PART
I – FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
ENGlobal
Corporation
Condensed
Consolidated Statements of Operations
(Unaudited)
(amounts
in thousands, except per share data)
|
|
For the Three Months Ended
|
|
|
|
March 30, 2019
|
|
|
March 31, 2018
|
|
Operating revenues
|
|
$
|
12,163
|
|
|
$
|
13,188
|
|
Operating costs
|
|
|
10,825
|
|
|
|
11,775
|
|
Gross profit
|
|
|
1,338
|
|
|
|
1,413
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
2,304
|
|
|
|
2,582
|
|
Operating loss
|
|
|
(966
|
)
|
|
|
(1,169
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
Other income (expense), net
|
|
|
15
|
|
|
|
(5
|
)
|
Interest expense, net
|
|
|
(3
|
)
|
|
|
(9
|
)
|
Loss before income taxes
|
|
|
(954
|
)
|
|
|
(1,183
|
)
|
|
|
|
|
|
|
|
|
|
Provision for federal and state income taxes
|
|
|
20
|
|
|
|
17
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(974
|
)
|
|
$
|
(1,200
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per common share:
|
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares used in computing loss per share:
|
|
|
27,431
|
|
|
|
27,514
|
|
See
accompanying notes to unaudited interim condensed consolidated financial statements.
ENGlobal
Corporation
Condensed
Consolidated Balance Sheets
(Unaudited)
(amounts
in thousands, except share amounts)
|
|
March 30, 2019
|
|
|
December 29, 2018
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
7,297
|
|
|
$
|
6,060
|
|
Trade receivables, net of allowances of $202 and $202
|
|
|
10,182
|
|
|
|
10,211
|
|
Prepaid expenses and other current assets
|
|
|
977
|
|
|
|
1,096
|
|
Contract assets
|
|
|
2,000
|
|
|
|
3,175
|
|
Total Current Assets
|
|
|
20,456
|
|
|
|
20,542
|
|
Property and equipment, net
|
|
|
610
|
|
|
|
677
|
|
Goodwill
|
|
|
720
|
|
|
|
720
|
|
Other assets
|
|
|
|
|
|
|
|
|
Right of use asset
|
|
|
1,378
|
|
|
|
—
|
|
Deposits and other assets
|
|
|
318
|
|
|
|
367
|
|
Total Other Assets
|
|
|
1,696
|
|
|
|
367
|
|
Total Assets
|
|
$
|
23,482
|
|
|
$
|
22,306
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
3,201
|
|
|
$
|
3,172
|
|
Accrued compensation and benefits
|
|
|
1,904
|
|
|
|
2,301
|
|
Contract liabilities
|
|
|
2,010
|
|
|
|
604
|
|
Other current liabilities
|
|
|
1,004
|
|
|
|
740
|
|
Total Current Liabilities
|
|
|
8,119
|
|
|
|
6,817
|
|
Long Term Leases
|
|
|
892
|
|
|
|
—
|
|
Total Liabilities
|
|
|
9,011
|
|
|
|
6,817
|
|
Commitments and Contingencies (Note 6 & 7)
|
|
|
|
|
|
|
|
|
Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
Common stock - $0.001 par value;
75,000,000 shares authorized; 27,409,907 and 27,487,594 shares issued and outstanding at March 30, 2019 and December 29, 2018, respectively
|
|
|
27
|
|
|
|
27
|
|
Additional paid-in capital
|
|
|
36,890
|
|
|
|
36,934
|
|
Accumulated deficit
|
|
|
(22,446
|
)
|
|
|
(21,472
|
)
|
Total Stockholders’ Equity
|
|
|
14,471
|
|
|
|
15,489
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
23,482
|
|
|
$
|
22,306
|
|
See
accompanying notes to unaudited interim condensed consolidated financial statements.
