Filed
Pursuant to Rule 424(b)(5)
Registration No. 333-252572
PROSPECTUS SUPPLEMENT
(To Prospectus dated March 19, 2021)
7,142,859 Shares of Common Stock
ENGlobal Corporation
We are
offering 7,142,859 shares of our common stock at a purchase
price of $2.80 per share of common stock to institutional investors
pursuant to this prospectus supplement and the accompanying
prospectus and the Securities Purchase Agreement dated June 1, 2021
with such investors. Our common stock is quoted on the Nasdaq
Capital Market under the symbol "ENG." On June 1, 2021, the last
reported sale price of our common stock on the Nasdaq Capital
Market was $3.60 per share.
Investing
in our common stock involves a high degree of risk. See “Risk
Factors” beginning on page S-4 of this prospectus supplement
and in our reports filed with the Securities and Exchange
Commission, which are incorporated by reference herein for a
discussion of information that should be considered in connection
with an investment in our common stock.
We have
retained A.G.P./Alliance Global Partners to act as our exclusive
placement agent in connection with the securities offered by this
prospectus supplement. The placement agent is not purchasing or
selling any of these securities nor is it required to sell any
specific number or dollar amount of securities, but has agreed to
use its reasonable best efforts to sell the securities offered by
this prospectus supplement. We have agreed to pay the placement
agent the placement agent fees set forth in the table
below.
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Public
offering price
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$2.80
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$20,000,005.20
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Placement
agent fees(1)
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$0.17
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$1,200,000.31
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Proceeds,
before expenses, to us
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$2.63
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$18,800,004.89
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(1)
See
“Plan of Distribution” beginning on page S-11 of this
prospectus supplement for additional information regarding
placement agent fees and estimated offering expenses.
Delivery
of the securities offered hereby is expected to be made on or about
June 4, 2021.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities, or determined if this prospectus supplement or the
accompanying prospectus is truthful or complete. Any representation
to the contrary is a criminal offense.
Placement Agent
A.G.P.
The
date of this prospectus supplement is June 1, 2021
TABLE OF CONTENTS
Prospectus
Supplement
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Page
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ABOUT THIS PROSPECTUS SUPPLEMENT
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ii
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PROSPECTUS SUPPLEMENT SUMMARY
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S-1
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THE OFFERING
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S-3
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RISK FACTORS
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S-4
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
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S-7
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USE OF PROCEEDS
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S-8
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DILUTION
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S-9
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CAPITALIZATION
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S-10
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PLAN OF DISTRIBUTION
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S-11
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LEGAL MATTERS
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S-13
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EXPERTS
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S-13
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WHERE YOU CAN FIND MORE INFORMATION
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S-13
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
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S-13
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Prospectus
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Page
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ABOUT
THIS PROSPECTUS
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II
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ENGLOBAL
CORPORATION
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1
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CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
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2
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WHERE
YOU CAN FIND MORE INFORMATION
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4
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INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
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4
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RISK
FACTORS
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5
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USE OF
PROCEEDS
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6
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DESCRIPTION
OF CAPITAL STOCK
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7
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PLAN
OF DISTRIBUTION
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9
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LEGAL
MATTERS
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12
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EXPERTS
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12
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ABOUT THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement and the accompanying base prospectus is part
of a registration statement that we filed with the Securities and
Exchange Commission (the “Commission” or the
“SEC”) utilizing a “shelf” registration
process. Under this shelf registration process, we may sell any
combination of the securities described in the base prospectus in
one or more offerings up to a total dollar amount of $100,000,000.
We provide information to you about this offering in two separate
documents that are bound together: (1) this prospectus
supplement, which describes the specific details regarding this
offering; and (2) the accompanying base prospectus, which
provides general information, some of which may not apply to this
offering. Generally, unless the context indicates otherwise, when
we refer to this “prospectus,” we are referring to both
documents combined. If information in this prospectus supplement is
inconsistent with the accompanying base prospectus, you should rely
on this prospectus supplement. However, if any statement in one of
these documents is inconsistent with a statement in another
document having a later date (for example, a document incorporated
by reference in this prospectus supplement), the statement in the
document having the later date modifies or supersedes the earlier
statement as our business, financial condition, results of
operations and prospects may have changed since the earlier dates.
You should also read and consider the additional information under
the captions “Incorporation of Certain Documents By
Reference” in this prospectus supplement.
In
making your investment decision, you should rely only on the
information contained or incorporated by reference in this
prospectus supplement, in the accompanying base prospectus and in
any free writing prospectus with respect to this offering filed by
us with the SEC. Neither we nor the placement agent have authorized
any person to provide you with different or additional information.
If anyone provides you with different, additional or inconsistent
information you should not rely on it. You should assume that the
information appearing in this prospectus supplement, the
accompanying base prospectus, any free writing prospectus with
respect to the offering filed by us with the SEC and the documents
incorporated by reference herein and therein is accurate only as of
their respective dates. Our business, financial condition, results
of operations and prospects may have changed since those
dates.
We
further note that the representations, warranties and covenants
made by us in any agreement that is filed as an exhibit to any
document that is incorporated by reference herein were made solely
for the benefit of the parties to such agreement, including, in
some cases, for the purpose of allocating risk among the parties to
such agreements, and should not be deemed to be a representation,
warranty or covenant to you. Moreover, such representations,
warranties or covenants were accurate only as of the date they were
made. In addition, the assertions embodied in any representations,
warranties and covenants contained in such agreements may be
subject to qualifications with respect to knowledge and materiality
different from those applicable to investors and may be qualified
by information in disclosure schedules. These disclosure schedules
may contain information that modifies, qualifies and creates
exceptions to the representations, warranties and covenants set
forth in the agreements. Accordingly, such representations,
warranties and covenants should not be relied on as accurately
representing the current state of our affairs.
We are
offering to sell, and seeking offers to buy, shares of common stock
only in jurisdictions where offers and sales are permitted. The
distribution of this prospectus supplement and the accompanying
base prospectus and the offering of the common stock in certain
jurisdictions may be restricted by law. Persons outside the United
States who come into possession of this prospectus supplement and
the accompanying base prospectus must inform themselves about, and
observe any restrictions relating to, the offering of the common
stock and the distribution of this prospectus supplement and the
accompanying base prospectus outside the United States. This
prospectus supplement and the accompanying base prospectus do not
constitute, and may not be used in connection with, an offer to
sell, or a solicitation of an offer to buy, any securities offered
by this prospectus supplement and the accompanying base prospectus
by any person in any jurisdiction in which it is unlawful for such
person to make such an offer or solicitation.
In this
prospectus supplement, we use the term “day” to refer
to a calendar day, and we use the term “business day”
to refer to any day other than Saturday, Sunday, a legal holiday or
a day on which banks in New York City are authorized or required to
close.
We have
filed or incorporated by reference exhibits to the registration
statement of which this prospectus supplement forms a part. You
should read the exhibits carefully for provisions that may be
important to you.
Unless
the context otherwise requires, the terms “ENGlobal,”
“the Company,” “we,” “us” and
“our” in this prospectus supplement refer to ENGlobal
Corporation, a Nevada corporation and its
subsidiaries.
PROSPECTUS SUPPLEMENT SUMMARY
This
summary description about us and our business highlights selected
information contained elsewhere in this prospectus supplement or
incorporated in this prospectus supplement and the accompanying
base prospectus by reference. This summary does not contain all of
the information you should consider before buying securities in
this offering. You should carefully read this entire prospectus
supplement, the accompanying base prospectus and any related free
writing prospectus, including each of the documents incorporated
herein or therein by reference, before making an investment
decision. Investors should carefully consider the information set
forth under “Risk Factors” in this prospectus
supplement on page S-4, in any related free writing prospectus, and
under similar headings in the other documents that are incorporated
by reference into this prospectus supplement. You also should
carefully read the information incorporated by reference into this
prospectus supplement, including our financial statements, other
information and the exhibits to the registration statement of which
this prospectus supplement is a part.
Our Company
The
Company, 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 utilizing
our vertically integrated project execution capabilities,
including, (i) professional engineering and project support
services, (ii) automation design, configuration and systems
integration expertise, and (iii) mechanical and modular fabrication
capabilities. We believe our vertically integrated strategy allows
us to differentiate our company from most of our competitors as a
full-service provider. As a result, our clients’ dependency
on and coordination of multiple vendors is reduced, improving
control over their projects’ costs and schedules. Our
strategy and positioning also allows the Company to pursue larger
scopes of work centered around many different types of modularized
engineered systems that can be both processing and automation
focused.
We
derive revenues primarily from three sources: (i) business
development efforts, (ii) preferred provider or alliance agreements
with strategic end user clients, original equipment manufacturers,
and technology partners, and (iii) referrals from existing
customers and industry members. Our business development
professionals are focused on specific market segments within the
energy industry. The market segments that we are targeting include
Renewables, Automation, Refining and Transportation, Upstream and
Government Services. This market focus allows us to develop centers
of expertise for each of our targeted markets.
