SEC Info - Englobal Corp. - ‘10-Q’ for 6/25/22

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		Alternative Formats (Word, et al.) Controls and Procedures Defaults Upon Senior Securities Exhibits Financial Information Financial Statements Item 1 Item 1A Item 2 Item 3 Item 4 Item 5 Item 6 Legal Proceedings Management's Discussion and Analysis of Financial Condition and Results of Operations Mine Safety Disclosures Notes to Unaudited Interim Condensed Consolidated Financial Statements Other Information Part I Part II Quantitative and Qualitative Disclosures About Market Risk Risk Factors Signatures Table of Contents Unaudited Condensed Consolidated Balance Sheets at June 25, 2022 and December 25, 2021 Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 25, 2022 and June 26, 2021 Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 25, 2022 and June 26, 2021 Unaudited Condensed Consolidated Statements of Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 25, 2022 and June 26, 2021 Unregistered Sales of Equity Securities and Use of Proceeds
1	1st Page – Filing Submission
"	Table of Contents
"	Part I
"	Financial Information
"	Item 1
"	Financial Statements
"	Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 25, 2022 and June 26, 2021
"	Unaudited Condensed Consolidated Balance Sheets at June 25, 2022 and December 25, 2021
"	Unaudited Condensed Consolidated Statements of Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 25, 2022 and June 26, 2021
"	Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 25, 2022 and June 26, 2021
"	Notes to Unaudited Interim Condensed Consolidated Financial Statements
"	Item 2
"	Management's Discussion and Analysis of Financial Condition and Results of Operations
"	Item 3
"	Quantitative and Qualitative Disclosures About Market Risk
"	Item 4
"	Controls and Procedures
"	Part II
"	Other Information
"	Legal Proceedings
"	Item 1A
"	Risk Factors
"	Unregistered Sales of Equity Securities and Use of Proceeds
"	Defaults Upon Senior Securities
"	Mine Safety Disclosures
"	Item 5
"	Item 6
"	Exhibits
"	Signatures

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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shortened period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

As of August 4, 2022, the registrant had outstanding i 35,802,313 shares of common stock, par value $0.001 per share.

See accompanying notes to unaudited interim condensed consolidated financial statements.

Under the typical payment terms of our fixed-price contracts, the customer pays us progress payments. These progress payments are based on quantifiable measures of performance or on the achievement of specified events or milestones. The customer may retain a small portion of the contract price until completion of the contract. Revenue recognized in excess of billings is recorded as a contract asset on the balance sheet. Amounts billed and due from our customers are classified as receivables on the balance sheet. The portion of the payments retained by the customer until final contract settlement is not considered a significant financing component because the intent is to protect the customer should we fail to adequately complete some or all of our obligations under the contract. For some contracts we may receive advance payments from the customer. We record a liability for these advance payments in contract liabilities on the balance sheet. The advance payment typically is not considered a significant financing component because it is used to meet working capital demand that can be higher in the early stages of a contract and to protect us from the other party failing to adequately complete some or all of its obligations under the contract.

To determine proper revenue recognition for contracts, we evaluate whether two or more contracts should be combined and accounted for as one single performance obligation or whether a single contract should be accounted for as more than one performance obligation. This evaluation requires significant judgment and the decision to combine a group of contracts or separate a single contract into multiple performance obligations could change the amount of revenue and profit recorded in a given period. For most of our contracts, we provide a significant service of integrating a complex set of tasks and components into a single project. Hence, the entire contract is accounted for as one performance obligation. Less commonly, we may provide distinct goods or services within a contract in which case we separate the contract into more than one performance obligation. If a contract is separated into more than one performance obligation, we allocate the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling price of the promised goods or services underlying each performance obligation and use the expected cost plus margin approach to estimate the standalone selling price of each performance obligation. Due to the nature of the work required to be performed on many of our performance obligations, the estimation of total revenue and cost at completion is complex, subject to variables and requires significant judgment. We estimate variable consideration at the most likely amount to which we expect to be entitled. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us.

Contracts are often modified to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of our contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase or a reduction of revenue) on a cumulative catch-up basis.

We have a standard, monthly process in which management reviews the progress and execution of our performance obligations. As part of this process, management reviews information including, but not limited to, any outstanding key contract matters, progress towards completion and the related program schedule, identified risks and opportunities and the related changes in estimates of revenues and costs. The risks and opportunities include management’s judgment about the ability and cost to achieve the schedule, technical requirements, and other contractual requirements. Management must make assumptions and estimates regarding labor productivity and availability, the complexity of the work to be performed, the availability of materials, the length of time to complete the performance obligation, execution by our subcontractors, the availability and timing of funding from our customer and overhead cost rates, among other variables.

Based on this analysis, any adjustments to revenue, operating costs and the related impact to operating income are recognized as necessary in the period they become known. These adjustments may result from positive performance and may result in an increase in operating income during the performance of individual performance obligations if we determine we will be successful in mitigating risks surrounding the technical, schedule and cost aspects of those performance obligations or realizing related opportunities. When estimates of total costs to be incurred exceed total estimates to be earned, a provision for the entire loss on the performance obligation is recognized in the period the loss becomes known. Likewise, these adjustments may result in a decrease in operating income if we determine we will not be successful in mitigating these risks or realizing related opportunities. Changes in estimates of net revenue, operating costs and the related impact to operating income are recognized monthly on a cumulative catch-up basis, which recognizes in the current period the cumulative effect of the changes on current and prior periods based on a performance obligation’s percentage of completion. A significant change in one or more of these estimates could affect the profitability of one or more of our performance obligations.

Set forth below are certain of the material terms of the Revolving Credit Facility:

Credit Limit: The credit limit is an amount equal to the lesser of (a) the Maximum Credit Limit and (b) the sum of (i) i 85% of the Borrowers’ Eligible Accounts (as defined in the Revolving Credit Facility), plus (ii) the lesser of (A) i 75% of the Borrowers’ Eligible Unbilled Accounts (as defined in the Revolving Credit Facility), or (B) $ i 3,000,000 plus (iii) the lesser of (A) i 20% of Borrowers’ Eligible Fixed Price Accounts, or (B) $ i 250,000. As of June 25, 2022, the credit limit under the Revolving Credit Facility was $ i 1.8 million.