ENGlobal
Corporation
Condensed
Consolidated Statements of Cash Flows
(Unaudited)
(amounts
in thousands)
|
|
For the Three Months Ended
|
|
|
|
March 30, 2019
|
|
|
March 31, 2018
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(974
|
)
|
|
$
|
(1,200
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
84
|
|
|
|
156
|
|
Share-based compensation expense
|
|
|
16
|
|
|
|
76
|
|
Changes in current assets and liabilities:
|
|
|
|
|
|
|
|
|
Trade accounts receivable
|
|
|
29
|
|
|
|
(474
|
)
|
Contract assets
|
|
|
1,175
|
|
|
|
596
|
|
Other current assets
|
|
|
163
|
|
|
|
378
|
|
Accounts payable
|
|
|
29
|
|
|
|
(370
|
)
|
Accrued compensation and benefits
|
|
|
(397
|
)
|
|
|
(475
|
)
|
Contract liabilities
|
|
|
1,406
|
|
|
|
(1,041
|
)
|
Income taxes payable
|
|
|
20
|
|
|
|
14
|
|
Other current liabilities
|
|
|
(253
|
)
|
|
|
(491
|
)
|
Net cash provided by (used in) operating activities
|
|
$
|
1,298
|
|
|
$
|
(2,831
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from notes receivable
|
|
|
5
|
|
|
|
4
|
|
Property and equipment acquired
|
|
|
(5
|
)
|
|
|
(8
|
)
|
Net cash used in investing activities
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Purchase of treasury stock
|
|
|
(60
|
)
|
|
|
—
|
|
Payments on capitalized leases
|
|
|
(1
|
)
|
|
|
(46
|
)
|
Net cash used in financing activities
|
|
$
|
(61
|
)
|
|
$
|
(46
|
)
|
Net change in cash, cash equivalents and restricted cash
|
|
|
1,237
|
|
|
|
(2,881
|
)
|
Cash, cash equivalents and restricted cash, at beginning of period
|
|
|
6,060
|
|
|
|
9,648
|
|
Cash, cash equivalents and restricted cash, at end of period
|
|
$
|
7,297
|
|
|
$
|
6,767
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
Cash paid during the period for interest
|
|
$
|
5
|
|
|
$
|
9
|
|
Right of use assets obtained in exchange for new operating lease liability
|
|
$
|
209
|
|
|
$
|
209
|
|
See
accompanying notes to unaudited interim condensed consolidated financial statements.
ENGlobal
Corporation
Condensed
Consolidated Statements of Stockholders’ Equity
(Unaudited)
(amounts
in thousands, except share amounts)
|
|
Quarter Ended
|
|
|
Quarter Ended
|
|
|
|
March 30, 2019
|
|
|
March 31, 2018
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
$
|
27
|
|
|
$
|
27
|
|
Treasury stock retired
|
|
|
—
|
|
|
|
—
|
|
Balance at end of period
|
|
|
27
|
|
|
|
27
|
|
|
|
|
|
|
|
|
|
|
Additional Paid-in Capital
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
|
36,934
|
|
|
|
36,843
|
|
Share-based compensation - employee
|
|
|
16
|
|
|
|
76
|
|
Treasury stock retired
|
|
|
(60
|
)
|
|
|
—
|
|
Balance at end of period
|
|
|
36,890
|
|
|
|
36,919
|
|
|
|
|
|
|
|
|
|
|
Accumulated Earnings (Deficit)
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
|
(21,472
|
)
|
|
|
(15,801
|
)
|
Net loss
|
|
|
(974
|
)
|
|
|
(1,200
|
)
|
Balance at end of period
|
|
|
(22,446
|
)
|
|
|
(17,001
|
)
|
|
|
|
|
|
|
|
|
|
Treasury Stock
|
|
|
|
|
|
|
|
|
Balance at beginning of period
|
|
|
—
|
|
|
|
—
|
|
Stock repurchased
|
|
|
(60
|
)
|
|
|
—
|
|
Treasury stock retired
|
|
|
60
|
|
|
|
—
|
|
Balance at end of period
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ Equity
|
|
$
|
14,471
|
|
|
$
|
19,945
|
|
See
accompanying notes to unaudited interim condensed consolidated financial statements.
ENGLOBAL
CORPORATION AND SUBSIDIARIES
NOTES
TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1 – BASIS OF PRESENTATION
The
accompanying unaudited condensed consolidated financial statements of ENGlobal Corporation (which may be referred to as “ENGlobal,”
the “Company,” “we,” “us,” or “our”) were prepared in accordance with accounting
principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and
the rules and regulations of the Securities and Exchange Commission. Accordingly, these condensed financial statements do not
include all of the information or note disclosures normally included in annual financial statements prepared in accordance with
U.S. GAAP. These condensed financial statements should be read in conjunction with the audited financial statements for the year
ended December 29, 2018, included in the Company’s 2018 Annual Report on Form 10-K filed with the Securities and Exchange
Commission.
The
condensed financial statements included herein are unaudited for the three month periods ended March 30, 2019 and March 31, 2018,
and in the case of the condensed balance sheet as of December 29, 2018 have been derived from the audited financial statements
of the Company. These financial statements reflect all adjustments (consisting of normal recurring adjustments), which are, in
the opinion of management, necessary to fairly present the results for the periods presented.
The
Company has assessed subsequent events through the date of filing of these condensed financial statements with the Securities
and Exchange Commission and believes that the disclosures made herein are adequate to make the information presented herein not
misleading.
We
had no items of other comprehensive income in any period presented; therefore, no other components of comprehensive income are
presented.
Each
of our quarters is comprised of 13 weeks.
