Cover
Cover - USD ($) | 12 Months Ended | ||
Dec. 30, 2023 | Mar. 29, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Entity Registrant Name | ENGlobal Corporation | ||
Entity Central Index Key | 0000933738 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-28 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 30, 2023 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2023 | ||
Entity Common Stock Shares Outstanding | 5,156,583 | ||
Entity Public Float | $ 10,144,231 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Fin Stmt Error Correction Flag | false | ||
Entity File Number | 001-14217 | ||
Entity Incorporation State Country Code | NV | ||
Entity Tax Identification Number | 88-0322261 | ||
Entity Address Address Line 1 | 11740 Katy Fwy – Energy Tower III | ||
Entity Address Address Line 2 | 11th floor | ||
Entity Address City Or Town | Houston | ||
Entity Address State Or Province | TX | ||
Entity Address Postal Zip Code | 77079 | ||
City Area Code | 281 | ||
Icfr Auditor Attestation Flag | false | ||
Auditor Name | Moss Adams LLP | ||
Auditor Location | Houston, Texas | ||
Auditor Firm Id | 659 | ||
Local Phone Number | 878-1000 | ||
Security 12b Title | Common Stock, $0.001 par value | ||
Trading Symbol | ENG | ||
Security Exchange Name | NASDAQ | ||
Entity Interactive Data Current | Yes |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 30, 2023 | Dec. 31, 2022 |
Current Assets: | ||
Cash | $ 615,000 | $ 3,464,000 |
Trade receivables, net of allowances of $4,336 and $2,129 | 6,432,000 | 7,644,000 |
Prepaid expenses and other current assets | 992,000 | 1,580,000 |
Payroll taxes receivable | 102,000 | 1,547,000 |
Contract assets | 3,296,000 | 4,934,000 |
Total Current Assets | 11,437,000 | 19,169,000 |
Property and equipment, net | 1,360,000 | 1,757,000 |
Goodwill | 720,000 | 720,000 |
Other assets | ||
Right-of-use asset | 5,079,000 | 8,072,000 |
Deposits and other assets | 191,000 | 305,000 |
Total Other Assets | 5,270,000 | 8,377,000 |
Total Assets | 18,787,000 | 30,023,000 |
Current Liabilities: | ||
Accounts payable | 7,005,000 | 4,454,000 |
Accrued compensation and benefits | 1,445,000 | 2,002,000 |
Current portion of operating leases | 1,726,000 | 1,638,000 |
Current portion of finance leases | 263,000 | 211,000 |
Contract liabilities | 1,195,000 | 956,000 |
Other current liabilities | 977,000 | 1,134,000 |
Short-term debt | 1,047,000 | 1,661,000 |
Total Current Liabilities | 13,658,000 | 12,056,000 |
Long-term unearned revenue | 375,000 | 425,000 |
Long-term operating leases | 5,761,000 | 6,669,000 |
Long-term finance leases | 548,000 | 548,000 |
Total Liabilities | 20,342,000 | 19,698,000 |
Stockholders' Equity (Deficit): | ||
Common stock - $0.001 par value; 75,000,000 shares authorized; 5,156,583 shares issued and outstanding at December 30, 2023 and 4,475,078 shares issued and outstanding at December 31, 2022 | 5,000 | 4,000 |
Additional paid-in capital | 61,354,000 | 58,082,000 |
Accumulated deficit | (62,914,000) | (47,761,000) |
Total Stockholders' Equity (Deficit) | (1,555,000) | 10,325,000 |
Total Liabilities and Stockholders' Equity (Deficit) | $ 18,787,000 | $ 30,023,000 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 30, 2023 | Dec. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | ||
Trade Receivables, Allowances | $ 4,336 | $ 2,129 |
Common Stock, Par Value | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 75,000,000 | 75,000,000 |
Common Stock, Shares Issued | 5,156,583 | 4,475,078 |
Common Stock, Shares Outstanding | 5,156,583 | 4,475,078 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Operating revenues | $ 39,036 | $ 40,189 |
Operating costs | 39,402 | 44,401 |
Gross loss | (366) | (4,212) |
Operating costs and expenses: | ||
Selling, general, and administrative expenses | 14,527 | 14,115 |
Operating loss | (14,893) | (18,327) |
Other income (expense) | ||
Interest expense, net | (219) | (223) |
Other income, net | 63 | 75 |
Loss before income taxes | (15,049) | (18,475) |
Provision for federal and state income taxes | (104) | (39) |
Net loss | $ (15,153) | $ (18,514) |
Basic and diluted loss per common share | $ (3.03) | $ (4.16) |
Basic and diluted weighted average shares used in computing loss per share: | 4,996 | 4,447 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICT) - USD ($) | Total | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) |
Balance, amount at Dec. 25, 2021 | $ 10,325,000 | $ 4,000 | $ 57,435,000 | $ (29,247,000) |
Common stock issued | 0 | |||
Common stock issued, net | 525,000 | |||
Fair value of warrants at issuance date | 0 | |||
Share-based compensation - employees | 219,000 | |||
Net Income (Loss) | (18,514,000) | |||
At-the-market offering costs | (97,000) | |||
Balance, amount at Dec. 31, 2022 | 10,325,000 | 4,000 | 58,082,000 | (47,761,000) |
Common stock issued | 1,000 | |||
Common stock issued, net | 180,000 | |||
Fair value of warrants at issuance date | 2,782,000 | 2,782,000 | ||
Share-based compensation - employees | 310,000 | |||
Net Income (Loss) | (15,153,000) | |||
At-the-market offering costs | 0 | |||
Balance, amount at Dec. 30, 2023 | $ (1,555,000) | $ 5,000 | $ 61,354,000 | $ (62,914,000) |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (15,153) | $ (18,514) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 933 | 933 |
Share-based compensation expense | 310 | 219 |
Loss on disposal of fixed assets | 261 | 13 |
Contingent consideration revaluation | 0 | (1,409) |
Impairment of intangible asset | 0 | 2,503 |
Impairment of ROU assets | 1,795 | 0 |
Changes in current assets and liabilities: | ||
Trade accounts receivable | 1,212 | 48 |
Contract assets | 1,638 | (757) |
Other current assets | 2,147 | 898 |
Accounts payable | 2,551 | 2,453 |
Accrued compensation and benefits | (557) | (181) |
Contract liabilities | 239 | (1,098) |
Income taxes payable | 53 | (38) |
Other current liabilities, net | (260) | 394 |
Net cash used in operating activities | (4,831) | (14,536) |
Cash Flows from Investing Activities: | ||
Property and equipment acquired | (174) | (602) |
Proceeds from sale of property and equipment | 45 | 0 |
Asset acquisition, net of cash acquired | 0 | (904) |
Net cash used in investing activities | (129) | (1,506) |
Cash Flows from Financing Activities: | ||
Issuance of common stock and warrants, net | 2,962 | 0 |
Payments on finance leases | (237) | (224) |
At-the-market offering costs | 0 | (97) |
Proceeds from Credit Agreement | 1,047 | 0 |
Proceeds (payments) from revolving credit facility | (1,661) | 625 |
Net cash provided by financing activities | 2,111 | 304 |
Net change in cash | (2,849) | (15,738) |
Cash at beginning of year | 3,464 | 19,202 |
Cash at end of year | 615 | 3,464 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the year for interest | 219 | 223 |
Fair value of warrants at issuance date | 2,782 | 0 |
Right of use assets obtained in exchange for new operating lease liability | 524 | 4,864 |
Leased assets obtained in exchange for new finance lease liabilities | 289 | 67 |
Asset acquisition, common stock issued | 0 | 525 |
Cash paid during the year for income taxes (net of refunds) | $ 57 | $ 52 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 12 Months Ended |
Dec. 30, 2023 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
ORGANIZATION AND BASIS OF PRESENTATION | NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION Organization and Operations – Basis of Presentation – Reverse Stock Split Going Concern – 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,, and borrowings under the Credit Agreement, as defined below. On June 15, 2023, the Company entered into a Credit Agreement (the “Credit Agreement”) with Alliance 2000, Ltd., a Texas limited partnership (“Alliance”), pursuant to which Alliance agreed, subject to certain terms and conditions, to extend up to two term loans in the aggregate principal amount of $1,250,000 to the Company (collectively, the “Term Loans”). On February 1, 2023, we entered into a securities purchase agreement (the “RDO Purchase Agreement”) providing for the sale and issuance by the Company to a single institutional investor of 496,375 shares (the “Shares”) of the Company’s common stock, at an offering price of $6.80 per Share in a registered direct offering. Concurrently with the sale of the Shares and pursuant to the RDO Purchase Agreement, the Company also sold and issued in a private placement, for no additional consideration to the investor, warrants to purchase up to 496,375 shares of the Company’s common stock (the “Warrants”). The gross proceeds to the Company from the offerings were approximately $3.4 million before deducting the placement agent’s fees and related offering expenses, and excluding the proceeds, if any, from the exercise of the Warrants. The Company used the net proceeds of the offering for working capital and general corporate purposes. We have had to extend the payment terms for our suppliers beyond our standard terms. In some cases, we have signed an agreement stipulating scheduled payment dates and amounts to provide assurance to the supplier that the balance will be paid in full. The payment terms for these arrangements are between a few weeks and 12 months depending on various factors such as amount, age, and how critical they are to our on-going operations. As of December 30, 2023 approximately $1.9 million of our trade payables have a payment schedule agreement. Our recurring losses, negative cash flows from operating activities, need for additional financing and the uncertainties surrounding our ability to obtain such financing, raise substantial doubt about our ability to continue as a going concern. We have limited cash on hand and will need additional working capital to fund our planned operations. We are subject to significant risks and uncertainties, including failing to secure additional capital to fund our planned operations or failing to profitably operate the business. We intend to raise funds through various potential sources, such as equity or debt financings; however, we can provide no assurance that such financing will be available on acceptable terms, or at all. If adequate financing is not available or we do not achieve profitability and positive cash flows from operating activities, we may be required to significantly curtail or cease our operations, and our business would be jeopardized. |
ACCOUNTING POLICIES AND NEW ACC
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS | 12 Months Ended |
Dec. 30, 2023 | |
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS | |
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS | NOTE 2 – ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS Consolidation Policy – Fair Value Measurements – Cash and cash equivalents – Receivables – Concentration of Credit Risk – Our businesses or product lines are largely dependent on a few relatively large customers. Although we believe we have an extensive customer base, the loss of one of these large customers or if such customers were to incur a prolonged period of decline in business, our financial condition and results of operations could be adversely affected. Two customers provided more than 10% each of our consolidated operating revenues for the year ended December 30, 2023 (18.0% within our Government Services segment and 16.2% within our Commercial segment). For the year ended December 31, 2022, two customers provided more than 10% each of our consolidated operating revenues (17.3% and 12.8%). Amounts included in trade receivables related to these customers totaled $0.5 million and $0.3 million, respectively, at December 30, 2023 and $0.2 million and $3.7 million, respectively, at December 31, 2022. Three customers that have been specifically reserved for and not within the top 10% percent of revenue had an outstanding accounts receivable balance of $7.0 million as of December 30, 2023. One customer not within the top 10% percent of revenue had an outstanding accounts receivable balance of $1.6 million as of December 31, 2022. We extend credit to customers in the normal course of business. We have established various procedures to manage our credit exposure, including initial credit approvals, credit limits and terms, letters of credit, and occasionally through rights of offset. We also use prepayments and guarantees to limit credit risk to ensure that our established credit criteria are met. Our most significant exposure to credit risks relates to situations under which we provide services early in the life of a project that is dependent on financing. Risks increase in times of general economic downturns and under conditions that threaten project feasibility. Property and Equipment – Asset Group Years Shop equipment 5 – 10 Furniture and fixtures 5 – 7 Computer equipment; Autos and trucks 3 – 5 Software 3 – 5 Leasehold improvements are amortized over the remaining term of the related lease. See Note 4 for details related to property and equipment and related depreciation. Expenditures for maintenance and repairs are expensed as incurred. Upon disposition or retirement of property and equipment, any gain or loss is charged to operations. Goodwill – The Company compares its fair value of a reporting unit and the carrying value of the reporting unit to measure goodwill impairment. Fair value was determined by applying discounted cash flows of the operating unit after allocation of certain corporate overhead. Estimating the cash flow of the operating unit requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates and future market conditions, among others. It is possible that changes in market conditions, economy, facts, circumstances, judgments and assumptions used in estimating the fair value could change, resulting in possible impairment of goodwill in the future. We performed a qualitative assessment of goodwill, which relates to Government Services, for each of the years ended December 30, 2023 and December 31, 2022. This assessment indicated that there was no impairment of goodwill for the years ended December 30, 2023 and December 31, 2022. Impairment of Long-Lived Assets – Revenue Recognition A majority of sales of fabrication and assembled systems are under fixed-price contracts. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. We generally recognize revenue over time as we perform because of continuous transfer of control to the customer. Our customer typically controls the work in process as evidenced either by contractual termination clauses or by our rights to payment for work performed to date plus a reasonable profit to deliver products or services that do not have an alternative use to the Company. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or service to be provided, which measures the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. We generally use the cost-to-cost method on the labor portion of a project for revenue recognition to measure progress of our contracts because it best depicts the transfer of control to the customer which occurs as we consume the materials on the contracts. Therefore, revenues and estimated profits are recorded proportionally as labor costs are incurred. Under the typical payment terms of our fixed-price contracts, the customer pays us progress payments. These progress payments are based on quantifiable measures of performance or on the achievement of specified events or milestones. The customer may retain a small portion of the contract price until completion of the contract. Revenue recognized in excess of billings is recorded as a contract asset on the balance sheet. Amounts billed and due from our customers are classified as receivables on the balance sheet. The portion of the payments retained by the customer until final contract settlement is not considered a significant financing component because the intent is to protect the customer should we fail to adequately complete some or all of our obligations under the contract. For some contracts we may receive advance payments from the customer. We record a liability for these advance payments in contract liabilities on the balance sheet. The advance payment typically is not considered a significant financing component because it is used to meet working capital demand that can be higher in the early stages of a contract and to protect us from the other party failing to adequately complete some or all of its obligations under the contract. To determine proper revenue recognition for contracts, we evaluate whether two or more contracts should be combined and accounted for as one single performance obligation or whether a single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate a single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. For most of our contracts, we provide a significant service of integrating a complex set of tasks and components into a single project. Hence, the entire contract is accounted for as one performance obligation. Less commonly, we may provide distinct goods or services within a contract in which case we separate the contract into more than one performance obligation. If a contract is separated into more than one performance obligation, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling price of the promised goods or services underlying each performance obligation and use the expected cost plus margin approach to estimate the standalone selling price of each performance obligation. Due to the nature of the work required to be performed on many of our performance obligations, the estimation of total revenue and cost at completion is complex, subject to variables and requires significant judgment. We estimate variable consideration at the most likely amount to which we expect to be entitled. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. Contracts are often modified to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of our contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase or a reduction of revenue) on a cumulative catch-up basis. We have a standard, monthly process in which management reviews the progress and execution of our performance obligations. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenues and costs. The risks and opportunities include management’s judgment about the ability and cost to achieve the schedule, technical requirements, and other contractual requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the availability of materials, the length of time to complete the performance obligation, execution by our subcontractors, the availability and timing of funding from our customer and overhead cost rates, among other variables. Based on this analysis, any adjustments to revenue, operating costs and the related impact to operating income are recognized as necessary in the period they become known. These adjustments may result from positive performance and may result in an increase in operating income during the performance of individual performance obligations if we determine we will be successful in mitigating risks surrounding the technical, schedule and cost aspects of those performance obligations or realizing related opportunities. When estimates of total costs to be incurred exceed total estimates to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is estimated. Likewise, these adjustments may result in a decrease in operating income if we determine we will not be successful in mitigating these risks or realizing related opportunities. Changes in estimates of net revenue, operating costs and the related impact to operating income are recognized monthly on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation’s percentage of completion. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations. Incremental Costs Income Taxes – A valuation allowance is recorded to reduce previously recorded tax assets when it becomes more-likely-than-not such asset will not be realized. We evaluate the realizability of deferred tax assets based on all available evidence, both positive and negative, regarding historical operating results, including the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. We account for uncertain tax positions in accordance with ASC 740. When uncertain tax positions exist, we recognize the tax benefit of the tax positions to the extent that the benefit will more-likely-than-not be realized. The determination as to whether the tax benefit will more-likely-than-not be realized is based upon technical merits of the tax positions as well as consideration of the available facts and circumstances. The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. Earnings per Share – Treasury Stock – Stock–Based Compensation – The Company accounts for restricted stock awards granted to consultants using the accounting guidance included in ASC 505-50 “Equity-Based Payments to Non-Employees” (“ASC 505-50”). All transactions in which services are received in exchange for share-based awards are accounted for based on the fair value of the consideration received or the fair value of the awards issued, whichever is more reliably measurable. Share-based compensation is measured at fair value at the earlier of the commitment date or the date the services are completed. Related Parties – |
DETAIL OF CERTAIN BALANCE SHEET
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | 12 Months Ended |
Dec. 30, 2023 | |
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | |
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | NOTE 3 – DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS The components of trade receivables, net as of December 30, 2023 and December 31, 2022, are as follows (amounts in thousands): 2023 2022 Amounts billed $ 10,106 $ 9,061 Amounts unbilled 662 619 Retainage — 93 Less: Allowance for credit losses (4,336 ) (2,129 ) Trade receivables, net $ 6,432 $ 7,644 Trade receivables, net as of December 25, 2021 was $7.7 million. The components of prepaid expense and other current assets are as follows as of December 30, 2023 and December 31, 2022 (amounts in thousands): 2023 2022 Prepaid expenses $ 793 $ 1,397 Other receivables – employee — 19 Other receivable 94 35 Inventory 105 129 Prepaid expenses and other current assets $ 992 $ 1,580 The components of other current liabilities are as follows as of December 30, 2023 and December 31, 2022 (amounts in thousands): 2023 2022 Accrual for known contingencies $ — $ 17 Customer prepayments 177 17 Warranty reserve 171 511 Gross receipts tax payable 3 — Property tax payable 47 — State income taxes payable 83 30 Unearned revenue 50 50 Insurance payable 446 509 Other current liabilities $ 977 $ 1,134 Our accrual for known contingencies includes litigation accruals, if any. See “Note 16 – Commitments and Contingencies” for further information. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Dec. 30, 2023 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 4 – PROPERTY AND EQUIPMENT Property and equipment consist of the following as of December 30, 2023 and December 31, 2022 (amounts in thousands): 2023 2022 Computer equipment and software $ 1,479 $ 1,500 Shop equipment 2,364 2,609 Furniture and fixtures 7 196 Leasehold improvements 340 828 Autos and trucks 100 100 $ 4,290 $ 5,233 Accumulated depreciation and amortization (2,930 ) (3,476 ) Property and equipment, net $ 1,360 $ 1,757 Depreciation expense was $0.6 million and $0.5 million for the years ended December 30, 2023 and December 31, 2022, respectively. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 12 Months Ended |
Dec. 30, 2023 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | NOTE 5 – REVENUE RECOGNITION Our revenue by contract type are as follows (amounts in thousands): For the Years Ended December 30, 2023 December 31, 2022 Fixed-price revenue $ 27,514 $ 30,050 Time-and-material revenue 11,522 10,139 Total Revenue 39,036 40,189 |
CONTRACTS
CONTRACTS | 12 Months Ended |
Dec. 30, 2023 | |
CONTRACTS | |
CONTRACTS | NOTE 6 – CONTRACTS Costs, estimated earnings, and billings on uncompleted contracts consist of the following as of December 30, 2023 and December 31, 2022 (amounts in thousands): 2023 2022 Costs incurred on uncompleted contracts $ 23,318 $ 59,298 Estimated earnings on uncompleted contracts 3,602 4,464 Earned revenues 26,920 63,762 Less: billings to date 24,819 59,784 Net costs in excess of billings on uncompleted contracts $ 2,101 $ 3,978 Costs and estimated earnings in excess of billings on uncompleted contracts $ 3,296 $ 4,934 Billings in excess of costs and estimated earnings on uncompleted contracts (1,195 ) (956 ) Net costs in excess of billings on uncompleted contracts $ 2,101 $ 3,978 Costs in excess of billings and billings in excess of costs on uncompleted contracts as of December 25, 2021 were $4.2 million and $2.1 million, respectively. Revenue on fixed-price contracts is recorded primarily using the percentage-of-completion (cost-to-cost) method. Revenue and gross margin on fixed-price contracts are subject to revision throughout the lives of the contracts and any required adjustments are made in the period in which the revisions become known. To manage unknown risks, management may use contingency amounts to increase the estimated costs, therefore lowering the earned revenues until the risks are better identified and quantified or have been mitigated. We had $0.2 million of contingency as of December 30, 2023 compared to $1.0 million as of December 31, 2022. Losses on contracts are recorded in full as they are identified. We recognize service revenue as soon as the services are performed. For clients that we consider higher risk, due to past payment history or history of not providing written work authorizations, we have deferred revenue recognition until we receive either a written authorization or a payment. We had $0.0 million in deferred revenue for the year ended December 30, 2023 and $0.2 million for the year ended December 31, 2022. This deferred revenue represents work on not to exceed contracts that has been performed but has not been billed or been recorded as revenue due to our revenue recognition policies as the work was performed outside the contracted amount without obtaining proper work order changes. It is uncertain as to whether these revenues will eventually be recognized by us or the proceeds collected. The costs associated with these billings have been expensed as incurred. |
DEBT
DEBT | 12 Months Ended |
Dec. 30, 2023 | |
DEBT | |
DEBT | NOTE 7 – DEBT The components of debt are as follows (amounts in thousands): December 30, 2023 December 31, 2022 Revolving Credit Facility (1) $ — $ 1,661 Credit Agreement (2) 1,047 — Priority Agreement (3) — — Total debt 1,047 1,661 Amount due within one year 1,047 1,661 Total long-term debt $ — $ — (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”). On June 15, 2023, the Company repaid in full all indebtedness outstanding under the Revolving Credit Facility. The Revolving Credit Facility was terminated on June 15, 2023 (2) On June 15, 2023, the Company entered into the Credit Agreement with Alliance, pursuant to which Alliance agreed, subject to certain terms and conditions, to extend up to two term loans in the aggregate principal amount of $1,250,000 to the Company (collectively, the “Term Loans”). In connection with entering into the Credit Agreement, (i) the Company and its subsidiaries, ENGlobal U.S., Inc., a Texas corporation, ENGlobal Government Services, Inc., a Texas corporation, and ENGlobal Technologies, LLC, a Texas limited liability company (collectively, the “Guarantors”), entered into a security agreement granting a security interest in favor of Alliance on substantially all of the Company’s and Guarantors’ assets to secure all of the indebtedness and other obligations owed to Alliance under the Credit Agreement and (ii) the Guarantors entered into a continuing guaranty pursuant to which the Guarantors guaranteed the payment of all indebtedness owed to Alliance. The Credit Agreement provides for an initial term loan of $1,000,000 and, under certain conditions, an additional term loan of $250,000. During the one-year term of the loan, the Company will make interest-only payments on a quarterly basis. The loan carries an annual interest rate of 8.5% and has an origination fee of 0.5%, payable upon maturity. The Credit Agreement matures on June 15, 2024. (3) On March 27, 2023, the Company entered into an invoice factoring agreement with FundThrough USA, Inc. (the “Priority Agreement”). The agreement provides the flexibility to receive funds early for a subset of customers at a discount rate of 2.75% to 8.25% depending on the length of payment terms with the customer. The Company had no outstanding receivables factored through the Priority Agreement as of December 30, 2023. The Priority Agreement was terminated on January 23, 2024. The future scheduled maturities of our debt are (amounts in thousands): Credit Agreement 2024 $ 1,047 Thereafter — $ 1,047 |
LEASES
LEASES | 12 Months Ended |
Dec. 30, 2023 | |
LEASES | |
LEASES | NOTE 8 – LEASES The Company leases land, office space and equipment. Arrangements are assessed at inception to determine if a lease exists and right-of-use (“ROU”) assets and lease liabilities are recognized based on the present value of lease payments over the lease term. Because the Company’s leases do not provide an implicit rate of return, the Company uses its incremental borrowing rate at the inception of a lease to calculate the present value of lease payments. The Company has elected to apply the short-term lease exception for all asset classes, excluding lease liabilities from the balance sheet and recognizing the lease payments in the period they are incurred. The components of lease expense are as follows (amounts in thousands): Financial Statement Classification Year ended December 30, 2023 Year ended December 31, 2022 Finance leases: Amortization expense SG&A Expense $ 237 $ 204 Interest expense Interest expense, net 52 44 $ 289 $ 248 Operating leases: Operating costs Operating costs 762 491 Selling, general and administrative expenses SG&A Expense 3,948 2,218 $ 4,710 $ 2,709 Total lease expense $ 4,999 $ 2,957 Supplemental balance sheet information related to leases are as follows (amounts in thousands): Financial Statement Classification December 30, 2023 December 31, 2022 ROU Assets: Operating leases Right of Use asset $ 5,079 $ 8,072 Finance leases Property and equipment, net 795 761 Total ROU Assets: $ 5,874 $ 8,833 Lease liabilities: Current liabilities Operating leases Current portion of operating leases $ 1,726 $ 1,638 Finance leases Current portion of finance leases 263 211 Noncurrent Liabilities: Operating leases Long Term operating leases 5,761 6,669 Finance leases Long Term finance leases 548 548 Total lease liabilities $ 8,298 $ 9,066 The weighted average remaining lease term and weighted average discount rate are as follows: December 30, 2023 December 31, 2022 Weighted average remaining lease term (years) Operating leases 6.6 7.3 Finance leases 3.1 3.7 Weighted average discount rate Operating leases 10.2 % 11.0 % Finance leases 9.1 % 8.2 % Maturities of operating lease liabilities as of December 30, 2023 are as follows (dollars in thousands): Operating leases Finance leases Total 2024 $ 1,919 $ 305 $ 2,224 2025 1,395 268 1,663 2026 920 239 1,159 2027 951 65 1,016 2028 and thereafter 3,157 14 3,171 Total lease payments 8,342 891 9,233 Less: imputed interest (855 ) (80 ) (935 ) Total lease liabilities $ 7,487 $ 811 $ 8,298 ROU assets recorded on a lessee’s balance sheet under ASC 842 are subject to the ASC 360-10 impairment guidance applicable to long-lived assets. When events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable (i.e., impairment indicators exist), the asset group is tested to determine whether an impairment exists. In 2023, the Company ceased operations at its fabrication facility in Brookshire, Texas and facility in Monahans, Texas. The method used to measure the impairment loss was the held and use model under ASC 360-10-35. Under the held-and-used impairment model, there are two steps after a trigger is identified. The first step is referred to as the recoverability test, which involves comparing the carrying amount of the asset group to the undiscounted future expected cash flows of the asset group. If the carrying amount of the asset group is less than the undiscounted cash flows for the asset group, the lessee has passed the recoverability test, and no impairment charge should be recognized. Under Step 2 of the held-and-used impairment model, the lessee compares the carrying amount of the asset group to its fair value. An asset group’s undiscounted cash flows used in the recoverability test (i.e., Step 1) and fair value used in Step 2 will be different amounts. Undiscounted cash flows do not take the time value of money into consideration, whereas fair value does take the time value of money into consideration. In addition, undiscounted cash flows are estimated using an entity-specific perspective, while fair value is estimated using a market-participant perspective. When the carrying amount of the asset group is higher than its fair value, an impairment loss exists. When the carrying amount of the asset group is lower than its fair value, an impairment loss does not exist. During the third quarter of 2023, we determined the carrying amount of the ROU asset located in Monahans, Texas was no longer recoverable and wrote the balance down to its estimated fair value. Additionally, during the fourth quarter of 2023, we determined the carrying amount of the ROU asset located in Brookshire, Texas exceeded its fair value by $1.6 million. The total impairment loss of $1.8 million was reported within the SG&A section of the Commercial segment on the Consolidate Statement of Operations. The discount rate used to measure the fair value of the ROU asset in Brookshire, Texas was 7.71%, which was based on the average WACC for market participants in the same industry since we believe this is the highest and best use of the facility. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Dec. 30, 2023 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | NOTE 9 – EMPLOYEE BENEFIT PLANS ENGlobal sponsors a 401(k) plan for its employees. The Company, at the direction of its Board of Directors, may make discretionary contributions. Our employees may elect to make contributions pursuant to a salary reduction agreement upon meeting age and length-of-service requirements. The Company matching contribution for the year ended December 30, 2023 was $0.3 million compared to $0.2 million in the year ended December 31, 2022. |
STOCK COMPENSATION PLANS
STOCK COMPENSATION PLANS | 12 Months Ended |
Dec. 30, 2023 | |
STOCK COMPENSATION PLANS | |
STOCK COMPENSATION PLANS | NOTE 10 – STOCK COMPENSATION PLANS The Company’s 2021 Long Term Incentive Plan (the “Long Term Incentive Plan”), currently provides for the aggregate issuance of up to 1,500,000 shares of common stock. The Long Term Incentive Plan provides for grants of non-statutory options, incentive stock options, restricted stock awards, performance shares, performance units, restricted stock units and other stock-based awards, in order to enhance the ability of ENGlobal to motivate current employees, to attract employees of outstanding ability and to provide for grants to be made to non-employee directors. At December 30, 2023, 5,376 shares of common stock are available to be issued pursuant to the Long Term Incentive Plan. We recognized non-cash stock-based compensation expense related to our Long Term Incentive Plan and the expired Amended and Restated 2009 Equity Incentive Plan of $0.3 million for the year ended December 30, 2023 and $0.2 million for the year ended December 31, 2022. Restricted Stock Awards – th Restricted stock awards granted to employees generally vest in four equal annual installments on the anniversary date of grant, so long as the grantee remains employed full-time with us as of each vesting date. Restricted stock awards are generally issued as new shares at the time of grant. The grant-date fair value of restricted stock grants is determined using the closing quoted market price on the grant date. The restricted shares and weighted-average grant-date fair value has been recast to reflect the one-for-eight reverse stock split effected on November 30, 2023. The following is a summary of the status of our restricted stock awards and of changes in restricted stock outstanding for the year ended December 30, 2023: Number of unvested restricted shares Weighted-average grant-date fair value Outstanding at December 31, 2022 11,622 $ 19.20 Granted 155,235 5.19 Vested 48,050 2.80 Forfeited 1,818 34.42 Outstanding at December 30, 2023 116,989 $ 2.96 As of December 30, 2023, there was $0.3 million of total unrecognized compensation cost related to unvested restricted stock awards which is expected to be recognized over a weighted-average period of 1.4 years. During the year ended December 30, 2023, the Company granted the following restricted stock awards: Date Issued Issued to Number of Shares Market Price Fair Value July 12, 2023 Directors (5) 142,860 $ 2.80 $ 400,008 August 9, 2023 Employees (4) 12,375 2.80 34,650 During the year ended December 31, 2022, the Company granted the following restricted stock awards: Date Issued Issued to Number of Shares Market Price Fair Value June 9, 2022 Director (3) 14,313 $ 10.48 $ 150,000 |
TREASURY STOCK
TREASURY STOCK | 12 Months Ended |
Dec. 30, 2023 | |
TREASURY STOCK | |
TREASURY STOCK | NOTE 11 – TREASURY STOCK On April 21, 2015, we announced that the Board of Directors had authorized the repurchase of up to $2.0 million of our common stock from time to time through open market or privately negotiated transactions, based on prevailing market conditions. We are not obligated to repurchase any dollar amount or specific number of shares of common stock under the repurchase program, which may be suspended, discontinued or reinstated at any time. As of December 30, 2023, the Company had purchased and retired 161,308 shares for $1.6 million under this program. The stock repurchase program was suspended from May 16, 2017 and was reinstated on December 19, 2018. No shares were repurchased during the years ended December 30, 2023 and December 31, 2022. Management does not intend to repurchase any shares in the near future. |
REDEEMABLE PREFERRED STOCK
REDEEMABLE PREFERRED STOCK | 12 Months Ended |
Dec. 30, 2023 | |
REDEEMABLE PREFERRED STOCK | |
REDEEMABLE PREFERRED STOCK | NOTE 12 – REDEEMABLE PREFERRED STOCK We are authorized to issue 2,000,000 shares of Preferred Stock, par value $0.001 per share (the “Preferred Stock”). Subject to the terms of our articles of incorporation, the Board of Directors has the authority to approve the issuance of all or any of these shares of the Preferred Stock in one or more series, to determine the number of shares constituting any series and to determine any voting powers, conversion rights, dividend rights and other designations, preferences, limitations, restrictions and rights relating to such shares. While there are no current plans to issue the Preferred Stock, it was authorized in order to provide the Company with flexibility to take advantage of contingencies such as favorable acquisition opportunities. |
FEDERAL AND STATE INCOME TAXES
FEDERAL AND STATE INCOME TAXES | 12 Months Ended |
Dec. 30, 2023 | |
FEDERAL AND STATE INCOME TAXES | |
FEDERAL AND STATE INCOME TAXES | NOTE 13 – FEDERAL AND STATE INCOME TAXES The components of our income tax expense for the years ended December 30, 2023 and December 31, 2022 are as follows (amounts in thousands): 2023 2022 Current: State 104 39 Total current 104 39 Deferred: Federal (20 ) (37 ) State 20 37 Total deferred — — Total income tax expense $ 104 $ 39 The following is a reconciliation of expected income tax benefit to actual income tax expense for the years ended December 30, 2023 and December 31, 2022 (amounts in thousands): 2023 2022 Federal income tax (benefit) at statutory rates $ (3,160 ) $ (3,888 ) Foreign tax rate adjustment (13 ) 122 State income tax, net of federal income tax effect (71 ) (256 ) Nondeductible expenses 102 188 State return to accrual (4 ) 30 Prior year adjustments and true-ups (26 ) 61 Change in valuation allowance 3,276 3,782 Total tax expense $ 104 $ 39 The components of the deferred tax asset (liability) consisted of the following as of December 30, 2023 and December 31, 2022 (amounts in thousands): 2023 2022 Noncurrent Deferred tax assets Federal and state net operating loss carryforward $ 13,770 $ 12,006 Tax credit carryforwards 1,977 1,977 Allowance for uncollectible accounts 986 491 Accruals not yet deductible for tax purposes 448 548 Goodwill 112 177 Lease payable 1,696 1,897 Capitalized research & development expenses 1,748 1,086 Depreciation 8 — Total noncurrent deferred tax assets 20,745 18,182 Less: Valuation allowance (19,442 ) (16,166 ) Total noncurrent deferred tax assets, net $ 1,303 $ 2,016 Noncurrent deferred tax liabilities: Depreciation — (10 ) Other (108 ) (116 ) Right-of-use asset (1,195 ) (1,890 ) Total noncurrent deferred tax liabilities (1,303 ) (2,016 ) Net deferred tax assets/deferred tax Liabilities $ — $ — We account for deferred income taxes in accordance with FASB ASC Topic 740 (“ASC 740”), which provides for deferred taxes using an asset and liability method. We recognize deferred tax assets and liabilities based on differences between the financial statement carrying amounts and the tax bases of assets and liabilities including net operating loss and tax credit carryforwards using enacted tax rates in effect for the year in which the differences are expected to reverse. The provision for income taxes represents the current taxes payable or refundable for the period plus or minus the tax effect of the net change in the deferred tax assets and liabilities during the period. Tax law and rate changes are reflected in income in the period such changes are enacted. We record a valuation allowance to reduce previously recorded tax assets when it becomes more-likely-than-not such asset will not be realized. We evaluate based on all available evidence, both positive and negative, regarding historical operating results, including the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. The ultimate realization of the deferred tax assets depends on the ability to generate sufficient taxable income of the appropriate character and in the related jurisdiction in the future. In evaluating our ability to recover our deferred tax assets, we consider the available positive and negative evidence, including our past operating results, the existence of cumulative losses in the most recent years and our forecast of future taxable income. In estimating future taxable income, we develop assumptions, including the amount of pretax operating income, the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment. During 2023, after evaluating all available evidence, we recorded a valuation allowance on all net deferred tax assets. As of December 30, 2023, the Company has a gross federal net operating loss carry-forward of approximately $60.8 million, which will begin to expire in 2032. Under the Tax Cuts and Jobs Act of 2017 (“TCJA”), net operating losses (“NOL’s”) generated in tax year 2018 and forward have an indefinite carryforward but are limited to 80% of taxable income when utilized. For NOL’s incurred in tax year 2017 and prior, the limitation to 80% of taxable income does not apply, but the NOL’s are subject to expiration. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 30, 2023 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 14 – SEGMENT INFORMATION Reporting Segments Our operating segments are strategic business units that offer our services and products to customers in their respective industries. The operating performance 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. Our three operating segments are: (i) Automation, (ii) Engineering, and (iii) Government Services. 