Interest: Any Loans will bear interest at a rate per annum equal to the Prime rate (defined as the rate announced as the “prime rate” or “bank prime rate” in the Western Edition of the Wall Street Journal) plus i 2.0%; provided that interest will not be less than $ i 7,500 per month.

Collateral: Lender receives a first priority lien on all assets of the Borrowers, including accounts receivable, contract assets, inventory, equipment, deposit accounts, general intangibles and investment property.

Maturity: The maturity date is i May 20, 2023 and shall be automatically extended for additional periods of one-year each, if written notice of termination is not given by one party to the other at least thirty days prior to the maturity date.

Loan Fee: The Borrowers will pay to Lender a loan fee of i 1.00% of the Maximum Credit Limit at the time of funding and annually thereafter on the anniversary date of the initial funding.

Termination Fee: In the event the Borrowers terminate the Revolving Credit Facility prior to the maturity date, the Borrowers will pay to Lender a termination fee of (i) i 2.00% of the Maximum Credit Limit, if the termination occurs on or prior to the first anniversary of the Closing Date, (ii) i 1.00% of the Maximum Credit Limit, if the termination occurs after the first anniversary of the Closing Date and on or prior to the second anniversary of the Closing Date and (iii) i 0.05% of the Maximum Credit Limit, if the termination occurs after the second anniversary of the Closing Date.

Covenants: The Revolving Credit Facility requires the Borrowers to comply with certain customary affirmative covenants, and negative covenants that, among other things, restrict, subject to certain exceptions, the ability of the Borrowers to engage in mergers, acquisitions or other transactions outside of the ordinary course of business, make loans or investments, incur indebtedness, pay dividends or repurchase stock, or engage in affiliate transactions. The Revolving Credit Facility does not require the Borrowers to comply with any financial covenants.

Supplemental balance sheet information related to leases was as follows (dollars in thousands):

The weighted average remaining lease term and weighted average discount rate were as follows:

Maturities of operating lease liabilities as of June 25, 2022 are as follows (dollars in thousands):

On January 11, 2022, the Company entered into a sales agreement (the “ATM Agreement”) with Lake Street Capital Markets, LLC (“Lake Street”) pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $ i 30 million to or through Lake Street, as sales agent, from time to time, in an “at the market offering”. The Company is not obligated to make any sales under the agreement and any determination by the Company to do so will be dependent, among other things, on market conditions and the Company’s capital raising needs. Upon the filing with the SEC on March 11, 2022 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2021, the Company’s registration statement on Form S-3 (File No. 333-252572), including the accompanying prospectus and related prospectus supplements related to the “at the market offering”, became subject to the provisions of General Instruction I.B.6 of Form S-3, which provides that i the Company may not sell securities in a public primary offering with a value exceeding one-third of its public float in any twelve-month period unless its public float is at least $75 million. As of March 7, 2022, the Company’s public float (i.e., the aggregate market value of its outstanding equity securities held by non-affiliates) was approximately $ i 56.1 million, based on the closing price per share of the Company’s common stock as reported on the Nasdaq Capital Market on March 7, 2022, as calculated in accordance with General Instruction I.B.6 of Form S-3. If the Company’s public float meets or exceeds $75 million at any time, the Company will no longer be subject to the restrictions set forth in General Instruction I.B.6 of Form S-3, at least until the filing of its next Section 10(a)(3) update as required under the Securities Act. During the first half of 2022, $ i 0.1 million in direct costs related to the ATM Agreement were recorded as a reduction of equity.

Supplemental balance sheet information related to intangible assets is as follows (dollars in thousands):

The future scheduled amortization of our intangible asset is as follows (in thousands):

We may pay contingent consideration over the next five years based on the achievement of certain revenue benchmarks. The purchase price includes the original estimated fair value of the contingent consideration recorded at the present value of approximately $ i 1.5 million. The estimated fair value of the contingent consideration was determined using a probability-weighted discounted cash flow model. We determined the fair value of the contingent consideration obligations by calculating the probability-weighted contingent consideration payments based on our assessment of the likelihood that the benchmarks will be achieved. The probability-weighted contingent consideration payments were then discounted using a discount rate based on the risk free rate of return ( i 10 year treasury rate) plus a risk premium using the probability-weighted cash flows. The fair value measurement is a Level 3 measurement. The fair value of the contingent consideration is reviewed quarterly.

The following tables summarize the Company's assets and liabilities that are measured at fair value on a recurring basis (in thousands):

The following table provides a roll-forward of the fair value of the contingent consideration categorized as Level 3 for the periods ending June 25, 2022 and December 25, 2021 (in thousands):

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain information contained in this Quarterly Report on Form 10-Q, as well as other written and oral statements made or incorporated by reference from time to time by the Company and its representatives in other reports, filings with the Securities and Exchange Commission (the “SEC”), press releases, conferences or otherwise, may be deemed to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). This information includes, without limitation, statements concerning the Company’s future financial position and results of operations, planned capital expenditures, business strategy and other plans for future operations, the future mix of revenues and business, customer retention, project reversals, commitments and contingent liabilities, future demand and industry conditions. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Generally, the words “anticipate,” “believe,” “estimate,” “expect,” “may” and similar expressions, identify forward-looking statements, which generally are not historical in nature. Actual results could differ materially from the results described in the forward-looking statements due to the risks and uncertainties set forth under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q, the specific risk factors identified under Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 25, 2021, and those described from time to time in our future reports filed with the SEC.

The following discussion is qualified in its entirety by, and should be read in conjunction with, the Company’s financial statements, including the notes thereto, included in this Quarterly Report on Form 10-Q and the Company’s Annual Report on Form 10-K for the year ended December 25, 2021.