NOTE
2 – ACCOUNTING STANDARDS
In
February 2016, the Financial Statements Accounting Board (“FASB”) issued ASU No. 2016-02,
Leases (Topic 842)
,
that amends the accounting standards for leases. This new standard retains a distinction between finance leases and operating
leases but the primary change is the recognition of lease assets and lease liabilities by lessees for leases classified
as operating leases on the lessee’s balance sheet and certain aspects of lease accounting have been simplified. This new
standard requires additional qualitative and quantitative disclosures along with specific quantitative disclosures required by
lessees and lessors to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty
of cash flows arising from leases. This pronouncement is effective for interim and annual reporting periods beginning after December
15, 2018, with early application permitted. In July 2018, the FASB issued ASU 2018-11,
Leases (Topic 842): Targeted Improvements
,
which allows for an additional transition method under the modified retrospective approach for the adoption of Topic 842. The
two permitted transition methods are now: (1) to apply the new lease requirements at the beginning of the earliest period presented,
and (2) to apply the new lease requirements at the effective date. Under both transition methods there is a cumulative effect
adjustment. We adopted the standard effective December 30, 2018 using the modified retrospective transition approach and elected
not to adjust prior comparative periods. The Company elected the practical expedient to not reassess prior conclusions related
to contracts containing leases, lease classification, lease term and initial direct costs. Upon adoption, the Company recognized
right-of-use assets and lease liabilities of $1.3 million at December 30, 2018. See Note 7.
NOTE
3 – CONTRACT ASSETS AND CONTRACT LIABILITIES
Our
contract assets consist of unbilled amounts typically resulting from sales under long-term contracts when the cost-to-cost method
of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. Our contract liabilities
consist of advance payments and billings in excess of costs incurred and deferred revenue. The noncurrent portion of deferred
revenue is included in other long-term liabilities in our consolidated balance sheets.
Costs,
estimated earnings and billings on uncompleted contracts consisted of the following at March 30, 2019 and December 29, 2018:
|
|
March 30, 2019
|
|
|
December 29, 2018
|
|
|
|
(dollars in thousands)
|
|
Costs incurred on uncompleted contracts
|
|
$
|
20,209
|
|
|
$
|
34,800
|
|
Estimated earnings on uncompleted contracts
|
|
|
4,314
|
|
|
|
6,921
|
|
Earned revenues
|
|
|
24,523
|
|
|
|
41,721
|
|
Less: billings to date
|
|
|
24,533
|
|
|
|
39,150
|
|
Net costs and estimated earnings in excess of billings on uncompleted contracts
|
|
$
|
(10
|
)
|
|
$
|
2,571
|
|
|
|
|
|
|
|
|
|
|
Contract assets
|
|
$
|
2,000
|
|
|
$
|
3,175
|
|
Contract liabilities
|
|
|
(2,010
|
)
|
|
|
(604
|
)
|
Net contract assets
|
|
$
|
(10
|
)
|
|
$
|
2,571
|
|
NOTE
4 – SEGMENT INFORMATION
Our
segments are strategic business units that offer different services and products and therefore require different marketing and
management strategies. The operating performance is regularly reviewed with these two operational leaders, the chief executive
officer (“CEO”), the chief financial officer (“CFO”) and others. This group represents the chief operating
decision maker (“CODM”) for ENGlobal.
The
Engineering, Procurement and Construction Management (“EPCM”) segment provides services relating to the development,
management and execution of projects requiring professional engineering and related project services primarily to the energy industry
throughout the United States. The Automation segment provides services related to the design, integration and implementation of
advanced automation, information technology, process distributed control systems, analyzer systems, and electrical projects primarily
to the upstream and downstream sectors throughout the United States. The Automation segment includes the government services group,
which provides engineering, design, installation and operation and maintenance of various government, public sector and international
facilities and the fabrication operation.
Revenues,
operating income, and identifiable assets for each segment are set forth in the following table. The amount identified as Corporate
includes those activities that are not allocated to the operating segments and includes costs related to business development,
executive functions, finance, accounting, safety, human resources and information technology that are not specifically identifiable
with the segments.