Within
the Renewables group, our focus is to design and build production
facilities for hydrogen and associated products, together with
converting existing production facilities to produce products from
renewable feedstock sources. These projects often utilize
technologies that are more fuel efficient, and therefore reduce the
associated carbon footprint of the facility. Our scope of work on
these projects will typically include front-end development,
engineering, procurement, mechanical fabrication, automation and
commissioning services, and may be performed in conjunction with a
construction partner.
Our
Automation group designs, integrates and commissions modular
systems that include electronic distributed control, on-line
process analytical data, continuous emission monitoring, and
electric power distribution. Often these packaged systems are
housed in a fabricated metal enclosure, modular building or
freestanding metal rack, which are commonly included in our scope
of work. We provide automation engineering, procurement,
fabrication, systems integration, programing and on-site
commissioning services to our clients for both new and existing
facilities.
Our
Refining and Transportation group focuses on providing engineering,
procurement and automation services as well as fabricated products
to downstream refineries and petrochemical facilities as well as
midstream pipeline, storage and other transportation related
companies. These services are often applied to small capital
improvement and maintenance projects within refineries and
petrochemical facilities. For our transportation clients, we work
on facilities that include pumping, compression, gas processing,
metering, storage terminals, product loading and blending systems.
In addition, this group designs, programs and maintains supervisory
control and data acquisition (“SCADA”) systems for our
transportation clients.
The
Upstream group provides engineering, fabrication and automation
services to clients who have operations in the U.S. oil and gas
exploration and development markets. The operations are usually
associated with the completion, purification, storage and
transmission of the oil and gas from the well head to the terminal
or pipeline destination.
Our
Government Services group provides services related to the
engineering, design, installation and maintenance of automated fuel
handling and tank gauging systems for the U.S. military across the
globe in addition to cybersecurity assessment and SCADA systems
design and maintenance in the private sector.
Our
business development professionals focus on building long-term
relationships with clients in order to provide solutions throughout
the life-cycle of their projects and facilities. Additionally, we
seek to capitalize on cross-selling opportunities between our
market segments and many of our projects will contain elements from
more than one market segment. Sales leads are often jointly
developed and pursued by our business development personnel from
multiple markets.
Products and services are also promoted through
trade advertising, participation in industry conferences and
on-line internet communication via our corporate home page
at www.englobal.com.
The ENGlobal website illustrates our Company’s full range of
services and capabilities and is updated on a continuous basis.
Through the ENGlobal website, we seek to provide visitors and
investors with a single point of contact for obtaining information
about our company. We are not incorporating the contents of the
website into this prospectus supplement.
We
also develop preferred provider and alliance agreements with
clients in order to facilitate repeat business. These preferred
provider agreements, also known as master service or umbrella
agreements, typically have a duration of three to five years. This
allows our clients to release work to us without having to
negotiate contract terms for each individual project. With the
primary terms of the contract agreed to, add-on projects with these
customers are easier to negotiate and can be accepted quickly,
without the necessity of a bidding process. Management believes
that these agreements can serve to stabilize project-centered
operations.
Our
engineering services are strategically located in offices in cities
near our clients while our fabrication and integration facilities
are more centrally located. We generally enter into two principal
types of contracts with our clients: time-and-material contracts
and fixed-price contracts. Our clients typically determine the type
of contract to be utilized for a particular engagement, with the
specific terms and conditions of a contract being negotiated and
typically contained in a multiyear services agreement.
Corporate Information
Our
principal executive offices are located at 654 N. Sam Houston
Parkway East, Suite 400, Houston, Texas 77060-5914. Our telephone
number is (281) 878-1000.
THE OFFERING
Common stock offered by us
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7,142,859 shares
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Offering price
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$2.80
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Use of proceeds
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We estimate the net proceeds to us from this offering will be
approximately $18.7 million, after deducting the placement
agent fee and estimated offering expenses payable by
us.
We intend to use the net proceeds for working capital and general
corporate purposes.
See “Use of Proceeds” on page S-8 for more
information.
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Common stock to be outstanding immediately after this
offering
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35,131,786 shares
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Best efforts
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We have agreed to issue and sell the shares of common stock offered
hereby to the public through the placement agent, and the placement
agent has agreed to offer and sell such shares on a “best
efforts” basis. The placement agent is not required to sell
any specific number or dollar amount of the shares of common stock
offered hereby, but will use its reasonable best efforts to sell
such securities. See “Plan of Distribution” on page
S-11 of this prospectus supplement.
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Nasdaq Capital Market Symbol
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ENG
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Risk factors
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You should read the “Risk Factors” section of this
prospectus supplement and the documents incorporated herein for a
discussion of certain factors to consider carefully before deciding
to purchase any of our securities.
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Outstanding Shares
The
number of shares of our common stock to be outstanding after this
offering is based on 27,988,927 shares of our common stock
outstanding as of June 1, 2021 and excludes, as of such date,
450,346 shares of our common
stock reserved for future issuance under our Amended and Restated
ENGlobal Corporation 2009 Equity Incentive Plan.
RISK FACTORS
An investment in our securities involves a
high degree of risk. Before you decide to invest in our securities,
you should consider carefully the risks described below and the
risks discussed in the sections entitled "Risk Factors" in our
Annual Report on Form 10-K for the fiscal year ended December 26,
2020, our Quarterly Report on Form 10-Q for the quarterly period
ended March 27, 2021, and the subsequent filings we make with the
SEC from time to time and the other information included or
incorporated by reference in this prospectus supplement and the
accompanying base prospectus. We expect to update these Risk
Factors from time to time in the periodic and current reports that
we file with the SEC after the date of this prospectus supplement.
These updated Risk Factors will be incorporated by reference in
this prospectus supplement and the accompanying base prospectus.
Please refer to these subsequent reports for additional information
relating to the risks associated with investing in our common
stock. If any of such risks and uncertainties actually occurs, our
business, financial condition, and results of operations could be
severely harmed. This could cause the trading price of our common
stock to decline, and you could lose all or part of your
investment.
Risks
Related to this Offering
Resales of our common stock in the public market by our
stockholders as a result of this offering may cause the market
price of our common stock to fall.
Sales
of a substantial number of shares of our common stock could occur
at any time. The issuance of new shares of our common stock could
result in resales of our common stock by our current stockholders
concerned about the potential ownership dilution of their holdings.
In turn, these resales could have the effect of depressing the
market price for our common stock.
You may experience future dilution as a result of future equity
offerings.
In
order to raise additional capital, we may in the future offer
additional shares of our common stock or other securities
convertible into or exchangeable for our common stock that could
result in further dilution to investors purchasing our common stock
in this offering or result in downward pressure on the price of our
common stock. Additionally, we entered into an at market issuance
sales agreement (“ATM Agreement”) in January 2021
pursuant to which we may offer and sell shares of our common stock
having an aggregate sales price of up to $25 million from time to
time in an “at the market offering.” To date, we have
issued 400,538 shares pursuant to the ATM Agreement for net
proceeds of approximately $1.5 million. We may sell shares of our
common stock or other securities in any other offering, including
in the at the market offering pursuant to the ATM Agreement, at
prices that are higher or lower than the prices paid by investors
in this offering, and investors purchasing shares or other
securities in the future could have rights superior to existing
stockholders.
Our management will have broad discretion over the use of the net
proceeds from this offering, you may not agree with how we use the
proceeds and the proceeds may not be invested
successfully.
We have
not designated any portion of the net proceeds from this offering
to be used for any particular purpose. Accordingly, our management
will have broad discretion as to the use of the net proceeds from
this offering and could use them for purposes other than those
contemplated at the time of commencement of this offering.
Accordingly, you will be relying on the judgment of our management
with regard to the use of these net proceeds, and you will not have
the opportunity, as part of your investment decision, to assess
whether the proceeds are being used appropriately. It is possible
that, pending their use, we may invest the net proceeds in a way
that does not yield a favorable, or any, return for our
company.
The trading price of our common stock may continue to be volatile,
which could cause you to lose part or all of your
investment.
The
trading price of our common stock has been highly volatile and
could continue to be subject to wide fluctuations in response to
various factors, some of which are beyond our control. During the
past twelve months, the sales price of our common stock ranged from
a low of $0.69 per share in September 2020, to a high of $9.40 per
share in January 2021. Although our financial condition and results
of operations have generally improved when comparing 2020 with
2019, we do not believe that this volatility corresponds to any
recent change in our financial condition.
The
stock market in general has experienced extreme price and volume
fluctuations that have often been unrelated or disproportionate to
the operating performance of those companies.
As a
result of this volatility, our securities could experience rapid
and substantial decreases in price, and you may be able to sell
securities you purchase under this prospectus only at a substantial
loss to the price at which you purchased the securities in this
offering.