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 Engineering 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. 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 Engineering and Automation groups are aggregated into one reportable segment, Commercial. Our corporate and other expenses that do not individually meet the criteria for segment reporting are reported separately as Corporate expenses. Revenue, operating income, identifiable assets, capital expenditures and depreciation for each segment are set forth in the following table. The amount identified as Corporate includes those activities that are not allocated to the operating segments and include costs related to business development, executive functions, finance, accounting, safety, human resources and information technology that are not specifically identifiable with the segments. Segment information for the years ended December 30, 2023 and December 31, 2022 are as follows (amounts in thousands): For the year ended December 30, 2023: Commercial Government Corporate Consolidated Operating revenues $ 30,072 8,964 — 39,036 Operating income (loss) (11,082 ) 1,145 (4,956 ) (14,893 ) Depreciation and amortization 733 11 189 933 Tangible assets 11,740 3,060 3,267 18,067 Goodwill — 720 — 720 Other intangible assets — — — — Total assets 11,740 3,780 3,267 18,787 Capital expenditures 379 — 84 463 For the year ended December 31, 2022: Commercial Government Corporate Consolidated Operating revenues $ 32,096 $ 8,093 $ — $ 40,189 Operating income (loss) (14,495 ) 935 (4,767 ) (18,327 ) Depreciation and amortization 731 14 188 933 Tangible assets 19,526 1,312 8,465 29,303 Goodwill — 720 — 720 Other intangible assets — — — — Total assets 19,526 2,032 8,465 30,023 Capital expenditures 348 23 209 580 |
EMPLOYEE RETENTION CREDIT
EMPLOYEE RETENTION CREDIT | 12 Months Ended |
Dec. 30, 2023 | |
EMPLOYEE RETENTION CREDIT | |
EMPLOYEE RETENTION CREDIT | NOTE 15 – EMPLOYEE RETENTION CREDIT Pursuant to the CARES Act, the Company is eligible for an employee retention credit subject to certain criteria. Since there are no generally accepted accounting principles for for-profit business entities that receive government assistance that is not in the form of a loan, an income tax credit or revenue from a contract with a customer, we determined the appropriate accounting treatment by analogy to other guidance. We accounted for the employee retention credit by analogy to International Accounting Standards (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, of International Financial Reporting Standards (IFRS). Under an IAS 20 analogy, a business entity would recognize the employee retention credit on a systematic basis over the periods in which the entity recognizes the payroll expenses for which the grant (i.e., tax credit) is intended to compensate when there is reasonable assurance (i.e., it is probable) that the entity will comply with any conditions attached to the grant and the grant (i.e., tax credit) will be received. The unpaid employee retention credits of $1.5 million that were accounted for as a receivable on the balance sheet as of December 31, 2022 were received in 2023. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 16 – COMMITMENTS AND CONTINGENCIES Litigation From time to time, ENGlobal or one or more of its subsidiaries may be involved in various legal proceedings or may be subject to claims that arise in the ordinary course of business alleging, among other things, claims of breach of contract or negligence in connection with the performance or delivery of goods and/or services. The outcome of any such claims or proceedings cannot be predicted with certainty. On March 12, 2024, ENGlobal U.S. Inc. was served with a lawsuit by VEnergy Industrial Park I, LLC (the “Plaintiff”). The lawsuit is pending in the County Court of Waller County, Texas. The Plaintiff is seeking monetary damages of $1.3 million for a breach of lease cause of action. We disagree with the Plaintiff’s claims and expect to petition the Court with affirmative defenses. However, litigation is inherently uncertain, and an adverse outcome could have a material impact on our financial condition. We carry a broad range of insurance coverage, including general and business automobile liability, commercial property, professional errors and omissions, workers’ compensation insurance, directors’ and officers’ liability insurance and a general umbrella policy, all with standard self-insured retentions/deductibles. We also provide health insurance to our employees (including vision and dental), and are partially self-funded for these claims. Provisions for expected future payments are accrued based on our experience, and specific stop loss levels provide protection for the Company. We believe we have adequate reserves for the self-funded portion of our insurance policies. We are not aware of any material litigation or claims that are not covered by these policies or which are likely to materially exceed the Company’s insurance limits. |
STOCKHOLDERS EQUITY
STOCKHOLDERS EQUITY | 12 Months Ended |
Dec. 30, 2023 | |
Stockholders' Equity (Deficit): | |
STOCKHOLDERS EQUITY | NOTE 17 – STOCKHOLDERS’ EQUITY On February 1, 2023, we entered into a securities purchase agreement (the “RDO Purchase Agreement”) providing for the sale and issuance by the Company to a single institutional investor of 496,375 shares (the “Shares”) of the Company’s common stock at an offering price of $6.80 per Share in a registered direct offering. Concurrently with the sale of the Shares and pursuant to the RDO Purchase Agreement, the Company also sold and issued in a private placement, for no additional consideration to the investor, warrants to purchase up to 496,375 shares of the Company’s common stock (the “Warrants”). The net proceeds to the Company from the offerings were approximately $3.0 million after deducting the placement agent’s fees and related offering expenses, and excluding the proceeds, if any, from the exercise of the Warrants. The Company used the net proceeds of the offering for working capital and general corporate purposes. We recorded the fair value of the warrants issued within additional paid-in capital. The warrants may be exercised by physical settlement or net share settlement, determined by the holder. |
ACQUISITION
ACQUISITION | 12 Months Ended |
Dec. 30, 2023 | |
ACQUISITION | |
ACQUISITION | NOTE 18 – ACQUISITIONS On May 18, 2022, ENG Calvert Holdings Ltd., a wholly owned subsidiary of the Company, completed the acquisition of the stock 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 expected 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. During the fourth quarter of 2022, we determined the carrying amount of the license agreement acquired was no longer recoverable and wrote the balance down to its estimated fair value. Fair value was based on expected future cash flows using Level 3 inputs. The $2.5 million impairment of the intangible asset and $1.4 million write down of the related contingent consideration balances are reflected within Operating Costs on the Consolidated Statement of Operations. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 30, 2023 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 19 – INTANGIBLE ASSETS The Company had recognized a $2.8 million intangible asset for the license acquired in the Calvert acquisition and $1.4 million of contingent consideration. During the fourth quarter of 2022, we determined the carrying amount of the license agreement acquired was no longer recoverable and wrote the balance down to its estimated fair value. Fair value was based on expected future cash flows using Level 3 inputs. The impairment of the intangible asset and balance are reflected within Operating Costs on the Consolidated Statement of Operations. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 30, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 20 – SUBSEQUENT EVENTS The Company has evaluated subsequent events through the date these financial statements were issued. The Company determined there were no events, other than as described below, that required disclosure or recognition in these financial statements. Priority Agreement On January 23, 2024, the Company terminated the invoice factoring agreement with FundThrough USA, Inc. Trade Receivable Settlement On February 14, 2024, the Company entered into a settlement and release agreement with a client for indebtedness relating to unpaid invoices. Credit Agreement On January 30, 2024, the Company borrowed an additional $0.2 million under the Credit Agreement with Alliance. |
ACCOUNTING POLICIES AND NEW A_2
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS (Policies) | 12 Months Ended |
Dec. 30, 2023 | |
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS | |
Consolidation Policy | Consolidation Policy – |
Fair Value Measurements | Fair Value Measurements – |
Cash and Cash Equivalents | Cash and cash equivalents – |
Receivables | Receivables – |
Concentration of Credit Risk | Concentration of Credit Risk – Our businesses or product lines are largely dependent on a few relatively large customers. Although we believe we have an extensive customer base, the loss of one of these large customers or if such customers were to incur a prolonged period of decline in business, our financial condition and results of operations could be adversely affected. Two customers provided more than 10% each of our consolidated operating revenues for the year ended December 30, 2023 (18.0% within our Government Services segment and 16.2% within our Commercial segment). For the year ended December 31, 2022, two customers provided more than 10% each of our consolidated operating revenues (17.3% and 12.8%). Amounts included in trade receivables related to these customers totaled $0.5 million and $0.3 million, respectively, at December 30, 2023 and $0.2 million and $3.7 million, respectively, at December 31, 2022. Three customers that have been specifically reserved for and not within the top 10% percent of revenue had an outstanding accounts receivable balance of $7.0 million as of December 30, 2023. One customer not within the top 10% percent of revenue had an outstanding accounts receivable balance of $1.6 million as of December 31, 2022. We extend credit to customers in the normal course of business. We have established various procedures to manage our credit exposure, including initial credit approvals, credit limits and terms, letters of credit, and occasionally through rights of offset. We also use prepayments and guarantees to limit credit risk to ensure that our established credit criteria are met. Our most significant exposure to credit risks relates to situations under which we provide services early in the life of a project that is dependent on financing. Risks increase in times of general economic downturns and under conditions that threaten project feasibility. |