Segment
information for the three months ended March 30, 2019 and March 31, 2018 is as follows (dollars in thousands):
For the three months ended March 30, 2019:
|
|
EPCM
|
|
|
Automation
|
|
|
Corporate
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
5,633
|
|
|
$
|
6,530
|
|
|
$
|
—
|
|
|
$
|
12,163
|
|
Gross profit
|
|
|
671
|
|
|
|
667
|
|
|
|
—
|
|
|
|
1,338
|
|
Gross Profit Margin
|
|
|
11.9
|
%
|
|
|
10.2
|
%
|
|
|
|
|
|
|
11.0
|
%
|
SG&A
|
|
|
587
|
|
|
|
428
|
|
|
|
1,289
|
|
|
|
2,304
|
|
Operating income (loss)
|
|
|
84
|
|
|
|
239
|
|
|
|
(1,289
|
)
|
|
|
(966
|
)
|
Other income, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
|
|
Interest expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
Tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(974
|
)
|
For the three months ended March 31, 2018:
|
|
EPCM
|
|
|
Automation
|
|
|
Corporate
|
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
5,095
|
|
|
$
|
8,093
|
|
|
$
|
—
|
|
|
$
|
13,188
|
|
Gross profit
|
|
|
416
|
|
|
|
997
|
|
|
|
—
|
|
|
|
1,413
|
|
Gross Profit Margin
|
|
|
8.2
|
%
|
|
|
12.3
|
%
|
|
|
|
|
|
|
10.7
|
%
|
SG&A
|
|
|
426
|
|
|
|
705
|
|
|
|
1,451
|
|
|
|
2,582
|
|
Operating income (loss)
|
|
|
(10
|
)
|
|
|
292
|
|
|
|
(1,451
|
)
|
|
|
(1,169
|
)
|
Other expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
Interest expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9
|
)
|
Tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(1,200
|
)
|
Total Assets by Segment
|
|
As of
March 30, 2019
|
|
|
As of
December 29, 2018
|
|
|
|
(dollars in thousands)
|
|
EPCM
|
|
$
|
6,160
|
|
|
$
|
4,792
|
|
Automation
|
|
|
9,357
|
|
|
|
10,550
|
|
Corporate
|
|
|
7,965
|
|
|
|
6,964
|
|
Consolidated
|
|
$
|
23,482
|
|
|
$
|
22,306
|
|
NOTE
5 – FEDERAL AND STATE INCOME TAXES
The
Company accounts for income taxes in accordance with FASB Accounting Standards Codification 740, “Income Taxes” (“ASC
740”). Under ASC 740-270 we estimate an annual effective tax rate based on year-to-date operating results and our projection
of operating results for the remainder of the year. We apply this annual effective tax rate to the year-to-date operating results.
If our actual results differ from the estimated annual projection, our estimated annual effective tax rate can change affecting
the tax expense for successive interim results as well as the estimated annual tax expense results. Certain states are not included
in the calculation of the estimated annual effective tax rate because the underlying basis for the tax is related to revenues
and not taxable income. Amounts for Texas margin taxes are reported as income tax expense.
The
Company applies a more likely than not recognition threshold for all tax uncertainties. The FASB guidance for uncertain tax positions
only allows the recognition of those tax benefits, based on their technical merits that are greater than 50 percent likelihood
of being sustained upon examination by the taxing authorities. Management has reviewed the Company’s tax positions and determined
there are no uncertain tax positions requiring recognition in the financial statements. U.S. federal tax returns prior to 2014
and Texas margins tax returns prior to 2014 are closed. Generally, the applicable statues of limitations are three to four years
from their filings.
The
Company recorded income tax expense of $20 thousand for the three months ended March 30, 2019 as compared to income tax expense
of $17 thousand for the three months ended March 31, 2018.
The
effective income tax rate for the three months ended March 30, 2019 was (2.06)% as compared to (42.79)% for the three months ended
March 31, 2018. The effective tax rate differed from the federal statutory rate of 21% primarily due to the effect of the valuation
allowances related to the expected unrealized deferred tax asset generated by the current year benefit.
NOTE
6 – COMMITMENTS AND CONTINGENCIES
From
time to time, ENGlobal or one or more of its subsidiaries is involved in various legal proceedings or is subject to claims that
arise in the ordinary course of business alleging, among other things, claims of breach of contract or negligence in connection
with the performance or delivery of goods and/or services. The outcome of any such claims or proceedings cannot be predicted with
certainty. Management is not aware of any pending or threatened lawsuits or proceedings that are expected to have a material effect
on our financial position, results of operations or liquidity.
We
carry a broad range of insurance coverage, including general and business automobile liability, commercial property, professional
errors and omissions, workers’ compensation insurance, directors’ and officers’ liability insurance and a general
umbrella policy, all with standard self-insured retentions/deductibles. We also provide health insurance to our employees (including
vision and dental), 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.
NOTE
7 – LEASES
The
Company leases land, office space and equipment. Arrangements are assessed at inception to determine if a lease exists and, with
the adoption of ASC 842, “Leases,” right-of-use (“ROU”) assets and lease liabilities are recognized based
on the present value of lease payments over the lease term. Because the Company’s leases do not provide an implicit rate
of return, the Company uses its incremental borrowing rate at the inception of a lease to calculate the present value of lease
payments. The Company has elected to apply the short-term lease exception for all asset classes, excluding lease liabilities from
the balance sheet and recognizing the lease payments in the period they are incurred.
The
Company’s finance leases are immaterial to our consolidated financial statements.