Some,
but not all, of the factors that may cause the market price of our
common stock to fluctuate include:
●
fluctuations
in our quarterly or annual financial results or the quarterly or
annual financial results of companies perceived to be similar to us
or relevant for our business;
●
changes
in estimates of our financial results or recommendations by
securities analysts;
●
failure
of our services or products to achieve or maintain market
acceptance;
●
changes
in market valuations of similar or relevant companies;
●
success
of competitive service offerings or technologies;
●
changes
in our capital structure, such as the issuance of securities or the
incurrence of debt;
●
announcements
by us or by our competitors of significant services, contracts,
acquisitions or strategic alliances;
●
regulatory
developments in the United States, foreign countries, or
both;
●
additions
or departures of key personnel;
●
investors’
general perceptions; and
●
changes
in general economic, industry or market conditions.
In
addition, if the market for energy related stocks, or the stock
market in general, experiences a loss of investor confidence, the
trading price of our common stock could decline for reasons
unrelated to our business, financial condition, or results of
operations. Further, in the past, following periods of volatility
in the overall market and the market price of a particular
company’s securities, securities class action litigation has
often been instituted against these companies. If any of the
foregoing occurs, it could cause our stock price to fall and may
expose us to lawsuits that, even if unsuccessful, could be costly
to defend and a distraction to management.
A possible “short
squeeze” due to a sudden increase in demand of our common
stock that largely exceeds supply may lead to additional price
volatility.
Historically there
has not been a large short position in our common stock. However,
in the future investors may purchase shares of our common stock to
hedge existing exposure or to speculate on the price of our common
stock. Speculation on the price of our common stock may involve
long and short exposures. To the extent an aggregate short exposure
in our common stock becomes significant, investors with short
exposure may have to pay a premium to purchase shares for delivery
to share lenders at times if and when the price of our common stock
increases significantly, particularly over a short period of time.
Those purchases may in turn, dramatically increase the price of our
common stock. This is often referred to as a “short
squeeze.” A short squeeze could lead to volatile price
movements in our common stock that are not directly correlated to
our business prospects, financial performance or other traditional
measures of value for the Company or our common stock.
You may experience immediate and substantial dilution in the book
value per share of the common stock you purchase.
The
public offering price per share is substantially higher than the
net tangible book value per share of our common stock. Therefore,
if you purchase securities in this offering, you will pay an
effective price per share of common stock you acquire that
substantially exceeds our net tangible book value per share after
this offering. Following this offering, you will experience
immediate dilution of $1.40 per share, representing the
difference between our as adjusted net tangible book value per
share after giving effect to this offering and the public offering
price per share. See “Dilution” for a more detailed
discussion of the dilution you may incur in connection with this
offering.
This offering may cause the trading price of our common stock to
decrease.
The
price per share, together with the number of shares of common stock
we issue if this offering is completed, may result in an immediate
decrease in the market price of our common stock. This decrease may
continue after the completion of this offering.
This offering is being conducted on a “best efforts”
basis.
The
placement agent is offering the shares on a “best
efforts” basis, and the placement agent is under no
obligation to purchase any shares for its own account. The
placement agent is not required to sell any specific number or
dollar amount of shares of common stock in this offering but will
use its best efforts to sell the securities offered in this
prospectus supplement. As a “best efforts” offering,
there can be no assurance that the offering contemplated hereby
will ultimately be consummated.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The
information discussed in this prospectus supplement, the base
prospectus, our filings with the SEC and our press releases include
“forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended (the
“Securities Act”), Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”),
the Private Securities Litigation Reform Act of 1995 (the
“PSLRA”), or in releases made by the SEC. Such
forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause our
actual results, performance or achievements to differ materially
from any future results, performance or achievements expressed or
implied by such forward-looking statements. Statements that are not
historical fact are forward-looking statements. Forward-looking
statements can be identified by, among other things, the use of
forward-looking language, such as the words “plan,”
“believe,” “expect,”
“anticipate,” “intend,”
“estimate,” “project,” “may,”
“will,” “would,” “could,”
“should,” “seeks,” or “scheduled
to,” or other similar words, or the negative of these terms
or other variations of these terms or comparable language, or by
discussion of strategy or intentions. These cautionary statements
are being made pursuant to the Securities Act, the Exchange Act and
the PSLRA with the intention of obtaining the benefits of the
“safe harbor” provisions of such laws.
The
forward-looking statements contained in or incorporated by
reference into this prospectus supplement are largely based on our
expectations, which reflect estimates and assumptions made by our
management. These estimates and assumptions reflect our best
judgment based on currently known market conditions and other
factors. Although we believe such estimates and assumptions to be
reasonable, they are inherently uncertain and involve a number of
risks and uncertainties that are beyond our control,
including:
●
the impact of the
COVID-19 pandemic and of the actions taken by governmental
authorities, individuals and companies in response to the pandemic
on our business, financial condition, and results of operations,
including on our revenues and profitability;
●
the effect of
economic downturns and the volatility and level of oil and natural
gas prices, including the severe disruptions in the worldwide
economy, including the global demand for oil and natural gas,
resulting from the COVID-19 pandemic;
●
our ability to
realize revenue projected in our backlog and our ability to collect
accounts receivable and process accounts payable in a timely
manner;
●
our ability to
increase our backlog, revenue and profitability;
●
our ability to
realize project awards or contracts on our pending proposals, and
the timing, scope and amount of any related awards or
contracts;
●
our ability to
retain existing customers and attract new customers;
●
our ability to
attract and retain key professional personnel;
●
our ability to
obtain additional financing when needed;
●
our dependence on
one or a few customers;
●
the risks of
internal system failures of our information technology systems,
whether caused by the Company, third-party service providers,
intruders or hackers, computer viruses, malicious code,
cyber-attacks, phishing and other cyber security problems, natural
disasters, power shortages or terrorist attacks;
●
the uncertainties
related to the U.S. Government's budgetary process and their
effects on our long-term U.S. Government contracts;
●
the risk of
unexpected liability claims or poor safety
performance;
●
our reliance on
third-party subcontractors and equipment
manufacturers;
●
our ability to
satisfy the continued listing standards of NASDAQ with respect to
our common stock or to cure any continued listing standard
deficiency with respect thereto; and
●
the effect of
changes in laws and regulations, including U.S. tax laws, with
which the Company must comply and the associated cost of compliance
with such laws and regulations.
Many of
these factors are beyond our ability to control or predict. These
factors are not intended to represent a complete list of the
general or specific factors that may affect us.
In
addition, management’s assumptions about future events may
prove to be inaccurate. All readers are cautioned that the
forward-looking statements contained in this prospectus supplement
and the accompanying base prospectus and in the documents
incorporated by reference herein and therein are not guarantees of
future performance, and we cannot assure any reader that such
statements will be realized or that the forward-looking events and
circumstances will occur. Actual results may differ materially from
those anticipated or implied in the forward-looking statements due
to factors described in “Risk Factors” included
elsewhere in this prospectus supplement and the accompanying base
prospectus and in the documents that we include in or incorporate
by reference herein and therein, including our Annual Report on
Form 10-K for the fiscal year ended December 26, 2020, our
Quarterly Report on Form 10-Q for the quarterly period ended March
27, 2021, and our subsequent SEC filings. All forward-looking
statements speak only as of the date they are made. We do not
intend to update or revise any forward-looking statements as a
result of new information, future events or otherwise, except as
required by law. These cautionary statements qualify all
forward-looking statements attributable to us or persons acting on
our behalf.
USE
OF PROCEEDS
We
estimate that the net proceeds from this offering will be
approximately $18.7 million, after deducting the placement
agent fee and estimated offering expenses payable by
us.
We
intend to use the net proceeds for working capital and general
corporate purposes.
DILUTION
If you
invest in the securities being offered by this prospectus
supplement, your interest will be diluted immediately to the extent
of the difference between the public offering price per share and
the adjusted net tangible book value per share of our common stock
after this offering.
The net
tangible book value of our common stock as of March 27, 2021, was
approximately $29.7 million, or approximately $1.07 per share. Net
tangible book value per share represents the amount of our total
tangible assets, excluding goodwill and intangible assets, less
total liabilities, divided by the total number of shares of our
common stock outstanding. Dilution per share to new investors
represents the difference between the effective amount per share
paid by purchasers for each share of common stock in this offering
and the net tangible book value per share of our common stock
immediately following the completion of this offering.
Dilution in net
tangible book value per share represents the difference between the
amount per share paid by purchasers in this offering and the net
tangible book value per share of our common stock immediately after
this offering. After giving effect to the sale of 7,142,859 shares
of common stock in this offering at the public offering price of
$2.80 per share, and after deducting the placement agent fee and
estimated offering expenses for the offering, our as adjusted net
tangible book value as of March 27, 2021 would have been
approximately $1.40 per share of common stock. This represents
an immediate increase in as adjusted net tangible book value of
$0.33 per share to our existing stockholders and an immediate
dilution of $1.40 per share to investors purchasing shares of
common stock in this offering.
