021 |
EMPLOYEE RETENTION CREDIT (Details Narrative) | ||
Employee retention credit | $ 170 | $ 140 |
STOCKHOLDERS EQUITY (Details Na
STOCKHOLDERS EQUITY (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||||||
Jan. 11, 2022 | Sep. 24, 2022 | Sep. 25, 2021 | Sep. 24, 2022 | Sep. 25, 2021 | Mar. 07, 2022 | Jun. 01, 2021 | Apr. 30, 2021 | Jan. 29, 2021 | |
Direct Costs | $ 12,392,000 | $ 6,735,000 | $ 30,439,000 | $ 29,177,000 | |||||
ATM Agreement [Member] | |||||||||
Stock issued | 400,538 | ||||||||
Proceeds from stock issued | 1,400,000 | ||||||||
ATM Agreement [Member] | Lake Street Capital Markets L L C [Member] | |||||||||
Proceeds from stock issued | $ 30,000,000 | ||||||||
Direct Costs | $ 100,000 | ||||||||
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 | ||||||||
Public Float | $ 56.1 | ||||||||
ATM Agreement [Member] | B. Riley Securities [Member] | |||||||||
Maximum offering price of common stock | $ 25,000,000 | ||||||||
Percentage of gross sale price commission | 3% | ||||||||
Purchase Agreement [Member] | |||||||||
Stock issued | 7,142,859 | ||||||||
Proceeds from stock issued | $ 18,700,000 | ||||||||
Offering price | $ 2.80 | ||||||||
Proffessional fees | $ 1,300,000 |
LIQUIDITY (Details Narrative)
LIQUIDITY (Details Narrative) - USD ($) $ in Millions | Sep. 25, 2022 | Jun. 11, 2022 |
LIQUIDITY (Details Narrative) | ||
Revolving credit facility amount | $ 2 | |
Outstanding borrowings amount | $ 1.6 | |
Securities aggregate offering price | $ 30 |
ACQUISITION (Details Narrative)
ACQUISITION (Details Narrative) - USD ($) $ in Thousands | Sep. 25, 2022 | Sep. 24, 2022 | Dec. 25, 2021 |
Common stock issued | $ 36 | $ 35 | |
Cash acquired | 9,664 | 19,202 | |
Additional cash | $ 57,996 | $ 57,403 | |
Calvert Group Belgium [Member] | |||
Common stock issued | $ 500 | ||
Cash acquired | 800 | ||
Additional cash | 1,400 | ||
Common stock | 600 | ||
Capitalized amount | $ 200 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 1 Months Ended | 6 Months Ended |
Dec. 25, 2021 | Sep. 24, 2022 | |
INTANGIBLE ASSETS | ||
Licenses | $ 0 | $ 2,875 |
Accumulated amortization | 0 | (201) |
Intangible assets, net of accumulated depreciation | $ 0 | $ 2,674 |
INTANGIBLE ASSETS (Details 1)
INTANGIBLE ASSETS (Details 1) - USD ($) | 6 Months Ended | 9 Months Ended | ||
Sep. 24, 2022 | Sep. 25, 2021 | Sep. 24, 2022 | Sep. 25, 2021 | |
Total intangible asset amortization expense | $ 132 | $ 0 | $ 201 | $ 0 |
SG&A Expense | ||||
Total intangible asset amortization expense | $ 132 | $ 0 | $ 201 | $ 0 |
INTANGIBLE ASSETS (Details 2)
INTANGIBLE ASSETS (Details 2) | Sep. 24, 2022 USD ($) |
INTANGIBLE ASSETS | |
2022 (remaining months) | $ 136 |
2023 | 543 |
2024 | 543 |
2025 | 543 |
2026 | 543 |
2027 | 366 |
Total | $ 2,674 |
INTANGIBLE ASSETS (Details 3)
INTANGIBLE ASSETS (Details 3) | Sep. 24, 2022 USD ($) |
Level 1 | |
Liabilities | |
Contingent consideration | $ 0 |
Level 2 | |
Liabilities | |
Contingent consideration | 0 |
Level 3 | |
Liabilities | |
Contingent consideration | $ 1,380 |
INTANGIBLE ASSETS (Details 4)
INTANGIBLE ASSETS (Details 4) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 24, 2022 | Dec. 25, 2021 | |
INTANGIBLE ASSETS | ||
Opening balance | $ 0 | $ 0 |
Contingent consideration in connection with acquisition | 1,380 | 0 |
Ending balance | $ 1,380 | $ 0 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) $ in Millions | 9 Months Ended |
Sep. 24, 2022 USD ($) | |
INTANGIBLE ASSETS | |
weighted-average amortization period | 4 years 11 months 1 day |
Intangible assets | $ 2.9 |
Estimated fair value contingent consideration | $ 1.4 |
Risk free rate of return | 10 |