The
components of lease expense were as follows:
|
|
Three months ended
March 30, 2019
|
|
Operating leases:
|
|
|
|
|
Operating costs
|
|
$
|
213
|
|
Selling, general and administrative expenses
|
|
|
487
|
|
|
|
|
700
|
|
Short-term leases:
|
|
|
|
|
Operating costs
|
|
|
—
|
|
Selling, general and administrative expenses
|
|
|
119
|
|
|
|
|
119
|
|
Total lease expense
|
|
$
|
819
|
|
Supplemental
balance sheet information related to leases was as follows:
|
|
Financial
Statement Classification
|
|
March 30, 2019
|
|
Operating ROU assets
|
|
Right of Use asset
|
|
$
|
1,378
|
|
|
|
|
|
|
|
|
Operating lease liabilities:
|
|
|
|
|
|
|
Current operating lease liabilities
|
|
Other current liabilities
|
|
$
|
498
|
|
Noncurrent operating lease liabilities
|
|
Long Term Leases
|
|
|
892
|
|
Total operating lease liabilities
|
|
|
|
$
|
1,390
|
|
The
weighted average remaining lease term and weighted average discount rate were as follows:
|
|
Three months ended
March 30, 2019
|
|
Weighted average remaining lease term of operating leases
|
|
|
2.7 years
|
|
Weighted average discount rate of operating leases
|
|
|
4.1
|
%
|
Maturities
of operating lease liabilities as of March 30, 2019 are as follows:
Year ending:
|
|
Amount
|
|
2019 (remaining months)
|
|
$
|
396
|
|
2020
|
|
|
555
|
|
2021
|
|
|
434
|
|
2022
|
|
|
64
|
|
Total lease payments
|
|
$
|
1,449
|
|
Less: imputed interest
|
|
|
(59
|
)
|
Total lease liabilities
|
|
$
|
1,390
|
|
The
aggregate amount of future minimum annual rental payments applicable to noncancelable leases as of December 29, 2018 were as follows:
Year ending:
|
|
Minimal Rental Payments
|
|
2019
|
|
$
|
445
|
|
2020
|
|
|
445
|
|
2021
|
|
|
387
|
|
2022
|
|
|
64
|
|
Total
|
|
$
|
1,341
|
|
ENGLOBAL
CORPORATION AND SUBSIDIARIES
MANAGEMENT’S
DISCUSSION AND ANALYSIS
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking
Statements
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, 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. 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 in
this Quarterly Report on Form 10-Q, the specific risk factors identified in the Company’s Annual Report on Form 10-K for
the year ended December 29, 2018, and those described from time to time in our future reports filed with the Securities and Exchange
Commission.
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 29, 2018.
Overview
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 engineered modular solutions
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 mechanical 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
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
are making strides implementing the multi-year strategic initiative we began in the fall of 2017. We have identified modular project
execution offerings as the opportunity to which our capabilities are best applied, focused our business development team on communicating
these offerings to specific clients and realigned our internal reporting structure to better facilitate complete modular project
execution. We have identified seven strategic market initiatives where we have a history of delivering project solutions and can
provide complete project execution that includes engineering, design, fabrication and integration of automated control systems
as a complete packaged solution for our clients, preferably in a modular form. This “design it once – build it many
times” concept has many merits including a single vendor interface, better control of costs, better control of schedule
and lower safety risk. These seven targeted market initiatives include: (1) natural gas and crude oil production systems; (2)
synthesis gas processing; (3) control systems implementation; (4) continuous emission monitoring systems; (5) pipeline pump, compression,
metering, loading and blending systems; (6) adding customer relationships in specific markets for automation; and (7) expanding
government services beyond our heritage contracts. We have identified specific individuals within the Company to lead the efforts
for each market initiative - “a champion” - while coordinating with the other sales leaders.
We
continue to be mindful of our overhead structure. While we have made investments in key individuals, product developments and
new facilities and equipment, which have all negatively impacted our SG&A, we have been able to offset those increases with
decreases in other areas and, overall, our SG&A costs have continued to decrease. 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.
On
April 18, 2018, we announced that our Board of Directors had initiated a review of strategic alternatives, which could include
strategic 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 engaged B. Riley FBR, Inc. as its exclusive financial
advisor during this process. 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.
Critical
Accounting Policies Update
A
summary of our critical accounting policies is described under the caption “Critical Accounting Policies” in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” in our 2018 Annual Report on Form 10-K. Our critical
accounting policies are further disclosed in Note 2 to the consolidated financial statements included in our 2018 Annual Report
on Form 10-K.
Results
of Operations
Historically,
the majority of our revenue has been provided through time-and-material contracts. However, due to our focus on providing engineered
modular solutions, approximately 35% of our revenue was from fixed-price contracts during the first three months of 2019 and 44%
for the first three months of 2018. 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 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 project to project; 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.
Comparison
of the three months ended March 30, 2019 versus the three months ended March 31, 2018
The
following table, for the three months ended March 30, 2019 versus the three months ended March 31, 2018, provides relevant financial
data that is derived from our consolidated statements of operations (amounts in thousands except per share data).