Property and Equipment | Property and Equipment – Asset Group Years Shop equipment 5 – 10 Furniture and fixtures 5 – 7 Computer equipment; Autos and trucks 3 – 5 Software 3 – 5 Leasehold improvements are amortized over the remaining term of the related lease. See Note 4 for details related to property and equipment and related depreciation. Expenditures for maintenance and repairs are expensed as incurred. Upon disposition or retirement of property and equipment, any gain or loss is charged to operations. |
Goodwill | Goodwill – The Company compares its fair value of a reporting unit and the carrying value of the reporting unit to measure goodwill impairment. Fair value was determined by applying discounted cash flows of the operating unit after allocation of certain corporate overhead. Estimating the cash flow of the operating unit requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates and future market conditions, among others. It is possible that changes in market conditions, economy, facts, circumstances, judgments and assumptions used in estimating the fair value could change, resulting in possible impairment of goodwill in the future. We performed a qualitative assessment of goodwill, which relates to Government Services, for each of the years ended December 30, 2023 and December 31, 2022. This assessment indicated that there was no impairment of goodwill for the years ended December 30, 2023 and December 31, 2022. |
Impairment of Long-lived Assets | Impairment of Long-Lived Assets – |
Revenue Recognition | Revenue Recognition A majority of sales of fabrication and assembled systems are under fixed-price contracts. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. We generally recognize revenue over time as we perform because of continuous transfer of control to the customer. Our customer typically controls the work in process as evidenced either by contractual termination clauses or by our rights to payment for work performed to date plus a reasonable profit to deliver products or services that do not have an alternative use to the Company. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or service to be provided, which measures the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation. We generally use the cost-to-cost method on the labor portion of a project for revenue recognition to measure progress of our contracts because it best depicts the transfer of control to the customer which occurs as we consume the materials on the contracts. Therefore, revenues and estimated profits are recorded proportionally as labor costs are incurred. Under the typical payment terms of our fixed-price contracts, the customer pays us progress payments. These progress payments are based on quantifiable measures of performance or on the achievement of specified events or milestones. The customer may retain a small portion of the contract price until completion of the contract. Revenue recognized in excess of billings is recorded as a contract asset on the balance sheet. Amounts billed and due from our customers are classified as receivables on the balance sheet. The portion of the payments retained by the customer until final contract settlement is not considered a significant financing component because the intent is to protect the customer should we fail to adequately complete some or all of our obligations under the contract. For some contracts we may receive advance payments from the customer. We record a liability for these advance payments in contract liabilities on the balance sheet. The advance payment typically is not considered a significant financing component because it is used to meet working capital demand that can be higher in the early stages of a contract and to protect us from the other party failing to adequately complete some or all of its obligations under the contract. To determine proper revenue recognition for contracts, we evaluate whether two or more contracts should be combined and accounted for as one single performance obligation or whether a single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate a single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. For most of our contracts, we provide a significant service of integrating a complex set of tasks and components into a single project. Hence, the entire contract is accounted for as one performance obligation. Less commonly, we may provide distinct goods or services within a contract in which case we separate the contract into more than one performance obligation. If a contract is separated into more than one performance obligation, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling price of the promised goods or services underlying each performance obligation and use the expected cost plus margin approach to estimate the standalone selling price of each performance obligation. Due to the nature of the work required to be performed on many of our performance obligations, the estimation of total revenue and cost at completion is complex, subject to variables and requires significant judgment. We estimate variable consideration at the most likely amount to which we expect to be entitled. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us. Contracts are often modified to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of our contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase or a reduction of revenue) on a cumulative catch-up basis. We have a standard, monthly process in which management reviews the progress and execution of our performance obligations. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenues and costs. The risks and opportunities include management’s judgment about the ability and cost to achieve the schedule, technical requirements, and other contractual requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the availability of materials, the length of time to complete the performance obligation, execution by our subcontractors, the availability and timing of funding from our customer and overhead cost rates, among other variables. Based on this analysis, any adjustments to revenue, operating costs and the related impact to operating income are recognized as necessary in the period they become known. These adjustments may result from positive performance and may result in an increase in operating income during the performance of individual performance obligations if we determine we will be successful in mitigating risks surrounding the technical, schedule and cost aspects of those performance obligations or realizing related opportunities. When estimates of total costs to be incurred exceed total estimates to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss is estimated. Likewise, these adjustments may result in a decrease in operating income if we determine we will not be successful in mitigating these risks or realizing related opportunities. Changes in estimates of net revenue, operating costs and the related impact to operating income are recognized monthly on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation’s percentage of completion. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations. |
Incremental Costs | Incremental Costs |
Income Taxes | Income Taxes – A valuation allowance is recorded to reduce previously recorded tax assets when it becomes more-likely-than-not such asset will not be realized. We evaluate the realizability of deferred tax assets based on all available evidence, both positive and negative, regarding historical operating results, including the estimated timing of future reversals of existing taxable temporary differences, estimated future taxable income exclusive of reversing temporary differences and carryforwards and potential tax planning strategies which may be employed to prevent an operating loss or tax credit carryforward from expiring unused. We account for uncertain tax positions in accordance with ASC 740. When uncertain tax positions exist, we recognize the tax benefit of the tax positions to the extent that the benefit will more-likely-than-not be realized. The determination as to whether the tax benefit will more-likely-than-not be realized is based upon technical merits of the tax positions as well as consideration of the available facts and circumstances. The Company recognizes interest and penalties related to unrecognized tax benefits in the provision for income taxes. |
Earnings Per Share | Earnings per Share – |
Treasury Stock | Treasury Stock – |
Stock-Based Compensation | Stock–Based Compensation – The Company accounts for restricted stock awards granted to consultants using the accounting guidance included in ASC 505-50 “Equity-Based Payments to Non-Employees” (“ASC 505-50”). All transactions in which services are received in exchange for share-based awards are accounted for based on the fair value of the consideration received or the fair value of the awards issued, whichever is more reliably measurable. Share-based compensation is measured at fair value at the earlier of the commitment date or the date the services are completed. |
Related Parties | Related Parties – |
ACCOUNTING POLICIES AND NEW A_3
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS | |
Estimated useful lives of assets | Asset Group Years Shop equipment 5 – 10 Furniture and fixtures 5 – 7 Computer equipment; Autos and trucks 3 – 5 Software 3 – 5 |
DETAIL OF CERTAIN BALANCE SHE_2
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | |
Trade receivables | 2023 2022 Amounts billed $ 10,106 $ 9,061 Amounts unbilled 662 619 Retainage — 93 Less: Allowance for credit losses (4,336 ) (2,129 ) Trade receivables, net $ 6,432 $ 7,644 |
Prepaid expenses and other current assets | 2023 2022 Prepaid expenses $ 793 $ 1,397 Other receivables – employee — 19 Other receivable 94 35 Inventory 105 129 Prepaid expenses and other current assets $ 992 $ 1,580 |
Other current liabilities | 2023 2022 Accrual for known contingencies $ — $ 17 Customer prepayments 177 17 Warranty reserve 171 511 Gross receipts tax payable 3 — Property tax payable 47 — State income taxes payable 83 30 Unearned revenue 50 50 Insurance payable 446 509 Other current liabilities $ 977 $ 1,134 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
PROPERTY AND EQUIPMENT | |
Property and equipment | 2023 2022 Computer equipment and software $ 1,479 $ 1,500 Shop equipment 2,364 2,609 Furniture and fixtures 7 196 Leasehold improvements 340 828 Autos and trucks 100 100 $ 4,290 $ 5,233 Accumulated depreciation and amortization (2,930 ) (3,476 ) Property and equipment, net $ 1,360 $ 1,757 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
REVENUE RECOGNITION | |
Revenue By Contract Type | For the Years Ended December 30, 2023 December 31, 2022 Fixed-price revenue $ 27,514 $ 30,050 Time-and-material revenue 11,522 10,139 Total Revenue 39,036 40,189 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
DEBT | |