The
following table illustrates this dilution on a per share
basis:
Public
offering price per share
|
|
$2.80
|
Net
tangible book value per share at March 27, 2021
|
$1.07
|
|
Increase
to net tangible book value per share attributable to investors
purchasing our common stock in this offering
|
$0.33
|
|
As
adjusted net tangible book value per share as of March 27, 2021,
after giving effect to this offering
|
|
$1.40
|
Dilution
of as adjusted net tangible book value per share to investors
purchasing our common stock in this offering
|
|
$1.40
|
The
number of shares of our common stock to be outstanding after this
offering is based on 27,588,389 shares of our common stock
outstanding as of March 27, 2021 and excludes, as of such
date, 450,346 shares of our common stock reserved for future
issuance under our Amended and Restated ENGlobal Corporation 2009
Equity Incentive Plan.
CAPITALIZATION
The
following table sets forth our cash and cash equivalents and
capitalization as of March 27, 2021:
●
on
an actual basis; and
●
on
an as adjusted basis to give effect to the issuance and sale of
7,142,859 shares of common stock by us in this offering at the
offering price of $2.80 per common share, and after deducting the
placement agent fee and estimated offering expenses payable by
us.
The
table below should be read in conjunction with, and is qualified in
its entirety by reference to, the “Use of Proceeds”
section of this prospectus supplement and our unaudited condensed
consolidated financial statements and the accompanying notes
incorporated by reference in this prospectus supplement. All
information is in thousands of dollars.
|
As of March 27, 2021
|
|
|
|
|
|
|
Cash
|
$13,927
|
$32,637
|
Total
assets
|
$30,391
|
$49,101
|
Total
liabilities
|
$16,677
|
$16,677
|
Preferred
stock, par value $0.001 per share; 2,000,000 shares authorized; no
shares issued (Actual and As Adjusted)
|
-
|
-
|
Common
stock, par value $0.001 per share; 75,000,000 shares authorized
(Actual and As Adjusted); 27,588,389 shares issued and outstanding
(Actual); 34,731,248 shares issued and outstanding (As
Adjusted)
|
28
|
35
|
Additional
paid-in capital
|
37,202
|
55,905
|
Accumulated
deficit
|
(23,516)
|
(23,516)
|
Total
stockholders' equity
|
$13,714
|
$32,424
|
The
above calculation is based on 27,588,389 shares outstanding as of
March 27, 2021 and exclude 450,346 common shares reserved for
future issuance under our Amended and Restated ENGlobal Corporation
2009 Equity Incentive Plan.
PLAN OF DISTRIBUTION
A.G.P./Alliance
Global Partners, which we refer to herein as the placement agent,
has agreed to act as our exclusive placement agent in connection
with this offering subject to the terms and conditions of the
placement agency agreement dated June 1, 2021. The placement agent
is not purchasing or selling any of the shares of our common stock
offered by this prospectus supplement, nor is it required to
arrange the purchase or sale of any specific number or dollar
amount of shares of our common stock, but has agreed to use its
reasonable best efforts to arrange for the sale of all of the
shares of our common stock offered hereby. Therefore, we will enter
into a securities purchase agreement directly with investors in
connection with this offering and we may not sell the entire amount
of shares of our common stock offered pursuant to this prospectus
supplement. We will make offers only to a limited number of
qualified institutional buyers and accredited
investors.
We have
agreed to indemnify the placement agent against specified
liabilities, including liabilities under the Securities Act, and to
contribute to payments the placement agent may be required to make
in respect thereof.
Fees
and Expenses
We have
agreed to pay the placement agent a placement agent’s fee
equal to $1,200,000.31, or 6%, of the aggregate purchase price of
the shares of our common stock sold in this offering. The following
table shows the per share and total cash placement agent’s
fees we will pay to the placement agent in connection with the sale
of the shares of our common stock offered pursuant to this
prospectus supplement and the accompanying base prospectus,
assuming the purchase of all of the shares offered hereby on a best
efforts basis:
|
|
|
Public
offering price
|
$2.80
|
$20,000,005.20
|
Placement
agent fees
|
$0.17
|
$1,200,000.31
|
Proceeds,
before expenses, to us
|
$2.63
|
$18,800,004.89
|
We have
agreed to reimburse the placement agent at closing for legal and
other expenses incurred by them in connection with the offering in
an amount not to exceed $30,000. We estimate the total expenses
payable by us for this offering, excluding the placement agent fees
and expenses, will be approximately $60,000.
The
placement agent may be deemed to be an underwriter within the
meaning of Section 2(a)(11) of the Securities Act, and any
commissions received by it and any profit realized on the resale of
the shares sold by it while acting as principal might be deemed to
be underwriting discounts or commissions under the Securities Act.
As an underwriter, the placement agent would be required to comply
with the requirements of the Securities Act and the Exchange Act,
including, without limitation, Rule 415(a)(4) under the Securities
Act and Rule 10b-5 and Regulation M under the Exchange Act. These
rules and regulations may limit the timing of purchases and sales
of shares by the placement agent acting as principal. Under these
rules and regulations, the placement agent:
●
may not
engage in any stabilization activity in connection with our
securities; and
●
may not
bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities, other than as permitted
under the Exchange Act, until it has completed its participation in
the distribution.
Listing
Our
common stock is listed on the Nasdaq Capital Market under the
symbol “ENG.”
Restrictions
We, all
of our directors, executive officers and ten percent or greater
stockholders have agreed, subject to certain exceptions, not to
sell or otherwise dispose of their respective shares of common
stock or any securities convertible into or exchangeable for common
stock, for a period of at least 60 days from the completion of this
offering.
Discretionary
Accounts
The
placement agent does not intend to confirm sales of the securities
offered hereby to any accounts over which it has discretionary
authority.
Other
Activities and Relationships
The
placement agent and certain of its affiliates are full service
financial institutions engaged in various activities, which may
include securities trading, commercial and investment banking,
financial advisory, investment management, investment research,
principal investment, hedging, financing and brokerage activities.
The placement agent and certain of its affiliates may in the future
perform various commercial and investment banking and financial
advisory services for us and our affiliates, for which they will
receive customary fees and expenses.
In the
ordinary course of their various business activities, the placement
agent and certain of its affiliates may make or hold a broad array
of investments and actively trade debt and equity securities (or
related derivative securities) and financial instruments (including
bank loans) for their own account and for the accounts of their
customers, and such investment and securities activities may
involve securities and/or instruments issued by us and our
affiliates. If the placement agent or its affiliates have a lending
relationship with us, they routinely hedge their credit exposure to
us consistent with their customary risk management policies. The
placement agent and its affiliates may hedge such exposure by
entering into transactions that consist of either the purchase of
credit default swaps or the creation of short positions in our
securities or the securities of our affiliates, including
potentially the common stock offered hereby. Any such short
positions could adversely affect future trading prices of the
common stock offered hereby. The placement agent and certain of its
affiliates may also communicate independent investment
recommendations, market color or trading ideas and/or publish or
express independent research views in respect of such securities or
instruments and may at any time hold, or recommend to clients that
they acquire, long and/or short positions in such securities and
instruments.
LEGAL MATTERS
Certain
legal matters in connection with the common stock being offered by
this prospectus supplement will be passed upon by Porter Hedges
LLP, Houston, Texas. The validity of the common stock being offered
by this prospectus supplement and certain other legal matters
concerning this offering will be passed on for us by Holland &
Hart LLP, Reno, Nevada. Sichenzia Ross Ference LLP, New York, New
York, is acting as counsel to the placement agent in connection
with certain legal matters relating to this offering.
EXPERTS
The
consolidated financial statements of ENGlobal Corporation and
subsidiaries (the Company) as of December 26, 2020 and December 28,
2019, and for the years then ended, have been incorporated by
reference herein, in reliance upon the report of Moss Adams LLP,
independent registered public accounting firm, incorporated by
reference herein, and upon the authority of said firm as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
This
prospectus supplement and the accompanying base prospectus are part
of a registration statement on Form S-3 we filed with the SEC. This
prospectus supplement and the accompanying base prospectus omit
some information contained in the registration statement in
accordance with SEC rules and regulations. You should review the
information and exhibits in the registration statement for further
information about us and our securities. Statements in this
prospectus supplement and the accompanying base prospectus
concerning any document we filed as an exhibit to the registration
statement or that we otherwise filed with the SEC are not intended
to be comprehensive and are qualified by reference to these
filings. You should review the complete document to evaluate these
statements. You can obtain a copy of the registration statement
from the SEC’s website.
The SEC
maintains a website on the Internet at www.sec.gov that contains reports,
proxy and information statements, and other information regarding
companies that file electronically with the SEC. We maintain a
website on the Internet at www.englobal.com. Copies of certain
information filed by us with the SEC can be downloaded from the
SEC’s website or from our website at www.englobal.com. Information on the
SEC website, our website or any other website is not incorporated
by reference in this prospectus supplement and does not constitute
part of this prospectus supplement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC
allows us to incorporate by reference into this prospectus
supplement certain information we file with it, which means that we
can disclose important information by referring you to those
documents. The information incorporated by reference is considered
to be a part of this prospectus supplement, and information that we
file later with the SEC will automatically update and supersede
information contained in this prospectus supplement.