ENGlobal Corporation (which may be referred to as “ENGlobal,” the “Company,” “we,” “us” or “our”), incorporated in the State of Nevada in June 1994, is a leading provider of innovative, delivered project solutions primarily to the energy industry. We deliver these solutions to our clients by combining our vertically-integrated engineering and professional project execution services with our automation and systems integration expertise and fabrication capabilities. We believe our vertically-integrated strategy allows us to differentiate our company from most of our competitors as a full-service provider, thereby reducing our clients’ dependency on and coordination of multiple vendors and improving control over their project costs and schedules. Our strategy and positioning has also allowed the Company to pursue larger scopes of work centered around many different types of modularized engineered systems.

We focus on four strategic markets where we have a long history of delivering project solutions and can provide complete project execution and have focused our business development teams on communicating these offerings to their clients. These four targeted markets include: (i) Energy & Renewables, (ii) Automation, (iii) Oil, Gas, and Petrochemicals, and (iv) Government Services.

We continue to be mindful of our overhead structure. We have made significant investments in key business development and other essential personnel, product developments and new facilities and equipment, which have all negatively impacted our selling, general and administrative (“SG&A”) expense. We believe the addition of these key personnel will allow the Company to expand its client base and acquire new projects. We recognize that the level of our SG&A is greater than it could be for a company our size; however, we have maintained our overhead structure in anticipation of higher revenue levels.

Our Board of Directors continues to review strategic transactions, which could include strategic acquisitions, mergers, reverse mergers, the issuance or buyback of public shares, or the purchase or sale of specific assets, in addition to other potential actions aimed at increasing shareholder value. The Company does not intend to disclose or comment on developments related to its review unless and until the Board has approved a specific transaction or otherwise determined that further disclosure is appropriate. There can be no assurance that the Board’s strategic review will result in any transaction, or any assurance as to its outcome or timing.

On March 11, 2020, the World Health Organization declared that the worldwide spread and severity of a new coronavirus, referred to as COVID-19, was severe enough to be characterized as a pandemic. The continued worldwide spread of COVID-19, in conjunction with related government and other preventative measures taken to mitigate the spread of COVID-19, have caused severe disruptions in the worldwide economy, including the global demand for oil and natural gas. In response, companies within the energy industry (including our customers) announced capital spending cuts which, in turn, resulted in a decrease in new project awards. As a result, we have not been successful in replacing our backlog as quickly as it has been converted to revenues, and our backlog has decreased by approximately $46.4 million from $59.2 million at December 28, 2019 to $12.8 million as of December 25, 2021.

During the fourth quarter of 2021 and into the first quarter of 2022, many of our clients returned to their offices and project development began to return. As a result, we began spending a significant amount of man hours bidding many of these new and resurrected projects for our clients. Some of these projects have been awarded to us during the first half of 2022 increasing our backlog by approximately $6.2 million during the first half of 2022 to $19.0 million as of June 25, 2022. We believe we have many potential opportunities in our sales pipeline that could replace a significant portion of the backlog reduction since the end of 2019. We believe our backlog and our opportunity pipeline is sufficient to keep a significant portion of our workforce productive in the near term.

Our critical accounting policies are further disclosed in Note 2 to the consolidated financial statements included in our 2021 Annual Report on Form 10-K.

Goodwill - Goodwill represents the excess of the purchase price of acquisitions over the fair value of the net assets acquired and liabilities assumed. Goodwill is not amortized but rather is tested and assessed for impairment annually, or more frequently if certain events or changes in circumstance indicate the carrying amount may exceed fair value. The annual test for goodwill impairment is performed in the fourth quarter of each year.

The Company compares its fair value of a reporting unit and the carrying value of the reporting unit to measure goodwill impairment. Fair value was determined by applying a historical earnings multiple times the cash flow of the operating unit after allocation of certain corporate overhead. Estimating the cash flow of the operating unit requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates and future market conditions, among others. It is possible that changes in market conditions, economy, facts, circumstances, judgments and assumptions used in estimating the fair value could change, resulting in possible impairments of goodwill in the future.

Contingent consideration – As part of the asset acquisition, the Company recognized the fair value of the contingent consideration based on estimates and assumtions by management. 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 changes in the costs basis of the assets and liabilities recognized.

Employee retention credit - Since there is no US GAAP guidance for for-profit business entities that receive government assistance that is not in the form of a loan, an income tax credit or revenue from a contract with a customer, we determined the appropriate accounting treatment by analogy to other guidance. We accounted for the employee retention credit by analogy to International Accounting Standards (IAS) 20, Accounting for Government Grants and Disclosure of Government Assistance, of International Financial Reporting Standards (IFRS).

Under an IAS 20 analogy, a business entity would recognize the 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.

In the course of providing our time-and-material services, we routinely provide materials and equipment and may provide construction management services on a subcontractor basis. Generally, these materials, equipment and subcontractor costs are passed through to our clients and reimbursed, along with small handling fees, which in general are at margins lower than those of our normal core business. In accordance with industry practice and generally accepted accounting principles, all such costs and fees are included in revenue. The material purchases and the use of subcontractor services can vary significantly from quarter to quarter; therefore, changes in revenue and gross profit, SG&A expense and operating income as a percentage of revenue may not be indicative of the Company’s core business trends.

Segment operating SG&A expense includes management and staff compensation, office costs such as rents and utilities, depreciation, amortization, travel, and other expenses generally unrelated to specific client contracts, but directly related to the support of a segment’s operations. Corporate SG&A expenses include finance, accounting, human resources, business development, legal and information technology which are unrelated to specific projects but which are incurred to support the Company’s activities.

The following table, for the three months ended June 25, 2022 versus the three months ended June 26, 2021, provides relevant financial data that is derived from our consolidated statements of operations (amounts in thousands except per share data).

The following table, for the six months ended June 25, 2022 versus the six months ended June 26, 2021, provides relevant financial data that is derived from our consolidated statements of operations (amounts in thousands except per share data).

Revenue – Revenue increased $0.3 million to $11.4 million from $11.1 million, or an increase of 2.5%, for the three months ended June 25, 2022 as compared to the three months ended June 26, 2021. The increase is primarily due to the progress of work on our Government Service contracts, the award of several projects within our Commercial segment, partially offset by the completion of several large projects within our Commercial segment and projects that were not renewed.