Operations Data
|
|
EPCM
|
|
|
Automation
|
|
|
Corporate
|
|
|
Consolidated
|
|
|
|
|
Three months ended March 30, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
5,633
|
|
|
$
|
6,530
|
|
|
$
|
—
|
|
|
$
|
12,163
|
|
|
|
100
|
%
|
Gross profit
|
|
|
671
|
|
|
|
667
|
|
|
|
—
|
|
|
|
1,338
|
|
|
|
|
|
Gross Profit Margin
|
|
|
11.9
|
%
|
|
|
10.2
|
%
|
|
|
|
|
|
|
11.0
|
%
|
|
|
|
|
SG&A
|
|
|
587
|
|
|
|
428
|
|
|
|
1,289
|
|
|
|
2,304
|
|
|
|
18.9
|
%
|
Operating income (loss)
|
|
|
84
|
|
|
|
239
|
|
|
|
(1,289
|
)
|
|
|
(966
|
)
|
|
|
(7.9
|
)%
|
Other income, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
Interest (expense), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
Tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20
|
)
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(974
|
)
|
|
|
(8.0
|
)%
|
Diluted loss per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.04
|
)
|
|
|
|
|
Three months ended March 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
5,095
|
|
|
$
|
8,093
|
|
|
$
|
—
|
|
|
$
|
13,188
|
|
|
$
|
100
|
%
|
Gross profit
|
|
|
416
|
|
|
|
997
|
|
|
|
—
|
|
|
|
1,413
|
|
|
|
|
|
Gross Profit Margin
|
|
|
8.2
|
%
|
|
|
12.3
|
%
|
|
|
|
|
|
|
10.7
|
%
|
|
|
|
|
SG&A
|
|
|
426
|
|
|
|
705
|
|
|
|
1,451
|
|
|
|
2,582
|
|
|
|
19.6
|
%
|
Operating income (loss)
|
|
|
(10
|
)
|
|
|
292
|
|
|
|
(1,451
|
)
|
|
|
(1,169
|
)
|
|
|
(8.9
|
)%
|
Other expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5
|
)
|
|
|
|
|
Interest (expense), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9
|
)
|
|
|
|
|
Tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17
|
)
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(1,200
|
)
|
|
|
(9.1
|
)%
|
Diluted loss per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.04
|
)
|
|
|
|
|
Increase (Decrease) in
Operating Results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
538
|
|
|
$
|
(1,563
|
)
|
|
$
|
—
|
|
|
$
|
(1,025
|
)
|
|
|
7.8
|
%
|
Gross profit (loss)
|
|
|
255
|
|
|
|
(330
|
)
|
|
|
—
|
|
|
|
(75
|
)
|
|
|
|
|
SG&A
|
|
|
161
|
|
|
|
(277
|
)
|
|
|
(162
|
)
|
|
|
(278
|
)
|
|
|
(10.8
|
)%
|
Operating income
|
|
|
94
|
|
|
|
(53
|
)
|
|
|
162
|
|
|
|
203
|
|
|
|
17.3
|
%
|
Other income, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
|
|
|
|
|
|
Interest expense, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6
|
|
|
|
|
|
Tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3
|
)
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
226
|
|
|
|
18.8
|
%
|
Diluted loss per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.00
|
|
|
|
|
|
Revenue
–
Revenue decreased $1.0 million to $12.2 million from $13.2 million, or a decrease of 7.8%, for the three months
ended March 30, 2019, as compared to the three months ended March 31, 2018. Revenue from the EPCM segment increased $0.5 million
to $5.6 million from $5.1 million, or an increase of 10.6%, for the three months ended March 30, 2019, as compared to the three
months ended March 31, 2018 primarily as a result of increased volume from engineered modular solutions. Revenue from the Automation
segment decreased $1.6 million to $6.5 million from $8.1 million, or a decrease of 19.3%, for the three months ended March 30,
2019, as compared to the three months ended March 31, 2018. This decrease is driven by completed projects for 2018 that have not
been replaced in 2019.
Gross
Profit –
Gross profit margin increased 0.3% to 11.0% from 10.7% for the three months ended March 30, 2019, as compared
to the three months ended March 31, 2018. Gross profit for the EPCM segment increased $0.3 million to $0.7 million from $0.4 million
and its gross profit margin increased 3.7% to 11.9% from 8.2% for the three months ended March 30, 2019, as compared to the three
months ended March 31, 2018. The increase in gross profit margin is primarily attributable to more efficient utilization of our
personnel and increased volume of engineered modular solutions. Gross profit margin for the Automation segment declined 2.1% to
10.2% from 12.3% for the three months ended March 30, 2019, as compared to the three months ended March 31, 2018, primarily due
to decreased utilization of our personnel.