Schedule of Debt | December 30, 2023 December 31, 2022 Revolving Credit Facility (1) $ — $ 1,661 Credit Agreement (2) 1,047 — Priority Agreement (3) — — Total debt 1,047 1,661 Amount due within one year 1,047 1,661 Total long-term debt $ — $ — |
Maturities of debt | Credit Agreement 2024 $ 1,047 Thereafter — $ 1,047 |
CONTRACTS ASSETS AND CONTRACT L
CONTRACTS ASSETS AND CONTRACT LIABILITIES (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
CONTRACTS ASSETS AND CONTRACT LIABILITIES (Tables) | |
Costs, Estimated Earnings And Billings On Uncompleted Contracts | 2023 2022 Costs incurred on uncompleted contracts $ 23,318 $ 59,298 Estimated earnings on uncompleted contracts 3,602 4,464 Earned revenues 26,920 63,762 Less: billings to date 24,819 59,784 Net costs in excess of billings on uncompleted contracts $ 2,101 $ 3,978 Costs and estimated earnings in excess of billings on uncompleted contracts $ 3,296 $ 4,934 Billings in excess of costs and estimated earnings on uncompleted contracts (1,195 ) (956 ) Net costs in excess of billings on uncompleted contracts $ 2,101 $ 3,978 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
LEASES | |
Lease expense | Financial Statement Classification Year ended December 30, 2023 Year ended December 31, 2022 Finance leases: Amortization expense SG&A Expense $ 237 $ 204 Interest expense Interest expense, net 52 44 $ 289 $ 248 Operating leases: Operating costs Operating costs 762 491 Selling, general and administrative expenses SG&A Expense 3,948 2,218 $ 4,710 $ 2,709 Total lease expense $ 4,999 $ 2,957 |
Supplemental Balance Sheet Information Related To Leases | Financial Statement Classification December 30, 2023 December 31, 2022 ROU Assets: Operating leases Right of Use asset $ 5,079 $ 8,072 Finance leases Property and equipment, net 795 761 Total ROU Assets: $ 5,874 $ 8,833 Lease liabilities: Current liabilities Operating leases Current portion of operating leases $ 1,726 $ 1,638 Finance leases Current portion of finance leases 263 211 Noncurrent Liabilities: Operating leases Long Term operating leases 5,761 6,669 Finance leases Long Term finance leases 548 548 Total lease liabilities $ 8,298 $ 9,066 |
Weighted Average Remaining Lease Term And Weighted Average Discount Rate | December 30, 2023 December 31, 2022 Weighted average remaining lease term (years) Operating leases 6.6 7.3 Finance leases 3.1 3.7 Weighted average discount rate Operating leases 10.2 % 11.0 % Finance leases 9.1 % 8.2 % |
Maturities Of Operating Lease Liabilities | Operating leases Finance leases Total 2024 $ 1,919 $ 305 $ 2,224 2025 1,395 268 1,663 2026 920 239 1,159 2027 951 65 1,016 2028 and thereafter 3,157 14 3,171 Total lease payments 8,342 891 9,233 Less: imputed interest (855 ) (80 ) (935 ) Total lease liabilities $ 7,487 $ 811 $ 8,298 |
STOCK COMPENSATION PLANS (Table
STOCK COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
STOCK COMPENSATION PLANS | |
Nonvested restricted stock activity | Number of unvested restricted shares Weighted-average grant-date fair value Outstanding at December 31, 2022 11,622 $ 19.20 Granted 155,235 5.19 Vested 48,050 2.80 Forfeited 1,818 34.42 Outstanding at December 30, 2023 116,989 $ 2.96 |
Restricted stock and restricted stock units activity | Date Issued Issued to Number of Shares Market Price Fair Value July 12, 2023 Directors (5) 142,860 $ 2.80 $ 400,008 August 9, 2023 Employees (4) 12,375 2.80 34,650 Date Issued Issued to Number of Shares Market Price Fair Value June 9, 2022 Director (3) 14,313 $ 10.48 $ 150,000 |
FEDERAL AND STATE INCOME TAXES
FEDERAL AND STATE INCOME TAXES (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
FEDERAL AND STATE INCOME TAXES | |
Components of our income tax expense | 2023 2022 Current: State 104 39 Total current 104 39 Deferred: Federal (20 ) (37 ) State 20 37 Total deferred — — Total income tax expense $ 104 $ 39 |
Effective income tax rate reconciliation | 2023 2022 Federal income tax (benefit) at statutory rates $ (3,160 ) $ (3,888 ) Foreign tax rate adjustment (13 ) 122 State income tax, net of federal income tax effect (71 ) (256 ) Nondeductible expenses 102 188 State return to accrual (4 ) 30 Prior year adjustments and true-ups (26 ) 61 Change in valuation allowance 3,276 3,782 Total tax expense $ 104 $ 39 |
Deferred tax assets and (liabilities) | 2023 2022 Noncurrent Deferred tax assets Federal and state net operating loss carryforward $ 13,770 $ 12,006 Tax credit carryforwards 1,977 1,977 Allowance for uncollectible accounts 986 491 Accruals not yet deductible for tax purposes 448 548 Goodwill 112 177 Lease payable 1,696 1,897 Capitalized research & development expenses 1,748 1,086 Depreciation 8 — Total noncurrent deferred tax assets 20,745 18,182 Less: Valuation allowance (19,442 ) (16,166 ) Total noncurrent deferred tax assets, net $ 1,303 $ 2,016 Noncurrent deferred tax liabilities: Depreciation — (10 ) Other (108 ) (116 ) Right-of-use asset (1,195 ) (1,890 ) Total noncurrent deferred tax liabilities (1,303 ) (2,016 ) Net deferred tax assets/deferred tax Liabilities $ — $ — |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 30, 2023 | |
SEGMENT INFORMATION | |
Segment information | For the year ended December 30, 2023: Commercial Government Corporate Consolidated Operating revenues $ 30,072 8,964 — 39,036 Operating income (loss) (11,082 ) 1,145 (4,956 ) (14,893 ) Depreciation and amortization 733 11 189 933 Tangible assets 11,740 3,060 3,267 18,067 Goodwill — 720 — 720 Other intangible assets — — — — Total assets 11,740 3,780 3,267 18,787 Capital expenditures 379 — 84 463 For the year ended December 31, 2022: Commercial Government Corporate Consolidated Operating revenues $ 32,096 $ 8,093 $ — $ 40,189 Operating income (loss) (14,495 ) 935 (4,767 ) (18,327 ) Depreciation and amortization 731 14 188 933 Tangible assets 19,526 1,312 8,465 29,303 Goodwill — 720 — 720 Other intangible assets — — — — Total assets 19,526 2,032 8,465 30,023 Capital expenditures 348 23 209 580 |
ACCOUNTING POLICIES AND NEW A_4
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS (Details) | 12 Months Ended |
Dec. 30, 2023 | |
Furniture and Fixtures | Maximum | |
Estimated useful lives | 7 years |
Furniture and Fixtures | Minimum [Member] | |
Estimated useful lives | 5 years |
Shop Equipment | Maximum | |
Estimated useful lives | 10 years |
Shop Equipment | Minimum [Member] | |
Estimated useful lives | 5 years |
Computer Equipment | Maximum | |
Estimated useful lives | 5 years |
Computer Equipment | Minimum [Member] | |
Estimated useful lives | 3 years |
Software | Maximum | |
Estimated useful lives | 5 years |
Software | Minimum [Member] | |
Estimated useful lives | 3 years |
ACCOUNTING POLICIES AND NEW A_5
ACCOUNTING POLICIES AND NEW ACCOUNTING PRONOUNCEMENTS (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
Impairment loss | $ 1.8 | $ 2.5 |
Customer 1 | Revenue | ||
Concentration risk | 18% | 17.30% |
Customer 1 | Trade Receivables | ||
Trade receivables | $ 0.5 | |
Customer 2 | ||
Concentration risk | 10% | 10% |
Customer 2 | Revenue | ||
Concentration risk | 16.20% | 12.80% |
Customer 2 | Trade Receivables | ||
Trade receivables | $ 0.3 | $ 3.7 |
Customer 3 | Trade Receivables | ||
Concentration risk | 10% | 10% |
Trade receivables | $ 7 | $ 1.6 |
DETAIL OF CERTAIN BALANCE SHE_3
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (Details) - USD ($) $ in Thousands | Dec. 30, 2023 | Dec. 31, 2022 |
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | ||
Amounts billed | $ 10,106 | $ 9,061 |
Amounts unbilled | 662 | 619 |
Retainage | 0 | 93 |
Less: allowance for uncollectible accounts | (4,336) | (2,129) |
Trade receivables, net | $ 6,432 | $ 7,644 |
DETAIL OF CERTAIN BALANCE SHE_4
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (Details 1) - USD ($) $ in Thousands | Dec. 30, 2023 | Dec. 31, 2022 |
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | ||
Prepaid expenses | $ 793 | $ 1,397 |
Other receivables - employee | 0 | 19 |
Inventory | 94 | 129 |
Other receivable | 105 | 35 |
Prepaid expenses and other current assets | $ 992 | $ 1,580 |
DETAIL OF CERTAIN BALANCE SHE_5
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (Details 2) - USD ($) $ in Thousands | Dec. 30, 2023 | Dec. 31, 2022 |
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | ||
Accrual for known contingencies | $ 0 | $ 17 |
Customer prepayments | 177 | 17 |
Warranty reserve | 171 | 511 |
Gross receipts tax payable | 3 | 0 |
Property tax payable | 47 | 0 |
State income taxes payable | 83 | 30 |
Unearned revenue | 50 | 50 |
Insurance payable | 446 | 509 |
Other current liabilities | $ 977 | $ 1,134 |
DETAIL OF CERTAIN BALANCE SHE_6
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (Details Narrative) $ in Millions | Dec. 25, 2021 USD ($) |
DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS | |
Trade receivables | $ 7.7 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Dec. 30, 2023 | Dec. 31, 2022 |
Property and equipment, gross | $ 4,290 | $ 5,233 |
Accumulated depreciation and amortization | (2,930) | (3,476) |
Property and equipment, net | 1,360 | 1,757 |
Computer Equipment and Software | ||
Property and equipment, gross | 1,479 | 1,500 |
Shop Equipment | ||
Property and equipment, gross | 2,364 | 2,609 |
Furniture and Fixtures | ||
Property and equipment, gross | 7 | 196 |
Leasehold Improvements | ||
Property and equipment, gross | 340 | 828 |
Autos And Trucks | ||
Property and equipment, gross | $ 100 | $ 100 |
PROPERTY AND EQUIPMENT (Detai_2
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
PROPERTY AND EQUIPMENT | ||
Depreciation expense | $ 0.6 | $ 0.5 |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
Total revenue | $ 39,036 | $ 40,189 |
Fixed-Price Revenue | ||
Total revenue | 27,514 | 30,050 |
Time-and-Material Revenue | ||
Total revenue | $ 11,522 | $ 10,139 |
CONTRACTS (Details)
CONTRACTS (Details) - USD ($) $ in Thousands | Dec. 30, 2023 | Dec. 31, 2022 |
CONTRACTS | ||
Costs incurred on uncompleted contracts | $ 23,318 | $ 59,298 |
Estimated earnings on uncompleted contracts | 3,602 | 4,464 |
Earned revenues | 26,920 | 63,762 |
Less: billings to date | 24,819 | 59,784 |
Net costs and estimated earnings in excess of billings | 2,101 | 3,978 |
Costs and estimated earnings in excess of billings on uncompleted contracts | 3,296 | 4,934 |
Billings in excess of costs and estimated earnings on uncompleted contracts | (1,195) | (956) |
Net costs in excess of billings on uncompleted contracts | $ 2,101 | $ 3,978 |
CONTRACTS (Details Narrative)
CONTRACTS (Details Narrative) - USD ($) $ in Millions | Dec. 30, 2023 | Dec. 31, 2022 | Dec. 25, 2021 |
CONTRACTS | |||
Deferred revenue | $ 0 | $ 0.2 | |
Costs in excess of billings | $ 4.2 | ||
Billings in excess of costs on uncompleted contracts | $ 2.1 | ||
Contingency amounts | $ 0.2 | $ 1 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | Dec. 30, 2023 | Dec. 31, 2022 |
DEBT | ||
Revolving credit facility | $ 0 | $ 1,661 |
Credit Agreement | 1,047 | 0 |
Priority Agreement | 0 | 0 |
Total debt | 1,047 | 1,661 |