Revenue decreased $4.8 million to $18.7 million from $23.5 million, or a decrease of 20.4%, for the six months ended June 25, 2022 as compared to the six months ended June 26, 2021. The decrease is primarily due to the completion of several large projects within our Commercial segment and projects that were not renewed as our clients were not accessible during the pandemic due to COVID-19 related restrictions, which negatively impacted our ability to interact with our clients. We believe that personal interaction is essential in our industry to build and maintain customer relationships and to drive new business. The decrease was partially offset by revenue from project awards with new customers as we continue our business development efforts to increase our backlog.

Gross Profit – Gross profit margin increased 11.0% to 11.7% from 0.7% for the three months ended June 25, 2022 as compared to the three months ended June 26, 2021. The increase in gross profit margin is primarily attributable to increased utilitization of personnel on project awards within our Commercial segment.

Gross profit margin decreased 1.0% to 3.6% from 4.6% for the six months ended June 25, 2022 as compared to the six months ended June 26, 2021. The decrease in gross profit margin is primarily attributable to the decrease in project volume in addition to an increase in Commercial segment costs associated with maintaining essential staffing as projects were completed without subsequent renewals or replacements and increased proposal activity from our efforts to replenish our backlog, partially offset by revenue from projects awards in 2022.

Selling, General and Administrative Expense – SG&A expenses decreased by $1.4 million for the three months ended June 25, 2022 as compared to the three months ended June 26, 2021 due to the $1.4 million bad debt reserve recorded during the second quarter of 2021 with no comparable occurrence in 2022, and a decrease in salaries and burden expense of $0.1 million, partially offset by an increase in office and marketing expense of $0.1 million, and an increase in recruiting and travel expenses of $0.1 million as we increased our business development efforts.

SG&A expenses decreased by $1.1 million for the six months ended June 25, 2022 as compared to the six months ended June 26, 2021 due to the $1.4 million bad debt reserve recorded during the second quarter of 2021 with no comparable occurrence in 2022, partially offset by an increase in office and marketing expense of $0.1 million, an increase in legal expense of $0.1 million as we filed a bid protest to challenge an award of a federal contract, and an increase in recruiting and travel expenses of $0.1 million as we hired an operational leader and increased our business development efforts.

Other Income (Expense), Net – Other income, net of expense, increased $15 thousand for the three months ended June 25, 2022 as compared to the three months ended June 26, 2021.

Other income, net of expense, decreased $1.7 million for the six months ended June 25, 2022 as compared to the six months ended June 26, 2021 primarily due to the $1.7 million employee retention credit recorded in the first quarter of 2021 with no comparable occurrence in 2022.

Interest Expense, net – Interest expense is incurred primarily in connection with our Revolving Credit Facility (defined below) and our finance leases. Our interest expense decreased to $52 thousand for the three months ended June 25, 2022 from $57 thousand for the three months ended June 26, 2021.

Our interest expense decreased to $103 thousand for the six months ended June 25, 2022 from $115 thousand for the six months ended June 26, 2021.

Tax Expense – Tax expense is incurred primarily for our state franchise taxes. We recorded income tax benefit of $56 thousand for the three months ended June 25, 2022 due to a revised forecast for the year compared to income tax expense of $23 thousand for the three months ended June 26, 2021.

We recorded income tax expense of $22 thousand for the six months ended June 25, 2022 compared to income tax expense of $46 thousand for the six months ended June 26, 2021.

Net Income (Loss) – Net loss for the three months ended June 25, 2022 was $1.5 million, or a $2.8 million decrease from net loss of $4.3 million for the three months ended June 26, 2021, primarily as a result of an increase in revenue and gross profit and increased utilitization of personnel on project awards within our Commercial segment.

Net loss for the six months ended June 25, 2022 was $5.2 million, or a $0.9 million increase from net loss of $4.2 million for the six months ended June 26, 2021, primarily as a result of a decrease in revenue and gross profit, increased business development costs within our Commercial segment, in addition to the employee retention credit recorded in the first quarter of 2021 with no comparable occurrence in 2022.

The Company defines liquidity as its ability to pay its liabilities as they become due, fund business operations and meet monetary contractual obligations. Our primary sources of liquidity are cash on hand, internally generated funds, sales of common stock pursuant to the ATM Agreement (defined below), and borrowings under the Revolving Credit Facility. We had cash of approximately $14.1 million at June 25, 2022 and $19.2 million at December 25, 2021. Our working capital as of June 25, 2022 was $19.4 million versus $26.3 million as of December 25, 2021.

As of June 25, 2022, the credit limit under the Revolving Credit Facility was $1.8 million and outstanding borrowings were $1.2 million, which yields enough interest to cover our minimum monthly interest charge. As of June 25, 2022, we were in compliance with all of the covenants under the Revolving Credit Facility. For additional information on the Revolving Credit Facility, see Part I, Item 1, Note 5 – Debt.

On January 11, 2022, we entered into a sales agreement (the “ATM Agreement”) with Lake Street Capital Markets, LLC (“Lake Street”) pursuant to which we may offer and sell shares of our common stock having an aggregate offering price of up to $30 million to or through Lake Street, as sales agent, from time to time, in an “at the market offering”. The Company is not obligated to make any sales under the agreement and any determination by the Company to do so will be dependent, among other things, on market conditions and the Company’s capital raising needs. Upon the filing with the SEC on March 11, 2022 of our Annual Report on Form 10-K for the fiscal year ended December 25, 2021, our registration statement on Form S-3 (File No. 333-252572), including the accompanying prospectus and related prospectus supplements related to the “at the market offering”, became subject to the provisions of General Instruction I.B.6 of Form S-3, which provides that we may not sell securities in a public primary offering with a value exceeding one-third of our public float in any twelve-month period unless our public float is at least $75 million. As of March 7, 2022, the Company’s public float (i.e., the aggregate market value of its outstanding equity securities held by non-affiliates) was approximately $56.1 million, based on the closing price per share of our common stock as reported on the Nasdaq Capital Market on March 7, 2022, as calculated in accordance with General Instruction I.B.6 of Form S-3. If our public float meets or exceeds $75 million at any time, we will no longer be subject to the restrictions set forth in General Instruction I.B.6 of Form S-3, at least until the filing of our next Section 10(a)(3) update as required under the Securities Act.