The
following documents, which have previously been filed by us with
the SEC under the Exchange Act, are incorporated herein by
reference:
●
our Annual Report
on Form 10-K for the fiscal year ended December 26, 2020, filed
with the SEC on March 11, 2021 (File No. 001-14217);
●
our Quarterly
Report on Form 10-Q for the quarter ended March 27, 2021, filed
with the SEC on May 6, 2021 (File No. 001-14217);
●
our Current Reports
on Form 8-K, filed with the SEC on April 15, 2016, January 29, 2021
and March 1, 2021 and our Current Report on Form 8-K/A filed with
the SEC on March 11, 2021 (excluding any information furnished
pursuant to Item 2.02 or Item 7.01 of any such Current Report on
Form 8-K or Form 8-K/A and any corresponding information furnished
under Item 9.01 or included as an exhibit); and
●
the description of
our common stock set forth in our registration statement on Form
8-A, filed with the SEC on December 17, 2007 (File No. 001-14217),
including any and all subsequent amendments and reports filed for
the purpose of updating that description.
All
documents filed by us pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act (excluding any information furnished
pursuant to Item 2.02 or Item 7.01 on any Current Report on Form
8-K or Form 8-K/A and any corresponding information furnished under
Item 9.01 or included as an exhibit) after the date of this
prospectus supplement until the termination of the offering under
this prospectus supplement shall be deemed to be incorporated in
this prospectus supplement by reference and to be a part hereof
from the date of filing of such documents. Any statement contained
herein, or in a document incorporated or deemed to be incorporated
by reference herein, shall be deemed to be modified or superseded
for purposes of this prospectus supplement to the extent that a
statement contained herein or in any subsequently filed document
which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus
supplement.
This
prospectus supplement may contain information that updates,
modifies or is contrary to information in one or more of the
documents incorporated by reference in this prospectus supplement.
You should rely only on the information incorporated by reference
or provided in this prospectus supplement. We have not authorized
anyone else to provide you with different information. You should
not assume that the information in this prospectus supplement is
accurate as of any date other than the date of this prospectus
supplement or the date of the documents incorporated by reference
in this prospectus supplement.
We will
provide to each person, including any beneficial owner, to whom
this prospectus supplement is delivered, upon written or oral
request, at no cost to the requester, a copy of any and all of the
information that is incorporated by reference in this prospectus
supplement.
Requests for such
documents should be directed to:
ENGlobal
Corporation
Attention: Chief
Financial Officer
654 N.
Sam Houston Parkway East, Suite 400
Houston, Texas
77060-5914
You may
also access the documents incorporated by reference in this
prospectus supplement through our website at www.englobal.com. Except for the
specific incorporated documents listed above, no information
available on or through our website shall be deemed to be
incorporated in this prospectus supplement or the registration
statement of which it forms a part.
PROSPECTUS
ENGlobal Corporation
$100,000,000
Common Stock
Preferred Stock
We may
offer from time to time shares of our common stock and shares of
our preferred stock.
The
aggregate initial offering price of the securities that we offer
will not exceed $100,000,000. We will offer the securities in
amounts, at prices and on terms to be determined at the time of the
offering.
Our
common stock is quoted on The Nasdaq Capital Market under the
symbol “ENG.”
We will
provide the specific terms of the offering in supplements to this
prospectus. You should read this prospectus and any supplement
carefully before you invest. This prospectus may not be used to
offer and sell our securities unless accompanied by a prospectus
supplement.
Investing
in our securities involves significant risks that are described in
the “Risk Factors” section beginning on page 4 of this
prospectus.
_______________
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.
The
date of this prospectus is March 19, 2021.
TABLE OF CONTENTS
|
Page
|
ABOUT
THIS PROSPECTUS
|
II
|
ENGLOBAL
CORPORATION
|
1
|
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
|
2
|
WHERE
YOU CAN FIND MORE INFORMATION
|
4
|
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
|
4
|
RISK
FACTORS
|
5
|
USE OF
PROCEEDS
|
6
|
DESCRIPTION
OF CAPITAL STOCK
|
7
|
PLAN
OF DISTRIBUTION
|
9
|
LEGAL
MATTERS
|
12
|
EXPERTS
|
12
|
ABOUT THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission (the
“Commission” or the “SEC”) utilizing a
“shelf” registration process. Under this shelf
registration process, we may sell any combination of the securities
described in this prospectus in one or more offerings up to a total
dollar amount of $100,000,000. This prospectus provides you with a
general description of the securities we may offer. Each time we
sell securities, we will provide a prospectus supplement that will
contain specific information about the terms of the offering and
the offered securities. This prospectus, together with applicable
prospectus supplements, any information incorporated by reference,
and any related free writing prospectuses we file with the
Commission, includes all material information relating to these
offerings and securities. We may also add, update or change in the
prospectus supplement any of the information contained in this
prospectus or in the documents that we have incorporated by
reference into this prospectus, including without limitation, a
discussion of any risk factors or other special considerations that
apply to these offerings or securities or the specific plan of
distribution. If there is any inconsistency between the information
in this prospectus and a prospectus supplement or information
incorporated by reference having a later date, you should rely on
the information in that prospectus supplement or incorporated
information having a later date. We urge you to read carefully this
prospectus, any applicable prospectus supplement and any related
free writing prospectus, together with the information incorporated
herein by reference as described under the heading
“Incorporation of Certain Documents By Reference” and
the additional information described under the heading “Where
You Can Find More Information,” before buying any of the
securities being offered.
You
should rely only on the information we have provided or
incorporated by reference in this prospectus, any applicable
prospectus supplement and any related free writing prospectus. We
have not authorized anyone to provide you with different
information. No dealer, salesperson or other person is authorized
to give any information or to represent anything not contained in
this prospectus, any applicable prospectus supplement or any
related free writing prospectus.
Neither
the delivery of this prospectus nor any sale made under it implies
that there has been no change in our affairs or that the
information in this prospectus is correct as of any date after the
date of this prospectus. You should assume that the information in
this prospectus, any applicable prospectus supplement or any
related free writing prospectus is accurate only as of the date on
the front of the document and that any information we have
incorporated by reference is accurate only as of the date of the
document incorporated by reference, regardless of the time of
delivery of this prospectus, any applicable prospectus supplement
or any related free writing prospectus, or any sale of a
security.
The
registration statement containing this prospectus, including
exhibits to the registration statement, provides additional
information about us and the securities offered under this
prospectus and any prospectus supplement. We have filed and plan to
continue to file other documents with the Commission that contain
information about us and our business. Also, we will file legal
documents that control the terms of the securities offered by this
prospectus as exhibits to the reports that we file with the
Commission. The registration statement and other reports can be
read at the Commission website or at the Commission offices
mentioned under the heading “Where You Can Find More
Information.”
This
prospectus contains summaries of certain provisions contained in
some of the documents described herein, but reference is made to
the actual documents for complete information. All of the summaries
are qualified in their entirety by the actual documents. Copies of
some of the documents referred to herein have been filed, will be
filed or will be incorporated by reference as exhibits to the
registration statement of which this prospectus is a part, and you
may obtain copies of those documents as described below under
“Where You Can Find More Information.”
ENGLOBAL CORPORATION
As used
in this prospectus, unless otherwise indicated, “we,”
“our,” “us,” the “Company” or
similar terms refer collectively to ENGlobal Corporation, and not
the subsidiaries of ENGlobal Corporation.
The
Company, 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 utilizing
our vertically integrated project execution capabilities,
including, (i) professional engineering and project support
services, (ii) automation design, configuration and systems
integration expertise, and (iii) mechanical and modular fabrication
capabilities. We believe our vertically integrated strategy allows
us to differentiate our company from most of our competitors as a
full-service provider. As a result, our clients’ dependency
on and coordination of multiple vendors is reduced, improving
control over their projects’ costs and schedules. Our
strategy and positioning also allows the Company to pursue larger
scopes of work centered around many different types of modularized
engineered systems that can be both processing and automation
focused.
We
derive revenues primarily from three sources: (i) business
development efforts, (ii) preferred provider or alliance agreements
with strategic end user clients, original equipment manufacturers,
and technology partners, and (iii) referrals from existing
customers and industry members. Our business development
professionals are focused on specific market segments within the
energy industry. The market segments that we are targeting include
Renewables, Automation, Refining and Transportation, Upstream and
Government Services. This market focus allows us to develop centers
of expertise for each of our targeted markets.
Within
the Renewables group, our focus is to design and build production
facilities for hydrogen and associated products, together with
converting existing production facilities to produce products from
renewable feedstock sources. These projects often utilize
technologies that are more fuel efficient, and therefore reduce the
associated carbon footprint of the facility. Our scope of work on
these projects will typically include front-end development,
engineering, procurement, mechanical fabrication, automation and
commissioning services, and may be performed in conjunction with a
construction partner.
