SEC Form SC 13D/A filed by ENGlobal Corporation (Amendment)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No. 1)*

Common Stock, $0.001 par value

(Title of Class of Securities)

293306106

(CUSIP Number)

William A. Coskey

3 Dashwood Court

The Hills, Texas 78738

Tel: (512) 351-9064

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

June 15, 2023

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ☒

Note. Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

CUSIP No. 293306106

CUSIP No. 293306106

Item 1. Security and Issuer.

This Amendment No. 1 to the Schedule 13D filed on April 16, 2021 (the “Statement”) relates to shares of common stock, par value $0.001 per share (“Common Stock”), of ENGlobal Corporation, a Nevada corporation (the “Company”). The principal executive offices of the Company are located at 11740 Katy Freeway – Energy Tower III, 11^th Floor, Houston, Texas 77079.

Item 2. Identity and Background.

(a) This Amendment No. 1 is filed jointly by William A. Coskey, a United States citizen, and Alliance 2000, Ltd., a Texas limited partnership (“Alliance”).  Mr. Coskey and Alliance are referred to herein collectively as the “Reporting Persons” and individually as a “Reporting Person.”  

(b) The principal business address of each of Mr. Coskey and Alliance, as well as BHC Management Corp., the sole general partner of Alliance (“BHC”), is 3 Dashwood Court, The Hills, Texas 78738.  

(c) The principal business of Alliance is investments in securities and other assets.  The principal occupation of Mr. Coskey is to serve as the President of BHC.  Mr. Coskey also serves as the Executive Chairman of the Company. The principal business of BHC is to serve as the general partner of Alliance.  

(d) Neither Reporting Person, nor BHC, has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).  

(e) Neither Reporting Person, nor BHC, has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining further violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.  

(f) Mr. Coskey is a United States citizen.  Alliance is a Texas limited partnership.  BHC is a Texas corporation.   

Item 3. Source and Amount of Funds or Other Consideration.

On August 1, 1994, the Company entered into an agreement to purchase all of the issued and outstanding shares of Industrial Data Systems, Inc., a Texas corporation, in a tax-free exchange of stock.  The Company issued 4,750,000 shares of its Common Stock to Mr. Coskey in exchange for the consideration of 100,000 shares of Industrial Data Systems, Inc.    The consideration for the issuance of 4,750,000 shares Common Stock of the Company to Mr. Coskey was valued at $351,131.  

On October 27, 1997, Mr. Coskey and his spouse each transferred 4,750,000 shares of Common Stock of the Company to Alliance.  No funds were exchanged for the transfer of these shares.  

On June 16, 1998, Mr. Coskey and his spouse acquired an aggregate of 100 shares of Common Stock of the Company at the time the Company became listed with the American Stock Exchange.  Mr. Coskey and his spouse purchased these shares of Common Stock using their own personal funds, for an aggregate purchase price of approximately $500.  

From November 17, 2017 through December 8, 2017, Alliance acquired an aggregate of 171,662 shares of Common Stock of the Company through open market purchases.    Alliance purchased these shares of Common Stock using its working capital, for an aggregate purchase price of approximately $135,615.   

Item 4. Purpose of Transaction.

The securities covered by this Amendment No. 1 were acquired for investment purposes.  

Mr. Coskey currently serves as the Executive Chairman of the Company. As the Executive Chairman of the Company, Mr. Coskey may have influence over the corporate activities of the Company, including activities which may relate to the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.  

Except as set forth in this Item 4, none of the Reporting Persons have any present plans or proposals that relate to or that would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D. The Reporting Persons retain the right to change their investment intent, and may, from time to time, acquire additional shares of Common Stock or other securities of the Company, or sell or otherwise dispose of (or enter into plans or arrangements to sell or otherwise dispose of), all or part of the shares of Common Stock or other securities of the Company, if any, beneficially owned by them, in any manner permitted by law.   

Item 5. Interest in Securities of the Issuer.

(a) The Reporting Persons have the following beneficial ownership in the Company’s Common Stock:  

(1) Mr. Coskey is the beneficial owner of 8,840,697 shares of Common Stock (100 shares of Common Stock jointly held by Mr. Coskey and his spouse, and 8,840,597 shares of Common Stock held by Alliance, over which he may be deemed to have shared voting and/or dispositive power as the President of BHC, the sole general partner of Alliance), which represents approximately 22.2% of the outstanding shares of Common Stock of the Company (based on 39,760,305 shares of Common Stock outstanding on May 16, 2023, as reported in the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 16, 2023).  