Amount due within one year | 1,047 | 1,661 |
Total long-term debt | $ 0 | $ 0 |
DEBT (Details 1)
DEBT (Details 1) - USD ($) | Dec. 30, 2023 | Dec. 31, 2022 |
Long-term debt | $ 1,047,000 | $ 1,661,000 |
Revolving Credit Facility | ||
2024 | 1,047,000 | |
Thereafter | 0 | |
Long-term debt | $ 1,047,000 |
DEBT (Details Narrative)
DEBT (Details Narrative) - USD ($) | 1 Months Ended | ||
Jun. 15, 2023 | Mar. 27, 2023 | May 21, 2020 | |
Aggregate principal amount | $ 1,250,000 | ||
Minimum [Member] | |||
Discount rate | 2.75% | ||
Maximum [Member] | |||
Discount rate | 8.25% | ||
Revolving Credit Facility | |||
Aggregate principal amount | $ 6,000,000 | ||
Description of credit agreement | The Credit Agreement provides for an initial term loan of $1,000,000 and, under certain conditions, an additional term loan of $250,000. During the one-year term of the loan, the Company will make interest-only payments on a quarterly basis. The loan carries an annual interest rate of 8.5% and has an origination fee of 0.5%, payable upon maturity | ||
Maturity Date | Jun. 15, 2023 | ||
Agreement termination date | Jan. 23, 2024 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
Total operating lease expense | $ 289 | $ 248 |
Total lease expense | 4,999 | 2,957 |
SG&A Expense | ||
Total finance lease expense | 237 | 204 |
Total operating lease expense | 3,948 | 2,218 |
Interest Expense, Net | ||
Total finance lease expense | 52 | 44 |
Total operating lease expense | 4,710 | 2,709 |
Operating Costs | ||
Total operating lease expense | $ 762 | $ 491 |
LEASES (Details 1)
LEASES (Details 1) - USD ($) $ in Thousands | Dec. 30, 2023 | Dec. 31, 2022 |
ROU assets | $ 5,874 | $ 8,833 |
Current lease liabilities - operating leases | 1,726 | 1,638 |
Current lease liabilities - finance leases | 263 | 211 |
Noncurrent lease liabilities - operating leases | 5,761 | 6,669 |
Noncurrent lease liabilities - finance leases | 548 | 548 |
Total lease liabilities | 8,298 | 9,066 |
ROU assets - operating leases | 5,079 | 8,072 |
Property and Equipment, Net | ||
ROU assets - finance leases | 795 | 761 |
Right of Use Asset | ||
ROU assets - operating leases | $ 5,079 | $ 8,072 |
LEASES (Details 2)
LEASES (Details 2) | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
LEASES | ||
Weighted average remaining lease term (years) - operating leases | 6 years 7 months 6 days | 7 years 3 months 18 days |
Weighted average discount rate - operating leases | 10.20% | 11% |
Weighted average remaining lease term (years) - finance leases | 3 years 1 month 6 days | 3 years 8 months 12 days |
Weighted average discount rate - finance leases | 9.10% | 8.20% |
LEASES (Details 3)
LEASES (Details 3) - USD ($) $ in Thousands | Dec. 30, 2023 | Dec. 31, 2022 |
Operating Leases | ||
2024 | $ 1,919 | |
2025 | 1,395 | |
2026 | 920 | |
2027 | 951 | |
2028 and thereafter | 3,157 | |
Total lease payments | 8,342 | |
Less: imputed interest | (855) | |
Total lease liabilities | 7,487 | |
Finance Leases | ||
2024 | 305 | |
2025 | 268 | |
2026 | 239 | |
2027 | 65 | |
2028 and thereafter | 14 | |
Total lease payments | 891 | |
Less: imputed interest | (80) | |
Total lease liabilities | 811 | |
Total | ||
2024 | 2,224 | |
2025 | 1,663 | |
2026 | 1,159 | |
2027 | 1,016 | |
2028 and thereafter | 3,171 | |
Total lease payments | 9,233 | |
Less: imputed interest | 935 | |
Total lease liabilities | $ 8,298 | $ 9,066 |
LEASES (Details Narrative)
LEASES (Details Narrative) $ in Millions | 12 Months Ended |
Dec. 30, 2023 USD ($) | |
LEASES | |
Discount rate | 7.71% |
Impairment losses | $ 1.8 |
Leases fair value | $ 1.6 |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
EMPLOYEE BENEFIT PLANS | ||
Contributions by employer | $ 0.3 | $ 0.2 |
STOCK COMPENSATION PLANS (Detai
STOCK COMPENSATION PLANS (Details) | 12 Months Ended |
Dec. 30, 2023 $ / shares shares | |
STOCK COMPENSATION PLANS | |
Number of unvested restricted shares, beginning balance | shares | 11,622 |
Number of unvested restricted shares, granted | shares | 155,235 |
Number of unvested restricted shares, vested | shares | (48,050) |
Number of unvested restricted shares, forfeited | shares | (1,818) |
Weighted-average grant-date fair value, beginning | $ / shares | $ 19.20 |
Weighted-average grant-date fair value, granted | $ / shares | 5.19 |
Weighted-average grant-date fair value, vested | $ / shares | 2.80 |
Weighted-average grant-date fair value, forfeited | $ / shares | $ 34.42 |
STOCK COMPENSATION PLANS (Det_2
STOCK COMPENSATION PLANS (Details 1) - USD ($) | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
Restricted Stock | July 12, 2023 [Member] | ||
Shares issued to | Directors | |
Number of shares | 142,860 | |
Market price | $ 2.80 | |
Fair value | $ 400,008 | |
Restricted Stock One [Member] | August 9, 2023 [Member] | ||
Shares issued to | Employees | |
Number of shares | 12,375 | |
Market price | $ 2.80 | |
Fair value | $ 34,650 | |
Restricted Stock Two [Member] | June 9, 2022 [Member] | ||
Shares issued to | Director | |
Number of shares | 14,313 | |
Market price | $ 10.48 | |
Fair value | $ 150,000 |
STOCK COMPENSATION PLANS (Det_3
STOCK COMPENSATION PLANS (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
Number of shares available to be issued pursuant to the Equity Plan | 5,376 | |
Non-cash stock-based compensation expense | $ 0.3 | $ 0.2 |
Unrecognized compensation cost related to unvested restricted stock awards | $ 0.3 | |
Unrecognized compensation cost related to unvested restricted stock awards, period of recognition | 1 year 4 months 24 days | |
Common stock shares | 5,156,583 | 4,475,078 |
Stock Compensation [Member] | ||
Common stock shares | 1,500,000 |
TREASURY STOCK (Details Narrati
TREASURY STOCK (Details Narrative) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 30, 2023 | Apr. 21, 2015 | |
TREASURY STOCK | ||
Shares authorized | $ 2 | |
Purchased shares | 161,308 | |
Stock retired | $ (1.6) |
REDEEMABLE PREFERRED STOCK (Det
REDEEMABLE PREFERRED STOCK (Details Narrative) | Dec. 30, 2023 $ / shares shares |
REDEEMABLE PREFERRED STOCK | |
Preferred stock, shares authorized | shares | 2,000,000 |
Preferred stock, par value | $ / shares | $ 0.001 |
FEDERAL AND STATE INCOME TAXE_2
FEDERAL AND STATE INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
Current: | ||
State | $ 104 | $ 39 |
Total current | 104 | 39 |
Deferred: | ||
Federal | (20) | (37) |
State | 20 | 37 |
Total income tax expense | 104 | 39 |
Total deferred | $ 0 | $ 0 |
FEDERAL AND STATE INCOME TAXE_3
FEDERAL AND STATE INCOME TAXES (Details 1) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
Federal income tax (benefit) at statutory rate of 21% | $ (3,160) | $ (3,888) |
Foreign tax rate adjustment | (13) | 122 |
Nondeductible expenses | 102 | 188 |
State RTA | (4) | 30 |
Prior year adjustments and true-ups | (26) | 61 |
Change in valuation allowance | 3,276 | 3,782 |
Total tax expenses | 104 | 39 |
Federal And State Income Taxes [Member] | ||
State income tax, net of federal income tax effect | $ (71) | $ (256) |
FEDERAL AND STATE INCOME TAXE_4
FEDERAL AND STATE INCOME TAXES (Details 2) - USD ($) $ in Thousands | Dec. 30, 2023 | Dec. 31, 2022 |
FEDERAL AND STATE INCOME TAXES | ||
Federal and state net operating loss carryforward | $ 13,770 | $ 12,006 |
Tax credit carryforwards | 1,977 | 1,977 |
Allowance for uncollectible accounts | 986 | 491 |
Accruals not yet deductible for tax purposes | 448 | 548 |
Goodwill | 112 | 177 |
Capitalized research & development expenses | 1,748 | 1,086 |
Depreciation | 8 | 0 |
Lease payable | 1,696 | 1,897 |
Total noncurrent deferred tax assets | 20,745 | 18,182 |
Less: valuation allowance | (19,442) | (16,166) |
Depreciation | 0 | (10) |
Total noncurrent deferred tax assets, net | 1,303 | 2,016 |
Other | 108 | 116 |
Right to use asset | 1,195 | 1,890 |
Total noncurrent deferred tax liabilities | (1,303) | (2,016) |
Net deferred tax assets/deferred tax liabilities | $ 0 | $ 0 |
FEDERAL AND STATE INCOME TAXE_5
FEDERAL AND STATE INCOME TAXES (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 30, 2023 USD ($) | |
FEDERAL AND STATE INCOME TAXES | |
Description of taxable income | 80% of taxable income when utilized. For NOL’s incurred in tax year 2017 and prior, the limitation to 80% of taxable income does not apply, but the NOL’s are subject to expiration |
Description of expire | expire in 2032 |
Federal net operating loss carry-forward | $ 6,080 |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 30, 2023 | Dec. 31, 2022 | |
Operating revenues | $ 39,036 | $ 40,189 |
Operating loss | (14,893) | (18,327) |
Depreciation and amortization | 933 | 933 |
Tangible assets | 18,067 | 29,303 |
Goodwill | 720 | 720 |
Other intangible assets | 2,800 | |
Other intangible assets | 0 | 0 |
Total assets | 18,787 | 30,023 |
Property and equipment acquired | 463 | 580 |
Property and equipment acquired | 174 | 602 |
Government [Member] | ||
Operating revenues | 8,964 | 8,093 |
Operating loss | 1,145 | 935 |
Depreciation and amortization | 11 | 14 |
Tangible assets | 3,060 | 1,312 |
Goodwill | 720 | 720 |
Other intangible assets | 0 | 0 |
Total assets | 3,780 | 2,032 |
Capital expenditures | 0 | 23 |
Commercial [Member] | ||
Operating revenues | 30,072 | 32,096 |
Operating loss | (11,082) | (14,495) |
Depreciation and amortization | 733 | 731 |
Tangible assets | 11,740 | 19,526 |
Goodwill | 0 | 0 |
Other intangible assets | 0 | 0 |
Total assets | 11,740 | 19,526 |
Capital expenditures | 379 | 348 |
Corporate | ||
Operating revenues | 0 | 0 |
Operating loss | (4,956) | (4,767) |
Depreciation and amortization | 189 | 188 |
Tangible assets | 3,267 | 8,465 |
Goodwill | 0 | 0 |
Other intangible assets | 0 | 0 |
Total assets | 3,267 | 8,465 |
Property and equipment acquired | $ 84 | $ 209 |
EMPLOYEE RETENTION CREDIT (Deta
EMPLOYEE RETENTION CREDIT (Details Narrative) | Dec. 30, 2023 USD ($) |
EMPLOYEE RETENTION CREDIT | |
Unpaid employee retention credit | $ 1,500 |
STOCKHOLDERS EQUITY (Details Na
STOCKHOLDERS EQUITY (Details Narrative) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Dec. 30, 2023 | Feb. 01, 2023 | |
Warrants to purchase | 496,375 | |
Purchase Agreement [Member] | ||
Stock issued | 496,375 | |
Offering price | $ 6.80 | |
Proffessional fees | $ 3 |
ACQUISITION (Details Narrative)
ACQUISITION (Details Narrative) - USD ($) $ in Thousands | Dec. 30, 2023 | Dec. 31, 2022 |
Common stock issued | $ 5 | $ 4 |
Cash acquired | 2,500 | |
Additional cash | 1,400 | |
Calvert Group Belgium [Member] | ||
Common stock issued | 800 | |
Cash acquired | 500 | |
Additional cash | 1,400 | |
Common stock | 600 | |
Capitalized amount | $ 200 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) $ in Thousands | 12 Months Ended |
Dec. 30, 2023 USD ($) | |
INTANGIBLE ASSETS | |
Intangible assets | $ 2,800 |
Estimated fair value contingent consideration | $ 140 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) $ in Millions | 1 Months Ended |
Jan. 30, 2024 USD ($) | |
Subsequent Event [Member] | |
Credit Facility agreement | $ 0.2 |