Our
Automation group designs, integrates and commissions modular
systems that include electronic distributed control, on-line
process analytical data, continuous emission monitoring, and
electric power distribution. Often these packaged systems are
housed in a fabricated metal enclosure, modular building or
freestanding metal rack, which are commonly included in our scope
of work. We provide automation engineering, procurement,
fabrication, systems integration, programing and on-site
commissioning services to our clients for both new and existing
facilities.
Our
Refining and Transportation group focuses on providing engineering,
procurement and automation services as well as fabricated products
to downstream refineries and petrochemical facilities as well as
midstream pipeline, storage and other transportation related
companies. These services are often applied to small capital
improvement and maintenance projects within refineries and
petrochemical facilities. For our transportation clients, we work
on facilities that include pumping, compression, gas processing,
metering, storage terminals, product loading and blending systems.
In addition, this group designs, programs and maintains supervisory
control and data acquisition (SCADA) systems for our transportation
clients.
The
Upstream group provides engineering, fabrication and automation
services to clients who have operations in the U.S. oil and gas
exploration and development markets. The operations are usually
associated with the completion, purification, storage and
transmission of the oil and gas from the well head to the terminal
or pipeline destination.
Our
Government Services group provides services related to the
engineering, design, installation and maintenance of automated fuel
handling and tank gauging systems for the U.S. military across the
globe in addition to cybersecurity assessment and SCADA systems
design and maintenance in the private sector.
Our
engineering services are strategically located in offices in cities
near our clients while our fabrication and integration facilities
are more centrally located. We generally enter into two principal
types of contracts with our clients: time-and-material contracts
and fixed-price contracts. Our clients typically determine the type
of contract to be utilized for a particular engagement, with the
specific terms and conditions of a contract being negotiated and
typically contained in a multiyear services agreement.
Our
business development professionals focus on building long-term
relationships with clients in order to provide solutions throughout
the life-cycle of their projects and facilities. Additionally, we
seek to capitalize on cross-selling opportunities between our
market segments and many of our projects will contain elements from
more than one market segment. Sales leads are often jointly
developed and pursued by our business development personnel from
multiple markets.
Products and services are also promoted through
trade advertising, participation in industry conferences and
on-line internet communication via our corporate home page
at www.englobal.com.
The ENGlobal website illustrates our company’s full range of
services and capabilities and is updated on a continuous basis.
Through the ENGlobal website, we seek to provide visitors and
investors with a single point of contact for obtaining information
about our company. We are not incorporating the contents of
the website into this prospectus.
We
also develop preferred provider and alliance agreements with
clients in order to facilitate repeat business. These preferred
provider agreements, also known as master service or umbrella
agreements, typically have a duration of three to five years. This
allows our clients to release work to us without having to
negotiate contract terms for each individual project. With the
primary terms of the contract agreed to, add-on projects with these
customers are easier to negotiate and can be accepted quickly,
without the necessity of a bidding process. Management believes
that these agreements can serve to stabilize project-centered
operations.
Our
principal executive offices are located at 654 N. Sam Houston
Parkway East, Suite 400, Houston, Texas 77060-5914. Our telephone
number is (281) 878-1000.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
The
information discussed in this prospectus, our filings with the SEC
and our public releases include “forward-looking
statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities
Act”), and Section 21E of the Securities Exchange Act of
1934, as amended (the “Exchange Act”), the Private
Securities Litigation Reform Act of 1995 (the “PSLRA”),
or in releases made by the SEC. Such forward-looking statements
involve known and unknown risks, uncertainties and other important
factors that could cause the actual results, performance or
achievements of us to differ materially from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Statements that are not historical fact
are forward-looking statements. Forward-looking statements can be
identified by, among other things, the use of forward-looking
language, such as the words “plan,”
“believe,” “expect,”
“anticipate,” “intend,”
“estimate,” “project,” “may,”
“will,” “would,” “could,”
“should,” “seeks,” or “scheduled
to,” or other similar words, or the negative of these terms
or other variations of these terms or comparable language, or by
discussion of strategy or intentions. These cautionary statements
are being made pursuant to the Securities Act, the Exchange Act and
the PSLRA with the intention of obtaining the benefits of the
“safe harbor” provisions of such laws.
The
forward-looking statements contained in or incorporated by
reference into this prospectus are largely based on our
expectations, which reflect estimates and assumptions made by our
management. These estimates and assumptions reflect our best
judgment based on currently known market conditions and other
factors. Although we believe such estimates and assumptions to be
reasonable, they are inherently uncertain and involve a number of
risks and uncertainties that are beyond our control,
including:
●
the impact of the
COVID-19 pandemic and of the actions taken by governmental
authorities, individuals and companies in response to the pandemic
on our business, financial condition, and results of operations,
including on our revenues and profitability;
●
our ability to
increase our backlog, revenue and profitability;
●
our ability to
realize revenue projected in our backlog and our ability to collect
accounts receivable and process accounts payable in a timely
manner;
●
the effect of
economic downturns and the volatility and level of oil and natural
gas prices, including the severe disruptions in the worldwide
economy, including the global demand for oil and natural gas,
resulting from the COVID-19 pandemic;
●
the uncertainties
related to the U.S. Government's budgetary process and their
effects on our long-term U.S. Government contracts;
●
our ability to identify, evaluate, and complete any transactions in
connection with our review of strategic transactions;
●
the impact of the announcement of our review of strategic
transactions on our business, including our financial and operating
results, or our employees, suppliers and
customers;
●
our
ability to realize project awards or contracts on our pending
proposals, and the timing, scope and amount of any related awards
or contracts;
●
our
ability to retain existing customers and attract new
customers;
●
our ability to accurately estimate the overall risks, revenue or
costs on a contract;
●
the risk of providing services in excess of original project scope
without having an approved change order;
●
our ability to execute our expansion into the modular solutions
market and to execute our updated business growth strategy to
position the Company as a leading provider of engineered modular
solutions to its customer base;
●
our
ability to attract and retain key professional
personnel;
●
our
ability to obtain additional financing when needed;
●
our debt obligations may limit our financial
flexibility;
●
our PPP loan may not be forgiven in full;
●
our
dependence on one or a few customers;
●
the
risks of internal system failures of our information technology
systems, whether caused by the Company, third-party service
providers, intruders or hackers, computer viruses, malicious code,
cyber-attacks, phishing and other cyber security problems, natural
disasters, power shortages or terrorist attacks;
●
the
risk of unexpected liability claims or poor safety
performance;
●
our ability to identify, consummate and integrate potential
acquisitions;
●
our
reliance on third-party subcontractors and equipment
manufacturers;
●
our
ability to satisfy the continued listing standards of NASDAQ with
respect to our common stock or to cure any continued listing
standard deficiency with respect thereto; and
●
the
effect of changes in laws and regulations, including U.S. tax laws,
with which the Company must comply and the associated cost of
compliance with such laws and regulations.
Many of
these factors are beyond our ability to control or predict. These
factors are not intended to represent a complete list of the
general or specific factors that may affect us.
In
addition, management’s assumptions about future events may
prove to be inaccurate. All readers are cautioned that the
forward-looking statements contained in this prospectus and in the
documents incorporated by reference into this prospectus are not
guarantees of future performance, and we cannot assure any reader
that such statements will be realized or that the forward-looking
events and circumstances will occur. Actual results may differ
materially from those anticipated or implied in the forward-looking
statements due to factors described in “Risk Factors”
included elsewhere in this prospectus and in the documents that we
include in or incorporate by reference into this prospectus,
including our Annual Report on Form 10-K for the fiscal year ended
December 26, 2020, and our subsequent SEC filings. All
forward-looking statements speak only as of the date they are made.
We do not intend to update or revise any forward-looking statements
as a result of new information, future events or otherwise, except
as required by law. These cautionary statements qualify all
forward-looking statements attributable to us or persons acting on
our behalf.
WHERE YOU CAN FIND MORE INFORMATION
This
prospectus forms a part of a registration statement on Form S-3 we
filed with the SEC. This prospectus does not contain all of the
information found in the registration statement. For further
information regarding us and our securities, you may desire to
review the full registration statement, including its exhibits and
schedules, filed under the Securities Act, as well as our proxy statement,
annual, quarterly and other reports and other information we file
with the SEC. The SEC maintains a website on the Internet at
www.sec.gov that contains
reports, proxy and information statements, and other information
regarding companies that file electronically with the SEC. We
maintain a website on the Internet at www.englobal.com. Our registration
statement, of which this prospectus constitutes a part, can be
downloaded from the SEC’s website or from our website at
www.englobal.com.
Information on the SEC website, our website or any other website is
not incorporated by reference in this prospectus and does not
constitute part of this prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The
following documents, which have previously been filed by us with
the SEC under the Exchange Act, are incorporated herein by
reference:
●
our
Annual Report on Form 10-K for the fiscal year ended December 26,
2020, filed with the SEC on March 11, 2021 (File No.