We believe our cash on hand, internally generated funds, availability under the Revolving Credit Facility, and sales of common stock pursuant to the ATM Agreement, along with other working capital, will be sufficient to fund our current operations and expected activity for the next twelve months.

Cash and the availability of cash could be materially restricted if (1) outstanding invoices billed are not collected or are not collected in a timely manner, (2) circumstances prevent the timely internal processing of invoices, (3) we lose one or more of our major customers or our major customers significantly reduce the amount of work requested from us, (4) we are unable to win new projects that we can perform on a profitable basis or (5) we are unable to reverse our use of cash to fund losses. If any such event occurs, we would be forced to consider alternative financing options.

Operating activities used $4.0 million of cash for the six months ended June 25, 2022 and used $4.6 million of cash for the six months ended June 26, 2021. The primary drivers of our cash used in operations for the six months ended June 25, 2022 were our net loss of $5.2 million mainly as a result of a decrease in revenue and gross profit, along with increased business development costs within our Commercial segment, an increase in contract assets net of contract liabilities of $1.2 million, and a decrease of other current liabilities and income tax payable of $0.5 million, partially offset by cash provided from a decrease in accrued compensation and benefits of $0.1 million, a decrease of trade payables of $0.3 million, a decrease in trade receivables of $0.4 million, a decrease in other current assets of $1.6 million, and $0.5 million from other components of working capital.

Investing activities used cash of $1.0 million for the six months ended June 25, 2022 primarily related to the Calvert acquisition in addition to the purchase of personal property and equipment and $88 thousand for the six months ended June 26, 2021 for the purchase of personal property and equipment.

Financing activities used $0.1 million of cash for the six months ended June 25, 2022 primarily for costs associated with the ATM Agreement and payments for our finance leases, partially offset by proceeds received from the Revolving Credit Facility. Financing activities provided cash of $20.1 million for the six months ended June 26, 2021 primarily due to sales of common stock under the ATM Agreement and Purchase Agreement, interest on the PPP Loan (defined below), and proceeds received from the Revolving Credit Facility partially offset by the interest incurred on our finance leases. On April 13, 2020, we obtained a $4.9 million loan (the “PPP Loan”) pursuant to the Paycheck Protection Program under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act, which was forgiven in full during 2021.

The Company is obligated to make future cash payments under the Revolving Credit Facility, operating leases, finance leases, and other liabilities. Amounts below are undiscounted and may differ from balances reflected on the financial statements. The table below sets forth certain information about our contractual obligations as of June 25, 2022 (in thousands):

Disclosure controls and procedures are controls and other procedures of a registrant designed to ensure that information required to be disclosed by the registrant in the reports that it files or submits under the Exchange Act is properly recorded, processed, summarized and reported, within the time periods specified in the SEC rules and forms. Disclosure controls and procedures include processes to accumulate and evaluate relevant information and communicate such information to a registrant’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of June 25, 2022, as required by Rule 13a-15 of the Exchange Act. Based on the evaluation described above, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 25, 2022, our disclosure controls and procedures were effective insofar as they are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

No changes in our internal control over financial reporting occurred during the three months ended June 25, 2022, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

From time to time, ENGlobal or one or more of its subsidiaries may be involved in various legal proceedings or may be subject to claims that arise in the ordinary course of business alleging, among other things, claims of breach of contract or negligence in connection with the performance or delivery of goods and/or services. The outcome of any such claims or proceedings cannot be predicted with certainty. As of the date of this filing, management is not aware of any such claims against the Company or any subsidiary business entity.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 25, 2021, which outline factors that could materially affect our business, financial condition or future results, and the additional risk factors below. These risks are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial conditions or operating results.

The COVID–19 pandemic has adversely affected and could continue to adversely affect our business, financial condition and results of operations. Our business is dependent upon the willingness and ability of our customers to conduct transactions with us. The COVID–19 pandemic has caused severe disruptions in the worldwide economy, including the global demand for oil and natural gas. In response, companies within the energy industry (including our customers) announced capital spending cuts which, in turn, resulted in a decrease in new project awards and/or adjustments, reductions, suspensions, cancellations or payment defaults with respect to existing project awards. The prolonged nature of the COVID–19 pandemic has resulted, and may continue to result, in a significant decrease in business and/or has caused, and may in the future cause, our customers to be unable to meet existing payment or other obligations to us, particularly in the event of a spread of COVID–19 in our market areas. The COVID–19 pandemic may also negatively impact the availability of our key personnel necessary to conduct our business as well as the business and operations of third-party service providers who perform critical services for our business. Because the severity, magnitude and duration of the COVID-19 pandemic and its economic consequences are uncertain, rapidly changing and difficult to predict, the impact on our business, financial condition and results of operations remains uncertain and difficult to predict. If COVID–19 continues to spread or if the response to contain the COVID-19 pandemic is unsuccessful, we could experience a material adverse effect on our business, financial condition, and results of operations.

Economic downturns and the volatility and level of oil and natural gas prices could have a negative impact on our businesses. Demand for the services offered by us has been and is expected to continue to be, subject to significant fluctuations due to a variety of factors beyond our control, including demand for engineering services in the petroleum refining, petroleum chemical and pipeline industries and in other industries that we provide services to. During economic downturns in these industries, our customers’ need to engage us may decline significantly and projects may be delayed or cancelled. We cannot predict how long the current economic downturn will last or how long the price of oil will remain relatively low. However, these factors can cause our profitability to decline significantly. Our clients’ willingness to undertake these activities depends largely on the following factors:

Anticipated future prices for oil and natural gas are a primary factor affecting spending by our clients. Historically, the markets for oil and natural gas have been volatile and lower prices or volatility in prices for oil and natural gas typically decreases spending by our clients, which can cause rapid and material declines in demand for our services and in the prices we are able to charge for our services. Further, a sustained period of lower prices or volatility in prices for oil and natural gas can exacerbate the potential for cancellations and adjustments to our backlog from our clients in the oil and natural gas industry. The February 2022 invasion of Ukraine by Russia is an ongoing conflict. As a result of the invasion, certain events are beginning to effect the global and United States economy, including increased inflation, substantial increases in the prices of oil and gas, large Western companies ceasing to do business in Russia and uncertain capital markets with declines in the leading market indexes. The duration of this war and its impact on our business are uncertain, but it is likely to continue causing disruption and instability which may lead to additional volatility in prices for oil and natural gas.