(2) Alliance is the beneficial owner of 8,840,597 shares of Common Stock (all held directly by Alliance), which represents approximately 22.2% of the outstanding shares of Common Stock of the Company (based on 39,760,305 shares of Common Stock outstanding on May 16, 2023, as reported in the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 16, 2023).  

(b)   

(c) None of the Reporting Persons has acquired or disposed of any securities of the Company during the 60 days prior to the filing of this Amendment No. 1.

(d) Except as set forth herein, no other person is known by the Reporting Persons to have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, Common Stock beneficially owned by the Reporting Persons.

(e) Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

Pursuant to Rule 13d-1(k) promulgated under the Act, the Reporting Persons entered into a Joint Filing Agreement (the “Joint Filing Agreement”) with respect to the joint filing of the Statement and any amendment or amendments thereto.  The foregoing description of the Joint Filing Agreement does not purport to be complete and is qualified in its entirety by the contents of the Joint Filing Agreement, a copy of which is attached hereto as Exhibit 1 and is incorporated herein by reference.

On June 15, 2023, Alliance entered into a Credit Agreement (the “Credit Agreement”) with the Company, pursuant to which Alliance has agreed, subject to certain terms and conditions, to extend up to two term loans in the aggregate principal amount of $1,250,000 to the Company (collectively, the “Term Loans”). In connection with entering into the Credit Agreement, (i) the Company and its subsidiaries, ENGlobal U.S., Inc., a Texas corporation, ENGlobal Government Services, Inc., a Texas corporation, and ENGlobal Technologies, LLC, a Texas limited liability company (collectively, the “Guarantors”), entered into a Security Agreement (the “Security Agreement”) granting a security interest in favor of Alliance on substantially all of the Company’s and Guarantors’ assets to secure all of the indebtedness and other obligations owed to Alliance under the Credit Agreement and (ii) the Guarantors entered into a Continuing Guaranty (the “Guaranty”) pursuant to which the Guarantors guaranteed the payment of all indebtedness owed to Alliance.

In accordance with the charter of the Company’s Audit Committee and the Company’s policy on related party transactions, the Loan Documents (as defined below) and the transactions contemplated thereby were reviewed and approved by the Company’s Audit Committee and determined in good faith to be on terms no less favorable to the Company than could be obtained from unrelated third parties and fair to the Company and the Guarantors from a financial point of view, and were approved by all of the disinterested members of the Company’s Board of Directors.

Set forth below are certain material terms of the Credit Agreement, the Security Agreement and the Guaranty (collectively, the “Loan Documents”):

Loan Amounts:

Interest: The outstanding principal balance of the Term Loans will bear interest (computed on the basis of a 365/366-day year, as the case may be, actual days elapsed) at a per annum rate equal to 8.5%. Interest will be due and payable quarterly in arrears on the last business day of each fiscal quarter, with any remaining accrued but unpaid interest payable at maturity.

Mandatory Prepayments: The Term Loans are required to be prepaid:

Negative Covenants: The Credit Agreement is subject to negative covenants that, among other things and subject to certain exceptions, limit the Company’s ability and the ability of the Guarantors to incur indebtedness, to merge, consolidate, transfer assets or undertake certain transactions outside of the ordinary course of business, to make guarantees; to make loans, advances and investments, to make dividends and distributions, to incur liens or encumbrances, to undertake affiliate transactions and to make certain organizational changes.

Maturity Date: June 15, 2024.

Loan Fee: The Company agreed to pay to Alliance a non-refundable origination fee equal to (i) 0.50% multiplied by the aggregate principal amount borrowed under Term Loan A and (ii) 0.50% multiplied by the aggregate principal amount borrowed under the Term Loan B (if any).

Collateral: The Company and Guarantors are granting Alliance, for the benefit of Alliance, a security interest in all of the Company and Guarantors’ now-owned and hereafter acquired property and assets of every kind.

Guaranty: Each of the Guarantors jointly and severally guarantee to Alliance prompt payment of the obligations in full when due.

The foregoing description of the Loan Documents does not purport to be complete and is qualified in its entirety by the contents of each of the Loan Documents, copies of which are attached hereto as Exhibit 2, Exhibit 3 and Exhibit 4 and are incorporated herein by reference.

Item 7.  Material to be Filed as Exhibits.  

SIGNATURES

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.