Selling,
General and Administrative –
Overall our SG&A expenses declined by $0.3 million for the three months ended March
30, 2019 as compared to the three months ended March 31, 2018. Office salaries declined by $0.1 million, depreciation and amortization
declined by $0.1 million and our stock compensation costs decreased by $0.1 million for the three months ended March 30, 2019
as compared to the three months ended March 31, 2018.
Interest
Expense, net -
Interest expense is incurred primarily in connection with our insurance financing and our capital leases.
Our interest expense decreased from $9 thousand for the three months ended March 31, 2018 to approximately $3 thousand for the
three months ended March 30, 2019.
Tax
Expense –
We recorded income tax expense of $20 thousand for the three months ended March 30, 2019 as compared to
income tax expense of $17 thousand for the three months ended March 31, 2018.
Net
Loss –
Net loss for the three months ended March 30, 2019 was $1.0 million, or a $0.2 million decrease from a net
loss of $1.2 million for the three months ended March 31, 2018, primarily as a result of lower selling, general and administrative
expense.
Liquidity
and Capital Resources
Overview
The
Company defines liquidity as its ability to pay its liabilities as they become due, fund business operations and meet monetary
contractual obligations. As we are currently operating without a credit facility, our primary sources of liquidity are cash on
hand and internally generated funds. We had cash of approximately $7.3 million at March 30, 2019 and $6.1 million as of December
29, 2018. Our working capital as of March 30, 2019 was $12.3 million versus $13.7 million as of December 29, 2018. Additionally,
we are continuing to proactively seek opportunities to improve our project awards ratio, streamline our project execution, and
increase our project margins and reduce selling, general and administrative costs. However, challenging industry conditions and
a competitive environment that extended throughout fiscal 2018 and the first quarter of 2019 negatively impact our financial results
for the quarter. Despite these market conditions, we believe our cash on hand, internally generated funds and other working capital
will be sufficient to fund our current operations and expected growth 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.
On
April 18, 2018, we announced that our Board of Directors had initiated a review of strategic alternatives, which could include
strategic 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 engaged B. Riley FBR, Inc. as its exclusive financial
advisor during this process. 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.
Cash
Flows from Operating Activities
Operating
activities provided $1.3 million of cash and used $2.8 million of cash for the three months ended March 30, 2019 and March 31,
2018, respectively. The primary drivers of our cash provided in operations for the three months ended March 30, 2019 were increases
of contract assets net of contract liabilities of $2.6 million offset by our operating loss before non-cash expenses of $1.0 million,
and increases of other components of working capital of $0.3 million.
The
primary drivers of our cash used in operations for the three months ended March 31, 2018 were our operating loss before non-cash
expenses of $1.2 million, a decrease in trade receivables of $0.5 million, a decrease of contract assets net of contract liabilities
of $0.4 million and decreases to other components of working capital of $0.7 million.
Cash
Flows from Investing Activities
Investing
activities was nil for the three months ended March 30, 2019 as expenditures for property and equipment of $5 thousand were offset
by proceeds from notes receivable of $5 thousand.
Investing
activities used cash of $4 thousand for the three months ended March 31, 2018 primarily due to the expenditures for property and
equipment reduced by payments from note receivable.
Cash
Flows from Financing Activities
The
use of cash for financing activities during the three months ended March 30, 2019 of $61 thousand was primarily for the purchase
of treasury stock which used $60 thousand. Financing activities for the three months ended March 31, 2018 used $46 thousand for
the payment of our capital leases obligations.
Changes
in Accounting
In
February 2016, the FASB issued ASU No. 2016-02,
Leases (Topic 842)
, that amends the accounting standards for leases. This
new standard retains a distinction between finance leases and operating leases but the primary change is the recognition of lease
assets and lease liabilities by lessees for those leases classified as operating leases on the lessee’s balance sheet and
certain aspects of lease accounting have been simplified. This new standard requires additional qualitative and quantitative disclosures
along with specific quantitative disclosures required by lessees and lessors to meet the objective of enabling users of financial
statements to assess the amount, timing, and uncertainty of cash flows arising from leases. This pronouncement is effective for
interim and annual reporting periods beginning after December 15, 2018, with early application permitted. In July 2018, the FASB
issued ASU 2018-11,
Leases (Topic 842): Targeted Improvements
, which allows for an additional transition method under the
modified retrospective approach for the adoption of Topic 842. The two permitted transition methods are now: (1) to apply the
new lease requirements at the beginning of the earliest period presented, and (2) to apply the new lease requirements at the effective
date. Under both transition methods there is a cumulative effect adjustment. We adopted the standard effective December 30, 2018
using the modified retrospective transition approach and elected not to adjust prior comparative periods. Upon adoption, the Company
recognized right-of-use assets and lease liabilities of $1.3 million at December 30, 2018. See Note 7.