Our backlog has declined significantly due to the COVID-19 pandemic and is subject to unexpected adjustments and cancellations and is, therefore, an uncertain indicator of our future revenue or earnings. Our backlog has declined significantly due to the COVID-19 pandemic because we have not been successful in replacing our backlog as quickly as it has been converted to revenues due to inefficiencies and complications resulting from many of our clients’ remote working conditions combined with the uncertainty of new project necessity and funding caused by COVID-19 related disruptions that have led to delays in project awards. Further, the COVID-19 pandemic has affected our ability to make business development contacts with customers. As a result, our backlog has decreased by approximately $46.4 million from $59.2 million at December 28, 2019 to $12.8 million as of December 25, 2021. During the first half of 2022, however, our backlog increased by approximately $6.2 million to $19.0 million as of June 25, 2022 as a result of our clients returning to their offices and project investment decisions being made again. We expect the majority of our backlog to be completed within 12 months. While we believe our backlog is sufficient to keep a significant portion of our workforce productive in the near term, it may not be at our current operating levels. We cannot assure investors that we will be successful in replacing our backlog as quickly as it has been converted to revenues, which will reduce future revenue and profits and impact our financial performance. In addition, we cannot assure investors that the revenue projected in our backlog will be realized or, if realized, will result in profits. Projects currently in our backlog may be canceled or may remain in our backlog for an extended period of time prior to project execution and, once project execution begins, it may occur unevenly over the current and multiple future periods. In addition, project terminations, suspensions or reductions in scope occur from time to time with respect to contracts reflected in our backlog, reducing the revenue and profit we actually receive from contracts reflected in our backlog. Future project cancellations and scope adjustments could further reduce the dollar amount of our backlog in addition to the revenue and profits that we actually earn. The potential for project cancellations, terminations, suspensions or reductions in scope and adjustments to our backlog are exacerbated by economic conditions, particularly in the energy industry which is experiencing volatility in oil prices since the beginning of 2020 due to concerns about the COVID–19 pandemic and its impact on the worldwide economy and global demand for oil and more recently as a result of the Russia-Ukraine conflict. We are unable to predict when market conditions may improve and worsening overall market conditions could result in further declines in our backlog.

If we are unable to collect our receivables, our results of operations and cash flows could be adversely affected. Our business depends on our ability to successfully obtain payment from our clients of the amounts they owe us for work performed and materials supplied. In the ordinary course of business, we extend unsecured credit to our customers. We may also agree to allow our customers to defer payment on projects until certain milestones have been met or until the projects are substantially completed, and customers typically withhold some portion of amounts due to us as retainage. As of June 25, 2022 we had one project that had $1.3 million in retainage. We bear the risk that our clients will pay us late or not at all. Though we evaluate and attempt to monitor our clients’ financial condition, there is no guarantee that we will accurately assess their creditworthiness. To the extent the credit quality of our clients deteriorates or our clients seek bankruptcy protection, our ability to collect receivables and our results of operations could be adversely affected. Even if our clients are credit-worthy, they may delay payments in an effort to manage their cash flow. Financial difficulties or business failure experienced by one or more of our major customers has had and could, in the future, continue to have a material adverse effect on both our ability to collect receivables and our results of operations. For example, on July 12, 2021, one of our major customers filed bankruptcy after suspending operations during the second quarter of 2021, which led to our recording of a $1.4 million bad debt reserve and a $0.5 million reduction in backlog during the year ended December 25, 2021.

The following table sets forth certain information with respect to repurchases of our common stock for the second quarter of 2022:

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
i Common Stock, $0.001 par value		i ENG		i NASDAQ

Large Accelerated Filer	☐	Accelerated Filer	☐
i Non-Accelerated Filer	☒	Smaller Reporting Company	i ☒
Emerging growth company	☐

		Page Number

Part I.	Financial Information	3

Item 1.	Financial Statements	3

	Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 25, 2022 and June 26, 2021	3

	Unaudited Condensed Consolidated Balance Sheets at June 25, 2022 and December 25, 2021	4

	Unaudited Condensed Consolidated Statements of Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 25, 2022 and June 26, 2021	5

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 25, 2022 and June 26, 2021	6

	Notes to Unaudited Interim Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4.	Controls and Procedures	28

Part II.	Other Information	29

Item 1.	Legal Proceedings	29

Item 1A.	Risk Factors	29

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32

Item 3.	Defaults Upon Senior Securities	32

Item 4.	Mine Safety Disclosures	32

Item 5.	Other Information	32

Item 6.	Exhibits	33

	Signatures	34

	June 25, 2022			December 25, 2021
ASSETS
Current Assets:
Cash	$	i 14,139		$	i 19,202
Trade receivables, net of allowances of $ i 273 and $ i 1,673		i 7,310			i 7,692
Prepaid expenses and other current assets		i 436			i 958
Payroll taxes receivable		i 2,003			i 3,065
Contract assets		i 5,645			i 4,177
Total Current Assets		i 29,533			i 35,094
Property and equipment, net		i 1,500			i 1,698
Goodwill		i 720			i 720
Intangible assets, net of accumulated amortization		i 2,746			i —
Other assets
Right of use asset		i 4,001			i 4,251
Deposits and other assets		i 282			i 306
Total Other Assets		i 4,283			i 4,557
Total Assets	$	i 38,782		$	i 42,069