001-14217);
●
our
Current Reports on Form 8-K, filed with the SEC on April 15, 2016,
January 29, 2021 and March 1, 2021 and our Current Report on Form
8-K/A filed with the SEC on March 11, 2021 (excluding any
information furnished pursuant to Item 2.02 or Item 7.01 of any
such Current Report on Form 8-K or Form 8-K/A and any corresponding
information furnished under Item 9.01 or included as an exhibit)
(File No. 001-14217); and
●
the
description of our common stock set forth in our registration
statement on Form 8-A, filed with the SEC on December 17, 2007
(File No. 001-14217), including any and all subsequent amendments
and reports filed for the purpose of updating that
description.
All
documents filed by us pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act (excluding any information furnished
pursuant to Item 2.02 or Item 7.01 on any Current Report on Form
8-K or Form 8-K/A and any corresponding information furnished under
Item 9.01 or included as an exhibit) after the date of this
prospectus until the termination of each offering under this
prospectus shall be deemed to be incorporated in this prospectus by
reference and to be a part hereof from the date of filing of such
documents. Any statement contained herein, or in a document
incorporated or deemed to be incorporated by reference herein,
shall be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained herein or in
any subsequently filed document which also is or is deemed to be
incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a
part of this prospectus.
You may
request a free copy of these filings, other than any exhibits,
unless the exhibits are specifically incorporated by reference into
this prospectus, by writing or telephoning us at the following
address:
ENGlobal
Corporation
Attention:
Chief Financial Officer
654 N.
Sam Houston Parkway East, Suite 400
Houston,
Texas 77060-5914
RISK FACTORS
An
investment in our securities involves a high degree of risk. You
should carefully consider the risk factors and all of the other
information included in, or incorporated by reference into, this
prospectus, including those risk factors included in our Annual
Report on Form 10-K for the year ended December 26, 2020, and our
subsequent Commission filings, in evaluating an investment in our
securities. If any of these risks were to occur, our business,
financial condition or results of operations could be adversely
affected. In that case, the trading price of our securities could
decline and you could lose all or part of your investment. When we
offer and sell any securities pursuant to a prospectus supplement,
we may include additional risk factors relevant to such securities
in the prospectus supplement.
USE OF PROCEEDS
Unless
we inform you otherwise in the prospectus supplement or any pricing
supplement, we will use the net proceeds from the sale of the
securities offered by us for working capital needs, capital
expenditures, repayment or refinancing of indebtedness,
acquisitions, repurchases and redemptions of securities, and for
other general corporate purposes. Pending any specific application,
we may initially invest funds in short-term marketable securities
or apply them to the reduction of indebtedness.
DESCRIPTION OF CAPITAL STOCK
The following description sets forth certain
material terms and provisions of our common stock and preferred
stock. This description also summarizes relevant provisions of the
Nevada Revised Statutes (“NRS”). The following
description is a summary and does not purport to be complete. It is
subject to, and qualified in its entirety by reference to, the
relevant provisions of the NRS, and to our Restated Articles of
Incorporation, dated January 29, 2021 (our “articles of incorporation”), and
our Second Amended and Restated Bylaws, dated April 14, 2016 (our
“bylaws”), which are filed as Exhibit 3.1 to our
Current Report on Form 8-K filed with the SEC on January 29, 2021 and Exhibit 3.1 to our Current Report on Form
8-K filed with the SEC on April 15, 2016, respectively, which are incorporated by
reference herein. Please read
“Where You Can Find More
Information.”
Authorized and Outstanding Capital Stock
The
following description of our common stock and provisions of our
articles of incorporation and bylaws are summaries and are
qualified by reference to our articles of incorporation and bylaws,
which have been incorporated by reference herein.
Our
authorized capital stock consists of 75,000,000 shares of common
stock, par value $0.001 per share, and 2,000,000 shares of
undesignated preferred stock, par value $0.001 per
share.
As of
March 8, 2021, there were 27,526,176 shares of common stock
outstanding, and no shares of preferred stock were issued or
outstanding.
Description of Common Stock
Voting. Holders of shares of the common stock are entitled
to one vote for each share held of record on matters properly
submitted to a vote of our stockholders. Stockholders are not
entitled to vote cumulatively for the election of
directors.
Dividends. Subject to the dividend rights of the holders of
any outstanding series of preferred stock, holders of shares of
common stock will be entitled to receive ratably such dividends, if
any, when, as, and if declared by our Board of Directors out of the
Company’s assets or funds legally available for such
dividends or distributions.
Liquidation and
Distribution. In the event of
any liquidation, dissolution, or winding up of the Company’s
affairs, holders of the common stock would be entitled to share
ratably in the Company’s assets that are legally available
for distribution to its stockholders. If the Company has any
preferred stock outstanding at such time, holders of the preferred
stock may be entitled to distribution preferences, liquidation
preferences, or both. In such case, the Company must pay the
applicable distributions to the holders of its preferred stock
before it may pay distributions to the holders of common
stock.
Conversion, Redemption, and
Preemptive Rights. Holders of
the common stock have no preemptive, subscription, redemption or
conversion rights.
Sinking Fund
Provisions. There are no
sinking fund provisions applicable to the common
stock.
Description of Preferred Stock
Subject
to the terms of our articles of incorporation, our Board of
Directors has the authority to approve the issuance of all or any
of our authorized shares of the preferred stock in one or more
series, to determine the number of shares constituting any series
and to determine any voting powers, conversion rights, dividend
rights and other designations, preferences, limitations,
restrictions and rights relating to such shares.
Anti-Takeover Effects of Nevada Law; Our Articles of Incorporation
and Our Bylaws
General. Certain provisions of our articles of
incorporation and bylaws, and certain provisions of the NRS could
make our acquisition by a third party, a change in our incumbent
management, or a similar change of control more difficult. These
provisions, which are summarized below, are likely to reduce our
vulnerability to an unsolicited proposal for the restructuring or
sale of all or substantially all of our assets or an unsolicited
takeover attempt. The summary of the provisions set forth below
does not purport to be complete and is qualified in its entirety by
reference to our articles of incorporation and our bylaws and the
relevant provisions of the NRS.
Preferred
Stock. The authorization of
undesignated preferred stock makes it possible for our Board of
Directors to issue preferred stock with voting or other rights or
preferences that could impede the success of any attempt to acquire
control of the Company.
No Action by Written
Consent. Our bylaws provide
that no action required or permitted to be taken at a meeting of
the stockholders may be taken by written
consent.
Advance Notice
Requirements. Stockholders
wishing to nominate persons for election to our Board of Directors
at a meeting or to propose any business to be considered by our
stockholders at a meeting must comply with certain advance notice
and other requirements set forth in our bylaws.
Special Meetings.
Our bylaws provide that special
meetings of stockholders may only be called by the President or
Secretary, by a majority of the Board of Directors, or by the
President at the written request of at least fifty percent (50%) of
the number of shares of the Company then outstanding and entitled
to vote.
Board
Vacancies. Our bylaws provide
that any vacancy on our Board of Directors, howsoever resulting,
may be filled by a majority vote of the remaining
directors.
Removal of Directors.
Our bylaws provide that any directors
may be removed either with or without cause at any time by the vote
of stockholders representing two-thirds of the voting power of the
issued and outstanding capital stock entitled to
vote.
Nevada Anti-Takeover
Statutes. The NRS contains
provisions restricting the ability of a Nevada corporation to
engage in business combinations with an interested stockholder.
Under the NRS, except under certain circumstances, business
combinations with interested stockholders are not permitted for a
period of two years following the date such stockholder becomes an
interested stockholder. The NRS defines an interested stockholder,
generally, as a person who is the beneficial owner, directly or
indirectly, of 10% of the outstanding shares of a Nevada
corporation. In addition, the NRS generally disallows the exercise
of voting rights with respect to “control shares” of an
“issuing corporation” held by an “acquiring
person,” unless such voting rights are conferred by a
majority vote of the disinterested stockholders. “Control
shares” are those outstanding voting shares of an issuing
corporation which an acquiring person and those persons acting in
association with an acquiring person (i) acquire or offer to
acquire in an acquisition of a controlling interest and (ii)
acquire within ninety days immediately preceding the date when the
acquiring person became an acquiring person. An “issuing
corporation” is a corporation organized in Nevada which has
two hundred or more stockholders, at least one hundred of whom are
stockholders of record and residents of Nevada, and which does
business in Nevada directly or through an affiliated corporation.
The NRS also permits directors to resist a change or potential
change in control of the corporation if the directors determine
that the change or potential change is opposed to or not in the
best interest of the corporation.
Amendment of Articles of Incorporation and Bylaws
Our
bylaws may be altered, amended or repealed and new bylaws may be
adopted at any regular or special meeting of the stockholders
owning a majority of the shares and entitled to vote thereon. The
bylaws may also be altered, amended or repealed and new bylaws may
be adopted at any regular or special meeting of our Board of
Directors by a majority vote of directors present at the meeting at
which a quorum is present, except that any such amendment may not
be inconsistent with or contrary to the provision of an amendment
adopted by the stockholders.