ITEM
3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our
financial instruments include cash and cash equivalents, accounts and notes receivable, accounts payable, capital leases payable
and debt obligations. The book value of cash and cash equivalents, accounts and notes receivable and accounts payable are considered
to be representative of fair value because of the short maturity of these instruments.
We
do not utilize financial instruments for trading purposes and we do not hold any derivative financial instruments that could expose
us to significant market risk. In the normal course of business, our results of operations are exposed to risks associated with
fluctuations in interest rates and, to a minor extent, currency exchange rates.
ITEM
4. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
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 Securities and Exchange Commission’s (“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 March 30, 2019, 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 March 30, 2019, 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.
Changes
in Internal Control over Financial Reporting
No
changes in our internal control over financial reporting occurred during the three months ended March 30, 2019, that materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART
II – OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
From
time to time, ENGlobal or one or more of its subsidiaries is involved in various legal proceedings or is subject to claims that
arise in the ordinary course of business alleging, among other things, claims of breach of contract or negligence in connection
with the performance or delivery of goods and/or services. The outcome of any such claims or proceedings cannot be predicted with
certainty. We believe, as of the date of this filing, all such active proceedings and claims of substance that have been asserted
against ENGlobal or one or more of its subsidiaries have been adequately allowed for, or are covered by insurance, such that,
if determined adversely to the Company, individually or in the aggregate, they would not have a material adverse effect on our
results of operations or financial position.
ITEM
1A. RISK FACTORS
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 29, 2018, 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.
We
are reviewing strategic alternatives and there can be no assurance that we will be successful in identifying or completing any
strategic alternative, that any such strategic alternative will result in additional value for our shareholders or that the process
will not have an adverse impact on our business.
On April 18, 2018, we announced that our Board of Directors had initiated
a review of strategic alternatives. These alternatives could include, but are not limited to, strategic 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. There can be no assurance that the review of strategic alternatives will result in the identification
or consummation of any transaction. Our Board of Directors may also determine that our most effective strategy is to continue
to effectuate our current business plan. The process of reviewing strategic alternatives may be time consuming and disruptive
to our business operations and, if we are unable to effectively manage the process, our business, financial condition and results
of operations could be adversely affected. We could incur substantial expenses associated with identifying and evaluating potential
strategic alternatives. No decision has been made with respect to any transaction and we cannot assure you that we will be able
to identify and undertake any transaction that allows our shareholders to realize an increase in the value of their common stock
or provide any guidance on the timing of such action, if any.
We
also cannot assure you that any potential transaction or other strategic alternative, if identified, evaluated and consummated,
will provide greater value to our shareholders than that reflected in the current price of our common stock. Any potential transaction
would be dependent upon a number of factors that may be beyond our control, including, but not limited to, market conditions,
industry trends, the interest of third parties in our business and the availability of financing to potential buyers on reasonable
terms. We do not intend to comment regarding the evaluation of strategic alternatives until such time as our Board of Directors
has determined the outcome of the process or otherwise has deemed that disclosure is appropriate or required by applicable law.
As a consequence, perceived uncertainties related to our future may result in the loss of potential business opportunities and
volatility in the market price of our common stock and may make it more difficult for us to attract and retain qualified personnel
and business partners.
Our
backlog is subject to unexpected adjustments and cancellations and is, therefore, an uncertain indicator of our future revenue
or earnings.
As of March 30, 2019, our backlog was approximately $30.1 million. We expect a majority of this backlog
to be completed in 2019 and 2020. 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 cancellations and adjustments to our backlog are exacerbated by economic
conditions, particularly in our chosen area of concentration, the energy industry. The energy industry has experienced a sustained
period of low crude oil and natural gas prices which has reduced our clients’ activities in the energy industry.
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 March 30, 2019 we had two projects
that had $0.1 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.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The
following table sets forth certain information with respect to repurchases of our common stock for the first quarter of 2019:
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)
|
|
December 30, 2018 to January 26, 2019
|
|
|
55,057
|
|
|
|
0.76
|
|
|
|
1,267,830
|
|
|
$
|
444,450
|
|
January 27, 2019 to March 2, 2019
|
|
|
22,630
|
|
|
|
0.83
|
|
|
|
1,290,460
|
|
|
$
|
425,589
|
|
March 3, 2018 to March 30, 2019
|
|
|
—
|
|
|
|
—
|
|
|
|
1,290,460
|
|
|
$
|
425,589
|
|
(1)
On April 21, 2015, the Company announced that its Board of Directors had authorized the repurchase of up to $2.0 million of
the Company’s common stock from time to time through open market or privately negotiated transactions, based on
prevailing market conditions. The Company is 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 March 30,
2019, the Company had purchased and retired 1,290,460 shares at an aggregate cost of $1.6 million under this repurchase
program.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM
4. MINE SAFETY DISCLOSURES
None
ITEM
5. OTHER INFORMATION
None.
ITEM
6. EXHIBITS
*
Filed herewith