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:
Accounts payable	$	i 2,298		$	i 2,001
Accrued compensation and benefits		i 2,252			i 2,183
Current portion of leases		i 1,293			i 1,389
Contract liabilities		i 2,332			i 2,054
Current portion of deferred payroll tax		i 537			i 537
Other current liabilities		i 207			i 667
Short-term contingent consideration		i 46			i —
Short-term debt		i 1,218			i —
Total Current Liabilities		i 10,183			i 8,831

Long-term contingent consideration		i 1,309			i —
Long-term debt		i —			i 1,035
Long-term leases		i 3,682			i 4,012
Total Liabilities		i 15,174			i 13,878
Commitments and Contingencies (Note 8)
Stockholders’ Equity:
Common stock - $ i 0.001 par value; i 75,000,000 shares authorized; i 35,802,313 shares issued and outstanding at June 25, 2022 and i 35,230,675 shares issued and outstanding at December 25, 2021		i 36			i 35
Additional paid-in capital		i 57,972			i 57,403
Accumulated deficit		( i 34,400	)		( i 29,247	)
Total Stockholders’ Equity		i 23,608			i 28,191
Total Liabilities and Stockholders’ Equity	$	i 38,782		$	i 42,069

	For the Six Months Ended
	June 25, 2022			June 26, 2021
Cash Flows from Operating Activities:
Net loss	$	( i 5,153	)	$	( i 4,210	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		i 368			i 187
Share-based compensation expense		i 111			i 107
Changes in current assets and liabilities
Trade accounts receivable		i 382			i 1,217
Contract assets		( i 1,468	)		i 1,190
Other current assets		i 1,608			( i 1,234	)
Accounts payable		i 297			( i 164	)
Accrued compensation and benefits		i 69			( i 569	)
Contract liabilities		i 278			( i 698	)
Income taxes payable		( i 27	)		( i 54	)
Other current liabilities, net		( i 433	)		( i 347	)
Net cash used in operating activities	$	( i 3,968	)	$	( i 4,575	)

Cash Flows from Investing Activities:
Asset acquisition, net of cash acquired		( i 937	)		i —
Property and equipment acquired		( i 92	)		( i 88	)
Net cash used in investing activities	$	( i 1,029	)	$	( i 88	)

Cash Flows from Financing Activities:
Issuance of common stock, net		i —			i 20,052
At-the-market offering costs		( i 67	)		i —
Payments on finance leases		( i 182	)		( i 55	)
Interest on PPP loan		i —			i 25
Proceeds from revolving credit facility, net		i 183			i 110
Net cash provided by (used in) financing activities	$	( i 66	)	$	i 20,132
Net change in cash		( i 5,063	)		i 15,469
Cash at beginning of period		i 19,202			i 13,706
Cash at end of period	$	i 14,139		$	i 29,175

Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	i 98		$	i 115
Right of use assets obtained in exchange for new operating lease liability	$	i 354		$	i 256
Cash paid during the period for income taxes (net of refunds)	$	i 48		$	i 151
Asset acquisition, common stock issued	$	i 525		$	i —
Asset acquisition, contingent consideration	$	i 1,355		$	i —

Englobal Corp. – ‘10-Q’ for 6/25/22

On: Friday, 8/5/22, at 6:04am ET · For: 6/25/22 · Accession #: 1654954-22-10637 · File #: 1-14217

Previous ‘10-Q’: ‘10-Q’ on 5/5/22 for 3/26/22 · Next: ‘10-Q’ on 11/8/22 for 9/24/22 · Latest: ‘10-Q’ on 11/13/23 for 9/30/23 · 2 References:

Quarterly Report — Form 10-Q

Filing Table of Contents

‘10-Q’ — Quarterly Report

Document Table of Contents

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Dates Referenced Herein and Documents Incorporated by Reference

2 Previous Filings that this Filing References

	For the Three Months Ended
	June 25, 2022			June 26, 2021
Common Stock
Balance at beginning of period	$	i 35		$	i 28
Common stock issued		i 1			i 7
Balance at the end of the period		i 36			i 35
Additional Paid-in Capital
Balance at beginning of period		i 57,407			i 37,202
Common stock issued		i 525			i 20,045
At-the-market offering costs		( i 15	)		i -
Share-based compensation - employees		i 55			i 62
Balance at end of period		i 57,972			i 57,309

Accumulated Deficit
Balance at beginning of period		( i 32,867	)		( i 23,516	)
Net loss		( i 1,533	)		( i 4,256	)
Balance at end of period		( i 34,400	)		( i 27,772	)

Total Stockholders’ Equity	$	i 23,608		$	i 29,572

	June 25, 2022			December 25, 2021
Costs incurred on uncompleted contracts	$	i 47,537		$	i 36,429
Estimated earnings on uncompleted contracts		i 6,282			i 4,866
Earned revenues		i 53,819			i 41,295
Less: billings to date		i 50,506			i 39,172
Net costs and estimated earnings in excess of billings (billings in excess of costs) on uncompleted contracts	$	i 3,313		$	i 2,123

Contract assets	$	i 5,645		$	i 4,177
Contract liabilities		( i 2,332	)		( i 2,054	)
Net contract assets	$	i 3,313		$	i 2,123

	June 25, 2022			December 25, 2021
Revolving Credit Facility (1)	$	i 1,218		$	i 1,035
Amount due within one year		( i 1,218	)		i —
Total long-term debt	$	i —		$	i 1,035

	Revolving Credit Facility
2022	$	i —
2023		i 1,218
2024 and thereafter		i —
	$	i 1,218

Total Assets by Segment	As of June 25, 2022		As of December 25, 2021
	(dollars in thousands)
Commercial	$	i 17,036	$	i 12,535
Government Services		i 2,881		i 3,788
Corporate		i 18,865		i 25,746
Consolidated	$	i 38,782	$	i 42,069

	Financial Statement Classification	June 25, 2022		December 25, 2021
ROU Assets:
Operating leases	Right of use asset	$	i 4,001	$	i 4,251
Finance leases	Property and equipment, net		i 796		i 979
Total ROU Assets:		$	i 4,797	$	i 5,230