Limitation of Liability and Indemnification of Officers and
Directors
Our
articles of incorporation limits the personal liability of
directors and officers for breach of fiduciary duty to the Company
or our stockholders. However, this provision does not eliminate or
limit the liability of any of our directors and officers
for:
●
acts or
omissions that involve intentional misconduct, fraud or a knowing
violation of law; or
●
the
payment of dividends in violation of Section 78.300 of the
NRS.
Any
repeal or modification of this provision will be prospective only
and will not adversely affect any limitation on the personal
liability of a director or officer of the Company for acts or
omissions prior to such repeal or modification.
Our
bylaws provide that the Company shall indemnify any director or
officer of the Company against all costs and expenses actually and
reasonably incurred by such person or on such person’s
behalf, to the extent such director or officer is a party to or a
witness in an action, suit or proceeding by reason of its position
with the Company.
Authorized but Unissued Shares
Our
authorized but unissued shares of common stock and preferred stock
are available for future issuance, subject to any limitations
imposed by the listing standards of The Nasdaq Capital Market.
These additional shares may be used for a variety of corporate
finance transactions, acquisitions and employee benefit plans. The
existence of authorized but unissued and unreserved common stock
and preferred stock could make it more difficult or discourage an
attempt to obtain control of us by means of a proxy contest, tender
offer, merger or otherwise.
Transfer Agent and Registrar
The
transfer agent and registrar for our common stock is Computershare
Investor Services, LLC. Its address is P.O. Box 30170, College
Station, Texas 77842-3170, and its telephone number is
1-800-662-7232.
Our
common stock is listed on The Nasdaq Capital Market under the
symbol “ENG.”
PLAN OF DISTRIBUTION
We may
sell our securities from time to time through underwriters, dealers
or agents or directly to purchasers, in one or more transactions at
a fixed price or prices, which may be changed, or at market prices
prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. We may use these
methods in any combination.
We will
describe the terms of the offering of the securities in a
prospectus supplement, information incorporated by reference or any
related free writing prospectus, including:
●
the
name or names of any underwriters, if any;
●
the
purchase price of the securities and the proceeds we will receive
from the sale;
●
any
underwriting discounts and other items constituting
underwriters’ compensation;
●
any
initial public offering price;
●
any
discounts or concessions allowed or reallowed or paid to dealers;
and
●
any
securities exchange or market on which the securities may be
listed.
Only
underwriters we name in the prospectus supplement, information
incorporated by reference or any related free writing prospectus
are underwriters of the securities offered thereby.
The
distribution of securities may be effected, from time to time, in
one or more transactions, including:
●
block
transactions (which may involve crosses) and transactions on the
NASDAQ or any other organized market where the securities may be
traded;
●
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its own account pursuant to a prospectus supplement;
●
ordinary
brokerage transactions and transactions in which a broker-dealer
solicits purchasers;
●
sales
“at the market” to or through a market maker or into an
existing trading market, on an exchange or otherwise;
and
●
sales
in other ways not involving market makers or established trading
markets, including direct sales to purchasers.
By Underwriters
We may
use an underwriter or underwriters in the offer or sale of our
securities.
●
If we
use an underwriter or underwriters, the offered securities will be
acquired by the underwriters for their own account.
●
We will
include the names of the specific managing underwriter or
underwriters, as well as any other underwriters, and the terms of
the transactions, including the compensation the underwriters and
dealers will receive, in the prospectus supplement.
●
The
underwriters will use this prospectus and the prospectus supplement
to sell our securities.
We may
also sell securities pursuant to one or more standby agreements
with one or more underwriters in connection with the call,
redemption or exchange of a specified class or series of any of our
outstanding securities. In a standby agreement, the underwriter or
underwriters would agree either:
●
to
purchase from us up to the number of shares of common stock that
would be issuable upon conversion or exchange of all the shares of
the class or series of our securities at an agreed price per share
of common stock; or
●
to
purchase from us up to a specified dollar amount of offered
securities at an agreed price per offered security, which price may
be fixed or may be established by formula or other method and which
may or may not relate to market prices of our common stock or any
other outstanding security.
The
underwriter or underwriters would also agree, if applicable, to
convert or exchange any securities of the class or series held or
purchased by the underwriter or underwriters into or for our common
stock or other security.
The
underwriter or underwriters may assist in the solicitation of
conversions or exchanges by holders of the class or series of
securities.
By Dealers
We may
use a dealer to sell our securities.
●
If we
use a dealer, we, as principal, will sell our securities to the
dealer.
●
The
dealer will then resell our securities to the public at varying
prices that the dealer will determine at the time it sells our
securities.
●
We will
include the name of the dealer and the terms of our transactions
with the dealer in the prospectus supplement.
By Agents
We may
designate agents to solicit offers to purchase our
securities.
●
We will
name any agent involved in offering or selling our securities and
any commissions that we will pay to the agent in the prospectus
supplement.
●
Unless
we indicate otherwise in the prospectus supplement, our agents will
act on a best efforts basis for the period of their
appointment.
●
Our
agents may be deemed to be underwriters under the Securities Act of
any of our securities that they offer or sell.
By Delayed Delivery Contracts
We may
authorize our agents and underwriters to solicit offers by certain
institutions to purchase our securities at the public offering
price under delayed delivery contracts.
●
If we
use delayed delivery contracts, we will disclose that we are using
them in the prospectus supplement and will tell you when we will
demand payment and delivery of the securities under the delayed
delivery contracts.
●
These
delayed delivery contracts will be subject only to the conditions
that we set forth in the prospectus supplement.
●
We will
indicate in the prospectus supplement the commission that
underwriters and agents soliciting purchases of our securities
under delayed delivery contracts will be entitled to
receive.
Direct Sales
We may
directly solicit offers to purchase our securities, and we may
directly sell our securities to institutional or other investors,
including our affiliates. We will describe the terms of our direct
sales in the prospectus supplement. We may also sell our securities
upon the exercise of rights which we may issue.
General Information
Underwriters,
dealers and agents that participate in the distribution of our
securities may be underwriters as defined in the Securities Act,
and any discounts or commissions they receive and any profit they
make on the resale of the offered securities may be treated as
underwriting discounts and commissions under the Securities Act.
Any underwriters or agents will be identified and their
compensation described in a prospectus supplement. We may indemnify
agents, underwriters and dealers against certain civil liabilities,
including liabilities under the Securities Act, or make
contributions to payments they may be required to make relating to
those liabilities. Our agents, underwriters and dealers, or their
affiliates, may be customers of, engage in transactions with or
perform services for us in the ordinary course of
business.
Preferred stock may
be a new issue of securities with no established trading market.
Any underwriters to whom preferred stock offered by this prospectus
are sold by us for public offering and sale may make a market in
the preferred stock offered by this prospectus, but the
underwriters will not be obligated to do so and may discontinue any
market making at any time without notice. No assurance can be given
as to the liquidity of the trading market for preferred stock
offered by this prospectus.
Representatives of
the underwriters through whom our securities are sold for public
offering and sale may engage in over-allotment, stabilizing
transactions, syndicate short covering transactions and penalty
bids in accordance with Regulation M under the Exchange Act.
Over-allotment involves syndicate sales in excess of the offering
size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the offered securities so long
as the stabilizing bids do not exceed a specified
maximum.
Syndicate covering
transactions involve purchases of the offered securities in the
open market after the distribution has been completed in order to
cover syndicate short positions. Penalty bids permit the
representative of the underwriters to reclaim a selling concession
from a syndicate member when the offered securities originally sold
by such syndicate member are purchased in a syndicate covering
transaction to cover syndicate short positions. Such stabilizing
transactions, syndicate covering transactions and penalty bids may
cause the price of the offered securities to be higher than it
would otherwise be in the absence of such transactions. These
transactions may be effected on a national securities exchange and,
if commenced, may be discontinued at any time. Underwriters,
dealers and agents may be customers of, engage in transactions with
or perform services for, us and our subsidiaries in the ordinary
course of business.
Fees and Commissions
If 5%
or more of the net proceeds of any offering of securities made
under this prospectus will be received by a Financial Industry
Regulatory Authority (“FINRA”) member participating in
the offering or affiliates or associated persons of such FINRA
member, the offering will be conducted in accordance with FINRA
Rule 5121.
LEGAL MATTERS
Certain
legal matters in connection with the securities offered hereby will
be passed on for us by Holland & Hart LLP, Reno, Nevada. Any
underwriters will be advised about other issues relating to any
offering by their own legal counsel.
EXPERTS
The
consolidated financial statements of ENGlobal Corporation and
subsidiaries (the Company) as of December 26, 2020 and December 28,
2019, and for the years then ended, have been incorporated by
reference herein, in reliance upon the report of Moss Adams LLP,
independent registered public accounting firm, incorporated by
reference herein, and upon the authority of said firm as experts in
accounting and auditing.
7,142,859
Shares of Common Stock
ENGLOBAL
CORPORATION
Prospectus
Placement Agent
A.G.P.
June 1,
2021
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