Lease liabilities:
Current liabilities
Operating leases	Current portion of leases	$	i 1,093	$	i 1,153
Finance leases	Current portion of leases		i 200		i 236
Noncurrent Liabilities:
Operating leases	Long-term leases		i 3,086		i 3,269
Finance leases	Long-term leases		i 596		i 743
Total lease liabilities		$	i 4,975	$	i 5,401

	At June 25, 2022
Weighted average remaining lease term (years)
Operating leases		i 4.8
Finance leases		i 4.0
Weighted average discount rate
Operating leases		i 0.9	%
Finance leases		i 8.1	%

	June 25, 2022			December 25, 2021
Licenses	$	i 2,816		$	i —
Accumulated amortization		( i 70	)		i —
Intangible assets, net of accumulated depreciation	$	i 2,746		$	i —

	Intagible Asset Amortization
2022 (remaining months)	$	i 265
2023		i 532
2024		i 532
2025		i 532
2026		i 532
2027		i 353
	$	i 2,746

	June 25, 2022		December 25, 2021
Opening balance	$	i —	$	i —
Contingent consideration in connection with acquisition		i 1,355		i —
Ending balance	$	i 1,355	$	i —

	Commercial			Government Services			Corporate			Consolidated
For the three months ended June 25, 2022:
Revenue	$	9,203		$	2,152		$	—		$	11,355		100.0	%
Gross profit		701			631			—			1,332		11.7	%
SG&A		1,605			172			1,113			2,890		25.5	%
Operating income (loss)		(904	)		459			(1,113	)		(1,558	)	(13.7	)%
Other income, net											21
Interest expense, net											(52	)
Tax benefit											56
Net loss											(1,533	)	(13.5	)%
Basic and diluted loss per share										$	(0.04	)

	Commercial			Government Services			Corporate			Consolidated
For the three months ended June 26, 2021:
Revenue		9,157			1,922			—			11,079		100.0	%
Gross profit (loss)		(201	)		283			—			82		0.7	%
SG&A		2,816			188			1,260			4,264		38.5	%
Operating income (loss)		(3,017	)		95			(1,260	)		(4,182	)	(37.7	)%
Other income, net											6
Interest expense, net											(57	)
Tax expense											(23	)
Net loss											(4,256	)	(38.4	)%
Basic and diluted loss per share											(0.14	)

	Commercial			Government Services			Corporate			Consolidated
Year Over Year Increase (Decrease) in Operating Results:
Revenue	$	46		$	230		$	—		$	276		2.5	%
Gross profit		902			348			—			1,250
SG&A		(1,211	)		(16	)		(147	)		(1,374	)	(32.2	)%
Operating income (loss)		2,113			364			147			2,624		62.7	%
Other income, net											15
Interest expense, net											5
Tax expense											79
Net loss											2,723		(64.0	)%
Basic and diluted loss per share										$	0.10

	Payment Due by Fiscal Period
	2022		2023		2024		2025		2026 and thereafter
Operating and finance leases	$	770	$	1,151	$	1,038	$	793	$	1,333
Revolving Credit Facility		—		1,218		—		—		—
Other liabilities⁽¹⁾		124		—		—		—		—
Total	$	894	$	2,369	$	1,038	$	793	$	1,333

	·	Prices and expectations about future prices of oil and natural gas;
	·	Domestic and foreign supply of and demand for oil and natural gas;
	·	The cost of exploring for, developing, producing and delivering oil and natural gas;
	·	Weather conditions, such as hurricanes, which may affect our clients’ ability to produce oil and natural gas;
	·	Available pipeline, storage and other transportation capacity;
	·	Federal, state and local regulation of oilfield activities;
	·	Environmental concerns regarding the methods our customers use to produce oil and natural gas;
	·	The availability of water resources and the cost of disposal and recycling services; and
	·	Seasonal limitations on access to work locations

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)		Maximum Number (or Approximate Dollar Value) of Shares That May Yet be Purchased Under Plans or Programs (1)
March 27, 2022 to April 23, 2022		—		—		—	$	—
April 24, 2022 to May 28, 2022		—		—		—	$	—
May 29, 2022 to June 25, 2022		—		—		—	$	—
Total		—		—		1,290,460	$	425,589

		Incorporated by Reference to:
Exhibit No.	Description	Form or Schedule	Exhibit No.	Filing Date with SEC	SEC File Number

3.1	Restated Articles of Incorporation of Registrant dated January 29, 2021	8-K	3.1	1/29/2021	001-14217

3.2	Second Amended and Restated Bylaws of Registrant dated April 14, 2016	8-K	3.1	4/15/2016	001-14217

*31.1	Certifications Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934

*31.2	Certifications Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934

**32.1	Certification Pursuant to Rule 13a – 14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*101.ins	Inline XBRL instance document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document

*101.sch	Inline XBRL taxonomy extension schema document

*101.cal	Inline XBRL taxonomy extension calculation linkbase document

*101.def	Inline XBRL taxonomy extension definition linkbase document

*101.lab	Inline XBRL taxonomy extension label linkbase document

*101.pre	Inline XBRL taxonomy extension presentation linkbase document

*104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Dated: August 4, 2022
	ENGlobal Corporation

	By:	/s/ *Darren W. Spriggs*
		Darren W. Spriggs
		Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

This ‘10-Q’ Filing	Date	Other Filings

	5/20/23
Filed on:	8/5/22
	8/4/22	8-K
For Period end:	6/25/22
	5/29/22
	5/28/22
	5/18/22
	4/24/22
	4/23/22
	3/27/22
	3/11/22	10-K
	3/7/22
	1/11/22	424B5, 8-K
	1/7/22
	12/25/21	10-K
	7/12/21	8-K
	6/26/21	10-Q
	6/1/21	8-K
	1/29/21	8-K, S-3
	5/21/20	8-K
	4/13/20	8-K
	3/11/20
	12/28/19	10-K
	12/19/18
	5/16/17
	4/21/15	8-K
		List all Filings